<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 22, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 13, 1996
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 Pittsburgh Airport
Marriott, 100 Aten Road, Parkway West at Montour Run, Coraopolis, Pennsylvania
15108, on Monday, May 13, 1996 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 1996 Nonemployee
Directors' Stock Incentive Plan.
3. Such other matters as may properly be brought before the meeting.
The close of business on March 25, 1996 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 two 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 1995 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,
H. JAMES MCKNIGHT
Secretary
<PAGE> 3
MICHAEL BAKER CORPORATION
PITTSBURGH, PENNSYLVANIA
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--MAY 13, 1996
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 13, 1996 at 10:00 a.m. at the
Pittsburgh Airport Marriott, 100 Aten Road, Parkway West at Montour Run,
Coraopolis, Pennsylvania 15108. It is expected that this Proxy Statement and
proxies will be mailed to shareholders on or about April 22, 1996.
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 March 25, 1996, the Company had 7,045,556 outstanding shares of Common
Stock (representing 7,045,556 votes) and 1,351,235 shares of Series B Common
Stock (representing 13,512,350 votes). Holders of Common Stock and Series B
Common Stock of record at the close of business on March 25, 1996 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 1996 Nonemployee Directors' 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 March
25, 1996 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 71.1% 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 February 29,
1996, 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 2,293,117 32.5% 1,232,306 91.2%
Employee Stock Ownership
Plan and Trust
Michael Baker Corporation
P.O. Box 12259
Pittsburgh, PA 15231-0259
RCM Capital Management 1,139,200 (2) 16.2% None --
RCM Limited L.P.
RCM General Corporation
RCM Capital Funds, Inc.
Four Embarcadero Center
Suite 2900
San Francisco, CA 94111
The Prudential Insurance 713,000 (3) 10.1% None --
Company of America
Prudential Plaza
Newark, NJ 07102-3777
Dimensional Fund Advisors Inc. 455,600 (4) 6.5% None --
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
William J. Copeland None -- None --
Donald P. Fusilli, Jr. 16,046 (6)(8) * 6,766 (7) *
Roy V. Gavert, Jr. 2,000 * None --
John C. Hayward 16,909 (6)(8) * 8,321 (7) *
Jack B. Hoey 10,000 (5) * None --
Charles I. Homan 38,246 (5)(6)(8) * 19,652 (5)(7) 1.5%
Thomas D. Larson 1,525 (5) * None --
Richard L. Shaw 8,205 * None --
Konrad M. Weis 7,500 (5) * None --
J. Robert White 9,620 (6)(8) * 92 (7) *
Edward L. Wiley 21,652 (5)(6)(8) * 14,331 (5)(7) 1.1
William A. Wulf 2,000 (5) * None --
All Directors and Executive 184,403 (5)(6)(8) 2.6% 62,436 (5)(7) 4.6%
Officers
as a group (20 persons)
</TABLE>
- ---------
* Less than 1%
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. The ESOP
requires the trustee to vote the shares held by the trust in accordance with
the instructions from the ESOP participants for all shares allocated to such
participants' accounts. Allocated shares for which no such instructions are
given and shares not allocated to the account of any employee are voted by
the trustee in the same proportion as the votes for which participant
instructions are given, except in the case of a tender offer, in which case
allocated shares for which no instructions are given are not voted or
tendered.
(2) RCM Capital Funds, Inc., a registered investment advisor, has no voting
power with respect to any shares and has sole dispositive power with respect
to 524,600 shares. This information has been taken from Schedule 13G dated
February 8, 1996 of RCM Capital Funds, Inc. The other three RCM entities
have sole voting power and sole dispositive power with respect to 614,600
shares. This information has been taken from Schedule 13G dated February 5,
1996 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 532,000 shares, and shared voting power
and shared dispositive power with respect to 181,000 shares. This
information has been taken from Schedule 13G dated February 8, 1996 of The
Prudential Insurance Company of America.
(4) Dimensional Fund Advisors Inc., a registered investment advisor, is deemed
to have beneficial ownership of 455,600 shares as of December 31, 1995, 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 February 7, 1996 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 (8,437
shares); Mr. Hayward (9,650 shares); Mr. Homan (16,275 shares); Mr. White
(2,536 shares); Mr. Wiley (11,568 shares); and directors and executive
officers as a group (77,491 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
(6,766 shares); Mr. Hayward (8,321 shares); Mr. Homan (18,574 shares); Mr.
White (92 shares); Mr. Wiley (14,331 shares); and directors and executive
officers as a group (61,358 shares).
(8) Includes shares issuable pursuant to stock options which may be exercised
within 60 days of the date of this Proxy Statement for Common Stock in the
following amounts: Mr. Fusilli (7,609 shares); Mr. Hayward (7,259 shares);
Mr. Homan (16,893 shares); Mr. White (7,084 shares); Mr. Wiley (7,084
shares); and all directors and executive officers as a group (67,604
shares).
3
<PAGE> 6
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 March 25, 1996. All of the nominees were elected directors by the
Company's shareholders at the 1995 Annual Meeting. 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 52
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 Engi-
neering, The Pennsylvania State University; Age 67
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 68
Konrad M. Weis 1991 Retired; formerly President and Chief Executive
Officer of Bayer USA Inc.--(chemicals, health care
and imaging technologies); Director of PNC Equity
Management Corporation, Titan Pharmaceuticals,
Inc. and Dravo Corporation; Age 67
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 53
William A. Wulf 1985 Professor of Computer Science at the University of
Virginia; formerly Associate Director of the
National Science Foundation; Age 56
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION; OTHER
NOMINEE SINCE DIRECTORSHIPS; AGE
- ------------------------- ----------- --------------------------------------------------
<S> <C> <C>
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 77
Roy V. Gavert, Jr. 1988 President and Chief Executive Officer of Kiplivit
North America, Inc. (manufacturing) since July
1995; 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 62
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. and Coastal Glass Distributors;
Age 68
</TABLE>
BOARD AND COMMITTEE MEETINGS
During 1995 there were eight meetings of the Company's Board of Directors.
