[EMCOR LOGO]
EMCOR GROUP, INC.
301 Merritt Seven
Norwalk, Connecticut 06851
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NOTICE OF ANNUAL MEETING
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To the Stockholders of EMCOR Group, Inc.
The Annual Meeting of Stockholders of EMCOR Group, Inc. (the "Company")
will be held in the Central Park Room, The Drake Swissotel, 440 Park Avenue, New
York, New York, on June 16, 2005 at 10:00 A.M. (local time) for the following
purposes:
1. To elect seven directors to serve until the next annual meeting
and until their successors are duly elected and qualified.
2. To approve adoption of the 2005 Management Stock Incentive Plan.
3. To approve adoption of the 2005 Stock Plan for Directors.
4. To ratify the appointment of Ernst & Young LLP as independent
auditors for 2005.
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 20,
2005 as the record date for determination of stockholders entitled to receive
notice of, and to vote at, the Annual Meeting and any adjournment thereof.
YOUR ATTENTION IS RESPECTFULLY DIRECTED TO THE ACCOMPANYING PROXY
STATEMENT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Sheldon I. Cammaker
SECRETARY
Norwalk, Connecticut
April 27, 2005
[EMCOR LOGO]
EMCOR GROUP, INC.
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PROXY STATEMENT
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2005 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 16, 2005
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The enclosed proxy is solicited by the Board of Directors of EMCOR
Group, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held at 10:00 A.M. (local
time) on June 16, 2005 in the Central Park Room, The Drake Swissotel, 440 Park
Avenue, New York, New York and at any adjournment or postponement of such
meeting. The enclosed proxy may be revoked at any time before it is exercised by
delivering a written notice to the Secretary of the Company stating that the
proxy is revoked, by duly executing a proxy bearing a later date and presenting
it to the Secretary of the Company, or by attending the Annual Meeting and
voting in person. Unless otherwise specified, the proxies from holders of the
Company's Common Stock, par value $.01 per share ("Common Stock"), will be voted
in favor of each proposal set forth in the Notice of Annual Meeting.
As of April 20, 2005, the Company had outstanding 15,500,408 shares of
Common Stock. Only stockholders of record of Common Stock at the close of
business on April 20, 2005 (the "Record Date") are entitled to notice of, and to
vote at, the Annual Meeting. Each share of Common Stock entitles the holder to
one vote at the Annual Meeting. The mailing address of the principal executive
office of the Company is 301 Merritt Seven, Norwalk, Connecticut 06851, and the
approximate date on which this Proxy Statement and the accompanying proxy are
being first sent or given to stockholders is April 27, 2005.
The Common Stock was the only voting security of the Company
outstanding and entitled to vote on the Record Date. The holders of record of a
majority of the outstanding shares of Common Stock entitled to vote will
constitute a quorum for the transaction of business at the Annual Meeting.
Assuming the presence of a quorum at the Annual Meeting, the affirmative vote of
the holders of a plurality of the votes cast by the holders of shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is necessary for the election of Directors. The affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting is required for
approval of adoption of each of the 2005 Management Stock Incentive Plan and the
2005 Stock Plan for Directors. The affirmative vote of the holders of a majority
of the shares of Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required for ratification of the
appointment of independent auditors to audit the accounts of the Company and its
subsidiaries. With respect to an abstention from voting on any matter and broker
"non-votes," the shares will be considered present and entitled to vote at the
Annual Meeting for purposes of determining a quorum. Abstentions will have the
effect of a vote against each of the proposals brought before the meeting but
will not have an effect on the election of Directors. A broker "non-vote" occurs
if a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular proposal. Accordingly, broker
"non-votes" will be disregarded and will have no effect on the outcome of the
vote on that proposal.
CORPORATE GOVERNANCE
The Company has a long history of good corporate governance practices
that has greatly aided its long-term success. The Board of Directors of the
Company and management have recognized for many years the need for sound
corporate governance practices in fulfilling their respective duties and
responsibilities to stockholders. The Board of Directors and the management of
the Company have taken numerous steps to enhance the Company's policies and
procedures in order to comply with corporate governance listing standards of the
New York Stock Exchange and the rules and regulations of the Securities and
Exchange Commission.
CORPORATE GOVERNANCE GUIDELINES. The Company's Corporate Governance
Guidelines provide the framework for the governance of the Company. The
Nominating and Corporate Governance Committee (the "Corporate Governance
Committee") regularly reviews corporate governance developments and makes
recommendations to the Board with respect to suggested modifications to the
Corporate Governance Guidelines.
INDEPENDENCE OF DIRECTORS. In order to assist the Board in determining
the independence of each director, the Board of Directors has adopted
categorical Standards for Determining Director Independence, a copy of which is
attached to this Proxy Statement as Exhibit A. To be considered independent the
Board must affirmatively determine that the director has no material
relationship with the Company. The Board of Directors has determined that six of
its seven directors, including all members of its Audit Committee, Compensation
and Personnel Committee (the "Compensation Committee"), and Corporate Governance
Committee are "independent", as defined by the listing standards of the New York
Stock Exchange and all applicable rules and regulations of the Securities and
Exchange Commission and for purposes of Rule 162(m) of the Internal Revenue Code
of 1986, as amended. These six directors are: Stephen W. Bershad, David A. B.
Brown, Larry J. Bump, Albert Fried, Jr., Richard F. Hamm, Jr. and Michael T.
Yonker. The seventh director, Frank T. MacInnis, is Chairman of the Board and
Chief Executive Officer of the Company.
EXECUTIVE SESSIONS OF THE BOARD. At the beginning of each regularly
scheduled meeting of the Board of Directors, non-management directors meet
without any Company representatives present; the chairpersons of the Audit
Committee, Compensation Committee and Corporate Governance Committee rotate
presiding over those sessions.
BOARD COMMITTEE CHARTERS. The Board of Directors has adopted written
charters for the Audit Committee, the Compensation Committee and the Corporate
Governance Committee. At least annually, each committee reviews such charters
and recommends any proposed changes to the Board for approval.
STANDARDS OF CONDUCT. The Company's Code of Business Conduct and Ethics
is applicable to all directors, officers and employees of the Company and its
subsidiaries. In addition, the Board of Directors has adopted a separate Code of
Ethics for the Company's chief executive officer and senior financial officers
which imposes additional ethical obligations upon them.
STOCKHOLDER COMMUNICATIONS. Stockholders and other interested persons
may communicate with members of the Board of Directors as a group, or with one
or more members of the Board (including non-management directors as a group), by
writing to them c/o EMCOR Group, Inc., 301 Merritt Seven, Norwalk, Connecticut
06851, Attention: Corporate Secretary. Such communications will be forwarded to
the individuals addressed. In addition, communications may be sent to the
non-management directors as a group by e-mail to
nonmanagementdirectors@emcorgroup.com or to the entire Board of Directors by
e-mail to alldirectors@emcorgroup.com.
