<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
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:
<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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
MICHAEL BAKER CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHAEL BAKER CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
<PAGE> 2
MICHAEL BAKER CORPORATION
P.O. BOX 12259
PITTSBURGH, PENNSYLVANIA 15231-0259
April 24, 1995
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 1995
TO THE SHAREHOLDERS OF MICHAEL BAKER CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of MICHAEL
BAKER CORPORATION (the "Company") will be held at the Westin William Penn, 530
William Penn Place, Pittsburgh, Pennsylvania 15219, on Wednesday, May 24, 1995
at 10:00 a.m., local time, for the purpose of considering and acting upon the
following:
1. The election by the holders of the Common Capital Stock of the
Company of nine directors to serve for a one-year term or until their
respective successors shall have been elected and shall have qualified as
follows:
A. The election by the holders of Common Stock and Series B Common
Stock (voting together) of six directors; and
B. The election by the holders of Common Stock of three directors.
2. To approve the adoption of the Company's 1995 Stock Incentive Plan.
3. Such other matters as may properly be brought before the meeting.
The close of business on April 7, 1995 has been fixed by the Board of
Directors as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting, or any adjournments thereof, and only
shareholders of record on such date are entitled to notice of and to vote at
said meeting.
If you are a holder of both Common Stock and Series B Common Stock of the
Company, you will find enclosed 2 proxy cards, both of which must be completed
and returned in order to vote all Common Stock and Series B Common Stock which
you hold. The Company's 1994 Annual Report to Shareholders is also enclosed.
You are cordially invited to attend the Annual Meeting of Shareholders.
Whether or not you plan to attend the Meeting, we urge you to please sign, date
and promptly return the enclosed proxy card(s) in the enclosed postage paid
envelope.
By Order of the Board of
Directors,
GLENN S. BURNS
Secretary
<PAGE> 3
MICHAEL BAKER CORPORATION
PITTSBURGH, PENNSYLVANIA
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--MAY 24, 1995
GENERAL INFORMATION
The solicitation of the proxy or proxies enclosed with this proxy statement
is made on behalf of the Board of Directors of Michael Baker Corporation (the
"Company"), P.O. Box 12259, Pittsburgh, Pennsylvania 15231-0259, for the Annual
Meeting of Shareholders to be held on May 24, 1995 at 10:00 a.m. at the Westin
William Penn, 530 William Penn Place, Pittsburgh, Pennsylvania 15219. It is
expected that this Proxy Statement and proxies will be mailed to shareholders on
or about April 24, 1995.
The Company's Common Capital Stock is divided into two series, denominated
Common Stock and Series B Common Stock. Each share of Common Stock entitles the
holder thereof to one vote on all matters submitted to the shareholders and each
share of Series B Common Stock entitles the holder thereof to ten votes on all
such matters. All matters submitted to a vote of shareholders are voted upon by
holders of Common Stock and Series B Common Stock voting together except that
(i) holders of Common Stock and holders of Series B Common Stock are each
entitled to vote separately as a series on certain extraordinary transactions
involving the Company or on certain amendments to the Company's Articles of
Incorporation, and (ii) holders of Common Stock, voting separately as a class,
are entitled to elect one-fourth of the directors to be elected at a meeting
(other than directors whom future holders of Cumulative Preferred Stock may have
the right to elect), rounded, if necessary, to the next higher whole number.
Holders of Common Stock vote together with the holders of Series B Common Stock
on the election of the remaining directors (other than those electable by future
holders of Cumulative Preferred Stock).
Holders of Common Stock and Series B Common Stock have cumulative voting
rights in the election of directors, including, in the case of the holders of
Common Stock, directors elected by such holders voting separately as a class.
Cumulative voting entitles each shareholder to that number of votes in the
election of directors as is equal to the number of shares which he holds of
record (multiplied by ten, in the case of Series B Common Stock) multiplied by
the total number of directors to be elected and to cast the whole number of such
votes for one nominee or distribute them among any two or more nominees as he
chooses. Shares represented by proxies, unless otherwise indicated on the proxy
card, will be voted cumulatively in such manner that the number of shares so
voted for each nominee (and for any substitute nominated by the Board of
Directors if any nominee listed becomes unable or is unwilling to serve) will be
as nearly equal as possible. The six nominees receiving the highest number of
affirmative votes cast at the Annual Meeting by the holders of Common Stock and
Series B Common Stock, voting together, and the three nominees receiving the
highest number of affirmative votes cast at the Annual Meeting by the holders of
the Common Stock, voting in person or by proxy, a quorum being present, will be
elected as directors.
On April 7, 1995, the Company had 7,001,826 outstanding shares of Common
Stock (representing 7,001,826 votes) and 1,361,726 shares of Series B Common
Stock (representing 13,617,260 votes). Holders of Common Stock and Series B
Common Stock of record at the close of business on April 7, 1995 are entitled to
notice of and to vote on all matters that may properly come before the meeting
except that holders of Series B Common Stock may not vote for the election of
directors electable solely by the holders of Common Stock.
The proxy solicited hereby may be revoked at any time before its exercise
by giving notice of revocation to the Secretary of the Company or by executing
and delivering a proxy bearing a later date or by attending and voting at the
Annual Meeting of Shareholders or any adjournment thereof. Unrevoked proxies
will be voted at the meeting in accordance with the specifications made thereon,
but in the absence of such specifications will be voted FOR each proposal.
Unsigned and undated proxies shall not be voted. Votes with respect to the
election of directors shall be counted as set forth above. With respect to all
other matters brought before the meeting (including without limitation the
adoption of the Company's 1995 Stock Incentive Plan), the affirmative vote by
the majority of the votes present at the meeting (in person or by proxy) shall
be required to approve such matter.
1
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as to the beneficial
ownership of the Company's Common Stock and Series B Common Stock as of April 7,
1995 by each person known by the Board of Directors of the Company to own
beneficially more than 5% of the outstanding shares of Common Stock and Series B
Common Stock of the Company, by each director and nominee, by each of the
executive officers named in the Summary Compensation Table included elsewhere in
this proxy statement (the "Summary Compensation Table") and by all directors and
executive officers as a group. The Michael Baker Corporation Employee Stock
Ownership Plan and Trust (the "ESOP") holds approximately 68.2% of the voting
power of the Company's outstanding Common Capital Stock. Information contained
in this proxy statement as to shares held by the ESOP is as of March 31, 1995,
the most recent practicable date. The information in the table concerning
beneficial ownership is based upon information furnished to the Company by or on
behalf of the persons named in the table.
<TABLE>
<CAPTION>
COMMON STOCK SERIES B COMMON STOCK
-------------------------- --------------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
BENEFICIAL BENEFICIAL
NAME OWNERSHIP(1) PERCENT OWNERSHIP(1) PERCENT
---- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Michael Baker Corporation 1,738,402 24.8% 1,232,640 90.5%
Employee Stock Ownership
Plan and Trust
Michael Baker Corporation
P.O. Box 12259
Pittsburgh, PA 15231-0259
RCM Capital Management 1,127,700 (2) 16.1% None --
RCM Limited L.P.
RCM General Corporation
RCM Capital Funds, Inc.
Four Embarcadero Center
Suite 2900
San Francisco, CA 94111
The Prudential Insurance 766,400 (3) 10.9% None --
Company of America
Prudential Plaza
Newark, NJ 07102-3777
Dimensional Fund Advisors Inc. 447,400 (4) 6.4% None --
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Joseph N. Alcorn III(8) None -- None --
William J. Copeland None -- None --
Donald P. Fusilli, Jr. 6,651 (6) * 6,506 (7) *
Roy V. Gavert, Jr. 2,000 * None --
Michael E. Gibbs(8) 130,318 (6) 1.9% 2,984 (7) *
Jack B. Hoey 10,000 (5) * None --
Charles I. Homan 18,523 (5)(6) * 19,136 (5)(7) 1.4%
Thomas D. Larson 1,525 (5) * None --
Richard L. Shaw 8,205 * None --
Konrad M. Weis None -- None --
J. Robert White None -- None --
William A. Wulf 2,000 (5) * None --
All Directors and Executive Officers 227,200 (5)(6) 3.2% 77,627 (5)(7) 5.7%
as a group (22 persons)
<FN>
- - ---------
* Less than 1%
</TABLE>
2
<PAGE> 5
(1) Under regulations of the Securities and Exchange Commission, a person who
has or shares voting or investment power with respect to a security is
considered a beneficial owner of the security. Voting power is the power to
vote or direct the voting of shares, and investment power is the power to
dispose of or direct the disposition of shares. Unless otherwise indicated
in the other footnotes below, each person has sole voting power and sole
investment power as to all shares listed opposite his name.
(2) RCM Capital Funds, Inc. has no voting power with respect to any shares and
has sole dispositive power with respect to 489,400 shares. This information
has been taken from Schedule 13G dated February 13, 1995 of RCM Capital
Funds, Inc. The other three RCM entities have sole voting power and sole
dispositive power with respect to 638,300 shares. This information has been
taken from Schedule 13G dated February 8, 1995 filed jointly by these other
three entities.
(3) The Prudential Insurance Company of America has sole voting power and sole
dispositive power with respect to 594,900 shares, and shared voting power
and shared dispositive power with respect to 168,500 shares. This
information has been taken from Schedule 13G dated February 10, 1995 of The
Prudential Insurance Company of America, as amended by Amendment No. 1 dated
April 4, 1995.
(4) Dimensional Fund Advisors Inc., a registered investment advisor, is deemed
to have beneficial ownership of 447,400 shares as of December 31, 1994, all
of which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, for all of which Dimensional Fund Advisors Inc.
serves as investment manager. Dimensional Fund Advisors Inc. disclaims
ownership of all such shares. This information has been taken from Schedule
13G dated January 30, 1995 of Dimensional Fund Advisors Inc.
(5) Some or all of such shares are jointly owned by such person and his spouse.
Voting and investment power as to such shares is shared by the nominee and
his spouse.
(6) Includes the number of shares of Common Stock indicated for each of the
following persons or group which are allocated to their respective accounts
as participants in the ESOP and as to which they are entitled to give
binding voting instructions to the trustee of the ESOP: Mr. Fusilli (6,651
shares); Mr. Gibbs (2,318 shares); Mr. Homan (13,445 shares); and directors
and executive officers as a group (70,392 shares).
(7) Includes the number of shares of Series B Common Stock indicated for each of
the following persons or group which are allocated to their respective
accounts as participants in the ESOP and as to which they are entitled to
give binding voting instructions to the trustee of the ESOP: Mr. Fusilli
(6,506 shares); Mr. Gibbs (2,984 shares); Mr. Homan (18,068 shares); and
directors and executive officers as a group (76,549 shares).
