<PAGE> 1
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- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CORRPRO COMPANIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
CORRPRO COMPANIES LOGO
1090 Enterprise Drive, Medina,
Ohio 44256
Tel 330/723-5082,
Fax 330/723-0694
June 15, 1999
Dear Corrpro Shareholders:
We invite you to attend Corrpro's 1999 Annual Shareholders' Meeting. It
will be held on Thursday, July 22, 1999, at The Medina Country Club, 5588
Wedgewood Road, Medina, Ohio 44256 beginning at 10:00 a.m. eastern daylight
savings time.
Our directors and officers are expected to be available before and after
the meeting to speak with you. During the meeting, we will review the
performance of our business over the past fiscal year and will consider the
matters explained in the formal notice and proxy statement that follow.
Please vote, sign and return the enclosed proxy as soon as possible,
whether or not you plan to attend the meeting. Your vote is important.
Sincerely,
/s/ Joseph W. Rog
Joseph W. Rog
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
CORRPRO COMPANIES LOGO
1090 Enterprise Drive, Medina,
Ohio 44256
Tel 330/723-5082,
Fax 330/723-0694
CORRPRO COMPANIES, INC.
NOTICE OF ANNUAL SHAREHOLDERS' MEETING
TO BE HELD JULY 22, 1999
- --------------------------------------------------------------------------------
To the Holders of Common Shares of
Corrpro Companies, Inc.
We will hold the Annual Shareholders' Meeting of Corrpro Companies, Inc. at
The Medina Country Club, 5588 Wedgewood Road, Medina, Ohio 44256, on Thursday,
July 22, 1999, at 10:00 a.m., eastern daylight savings time.
The meeting's purpose is to:
1. Elect 4 Directors;
2. Vote on the adoption of an employee stock purchase plan;
3. Consider any other matters which properly come before the
meeting and any adjournments.
Only shareholders of record of common stock at the close of business on May
24, 1999 are entitled to receive notice of and to vote at the meeting. A list of
the shareholders entitled to vote will be available for examination at the
meeting by any shareholder for any purpose properly related to the meeting.
We have enclosed our fiscal 1999 annual report, which includes our
financial statements, and our proxy statement with this notice of annual
meeting.
To assure your wishes are carried out, please vote, sign and mail the
enclosed proxy as soon as possible. We have enclosed a postage prepaid return
envelope. Your proxy is being solicited by Corrpro's Board of Directors.
/s/ Neal R. Restivo
Neal R. Restivo
Executive Vice President -- Chief Financial Officer,
Secretary and Treasurer
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
June 15, 1999
<PAGE> 4
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CORRPRO COMPANIES, INC.
PROXY STATEMENT
ANNUAL SHAREHOLDERS' MEETING
- --------------------------------------------------------------------------------
Corrpro's 1999 annual shareholders' meeting will be held July 22, 1999
beginning at 10:00 a.m., eastern daylight savings time. It will be at The Medina
Country Club, 5588 Wedgewood Road, Medina, Ohio 44256.
RECORD DATE
- --------------------------------------------------------------------------------
Shareholders as of the close of business on May 24, 1999 are entitled to
vote at the meeting. Each share is entitled to one vote. On May 24, 1999, we had
7,679,478 shares of our common stock outstanding.
AGENDA
- --------------------------------------------------------------------------------
The purpose of the meeting is to:
1. Elect 4 Directors;
2. Vote on the adoption of an employee stock purchase plan; and
3. Consider any other proper business.
PROXIES
- --------------------------------------------------------------------------------
We will follow your voting instructions on the proxy card that you return.
If no instructions are given, we will vote signed proxies for the proposals.
Unless you tell us on the proxy card to vote differently, we will vote signed
returned proxies "for" the Board's nominees and "for" agenda item 2. The Board
or proxy holders will use their discretion on other matters. If a nominee cannot
or will not serve as a Director, the Board or proxy holders will vote for a
person whom they believe will carry on our present policies.
<PAGE> 5
PROXIES SOLICITED BY
- --------------------------------------------------------------------------------
Corrpro is soliciting this proxy on behalf of the Corrpro Board of
Directors.
FIRST MAILING DATE
- --------------------------------------------------------------------------------
This proxy statement is being mailed to shareholders on or about June 15,
1999.
REVOKING YOUR PROXY
- --------------------------------------------------------------------------------
You may revoke your proxy before it is voted at the meeting. To revoke,
follow the procedures listed under "Voting Procedures / Revoking Your Proxy."
FISCAL YEAR
- --------------------------------------------------------------------------------
Our fiscal year is the 12-month period beginning April 1 and ending March
31. Unless otherwise noted, we are presenting information for our fiscal year
that ended March 31, 1999. Fiscal 1999 means our most recently completed fiscal
year which ended March 31, 1999. Fiscal 2000 means our current fiscal year that
will end March 31, 2000.
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
PROMPT RETURN OF YOUR PROXY WILL HELP REDUCE THE COSTS OF RESOLICITATION.
2
<PAGE> 6
CONTENTS
<TABLE>
<S> <C>
General Information......................................... 1
Proposal One: Election of Directors......................... 3
Proposal Two: Approval of Employee Stock Purchase Plan...... 5
Board Information........................................... 8
Compensation Committee Report on Executive
Compensation(1)........................................... 9
Company Stock Performance(1)................................ 11
Executive Compensation and Other Information................ 12
Section 16(a) Beneficial Ownership Reporting Compliance..... 14
Corrpro Share Ownership..................................... 14
Compensation Committee Interlocks and Insider
Participation............................................. 15
Independent Auditors........................................ 16
Voting Procedures/Revoking Your Proxy....................... 16
Submission of Shareholder Proposals......................... 17
Other Business.............................................. 17
Corrpro Companies, Inc. Employee Stock Purchase Plan........ Appendix
</TABLE>
- ---------------
(1) The Compensation Committee report and the performance graph will not be
incorporated by reference into any present or future filings we make with
the SEC, even if those reports incorporate all or any part of this proxy
statement.
PROPOSAL ONE: ELECTION OF DIRECTORS
BOARD STRUCTURE
- --------------------------------------------------------------------------------
The Board has seven members. The Directors are divided into two classes. At
each annual meeting, the term of one class expires. Directors in each class
serve for two year terms.
BOARD NOMINEES WHOSE TERMS EXPIRE AT THE 2001 ANNUAL MEETING:
- --------------------------------------------------------------------------------
We will elect 4 Directors this year. We urge you to Vote for Mr. Hodge, Mr.
Kroon, Mr. Lynham, and Mr. Rog.
ROBERT E. HODGE
- --------------------------------------------------------------------------------
Mr. Hodge has been a Director of Corrpro since November 1993. He retired in
January 1993 from his position as Senior Vice President of Gas Supply, Natural
Gas Pipeline Company of America, a unit of MidCon Corp., which is a subsidiary
of Occidental Petroleum Corporation. Mr. Hodge joined Natural Gas Pipeline
Company of America in 1960 and became Senior Vice President in 1989. He
graduated from the University of Missouri, Rolla, with a degree in electrical
engineering. He also holds a Master of Business Administration degree from the
University of Illinois. Age 61.
3
<PAGE> 7
DAVID H. KROON
- --------------------------------------------------------------------------------
Mr. Kroon has been a Director of Corrpro since 1984, and Executive Vice
President since April 1993. He served as Senior Vice President of Corrpro from
its formation in 1984 until April 1993. Mr. Kroon has over twenty-five years of
engineering and consulting experience in the corrosion control market. He is
widely published in water and waste treatment, electrical power, oil and gas,
and environmental journals worldwide. His experience includes management of
business, planning, policies and procedures, and professional development. Mr.
Kroon graduated from Yale University with a Bachelor of Science degree in
Chemistry. Age 49.
C. RICHARD LYNHAM
- --------------------------------------------------------------------------------
Mr. Lynham has been a Director of Corrpro since June 1992. Since 1992, he
has been the owner and Chief Executive Officer of Harbor Castings, Inc., an
investment casting foundry located in North Canton, Ohio. Previously he was
Group Vice President, Ceramics, for Ferro Corporation (1984-1992), a Fortune 500
manufacturer of specialty industrial products. Mr. Lynham is a director of
Western Reserve Bancorp, Inc. Mr. Lynham holds the degrees of Bachelor of
Mechanical Engineering from Cornell University and Master of Business
Administration from Harvard University. Age 57.
