<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Section 240.14a-11(c) or
Section 240.14a-12
</TABLE>
MICHAEL BAKER CORPORATION
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ ] $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:
----------------------------------------------------
[ X ] No fee required
<PAGE> 2
MICHAEL BAKER CORPORATION
P.O. BOX 12259
PITTSBURGH, PENNSYLVANIA 15231-0259
June 1, 1999
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 1, 1999
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 Robert Morris College, Charles
L. Sewall Center--Center For Leadership, Narrows Run Road, Coraopolis,
Pennsylvania 15108 on Thursday, July 1, 1999 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 as follows to serve for a one-year term or until
their respective successors shall have been elected and shall have
qualified:
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. Such other matters as may properly be brought before the Annual
Meeting.
The close of business on May 7, 1999 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 Annual Meeting, or any adjournments thereof, and
only shareholders of record on such date are entitled to notice of and to vote
at said Annual Meeting.
If you hold both Common Stock and Series B Common Stock of the Company
directly, you will find enclosed two proxy cards, both of which must be fully
completed and returned in order to vote all Common Stock and Series B Common
Stock which you hold. If you hold both Common Stock and Series B Common Stock of
the Company through the Michael Baker Corporation Employee Stock Ownership Plan
and Trust (the "ESOP"), you will find enclosed two proxy cards, both of which
must be fully completed and returned in order to vote all Common Stock and
Series B Common Stock which you hold indirectly through the ESOP. The Company's
1998 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 Annual Meeting, we urge you to please vote
by telephone, by internet or by signing, dating and promptly returning 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-JULY 1, 1999
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 Thursday, July 1, 1999 at 10:00 a.m. at
Robert Morris College, Charles L. Sewall--Center For Leadership, Narrows Run
Road, Coraopolis, Pennsylvania 15108. It is expected that this Proxy Statement
and proxies will be mailed to shareholders on or about June 1, 1999.
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 those electable by holders of Cumulative Preferred Stock if any is
issued in the future), 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
holders of Cumulative Preferred Stock if any is issued in the future).
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 May 7, 1999, the Company had outstanding 7,159,684 shares of Common
Stock (entitling holders to 7,159,684 votes) and 1,315,922 shares of Series B
Common Stock (entitling holders to 13,159,220 votes). Holders of Common Stock
and Series B Common Stock of record at the close of business on May 7, 1999 are
entitled to notice of and to vote on all matters that may properly come before
the Annual 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 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
Annual Meeting in accordance with the specifications made thereon, but in the
absence of such specifications will be voted FOR each proposal. Votes with
respect to the election of directors will be counted as set forth above. With
respect to all other matters brought before the Annual Meeting, the affirmative
vote of the holders of shares representing the majority of the votes cast at the
Annual Meeting (in person or by proxy) will be required to approve such matter.
1
<PAGE> 4
The Board of Directors does not know of any other business that may be
presented for consideration at the 1999 Annual Meeting. If any other business
should properly come before the Annual Meeting, it is the intention of those
named in the Proxies solicited hereby to vote the shares represented by such
Proxies in accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
A proposal submitted by a shareholder for the regular annual meeting of
shareholders to be held in 2000 must be received by the Secretary, Michael Baker
Corporation on or prior to February 1, 2000 in order to be eligible for
inclusion in the Company's Proxy Statement for that annual meeting. In
connection with the 2000 Annual Meeting of Shareholders, if the Company does not
receive notice of a matter or proposal to be considered, on or before April 17,
2000, then the persons appointed by the Board of Directors to act as proxies for
such annual meeting will be allowed to use their discretionary voting authority
with respect to any such matter or proposal raised at such annual meeting.
Section 2.01.1 of the Company's By-Laws sets forth procedures by which
shareholders may nominate candidates for election as directors.