The Executive Committee of the Board of Directors, of which Messrs. Copeland,
Shaw, Gavert and Homan are members, held six meetings. The Audit Committee of
the Board of Directors, of which Messrs. Gavert, Larson and Wulf are members,
held three meetings. The Compensation Committee, of which Messrs. Hoey, Weis and
Larson are members, held four meetings. The Nominating Committee, of which
Messrs. Hoey, Copeland and Weis are members, held no 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 of 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 accountants, reviewing with the
independent accountants the plan for, and the results of, the auditing
engagement, approving professional services provided by the independent
accountants prior to the performance of such services, reviewing the
independence of the independent accountants 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 and the four remaining most highly
compensated executive officers of the Company for the year ended December 31,
1995.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------------------------------------
ANNUAL
COMPENSATION SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#)(2) COMPENSATION(1)
- --------------------------- ---- -------- -------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Charles I. Homan 1995 $302,500 $ 29,431 27,500 $ 10,063
President and Chief 1994 226,600 17,876 -- $10,025
Executive Officer 1993 195,000 17,064 -- 9,736
Donald P. Fusilli, Jr. 1995 180,000 4,216 12,600 8,349
President of Baker/MO 1994 171,000 -- -- 8,271
Services, Inc., a 1993 154,000 -- -- 7,665
subsidiary
John C. Hayward 1995 170,000 21,448 11,900 9,128
President of Michael 1994 140,000 15,060 -- 8,738
Baker, Jr., Inc., a 1993 130,000 13,300 -- 7,392
subsidiary
J. Robert White(3) 1995 165,000 19,597 11,550 7,642
Executive Vice President 1994 82,500 100,000 -- 744
and Chief Financial 1993 -- -- -- --
Officer
Edward L. Wiley 1995 165,000 17,535 11,550 6,232
Executive Vice President 1994 150,000 12,214 -- 6,120
of Michael Baker, Jr., 1993 140,500 13,173 -- 6,211
Inc., a subsidiary
</TABLE>
- ---------
(1) Includes matching contributions made by the Company under its 401(k) plan
paid on behalf of the following individuals in 1995, 1994 and 1993,
respectively: Mr. Homan, $7,759, $7,721 and $7,500; Mr. Fusilli, $7,717,
$7,745 and $7,193; Mr. Hayward, $7,736, $7,346 and $6,000; and Mr. Wiley,
$5,178, $5,193 and $5,404. A contribution of $6,029 was made on behalf of
Mr. White in 1995. Also includes group life insurance premiums paid by the
Company on behalf of the following individuals in 1995, 1994 and 1993,
respectively: Mr. Homan, $2,304, $2,304 and $2,236; Mr. Fusilli, $632, $526
and $471; Mr. Hayward, $1,392, $1,392 and $1,392; and Mr. Wiley, $1,054,
$927 and $807. Premiums of $1,613 and $744 were paid on behalf of Mr. White
in 1995 and 1994, respectively.
(2) Stock options were granted January 1, 1995 under the Company's 1995 Stock
Incentive Plan.
(3) Mr. White joined the Company July 1, 1994. His annualized salary for 1994
was $165,000.
OPTIONS GRANTED IN YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE FOR
NO. OF GRANTED TO EXERCISE OPTION TERM(S)
OPTIONS EMPLOYEES PRICE/ EXPIRATION --------------------------
NAME GRANTED IN 1995 SHARE DATE 5% 10%
- ------------------------- -------- ---------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Charles I. Homan 27,500 15.55% $5.00 12/31/2004 $75,807.63 $186,717.81
Donald P. Fusilli, Jr. 12,600 7.12 5.00 12/31/2004 34,733.68 85,550.70
John C. Hayward 11,900 6.73 5.00 12/31/2004 32,804.03 80,797.89
J. Robert White 11,550 6.53 5.00 12/31/2004 31,839.20 78,421.48
Edward L. Wiley 11,550 6.53 5.00 12/31/2004 31,839.20 78,421.48
</TABLE>
All options were granted pursuant to the 1995 Stock Incentive Plan and vest
in four equal annual installments beginning on the date of grant. The dollar
amounts under the potential realizable value column are the result of
calculations of assumed annual compound rates of appreciation over the ten-year
life of the options in accordance with the proxy regulations of the Securities
and Exchange Commission and are not intended to forecast possible future
appreciation, if any, of the Company's Common Stock. The actual value, if any,
an executive may realize will depend on the excess of the market price of the
shares over the exercise price on the date the option is exercised.
6
<PAGE> 9
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--$500; 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--$2,500.
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 9 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, Larson and Weis in their capacity as the Board's Compensation
Committee addressing the Company's compensation policies for 1995 as they
affected executive officers of the Company, including Mr. Homan, the President
and Chief Executive Officer, and Messrs. White, Hayward, Fusilli and Wiley, the
four executive officers other than Mr. Homan who were, for 1995, the Company's
most highly paid executives.
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. In determining Mr. Homan's salary as President
and Chief Executive Officer and the remaining Executive Officers' base salaries
for 1995, 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 Record, a trade publication for the engineering and
construction industry.
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 receivable, 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
7
<PAGE> 10
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.
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 1995. Hewitt provides
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 was approved by the shareholders at the 1995 Annual
Meeting and provides long-term incentive compensation to eligible employees.
Stock options are awarded based on the Compensation Committee's 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 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 the compensation package cannot be realized unless an appreciation in
the Company's stock price occurs over a number of years.
1996 Nonemployee Directors' Stock Incentive Plan
On February 27, 1996, the Board of Directors approved the 1996 Nonemployee
Directors' Stock Incentive Plan which, if adopted by the shareholders of the
Company, will provide long-term incentive compensation to eligible directors.
Stock options and restricted shares will be granted to eligible directors
pursuant to the Plan following the annual meeting of shareholders each year.