JOSEPH W. ROG
- --------------------------------------------------------------------------------
Mr. Rog has been a Director and Corrpro's Chief Executive Officer since its
formation in 1984. He become Chairman of the Board in June 1993 and has been
President since June 1995. Mr. Rog was also Corrpro's President between January
1984 and June 1993. Mr. Rog has over thirty-five years of industry experience in
various technical and management capacities and has broad, first-hand experience
in corrosion analysis and the design and implementation of corrosion control
systems. He graduated from Kent State University with a Bachelor of Science
degree in Geology, and has also completed the Graduate School of Business course
at Stanford University. Age 59.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THESE NOMINEES.
CONTINUING DIRECTORS WHOSE
TERMS EXPIRE AT THE 2000 ANNUAL MEETING:
- --------------------------------------------------------------------------------
WARREN F. ROGERS
- --------------------------------------------------------------------------------
Dr. Rogers has been a Director of Corrpro since July 1996. He has been,
since 1979, president of Warren Rogers Associates, Inc., a Newport, Rhode Island
firm which provides underground storage tank management and consulting services,
including mathematical and statistical modeling. Dr. Rogers has also served as a
Vice President of the Center for Naval Analysis in Alexandria, Virginia from
1982 to 1989. He earned a Ph.D. in statistics from Stanford University and has
an M.S. in Operations Research from the U.S. Naval Post-Graduate School. Age 69.
4
<PAGE> 8
BARRY W. SCHADECK
- --------------------------------------------------------------------------------
Mr. Schadeck has been a Director of Corrpro since April 1993 and Executive
Vice President since July 1995. He has been President of Corrpro Canada, Inc., a
Corrpro subsidiary, since its formation in May 1994. Mr. Schadeck has served as
President, since 1993, and Chief Financial Officer, since 1979, of Corrpro's
Commonwealth Seager Group subsidiary. Prior to 1979, for seven years he was
Chief Financial Accountant of Associated Engineering Services Ltd. Mr. Schadeck
graduated from Northern Alberta Institute of Technology with a degree in
accounting, and received his designation as a Certified General Accountant in
1978. Age 48.
WALTER W. WILLIAMS
- --------------------------------------------------------------------------------
Mr. Williams has been a Director of Corrpro since July 1996. He retired in
November 1992 from his position as Chairman and Chief Executive Officer of
Rubbermaid Incorporated, a position he had held since May 1991. Prior to that
time, Mr. Williams was President and Chief Operating Officer of Rubbermaid
Incorporated beginning in September 1987 and Vice Chairman beginning in October
1990. Prior to joining Rubbermaid, he spent 31 years with The General Electric
Company in a wide variety of domestic and international consumer marketing,
sales and general management positions. He is a director of Enamelon, Inc., the
Stanley Works, and Paxar Corporation. Mr. Williams graduated from Utica College
of Syracuse University with a degree in Finance. Age 65.
PROPOSAL TWO: ADOPTION OF THE CORRPRO EMPLOYEE
STOCK PURCHASE PLAN
The Board believes it is in Corrpro's best interest to approve a proposal
to Adopt the Corrpro Employee Stock Purchase Plan.
PROPOSED RESOLUTION
- --------------------------------------------------------------------------------
On June 1, 1999, the Compensation Committee of the Board approved the
Corrpro Companies, Inc. Employee Stock Purchase Plan. To become effective, the
plan requires the affirmative vote of a majority of the common shares present in
person or by proxy at the annual meeting. Then the plan will be effective
beginning January 1, 2000. This plan is intended to meet the requirements of
Section 423 of the Internal Revenue Code, which specifies provisions that the
plan must follow. The following resolution will be proposed for adoption at the
annual meeting:
RESOLVED, that the Corrpro Companies, Inc. Employee Stock Purchase
Plan submitted to the 1999 Corrpro Annual Shareholders' Meeting be and
hereby is adopted.
REASONS FOR THE PROPOSAL
An employee stock purchase plan is a form of stock based compensation.
Employees have a systematic long-term investment opportunity to own employer
stock. When shareholder value increases, the wealth of the people who help
produce shareholder value increases.
5
<PAGE> 9
Corrpro has designed its employee stock purchase plan to be broad-based
among its employees. The plan expands Corrpro's benefit package to employees at
relatively low cost. It will increase employee awareness of Corrpro's stock
performance at all levels. The plan provides employees with potential tax
savings and attractive investment opportunities. Corrpro receives a continuing
source of equity and an attractive incentive to help attract and retain key
employees.
SUMMARY OF THE EMPLOYEE STOCK PURCHASE PLAN
- --------------------------------------------------------------------------------
We have summarized the material features of the plan below. The plan will
be governed by the plan document, which is attached to this proxy statement.
Purpose. The plan's purpose is to encourage eligible Corrpro employees to
acquire or increase their personal equity interest in Corrpro.
Administration. The Stock Option Subcommittee of the Board will be the
administrator of the plan. The administrator decides when and how shares are
sold under the plan, designates which Corrpro subsidiary companies' employees
can participate, interprets the plan, and adopts any needed rules and
regulations for the plan's administration. The administrator may designate
others, including Corrpro officers and employees, to perform the day-to-day
administration and maintain records.
Eligibility. Generally, all Corrpro employees are eligible to participate.
The plan excludes persons employed for less than twelve consecutive months,
employees who own (including stock options) 5% or more of Corrpro shares,
employees who are customarily employed by the Company for less than 20 hours per
week or 5 months in any calendar year, and employees who are prohibited from
participating in the plan by law. On June 1, 1999, approximately 680 employees
would be eligible to participate.
Grant, Exercise and Expiration. The plan provides for 6 month "offering
periods" during which an employee may elect to have a percentage of pay withheld
and accumulated. An electing participant is treated as having been granted a
stock option to purchase Corrpro shares on the first day of the offering period,
which is also referred to as the "grant date". At the end of the offering
period, the employee is treated as having exercised a stock option and thus
purchases shares of Corrpro. The last day of the offering period is referred to
as the "exercise date".
The purchase price per share is determined by the administrator. It can be
between 85% and 100% of the lower of the Corrpro fair market value stock price
1) at the beginning of the offering period or 2) the end of the offering period.
Initially, the administrator has established 90% as the applicable percentage.
Fair market value will be the closing price on the New York Stock Exchange on
the grant date or exercise date. If such date is not a trading date, the most
recent preceding trading date will be used to determine fair market value.
Offering periods begin each January 1 and July 1 until no shares remain
available under the plan.
Enrollment. Eligible Corrpro employees may elect to have a whole percentage
from 1% to 10% of base pay deducted each payroll period, up to a limit of $3,000
each offering. Corrpro will account for such deductions until these amounts are
either withdrawn, distributed or used to purchase shares. No interest will be
credited on these cash amounts.
6
<PAGE> 10
Generally a participant may change his or her authorized payroll deduction
at any time without withdrawing from the plan. In such cases, his or her
accumulated deductions will be applied to purchase shares on the next June 30 or
December 31. A participant may elect to withdraw from participation in the plan
at any time and receive the amount of accumulated payroll deductions, subject to
any notice or other procedural requirements established by the administrator.
Number of Shares That May Be Purchased. On each exercise date, a
participant's accumulated payroll deductions are used to purchase Corrpro shares
from Corrpro. Section 423 of the Internal Revenue Code provides that no employee
may be granted an option under this plan (or any other Corrpro plan under
Section 423) which would permit the employee to purchase in any calendar year
Corrpro shares with a fair market value (determined as of the grant date) in
excess of $25,000.
In total 375,000 Corrpro common shares may be purchased under the plan.
This total, the purchase price, and the type of shares available under the plan,
may be adjusted in the event of a stock dividend, recapitalization, stock split,
merger or similar transaction.
Termination of Employment. A participant's whose employment ends prior to
the next exercise date will not be able to purchase shares for that offering
period. Corrpro will distribute the participant's accumulated payroll deductions
to the participant in cash as soon as administratively feasible.
Current Market Price of Common Stock. On June 1, 1999, the closing price of
Corrpro shares as reported on the New York Stock Exchange was $10 per share.