(8) Messrs. Alcorn and Gibbs resigned from the Company effective February 15,
1995.
PROXY PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nine directors will be elected for a one-year term expiring on the date of
the next Annual Meeting of Shareholders or until their respective successors
shall have been elected and shall have qualified. Six directors are to be
elected by the holders of Common Stock and Series B Common Stock voting
together, and three directors are to be elected solely by the holders of Common
Stock. The persons named in the enclosed proxy intend to vote for the nominees
whose names appear below. Although it is expected that such nominees will be
available for election, if any of them becomes unable or is unwilling to serve
at the time the election occurs, it is intended that shares represented by
proxies will be voted for the election of the other nominees named and such
substituted nominees, if any, as shall be designated by the Company's Board of
Directors.
The following table sets forth certain information regarding the nominees
as of April 7, 1995. Seven of the nominees were elected directors by the
Company's shareholders at the 1994 Annual Meeting. J. Robert White was elected
to the Board of Directors on August 5, 1994. Charles I. Homan was elected to the
Board of Directors on
3
<PAGE> 6
October 1, 1994. Except as otherwise indicated, each nominee has held the
principal occupation listed or another executive position with the same entity
for at least the past five years.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION; OTHER
NOMINEE SINCE DIRECTORSHIPS; AGE
------- -------- ---------------------------
<S> <C> <C>
TO BE ELECTED BY HOLDERS OF COMMON STOCK AND SERIES B COMMON STOCK
Charles I. Homan 1994 President and Chief Executive Officer since October
1994; formerly Executive Vice President from January
1990 to September 1994; formerly Senior Vice President
from April 1988 to December 1989; formerly President of
Michael Baker Jr., Inc. (a subsidiary) from May 1983 to
September 1994; Director of Century Financial
Corporation and Century National Bank; Age 51
Thomas D. Larson 1993 Self employed (consultant); formerly Administrator,
United States Federal Highway Administration until
January 1992; formerly Secretary of the Pennsylvania
Department of Transportation; formerly Professor of
Engineering, The Pennsylvania State University; Age 66
Richard L. Shaw 1966 Chairman of the Board; formerly Chairman of the Board,
President and Chief Executive Officer of the Company
from September 1993 through September 1994; formerly
President and Chief Executive Officer of the Company
from April 1984 to May 1992; Director of L.B. Foster
Company (manufacturing); Age 67
Konrad M. Weis 1991 Retired; formerly President and Chief Executive Officer
of Miles, Inc. (formerly Bayer USA Inc.)--(chemicals,
health care and imaging technologies); Director of PNC
Equity Management Corporation and Dravo Corporation;
Age 66
J. Robert White 1994 Executive Vice President, Chief Financial Officer and
Treasurer since July 1994; formerly Assistant Director
of Investor Relations for Westinghouse Electric
Corporation from prior to 1990 through June 1994;
formerly Adjunct Professor of Accounting and Finance at
the University of Pittsburgh and Carnegie-Mellon
University; Age 52
William A. Wulf 1985 Professor of Computer Science at the University of
Virginia; formerly Associate Director of the National
Science Foundation; Age 55
TO BE ELECTED SOLELY BY HOLDERS OF COMMON STOCK
William J. Copeland 1983 Retired; formerly Chairman of the Board of the Company;
formerly Vice Chairman of the Board of PNC Financial
Corp. and Pittsburgh National Bank; Director or trustee
of various investment companies affiliated with
Federated Investors, Inc.; Age 76
Roy V. Gavert, Jr. 1988 Managing Director of World Class Processing, Inc.
(manufacturing); principal of the Horton Company
(manufacturer of valves for household appliances);
formerly Managing Director of Gavert Wennerholm & Co.
(venture capital); formerly Managing Director of Eagle
Capital, Inc. (investment bank and venture capital);
formerly Executive Vice President, Westinghouse
Electric Corporation; Age 61
Jack B. Hoey 1988 Retired; formerly Chairman, President and Chief
Executive Officer of Peoples Natural Gas Company
(public utility); Director of United Financial
Technologies, Inc.; Age 67
</TABLE>
4
<PAGE> 7
BOARD AND COMMITTEE MEETINGS
During 1994 there were eight meetings of the Company's Board of Directors.
The Executive Committee of the Board of Directors, of which Messrs. Copeland,
Shaw and Gavert are members, held seven meetings. The Audit Committee of the
Board of Directors, of which Messrs. Gavert, Larson and Wulf are members, held
seven meetings. The Compensation Committee, of which Messrs. Hoey, Weis and Shaw
were members in 1994, held four meetings. As of January 18, 1995, Mr. Larson
replaced Mr. Shaw on the Compensation Committee. The Nominating Committee, of
which Messrs. Hoey, Copeland and Weis are members, held twelve meetings. Section
2.01.1 of the Company's By-Laws sets forth procedures by which shareholders may
nominate candidates for election as directors. All directors attended at least
75% of the total number of meetings of the Board of Directors and all committees
of the Board of which they were members.
The Executive Committee was established with all the powers and the right
to exercise all the authority of the Board of Directors in the management of the
business and affairs of the Company. The functions performed by the Audit
Committee include recommending the independent auditors, reviewing with the
independent auditors the plan for, and the results of, the auditing engagement,
approving professional services provided by the independent auditors prior to
the performance of such services, reviewing the independence of the independent
auditors and reviewing the Company's system of internal accounting controls. The
Compensation Committee reviews and recommends to the Board the compensation of
senior executive personnel and directors. The Nominating Committee was
established in August 1993 to interview and recommend to the Board candidates to
serve as executive officers and/or directors.
DIRECTORS AND OFFICERS
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding compensation
received by the Chief Executive Officer, the four remaining most highly
compensated executive officers of the Company as of December 31, 1994, and the
former Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
FISCAL SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1)
- - --------------------------- ------ ------- ------ -------------
<S> <C> <C> <C> <C>
Richard L. Shaw(2) 1994 360,400 -- 26,235
Chairman of the Board; formerly President 1993 207,800 -- 22,380
and Chief Executive Officer 1992 162,900 -- 15,318
Charles I. Homan(3) 1994 226,600 17,876 10,025
President and Chief Executive Officer; 1993 195,000 17,064 9,736
formerly Executive Vice President; 1992 175,000 -- 6,888
formerly President of Michael Baker Jr.,
Inc.,
a subsidiary
Joseph N. Alcorn III(4) 1994 190,000 -- 7,450
Executive Vice President; President of 1993 171,000 -- 7,304
Baker Mellon Stuart Construction, Inc., 1992 160,000 -- 6,695
a subsidiary
Michael E. Gibbs(5) 1994 190,000 -- 5,953
Executive Vice President; President of 1993 190,000 -- 3,367
Baker/MO Services, Inc., a subsidiary 1992 175,000 269,354 4,122
J. Robert White(6) 1994 82,500 100,000 744
Executive Vice President, 1993 -- -- --
Chief Financial Officer and Treasurer 1992 -- -- --
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
FISCAL SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1)
- - --------------------------- ------ ------- ------ ------------
<S> <C> <C> <C> <C>
Donald P. Fusilli, Jr. 1994 171,000 -- 8,271
Executive Vice President of 1993 154,000 -- 7,664
Baker/MO Services, Inc. (a subsidiary); 1992 140,000 -- 6,404
formerly Executive Vice President,
General Counsel and Secretary
<FN>
- - ---------
(1) Includes matching contributions made by the Company under its 401(k) plan
paid on behalf of the following individuals in 1994, 1993 and 1992,
respectively: Mr. Shaw, $9,240, $5,385 and $1,885; Mr. Homan, $7,721, $7,500
and $6,192; Mr. Alcorn, $5,146, $5,000 and $5,255; Mr. Gibbs, $5,377, $3,637
and $4,122; and Mr. Fusilli, $7,745, $7,193 and $6,078. Mr. White joined the
Company July 1, 1994 and did not receive 401(k) matching contributions in
1994. Also includes group life insurance premiums paid by the Company on
behalf of the following individuals in 1994, 1993 and 1992, respectively:
Mr. Shaw, $16,995, $16,995 and $13,433; Mr. Homan, $2,304, $2,236 and $696;
Mr. Alcorn, $2,304, $2,304 and $1,440; and Mr. Fusilli, $526, $471 and $326.
Group life insurance premiums were paid on behalf of Messrs. Gibbs and White
in 1994 only, in the respective amounts of $576 and $744.
(2) Mr. Shaw resigned from the Company effective September 30, 1994. Amounts
shown as salary include consulting fees received by Mr. Shaw under his
employment agreement. See "Transactions with Management."
(3) Mr. Homan became President and Chief Executive Officer upon Mr. Shaw's
resignation effective September 30, 1994.
(4) Mr. Alcorn resigned from the Company effective February 15, 1995.
(5) A description of Mr. Gibbs' employment contract is set forth below under the
heading "Transactions with Management". Mr. Gibbs resigned effective
February 15, 1995.
(6) Mr. White joined the Company July 1, 1994. His annualized salary for 1994
was $165,000.
</TABLE>
COMPENSATION OF DIRECTORS
Compensation for non-employee directors is as follows: Annual
retainer--$15,000; Attendance at each regularly scheduled Board of Directors
meeting--$1,000; Attendance at each special meeting of the Board of
Directors--$1,000; Attendance at a committee meeting scheduled on a date other
than the date of a regularly scheduled Board of Directors meeting--$500;
Attendance at a committee meeting scheduled on the date of a regularly scheduled
Board of Directors meeting--$100; Telephonic attendance at a Board of Directors
or committee meeting--$100; Additional annual retainer for chairman of the Board
of Directors--$5,000; and Additional annual retainer for committee
chairmen--$1,000.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
and Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement in whole or in part, the following report and the
Stock Performance Graph on page 8 shall not be incorporated by reference into
any such filings.
REPORT OF THE COMPENSATION COMMITTEE
Introduction
Decisions regarding compensation of the Company's executives generally are
made by a three-member Compensation Committee of the Board. All decisions of the
committee relating to compensation of the Company's executive officers are
reviewed and approved by the full Board. Set forth below is a report submitted
by Messrs. Hoey, Shaw and Weis in their capacity as the Board's Compensation
Committee addressing the Company's compensation policies for 1994 as they
affected executive officers of the Company, including Mr. Shaw, the former
President and Chief Executive Officer, Mr. Homan, the current President and
Chief Executive Officer, and Messrs. Gibbs, Alcorn, White and Fusilli, the four
executive officers other than Mr. Shaw and Mr. Homan who were, for 1994, the
Company's most highly paid executives (collectively, with Mr. Shaw and Mr.