Stock option and restricted share grants will create a long-term mutuality of
interests between the nonemployee directors and shareholders of the Company, and
provide an effective incentive for nonemployee directors to encourage the
creation of shareholder value over the long term since the full benefit of the
compensation package cannot be realized unless an appreciation in the Company's
stock 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 Thomas D. Larson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPANTS
The three members of the Compensation Committee in 1995, Jack B. Hoey,
Konrad M. Weis and Thomas D. Larson, are nonemployee directors. 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.
8
<PAGE> 11
STOCK PERFORMANCE GRAPH
The following line graph compares, for the period of five years commencing
December 31, 1990 and ending December 31, 1995, 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 12/31/95)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MICHAEL BAKER
(FISCAL YEAR COVERED) CORPORATION PEER GROUP S&P 500
<S> <C> <C> <C>
12/90 100 100 100
12/91 181 93 130
12/92 198 96 140
12/93 148 101 155
12/94 50 97 157
12/95 67 132 215
</TABLE>
Assumes $100 invested at the close of trading on December 31, 1990 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.
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. To the Company's knowledge, no such persons were deliquent in filing
required reports in 1995. 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.
9
<PAGE> 12
TRANSACTIONS WITH MANAGEMENT
The Company entered into an employment agreement with Richard L. Shaw
(formerly President and Chief Executive Officer of the Company) 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 Glenn S. Burns (currently President of BMSCI) was a shareholder and
general counsel. In connection with such acquisition, Mr. Burns became general
counsel of BMSCI. In May 1995, Mr. Burns 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).
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 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.
Baker/MO and MO Services L.P. leased 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 was 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 1995 was $144,000. The Company terminated the lease effective March
31, 1996.
10
<PAGE> 13
PROXY PROPOSAL NO. 2
ADOPTION OF NONEMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
The 1996 Nonemployee Directors' Stock Incentive Plan (the "Directors'
Plan") was adopted by the Board of Directors on February 27, 1996. The
affirmative vote of a majority of the votes represented in person or by proxy at
the Annual Meeting is required for approval of the Directors' Plan. The Board of
Directors recommends that the shareholders vote for approval of the adoption of
the Directors' Plan.
The principal features of the Directors' Plan are summarized below, but the
summary is qualified in its entirety by the full text of the Directors' Plan,
which is set forth as Exhibit A to this Proxy Statement.
GENERAL
The purposes of the Directors' Plan are to promote the long-term success of
the Company by creating a long-term mutuality of interests between the
nonemployee directors and shareholders of the Company, to provide an additional
inducement for such directors to remain with the Company, to reward such
directors by providing an opportunity to acquire shares of Common Stock on
favorable terms and to provide a means through which the Company may attract
able persons to serve as directors of the Company.
The aggregate number of shares which may be issued and as to which grants
or awards of stock options and/or restricted shares may be made under the
Directors' Plan is 150,000 shares of Common Stock, subject to proportionate
adjustment in the event of stock splits and similar events. If any stock option
granted under the Directors' 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 Director's
Plan. If shares of Common Stock are forfeited to the Company pursuant to the
restrictions applicable to restricted shares awarded under the Directors' Plan,
the shares so forfeited shall not again be available for purposes of the
Directors' Plan unless during the period such shares were outstanding the
awardee received no dividends or other "benefits of ownership" from such shares.
For purposes of applying that standard, no benefit is deemed to be derived by an
awardee from voting rights or where dividends accumulate but due to forfeiture
are never realized.
ADMINISTRATION
The Directors' Plan will be administered by a Committee (the "Committee")
appointed by the Board of Directors and consisting of not less than two members
of the Board. The Board of Directors has appointed the Compensation Committee of
the Board as the Committee to administer the Directors' Plan.
The Committee has the power to interpret the Directors' Plan and to
prescribe rules, regulations and procedures in connection with the operations of
the Directors' Plan. All questions of interpretation and application of the
Directors' Plan, or as to stock options granted or restricted shares awarded
under the Directors' Plan, will be subject to the determination of the
Committee, which will be final and binding.
Notwithstanding the discretion to administer the Directors' Plan granted to
the Committee, the selection of the directors to whom stock options are to be
granted or restricted shares awarded, the timing of such grants and awards, the
number of shares subject to any stock options or restricted share award, the
terms of any restricted share award, the exercise price of any stock option, the
periods during which any stock option may be exercised and the term of any stock
option are set forth in the Directors' Plan, and the Committee has no discretion
as to such matters.
GRANT OF STOCK OPTIONS AND AWARD OF RESTRICTED SHARES
On the first business day following each Annual Meeting of Shareholders of
the Company, each person who is then a member of the Board of Directors of the
Company and who is not then an employee of the Company or any of its
subsidiaries (a "nonemployee Director") will be granted a "nonstatutory stock
option" (i.e., a stock option which does not qualify under Section 422 of the
Internal Revenue Code of 1986) to purchase 1,000 shares of Common Stock, and
shall be awarded 500 restricted shares. If the number of shares remaining
available for the grant of stock options and the award of restricted shares
under the Plan is not sufficient for each nonemployee Director to be granted an
option for 1,000 shares and awarded 500 restricted shares, then each nonemployee
Director shall be granted an option and awarded restricted shares for a number
of whole shares equal to the number of shares then remaining available divided
by the number of nonemployee
11
<PAGE> 14
Directors, disregarding any fractions of a share, and allocating one-half of the
remaining shares to options and one-half to restricted shares.
STOCK OPTIONS
The option price for each stock option will be the fair market value of the
Common Stock on the date the stock option is granted. Fair market value, for
this purpose, 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.
No stock option may be exercised by a grantee during the first six months
of its term, unless the exercise date has been accelerated upon the occurrence
of one or more events described under "Acceleration of Options and Lapse of
Restrictions in Certain Events" below. Each stock option shall expire, and 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.