Federal Income Tax Considerations. Participants do not recognize taxable
income on the applicable grant date or on the applicable exercise date by reason
of their elections to participate in an offering. If a participant sells the
shares purchased more than two years after the applicable grant date, the
participant will have taxable ordinary income. The amount of ordinary income is
the lesser of 1) the sale price less the purchase price actually paid, or 2) the
sale price less the option price of the shares on the grant date. Any additional
gain is capital gain. If the sale price is less than the purchase price, the
participant will have a capital loss.
If a participant sells the shares within two years of the grant date, the
participant generally will have taxable ordinary income equal to the difference
between the fair market value of the option shares on the exercise date and the
purchase price. Any additional gain is long-term or short-term capital gain,
depending on how long the participant held the shares. Corrpro is not entitled
to any deduction in connection with the purchase or sale of shares, except in
cases where the participant sells the shares prior to meeting the two-year
holding requirement mentioned above. In those cases, Corrpro is entitled to a
deduction equal to the amount of ordinary income required to be recognized by
the participant.
Amendment or Termination. Corrpro's Board may amend or terminate the plan
to comply with the rules or regulations of any governmental authority, or to be
eligible for tax benefits under the Internal Revenue Code, or for any other
reasons. Generally, no amendment or termination may adversely affect the rights
of any participant with respect to any grant previously made unless required by
law. No amendment may increase the number of shares authorized for sale under
the plan without the approval of Corrpro's shareholders.
7
<PAGE> 11
Transferability. Only the employee may purchase the shares pursuant to his
or her election to participate. The employee's rights to make such purchases are
not transferable except in case of his or her death.
Duration of the plan. The plan will end on December 31, 2009.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF
THE CORRPRO COMPANIES, INC. EMPLOYEE STOCK PURCHASE PLAN
BOARD INFORMATION
BOARD MEETINGS:
- --------------------------------------------------------------------------------
In fiscal 1999, the Board held a total of 7 regular quarterly and special
meetings. Each Director attended at least 75% of all Board and applicable
Committee meetings.
BOARD COMMITTEES:
- --------------------------------------------------------------------------------
The Audit Committee approves annually the firm of independent auditors that
is to be engaged to audit and to report on the financial statements. It also
reviews and approves the annual audit plan, oversees our internal control
structure, reviews our financial reporting, and reports its activities to the
Board on a regular basis. The Audit Committee held three meetings in fiscal
1999. Members: Mr. Hodge, Mr. Lynham (Chairperson), Dr. Rogers, and Mr.
Williams.
The Compensation Committee reviews and approves the Chief Executive
Officer's ("CEO") compensation and, upon consultation with the CEO, compensation
for the officers of the Company and its subsidiaries who report directly to the
CEO. It also establishes, amends, and determines awards under executive
compensation plans and programs; oversees selection of and meets with outside
consultants to review the Company's executive compensation programs as
appropriate; and reviews Board responsibilities, recommends the number of
Directors, and is authorized to nominate Directors and Committee members. The
Compensation Committee held 6 meetings during fiscal 1999. Members: Mr. Hodge
(Chairperson), Mr. Lynham, Dr. Rogers, and Mr. Williams. Its Stock Option
Subcommittee, which administers and authorizes awards under certain of the
Company's compensation plans, is comprised of Mr. Hodge, Mr. Lynham, and Mr.
Williams.
The entire Board elected to exercise its right to nominate the Directors
standing for re-election at the 1999 annual shareholders' meeting.
BOARD COMPENSATION
RETAINER AND FEES
- --------------------------------------------------------------------------------
Corrpro pays non-employee Directors an annual retainer of $12,000. Corrpro
also pays non-employee Directors $1,000 ($1,200 for a Committee chairperson) for
each in-person Board or Committee meeting attended and $350 ($550 for a
Committee chairperson) for each
8
<PAGE> 12
telephonic Board or Committee meeting attended. Corrpro also reimburses its
Directors for reasonable out of pocket expenses incurred in attending Board and
Committee meetings.
DEFERRED COMPENSATION PLAN
- --------------------------------------------------------------------------------
Eligible Directors may elect to defer payment of all or any part of the
compensation under the Deferred Compensation Plan for Outside Directors.
Participating Directors elect an investment model which determines the return on
their deferred funds. The investment model can include Corrpro common shares.
Deferred portions are payable in a lump sum, over a period of five years or over
a period of ten years. The Director specifies in advance the date on which
payments will begin. Payments are accelerated if the Director dies or becomes
disabled.
OUTSIDE DIRECTORS' STOCK OPTION PLAN
- --------------------------------------------------------------------------------
Under the 1997 Non-employee Directors' Stock Option Plan, Corrpro
automatically grants stock options to purchase 2,500 Corrpro shares at fair
market value on the date a Director is first elected, and, beginning the next
calender year, on each September 30th that the individual is a Corrpro Director.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMMITTEE
- --------------------------------------------------------------------------------
Corrpro's Compensation Committee is comprised only of outside Directors.
Our Stock Option Subcommittee is comprised only of independent Directors as
defined by the Securities and Exchange Commission and the Internal Revenue
Service. We generally exercise the Board's powers in compensating Corrpro's
executive officers. We also administer Corrpro's incentive plans, including the
1997 Long-Term Incentive Plan.
BASE SALARIES
- --------------------------------------------------------------------------------
We review recommendations and set the base salaries of the named executive
officers each fiscal year. In performing this review, we consider the
compensation practices of comparable companies, competitive trends, individual
performance, and duties and responsibilities of the officers.
In establishing Mr. Rog's base salary for fiscal 1999, we considered an
independent consulting firm's data base of competitive information from domestic
industrial companies of similar size. We also considered the proxy statements of
those companies comprising the peer group utilized in the performance graph
under "Company Stock Performance" for comparing total returns to shareholders.
We believed it was necessary to consider not only the peer group of companies
but also the broader group of domestic industrial companies of similar size for
salary comparisons since this broader group of companies competes for the talent
of the executive officers.
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<PAGE> 13
INCENTIVE COMPENSATION
- --------------------------------------------------------------------------------
Cash Incentives. Corrpro maintains a cash bonus program. Key employees,
including the executive officers, can earn cash bonuses. Bonuses are determined
based on performance measures approved by the Board and management's discretion.
The performance measures used for fiscal 1999 included Corrpro's consolidated
earnings before taxes and bonus expense, as well as local, regional and business
unit performance objectives. Approximately 150 key employees, including the
executive officers, received cash bonus awards for fiscal 1999.
In determining the size of target awards for the Chief Executive Officer
and executive officers, the Committee subjectively reviewed the performance of
each executive relative to such executive's individual goals.
Equity Incentives. Our Stock Option Subcommittee granted stock options to
the five named executive officers during fiscal 1999. The options were designed
to provide incentives to manage Corrpro in the best interests of the
shareholders, and to encourage the executives to remain employed by Corrpro on a
long-term basis. We granted these awards based upon the level of the executive's
responsibility, performance, and the importance of such executive's retention.
These factors were weighted subjectively by the Compensation Committee.
Respectfully submitted,
Compensation Committee:
Robert E. Hodge
C. Richard Lynham
Warren F. Rogers
Walter W. Williams
10
<PAGE> 14
COMPANY STOCK PERFORMANCE
The graph below compares the cumulative return from investing $100 on March
31, 1994 in Corrpro shares, the S&P 500 Index, and an index of peer companies.
The peer companies offer a broad range of engineering, environmental and cost
construction services. They include Exponent, Inc., Harding Lawson Associates
Group, Inc., Michael Baker Corp. and for periods prior to fiscal 1999,
Tanknology Environmental, Inc. Tanknology Environmental, Inc.'s results are no
longer available as of the end of fiscal 1999.