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 May 7,
1999 held 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 or 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 72.1% of the voting power of the
Company's outstanding Common Capital Stock. 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
----------------------------- ---------------------------
NUMBER OF NUMBER OF
SHARES AND SHARES AND
NATURE OF NATURE OF
BENEFICIAL BENEFICIAL
NAME OWNERSHIP(1) PERCENT OWNERSHIP(1) PERCENT
---- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Michael Baker Corporation 2,415,622 33.7 1,223,473 93.0
Employee Stock Ownership
Plan and Trust(1)
Michael Baker Corporation
P.O. Box 12259
Pittsburgh, PA 15231-0259
Goldman Sachs(2) 882,800 12.3 None --
85 Broad Street
New York, New York 10004
Lord, Abbett & Co. 787,690 11.0 None --
767 Fifth Avenue
New York, New York 10153
Dimensional Fund Advisors Inc.(3) 456,114 6.4 None --
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Robert N. Bontempo 3,000(7) * None --
William J. Copeland 5,500(7) * None --
Donald P. Fusilli, Jr. 40,547(5)(7) * 8,385(6) *
Roy V. Gavert, Jr. 4,500(7) * None --
John C. Hayward 39,713(5)(7) * 10,167(6) *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
COMMON STOCK SERIES B COMMON STOCK
----------------------------- ---------------------------
NUMBER OF NUMBER OF
SHARES AND SHARES AND
NATURE OF NATURE OF
BENEFICIAL BENEFICIAL
NAME OWNERSHIP(1) PERCENT OWNERSHIP(1) PERCENT
---- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Charles I. Homan 95,623(4)(5)(7) 1.3 21,692(4)(6) 1.6
Thomas D. Larson 6,425(4)(7) * None --
John E. Murray, Jr. 3,000(7) * None --
Richard L. Shaw 12,705(7) * None --
Konrad M. Weis 12,000(4)(7) * None --
J. Robert White 18,130(5)(7) * 1,614(6) --
Edward L. Wiley 48,637(5)(7) * 15,703(6) 1.2
All Directors and 339,056(4)(5)(7) 4.7 64,612(6) 4.9
Executive Officers as a group
(17 persons)
</TABLE>
- ---------
*Less than 1%
(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. In the case of a tender offer, allocated shares for
which no instructions are given are not voted or tendered, 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.
(2) Shares held as a group by Goldman, Sachs & Co. and the Goldman Sachs Group,
L.P., each of which disclaim beneficial ownership of all such shares. This
information has been taken from Schedule 13G dated as of February 14, 1999
filed by Goldman, Sachs & Co. and the Goldman Sachs Group, L.P.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Registrant Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts (these
investment companies and investment vehicles are the "Portfolios") according
to the Schedule 13G, dated as of February 11, 1999 filed by Dimensional. In
its role as investment advisor and investment manager, Dimensional possesses
both voting and investment power over the securities of the Company
described in the Schedule 13G that are owned by the Portfolios. Dimensional
disclaims beneficial ownership of such securities.
(4) 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.
(5) 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 (12,382
shares); Mr. Hayward (12,248 shares); Mr. Homan (23,648); Mr. White (6,400
shares); Mr. Wiley (18,430 shares); and directors and executive officers as
a group (87,915 shares). ESOP holdings have been rounded to the nearest full
share.
(6) 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
(8,385 shares); Mr. Hayward (10,167 shares); Mr. Homan (20,614 shares); Mr.
White (1,614 shares); Mr. Wiley
3
<PAGE> 6
(15,703 shares); and directors and executive officers as a group (63,534
shares). ESOP holdings have been rounded to the nearest full share.
(7) Includes indicated number of shares of Common Stock issuable pursuant to
stock options which may be exercised within 60 days of the date of this
Proxy Statement: Mr. Bontempo (2,000 shares); Mr. Copeland (3,000 shares);
Mr. Fusilli (28,165 shares); Mr. Gavert (3,000 shares); Mr. Hayward
(27,465); Mr. Homan (66,897 shares); Mr. Larson (2,000 shares); Mr. Murray
(2,000 shares); Mr. Shaw (3,000 shares); Mr. Weis (3,000 shares); Mr. White
(11,730 shares); Mr. Wiley (27,207 shares); and all directors and executive
officers as a group (213,783 shares).