If a grantee ceases to be a director for any reason, any unexpired option
which is then exercisable will remain exercisable for a period of one year
following the date such grantee ceases to be a director or until the expiration
of the option, whichever is shorter. If the grantee dies after ceasing to be a
director, any unexpired stock option will be exercisable by the person entitled
to do so under his Will or by his legal representative (but only to the extent
such option was exercisable by the grantee immediately prior to his death) at
any time prior to the expiration of such option or within one year after the
date of death, whichever is shorter.
The option price for each stock option will be payable in full in cash at
the time of exercise; however, in lieu of cash the person exercising the stock
option may 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 (determined as described above) 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.
No stock option granted under the Directors' Plan is transferable other
than by Will or by the laws of descent and distribution, and a stock option may
be exercised during a grantee's lifetime only by the grantee.
RESTRICTED SHARES
Awards of restricted shares shall be confirmed by an agreement which shall
set forth the number of shares of Common Stock awarded. The agreement shall be
executed on behalf of the Company by the Chief Executive Officer or by the Chief
Financial Officer and by the awardee. None of the restricted shares may be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of during a
period of two years commencing on the date of the award of the restricted shares
(the "Restricted Period"), except that shares may be transferred by Will or by
the laws of descent and distribution and the transfer restriction will lapse in
the event the awardee ceases to be a director of the Company as a result of
voluntary retirement with the consent of the Company, disability, or death. The
restricted shares shall be forfeited during the Restricted Period in the event
the awardee ceases to be a director of the Company for any reason, other than as
a result of voluntary retirement with the consent of the Company, disability, or
death.
Following a restricted share award and prior to the lapse or termination of
the applicable restrictions, share certificates for the restricted shares shall
be issued in the name of the awardee and deposited with the Company in escrow
together with related stock powers signed by the awardee. Upon the lapse or
termination of the applicable restrictions (and not before such time), the
awardee shall be issued or transferred share certificates for such restricted
shares. From the date a restricted share award is effective, the awardee shall
be a shareholder with respect to all the shares represented by such certificates
and shall have all the rights of a shareholder with respect to all the shares,
including the right to vote such shares and to receive all dividends and other
distributions paid with respect to such shares.
ACCELERATION OF OPTIONS AND LAPSE OF RESTRICTIONS IN CERTAIN EVENTS
The Plan provides for acceleration of the exercisability of stock options
and the lapse of restrictions on restricted share awards upon the occurrence of
one or more events described in Section 8 of the Plan ("Section 8 Events"). Such
an event is deemed to have occurred when (1) the Company acquires actual
12
<PAGE> 15
knowledge that any person (other than the Company, a subsidiary or an employee
benefit plan sponsored by the Company) has acquired beneficial ownership,
directly or indirectly, of securities representing 20% or more of the voting
power of the Company, (2) a tender offer is made to acquire securities
representing 20% or more of the voting power of the Company, (3) 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 (4) 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 corporation or any corporation
which acquires the stock of the Company or more than 10% of its consolidated
assets.
Notwithstanding any other provision contained in the Plan, in case any
Section 8 Event occurs all outstanding stock options will become immediately and
fully exercisable whether or not otherwise exercisable by their terms and all
restrictions applicable to restricted share awards will lapse regardless of the
scheduled lapse of such restrictions.
POSSIBLE ANTI-TAKEOVER EFFECT
The provisions of the Plan providing for the acceleration of the exercise
date of stock options and the lapse or restrictions on restricted share awards
upon the occurrence of a Section 8 Event may be considered as having an
anti-takeover effect.
MISCELLANEOUS
The Board of Directors may amend or terminate the Directors' Plan at any
time except that the Board may not revoke any outstanding stock options and
except that no amendment of the Directors' Plan may (i) be made without
shareholder approval if shareholder approval of the amendment is at the time
required for stock options under the Directors' Plan to qualify for the
exemption from short-swing trading liability under Section 16(b) of the
Securities Exchange Act of 1934 provided by Securities and Exchange Commission
Rule 16b-3 or by the rules of any stock exchange on which the Common Stock is
listed, (ii) amend more than once every six months the provisions of the
Directors' Plan relating to the selection of the directors to whom stock options
are to be granted or restricted shares are to be awarded, the timing of such
grants and awards, the number of shares subject to any stock option or
restricted share award, the exercise price of any stock option, the periods
during which any stock option may be exercised and the term of any stock option
other than to comport with changes in the Internal Revenue Code or the rules and
regulations thereunder or (iii) otherwise amend the Directors' Plan in any
manner that would cause stock options under the Directors' Plan not to qualify
for the exemption provided by Rule 16b-3. No amendment or termination of the
Directors' Plan may, without the written consent of the holder of a stock option
or restricted share award theretofore awarded under the Directors' Plan,
adversely affect the rights of such holder with respect thereto.
Notwithstanding the provisions described in the preceding paragraph, the
Board has the power to amend the Directors' Plan in any manner deemed necessary
or advisable for stock options granted under the Directors' Plan to qualify for
the exemption provided by Rule 16b-3, and any such amendment will, to the extent
deemed necessary or advisable by the Board, be applicable to any outstanding
stock options theretofore granted under the Directors' Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal Federal income tax
consequences of the grant and exercise of nonstatutory stock options and the
award of restricted shares under present law.
Nonstatutory Stock Options. A director will 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, 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 by the
director on the date of exercise. If the option price of the nonstatutory stock
option is paid in whole or in part in shares, 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,
13
<PAGE> 16
less the amount of cash, if any paid upon exercise, is treated as compensation
received on the date of exercise of the nonstatutory stock option. Special rules
will apply upon the exercise by a director of a nonstatutory stock option in
certain limited circumstances if there is a Section 16(b) restriction period
following the date of exercise.
The Company generally will be entitled to a deduction for compensation paid
in the same amount treated as compensation received.