AVAILABILITY OF CORPORATE GOVERNANCE MATERIALS. The charters of the
Audit Committee, Compensation Committee and Corporate Governance Committee, the
categorical Standards for Determining Director Independence, the Corporate
Governance Guidelines, the Code of Business Conduct and Ethics, the Code of
Ethics for the Company's chief executive officer and senior financial officers
and other corporate governance materials may be obtained at the Company's
website at www.emcorgroup.com or by writing to the Company at 301 Merritt Seven,
Norwalk, Connecticut 06851, Attention: Corporate Secretary.
-2-
ELECTION OF DIRECTORS (PROPOSAL 1)
At the Annual Meeting, seven directors are to be elected by the holders
of Common Stock to serve until the next Annual Meeting of Stockholders and until
their successors have been duly elected and qualified. To be elected as a
director, each nominee must receive the favorable vote of a plurality of the
shares present in person or represented by proxy and entitled to vote at the
Annual Meeting. Certain information concerning the nominees for election at the
Annual Meeting is set forth below. Each nominee is presently a director of the
Company. While the Board of Directors has no reason to believe that any of those
named as a nominee for election to the Board will not be available as a
candidate, should such a situation arise, the proxy may be voted for the
election of other nominees in the discretion of the persons acting pursuant to
the proxy.
FRANK T. MACINNIS, Age 58. Mr. MacInnis has been Chairman of the Board
and Chief Executive Officer of the Company since April 1994. He also served as
President of the Company from April 1994 to April 1997 and from February 2004 to
October 2004. From April 1990 to April 1994, Mr. MacInnis was President and
Chief Executive Officer, and from August 1990 to April 1994, was Chairman of the
Board, of Comstock Group Inc., a nationwide electrical contracting company. From
1986 to April 1990, Mr. MacInnis served as Senior Vice President and Chief
Financial Officer of Comstock Group Inc. In addition, from 1986 to April 1994,
Mr. MacInnis was also President of Spie Group Inc., which has or had interests
in Comstock Group Inc., Spie Construction Inc., a Canadian pipeline construction
company, and Spie Horizontal Drilling Inc., a United States company engaged in
underground drilling for pipelines and communications cable. Mr. MacInnis is
also a director of The Williams Companies, Inc. and ITT Industries, Inc.
STEPHEN W. BERSHAD, Age 63. Mr. Bershad has been Chairman of the Board
and Chief Executive Officer for more than the past five years of Axsys
Technologies, Inc., a manufacturer of precision optical components and systems
for aerospace, defense and other high technology markets. He has been a director
of the Company since December 15, 1994.
DAVID A.B. BROWN, Age 61. Mr. Brown has been President of The Windsor
Group, a management consulting firm of which he is a co-founder, for more than
the past five years. He has been a director of the Company since December 15,
1994. Mr. Brown is also a director of Layne-Christensen Corp., Mission Resources
Inc., Pride International, Inc. and NS Group, Inc.
LARRY J. BUMP, Age 65. Mr. Bump, a private investor, was Chairman of
the Board of Willbros Group, Inc., an international engineering and construction
company, from 1981 until May 2004 and was Chief Executive Officer of that
company from 1980 until 2002, when he retired. Mr. Bump is currently a director
of Willbros Group, Inc. but has indicated he will not stand for re-election to
the Board of that company in June 2005. Mr. Bump has been a director of the
Company since February 27, 2003.
ALBERT FRIED, JR., Age 75. Mr. Fried has been Managing Member of Albert
Fried & Company, LLC, a broker/dealer and member of the New York Stock Exchange,
since 1955. He has been a director of the Company since December 15, 1994.
RICHARD F. HAMM, JR., Age 45. Since December 2004, Mr. Hamm has been
the Senior Vice President, General Counsel and Secretary of Dendreon Corporation
("Dendreon"), a biotechnology company developing targeted therapies for the
treatment of cancer. From April 2002 until joining Dendreon, he was Deputy
General Counsel and a Vice President of Medtronic, Inc., a medical technology
company. From July 2000 to April 2002, he was Vice President, Corporate
Development & Planning of Carlson Companies, Inc. ("Carlson"), a global travel,
hospitality and marketing services company, and was Vice President, Corporate
Strategic Development & Acquisitions of Carlson from January 1999 to June 2000.
From January 1997 to December 1998, he was Senior Vice President, Legal and
Business Development of Tropicana Products, Inc. ("Tropicana"), a manufacturer
of fruit juices, and Vice President and General Counsel of Tropicana from June
1993 to January 1997. Mr. Hamm has been a director of the Company since June 19,
1998. He is also a director of Axsys Technologies, Inc.
-3-
MICHAEL T. YONKER, Age 62. For more than nine years prior to his
retirement in June 1998, Mr. Yonker was President and Chief Executive Officer of
Portec, Inc., a diversified industrial products company with operations in the
construction equipment, materials handling and railroad products industries. He
has been a director of the Company since October 25, 2002. Mr. Yonker is also a
director of Modine Manufacturing Company and Woodward Governor Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 2004, the Board of Directors met nine times, and committees of
the Board held 19 meetings. Each director attended more than 90% of the meetings
of the Board and committees on which he served during 2004. As provided in the
Company's Corporate Governance Guidelines, each director is expected to attend
all Annual Meetings of Stockholders, and each director attended the 2004 Annual
Meeting of Stockholders.
The Company's Board of Directors has standing Audit, Compensation and
Corporate Governance Committees. The members and the principal responsibilities
of these committees are as follows:
The Audit Committee, comprised of Messrs. Bershad, Brown, Bump and
Hamm, among other things, is responsible for engaging, subject to ratification
by stockholders, overseeing, and discharging, the independent auditors for the
Company, setting their fees, reviewing the scope and audit procedures of the
independent auditors, approving their audit and permitted non-audit services,
reviewing with management and the independent auditors annual and quarter-annual
financial statements, receiving periodic reports from the independent auditors
and management regarding the auditors' independence, meeting with the Company's
management and independent auditors on matters relating to, among other things,
major issues regarding accounting principles and practices and financial
statement presentation, the Company's risk assessment and risk management
policies and major risk exposures, and the adequacy of the Company's internal
audit controls, and reviewing the Company's internal auditing and accounting
personnel.
The Audit Committee met five times during 2004. The Board of Directors
has determined that each of the members of the Audit Committee, Messrs. Bershad,
Brown, Bump, and Hamm, are "audit committee financial experts" within the
meaning of the rules of the Securities and Exchange Commission. Mr. Brown, the
chairperson of the Audit Committee, serves on the audit committees of more than
three public companies. The Board has determined that this simultaneous service
will not impair Mr. Brown's ability to effectively serve on the Company's Audit
Committee.