COMPARISON OF CUMULATIVE TOTAL RETURN
MARCH 31, 1994 TO MARCH 31, 1999
<TABLE>
<CAPTION>
CORRPRO S&P 500 PEER GROUP
------- ------- ----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 86.08 115.57 64.66
1996 38.61 152.67 77.24
1997 48.73 182.93 77.79
1998 75.00 270.74 116.53
1999 71.99 320.71 78.58
</TABLE>
11
<PAGE> 15
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF COMPENSATION
- --------------------------------------------------------------------------------
The following table summarizes the compensation we paid the chief executive
officer and each of the four other most highly compensated executive officers as
of the end of fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
NAME AND PRINCIPAL FISCAL OTHER ANNUAL STOCK ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Rog............. 1999 $274,000 $165,000 $0 25,000 $4,004
Chairman of the Board, 1998 249,000 132,600 0 131,250 3,032
President, and Chief 1997 235,000 79,000 0 50,000 1,084
Executive Officer
Michael K. Baach.......... 1999 165,000 80,000 0 10,000 1,425
Executive Vice President 1998 150,000 63,600 0 31,250 1,096
Sales and Marketing 1997 140,000 39,000 0 15,000 385
George A. Gehring, Jr..... 1999 165,000 120,000 0 10,000 2,538
Executive Vice 1998 150,000 63,600 0 31,250 2,167
President, 1997 140,000 39,000 0 15,000 210
Eastern Region
Neal R. Restivo........... 1999 175,000 75,000 0 10,000 3,445
Executive Vice 1998 164,000 63,600 0 37,500 2,940
President, 1997 152,360 39,000 0 15,000 914
Chief Financial Officer,
Secretary and Treasurer
Barry W. Schadeck......... 1999 165,000 120,000 0 10,000 0
Executive Vice 1998 142,660 82,200 0 31,250 0
President, 1997 139,612 39,000 0 15,000 0
Western Region and
President of Corrpro
Canada, Inc.
</TABLE>
- -------------------------
(1) Amounts represent Company matching contributions Corrpro's 401(k) retirement
savings plan.
12
<PAGE> 16
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table lists our grants during fiscal 1999 of stock options to
the officers named in the Summary Compensation Table. The amounts shown as
potential realizable values rely on arbitrarily assumed increases in value
required by the SEC. In assessing those amounts, please note that the ultimate
value of the options depends on actual future share prices. Market conditions
and other factors can influence those future share values.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM (2)
OPTIONS EMPLOYEES IN BASE PRICES EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR ($/SH)1) DATE 5% 10%
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Rog......... 25,000 23.51% $12.80 May 15, 2008 $195,363 $509,998
Michael K. Baach...... 10,000 9.41 12.80 May 15, 2008 78,145 203,999
George A. Gehring, Jr. 10,000 9.41 12.80 May 15, 2008 78,145 203,999
Neal R. Restivo....... 10,000 9.41 12.80 May 15, 2008 78,145 203,999
Barry W. Schadeck..... 10,000 9.41 12.80 May 15, 2008 78,145 203,999
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE EXERCISABLE EXERCISABLE
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Rog........... None N/A 172,083 79,167 $860,768 $32,188
Michael K. Baach........ None N/A 44,167 30,833 240,959 16,354
George A. Gehring, Jr... 11,250 $136,040 119,167 30,833 186,584 16,354
Neal R. Restivo......... None N/A 65,000 35,000 287,251 16,874
Barry W. Schadeck....... None N/A 60,417 30,833 198,427 16,354
</TABLE>
- -------------------------
(1) This value is calculated based on the difference between $11 3/8, the
closing price of the Company's Common Shares on March 31, 1999, and the
exercise price of the options.
EMPLOYMENT AGREEMENTS
- --------------------------------------------------------------------------------
Mr. Rog's current employment agreement has a term which began April 1, 1998
and continues until March 31, 2001. Under this agreement, Mr. Rog serves as
Corrpro's Chairman of the Board, Chief Executive Officer and President. The
agreement provides for Mr. Rog to be nominated as a Corrpro Director for so long
as such agreement remains in effect.
This employment agreement provides for the payment of base salary and such
other compensation as determined by the Board of Directors from time to time.
Other compensation may include bonuses, stock options, and incentive
compensation. Mr. Rog's base salary is subject to annual review.
13
<PAGE> 17
Mr. Rog may not compete with Corrpro during the term of the agreement and
for as long as Mr. Rog receives payments pursuant to the agreement. Corrpro may
terminate Mr. Rog's employment for good cause, in which case the Company will
pay Mr. Rog his base salary earned through termination with no further
obligation to him except as required by law. Mr. Rog has earned the right to
receive retirement income with a lifetime survivor benefit to his spouse in an
amount equal to 50% of his base salary, payable monthly, provided that certain
conditions are satisfied.
Corrpro may have to pay severance to Mr. Rog if specified events occur.
These events include termination of his employment 1) because Corrpro is in
breach or 2) without good cause three months prior to or twelve months after a
change in control, as defined. In such cases, Corrpro must pay one year of
severance (two years in the event of a change in control) at the rate of his
base salary in effect at the time of termination plus a payment equal to full
year's participation in any short-term incentive bonus plan at the 100% level.
Mr. Rog would also be entitled to continue any medical or other insurance
coverage in effect at the time of termination until age 65. If the severance is
payable due to a change in control, Corrpro must set aside sufficient funds in a
trust which satisfies certain tax requirements.
Mr. Rog's is eligible for disability benefits. If he becomes disabled while
employed, his salary and other compensation continues for the first ninety days,
offset by amounts paid under other company sponsored disability plans. If his
disability cannot be reasonably accommodated, the Board may terminate his
employment. In such case, Mr. Rog's current participation in bonus and incentive
plans will not be adversely affected. Mr. Rog is also covered by other company
welfare benefits.
Corrpro and Mr. Baach, Mr. Gehring, and Mr. Restivo have signed employment
agreements beginning April 1, 1998 and ending March 31, 2001 under which each
serves as an Executive Vice President. These agreements provide for the payment
of base salaries, subject to annual adjustment. In general, these agreements
provide similar severance arrangements as the employment agreement with Mr. Rog
described above, except that no retirement income will be paid and that medical
and other insurance coverage shall continue for a period of twelve months rather
than to age 65 if the employee is terminated if specified events occur. Mr.
Schadeck's services are provided through one of Corrpro's Canadian subsidiaries.
This subsidiary has engaged Mr. Schadeck under a management services agreement
which provides for base level compensation and bonuses based on performance. The
agreements with the named executive officers generally restrict the officers
from competing for one year following termination.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of reports filed by our Directors, executive officers and
beneficial holders of 10% or more of our shares, and upon information provided
by those persons, all SEC stock ownership reports required to be filed by those
reporting persons during fiscal 1999 were timely made.
CORRPRO SHARE OWNERSHIP
The following tables lists our share ownership for the persons or groups
specified on May 24, 1999, unless otherwise noted. Ownership includes direct and
indirect (beneficial) ownership, as defined by SEC rules. To our knowledge, each
person, along with his or her spouse, has sole voting and investment power over
the shares unless otherwise noted.
14
<PAGE> 18
CERTAIN BENEFICIAL OWNERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES(1) PERCENT
- -------------------------------------------------------------------------------
<S> <C> <C>
Michael K. Baach......................................... 121,179 1.5%
George A. Gehring, Jr.................................... 119,675 1.5%
Robert E. Hodge (2)...................................... 10,000 *
David H. Kroon........................................... 282,648 3.4%
C. Richard Lynham........................................ 18,125 *
Neal R. Restivo.......................................... 66,500 *
Joseph W. Rog............................................ 424,292 5.2%
Warren F. Rogers......................................... 3,375 *
Barry W. Schadeck........................................ 146,270 1.8%
Walter W. Williams....................................... 78,075 *
14 Directors and executive officers as a group........... 1,306,377 15.9%
David L. Babson & Company Incorporated (3)............... 969,200 12.3%
</TABLE>
- ---------------
*Less than 1%
(1) The number of shares listed includes shares under currently exercisable
stock options and stock options which may become exercisable within 60 days
following May 24, 1999. The number of such exercisable stock options for
those listed above are: Mr. Baach (44,167); Mr. Gehring (116,017 shares);
Mr. Hodge (8,750 shares); Mr. Kroon (41,042 shares); Mr. Lynham (16,250
shares); Mr. Restivo (65,000 shares); Mr. Rog (172,083 shares); Dr. Rogers
(3,125); Mr. Schadeck (60,417 shares) Mr. Williams (3,125); and all
Directors and executive officers as a group (557,266).