4
<PAGE> 7
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 proxies intend to vote for the nominees
whose names appear below. Although it is expected that all 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 May 7, 1999. All of the nominees were elected directors by the Company's
shareholders at the 1998 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
Robert N. Bontempo 1997 Associate Professor of International Business at
Columbia University since July 1994; formerly
Assistant Professor of International Business at
Columbia University from July 1989 to July 1994;
Fellow at the Center for Advanced Study at
Stanford University, Summer 1992; formerly
Personnel Research Analyst at IBM Corporate
Headquarters; Age 40
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 Citizens Banking Company; Age 55
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 70
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 71
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 70
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 56
</TABLE>
5
<PAGE> 8
<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; Age
80
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 65
John E. Murray, Jr. 1997 President and Professor of Duquesne University
since July 1988; formerly University Distinguished
Service Professor at University of Pittsburgh;
formerly Dean of Villanova University School of
Law; formerly Acting Dean and Professor at
Duquesne University School of Law; Director of
Federated Investors; Age 66
</TABLE>
BOARD AND COMMITTEE MEETINGS
Mr. Jack B. Hoey was a Director of the Company until his term expired on
April 22, 1998, at which time he declined to seek reelection. Mr. Hoey served on
the Compensation Committee and the Nominating Committee until April 22, 1998.
During 1998 there were five meetings of the Company's Board of Directors.
The Executive Committee of the Board of Directors, of which Messrs. Shaw,
Copeland, Gavert and Homan are members, held ten meetings. The Audit Committee
of the Board of Directors, of which Messrs. Gavert, Bontempo and Larson are
members, held four meetings. The Compensation Committee, of which Messrs.
Larson, Murray and Weis are currently members, held three meetings. The
Governance Committee, of which Messrs. Bontempo, Murray and White are members,
held no meetings. The Nominating Committee, of which Messrs. Copeland, Shaw and
Weis are currently members, held no meetings. 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 Governance Committee addresses corporate governance issues,
including evaluation of the Board of Directors and development of criteria to
select candidates to serve on the Board of Directors. The Nominating Committee
interviews and recommends candidates to the Board to serve as executive officers
and/or directors.
6
<PAGE> 9
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 last three completed
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------- ------------
SHARES OF
COMMON STOCK
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(2) COMPENSATION(1)
--------------------------- ---- ------ ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Charles I. Homan 1998 $385,300 $ -- 58,362 $12,592
President and 1997 341,600 62,757 23,529 12,092
Chief Executive Officer 1996 319,400 54,412 12,571 11,455
Donald P. Fusilli, Jr. 1998 $201,200 $23,022 27,480 $10,000
Executive Vice President 1997 188,200 25,642 9,122 8,700
--Energy 1996 180,000 24,750 5,236 8,658
John C. Hayward 1998 $195,700 $22,569 26,738 $12,592
Executive Vice President 1997 188,200 15,643 9,122 10,578
--Transportation 1996 180,000 15,000 5,236 9,267
J. Robert White 1998 $209,100 $ -- 28,664 $10,827
Executive Vice President, 1997 192,300 31,923 9,122 8,030
Chief Financial Officer 1996 180,000 30,001 5,236 9,479
and Treasurer
Edward L. Wiley 1998 $206,200 $11,068 28,161 $11,400
Executive Vice President 1997 192,300 36,314 9,122 10,075
--Civil 1996 180,000 35,776 5,236 9,351
</TABLE>
- ---------
(1) Includes matching contributions made by the Company under its 401(k) plan
paid on behalf of the following individuals in 1998, 1997 and 1996,
respectively: Mr. Homan, $10,000, $9,500 and $9,151; Mr. Fusilli, $10,000,
$7,254 and $7,873; Mr. Hayward, $10,000, $9,012 and $7,962; Mr. White,
$6,777, $5,438 and $7,860; and Mr. Wiley, $10,000, $8,802 and $8,211. Also
includes group life insurance premiums paid by the Company on behalf of the
following individuals in 1998, 1997 and 1996, respectively: Mr. Homan,
$2,592, $2,592 and $2,304; Mr. Fusilli, $1,072, $1,446 and $785; Mr. Hayward
$2,592, $1,566 and $1,305; Mr. White, $4,050, $2,592 and $1,619 and Mr.