Homan, the "Executive Officers").
6
<PAGE> 9
Compensation Philosophy
The Company applies a consistent philosophy toward compensation based upon
the following objectives: (i) to attract and retain executive officers and other
key employees of outstanding ability, and to motivate all employees to perform
to the full extent of their abilities; (ii) to ensure that pay is competitive
with other leading companies in the Company's industry; (iii) to reward
executive officers for corporate, group and individual performance; and (iv) to
ensure that total compensation to the executive officers as group is not
disproportionate when compared to the Company's total employee population.
Compensation
The Company applies a compensation program consisting of base salary and
annual incentive compensation. Mr. Homan was elected to the position of
President and Chief Executive Officer in September 1994 upon the retirement of
Richard L. Shaw. In determining Mr. Homan's salary as President and Chief
Executive Officer and the remaining Executive Officers' base salaries for 1994,
the Compensation Committee considered predecessors' salaries, the relationship
of compensation to other executive officers of the Company, the Company's
current and projected growth and profitability performance, an executive
compensation report prepared on the Company's behalf by Hewitt Associates (a
compensation consulting firm) (the "Hewitt Report") and available executive
compensation studies published by Arthur Andersen & Co. and the Engineering News
Report, a trade publication for the engineering and construction industry. Mr.
Shaw's salary for 1994 as President and Chief Executive Officer was determined
based upon his salary prior to retirement and other factors described above.
Incentive compensation for Mr. Homan and the other Executive Officers is
determined by reference to corporate performance goals measured by financial
ratios such as profitability and earnings per share growth. Each such officer's
annual performance is measured by reviewing the return on sales, new work added,
accounts receivables, human resources development and total quality management
goals.
The Chief Executive Officer recommends to the Compensation Committee salary
adjustments for executive officers. The committee reviews these recommendations
in light of the above factors and with reference to the Hewitt Report and the
executive salary studies described above. A final comparison is made to verify
that the total percentage increase in compensation paid to the executive
officers as a group is not disproportionate to the percentage increase
applicable to other Company employee groups.
All executive employees participate in an annual incentive program. The
components of the plan are based upon corporate and individual performance.
Measures of corporate performance may include, but are not limited to, one or
more financial ratios such as earnings per share, profitability, return on
equity and return on assets. Individual performance is based on the performance
rating received as part of the annual Performance Management Process. The
Performance Management Process is a program which emphasizes performance
planning (management/ employee goal setting), progress reviews and management
feedback to employees. A primary objective of the program is to enhance the
professional development of the individual employee. The rating is based upon
factors agreed to by the Chief Executive Officer and the individual executive
officer. Mr. Homan, other engineering group participants and Baker Support
Services, Inc. participants received an incentive payment in 1994 due to the
financial performance of those respective units.
In 1992, the Compensation Committee retained the services of Hewitt
Associates, a compensation consulting firm, with a continuing task to assist the
committee in connection with performance of its duties in 1994. Hewitt will
provide ongoing advice to the committee with respect to the reasonableness of
compensation paid to executive officers of the Company.
1995 Stock Incentive Plan
On December 15, 1994, the Board of Directors approved the 1995 Stock
Incentive Plan which, if adopted by the shareholders of the Company, will
provide long-term incentive compensation to eligible employees. Stock options
will be awarded based on the Compensation Committee's subjective judgment
concerning the position and responsibilities of the employee being considered,
the nature and value of his or her services, his or her current contribution to
the success of the Company, and any other factors which the Compensation
Committee may deem relevant. Stock option awards will tie the interests of
employees to the long-term performance of the Company, and provide an effective
incentive for employees to create shareholder value over the long term since the
full benefit of
7
<PAGE> 10
the compensation package cannot be realized unless an appreciation in the
Company's stock price occurs over a number of years.
This report is submitted by the Compensation Committee of the Company's
Board of Directors.
Jack B. Hoey Konrad M. Weis Richard L. Shaw
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPANTS
Two members of the Compensation Committee in 1994, Jack B. Hoey and Konrad
M. Weis, are non-employee directors and the third member, Richard L. Shaw, was
the Company's Chief Executive Officer. All executive officers of the Company
serve as directors of one or more subsidiaries of the Company. Various such
subsidiaries have one or more executive officers who serve as directors of the
Company and, in the case of Mr. Shaw, on the Company's Compensation Committee.
As of January 18, 1995, Thomas D. Larson replaced Mr. Shaw on the Compensation
Committee.
STOCK PERFORMANCE GRAPH
The following line graph compares, for the period of five years commencing
December 31, 1989 and ending December 31, 1994, the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock with the
cumulative total return of the S&P 500 Stock Index and with a peer group
identified by the Company to best approximate the Company's diverse business
groups.
COMPARISON OF FIVE-YEAR TOTAL RETURNS*
MICHAEL BAKER CORPORATION ("BKR"), S&P 500, AND A PEER GROUP**
(PERFORMANCE RESULTS THROUGH 12/31/94)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MICHAEL BAKER
(FISCAL YEAR COVERED) CORPORATION PEER GROUP S&P 500
<S> <C> <C> <C>
12/89 100 100 100
12/90 85 103 97
12/91 154 96 126
12/92 169 99 136
12/93 126 105 150
12/94 43 100 152
</TABLE>
Assumes $100 invested at the close of trading on December 31, 1989 in the
Company's Common Stock, S&P 500, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
** The Peer Group was selected to include publicly traded companies engaging in
one or more of the following lines of business: engineering, construction,
and operations and maintenance. The Peer Group consists of the following
companies: Greiner Engineering, Inc., Dames & Moore, Inc., Roy F. Weston
Inc., Jacobs Engineering Group, Inc., ICF International, Inc., Earth
Technology Corp. (USA), Harding Associates, Inc., URS Corp., Guy F. Atkinson
Co. of California, Granite Construction Inc., Kasler Corp., Turner Corp.,
McDermott International, Inc., Oceaneering International Inc., Air & Water
Technologies Corp., Halliburton Co., CRSS Inc., Fluor Corp., Foster Wheeler
Corp., Gilbert Associates, Morrison Knudsen Corp., Perini Corp., and Stone &
Webster, Inc.
8
<PAGE> 11
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission (the "Commission") initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Such persons are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms which
they file. In October 1994, Thomas D. Larson, a director of the Company,
purchased 1,000 shares of Common Stock of the Company. In December 1994, Charles
I. Homan, President, Chief Executive Officer and a director of the Company,
purchased 2,000 shares of Common Stock of the Company. Messrs. Larson and Homan
inadvertently failed to file with the Commission required monthly reports
relating to such purchases. Such purchases were reported, however, in Mr.
Larson's and Mr. Homan's year-end reports. In making this disclosure, the
Company has relied solely on written representations of its directors and
executive officers and copies of the reports that they have filed with the
Commission.
TRANSACTIONS WITH MANAGEMENT
The Company entered into an employment agreement with Richard L. Shaw in
April 1988, which agreement was supplemented in March 1992 and October 1994. At
the time of his retirement as of the end of September 1994, Mr. Shaw was being
compensated at an annual salary of approximately $400,000. The agreement
provides for Mr. Shaw's performance of consulting services to the Company from
October 1, 1994 until May 31, 1998, with annual compensation equal to 20% of his
salary prior to retirement. In addition, during this period, the Company will
cover costs of health insurance, reimburse actual out-of-pocket expenses and
maintain a life insurance policy for Mr. Shaw. This agreement also provides for
a supplemental retirement benefit of $2,500 per month commencing after the
expiration of such period.
On September 3, 1991, the Company, through a newly formed subsidiary, Baker
Mellon Stuart Construction, Inc. ("BMSCI"), acquired certain assets and
contracts from Federal Street Construction Co., Inc. (formerly Mellon Stuart
Company) ("Federal Street"), a corporation of which at the time of such
acquisition Joseph N. Alcorn III was a shareholder and Executive Vice President
and Glenn S. Burns (currently Vice President, Secretary and General Counsel of
the Company) was a shareholder and general counsel. In connection with such
acquisition, Mr. Alcorn became Executive Vice President of BMSCI and Mr. Burns
became general counsel of BMSCI. In September 1993, Mr. Alcorn became President
of BMSCI. The purchase price for such assets and contracts was $500,000 cash and
a receivable of $1,285,000 from Federal Street for the net negative book value
of the acquired assets and contracts of Federal Street as of the acquisition
date. The Company may make additional payments to Federal Street or Federal
Street may owe amounts to the Company based upon the profitability of the
contracts acquired. The purchase price was arrived at by negotiation between the
parties. In addition, on March 1, 1995 the Company paid $845,000 to Federal
Street, based upon the operating performance of BMSCI in 1991, 1992 and 1993 and
as consideration for certain noncompetition covenants of Federal Street (subject
to set-off for amounts owed by Federal Street to the Company).
BMSCI provided Federal Street with certain construction-related personnel
services during 1994. Federal Street is charged for these services based on
direct labor hours and actual costs incurred. BMSCI's charges to Federal Street
for these services were approximately $123,000 in 1994.
On August 17, 1990 (effective as of July 1, 1990), the Company, through
Baker/MO Services, Inc. ("Baker/ MO"), a newly formed subsidiary, acquired all
the outstanding shares of capital stock of MO, Inc. ("MO") from Michael E.
Gibbs, MO's sole shareholder. Also on August 17, 1990 (effective as of July 1,
1990), the Company, through MO Services L.P., a newly formed limited partnership
the partners of which are subsidiaries of the Company, acquired substantially
all of the net assets of MO Project Services, Inc. ("MOPS"), a corporation of
which Mr. Gibbs is the sole shareholder. As consideration for certain
noncompetition covenants of MOPS contained in the purchase agreement, the
Company issued a promissory note to MOPS in the amount of $1,250,000, paid in
the following installments: January 15, 1991--$350,000; January 15,
1992--$200,000; January 15, 1993--$200,000; January 15, 1994--$250,000; and
January 15, 1995--$250,000.
In connection with the acquisitions of the stock of MO and the assets of
MOPS described above, the Company and Baker/MO entered into an employment
agreement with Mr. Gibbs, pursuant to which Mr. Gibbs was employed as President
of Baker/MO and General Manager of MO Services L.P. for the period from July 1,
1990 through
9
<PAGE> 12
June 30, 1995. Mr. Gibbs resigned effective February 15, 1995. The employment
agreement contained certain noncompetition covenants, pursuant to which Mr.