The Compensation Committee, comprised of Messrs. Bershad, Bump, Fried
and Yonker, oversees the evaluation of the Company's management and reviews and
advises the Board of Directors with respect to the qualifications of individuals
identified as candidates for positions as the Company's Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, and General Counsel and for
the position of chief executive officer of each subsidiary of the Company whose
proposed annual base salary is $400,000 or more. It also reviews and approves
corporate goals and objectives relevant to compensation for the Chief Executive
Officer, evaluates his performance in light of those goals and objectives and,
together with the other independent directors, has sole authority to determine
his compensation level based on this evaluation. The Compensation Committee also
is responsible for reviewing and approving, based on proposals made by the Chief
Executive Officer, compensation for the other executive officers of the Company
as well as the compensation of other officers and employees of the Company and
each subsidiary whose proposed annual base salary is $400,000 or more and for
approving, together with the other independent directors, any employment,
severance or similar contracts for the executive officers of the Company and
other officers and employees of the Company and each subsidiary whose proposed
annual base salary is $400,000 or more. The Compensation Committee also makes
recommendations to the Board of Directors with respect to incentive compensation
and equity-based plans for officers and other employees of the Company,
administers the 1994 Management Stock Option Plan, the Executive Stock Bonus
Plan, the 2003 Management Stock Incentive Plan, and the Key Executive Incentive
Bonus Plan and reviews executive development plans. During 2004, the
Compensation Committee held ten meetings.
-4-
The Corporate Governance Committee, comprised of Messrs. Brown, Fried,
Hamm and Yonker, is charged with leading the search for individuals qualified to
become members of the Board of Directors, consistent with criteria approved by
the Board and set forth in the Company's Corporate Governance Guidelines;
recommending to the Board nominees for election to the Board; developing and
overseeing an annual self-evaluation process for the Board and its committees;
making recommendations with respect to corporate governance guidelines,
compensation and benefits for non-employee directors and matters relating to
Board members' retirement and removal, the number, function and membership of
Board committees, and directors and officer liability insurance and indemnity
agreements between the Company and officers and directors. During 2004, the
Corporate Governance Committee held four meetings.
RECOMMENDATIONS FOR DIRECTOR CANDIDATES
The Corporate Governance Committee will consider recommendations for
candidates for Board membership suggested by Corporate Governance Committee
members, other Board members and stockholders. A stockholder who wishes the
Corporate Governance Committee to consider his/her recommendations for nominees
for the position of director should submit his/her recommendations in writing to
the Corporate Governance Committee in care of Corporate Secretary, EMCOR Group,
Inc., 301 Merritt Seven, Norwalk, Connecticut 06851, together with whatever
supporting material the stockholder considers appropriate. The material, at a
minimum, should include such background and biographical material as will enable
the Corporate Governance Committee to make an initial determination as to
whether the prospective nominee satisfies the criteria for directors set out in
the Company's Corporate Governance Guidelines. The Corporate Governance
Guidelines are available at the Company's website at www.emcorgroup.com. A
stockholder may also nominate director candidates by complying with the
Company's bylaw provisions discussed below under "Other Matters--Stockholder
Proposals."
If the Corporate Governance Committee identifies a need to replace a
current member of the Board of Directors, to fill a vacancy in the Board, or to
expand the size of the Board, the process to be followed by the Committee to
identify and evaluate candidates includes (a) consideration of those individuals
recommended by stockholders as candidates for Board membership and those
individuals recommended in response to requests for recommendations made of
Board members and others, including those suggested by third party executive
search firms retained by the Committee, from time to time, (b) meetings from
time to time to evaluate biographical information and background material
relating to candidates, and (c) interviews of selected candidates by members of
the Committee.
As provided in the Company's Corporate Governance Guidelines, in its
assessment of each potential candidate, the Corporate Governance Committee is to
consider the candidate's achievements in his or her personal career, experience,
wisdom, integrity, ability to make independent analytical inquiries, and
understanding of the business environment. The Corporate Governance Committee
will also take into account the willingness of a candidate to devote adequate
time to Board duties. The Corporate Governance Committee may also consider any
other relevant factors that it may from time to time deem appropriate, including
the current composition of the Board, the balance of management and independent
directors, the need for Audit Committee expertise and the evaluation of all
prospective nominees.
DIRECTOR COMPENSATION
The annual retainer for each director who is not an employee of the
Company or any subsidiary ("non-employee director") is currently, and for 2004
was, $40,000 payable in options to purchase shares of Common Stock. Accordingly,
in January 2004, each non-employee director was granted options to purchase
4,275 shares of Common Stock at $43.83 per share, the fair market value of a
share of Common Stock on the grant date, under the terms of the Company's 1997
Non-Employee Directors' Non-Qualified Stock Option Plan (the "1997 Directors'
Option Plan"). All "retainer options" vest during the course of the calendar
year in which they are granted and have a five-year term. In addition, pursuant
to the terms of the Company's 2003 Non-Employee Directors' Non-Qualified Stock
Option Plan (the "2003 Directors' Plan"), each non-employee director, upon his
election in June 2004 as a director at the 2004 Annual Meeting of Stockholders,
was granted an option to purchase 5,000 shares of Common Stock at $44.06 per
share, the fair market value of a share of Common Stock on the grant date; all
of these options became fully exercisable as of the date of grant and have a
term of ten years.
-5-
Each non-employee director also is currently, and for 2004 was,
entitled to fees payable in cash for attending meetings of the Board of
Directors, fees payable in cash for attending meetings of committees of the
Board upon which he serves and fees payable in cash for acting as Chairman of a
committee of the Board. The fee for participating in a Board meeting is $1,500,
other than a telephonic meeting of the Board in which case the fee is $750; the
fee for participating in a meeting of the Compensation Committee and the
Corporate Governance Committee is $1,000, other than a telephonic meeting in
which case the fee is $750; and the annual fee for acting as a Chairman of each
such Committee is $3,000. In addition, the fee each member of the Audit
Committee receives for attending Audit Committee meetings is $1,000 except for
meetings of the Audit Committee at which the financial statements included in
the Company's Forms 10-K and Forms 10-Q are reviewed in which case the meeting
fee is $1,500 and except for a telephonic meeting in which case the meeting fee
is $750. The annual fee for acting as Chairman of the Audit Committee is $4,000.
The Board has determined that commencing January 1, 2006 the annual
retainer for each non-employee director shall be increased to $100,000 per
annum, of which $60,000 shall be payable in cash and $40,000 shall be payable in
options under the Company's 1997 Directors' Option Plan or, if the 2005 Stock
Plan for Directors (the "2005 Directors' Stock Plan") described below under
"Proposal No. 3--Approval of 2005 Stock Plan for Directors" is approved by
stockholders, in shares of Common Stock, as each non-employee director shall
elect. For the second half of 2005, the Board determined that non-employee
directors shall be paid a cash retainer of $50,000. Directors will continue to
be entitled to an annual grant of options to purchase 5,000 shares of Common
Stock under the terms of the Company's 2003 Directors' Plan.
Effective July 1, 2005, no additional fees will be paid to directors
for attendance at meetings of the Board or meetings of committees of the Board.
However, members of the Audit Committee (other than the Chairman) are to receive
an annual retainer of $5,000. The annual fee for acting as Chairman of the Audit
Committee will be $10,000, and the annual fee for acting as Chairman of each
other committee of the Board will be $5,000.
In connection with attendance at one annual Board meeting, directors
are invited to include their spouses or other companions. The average cost to
the Company per director for such spousal travel and related social gatherings
in 2004 was approximately $3,780.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of April 20, 2005 certain information
regarding beneficial ownership of the Common Stock by each person or group known
by the Company to be a beneficial owner of more than five percent of the
outstanding shares of Common Stock.