Wiley, $1,400, $1,273 and $1,140.
(2) Stock options were granted February 27, 1996, February 27, 1997 and February
27, 1998, under the Company's 1995 Stock Incentive Plan. In addition the
Company also granted certain performance based stock options to the
executive officers on April 23, 1998, which will vest in the first quarter
of 2001 if the Company achieves certain performance goals in the year 2000.
7
<PAGE> 10
OPTIONS GRANTED IN 1998
The following table sets forth, as to the individuals named in the Summary
Compensation Table, information with respect to stock options granted during
1988 under the 1995 Stock Incentive Plan.
OPTIONS GRANTED IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE APPRECIATION
NO. OF SHARES GRANTED TO EXERCISE FOR OPTION TERM(3)
SUBJECT TO EMPLOYEES PRICE/ EXPIRATION -------------------------
NAME OPTIONS GRANTED IN 1998 SHARE DATE 5% 10%
---- --------------- ------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Charles I. Homan 18,361(1) 4.6 $ 9.5313 2/27/2008 $110,059 $278,912
40,001(2) 10.1 10.1250 4/23/2008 254,709 645,482
Donald P. Fusilli, Jr. 6,977(1) 1.8 $ 9.5313 2/27/2008 $ 41,821 $105,984
20,503(2) 5.2 10.1250 4/23/2008 130,554 330,850
John C. Hayward 6,977(1) 1.8 $ 9.5313 2/27/2008 $ 41,821 $105,984
19,761(2) 5.0 10.1250 4/23/2008 125,829 318,876
J. Robert White 7,163(1) 1.8 $ 9.5313 2/27/2008 $ 42,936 $108,809
21,501(2) 5.4 10.1250 4/23/2008 136,909 346,954
Edward L. Wiley 7,161(1) 1.8 $ 9.5313 2/27/2008 $ 42,924 $108,779
21,000(2) 5.3 10.1250 4/23/2008 133,719 338,869
</TABLE>
- ---------
(1) Options were granted pursuant to the 1995 Stock Incentive Plan and vest in
four equal annual installments beginning on February 27, 1998, the date of
grant.
(2) Options were granted April 23, 1998, pursuant to the 1995 Stock Incentive
Plan. The options become fully exercisable on April 23, 2006, but will vest
in the first quarter of 2001 if certain performance goals are satisfied for
the year 2000.
(3) The dollar amounts under the potential realizable value columns are the
result of calculations at assumed annually compounded rates of stock price
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 actual 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.
The following table sets forth as to the persons named in the Summary
Compensation Table information with respect to (i) the stock options exercised
during 1998, (ii) the net value realized upon such exercises, (iii) the number
of shares covered by unexercised stock options at December 31, 1998, and (iv)
the value of such unexercised options at December 31, 1998.
AGGREGATED OPTION EXERCISES IN 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 1998 DECEMBER 31, 1998
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- -------- ------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Charles I. Homan -- -- 53,282/68,680 $211,633/$51,986
Donald P. Fusilli, Jr. -- -- 22,832/31,606 $ 92,591/$20,578
John C. Hayward -- -- 22,132/30,864 $ 89,266/$20,578
J. Robert White 15,477 $67,525 6,351/32,742 $ 13,362/$20,608
Edward L. Wiley -- -- 21,828/32,241 $ 87,614/$20,608
</TABLE>
- ---------
(1) Based on the exercise price and fair market value of the Common Stock as of
December 31, 1998.