(2) Mr. Hodge has shared voting power for 1,000 shares held in the Hodge Family
Trust.
(3) Such number of shares owned is based upon information provided by a Schedule
13G/A filed by David L. Babson Company Incorporated with the Securities and
Exchange Commission on January 19, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Warren F. Rogers, a member of the Compensation Committee, is president of
Warren Rogers Associates, Inc. ("WRA"). WRA currently conducts, on behalf of the
Company, statistical evaluation of corrosion data relating to the Company's
customers, primarily in the underground storage tank market. The Company has
worked with WRA since 1985. During fiscal 1999, fees paid to WRA totaled
$878,005. The Company believes that the terms of all transactions and
arrangements with WRA are no less favorable to the Company than similar
transactions and arrangements which might have been entered into with unrelated
parties.
15
<PAGE> 19
INDEPENDENT AUDITORS
Corrpro is incorporated in Ohio, which does not require approval by
shareholders of the selection of independent auditors. A representative of KPMG
LLP is expected to be present at the meeting. KPMG acted as independent auditors
for Corrpro for the fiscal 1999. The Audit Committee will select Corrpro's
auditors for fiscal 2000.
VOTING PROCEDURES/REVOKING YOUR PROXY
You can vote by mail or in person at the meeting. To vote by mail, complete
and sign your proxy card -- or your broker's voting instruction card if your
shares are held by your broker -- and return it in the enclosed business-reply
envelope.
To be elected, Directors must receive a plurality of the shares present and
voting in person or by proxy, provided a quorum exists. A plurality means
receiving the largest number of votes, regardless of whether that is a majority.
A quorum is present if at least a majority of the outstanding shares on the
Record Date (7,679,478 shares) is present in person or by proxy. Proposal Two,
to adopt the Corrpro Employee Stock Purchase Plan, must be approved by a
majority of the votes cast, provided a quorum is present. All other matters
submitted to you at the meeting will be decided by a majority of the votes cast
on the matter, provided a quorum exists, except as otherwise provided by law or
our Articles of Incorporation or Code of Regulations.
Those who fail to return a proxy or attend the meeting will not count
towards determining any required plurality, majority or quorum. Shareholders and
brokers returning proxies or attending the meeting who abstain from voting on a
proposition will count towards determining a quorum for that matter, and their
proxies will not affect determination of a plurality. Those abstentions,
however, will not count towards achievement of a majority.
If you are a participant in our 401(k) retirement savings plan, the blue
proxy card will represent the number of shares in your plan account. The proxy
will also serve as a voting instruction to the trustee of the 401(k) plan for
your plan shares. For our plans, if you do not vote your shares, the trustees of
those plans will vote them on your behalf.
The enclosed proxies will be voted in accordance with the instructions you
place on the proxy card. Unless otherwise stated, all shares represented by your
returned, signed proxy will be voted as noted on the first page of this proxy
statement.
You can change your mind after sending in a proxy, until the meeting by
following these procedures.
Proxies may be revoked if you:
- Deliver a signed, written revocation letter, dated later than the proxy,
to Neal R. Restivo, Secretary, at 1090 Enterprise Drive, Medina,
Ohio 44256;
- Deliver a signed proxy, dated later than the first one, to National City
Bank 629 Euclid Avenue, Suite 635, Cleveland, Ohio 44114;
- Attend the meeting and vote in person or by proxy. Attending the meeting
alone will not revoke your proxy.
16
<PAGE> 20
PROXY SOLICITATION
Beacon Hill Partners, Inc. will help us solicit proxies at a cost to
Corrpro of $2,500 plus expenses. Our employees may also solicit proxies for no
additional compensation. We will reimburse banks, brokers, custodians, nominees
and fiduciaries for reasonable expenses they incur in sending these proxy
materials to you if you are a beneficial holder of our shares.
SUBMISSION OF SHAREHOLDER PROPOSALS
From time to time, shareholders seek to nominate Directors or present
proposals for inclusion in the proxy statement and form of proxy for
consideration at the annual meeting. To be included in the proxy statement or
considered at an annual or any special meeting, you must timely submit, to our
Secretary, nominations of Directors or proposals, in addition to meeting other
legal requirements. We must receive proposals to be included in the proxy
statement for the 2000 annual meeting no later than February 14, 2000. We must
receive proposals not to be included in the proxy statement for the 2000 annual
meeting no later than May 1, 2000.
OTHER BUSINESS
The Board of Directors knows of no other matters for consideration at the
meeting. If any other business should properly arise, the persons appointed in
the enclosed proxy have discretionary authority to vote in accordance with their
best judgment.
A copy of Corrpro's Fiscal 1999 Annual Report on Form 10-K to the
Securities and Exchange Commission may be obtained by shareholders, without
charge, upon written request to Investor Relations, Corrpro Companies, Inc. You
may also obtain our SEC filings through the Internet at www.sec.gov or visit us
at our website at www.corrpro.com.
By order of the Board of Directors.
/s/ Neal R. Restivo
Neal R. Restivo
Executive Vice President, Chief Financial Officer
Secretary and Treasurer
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
17
<PAGE> 21
APPENDIX
CORRPRO COMPANIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN. This Employee Stock Purchase Plan is adopted on
this 1st day of June, 1999, with an effective date of January 1, 2000. The Plan
is intended to encourage eligible employees of the Company and its Subsidiaries
to acquire or increase their ownership of common stock of the Company on
reasonable terms. The opportunity so provided is intended to foster in
participants a strong incentive to put forth maximum effort for the continued
success and growth of the Company and its Subsidiaries, to aid in retaining
individuals who put forth such efforts, and to assist in attracting the best
available individuals to the Company and its Subsidiaries in the future. It is
the Company's intention that this Employee Stock Purchase Plan qualify as an
"employee stock purchase plan" under Section 423 of the Code. Accordingly, the
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. DEFINITIONS. When used herein, the following terms shall have the
meanings set forth below:
2.1 "Account" means the funds accumulated with respect to an Employee
as a result of deductions from his paycheck for the purpose of purchasing
Shares under the Plan. The funds allocated to an Employee's Account shall
remain the property of the Employee at all times but may be commingled with
the general funds of the Company.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Change in Control" means a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act (as in
effect on the date the Plan is adopted by the Board), whether or not the
Company is then subject to such reporting requirement; provided, that,
without limitation, such a change in control shall be deemed to have
occurred if:
(a) any "person" (as defined in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing twenty percent (20%) or more of the combined
voting power of the Company's then outstanding securities; or
(b) During any period of two (2) consecutive years (not including
any period prior to the date the Plan is adopted by the Board) there
shall cease to be a majority of the Board comprised of Continuing
Directors; or
(c) (i) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
1
<PAGE> 22
(ii) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
2.4 "Code" means the Internal Revenue Code of 1986, as in effect at
the time of reference, or any successor revenue code which may hereafter be
adopted in lieu thereof, and reference to any specific provisions of the
Code shall refer to the corresponding provisions of the Code as it may
hereafter be amended or replaced.
2.5 "Committee" means the stock option subcommittee of the Board or of
its compensation committee or any other committee appointed by the Board
which is invested by the Board with responsibility for the administration
of the Plan and whose members meet the requirements for eligibility to
serve as set forth in the Plan.
2.6 "Company" means Corrpro Companies, Inc.
2.7 "Continuing Directors" means individuals who at the beginning of
any period of two (2) consecutive years (not including any period prior to
the adoption of this Plan) constitute the Board and any new director(s)
whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved.
2.8 "Eligible Compensation" means the regular compensation (i.e.,
straight time earnings or base salary) earned by an Employee during a
payroll period, before deductions or withholdings, but shall exclude,
unless the Committee determines otherwise, all other amounts, including,
but not limited to, (i) amounts paid as bonuses, for overtime, auto and
other allowances, imputed income, as the reimbursement of expenses and
other additional compensation, (ii) all amounts contributed by the Company
or any Subsidiary under any profit-sharing (other than amounts which are
elective deferrals under Section 401(k) of the Code), pension, retirement,
group insurance or other employee welfare benefit plan or trust whether now
in existence or hereinafter adopted (iii) any income from stock option
exercises or other equity based compensation and (iv) amounts paid as
severance, disability, retirement plan distributions, deferred
compensation, or otherwise from benefit plans or similar arrangements.