Restricted Shares. An awardee of restricted shares will not recognize any
taxable income for Federal income tax purposes in the year of the award,
provided the shares are subject to restrictions (that is, they are
nontransferable and subject to a substantial risk of forfeiture). If an awardee
is subject to Section 16(b) of the 1934 Act on the date of the award, the shares
generally will be deemed to be subject to restrictions (in addition to the
restrictions imposed by the award) for at least six months following the date of
the award. However, an awardee may elect under Section 83(b) of the Code to
recognize compensation income in the year of the award in an amount equal to the
fair market value of the shares on the date of the award, determined without
regard to the restrictions. If the awardee does not make a Section 83(b)
election, the fair market value of the shares on the date the restrictions lapse
will be treated as compensation income to the awardee and will be taxable in the
year the restrictions lapse. The Company generally will be entitled to a
deduction for compensation paid in the same amount treated as compensation
income to the awardee.
Other Tax Matters. The acceleration of the exercise date of stock options,
the exercise of a stock option, or the lapse of restrictions on restricted
shares following the occurrence of a Section 8 Event, in certain circumstances,
may result in (i) a 20% Federal excise tax (in addition to Federal income tax)
to the director on certain amounts associated with the stock option or, in the
case of restricted shares, on all or a portion of the fair market value of the
shares on the date the restrictions lapse and (ii) the loss of the compensation
deduction which would otherwise be allowable to the Company.
NEW PLAN BENEFITS TABLE
No stock options have been granted or restricted shares awarded under the
Directors' Plan. The following table sets forth what options and restricted
shares will be granted after the Annual Meeting of Shareholders upon approval of
the Directors' Plan. No stock options will be granted and no restricted shares
will be awarded under the Directors' Plan to employees of the Company.
<TABLE>
<CAPTION>
NAME STOCK OPTIONS(#) RESTRICTED SHARES(#)
- ------------------------------------- ---------------- --------------------
<S> <C> <C>
William J. Copeland 1,000 500
Roy V. Gavert, Jr. 1,000 500
Jack B. Hoey 1,000 500
Thomas D. Larson 1,000 500
Richard L. Shaw 1,000 500
Konrad M. Weis 1,000 500
William A. Wulf 1,000 500
------ ------
Nonemployee directors as a group 7,000 3,500
</TABLE>
AUDITORS
The Board of Directors of the Company has selected the independent
accounting firm of Price Waterhouse LLP ("PW") to examine the financial
statements of the Company for the 1996 fiscal year.
PW audited the financial statements of the Company for the 1995 fiscal
year. The Board of Directors expects that representatives of PW 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
14
<PAGE> 17
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 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.
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 1997 Annual Meeting of Shareholders, which is presently expected to be held
on or about April 26, 1997, 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, 1996.
By Order of the Board of
Directors,
H. JAMES MCKNIGHT
Secretary
April 22, 1996
15
<PAGE> 18
EXHIBIT A
MICHAEL BAKER CORPORATION
1996 NONEMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
The purposes of the 1996 Nonemployee Directors' Stock Incentive Plan (the
"Plan") are to promote the long-term success of Michael Baker Corporation (the
"Corporation") by creating a long-term mutuality of interests between the
nonemployee Directors and shareholders of the Corporation, to provide an
additional inducement for such nonemployee Directors to remain with the
Corporation, to reward such nonemployee Directors 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 serve on the Board of
Directors of the Corporation (the "Board").
SECTION 1
ADMINISTRATION
The Plan shall be administered by the Compensation Committee (the
"Committee") appointed by the Board and consisting of not less than two members
of the Board.
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 unanimously approved in writing by the Committee, shall be the
acts of the Committee.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations 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 stock options granted under the Plan or
restricted shares awarded under the Plan, shall be subject to the determination
of the Committee.
Notwithstanding the above, the selection of the nonemployee Directors to
whom stock options are to be granted or restricted shares are to be awarded, the
timing of such grants and awards, the number of shares subject to any stock
option or restricted share award, the terms of any restricted share award, the
exercise price of any stock option, the periods during which any stock option
may be exercised and the term of any stock option shall be as hereinafter
provided, and the Committee shall have no discretion as to such matters.
SECTION 2
ELIGIBILITY
Only nonemployee Directors of the Corporation, as defined in Section 4,
shall be eligible to be granted stock options and to receive awards of
restricted shares as described herein.
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 or awards of stock options and/or restricted shares may be
made under the Plan is 150,000 shares, subject to adjustment and substitution as
set forth in Section 7. If any stock option granted under the Plan is canceled
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 to restricted shares awarded under the Plan, the
shares so forfeited shall not again be available for purposes of the Plan unless
during the period such shares were outstanding the awardee received no dividends
or other "benefits of ownership" from such shares. For the purpose of applying
this standard, no benefit is deemed to be derived by an awardee from voting
rights or where dividends accumulate but due to forfeiture are never realized.
The shares which may be issued under the Plan may be
A-1
<PAGE> 19
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 AND AWARD OF RESTRICTED SHARES
On the first business day following the day of each annual meeting of the
shareholders of the Corporation, each person who is then a member of the Board
of Directors of the Corporation and who is not then an employee of the
Corporation (a "nonemployee Director") shall be granted a "nonstatutory stock
option" (i.e., a stock option which does not qualify under section 422 or
section 423 of the Internal Revenue Code of 1986) to purchase 1,000 shares of
Common Stock, and shall be awarded 500 restricted shares. If the number of
shares then remaining available for the grant of stock options and the award of
restricted shares under the Plan is not sufficient for each nonemployee Director
to be granted an option for 1,000 shares and awarded 500 restricted shares, then
each nonemployee Director shall be granted an option and awarded restricted
shares equal to the number of shares then remaining available divided by the
number of nonemployee Directors, disregarding any fractions of a share, and
allocating one-half of the remaining shares to options and one-half to
restricted shares.
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 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,
determined as provided in Section 5(G).
(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 pay the option
price in whole or in part by delivering to the Corporation shares of the Common
Stock having a 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) Except as otherwise provided in Section 8(B), no stock option shall be
exercisable while the grantee is a Director prior to the six month anniversary
of the date of grant. No stock option shall be exercisable 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.