8
<PAGE> 11
COMPENSATION OF DIRECTORS
Compensation for non-employee directors is as follows: Annual
retainer--$15,000; Attendance at each regularly scheduled or special meeting of
the Board of Directors--$1,000; Attendance at a Board of Directors committee
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 Graphs on page 11 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. On April 22, 1998,
Jack B. Hoey declined to seek reelection to the Board of Directors and
accordingly, no longer serves on the Board of Directors or as Chairman of the
Compensation Committee. To assist with the transition of Mr. Hoey stepping down
from the Compensation Committee, Dr. Murray was appointed to the Compensation
Committee on December 11, 1997, temporarily increasing the number of
Compensation Committee members to four. Effective April 22, 1998, the number of
Compensation Committee members returned to three with Dr. Larson succeeding Mr.
Hoey as the Chairman of the Compensation Committee and with Drs. Murray and Weis
serving as the remaining members of the Compensation Committee.
All decisions of the Compensation 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. Larson, Murray and Weis in their
capacity as the Board's Compensation Committee addressing the Company's
compensation policies for 1998 as they affected executive officers of the
Company, including Mr. Homan, the President and Chief Executive Officer, and
Messrs. Fusilli, Hayward, White and Wiley, the four executive officers other
than Mr. Homan who were, for 1998, the Company's most highly paid executive
officers.
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 a group is not
disproportionate when compared to the Company's total employee population.
Compensation
The Compensation Committee retains the services of Hewitt Associates, a
compensation consulting firm, to assist the Committee in connection with
performance of its duties. Hewitt Associates provides ongoing advice to the
Committee with respect to the reasonableness of compensation paid to executive
officers of the Company.
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 1998, the Compensation Committee reviewed the relationship of Mr. Homan's
compensation to that of other executive officers of the Company and the
Company's current and projected growth and profitability performance.
Incentive compensation for Mr. Homan and the other executive officers is
determined based on the achievement of such predetermined corporate performance
goals as profitability and earnings per share. Each such officer's annual
performance is measured by reviewing contribution to overhead and profit, new
work added, cash flow return on investment, human resources development and
continuous improvement management goals.
9
<PAGE> 12
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 its knowledge of compensation paid to key
executives at comparable companies. A final comparison is made to verify that
the total percentage increase in compensation paid to the executive officers as
a group is not disproportionate to the percentage increase applicable to other
Company employee groups.
All executive employees participate in an annual incentive program. The
components of the plan are based upon corporate and individual performance.
Measures of corporate performance may include, but are not limited to, one or
more financial measures such as earnings per share and profitability. 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. Primary objectives of the
program are to enhance the professional development of the individual employee
and to align individual performance goals with those of the Company. The rating
is based upon factors agreed to by the Chief Executive Officer and the
individual executive employees.
1995 Stock Incentive Plan
On December 15, 1994, the Board of Directors approved the 1995 Stock
Incentive Plan (the "Option Plan"), which was approved by the shareholders at
the 1995 Annual Meeting and provides long-term incentive compensation to
eligible employees. The Compensation Committee retains the services of Buck
Consultants to assist the Committee in evaluating the Option Plan relative to
practices of other publicly-traded companies engaging in one or more lines of
business comparable to those of the Company.
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.
In addition to it's annual consideration of stock option awards, on April
23, 1998, the Compensation Committee awarded a one-time grant of stock options
(the "Vision 2000 Options") to certain employees the vesting of which will be
based upon the Company achieving earnings for the year ended December 31, 2000
(the "Fiscal Year 2000") equal to or in excess of $1.25 per share of Common
Stock. The Vision 2000 Options will vest and may be exercisable immediately upon
the determination of the Board of Directors, based on the audited financial
results of the Company for the Fiscal Year 2000, that the Company has achieved
earnings of at least $1.25 per share for the Fiscal Year 2000. The exercise
price of the options granted is $10.1250, the fair market value of the Common
Stock on the date of the grant.