Amount and Nature Percent
Name and Address of Beneficial Owner of Beneficial Ownership Owned
----------------------------------- ---------------------- --------
FMR Corp .................................... 1,970,372(1) 13%
82 Devonshire Street
Boston, Massachusetts 02109
The TCW Group, Inc. ......................... 1,888,748(2) 12%
86 South Figueroa Street
Los Angeles, California 90017
Mac-Per-Wolf Company ........................ 1,508,282(3) 10%
310 S. Michigan Avenue
Suite 2500
Chicago, Illinois
and
Janus Small Cap Value Fund
100 Fillmore Street
Denver, Colorado 80206
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(1) Based on a Schedule 13G Information Statement filed by FMR Corp. ("FMR"),
Edward C. Johnson, 3rd ("Mr. Johnson") and Abigail P. Johnson
(collectively, the "Reporting Persons"). The Schedule 13G Information
Statement discloses that the Reporting Persons own beneficially 1,970,372
shares of Common Stock, have sole power to vote or to direct the vote of
20,500 of such shares, sole power to dispose or to direct the disposition
of the 1,970,372 shares, and the interest of Fidelity Low Price Stock Fund
in such shares amounted to 1,467,872 shares. The Schedule 13G also
discloses that Fidelity Management & Research Company ("Fidelity"), a
wholly owned subsidiary of FMR and an investment adviser, is the
beneficial owner of 1,949,872 of such 1,970,372 shares as a result of
acting as investment adviser to various investment companies, including
Fidelity Low Price Fund, and that Mr. Johnson, Chairman of FMR, and FMR,
through its control of Fidelity and certain investment companies, each has
sole power to dispose of the 1,949,872 shares, that neither FMR nor Mr.
Johnson has sole power to vote or direct the voting of such 1,949,872
shares, that Fidelity Management Trust Company ("FMT"), a subsidiary of
FMR, is the beneficial owner of 20,500 of such 1,970,372 shares of Common
Stock, that Mr. Johnson and FMR, through its control of FMT, each has sole
dispositive power over the 20,500 shares and sole power to vote or to
direct the voting of such 20,500 shares.
(2) Based on a Schedule 13G Information Statement filed by The TCW Group, Inc.
("TCW") on behalf of the TCW Business Unit, which consists of TCW and its
direct and indirect subsidiaries. The Schedule 13G discloses that the TCW
Business Unit has shared power to vote or direct the vote of 1,771,938 of
such shares and has shared power to dispose or to direct the disposition
of 1,888,748 shares.
(3) Based on a Schedule 13G Information Statement filed by Mac-Per-Wolf
Company ("MPW") and Janus Small Cap Value Fund ("Janus"). The Schedule 13G
discloses that MPW is filing on behalf of its two subsidiaries, PWMCO, LLC
and Perkins, Wolf, McDonald and Company (collectively, "Perkins Wolf"),
that Perkins Wolf furnishes investment advice to various investment
companies and to individual and institutional clients, including Janus,
that MPW has sole voting power of such 1,508,282 shares and sole
dispositive power of such shares and that Janus has sole voting power of
900,000 of such shares and sole dispositive power of 900,000 of such
shares.
-7-
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 20, 2005, certain
information regarding the beneficial ownership of the Common Stock by each of
the Company's directors, its Chief Executive Officer, each of the other four
most highly compensated executive officers of the Company, and all its directors
and executive officers as a group. Except as otherwise noted, to the Company's
knowledge, each of the persons listed below has sole voting power and investment
power with respect to the shares listed next to his name.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) Percent Owned
------------------------ ------------------------ -------------
Frank T. MacInnis .................................................. 643,255(2) 4.1%
Stephen W. Bershad ................................................. 66,673(3) *
David A.B. Brown ................................................... 47,673(3) *
Larry J. Bump ...................................................... 25,248(3) *
Albert Fried, Jr. .................................................. 55,848(3) *
Richard F. Hamm, Jr. ............................................... 37,348(3) *
Michael T. Yonker .................................................. 26,681(3) *
Anthony J. Guzzi ................................................... 6,911(2) *
Sheldon I. Cammaker ................................................ 117,072(2) *
Leicle E. Chesser .................................................. 173,537(2) 1.1%
R. Kevin Matz ...................................................... 106,814(2) *
All directors and executive officers as a group .................... 1,404,970(4) 9.0%
-----------------
* Represents less than 1%.
(1) The information contained in the table reflects "beneficial ownership" as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended.
All percentages set forth in this table have been rounded.
(2) Includes in the case of Mr. MacInnis 481,375 shares, in the case of Mr.
Cammaker 106,149 shares, in the case of Mr. Chesser 106,149 shares, and in
the case of Mr. Matz 90,769 shares, that may be acquired upon the exercise
of presently exercisable options or options exercisable within 60 days of
the date hereof and granted pursuant to the Company's stock option plans
and programs. None of Mr. Guzzi's options are presently exercisable or
exercisable within 60 days of the date hereof. Also includes in the case
of Mr. MacInnis 27,531 shares, in the case of Mr. Guzzi 12,500 shares, in
the case of Mr. Cammaker 8,959 shares, in the case of Mr. Chesser 13,098
shares, and in the case of Mr. Matz 8,670 shares, to be issued in respect
of restricted stock units.
(3) Includes in the case of Mr. Bershad 51,673 shares, in the case of Mr.
Brown 45,673 shares, in the case of Mr. Bump 25,248 shares, in the case of
Mr. Fried 41,348 shares, in the case of Mr. Hamm 37,348 shares, and in the
case of Mr. Yonker 26,681 shares, that may be acquired upon exercise of
presently exercisable options or options exercisable within 60 days of the
date hereof and granted pursuant to the Company's stock options plans and
programs for non-employee directors.
(4) Includes 1,084,246 shares that may be acquired upon the exercise of
presently exercisable options or options exercisable within 60 days of the
date hereof and 82,685 shares to be issued in respect of restricted stock
units.
-8-
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following Summary Compensation Table sets forth the compensation
awarded to, earned by or paid to, each of the Chief Executive Officer and the
other four most highly compensated executive officers of the Company
(collectively, the "named executive officers") during the fiscal years ended
December 31, 2004, 2003 and 2002 for services rendered in all capacities to the
Company and its subsidiaries. For information regarding the Company's agreements
with the named executive officers, see "Termination of Employment and Change of
Control Arrangements" below.