A-2
<PAGE> 20
(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) If a grantee ceases to be a Director of the Corporation for any reason,
any outstanding stock options of the grantee shall be exercisable and shall
terminate according to the following provisions:
(i) If a grantee ceases to be a Director of the Corporation, any then
outstanding stock option of such grantee shall be exercisable by the
grantee (but only to the extent exercisable by the grantee immediately
prior to the grantee ceasing to be a Director) at any time prior to the
expiration date of such stock option or within one year after the date the
grantee ceases to be a Director, whichever is the shorter period, provided
that, in no event shall the option be exercisable during the first six
months of its term;
(ii) Following the death of a grantee after ceasing to be a Director
and during a period when a stock option remains outstanding, any stock
option of the grantee outstanding at the time of death shall be exercisable
by such person entitled to do so under the Will of the grantee or 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.
A stock option of a grantee who has ceased to be a Director of the
Corporation shall terminate upon the expiration of the applicable exercise
period, if any, specified in this Section 5(E).
(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 Chief
Executive Officer or by the Chief Financial Officer and by the grantee.
(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):
(a) if the Common Stock is listed on the New York or American 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, (b) if the
Common Stock is not listed on either such exchange, the highest and lowest sales
price per share of 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 (c) 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 Quotations 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 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) on 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
A-3
<PAGE> 21
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 each 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.
SECTION 6
TERMS AND CONDITIONS OF RESTRICTED SHARES
Awards of restricted shares shall be confirmed by an agreement which shall
set forth the number of shares of Common Stock awarded. The agreement shall be
executed on behalf of the Corporation by the Chief Executive Officer or by the
Chief Financial Officer and by the awardee. Any award of restricted shares shall
be subject to the following terms and restrictions:
(A) None of the shares of the restricted shares may be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the
Restricted Period (as hereinafter defined), except that shares may be
transferred by Will or, if the awardee dies intestate, by the laws of descent
and distribution of the state of domicile of awardee at the time of death.
(B) The restricted shares shall be forfeited during the Restricted Period
in the event the awardee ceases to be a Director of the Corporation for any
reason, other than as a result of voluntary retirement with the consent of the
Corporation, disability, or death.
(C) The restrictions set forth in this Section 6 shall apply for a period
(the "Restricted Period") of two years commencing on the date of the award of
the restricted shares, except that, in the event the awardee ceases to be a
Director of the Corporation as a result of voluntary retirement with the consent
of the Corporation, disability, or death, the Restricted Period set forth in
this Section 6 shall end on the date of such retirement, disability, or death,
whichever the case.
Following a restricted share award and prior to the lapse or termination of
the applicable restrictions, share certificates for the restricted shares shall
be issued in the name of the awardee and deposited with the Corporation in
escrow together with related stock powers signed by the awardee. Upon the lapse
or termination of the applicable restrictions (and not before such time), the
awardee shall be issued or transferred share certificates for such restricted
shares. From the date a restricted share award is effective, the awardee shall
be a shareholder with respect to all the shares represented by such certificates
and shall have all the rights of a shareholder with respect to all the shares,
including the right to vote such shares and to receive all dividends and other
distributions paid with respect to such shares.
SECTION 7
ADJUSTMENT AND SUBSTITUTION 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 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. Shares of Common Stock
so distributed with respect to any restricted shares held in escrow shall also
be held by the Corporation in escrow and shall be subject to the same
restrictions as are applicable to the restricted shares on which they were
distributed.
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
A-4
<PAGE> 22
securities into which each outstanding share of the Common Stock shall be so
changed or for which each such share shall be exchangeable. Any such stock or
securities, as well as any cash or other property, into or for which any
restricted shares held in escrow shall be changed or exchangeable in any such
transaction shall also be held by the Corporation in escrow and shall be subject
to the same restrictions as are applicable to the restricted shares in respect
of which such stock, securities, cash or other property was issued or
distributed.
In case of any adjustment or substitution as provided for in the first two
paragraphs of this Section 7, 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.
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, (a) 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, and (b) any stock,
securities, cash or other property distributed with respect to any restricted
shares held in escrow shall also be held by the Corporation in escrow and shall
be subject to the same restrictions as are applicable to the restricted shares
in respect of which such stock, securities, cash or other property was
distributed or exchanged.
No adjustment or substitution provided for in this Section 7 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. Owners of restricted shares held in
escrow shall be treated in the same manner as owners of Common Stock not held in
escrow with respect to fractional shares created by an adjustment or
substitution of shares, except that, any cash or other property paid in lieu of
a fractional share shall be subject to restrictions similar to those applicable
to the restricted shares exchanged therefor.
SECTION 8
ADDITIONAL RIGHTS IN CERTAIN EVENTS
(A) Definitions
For purposes of the Plan, the following terms shall have the following
meanings:
(1) The term "Person" shall be used as the term is used in Section 13(d)
and 14(d) of the 1934 Act.
(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 an offer made by the
Corporation), whether or not such offer is approved or opposed by the Board.
(5) "Continuing Director" 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
A-5
<PAGE> 23
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 8 Event" shall mean the date upon which any of the following
events occur:
(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; or
(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
or awardee are included in determining the Beneficial Ownership of a Person
referred to in paragraph 6(a), (ii) a grantee or awardee 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 or awardee is a "participant" as
defined in 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 8 Event with respect to such grantee or awardee shall be deemed
to have occurred by reason of such event.
(B) Acceleration of the Exercise Date of Stock Options.
Notwithstanding any other provision contained in the Plan, in case any
"Section 8 Event" occurs, all outstanding stock options (other than those held
by a person referred to in the proviso to Section 8(A)(6)) shall become
immediately and fully exercisable whether or not otherwise exercisable by their
terms.
(C) Lapse of Restrictions on Awards.
If any "Section 8 Event" occurs prior to the scheduled lapse of all
restrictions applicable to awards under the Plan (other than those held by a
person referred to in the proviso to Section 8(A)(6)), all such restrictions
shall lapse upon the occurrence of any such "Section 8 Event" regardless of the
scheduled lapse of such restrictions.