Gibbs agreed, during the term of the agreement and for five years after any
termination, not to engage in any business which competes with Baker/MO or MO
Services L.P. or any of their affiliates or subsidiaries. In consideration for
such covenants the Company issued a promissory note to Mr. Gibbs in the amount
of $1,250,000, paid in the following installments: January 15, 1991--$350,000;
January 15, 1992--$200,000; January 15, 1993--$200,000; January 15,
1994--$250,000; and January 15, 1995--$250,000.
During 1994, Baker/MO incurred approximately $717,000 of expenses for
fabrication and welding services provided to Baker/MO by Professional Projects,
Inc., a corporation of which the brothers of Michael E. Gibbs are the sole
shareholders.
Baker/MO and MO Services L.P. lease office space and adjacent operational
facilities in Houston, Texas from Blue River Investments, Inc., a corporation
which is approximately 50% owned by Mr. Gibbs and of which Mr. Gibbs is the
President. The lease is on a month-to-month basis and is for approximately
21,800 square feet of office space plus adjacent facilities. Rental paid under
the lease in 1994 was $144,000.
PROXY PROPOSAL NO. 2
ADOPTION OF 1995 STOCK INCENTIVE PLAN
1995 STOCK INCENTIVE PLAN
The Company's 1995 Stock Incentive Plan was approved by the Board of
Directors on December 15, 1994. The affirmative vote of a majority of the votes
present at the Annual Meeting (in person or by proxy) shall be required for
approval of adoption of the 1995 Stock Incentive Plan. The Board of Directors
recommends that the shareholders vote for approval of adoption of the 1995 Stock
Incentive Plan. The proxies solicited on behalf of the Board of Directors will
be voted for the adoption of the 1995 Stock Incentive Plan unless otherwise
specified.
The principal features of the 1995 Stock Incentive Plan (the "Option Plan")
are summarized below. Such summary, however, is qualified in its entirety by the
full text of the Option Plan, which is set forth as Exhibit A to this proxy
statement.
GENERAL
The purposes of the Option Plan are to encourage eligible employees of the
Company and its subsidiaries, including officers, to increase their efforts to
make the Company and each subsidiary more successful, to provide an additional
inducement for such employees to remain with the Company or a subsidiary, to
reward such employees by providing an opportunity to acquire Common Stock of the
Company on favorable terms and to provide a means through which the Company may
attract able persons to enter the employ of the Company or one of its
subsidiaries. Those key employees of the Company or any subsidiary who share
responsibility for the management, growth or protection of the business of the
Company or any subsidiary may be eligible to be granted stock incentive awards
("Awards") under the Option Plan.
The aggregate number of shares of Common Stock which may be issued under
the Option Plan is 500,000 shares, subject to proportionate adjustment in the
event of stock splits and similar events. No Awards payable in Common Stock may
be granted under the Option Plan subsequent to December 14, 2004.
ADMINISTRATION
The Option Plan will be administered by a committee (the "Stock Option
Committee") appointed by the Board of Directors and consisting of not less than
two members of the Board, none of whom will be eligible to participate in the
Option Plan. The Stock Option Committee will be initially composed of the
non-employee members of the Compensation Committee of the Board of Directors.
The Stock Option Committee will have full authority, in its discretion, to
grant Awards under the Option Plan and to determine the employees to whom Awards
shall be granted and the number of shares to be covered by each Award. In
determining the eligibility of any employee, as well as in determining the
number of shares to be covered by an Award and the type or types of Awards to be
made, the Stock Option Committee will consider the position and the
responsibilities of the employee being considered, the nature and value to the
Company or a subsidiary of his or her services, his or her present and/or
potential contribution to the success of the Company or a subsidiary and such
other factors as the Stock Option Committee may deem relevant.
10
<PAGE> 13
STOCK OPTIONS
Stock options granted by the Stock Option Committee may be either
"incentive stock options" (stock options qualifying under Section 422 of the
Internal Revenue Code of 1986 (the "Code")), "nonstatutory stock options" (stock
options which do not so qualify) or both types of stock options (but not in
tandem). The option price, as determined by the Stock Option Committee in its
discretion, for each stock option may not be less than 100% of the fair market
value of the Common Stock on the date the stock option is granted. Fair market
value, for purposes of the Option Plan, will generally be the mean between the
publicly reported high and low sale prices per share of the Common Stock for the
date as of which fair market value is to be determined. On April 7, 1995 the
fair market value of a share of the Company's Common Stock, as so computed, was
$4.28.
No stock option may be exercised by an optionee during employment during
the first six months of its term unless the exercise date has been accelerated
as described under "Additional Rights in Certain Events" below. No stock option
may be exercised after the expiration of ten years from the date of grant. A
stock option to the extent exercisable at any time may be exercised in whole or
in part.
Unless the Stock Option Committee, in its discretion, otherwise determines,
the following provisions in this paragraph will apply in the event of the
termination of employment of the awardee. If the employment of the awardee is
voluntarily or involuntarily terminated with the consent of the Company or a
subsidiary, or the awardee retires under any retirement plan of the Company or a
subsidiary, all outstanding stock options held by the awardee will be
exercisable by the awardee (but only to the extent exercisable immediately prior
to the termination of employment) at any time (i) prior to the expiration date
of the stock option or within three months after the date of termination of
employment, whichever is the shorter period, in the case of an incentive stock
option, or (ii) prior to the expiration date of the stock option or within one
year (or three years in the event the awardee has retired) after the date of
termination of employment, whichever is the shorter period, in the case of a
nonstatutory stock option, and to the extent not exercisable will terminate,
unless the exercise period has been extended as described under "Additional
Rights in Certain Events" below. If the employment of the awardee is voluntarily
or involuntarily terminated because the awardee is a "disabled grantee" within
the meaning of Section 422(c)(6) of the Code, all outstanding stock options held
by the awardee will be exercisable by the awardee (whether or not so exercisable
immediately prior to the termination of employment) at any time prior to the
expiration date of the stock option or within one year after the date of
termination of employment, whichever is the shorter period. Following the death
of the awardee during employment, all outstanding stock options held by the
awardee at the time of death will be exercisable in full (whether or not so
exercisable immediately prior to the death of the awardee) by the person
entitled to do so under the will of the awardee, or, if the awardee shall fail
to make testamentary disposition of the stock option or shall die intestate, by
the legal representative of the awardee, at any time prior to the expiration
date of the stock option or within one year after the date of death of the
awardee, whichever is the shorter period. Following the death of the awardee
after termination of employment, all outstanding stock options held by the
awardee at the time of death will be exercisable in full (but only to the extent
exercisable immediately prior to the death of the awardee) by the person
entitled to do so under the will of the awardee, or, if the awardee shall fail
to make testamentary disposition of the stock option or shall die intestate, by
the legal representative of the awardee, at any time prior to the expiration
date of the stock option or within one year after the date of death of the
awardee, whichever is the shorter period.
The option price for each stock option will be payable in full in cash at
the time of exercise; however, in lieu of cash any optionee may, if authorized
by the Committee, pay the option price in whole or in part by delivering to the
Company shares of Common Stock having a fair market value on the date of
exercise of the stock option equal to the option price for the shares being
purchased, except that any portion of the option price representing a fraction
of a share must be paid in cash and no shares of Common Stock which have been
held less than six months may be delivered in payment of the option price of a
stock option.
No stock option granted under the Option Plan is transferable other than by
will or by the laws of descent and distribution, and a stock option may be
exercised during an optionee's lifetime only by the optionee.
Subject to the foregoing and the other provisions of the Option Plan, stock
options granted under the Option Plan may be exercised at such times and in such
amounts and be subject to such restrictions and other terms and conditions, if
any, as shall be determined, in its discretion, by the Committee.
11
<PAGE> 14
ADDITIONAL RIGHTS IN CERTAIN EVENTS
The Option Plan provides for certain additional rights upon the occurrence
of one or more events described in Section 7 of the Option Plan ("Section 7
Events"). Such an event is deemed to have occurred when (i) the Company acquires
actual knowledge that any person (other than the Company, the Company's Stock
Ownership Plan or Trust, a subsidiary or any employee benefit plan sponsored by
the Company) has acquired beneficial ownership, directly or indirectly, of
securities of the Company representing 20% or more of the voting power of the
Company, (ii) a tender offer is made to acquire securities of the Company
representing 20% or more of the voting power of the Company, (iii) a person
other than the Company solicits proxies relating to the election or removal of
50% or more of any class of the Board of Directors or (iv) the shareholders of
the Company approve a merger, consolidation, share exchange, division or sale or
other disposition of assets of the Company as a result of which the shareholders
of the Company immediately prior to the transaction will not own a majority of
the voting power of the surviving or resulting Company or any company which
acquires the stock of the Company or more than 10% of its consolidated assets.
Subject to the provisions of Section 4 of the Option Plan limiting such
rights in the case of incentive stock options, unless the agreement between the
Company and the awardee otherwise provides, if any Section 7 Event occurs (i)
all outstanding stock options will become immediately and fully exercisable and
(ii) all stock options held by an awardee whose employment with the Company or a
subsidiary terminates within one year of any Section 7 Event for any reason
other than voluntary termination with the consent of the Company or a
subsidiary, retirement under any retirement plan of the Company or subsidiary or
death will be exercisable for a period of one year (or three years if the
awardee has retired) from the date of such termination of employment, but in no
event after the expiration date of the stock option.
POSSIBLE ANTI-TAKEOVER EFFECT
The provisions of the Option Plan providing for the acceleration of the
exercise date of stock options upon the occurrence of a Section 7 Event and for
the extension of the period during which stock options may be exercised upon
termination of employment following a Section 7 Event may be considered as
having an anti-takeover effect.
MISCELLANEOUS
The Board of Directors may amend or terminate the Option Plan at any time
except that the Board may not terminate any outstanding Award and except that,
without the approval of the shareholders of the Company, no amendment may (i)
increase the number of shares which may be issued under the Option Plan, (ii)
increase the maximum number of shares as to which stock options may be granted
and as to which shares may be awarded under the Option Plan to any one employee
during any one calendar year, (iii) materially increase the benefits accruing
under the Option Plan to persons subject to the provisions of Section 16(b) of
the 1934 Act, (iv) materially modify the requirements as to eligibility for
participation in the Option Plan by persons subject to the provisions of Section
16(b) of the 1934 Act, (v) make any changes in the class of employees eligible
to receive incentive stock options or (vi) extend the duration of the Option
Plan.