SUMMARY COMPENSATION TABLE
================================================================================
Annual Long Term
Compensation Compensation Awards(3)
---------------------------------------------- ------------------------
Number of
Restricted Securities
Other Annual Stock Underlying All Other
Bonus Compensation Award Options/ Compensation
Salary (1) (2) (4) SARs(5) (6)
Name and Principal Position Year ($) ($) ($) ($) (#) ($)
-------------------------- ----- ------- -------- ------------ --------- --------- ------------
Frank T. MacInnis ........................ 2004 820,000 913,590 29,953 0 74,129 30,242
Chairman of the Board and 2003 800,000 317,638 23,778 117,638 55,443 30,242
Chief Executive Officer 2002 800,000 992,608 29,624 367,608 56,800 30,242
Anthony J. Guzzi ......................... 2004 100,962 1,342,750(8) 6,749 0 30,000 0
President and
Chief Operating Officer(7)
Sheldon I. Cammaker ...................... 2004 420,000 264,374 40,358 32,921 22,795 25,123
Executive Vice President and 2003 410,000 236,043 36,709 29,409 17,049 25,123
General Counsel and Secretary 2002 410,000 405,963 37,189 50,576 17,500 25,123
Leicle E. Chesser ........................ 2004 420,000 312,955 34,178 61,744 22,795 24,459
Executive Vice President and 2003 410,000 245,885 23,129 48,524 17,049 24,459
Chief Financial Officer 2002 410,000 473,870 26,324 93,513 17,500 24,459
R. Kevin Matz ............................ 2004 340,000 230,372 17,863 38,560 17,970 11,072
Senior Vice President-- 2003 315,000 221,245 30,938 34,784 12,475 11,072
Shared Services 2002 300,000 341,937 23,982 52,237 12,800 11,072
-----------------
(1) The amounts reported under "Bonus" include the value of units that
correspond to shares of Common Stock mandatorily deferred and credited to
each named executive officer's account under the Company's Executive Stock
Bonus Plan (the "Stock Bonus Plan") other than in the case of Mr. Guzzi,
who did not participate in the Stock Bonus Plan. Pursuant to the Stock
Bonus Plan, 25% of the annual bonus earned by each such named executive
officer is automatically credited to him in the form of units that will
subsequently be converted into Common Stock at a 15% discount from the
fair market value of Common Stock as of the date the annual bonus is
determined. The units are to be converted into shares of Common Stock and
delivered to the executive officer on the earliest of (i) the first
business day immediately following the day upon which the Company releases
to the public generally its results in respect of the fourth quarter of
the third year following the year in respect of which such units were
issued, (ii) the executive officer's termination of employment for any
reason or (iii) immediately prior to a "change of control" (as defined in
the Stock Bonus Plan). Dividend equivalents are credited in the form of
additional units (at a 15% discount) at the same rate as dividends are
paid to all stockholders. The portion of the amounts reported under
"Bonus" for 2004, 2003, and 2002, respectively, associated with mandatory
deferrals under the Stock Bonus Plan for each named executive officer,
other than Mr. Guzzi, is as follows: Frank T. MacInnis--$257,340,
$117,638, and $367,708; Sheldon I. Cammaker--$82,374, $73,543, and
$126,463; Leicle E. Chesser--$102,955, $80,885; and $155,870; and R. Kevin
Matz--$74,132, $72,245 and $108,837. Mr. Guzzi was granted 25,000
restricted stock units in October 2004 when he joined the Company, (a)
12,500 of which were converted into an equal number of shares of Common
Stock on March 1, 2005, the day after the Company released to the public
generally its results for the fourth quarter of 2004, and (b) 12,500 of
which will be converted into an equal number of shares of Common Stock on
the first business day after the Company releases to the public generally
its results for the fourth quarter of 2005.
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(2) The personal benefits provided to the named executive officers did not
exceed the disclosure threshold established by the Securities and Exchange
Commission pursuant to applicable rules. Figures represent amounts
reimbursed for the payment of taxes upon certain personal benefits.
(3) The column specified by Item 402 (b) of Regulation S-K of the Securities
and Exchange Commission to report Long-Term Incentive Plan Payouts has
been excluded because the Company has no long-term incentive compensation
plan and has not had any such plan during any portion of fiscal years
2004, 2003 and 2002.
(4) The amounts reported under "Restricted Stock Award" for 2004, 2003 and
2002 represent the value of units that correspond to shares of Common
Stock voluntarily deferred and credited to a named executive officer's
account under the Stock Bonus Plan other than in the case of Mr. Guzzi.
Pursuant to the Stock Bonus Plan, each such named executive officer is
permitted at his election to cause all or part of his annual bonus not
mandatorily deferred under the Stock Bonus Plan to be credited to him in
the form of units that will subsequently be converted into Common Stock at
a 15% discount from the fair market value of Common Stock as of the date
the annual bonus is determined. Any voluntary deferral election under the
Stock Bonus Plan must be made at least six months prior to the end of the
calendar year in respect of which the bonus will be payable. These units
are to be converted into shares of Common Stock and delivered to the
executive officer on the earliest of (i) the date selected by the
executive officer but in no event earlier than the first business day
immediately following the day upon which the Company releases to the
public generally its results in respect of the fourth quarter of the third
calendar year following the year in respect of which such units were
issued, (ii) the executive officer's termination of employment for any
reason, or (iii) immediately prior to a "change of control." Dividend
equivalents are credited in the form of additional units (at a 15%
discount) at the same rate as dividends are paid to all stockholders. The
total holdings of shares of Common Stock represented by the aforementioned
units, including units granted in 2005 in respect of 2004, and the
aggregate market value of such underlying shares as of December 31, 2004
($45.18 per share) for each of the named executive officers (other than
Mr. Guzzi) were as follows: Frank T. MacInnis--27,531 shares, $1,243,850;
Sheldon I. Cammaker--8,959 shares, $404,768; Leicle E. Chesser--13,098
shares, $591,767; and R. Kevin Matz--8,670 shares, $391,711.
(5) The awards set forth in this column are of stock options only. The Company
did not award stock appreciation rights.
(6) The amounts reported in this column include insurance premiums paid by the
Company with respect to term life insurance for the benefit of each named
executive officer (other than Mr. Guzzi, who did not have such insurance
coverage) and matching contributions made by the Company under the 401(k)
part of the Company's Retirement and Savings Plan, a defined contribution
profit sharing plan, for the account of each named executive officer
(other than Mr. Guzzi who did not participate in the plan), and in
addition, with respect to 2003 and 2002, contributions paid by the Company
pursuant to the retirement account part of the Company's Retirement and
Savings Plan for the account of each such named executive officer.
(7) Mr. Guzzi was elected President and Chief Operating Officer of the Company
on October 25, 2004.
(8) Includes Mr. Guzzi's signing bonus of $200,000 and grant of 25,000
restricted stock units entitling him to an equal number of shares of
Common Stock with a value as of the grant date of $967,750.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth certain information concerning certain
grants to the named executive officers of stock options during fiscal 2004. As
indicated under the Summary Compensation Table above, the Company did not grant
stock appreciation rights ("SARs") of any kind.