2.9 "Exchange Act" means the Securities Exchange Act of 1934, as in
effect at the time of reference, or any successor law which may hereafter
be adopted in lieu thereof, and any reference to any specific provisions of
the Exchange Act shall refer to the corresponding provisions of the
Exchange Act as it may hereafter be amended or replaced.
2.10 "Employees" means persons employed by the Company or any of its
Subsidiaries; provided, however, that no person shall be considered an
Employee unless he (i) is customarily employed by the Company or any of its
Subsidiaries for more than twenty (20) hours per week and more than five
(5) months in a calendar year and (ii) has been employed by the Company or
any of its Subsidiaries (including service with such Subsidiary prior to
its becoming a subsidiary of the Company) for at least twelve (12)
consecutive months as of the Offering Commencement Date of any such
offering.
2.11 "Fair Market Value" means, with respect to the Shares, the
closing price of the Shares on the New York Stock Exchange or other
national securities exchange, on
2
<PAGE> 23
the last business day prior to the date on which the value is to be
determined, as reported in "The Wall Street Journal" or such other source
of quotations for, or reports of trading of, the Shares as the Committee
may reasonably select from time to time; provided, however, if the Shares
are not then traded on such an exchange, but are then traded on the
over-the-counter market, Fair Market Value means the mean between the high
and the low bid and asked prices for the Shares on the over-the-counter
market on the last business day prior to the date on which the value is to
be determined (or the next preceding day on which sales occurred if there
were no sales on such date); provided further, however, if no sales have
occurred in the over-the-counter market during the three week period
preceding the date on which the value is to be determined, Fair Market
Value means the average of the mean between the high and low bid and asked
prices for the Shares on the over-the-counter market for the three (3)
month period ending on the last business day prior to the date on which the
value is to be determined.
2.12 "Offering Commencement Date" means January 1 or July 1, as the
case may be, or any other date determined by the Committee, on which a
particular offering begins.
2.13 "Offering Termination Date" means the June 30 or December 31, as
the case may be, or any other date determined by the Committee, on which a
particular offering terminates.
2.14 "Option" means the right granted to an Employee to purchase
Shares pursuant to an offering made under the Plan and pursuant to such
Employee's election to purchase Shares in such offering, at a price, and
subject to such limitations and restrictions as the Plan and the Committee
may impose.
2.15 "Parent" means any corporation, other than the employer
corporation, in an unbroken chain of corporations ending with the employer
corporation if each of the corporations other than the employer corporation
owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
2.16 "Plan" means Corrpro Companies, Inc. Employee Stock Purchase
Plan.
2.17 "Purchase Period" means the period commencing on the Offering
Commencement Date and ending on the Offering Termination Date during which
installment payments for Shares purchased pursuant to Options granted
pursuant to an offering made under the Plan shall be made.
2.18 "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations of the Exchange Act, as in effect at the time of reference, or
any successor rules or regulations which may hereafter be adopted in lieu
thereof, and any reference to any specific provisions of Rule 16b-3 shall
refer to the corresponding provisions of Rule 16b-3 as it may hereafter be
amended or replaced.
2.19 "Shares" means shares of the Company's no par value common stock
or, if by reason of the adjustment provisions contained herein, any rights
under the Plan pertain to any other security, such other security.
2.20 "Subsidiary" or "Subsidiaries" means any corporation or
corporations other than the employer corporation in an unbroken chain of
corporations beginning with the employer corporation if each of the
corporations other than the last corporation in the
3
<PAGE> 24
unbroken chain owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
2.21 "Successor" means the legal representative of the estate of a
deceased Employee or the person or persons who shall acquire the right to
exercise or receive an Option by bequest or inheritance or by reason of the
death of the Employee.
3. STOCK SUBJECT TO THE PLAN. There will be reserved for use, upon the
exercise of Options to be granted from time to time pursuant to offerings made
under the Plan, an aggregate of 375,000 Shares, which Shares may be, in whole or
in part, as the Board shall from time to time determine, authorized but unissued
Shares, or issued Shares which shall have been reacquired by the Company. The
number of Shares reserved under the Plan may be issued pursuant to the exercise
of Options granted pursuant to one or more offerings made under the Plan. Any
Shares subject to issuance upon exercise of Options but which are not issued
because of a surrender, lapse, expiration or termination of any such Option
prior to issuance of the Shares shall once again be available for issuance in
satisfaction of Options.
4. ADMINISTRATION OF THE PLAN. The Board shall appoint the Committee to
administer the Plan. Subject to the provisions of the Plan, the Committee shall
have full authority, in its discretion, to determine when offerings will be made
under the Plan, the number of Shares available for purchase in any such
offering, and the terms and conditions of any such offering; to amend or cancel
options (subject to Section 25 of the Plan); to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan; and
generally to interpret and determine any and all matters whatsoever relating to
the administration of the Plan, including the designation of individuals
responsible for the day-to-day operation of the Plan. All decisions,
determinations and interpretations made by the Committee shall be binding and
conclusive on all participants in the Plan and on their legal representatives,
heirs and beneficiaries. The Board may from time to time appoint members to the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee. No member of the Committee
shall be liable, in the absence of bad faith, for any act or omission with
respect to his service on the Committee.
5. OFFERINGS. Unless the Committee, in its discretion, determines
otherwise, the Plan will be implemented by up to twenty (20) consecutive six (6)
month offerings. The first offering under the Plan shall commence on January 1,
2000 and terminate on June 30, 2000. Thereafter, offerings shall commence on
each subsequent July 1 and January 1 and terminate on the following December 31
and June 30, respectively, of such year until the Plan is terminated or no
additional Shares are available for purchase under the Plan. The Committee may
establish a maximum number or Shares available during any particular offering.
6. ELIGIBILITY TO PARTICIPATE IN OFFERINGS. All Employees shall be eligible
to participate in the Plan; provided, however, that the Committee may exclude
the Employees of any specified Subsidiary from any offering made under the Plan;
and provided further, that the Committee may determine that any offering of
Shares made under the Plan will not be extended to highly compensated Employees
(within the meaning of Section 414(q) of the Code).
7. PARTICIPATION. An eligible Employee may become a participant in the Plan
by completing, signing and filing a subscription agreement ("Subscription
Agreement") which shall designate a whole percentage of his Eligible
Compensation, not to exceed ten percent (10%) unless the Committee, in its
discretion, determines to set a higher or lower percentage, to be withheld
during the Purchase Period of any offering in which he participates, and any
4
<PAGE> 25
other necessary papers, including, but not limited to, any forms required to
establish a book entry account with the Company's stock transfer agent or a
brokerage account at a brokerage firm designated by the Committee in the
Employee's name for the purpose of holding any Shares purchased pursuant to the
Plan, with such person as the Committee may designate at least ten (10) days
prior to the Offering Commencement Date of the first offering in which he wishes
to participate. The Committee may require, as a condition to participation in
any particular offering, that the eligible Employee agree to hold the Shares
acquired upon exercise of the option thereby granted for a reasonable period of
time. After completing, signing and filing a Subscription Agreement and any
other necessary papers in accordance with the preceding sentence, an Employee
shall be deemed to have become a participant in the Plan for each subsequent
offering until the Employee withdraws from the Plan in accordance with Section
14 hereof, is deemed to have withdrawn from the Plan in accordance with Section
19 hereof, or otherwise gives written notice of his intent to withdraw to such
person as the Committee may designate. Except as otherwise provided in Section
14, if an Employee desires to change the percentage of his Eligible Compensation
to be withheld and applied to the purchase of Shares, or if an Employee who
withdraws from the Plan desires to re-enter the Plan, he must file a new
Subscription Agreement in accordance with this Section 7 at least fifteen (15)
days prior to the Offering Commencement Date of the particular offering to which
such change or re-entry is intended to apply. An Employee's re-entry into the
Plan cannot become effective before the beginning of the next offering following
his withdrawal; provided, however, if an Employee is subject to Section 16(b) of
the Exchange Act, his re-entry into the Plan must comply with the requirements
of Rule 16b-3 for all transactions under the Plan to be exempt from Section
16(b) of the Exchange Act. Participation in one offering under the Plan shall
neither limit nor require participation in any other offering.