In 1998, the Compensation Committee reviewed the Option Plan, and, based on
its review, recommended to the Board of Directors that the Option Plan be
amended to increase by 1,000,000 the number of shares available for grants
thereunder and to increase the maximum number of shares as to which options may
be granted to any one employee during any calendar year from 30,000 to 100,000
shares. The Board of Directors approved the amendment on February 27, 1998 and
the Shareholders adopted the amendment on April 22, 1998 at the Annual Meeting
of Shareholders. The Compensation Committee believes these changes are desirable
in order to ensure that there are sufficient options available under the Option
Plan to continue to motivate and reward employees and to ensure that the grants
are significant enough to provide meaningful inducement and reward to key
employees.
1996 Nonemployee Directors' Stock Incentive Plan
On February 27, 1996, the Board of Directors approved the 1996 Nonemployee
Directors' Stock Incentive Plan, which was approved by the shareholders at the
1996 Annual Meeting. This plan provides long-term incentive compensation to
eligible directors. Under this plan, each member of the Board of Directors who
is not an employee of the Company or any of its subsidiaries is granted 500
restricted shares and an option
10
<PAGE> 13
to purchase 1,000 shares of Common Stock on the first business day following
each Annual Meeting of Shareholders.
This report is submitted by the Compensation Committee of the Company's Board of
Directors.
Thomas D. Larson John E. Murray, Jr. Konrad M. Weis
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPANTS
The members of the Compensation Committee in 1998, Thomas D. Larson, John
E. Murray, Jr. and M. Weis, are nonemployee directors. During 1998, no executive
officer of the Company served on a compensation committee (or other board
committee performing equivalent functions) or on the board of directors of any
entity (other than the Company's Board of Directors) related to any member of
the Company's Board of Directors.
STOCK PERFORMANCE GRAPH
The line graph below compares, for the five-year period commencing December
31, 1993, 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 Index, the Russell 2000 Index and a peer group identified by the Company to
best approximate the Company's diverse business groups.
The peer group was selected to include publicly-traded companies engaging
in one or more of the Company's lines of business: engineering, construction and
operations and maintenance.
The peer group consists of the following companies: Aqua Alliance, Inc.
(f/k/a Air and Water Technologies Corp.), Dames & Moore Group, Granite
Construction, Inc., Harding Lawson Associates Group, Inc., ICF Kaiser
International Inc., Jacobs Engineering Group, Inc., Morrison Knudsen Corp.,
Perini Corp., Stone & Webster, Inc., STV Group, Inc., Tetra Tech, Inc., Turner
Corp., URS Corp., and Roy F. Weston, Inc. The Company removed Guy F. Atkinson
Company of California, from the peer group after it ceased operations during
1998.
The following five year total shareholder return chart compares the
Company's total shareholder return on the Company's Common Stock with that of
the peer group, the S&P 500 Index and the Russell 2000 Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS*
AMONG MICHAEL BAKER CORPORATION, THE S&P 500 INDEX,
THE RUSSELL 2000 INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MICHAEL BAKER
RUSSELL 2000 S&P 5000 PEER GROUP CORPORATION
------------ -------- ---------- -------------
<S> <C> <C> <C> <C>
'12/93' 100.00 100.00 100.00 100.00
'12/94' 98.00 101.00 80.00 34.00
'12/95' 126.00 139.00 97.00 45.00
'12/96' 147.00 171.00 96.00 58.00
'12/97' 180.00 229.00 111.00 89.00
'12/98' 179.00 294.00 152.00 89.00
</TABLE>
* Assumes $100 invested at the close of trading on December 31, 1993 in the
Company's Common Stock, the peer group, the S&P 500 Index and the Russell 2000
Index, and assumes reinvestment of dividends.