If an awardee (i) engages in a business which is in competition with the
Company or any of its subsidiaries, (ii) induces or attempts to induce any
customer, supplier, licensee or other individual, corporation or other business
organization having a business relationship with the Company or any of its
subsidiaries to cease doing business with the Company or any of its subsidiaries
or in any way interferes with the relationship between any such customer,
supplier, licensee or other person and the Company or any of its subsidiaries,
or (iii) solicits any employee of the Company or any of its subsidiaries to
leave the employment thereof or in any way interferes with the relationship of
such employee with the Company or any of its subsidiaries, the Stock Option
Committee may immediately terminate all outstanding stock options held by the
awardee. The first clause of the preceding sentence shall not apply if the
exercise period of the stock option upon termination of employment has been
extended as a result of the occurrence of a Section 7 Event.
If the outstanding shares of Common Stock are changed in value by reason of
a spin-off, split-off, split-up, dividend in partial liquidation or dividend in
property other than cash or extraordinary distribution to shareholders, then the
Stock Option Committee shall make any adjustments to any outstanding stock
options under the Option Plan which it determines are equitably required to
prevent dilution or enlargement of the rights of optionees.
12
<PAGE> 15
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal Federal income tax
consequences of the grant and exercise of stock options under present law.
Incentive Stock Options. An optionee does not recognize any taxable income
for Federal income tax purposes upon receipt of an incentive stock option or,
generally, upon the exercise of an incentive stock option, whether the option
price is paid in whole or in part in cash or shares of Common Stock. The
exercise of an incentive stock option generally will result in an increase in an
optionee's taxable income for alternative minimum tax purposes.
If an optionee exercises an incentive stock option and does not dispose of
the shares received in a subsequent "disqualifying disposition" (generally, a
sale, gift or other disposition within two years after the date of grant of the
incentive stock option or within one year after the shares are transferred to
the optionee), upon disposition of the shares any amount realized in excess of
the optionee's tax basis in the shares disposed of is treated as a long-term
capital gain, and any loss is treated as a long-term capital loss. In the event
of a "disqualifying disposition," the difference between the fair market value
of the shares received on the date of exercise and the option price (limited, in
the case of a taxable sale or exchange, to the excess of the amount realized
upon disposition over the optionee's tax basis in the shares) is treated as
compensation received by the optionee and is taxable in the year of disposition.
Any additional gain is taxable as a capital gain and any loss as a capital loss,
which is long-term or short-term depending on whether the shares were held for
more than one year. Under proposed regulations, special rules apply in
determining the compensation income recognized upon a "disqualifying
disposition" if the option price of the incentive stock option is paid in shares
of Common Stock or, in certain limited circumstances, if the optionee is subject
to Section 16(b) of the 1934 Act. If shares of Common Stock received upon the
prior exercise of an incentive stock option are transferred to the Company in
payment of the option price of an incentive stock option within either of the
periods referred to above, the transfer is considered a "disqualifying
disposition" of the shares transferred, but, under proposed regulations, only
compensation income determined as stated above, and no capital gain or loss, is
recognized.
Neither the Company nor any of its subsidiaries is entitled to a deduction
for compensation paid with respect to shares received by an optionee upon
exercise of an incentive stock option and not disposed of in a "disqualifying
disposition." If an amount is treated as compensation received by an optionee
because of a "disqualifying disposition," the Company or one of its subsidiaries
generally is entitled to a corresponding deduction in the same amount for
compensation paid.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income for Federal income tax purposes upon receipt of a nonstatutory stock
option.
Upon the exercise of a nonstatutory stock option with cash, the amount by
which the fair market value of the shares received, determined as of the date of
exercise, exceeds the option price is generally treated as compensation received
in the year of exercise.
If the option price of a nonstatutory stock option is paid in whole or in
part in shares of Common Stock, no income, gain or loss is recognized on the
receipt of shares equal in value on the date of exercise to the shares delivered
in payment of the option price. The fair market value of the remainder of the
shares received upon exercise of the nonstatutory stock option, determined as of
the date of exercise, less the amount of cash, if any, paid upon exercise is
generally treated as compensation income received on the date of exercise.
Special rules will apply upon the exercise of a nonstatutory stock option in
certain limited circumstances by an optionee who is subject to Section 16(b) of
the 1934 Act.
In each instance that an amount is treated as compensation received, the
Company or one of its subsidiaries generally is entitled to a corresponding
deduction in the same amount for compensation paid.
Other Tax Matters. The acceleration of the exercise date of a stock option
or the exercise of a stock option following the occurrence of a Section 7 Event,
in certain circumstances, may result in (i) a 20% Federal excise tax (in
addition to Federal income tax) to the optionee on certain amounts associated
with the stock option and (ii) the loss of a compensation deduction which would
otherwise be allowable to the Company or one of its subsidiaries.
13
<PAGE> 16
NEW PLAN BENEFITS TABLE
The following table sets forth information regarding options granted as of
January 1, 1995, subject to shareholder approval of the Option Plan, to certain
officers of the Company. One-quarter of the options vested immediately upon
grant, with the remaining three-quarters scheduled to vest in equal installments
over the next three years. The exercise price for such options is $5.00 per
share. The closing market price for Common Stock on April 7, 1995 was $4.31.
Richard L. Shaw, Chairman of the Board, is not a participant in the Option Plan.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION NUMBER OF SHARES
- - --------------------------- ----------------
<S> <C>
Charles I. Homan
President and Chief Executive Officer 27,500
Joseph N. Alcorn, III
Executive Vice President 3,325(1)
Michael E. Gibbs
Executive Vice President;
President of Baker/MO Services, Inc.
a subsidiary 3,325(1)
J. Robert White
Executive Vice President and
Chief Financial Officer 11,550
Donald P. Fusilli, Jr.
Executive Vice President of
Baker/MO Services, Inc. 12,600
Executive group (12 persons) 140,000
Non-executive officer group (6 persons) 36,894
<FN>
- - ---------
(1) The amount represents the one-quarter of the original grant which vested
immediately. The remaining three-quarters was terminated upon the
resignations of Messrs. Alcorn and Gibbs, effective February 15, 1995.
</TABLE>
AUDITORS
The Board of Directors of the Company has selected the independent
accounting firm of Price Waterhouse LLP to examine the financial statements of
the Company for the 1995 fiscal year.
Price Waterhouse LLP audited the financial statements of the Company for
the 1994 fiscal year. The Board of Directors expects that representatives of
Price Waterhouse LLP will be present at the Annual Meeting of Shareholders and,
while such representatives do not currently plan to make a statement at the
meeting, they will be available to respond to appropriate questions.
Upon the recommendation of the Audit Committee and the approval of the
Executive Committee, on August 22, 1994 the Company dismissed Arthur Andersen &
Co. ("AA") as its independent accountants. The reports of AA on the Company's
financial statements for the two fiscal years ended December 31, 1993 contained
no adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty or accounting principle. In connection with its audits for the
two fiscal years ended December 31, 1993 and through August 22, 1994 there have
been no disagreements with AA on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of AA, would have caused AA
to make reference thereto in their report on the Company's financial statements
for such years. During the two fiscal years ended December 31, 1993 and through
August 22, 1994 there have been no reportable events (as defined in Regulation
S-K, Item 304(a)(1)(v) promulgated under the Securities Act of 1933, as
amended). In a letter dated August 24, 1994 AA agreed with the statements set
forth in this paragraph. A copy of such letter is included as Exhibit 16 to the
Company's Current Report on Form 8-K dated August 22, 1994.
The Company engaged Price Waterhouse LLP ("PW") as its new independent
accountants as of August 22, 1994. During the two full fiscal years ended
December 31, 1993, the Company engaged PW to audit the financial statements of
BMSCI. The opinions of AA on the Company's financial statements for such years,
insofar as they related to amounts included for BMSCI, were based solely on the
reports of PW.
14
<PAGE> 17
OTHER MATTERS
The Board of Directors does not know at this time of any other or further
business that may come before the meeting, but, if any such matters should
hereafter become known or determined and be properly brought before such meeting
for action, the proxy holders will vote upon the same according to their
discretion and best judgment.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, in a limited number of instances, officers, directors and
regular employees of the Company may, for no additional compensation, solicit
proxies in person or by telephone to vote for all nominees.
In order to be eligible for inclusion in the Company's Proxy Statement for
the 1996 Annual Meeting of Shareholders, which is presently expected to be held
on or about April 26, 1996, a proposal submitted by a shareholder for such
meeting must be received by the Secretary, Michael Baker Corporation, P.O. Box
12259, Pittsburgh, Pennsylvania 15231-0259 on or before December 26, 1995.
By Order of the Board of Directors,
GLENN S. BURNS
Secretary
April 24, 1995
15
<PAGE> 18
EXHIBIT A
MICHAEL BAKER CORPORATION
1995 STOCK INCENTIVE PLAN
The purposes of the 1995 Stock Incentive Plan (the "Plan") are to encourage
eligible employees of Michael Baker Corporation (the "Corporation") and its
subsidiaries to increase their efforts to make the Corporation and each
Subsidiary more successful, to provide an additional inducement for such
employees to remain with the Corporation or a Subsidiary, to reward such
employees by providing an opportunity to acquire shares of the Common Stock, par
value $1.00 per share, of the Corporation (the "Common Stock") on favorable
terms and to provide a means through which the Corporation may attract able
persons to enter the employ of the Corporation or one of its Subsidiaries. For
the purposes of the Plan, the term "Subsidiary" means any Corporation in an
unbroken chain of corporations beginning with the Corporation, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing at least fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
SECTION 1
ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") to be
appointed from time to time by the Corporation's Board of Directors (the
"Board") which hereafter shall consist of not less than two members of the
Board, each of whom shall on January 1, 1995, or at the time of appointment to
the Committee subsequent thereto and at all times during service as a member of
the Committee be (i) a "disinterested person" as that term is then defined under
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "1934
Act") or any successor rule and (ii) an "outside director" under Section
162(m)(4)(c) of the Internal Revenue Code of 1986 (the "Code"), or any successor
provision.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operation of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. All questions of interpretation and
application of the Plan, or as to grants under the Plan, shall be subject to the
determination of the Committee, which shall be final and binding.
The Committee shall keep records of action taken at its meetings. A
majority of the Committee shall constitute a quorum at any meeting, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by all the members of the Committee, shall
be the acts of the Committee.
SECTION 2
ELIGIBILITY
Those key employees of the Corporation or any Subsidiary (including, but
not limited to, covered employees as defined in section 162(m)(3) of the Code,
or any successor provision) who share responsibility for the management, growth
or protection of the business of the Corporation or any Subsidiary shall be
eligible to be granted stock options as described herein.