8. GRANT OF OPTIONS. Subject to the limitations set forth in Sections 6 and
9 of the Plan, on the Offering Commencement Date of each offering made under the
Plan, each Employee who has previously elected to participate in the Plan shall
automatically be granted an Option for as many full Shares as he will be able to
purchase with the payroll deductions credited to his Account during the Purchase
Period of that offering. In the event the total maximum number of Shares
resulting from all elections to purchase under any offering of Shares made under
the Plan exceeds the number of Shares offered, the Company reserves the right to
reduce the maximum number of Shares which Employees may purchase pursuant to
their elections to purchase, to allot the Shares available in such manner as it
shall determine (subject to the requirements of Section 423 of the Code), but
generally pro rata to subscriptions received, and to grant Options to purchase
only for such reduced number of Shares. Notice of any such reduction shall be
given to each participating Employee, in a uniform and nondiscriminatory manner
determined by the Committee in its sole discretion. In the event an Employee's
election to purchase Shares pursuant to an offering made under the Plan is
canceled, in whole or in part, pursuant to the provisions of the Plan, a
proportionate portion of the Option granted to such Employee shall automatically
terminate.
9. LIMITATIONS OF NUMBER OF SHARES WHICH MAY BE PURCHASED. The following
limitations shall apply with respect to the number of Shares which may be
purchased by each Employee who elects to participate in an offering made under
the Plan:
(a) Unless the Committee, in its discretion, determines to set a
higher or lower percentage or dollar maximum, no Employee may purchase, or
elect to purchase, Shares during any one offering pursuant to the Plan for
an aggregate purchase price in excess of the lesser of (i) ten percent
(10%) of his Eligible Compensation during the Purchase
5
<PAGE> 26
Period applicable to such offering or (ii) three thousand United States
dollars (US$3,000.00).
(b) No Employee shall be granted an Option to purchase Shares under
the Plan if such Employee immediately after such Option is granted, owns
stock (within the meaning of Section 424(d) of the Code, and including
stock subject to purchase under any outstanding options) possessing five
percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or, if applicable, any Subsidiary or, if
applicable, a Parent.
(c) No Employee shall be granted an Option to purchase Shares which
permits his right to purchase stock under the Plan and all other employee
stock purchase plans of the Company and, if applicable, a Subsidiary, and,
if applicable, a Parent, to accrue (as determined under Section 423(b)(8)
of the Code) at a rate which exceeds ($25,000) of fair market value of such
stock (determined on the date the Option to purchase is granted) for each
calendar year in which such Option is outstanding at any time.
10. EXERCISE PRICE. Unless the Committee, in its discretion, determines to
set a higher per Share exercise price, the per Share exercise price for Shares
subject to purchase under Options granted pursuant to an offering made under the
Plan shall be an amount equal to the lesser of (a) eighty-five percent (85%) of
the Fair Market Value of the Shares on the Offering Commencement Date, and (b)
eighty-five percent (85%) of the Fair Market Value of the Shares on the Offering
Termination Date.
11. METHOD OF PAYMENT. Payment of the exercise price of any Option granted
pursuant to the Plan shall be made in installments through payroll deductions,
with no right of prepayment. Each Employee electing to participate in an
offering of Shares made under the Plan shall authorize the Company pursuant to
Section 7 of the Plan to withhold a designated amount from his regular weekly,
bi-weekly, semimonthly or monthly pay for each payroll period during the
Purchase Period, which amount, expressed as a percentage, may not exceed ten
percent (10%) of his Eligible Compensation, subject to the provisions of
Sections 7 and 9(a) above. All such payroll deductions made for an Employee
shall be credited to his Account. An Employee may not make any separate cash
payments into his Account, nor may payment for Shares be made other than by
payroll deduction. No interest shall accrue on the amounts credited to an
Employee's Account pursuant to this Section 11.
12. EXERCISE OF OPTIONS. As of the close of business on the Offering
Termination Date of any offering of Shares made under the Plan, each outstanding
Option shall automatically be exercised. Subject to the limitations in Sections
6, 8 and 9 of the Plan, upon the exercise of an Option, the aggregate amount of
the payroll deductions credited to the Account of each Employee as of that date
will automatically be applied to the exercise price for the purchase of that
number of Shares, rounded down to the nearest whole share, equal to the Account
balance divided by the exercise price. A certificate representing the Shares so
purchased shall be delivered to the Employee or the Employee's Successor, or, in
the Committee's discretion, to a book entry account at the Company's stock
transfer agent or a brokerage account established for the benefit of the
Employee or the Employee's Successor (which contains such terms and conditions
as the Committee may designate), as soon as reasonably practicable after the
exercise of the Option. Unless an Employee notifies the Company in writing not
to carry over the balance of his Account to the next offering, the Company shall
carry over the balance of his Account to the next offering. Upon termination of
the Plan, the balance of each Employee's Account shall be returned to him.
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<PAGE> 27
13. RIGHTS AS SHAREHOLDER. An Employee will become a shareholder of the
Company with respect to Shares for which payment has been received at the close
of business on the Offering Termination Date. An Employee will have no rights as
a shareholder with respect to Shares under an election to purchase Shares until
he has become a shareholder as provided above.
14. CANCELLATION OF ELECTION TO PURCHASE. An Employee who has elected to
purchase Shares pursuant to any offering made under the Plan may cancel his
election in its entirety or may partially cancel his election (as set forth in
his Subscription Agreement) by reducing the percentage amount which he has
authorized the Company to withhold from his Eligible Compensation for each
payroll period during the Purchase Period. Any such full or partial cancellation
shall be effective upon the delivery by the Employee of written notice of
cancellation to such person as the Committee may designate. Such notice of
cancellation must be so delivered before the close of business on the third to
last business day of the Purchase Period. If an Employee partially cancels his
original election by reducing the amount authorized to be withheld from his pay,
he shall continue to make installment payments at the reduced rate for the
remainder of the Purchase Period, and for any subsequent offering in which he
participates unless he files a new Subscription Agreement in accordance with
Section 7 hereof.
An Employee's rights upon the full or partial cancellation of his election
to purchase Shares shall be limited to the following:
(a) He may receive in cash, as soon as practicable after delivery of
the notice of cancellation, the amount then credited to his Account, except
that, in the case of a partial cancellation, he must retain in his Account
an amount equal to the amount of his new payroll deduction times the number
of payroll periods in the Purchase Period through the date of cancellation,
or
(b) He may have the amount credited to his Account at the time the
cancellation becomes effective applied to the purchase of the number of
Shares such amount will then purchase. The purchase of Shares will become
effective at the close of business on the Offering Termination Date.
In the case of a full cancellation, the Employee shall be deemed to have
withdrawn from the Plan. To re-enter the Plan, the Employee must file a new
Subscription Agreement in accordance with Section 7.
15. LEAVE OF ABSENCE OR LAYOFF. An Employee purchasing Shares under the
Plan who is granted a leave of absence (including a military leave) or is laid
off during the Purchase Period may at that time elect to suspend payments during
the leave of absence, or, in the case of a layoff, he may suspend payments for
not more than ninety (90) days (or such other period as determined by the
Committee in its sole discretion), but, in either case, not beyond the last day
of the Purchase Period. Any such suspension shall be treated as a partial
cancellation of his election to purchase Shares.
If the Employee does not return to active service upon the expiration of
his leave of absence or within ninety (90) days (or such other period as
determined by the Committee in its sole discretion) from the date of his layoff,
his election to purchase shall be deemed to have been canceled at that time, and
the Employee's only right will be to receive in cash the amount credited to his
Account.
7
<PAGE> 28
16. EFFECT OF FAILURE TO MAKE PAYMENTS WHEN DUE. If in any payroll period
an Employee who has filed an election to purchase Shares under the Plan has no
pay or his pay is insufficient (after other authorized deductions) in any
payroll period to permit deduction of his installment payment, the amount of
such deficiency shall be treated as a partial cancellation of his election to
purchase Shares.