OPTION GRANTS IN LAST FISCAL YEAR
Grant Date
Individual Grants Value
----------------------------------------------------------- ----------
Number of % of Total
Securities Options
Underlying Granted to Exercise or Grant Date
Options Employees in Base Price Expiration Present
Granted#(1) Fiscal Year ($/Sh)(2) Date Value($)(3)
---------- ------------ ---------- ---------------- ----------
Frank T. MacInnis ................ 74,129 33% $43.83 January 2, 2014 $1,634,737
Anthony J. Guzzi ................. 30,000 14% $38.68 October 25, 2014 $ 508,927
Sheldon I. Cammaker .............. 22,795 10% $43.83 January 2, 2014 $ 502,692
Leicle E. Chesser ................ 22,795 10% $43.83 January 2, 2014 $ 502,692
R. Kevin Matz .................... 17,970 8% $43.83 January 2, 2014 $ 396,287
-----------------
(1) The options referred to in this table have a ten-year term and are
exercisable as follows, except for those granted to Mr. Guzzi: one-fourth
on or after the grant date, one-fourth on or after the first anniversary
of the grant date, one-fourth on or after the second anniversary of the
grant date and one-fourth on or after the last business day of the
calendar year immediately preceding the third anniversary of the grant
date. One-third of Mr. Guzzi's options are exercisable on or after each of
the first three anniversaries of the grant date; these options have a ten
year term.
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(2) The stock option exercise price for a share of Common Stock is the fair
market value of a share of Common Stock on the date of grant. No SARs,
performance units or other instruments were granted in tandem with the
stock options reported herein.
(3) Present value was calculated using the Black-Scholes option-pricing model
which involves an extrapolation of future price levels based solely on
past performance. The present value as of the date of grant, calculated
using the Black-Scholes method, is based on assumptions about future
interest rates, dividend yield, stock price volatility, and exercise
dates. In the case of Messrs. MacInnis, Cammaker, Chesser and Matz, in
calculating the present value as of the date of grant of the options
reported in the table, the Company assumed an interest rate of 2.8% per
annum, an annual dividend yield of zero, volatility of 35.3%, and an
exercise date at the end of option term in 2014. In the case of Mr. Guzzi,
in calculating the present value as of the date of grant of the options
reported in the table, the Company assumed an interest rate of 3.75%, an
annual dividend yield of zero, volatility of 24.7%, and an exercise date
at the end of the option term in 2014. There is no assurance that these
assumptions will prove to be true in the future. The actual value, if any,
that may be realized by each individual will depend on the future market
price of the Common Stock and cannot be forecasted accurately by
application of an option-pricing model.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning
unexercised options to purchase Common Stock held at the end of fiscal year 2004
by the named executive officers and exercises of options by the named executive
officers during fiscal year 2004. No named executive officer holds any SARs.
AGGREGATED OPTION EXERCISES FISCAL 2004 AND
FISCAL 2004 YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares Value FY-End (#) FY-End ($)(1)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
----- ---------- ------ ------------------ ----------------
Frank T. MacInnis ..................... 34,283 $1,385,033 595,172/97,517 $14,105,250/$73,387
Anthony J. Guzzi ...................... None -------- -0-/30,000 $0/$194,100
Sheldon I. Cammaker ................... 20,000 $ 821,570 108,250/29,994 $ 1,711,278/$22,567
Leicle E. Chesser ..................... 3,500 $ 141,120 139,750/29,994 $ 2,971,908/$22,567
R. Kevin Matz ......................... 1,300 $ 52,690 83,031/22,914 $ 1,205,365/$17,790
-----------------
(1) For purposes of this column, value is calculated based on the aggregate
amount of the excess of $45.18 (the closing price of the Common Stock as
reported on the New York Stock Exchange on December 31, 2004) over the
relevant exercise price for a share of Common Stock with respect to the
options. None of Mr. Guzzi's options was exercisable as of the end of
2004.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes as of December 31, 2004 equity
compensation plans that were approved by stockholders and equity compensation
plans that were not approved by stockholders as of December 31, 2004. The table
does not include information about the proposed 2005 Management Stock Incentive
Plan and the 2005 Stock Plan for Directors which is being submitted for approval
of stockholders at the Annual Meeting.
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A B C
------------------------ -------------------- -----------------------
Number of Securities
Remaining Available for
Number of Securities to be Weighted Average Future Issuance Under
Issued upon Exercise of Exercise Price of Equity Compensation Plans
Outstanding Options, Outstanding Options, (Excluding Securities
Plan Category Warrants and Rights Warrants and Rights Reflected in Column A)
----------------------- ------------------------ -------------------- -----------------------
Equity Compensation Plans
Approved by
Stockholders .................. 624,288(1) $16.85 469,214(2)
Equity Compensation
Plans Not Approved
by Stockholders ............... 1,440,403(3) $34.43 103,463(4)
----------- ----------- ---------
Total 2,064,691 $32.56 572,677
-----------------
(1) The only equity compensation plans approved by stockholders under which
securities may be issued is the 1997 Non-Employee Directors' Non-Qualified
Stock Option Plan (the "1997 Directors' Option Plan"), the 2003
Non-Employee Directors' Stock Option Plan (the "2003 Directors' Option
Plan"), and the 2003 Management Stock Incentive Plan. Only options are
outstanding under these plans. As of April 20, 2005, 724,973 shares of
Common Stock were issuable pursuant to options outstanding under these
plans, with a weighted average exercise price of $14.36.
(2) Includes 89,214 shares of Common Stock reserved for issuance under the
1997 Directors' Option Plan, 60,000 shares of Common Stock reserved for
issuance under the 2003 Directors' Option Plan and 320,000 shares of
Common Stock reserved for issuance under the 2003 Management Stock
Incentive Plan. As of April 20, 2005, excluding options referred to in
note (1) above, (a) there were available for future issuance under the
1997 Directors' Option Plan 57,462 shares, (b) there were available for
future issuance shares under the 2003 Directors' Option Plan 60,000
shares, and (c) there were available for future issuance under the 2003
Management Stock Incentive Plan 300 shares.
(3) 50,468 shares relate to options to purchase shares of Common Stock which
are held by employees (other than executive officers) of the Company (the
"Employee Options"), 1,259,398 shares relate to options to purchase shares
Common Stock which are held by executive officers of the Company (the
"Executive Options"), 14,000 shares relate to options to purchase shares
of Common Stock which are held by Directors of the Company (the "Director
Options"), and 116,537 shares relate to restricted stock units ("RSUs")
described below under "Restricted Stock Units." As of April 20, 2005, the
number of securities to be issued upon the exercise of outstanding
options, warrants and rights was 1,208,343 (with a weighted average
exercise price of $35.69) by reason of the exercise of 14,000 Director
Options and the "conversion of 85,477 RSUs into 85,477 shares of Common
Stock.
(4) Represents shares relating to the grant of RSU's. As of April 20, 2005,
excluding options referred to in note (1) above, no additional securities
are available for issuance under equity compensation plans not approved by
stockholders.
EQUITY COMPENSATION PLANS NOT APPROVED BY STOCKHOLDERS
EMPLOYEE OPTIONS
The Employee Options referred to in note (3) to the immediately
preceding table under Equity Compensation Plan Information (the "Table") vest
over three years in equal annual installments, commencing with the first
anniversary of the date of grant of the Employee Options. The Board of Directors
granted such Employee Options to certain key employees of the Company based upon
the performance of such employees. Such Employee Options have an exercise price
per share equal to the fair market value of a share of Common Stock on their
respective grant dates and have a term of ten years from the grant date.