SECTION 9
EFFECT OF THE PLAN ON THE RIGHTS OF
NONEMPLOYEE DIRECTORS AND THE CORPORATION
Nothing in the Plan, in any stock option, in any award under the Plan or in
any agreement providing for any of the foregoing shall confer any right to any
person to continue as a Director of the Corporation or interfere in any way with
the rights of the shareholders of the Corporation or the Board to elect and
remove Directors.
A-6
<PAGE> 24
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 termination shall terminate any outstanding
stock options granted under the Plan; and provided further that no alteration or
amendment of the Plan shall (a) be made without shareholder approval if
shareholder approval of the amendment is at the time required for stock options
under the Plan to qualify for the exemption from Section 16(b) of the 1934 Act
provided by Rule 16b-3 or by the rules of any stock exchange on which the Common
Stock may then be listed, (b) amend more than once every six months the
provisions of the Plan relating to the selection of the Directors to whom stock
options are to be granted or restricted shares are to be awarded, the timing of
such grants and awards, the number of shares subject to any stock option or
restricted share award, the exercise price of any stock option, the periods
during which any stock option may be exercised and the term of any stock option
other than to comport with changes in the Internal Revenue Code or the rules and
regulations thereunder or (c) otherwise amend the Plan in any manner that would
cause stock options under the Plan not to qualify for the exemption provided by
Rule 16b-3. No alteration, amendment, revocations or termination of the Plan
shall, without the written consent of the holder of stock option or restricted
share award, theretofore awarded 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 February 27, 1996, the date of
adoption of the Plan by the Board, provided that such adoption of the Plan by
the Board is approved by the affirmative vote of the holders of at least a
majority of the shares of Common Stock represented in person or proxy and
entitled to vote at a duly called and convened meeting of shareholders called
and held on or prior to February 1997. No stock option granted under the Plan
may be exercised and no restricted shares may be awarded until after such
approval. No stock option may be granted and no awards may be made under the
Plan subsequent to February 26, 2006.
A-7
<PAGE> 25
<TABLE>
<S> <C>
Please mark
your votes as [ X ]
indicated in
this example
</TABLE>
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS BY HOLDERS OF Charles I. Homan, Thomas D. Larson, Richard L. Shaw, Konrad M. Weis,
COMMON STOCK AND SERIES B COMMON STOCK: J. Robert White and William A. Wulf
FOR WITHHOLD
all nominees listed AUTHORITY
(except as marked to vote for all INSTRUCTION: to withhold authority to vote for any individual nominee(s)
to the contrary) nominees listed write the name of such nominee(s) in the space provided:
[ ] [ ] ________________________________________________________________________
2. TO APPROVE THE ADOPTION OF THE COMPANY'S 1996 3. In his discretion, the Proxy is authorized to vote upon such
NONEMPLOYEE DIRECTORS STOCK INCENTIVE PLAN. other business as may be properly brought before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If you plan to attend the
Annual Meeting, please [ ]
check this box.
SIGNATURE(S)_______________________________________ SIGNATURE(S)__________________________________ Date _________________, 1996
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.
</TABLE>
FOLD AND DETACH HERE
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Dear ESOP Participant:
Enclosed you will find the Michael Baker Corporation (the "Company") 1995
Annual Report to Shareholders, the 1996 Proxy Statement, a proxy card with a
blue stripe and/or a proxy card with a green stripe and a postage-paid return
envelope.
As a participant of the ESOP, you are entitled to give binding voting
instructions with respect to (i) the election of six directors of the Company
(if you are a holder of Common Stock or Series B Common Stock of the Company),
(ii) the election of three additional directors of the Company (only if you
are a holder of Common Stock of the Company), (iii) the adoption of the
Company's 1996 Nonemployee Directors' Stock Incentive Plan; and (iv) the
authorization of your proxies to exercise their discretion as to any other
matters which may arise at the 1996 Annual Meeting of the Company. The enclosed
proxy statement provides detailed information concerning the voting at the
Annual Meeting and the matters which will be acted upon. You are encouraged to
read the enclosed materials carefully and to exercise your right to vote. ESOP
participants must complete, sign and return the enclosed proxy card or cards for
all votes for which you may give instructions to be counted. Each ESOP
participant's voting instructions will be tabulated by Putnam Fiduciary Trust
Company, as Trustee of the ESOP, effective April 1, 1996, and will be held in
complete confidence by the Trustee except as may be necessary to meet Legal
requirements. If you fail to provide voting instructions for shares that have
been allocated to your account, Putnam Fiduciary Trust Company, as Trustee, will
direct the former trustee, as recordholder of the shares on record date, to vote
your shares in proportion to the shares for which it receives instructions from
other participants. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE
MUST RECEIVE YOUR PROXY (OR PROXIES) BY RETURN MAIL NO LATER THAN 5:00 P.M. EST,
MAY 9, 1996. YOUR VOTE IS IMPORTANT.
Very truly yours,
PUTNAM FIDUCIARY TRUST COMPANY, TRUSTEE
Michael Baker Corporation
Employee Stock Ownership Plan
<PAGE> 26
SERIES B COMMON STOCK
MICHAEL BAKER CORPORATION
1996 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 13, 1996 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.