17. RETIREMENT. If an Employee who retires in a manner entitling him to
early, normal or late retirement benefits under the provisions of any retirement
plan of the Company or a Subsidiary in which the Employee participates (or if no
such plan then exists, at or after age sixty-five (65)) has an election to
purchase Shares in effect at the time of his retirement, he may, within three
(3) months after the date of his retirement (but in no event later than the
close of business on the third to last business day of the Purchase Period), by
delivering written notice to such person as the Committee may designate, elect
to:
(a) Receive in cash, as soon as practicable after delivery of such
notice, the amount then credited in his Account, or
(b) Have the amount credited to his Account at the time of the
termination of his employment by reason of retirement applied to the
purchase of the number of Shares such Account will purchase as of the date
of his termination, such purchase to be effective as of the Offering
Termination Date.
If no such notice is given within such period, the election will be deemed
canceled as of the date of retirement and the only right of the Employee will be
to receive in cash the amount credited to his Account.
18. DEATH. If an Employee, including a retired Employee, dies and has an
election to purchase Shares in effect at the time of his death, the Employee's
Successor may, within three (3) months from the date of death (but in no event
later than the close of business on the third to last business day of the
Purchase Period), by delivering written notice to such person as the Committee
may designate, elect to:
(a) Receive in cash, as soon as practicable after delivery of such
notice, the amount then credited in the Employee's Account, or
(b) Have the amount credited to the Employee's Account at the time of
the Employee's death applied to the purchase of the number of Shares such
Account will purchase as of the date of death, such purchase to be
effective as of the Offering Termination Date.
If no such notice is given within such period, the election will be deemed
canceled as of the date of death, and the only right of such Successor will be
to receive in cash the amount credited to the Employee's Account.
19. TERMINATION OF EMPLOYMENT OTHER THAN FOR RETIREMENT OR DEATH. If an
Employee's employment is terminated for any reason other than retirement or
death prior to the end of the Purchase Period of any offering, the Employee's
rights under the Plan will terminate at such time. A notice to withdraw from the
Plan will be considered as having been received from the Employee on the day his
employment ceases, and the only right of the Employee will be to receive the
cash then credited to his Account.
20. NONTRANSFERABILITY OF OPTIONS. An Option, or an Employee's right to any
amounts held for his Account under the Plan, shall not be transferable, other
than (a) by will or the laws of descent and distribution, and an Option may be
exercised, during the lifetime of the
8
<PAGE> 29
holder of the Option, only by the holder or in the event of death, the holder's
Successor or (b) if permitted pursuant to the Code and the Regulations
thereunder without affecting the Option's qualification under Section 423 of the
Code, pursuant to a qualified domestic relations order.
21. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
all of the outstanding Shares by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations, or exchanges of
shares, separations, reorganizations or liquidations, or similar events, or in
the event of extraordinary cash or non-cash dividends being declared with
respect to the Shares, or similar transactions or events, the number and class
of Shares available under the Plan in the aggregate, the number and class of
Shares subject to Options theretofore granted, applicable purchase prices and
all other applicable provisions, shall, subject to the provisions of the Plan,
be equitably adjusted by the Committee. The foregoing adjustment and the manner
of application of the foregoing provisions shall be determined by the Committee
in its sole discretion. Any such adjustment may provide for the elimination of
any fractional Share which might otherwise become subject to an Option.
22. CHANGE IN CONTROL. Notwithstanding anything to the contrary herein, in
the case of a Change in Control of the Company, the Board may, in its sole
discretion, elect to terminate the Purchase Period of any offering then in
effect as of the last day of the month during which the Change in Control
occurs, with the effect that such day will be the Offering Termination Date of
such offering.
23. TAXES. The Employee, or his Successor, shall promptly notify the
Company of any disposition of Shares acquired pursuant to the exercise of an
Option under the Plan and the Company shall have the right to deduct any taxes
required by law to be withheld as a result of such disposition from any amounts
otherwise payable then or at any time thereafter to the Employee. The Company
shall also have the right to require a person entitled to receive Shares
pursuant to the exercise of an Option to pay the Company the amount of any taxes
which the Company is or will be required to withhold with respect to the Shares
before the certificate for such Shares is delivered pursuant to the Option.
24. TERMINATION OF THE PLAN. The Plan shall terminate ten (10) years from
the date the Plan becomes effective, and an Option shall not be granted under
the Plan after that date although the terms of any Options may be amended at any
date prior to the end of its term in accordance with the Plan. Any Options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms and conditions of the Option and this Plan.
25. AMENDMENT OF THE PLAN. The Plan may be amended at any time and from
time to time by the Board, but no amendment without the approval of the
shareholders of the Company shall be made if shareholder approval under Section
423 of the Code or Rule 16b-3 would be required. Notwithstanding the
discretionary authority granted to the Committee in Section 4 of the Plan, no
amendment of the Plan or any Option granted under the Plan shall impair any of
the rights of any holder, without the holder's consent, under any Option
theretofore granted under the Plan.
26. DELIVERY OF SHARES ON EXERCISE. Delivery of certificates, or the book
entry on the Company's stock transfer agent's books, for Shares to or for the
benefit of an Employee pursuant to the exercise of an Option may be postponed by
the Company for such period as may be required for it with reasonable diligence
to comply with any applicable requirements
9
<PAGE> 30
of any federal, state or local law or regulation or any administrative or
quasi-administrative requirement applicable to the sale, issuance, distribution
or delivery of such Shares. The Committee may, in its sole discretion, require
an Employee to furnish the Company with appropriate representations and a
written investment letter prior to the exercise of an Option or the delivery of
any Shares pursuant to the exercise of an Option.
27. FEES AND COSTS. The Company shall pay all original issue taxes on the
exercise of any Option granted under the Plan and all other fees and expenses
necessarily incurred by the Company in connection therewith.
28. NO CONTRACT OF EMPLOYMENT. Neither the adoption of this Plan nor the
grant of any Option shall be deemed to obligate the Company or any Subsidiary to
continue the employment of any Employee.
29. EFFECTIVENESS OF THE PLAN. The Plan shall become effective on January
1, 2000. Notwithstanding the foregoing, unless the Plan is approved by the
Company's shareholders at a meeting duly held in accordance with Ohio law within
twelve (12) months after being adopted by the Board the Plan and all Options
made under it shall be void and of no force and effect.
30. OTHER PROVISIONS. As used in the Plan, and in other documents prepared
in implementation of the Plan, references to the masculine pronoun shall be
deemed to refer to the feminine or neuter, and references in the singular or the
plural shall refer to the plural or the singular, as the identity of the person
or persons or entity or entities being referred to may require. The captions
used in the Plan and in such other documents prepared in implementation of the
Plan are for convenience only and shall not affect the meaning of any provision
hereof or thereof.
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<PAGE> 31
PROXY CORRPRO COMPANIES, INC.
BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING, JULY 22, 1999
The undersigned, having received the Notice of Meeting and Proxy Statement,
hereby constitutes and appoints Joseph W. Rog, David H. Kroon, and Barry W.
Schadeck, and each of them (with full power of substitution respectively), true
and lawful attorneys and proxies for the undersigned to attend the Annual
Meeting to be held on July 22, 1999, at 10:00 a.m., at The Medina Country Club,
5588 Wedgewood Road, Medina, Ohio, and any adjournments thereof.
The Proxy when properly executed will be voted in the manner directed; if no
direction is made this Proxy will be voted FOR the Director Nominees, FOR
Proposal Two (approval of the Employee Stock Purchase Plan). In their
discretion, the parties are also authorized to vote upon such other matters as
may properly come before the meeting.
1. Election of Directors, Nominees:
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for the nominees listed below
</TABLE>
ROBERT E. HODGE, DAVID H. KROON, C. RICHARD LYNHAM AND JOSEPH W. ROG
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
2. Proposal to approve the Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on the reverse side)
(Continued from other side)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES. SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTOR'S RECOMMENDATIONS. YOUR SHARES CANNOT BE VOTED UNLESS
YOU SIGN AND RETURN THIS CARD.
Dated:
----------------------
----------------------------
Signature(s)
----------------------------
Signature(s)
Please sign exactly as name
appears hereon. Joint owners
should each sign. When
signing as attorney,
executor, administrator,
trustee, or guardian, please
give full title as such.
[ ] ATTEND MEETING
We would appreciate your
indicating if you are
planning to attend the
Annual Meeting. Your failure
to check this box will not
prejudice you from attending
the meeting.
Proxy Card