Subject to the provisions of the Plan, the Committee shall have full and
final authority, in its discretion, to grant stock options as described herein
and to determine the employees to whom any such grant shall be made and the
number of shares to be covered thereby. In determining the eligibility of any
employee, as well as in determining the number of shares covered by each grant
of a stock option, the Committee shall consider the position and the
responsibilities of the employee being considered, the nature and value to the
Corporation or a Subsidiary of his or her services, his or her present and/or
potential contribution to the success of the Corporation or a Subsidiary and
such other factors as the Committee may deem relevant.
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SECTION 3
SHARES AVAILABLE UNDER THE PLAN
The aggregate number of shares of the Common Stock which may be issued and
as to which grants of stock options may be made under the Plan is 500,000
shares, subject to adjustment and substitution as set forth in Section 6. If any
stock option granted under the Plan is cancelled by mutual consent or terminates
or expires for any reason without having been exercised in full, the number of
shares subject thereto shall again be available for purposes of the Plan. If
shares of Common Stock are forfeited to the Corporation pursuant to the
restrictions applicable, the shares so forfeited shall not again be available
for purposes of the Plan unless during the period such shares were outstanding,
the grantee received no dividends or other "benefits of ownership" from such
shares. The shares which may be issued under the Plan may be either authorized
but unissued shares or treasury shares or partly each, as shall be determined
from time to time by the Board.
SECTION 4
GRANT OF STOCK OPTIONS
The Committee shall have authority, in its discretion, to grant "incentive
stock options" pursuant to Section 422 of the Code, to grant "nonstatutory stock
options" (i.e., stock options which do not qualify under Sections 422 or 423 of
the Code) or to grant both types of stock options (but not in tandem).
During the duration of the Plan, the maximum number of shares as to which
stock options may be granted and as to which shares may be awarded under the
Plan to any one employee during any calendar year is 30,000 shares, subject to
adjustment and substitution as set forth in Section 6. For the purposes of this
limitation, any adjustment or substitution made pursuant to Section 6 with
respect to the maximum number of shares set forth in the preceding sentence
shall also be made with respect to any shares subject to stock options
previously granted under the plan to such employee during the same calendar
year.
Notwithstanding any other provision contained in the Plan or in any stock
option agreement referred to in Section 5(F) but subject to the possible
exercise of the Committee's discretion contemplated in the last sentence of this
Section 4, the aggregate fair market value, determined as provided in Section
5(G) on the date of grant, of the shares with respect to which incentive stock
options are exercisable for the first time by an employee during any calendar
year under all plans of the corporation employing such employee, any parent or
subsidiary corporation of such corporation and any predecessor corporation of
any such corporation shall not exceed $100,000. If the date on which one or more
of such incentive stock options could first be exercised would be accelerated
pursuant to any provision of the Plan or any stock option agreement, and the
acceleration of such exercise date would result in a violation of the limitation
set forth in the preceding sentence, then, notwithstanding any such provision,
but subject to the provisions of the next succeeding sentence, the exercise
dates of such incentive stock options shall be accelerated only to the date or
dates, if any, that do not result in a violation of such limitation and, in such
event, the exercise dates of the incentive stock options with the lowest option
prices shall be accelerated to the earliest such dates. The Committee may, in
its discretion, authorize the acceleration of the exercise date of one or more
incentive stock options even if such acceleration would violate the $100,000
limitation set forth in the first sentence of this paragraph and even if such
incentive stock options are thereby converted in whole or in part to
nonstatutory stock options.
The Committee may accept the cancellation of outstanding stock options in
return for the grant of new stock options for the same or a different number of
shares and at the same or a different option price.
SECTION 5
TERMS AND CONDITIONS OF STOCK OPTIONS
Stock options granted under the Plan shall be subject to the following
terms and conditions:
(A) The purchase price at which each stock option may be exercised (the
"option price") shall be such price as the Committee, in its discretion, shall
determine but shall not be less than one hundred percent (100%) of the fair
market value per share of the Common Stock covered by the stock option on the
date of grant, except that in the case of an incentive stock option granted to
an employee who, immediately prior to such grant, owns stock
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<PAGE> 20
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation or any Subsidiary (a "Ten Percent
Employee"), the option price shall not be less than one hundred ten percent
(110%) of such fair market value on the date of grant. For purposes of this
Section 5(A), the fair market value of the Common Stock shall be determined as
provided in Section 5(G). For purposes of this Section 5(A), an individual (i)
shall be considered as owning not only shares of stock owned individually but
also all shares of stock that are at the time owned, directly or indirectly, by
or for the spouse, ancestors, lineal descendants, and brothers and sisters
(whether by the whole or half blood) of such individual and (ii) shall be
considered as owning proportionately any shares owned, directly or indirectly,
by or for any corporation, partnership, estate or trust in which such individual
is a shareholder, partner or beneficiary.
(B) The option price for each stock option shall be paid in full upon
exercise and shall be payable in cash in United States dollars (including check,
bank draft or money order), which may include cash forwarded through a broker or
other agent-sponsored exercise or financing program; provided, however, that in
lieu of such cash the person exercising the stock option may (if authorized by
the Committee at the time of grant in the case of an incentive stock option, or
at any time in the case of a nonstatutory stock option) pay the option price in
whole or in part by delivering to the Corporation shares of the Common Stock
having fair market value on the date of exercise of the stock option, determined
as provided in Section 5(G), equal to the option price for the shares being
purchased; except that (i) any portion of the option price representing a
fraction of a share shall in any event be paid in cash and (ii) no shares of the
Common Stock which have been held for less than six months may be delivered in
payment of the option price of a stock option. If the person exercising a stock
option participates in a broker or other agent-sponsored exercise or financing
program, the Corporation will cooperate with all reasonable procedures of the
broker or other agent to permit participation by the person exercising the stock
option in the exercise or financing program. Notwithstanding any procedure of
the broker or other agent-sponsored program, if the option price is paid in
cash, the exercise of the stock option shall not be deemed to occur and no
shares of the Common Stock will be issued until the Corporation has received
full payment in cash (including check, bank draft or money order) for the option
price from the broker or other agent. The date of exercise of a stock option
shall be determined under procedures established by the Committee, and as of the
date of exercise the person exercising the stock option shall be considered for
all purposes to be the owner of the shares with respect to which the stock
option has been exercised. Payment of the option price with shares shall not
increase the number of shares of the Common Stock which may be issued under the
Plan as provided in Section 3.
(C) No stock option shall be exercisable by a grantee during the first six
months of its term, except that this limitation on exercise shall not apply if
Section 7(B) becomes applicable. No stock option shall be exercisable after the
expiration of ten years (five years in the case of incentive stock option
granted to a Ten Percent Employee) from the date of grant. A stock option to the
extent exercisable at any time may be exercised in whole or in part.
(D) No stock option shall be transferable by the grantee otherwise than by
will, or if the grantee dies intestate, by the laws of descent and distribution
of the state of domicile of the grantee at the time of death. All stock options
shall be exercisable during the lifetime of the grantee only by the grantee.
(E) Subject to the provisions of Section 4 in the case of incentive stock
options, unless the Committee, in its discretion, shall otherwise determine:
(i) If the employment of a grantee who is not disabled within the
meaning of Section 422(c)(6) of the Code (a "Disabled Grantee") is
voluntarily or involuntarily terminated with the consent of the Corporation
or Subsidiary or a grantee retires under any retirement plan of the
Corporation or a Subsidiary, any then outstanding incentive stock option
held by such grantee shall be exercisable by the grantee (but only to the
extent exercisable by the grantee immediately prior to the termination of
employment) at any time prior to the expiration date of such incentive
stock option or within three months after the date of termination of
employment, whichever is the shorter period;
(ii) If the employment of a grantee who is not a Disabled Grantee is
voluntarily or involuntarily terminated with consent of the Corporation or
a Subsidiary, any then outstanding nonstatutory stock option held by such
grantee shall be exercisable by the grantee (but only to the extent
exercisable by the grantee immediately prior to the termination of
employment) at any time prior to the expiration date of such nonstatutory
stock option or within one year after the date of termination of
employment, whichever is the shorter period;
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<PAGE> 21
(iii) If the employment of a grantee who is a Disabled Grantee is
voluntarily or involuntarily terminated with the consent of the Corporation
or a Subsidiary, any then outstanding stock option held by such grantee
shall be exercisable by the grantee in full (whether or not so exercisable
by the grantee immediately prior to the termination of employment) by the
grantee at any time prior to the expiration date of such stock option or
within one year after the date of termination of employment, whichever is
the shorter period;
(iv) If a grantee retires under any retirement plan of the Corporation
or a Subsidiary, any then outstanding nonstatutory stock option held by
such grantee shall be exercisable by the grantee (but only to the extent
exercisable by the grantee immediately prior to such retirement) at any
time prior to the expiration date of such nonstatutory stock option or
within three years after the date of retirement, whichever is the shorter
period;
(v) Following the death of a grantee during employment, any
outstanding stock option held by the grantee at the time of death shall be
exercisable in full (whether or not so exercisable by the grantee
immediately prior to the death of the grantee) by the person entitled to do
so under the will of the grantee, or, if the grantee shall fail to make
testamentary disposition of the stock option or shall die intestate, by the
legal representative of the grantee at any time prior to the expiration
date of such stock option or within one year after the date of death,
whichever is the shorter period;
(vi) Following the death of a grantee after termination of employment
during a period when a stock option is exercisable, any outstanding stock
option held by the grantee at the time of death shall be exercisable by
such person entitled to do so under the will of the grantee by such legal
representative (but only to the extent the stock option was exercisable by
the grantee immediately prior to the death of the grantee) at any time
prior to the expiration date of such stock option or within one year after
the date of death, whichever is the shorter period; and
(vii) If a grantee of a stock option (a) engages in the operation or
management of a business (whether as owner, partner, officer, director,
employee or otherwise and whether during or after termination of
employment) which is in competition with the Corporation or any of its
Subsidiaries, (provided, however, that this clause shall not apply if
Section 7(C) applies following termination of employment), (b) induces or
attempts to induce any customer, supplier, licensee or other individual,
corporation or other business organization having a business relationship
with the Corporation or any of its Subsidiaries to cease doing business
with the Corporation or any of its Subsidiaries or in any way interferes
with the relationship between any such customer, supplier, licensee or
other person and the Corporation or any of its Subsidiaries or (c) solicits
any employee of the Corporation or any of its Subsidiaries to leave the
employment thereof or in any way interferes with the relationship of such
employee with the Corporation or any of its Subsidiaries, the Committee, in
its discretion, may immediately terminate all outstanding stock options
held by the grantee. Whether a grantee has engaged in any of the activities
referred to in the preceding sentence which would cause the outstanding
stock options to be terminated shall be determined, in its discretion, by
the Committee, and any such determination by the Committee shall be final
and binding.