EXECUTIVE OPTIONS
140,000 of the Executive Options referred to in note (3) to the Table
were granted to six executive officers in connection with employment agreements
with the Company as of January 1, 1998, as amended (the "1998 Employment
Agreements"). Pursuant to the terms of the 1998 Employment Agreements, each such
executive officer received options on the first business day of 2000 and 2001
with respective exercise prices of $17.56 and $25.44 per share; in addition, Mr.
MacInnis, Chairman of the Board and Chief Executive Officer of the Company,
received an additional grant under his 1998 Employment Agreement of an option to
purchase 200,000 shares with an exercise price of $19.75 per share. Such
Executive Options vested on the
-12-
first anniversary of the grant date, other than the option granted to Mr.
MacInnis for 200,000 shares which vested in four equal installments based upon
the Common Stock reaching target stock prices of $25, $30, $35 and $40.
488,135 of the Executive Options referred to in note (3) to the Table
were granted to six executive officers in connection with employment agreements
with the Company dated January 1, 2002 (the "2002 Employment Agreements") and
30,000 of the Executive Options were granted to Mr. Anthony Guzzi, President and
Chief Operating Officer of the Company when he joined the Company in October
2004. Of these Executive Options, (a) an aggregate amount of 171,100 of such
Executive Options were granted on December 14, 2001 with an exercise price of
$41.70 per share, (b) an aggregate amount of 145,700 of such Executive Options
were granted on January 2, 2002 with an exercise price of $46.35 per share, (c)
an aggregate amount of 141,335 of such Executive Options were granted on January
2, 2003 with an exercise price of $54.73 and (d) 30,000 of such Executive
Options were granted on October 25, 2004 with an exercise price of $38.68. The
Executive Options referred to above in clause (a) were exercisable in full on
the grant date. The Executive Options referred to above in clauses (b) and (c)
were originally exercisable as follows: one-fourth on or after the grant date,
one-fourth on or after the first anniversary of the grant date, one-fourth on or
after the second anniversary of the grant date and one-fourth on or after the
last business day of the calendar year immediately preceding the third
anniversary of the grant date. However, on June 10, 2004, the Executive Options
referred to in clauses (b) and (c) were amended so that they became exercisable
in full on that date in anticipation of a change in accounting rules requiring
the expensing of stock options beginning in July 2005. The Executive Options
granted to Mr. Guzzi have an exercise price of $38.68 and become exercisable in
three equal annual installments, commencing with the first anniversary of the
date of grant.
Each of the Executive Options granted have a term of ten years from
their respective grant dates and an exercise price per share equal to the fair
market value of a share of Common Stock on their respective grant dates.
DIRECTOR OPTIONS
The Director Options referred to in note (3) to the Table were granted
in 2002 to each non-employee director of the Company in the amount of 2,000
Director Options except for Mr. Larry J. Bump, who received 2,000 Director
Options in 2003 upon his election to the Board. These options were in addition
to the 3,000 options to purchase Common Stock granted to each non-employee
director under the Company's 1995 Non-Employee Directors' Non-Qualified Stock
Option Plan, which plan has been approved by the Company's stockholders. The
price at which such Director Options are exercisable is equal to the fair market
value per share of Common Stock on the grant date. The exercise price per share
of the Director Options is $55.49 per share, except those granted to Mr. Yonker,
upon his election to the Board on October 25, 2002, which have an exercise price
of $51.75 per share, and those granted to Mr. Bump, upon his election to the
Board on February 27, 2003, which have an exercise price of $48.15 per share.
All of these options became exercisable in full on or after the grant date and
have a term of ten years from the grant date.
RESTRICTED STOCK UNITS
An Executive Stock Bonus Plan (the "Stock Bonus Plan") for executive
officers was adopted by the Board of Directors in October 2000 and amended
December 11, 2003. Pursuant to the Stock Bonus Plan, as amended, 25% of the
annual bonus earned by each executive officer (other than Mr. Guzzi who was not
a participant in the Stock Bonus Plan) is automatically credited to him in the
form of units ("RSUs") that will subsequently be converted into Common Stock at
a 15% discount from the fair market value of Common Stock as of the date the
annual bonus is determined. The units are to be converted into shares of Common
Stock and delivered to the executive officer on the earliest of (a) the first
business day following the day upon which the Company releases to the public
generally its results in respect of the fourth quarter of the third calendar
year following the year in respect of which the RSUs were granted ("Release
Date"), (b) the executive officer's termination of employment for any reason or
(c) immediately prior to a "change of control" (as defined in the Stock Bonus
Plan). In addition, pursuant to the Stock Bonus Plan, each executive officer is
permitted at his
-13-
election to cause all or part of his annual bonus not automatically credited to
him in the form of RSUs under the Stock Bonus Plan to be credited to him in the
form of units ("Voluntary Units") that will subsequently be converted into
Common Stock at a 15% discount from the fair market value of Common Stock as of
the date the annual bonus is determined. An election to accept Voluntary Units
under the Stock Bonus Plan must be made at least six months prior to the end of
calendar year in respect of which the bonus will be payable. These Voluntary
Units are to be converted into shares of Common Stock and delivered to the
executive officer on the earliest of (a) the date selected by the executive
officer, but in no event earlier than the Release Date, (b) the executive
officer's termination of employment or (c) immediately prior to a "change of
control."
In addition, on October 25, 2004, when he joined the Company, Mr. Guzzi
was granted 25,000 restricted stock units, and 12,500 of these units were
converted into an equal number of shares of Common Stock on March 1, 2005 and
12,500 of these units will be converted into 12,500 shares of Common Stock on
the first business day immediately following the day upon which the Company
releases to the public its results for the fourth quarter of each of 2005.
TERMINATION OF EMPLOYMENT
AND CHANGE OF CONTROL ARRANGEMENTS
SEVERANCE AGREEMENTS
Each of Messrs. Frank T. MacInnis, Chairman of the Board and Chief
Executive Officer, Anthony J. Guzzi, President and Chief Operating Officer,
Sheldon I. Cammaker, Executive Vice President and General Counsel, Leicle E.
Chesser, Executive Vice President and Chief Financial Officer, R. Kevin Matz,
Senior Vice President-Shared Services is a party to a severance agreement with
the Company which provides for certain benefits under certain circumstances
should such executive officer's employment with the Company be terminated (the
"Severance Agreements"). The Company entered into a Severance Agreement with Mr.
Anthony Guzzi as of October 25, 2004 and with Messrs. MacInnis, Cammaker,
Chesser, and Matz as of April 25, 2005. Messrs. MacInnis, Guzzi, Cammaker,
Chesser and Matz are hereinafter referred to individually as an "Executive" and
collectively as "Executives."