11
<PAGE> 14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. The Company believes that all such filing requirements applicable to
its executive officers and directors were complied with in 1998, except that a
Form 5 filed by Philip A. Shucet, an officer of the Company, was deemed to be
late because it inadvertently omitted certain information. In making this
disclosure the Company has relied solely on written representations of its
directors and executive officers and copies of the reports that they have filed
with the Commission.
TRANSACTIONS WITH MANAGEMENT
The Company entered into an employment agreement with Richard L. Shaw
(formerly President and Chief Executive Officer of the Company) in April 1988,
which agreement was supplemented in March 1992, October 1994 and February 1998.
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 until
May 31, 2000, 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.
AUDITORS
The Board of Directors of the Company has selected the independent
accounting firm of PricewaterhouseCoopers LLP ("PwC") to examine the financial
statements of the Company for 1999.
PwC audited the financial statements of the Company for 1998. The Board of
Directors expects that representatives of PwC will be present at the Annual
Meeting of Shareholders and, while such representatives do not currently plan to
make a statement at the Annual Meeting, they will be available to respond to
appropriate questions.
OTHER MATTERS
The Board of Directors does not know at this time of any other or further
business that may come before the Annual Meeting, but, if any such matters
should hereafter become known or determined and be properly brought before such
Annual 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.
By Order of the Board of
Directors,
H. JAMES MCKNIGHT
Secretary
June 1, 1999
12
<PAGE> 15
ANNUAL MEETING OF STOCKHOLDERS OF
MICHAEL BAKER CORPORATION
July 1, 1999
TO VOTE BY MAIL
- ---------------
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
- --------------------------------------------
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
- -------------------
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
YOUR CONTROL NUMBER IS [ ]
----------------------------------------------------
NOTE: REFER TO REVERSE SIDE FOR VOTING INSTRUCTIONS
DEPENDING UPON WHICH STOCK YOU OWN.
----------------------------------------------------
Please Detach and Mail In the Envelope Provided
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
A [X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.
FOR WITHHELD Nominees: State 1 - Common Only State 2 - Series B Common Only
1. ELECTION OF [ ] [ ] --------------------- ------------------------------
DIRECTORS Robert N. Bontempo Robert N. Bontempo
Charles I. Homan Charles I. Homan
(INSTRUCTION: To withhold authority to vote for Thomas D. Larson Thomas D. Larson
any individual nominees(s), write the name of Richard L. Shaw Richard L. Shaw
each nominee(s) in the space below. Konrad M. Weis Konrad M. Weis
J. Robert White J. Robert White
William J. Copeland
----------------------------------------------- Ray V. Gavert. Jr.
John E. Murray, Jr.
PLEASE MARK, SIGN BELOW, DATE, AND RETURN THIS
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
Signature_______________________________________ Signature if held jointly______________________________ DATED: ________________
NOTE: Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation please sign in full
corporate name by president or other authorized officer. If a partnership please sign in partnership name by authorized person.
</TABLE>
<PAGE> 16
IF THE NAME ON YOUR PROXY CARD IS:
Michael Baker Corp. Common OR
Michael Baker Corp. Common ESOP
YOU ARE VOTING FOR NOMINEES IN SLATE 1 ONLY
IF THE NAME ON YOUR PROXY CARD IS:
Michael Baker Corp. Ser B Common OR
Michael Baker Corp. Ser B Common ESOP
YOU ARE VOTING FOR NOMINEES IN SLATE 2 ONLY
PROXY
MICHAEL BAKER CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The undersigned stockholder hereby appoints Richard L. Shaw and Charles
I. Homan and each or any one of them, with full power of substitution, as
Proxies to represent and to vote as designated on the reverse, all the shares of
stock of Michael Baker Corp. (the "Company"), held of record by the undersigned
on May 7, 1999, at the Annual Meeting of the Stockholders (the "Annual Meeting")
to be held on July 1, 1999, or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
(TO BE SIGNED ON THE REVERSE SIDE)