(F) All stock options shall be confirmed by an agreement, or an amendment
thereto, which shall be executed on behalf of the Corporation by the President
and Chief Executive Officer, the Chief Financial Officer or any Vice President
and by the grantee. The agreement confirming a stock option shall specify
whether the stock option is an incentive stock option or a nonstatutory stock
option. The provisions of such agreements need not be identical.
(G) Fair market value of the Common Stock shall be the mean between the
following prices, as applicable, for the date as of which fair market value is
to be determined as quoted in The Wall Street Journal (or in such other reliable
publication as the Committee, in its discretion, may determine to rely upon):
(i) if the Common Stock is listed on the American or the New York Stock
Exchange, the highest and lowest sales prices per share of the Common Stock as
quoted in the Composite Transactions listing for such exchange on such date,
(ii) if the Common Stock is not listed on either such exchange, the highest and
lowest sales prices per share of the Common Stock for such date on (or on any
composite index including) the principal United States securities exchange
registered under the 1934 Act on which the Common Stock is listed, or (iii) if
the Common Stock is not listed on any such exchange, the highest and lowest
sales prices per share of the Common Stock for such date on the National
Association of Securities Dealers Automated Quotation System or any successor
system then in use ("NASDAQ"). If there are no such sale price quotations for
the date as of which fair market value is to be
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<PAGE> 22
determined but there are such sale price quotations within a reasonable period
both before and after such date, then fair market value shall be determined by
taking a weighted average of the means between the highest and lowest sales
prices per share of the Common Stock as so quoted on the nearest date before and
the nearest date after the date as of which fair market value is to be
determined. The average should be weighted inversely by the respective numbers
of trading days between the selling dates and the date as of which fair market
value is to be determined. If there are no such sale price quotations on or
within a reasonable period both before and after the date as of which fair
market value is to be determined, then fair market value of the Common Stock
shall be the mean between the bona fide bid and asked prices per share of Common
Stock as so quoted for such date on NASDAQ, or if none, the weighted average of
the means between such bona fide bid and asked prices on the nearest trading
date before and the nearest trading date after the date as of which fair market
value is to be determined, if both such dates are within a reasonable period.
The average is to be determined in the manner described above in this Section
5(G). If the fair market value of the Common Stock cannot be determined on the
basis previously set forth in this Section 5(G) for the date as of which fair
market value is to be determined, the Committee shall in good faith determine
the fair market value of the Common Stock on such date. Fair market value shall
be determined without regard to any restriction other than a restriction which,
by its terms, will never lapse.
(H) The obligation of the Corporation to issue shares of the Common Stock
under the Plan shall be subject to (i) the effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to such
shares, if deemed necessary or appropriate by counsel for the Corporation, (ii)
the condition that the shares shall have been listed (or authorized for listing
upon official notice of issuance) upon the American Stock Exchange or each such
other stock exchange, if any, on which the Common Stock shares may then be
listed and (iii) all other applicable laws, regulations, rules and orders which
may then be in effect.
Subject to the foregoing provisions of this Section 5 and the other
provisions of the Plan, any stock option granted under the Plan may be exercised
at such times and in such amounts and be subject to such restrictions and other
terms and conditions, if any, as shall be determined, in its discretion, by the
Committee and set forth in the agreement referred to in Section 5(F), or an
amendment thereto.
SECTION 6
ADJUSTMENT AND SUBSTITUTION OF SHARES
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
subject to any outstanding stock options and the number of shares of the Common
Stock which may be issued under the Plan but are not subject to outstanding
stock options and the maximum number of shares as to which stock options may be
granted and as to which shares may be awarded under the Plan to any employee
during any calendar year under Section 4 on the date fixed for determining the
shareholders entitled to receive such stock dividend or distribution shall be
adjusted by adding thereto the number of shares of the Common Stock which would
have been distributable thereon if such shares had been outstanding on such
date.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock subject to any then outstanding stock option and for
each share of the Common Stock which may be issued under the Plan but which is
not then subject to any outstanding stock option, the number and kind of shares
of stock or other securities into which each outstanding share of the Common
Stock shall be so changed or for which each such share shall be exchangeable.
In case of any adjustment or substitution as provided for in the first two
paragraphs of this Section 6, the aggregate option price for all shares subject
to each then outstanding stock option prior to such adjustment or substitution
shall be the aggregate option price for all shares of stock or other securities
(including any fraction) to which such shares shall have been adjusted or which
shall have been substituted for such shares. Any new option price per share
shall be carried to at least three decimal places with the last decimal place
rounded upwards to the nearest whole number.
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<PAGE> 23
If the outstanding shares of the Common Stock shall be changed in value by
reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash, or extraordinary distribution
to shareholders of the Common Stock, the Committee shall make any adjustments to
any then outstanding stock option which it determines are equitably required to
prevent dilution or enlargement of the rights of optionees which would otherwise
result from any such transaction.
No adjustment or substitution provided for in this Section 6 shall require
the Corporation to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this Section 6
requires the approval of shareholders in order to enable the Corporation to
grant incentive stock options, then no such adjustment or substitution shall be
made without the required shareholder approval. Notwithstanding the foregoing,
in the case of incentive stock options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal of
such stock option within the meaning of Section 424 of the Code, the Committee
may elect that such adjustment or substitution not be made but rather shall use
reasonable efforts to effect such other adjustment of each then outstanding
stock option as the Committee, in its discretion, shall deem equitable and which
will not result in any disqualification, modification, extension or renewal
(within the meaning of Section 424 of the Code) of such incentive stock option.
Except as provided in this Section 6, a grantee shall have no rights by
reason of any issue by the Corporation of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
SECTION 7
ADDITIONAL RIGHTS IN CERTAIN EVENTS
(A) Definitions
For purposes of this Section 7, the following terms shall have the
following meanings:
(1) The term "Person" shall be used as that term is used in Section 13(d)
and 14(d) of the 1934 Act as in effect on the effective date of the Plan.
(2) "Beneficial Ownership" shall be determined as provided in Rule 13d-3
under the 1934 Act as in effect on the effective date of the Plan.
(3) "Voting Shares" shall mean all securities of a company entitling the
holders thereof to vote in an annual election of directors (without
consideration of the rights of any class of stock other than the Common Stock to
elect directors by a separate class vote); and a specified percentage of "Voting
Power" of a company shall mean such number of the Voting Shares as shall enable
the holders thereof to cast such percentage of all the votes which could be cast
in an annual election of directors (without consideration of the rights of any
class of stock other than Common Stock to elect directors by a separate class
vote).
(4) "Tender Offer" shall mean a tender offer or exchange offer to acquire
securities of the Corporation (other than such offer made by the Corporation or
any Subsidiary), whether or not such offer is approved or opposed by the Board.
(5) "Continuing Directors" shall mean a director of the Corporation who
either (a) was a director of the Corporation on the effective date of the Plan
or (b) is an individual whose election, or nomination for election, as a
director of the Corporation was approved by a vote of at least two-thirds of the
directors then still in office who were Continuing Directors (other than an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of directors of the
Corporation which would be subject to Rule 14a-11 under the 1934 Act, or any
successor Rule).
(6) "Section 7 Event" shall mean the date upon which any of the following
events occur:
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<PAGE> 24
(a) The Corporation acquires actual knowledge that any Person other
than the Corporation, a Subsidiary, the Corporation's Stock Ownership Plan
and Trust or any employee benefit plan(s) sponsored by the Corporation has
acquired the Beneficial Ownership, directly or indirectly, of securities of
the Corporation entitling such Person to 20% or more of the Voting Power of
the Corporation;
(b) A Tender Offer is made to acquire securities of the Corporation
entitling the holders thereof to 20% or more of the Voting Power of the
Corporation; or
(c) A solicitation subject to Rule 14a-11 under the 1934 Act (or any
successor Rule) relating to the election or removal of 50% or more of the
members of any class of the Board shall be made by any person other than
the Corporation or less than 51% of the members of the Board shall be
Continuing Directors; or
(d) The shareholders of the Corporation shall approve a merger,
consolidation, share exchange, division or sale or other disposition of
assets of the Corporation as a result of which the shareholders of the
Corporation immediately prior to such transaction shall not hold, directly
or indirectly, immediately following such transaction a majority of the
Voting Power of (i) in the case of a merger or consolidation, the surviving
or resulting corporation, (ii) in the case of a share exchange, the
acquiring corporation or (iii) in the case of a division or a sale or other
disposition of assets, each surviving, resulting or acquiring corporation
which, immediately following the transaction, holds more than 10% of the
consolidated assets of the Corporation immediately prior to the
transaction;
provided, however, that (i) if securities beneficially owned by a grantee are
included in determining the Beneficial Ownership of a Person referred to in
paragraph 6(a), (ii) a grantee is required to be named pursuant to Item 2 of the
Schedule 14D-1 (or any similar successor filing requirement) required to be
filed by the bidder making a Tender Offer referred to in paragraph 6(b) or (iii)
if a grantee is a "participant" as defined in Rule 14a-11 under the 1934 Act (or
any successor rule) in a solicitation (other than a solicitation by the
Corporation) referred to in paragraph 6(c), then no Section 7 Event with respect
to such grantee shall be deemed to have occurred by reason of such event.
(B) Acceleration of the Exercise Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock
options, unless the agreement referred to in Section 5(F), or an amendment
thereto, shall otherwise provide, notwithstanding any other provision contained
in the Plan, in case any "Section 7 Event" occurs all outstanding stock options
(other than those held by a person referred to in the proviso to Section
7(A)(6)) shall become immediately and fully exercisable whether or not otherwise
exercisable by their terms.
(C) Extension of the Expiration Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock
options, unless the agreement referred to in Section 5(F), or an amendment
thereto, shall otherwise provide, notwithstanding any other provision contained
in the Plan, all stock options held by a grantee (other than a grantee referred
to in the proviso to Section 7(A)(6)) whose employment with the Corporation or a
Subsidiary terminates within one year of any Section 7 Event for any reason
other than voluntary termination with the consent of the Corporation or a
Subsidiary, retirement under any retirement plan of the Corporation or a
Subsidiary or death, which are exercisable shall continue to be exercisable for
a period of one year from the date of such termination of employment, but in no
event after the expiration date of the stock option.