FOLD AND DETACH HERE
<PAGE> 27
<TABLE>
<S> <C>
Please mark
your votes as [ X ]
indicated in
this example
</TABLE>
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS BY HOLDERS OF 2. ELECTION OF DIRECTORS BY
COMMON STOCK AND SERIES B COMMON STOCK: HOLDERS OF COMMON STOCK
FOR WITHHOLD FOR WITHHOLD If you plan to attend the
all nominees listed AUTHORITY all nominees listed AUTHORITY Annual Meeting, please [ ]
(except as marked to vote for all (except as marked to vote for all check this box.
to the contrary) nominees listed to the contrary) nominees listed
[ ] [ ] [ ] [ ]
Charles I. Homan, Thomas D. Larson, Richard L. Shaw, William J. Copeland, Roy V. Gavert, Jr.,
Konrad M. Weis, J. Robert White and William A. Wulf and Jack B. Hoey
INSTRUCTION: to withhold authority to vote for any INSTRUCTION: to withhold authority to vote for any
individual nominee(s) write the name of such nominee(s) individual nominee(s) write the name of such nominee(s)
in the space provided: in the space provided:
______________________________________________________ ____________________________________________________________
3. TO APPROVE THE ADOPTION OF THE COMPANY'S 1996
NONEMPLOYEE DIRECTORS STOCK INCENTIVE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In his discretion, the Proxy is authorized to vote upon such
other business as may be properly brought before the meeting.
SIGNATURE(S)_______________________________________ SIGNATURE(S)__________________________________ Date _________________, 1996
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.
</TABLE>
FOLD AND DETACH HERE
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Dear ESOP Participant:
Enclosed you will find the Michael Baker Corporation (the "Company") 1995
Annual Report to Shareholders, the 1996 Proxy Statement, a proxy card with a
blue stripe and/or a proxy card with a green stripe and a postage-paid return
envelope.
As a participant of the ESOP, you are entitled to give binding voting
instructions with respect to (i) the election of six directors of the Company
(if you are a holder of Common Stock or Series B Common Stock of the Company),
(ii) the election of three additional directors of the Company (only if you
are a holder of Common Stock of the Company), (iii) the adoption of the
Company's 1996 Nonemployee Directors' Stock Incentive Plan; and (iv) the
authorization of your proxies to exercise their discretion as to any other
matters which may arise at the 1996 Annual Meeting of the Company. The enclosed
proxy statement provides detailed information concerning the voting at the
Annual Meeting and the matters which will be acted upon. You are encouraged to
read the enclosed materials carefully and to exercise your right to vote. ESOP
participants must complete, sign and return the enclosed proxy card or cards for
all votes for which you may give instructions to be counted. Each ESOP
participant's voting instructions will be tabulated by Putnam Fiduciary Trust
Company, as Trustee of the ESOP, effective April 1, 1996, and will be held in
complete confidence by the Trustee except as may be necessary to meet Legal
requirements. If you fail to provide voting instructions for shares that have
been allocated to your account, Putnam Fiduciary Trust Company, as Trustee, will
direct the former trustee, as recordholder of the shares on record date, to vote
your shares in proportion to the shares for which it receives instructions from
other participants. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE
MUST RECEIVE YOUR PROXY (OR PROXIES) BY RETURN MAIL NO LATER THAN 5:00 P.M. EST,
MAY 9, 1996. YOUR VOTE IS IMPORTANT.
Very truly yours,
PUTNAM FIDUCIARY TRUST COMPANY, TRUSTEE
Michael Baker Corporation
Employee Stock Ownership Plan
<PAGE> 28
COMMON STOCK
MICHAEL BAKER CORPORATION
1996 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 13, 1996 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> 29
<TABLE>
<S> <C>
Please mark
your votes as [ X ]
indicated in
this example
</TABLE>
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS BY HOLDERS OF Charles I. Homan, Thomas D. Larson, Richard L. Shaw, Konrad M. Weis,
COMMON STOCK AND SERIES B COMMON STOCK: J. Robert White and William A. Wulf
FOR WITHHOLD
all nominees listed AUTHORITY
(except as marked to vote for all INSTRUCTION: to withhold authority to vote for any individual nominee(s)
to the contrary) nominees listed write the name of such nominee(s) in the space provided:
[ ] [ ] ________________________________________________________________________
2. TO APPROVE THE ADOPTION OF THE COMPANY'S 1996 3. In his discretion, the Proxy is authorized to vote upon such
NONEMPLOYEE DIRECTORS STOCK INCENTIVE PLAN. other business as may be properly brought before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If you plan to attend the
Annual Meeting, please [ ]
check this box.
SIGNATURE(S)_______________________________________ SIGNATURE(S)__________________________________ Date _________________, 1996
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.
</TABLE>
FOLD AND DETACH HERE
<PAGE> 30
SERIES B COMMON STOCK
MICHAEL BAKER CORPORATION
1996 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 13, 1996 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.
FOLD AND DETACH HERE
<PAGE> 31
<TABLE>
<S> <C>
Please mark
your votes as [ X ]
indicated in
this example
</TABLE>
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS BY HOLDERS OF 2. ELECTION OF DIRECTORS BY
COMMON STOCK AND SERIES B COMMON STOCK: HOLDERS OF COMMON STOCK
FOR WITHHOLD FOR WITHHOLD If you plan to attend the
all nominees listed AUTHORITY all nominees listed AUTHORITY Annual Meeting, please [ ]
(except as marked to vote for all (except as marked to vote for all check this box.
to the contrary) nominees listed to the contrary) nominees listed
[ ] [ ] [ ] [ ]
Charles I. Homan, Thomas D. Larson, Richard L. Shaw, William J. Copeland, Roy V. Gavert, Jr.,
Konrad M. Weis, J. Robert White and William A. Wulf and Jack B. Hoey
INSTRUCTION: to withhold authority to vote for any INSTRUCTION: to withhold authority to vote for any
individual nominee(s) write the name of such nominee(s) individual nominee(s) write the name of such nominee(s)
in the space provided: in the space provided:
______________________________________________________ ____________________________________________________________
3. TO APPROVE THE ADOPTION OF THE COMPANY'S 1996
NONEMPLOYEE DIRECTORS STOCK INCENTIVE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In his discretion, the Proxy is authorized to vote upon such
other business as may be properly brought before the meeting.
SIGNATURE(S)_______________________________________ SIGNATURE(S)__________________________________ Date _________________, 1996
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.
</TABLE>
FOLD AND DETACH HERE
<PAGE> 32
COMMON STOCK
MICHAEL BAKER CORPORATION
1996 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 13, 1996 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