SECTION 8
EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER
Neither the adoption of the Plan nor any action of the Board or the
Committee pursuant to the Plan shall be deemed to give any employee any right to
be granted a stock option under the Plan. Nothing in the Plan, in any stock
option, or in any agreement providing for a stock option shall confer any right
on any employee to continue in the employ of the Corporation or any Subsidiary
or interfere in any way with the rights of the Corporation or any Subsidiary to
terminate the employment of any employee at any time.
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SECTION 9
WITHHOLDING
To the extent required by applicable Federal, state, local or foreign law,
the person exercising the stock option shall make arrangements satisfactory to
the Corporation, in its discretion, for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Corporation shall not be
required to issue any Common Stock under the Plan until such obligations are
satisfied.
SECTION 10
AMENDMENT
The right to alter and amend the Plan at any time and from time to time and
the right to revoke or terminate the Plan are hereby specifically reserved to
the Board; provided that no such alteration or amendment of the Plan shall,
without shareholder approval (i) increase the number of shares which may be
issued under the Plan as set forth in Section 3, (ii) increase the maximum
number of shares as to which stock options may be granted and as to which shares
may be awarded under the Plan to any one employee during any one calendar year
as set forth in Section 4, (iii) materially increase the benefits accruing under
the Plan to persons subject to the provisions of Section 16(b) of the 1934 Act,
(iv) materially modify the requirements as to eligibility for participation in
the Plan by persons subject to the provisions of Section 16(b) of the 1934 Act,
(v)make any changes in the class of employees eligible to receive incentive
stock options under the Plan or (vi) extend the duration of the Plan. No
alteration, amendment, revocations or termination of the Plan shall, without the
written consent of the holder of stock options under the Plan, adversely affect
the rights of such holder with respect thereto.
SECTION 11
EFFECTIVE DATE AND DURATION OF PLAN
The effective date of the Plan shall be January 1, 1995, and the date of
adoption of the Plan by the Board shall be December 15, 1994, provided that such
adoption of the Plan by the Board is approved by a majority of the votes cast at
a duly held meeting of shareholders held on or prior to December 1, 1995, at
which a quorum representing a majority of the outstanding voting stock of the
Corporation is, either in person or by proxy, present and voting. No stock
option granted under the Plan may be exercised until after such approval. No
stock option may be granted under the Plan subsequent to December 14, 2004.
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<PAGE> 26
COMMON STOCK
MICHAEL BAKER CORPORATION
1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned does hereby appoint Richard L. Shaw and Charles I. Homan, or
any one of them, Proxies for the undersigned with full power of substitution
to vote at the Annual Meeting of the Shareholders of Michael Baker
Corporation (the "Company") to be held May 24, 1995 and at any and all
adjournments of said meeting, all the shares of Common Stock of the Company
which the undersigned may be entitled to vote.
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 EACH PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(OVER)
FOLD AND DETACH HERE
<PAGE> 27
/ /
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS BY Charles I. Homan, Thomas D. Larson, 2. ELECTION OF DIRECTORS BY William J. Copeland,
HOLDERS OF COMMON STOCK Richard L. Shaw, Konrad M. Weis, HOLDERS OF COMMON STOCK: Roy V. Gavert, Jr.
AND SERIES B COMMON STOCK: J. Robert White and William A. Wulf and Jack B. Hoey
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR WITHHOLD INSTRUCTION: to withhold FOR WITHHOLD INSTRUCTION: to withhold
all nominees listed AUTHORITY authority to vote for any all nominees listed AUTHORITY authority to vote for any
(except as marked to vote for individual nominee(s) write (except as marked to vote for individual nominee(s) write
to the contrary) nominees the name of such nominee(s) to the contrary) nominees the name of such nominee(s)
listed in the space provided: listed in the space provided:
0 0 ___________________________ 0 0 ___________________________
</TABLE>
<TABLE>
<S> <C>
3. TO APPROVE THE ADOPTION OF 4. In his discretion, the Proxy is
THE COMPANY'S 1995 STOCK authorized to vote upon such
INCENTIVE PLAN. other business as may be properly
brought before the meeting.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
0 0 0
Please date and sign exactly as name appears
hereon. When signing as Attorney, Executor,
Administrator, Trustee, Guardian, Corporate
Official, etc., full title as such should be
shown. For joint accounts, each joint owner
should sign.
Date: ________________________________, 1995
_____________________________________ [SEAL]
_____________________________________ [SEAL]
</TABLE>
FOLD AND DETACH HERE
<PAGE> 28
SERIES B COMMON STOCK
MICHAEL BAKER CORPORATION
1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned does hereby appoint Richard L. Shaw and Charles I. Homan,
or any one of them, Proxies for the undersigned with full power of
substitution to vote at the Annual Meeting of the Shareholders of Michael
Baker Corporation (the "Company") to be held May 24, 1995 and at any and all
adjournments of said meeting, all the shares of Series B Common Stock of the
Company which the undersigned may be entitled to vote.
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 EACH PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(Over)
FOLD AND DETACH HERE
<PAGE> 29
/ /
1.ELECTION OF DIRECTORS BY Charles I. Homan, Thomas D. Larson,
HOLDERS OF COMMON STOCK Richard L. Shaw, Konrad M. Weis,
AND SERIES B COMMON STOCK: J. Robert White and William A. Wulf
INSTRUCTION: to withhold authority
to vote for any individual nominee(s)
FOR WITHHOLD write the name of such nominee(s) in
all nominees listed AUTHORITY the space provided:
(except as marked to vote for all
to the contrary) nominees listed _______________________________________
0 0
2.TO APPROVE THE ADOPTION OF THE 3.In his discretion, the Proxy is
COMPANY'S 1995 STOCK INCENTIVE PLAN. authorized to vote upon such
other business as may be
properly brought before the
meeting.
FOR AGAINST ABSTAIN
0 0 0
Please date and sign exactly as
name appears hereon. When
signing as Attorney, Executor,
Administrator, Trustee,
Guardian, Corporate Official,
etc., full title as such should
be shown. For joint accounts,
each joint owner should sign.
DATE: ___________________ , 1995
_________________________ [SEAL]
_________________________ [SEAL]
FOLD AND DETACH HERE
<PAGE> 30
COMMON STOCK (ESOP)
MICHAEL BAKER CORPORATION
1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned does hereby appoint Richard L. Shaw and Charles I. Homan, or
any one of them, Proxies for the undersigned with full power of substitution to
vote at the Annual Meeting of the Shareholders of Michael Baker Corporation
(the "Company") to be held May 24, 1995 and at any and all adjournments of said
meeting, all the shares of Common Stock of the Company which the undersigned
may be entitled to vote.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE OR IF SUCH DIRECTION IS
NOT RECEIVED BY THE ESOP TRUSTEE ON OR BEFORE MAY 22, 1995, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE MICHAEL BAKER CORPORATION EMPLOYEE STOCK OWNERSHIP
PLAN. YOUR VOTE WILL BE KEPT CONFIDENTIAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(Over)
FOLD AND DETACH HERE
<PAGE> 31
/ /
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS BY Charles I. Homan, Thomas D. Larson, 2. ELECTION OF DIRECTORS BY William J. Copeland,
HOLDERS OF COMMON STOCK Richard L. Shaw, Konrad M. Weis, HOLDERS OF COMMON STOCK: Roy V. Gavert, Jr.
AND SERIES B COMMON STOCK: J. Robert White and William A. Wulf and Jack B. Hoey
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR WITHHOLD INSTRUCTION: to withhold FOR WITHHOLD INSTRUCTION: to withhold
all nominees listed AUTHORITY authority to vote for any all nominees listed AUTHORITY authority to vote for any
(except as marked to vote for individual nominee(s) write (except as marked to vote for individual nominee(s) write
to the contrary) nominees the name of such nominee(s) to the contrary) nominees the name of such nominee(s)
listed in the space provided: listed in the space provided:
0 0 ___________________________ 0 0 ___________________________
</TABLE>
<TABLE>
<S> <C>
3. TO APPROVE THE ADOPTION OF 4. In his discretion, the Proxy is
THE COMPANY'S 1995 STOCK authorized to vote upon such
INCENTIVE PLAN. other business as may be properly
brought before the meeting.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
0 0 0
Please date and sign exactly as name appears
hereon. When signing as Attorney, Executor,
Administrator, Trustee, Guardian, Corporate
Official, etc., full title as such should be
shown. For joint accounts, each joint owner
should sign.
Date: ________________________________, 1995
_____________________________________ [SEAL]
_____________________________________ [SEAL]
</TABLE>
FOLD AND DETACH HERE
<PAGE> 32
SERIES B COMMON STOCK (ESOP)
MICHAEL BAKER CORPORATION
1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned does hereby appoint Richard L. Shaw and Charles I. Homan,
or any one of them, Proxies for the undersigned with full power of
substitution to vote at the Annual Meeting of the Shareholders of Michael
Baker Corporation (the "Company") to be held May 24, 1995 and at any and all
adjournments of said meeting, all the shares of Series B Common Stock of the
Company which the undersigned may be entitled to vote.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE OR IF SUCH DIRECTION IS
NOT RECEIVED BY THE ESOP TRUSTEE ON OR BEFORE MAY 22, 1995, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE MICHAEL BAKER CORPORATION EMPLOYEE STOCK OWNERSHIP
PLAN. YOUR VOTE WILL BE KEPT CONFIDENTIAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(Over)
FOLD AND DETACH HERE
<PAGE> 33
/ /
1.ELECTION OF DIRECTORS BY Charles I. Homan, Thomas D. Larson,
HOLDERS OF COMMON STOCK Richard L. Shaw, Konrad M. Weis,
AND SERIES B COMMON STOCK: J. Robert White and William A. Wulf
INSTRUCTION: to withhold authority
to vote for any individual nominee(s)
FOR WITHHOLD write the name of such nominee(s) in
all nominees listed AUTHORITY the space provided:
(except as marked to vote for
to the contrary) nominees listed _______________________________________
0 0
2.TO APPROVE THE ADOPTION OF THE 3.In his discretion, the Proxy is
COMPANY'S 1995 STOCK INCENTIVE PLAN. authorized to vote upon such
other business as may be
properly brought before the
meeting.
FOR AGAINST ABSTAIN
0 0 0
Please date and sign exactly as
name appears hereon. When
signing as Attorney, Executor,
Administrator, Trustee or
Guardian, Corporate Official,
etc., full title as such should
be shown. For joint accounts,
each joint owner should sign.
DATE: ___________________ , 1995
_________________________ [SEAL]
_________________________ [SEAL]
FOLD AND DETACH HERE