Each of the Severance Agreements provides that if the Executive's
employment is terminated by the Company without Cause (as that term is defined
in his Severance Agreement) or if he terminates his employment for Good Reason
(as that term is defined in his Severance Agreement), he will be entitled to
receive, in eight equal quarter annual installments, an aggregate amount equal
to twice his base salary in effect immediately prior to the occurrence of the
event or circumstance upon which the termination is based. In addition, he will
be entitled to receive all unpaid amounts in respect of his bonus for any
calendar year ended before the date of termination and an amount equal to his
target bonus for the year in which his termination takes place multiplied by a
fraction the numerator of which is the number of days in the calendar year in
which the termination occurs that he was employed by the Company and the
denominator of which is 365. He will also be entitled for a period of 18 months
from the date of termination, at the Company's expense, to coverage for himself
(and, to the extent applicable, his eligible dependents) under the Company's
medical, dental and hospitalization insurance plans and for a period of 12
months from the date of termination, at the Company's expense, to coverage under
the Company's group life and accidental death and dismemberment insurance plans;
provided, however, that if he is provided with comparable coverage by a
successor employer any such coverage by the Company shall cease. No severance
benefits are payable under the Severance Agreement if benefits are payable under
such Executive's Change of Control Agreement hereafter referred to.
CHANGE OF CONTROL AGREEMENTS
Each of the Executives is a party to a Change of Control Agreement with
the Company (the "Change of Control Agreements"). The purpose of the Change of
Control Agreements is to retain the services of these Executives and to assure
their continued productivity without disturbance in circumstances arising from
the possibility or occurrence of a Change of Control of the Company. For
purposes of these agreements a "Change of Control" means, in general, the
occurrence of (i) the acquisition by a person or group of persons of 25% or more
of the voting securities of the Company, (ii) the approval by the Company's
stockholders of
-14-
a merger, business combination or sale of the Company's assets, the result of
which is that less than 65% of the voting securities of the resulting
corporation is owned by the holders of the Common Stock prior to such
transaction or (iii) the failure of Incumbent Directors (as defined in the
Change of Control Agreements) to constitute at least a majority of the Board of
Directors of the Company during any two year period.
Generally, no benefits are provided under the Change of Control
Agreements for any type of termination before a Change of Control, for
termination after a Change of Control due to death, disability, any termination
for Cause (as that term is defined in the Change of Control Agreements) or for
voluntary termination (other than for Good Reason (as that term is defined in
the Change of Control Agreements)).
Each Change of Control Agreement generally provides to the Executive a
severance benefit if the Company terminates the Executive's employment without
Cause or the Executive terminates his employment for Good Reason within two
years following a Change of Control equal to the sum of three times (i) his base
salary at the time of the Change of Control, (ii) the higher of (A) his bonus in
respect of the year prior to the Change of Control and (B) the average of his
bonuses for the three years prior to the Change of Control and (iii) the value
of perquisites provided in respect of the year prior to the Change of Control.
Other severance benefits include outplacement assistance and a continuance of
insurance benefits for three years. The severance benefits under each
Executive's Change of Control Agreement are reduced by any severance benefits
payable under such Executive's Severance Agreement.
SECTION 280G
If all or any portion of the payments or benefits referred to in the
preceding paragraphs under "Severance Agreements" and "Change of Control
Agreements" either alone or together with other payments and benefits which any
of Messrs. MacInnis, Guzzi, Cammaker, Chesser or Matz receives or is then
entitled to receive from the Company would constitute a "parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), then such officer shall be entitled to such additional
payments as may be necessary to ensure that the net after tax benefit of all
such payments shall be equal to his respective net after tax benefit as if no
excise tax had been imposed under Section 4999 of the Code.
GUZZI LETTER AGREEMENT
On October 25, 2005, the Company and Mr. Guzzi entered into a Letter
Agreement setting forth certain terms of Mr. Guzzi's employment with the Company
(the "Guzzi Letter Agreement"). Pursuant to the Guzzi Letter Agreement, (a) Mr.
Guzzi's salary was set at the annual rate of no less than $525,000, (b) he
received a bonus in respect of 2004 of $175,000, (c) he received a signing bonus
of $200,000, (d) his annual target bonus was set at no less than 100% of his
base salary, (e) he was granted an option to purchase 30,000 shares of Common
Stock at an exercise price per share of $38.68, the fair market value of a share
of Common Stock on the grant date, and (f) he was awarded 25,000 restricted
stock units entitling him to 12,500 shares of the Common Stock on March 1, 2005
and 12,500 of such shares on the first business day following the day of the
release to the public generally of the Company's results for the fourth quarter
of 2005. The Letter Agreement also provided that, upon the commencement of Mr.
Guzzi's employment with the Company, Mr. Guzzi and the Company would enter into
the Severance Agreement and Change of Control Agreement described above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2004, the Compensation Committee was responsible for matters
concerning executive compensation.
Messrs. Bershad, Bump, Fried and Yonker served as members of the
Compensation Committee during 2004.
No member of the Compensation Committee was at any time during 2004 an
officer or employee or former officer of the Company or any of its subsidiaries
or had any relationship requiring disclosure by the Company under any paragraph
of Item 404 of Regulation S-K of the Securities and Exchange Commission.
-15-
COMPENSATION COMMITTEE REPORT
The Compensation Committee administers the Company's executive
compensation program. The Compensation Committee is comprised entirely of
independent directors, consistent with New York Stock Exchange listing standards
and the Company's corporate governance policies.
The main objective of the Company's executive compensation program is
to attract and retain highly-qualified executives critical to the long-term
success of the Company and motivate such executives to advance the interests of
stockholders by linking a significant portion of their compensation to the
performance of the Company. As described below in more detail, the key
components of executive officer compensation are base salary, an annual bonus (a
portion of which has been payable in restricted stock units), and stock options.
The Compensation Committee seeks to compensate its executive officers at levels
competitive with other companies in the same industry and/or comparable in size
to the Company (the "Comparable Companies"). After evaluating compensation paid
to executives by Comparable Companies, the report of the Compensation
Committee's outside compensation consultant and, except with respect to his own
compensation, the recommendations of the Company's Chief Executive Officer, the
Compensation Committee works to create compensation packages designed to achieve
the Company's goal of motivating such executives to maximize stockholder return.
The Compensation Committee does not have target amounts of stock ownership for
its executive officers.
BASE SALARY. Each year the Compensation Committee sets executive
officer base salary by reference to the salaries of executive officers holding
comparable positions at Comparable Companies and based upon salaries paid in
prior years. In setting the base salary of the executives, the Compensation
Committee also considers the performance of the Company in the immediately
preceding fiscal year and such executive's individual performance over the past
year and relative skill, experience, background and responsibilities. During
2004, the base salary for each of Messrs. MacInnis, Cammaker, Chesser and Matz
was also determined, in part, by the requirements of such executive's employment
agreement with the Company (the "Prior Employment Agreements"). Those Prior
Employment Agreements expired on December 31, 2004. During 2004 and for the
fiscal year 2005, Mr. Guzzi's salary was based, in part, upon the terms of the
Guzzi Letter Agreement described in the section entitled "Termination of
Employment and Change of Control Arrangements."
BONUSES. As set forth in their respective Prior Employment Agreements,
in 2004 each executive officer, other than Mr. Guzzi was eligible for an annual
bonus. During 2004, such bonuses on average were approximately 57% of an
executive's total compensation. A portion of such bonus was paid in restricted
stock units as described in footnotes 1 and 4 to the "Summary Compensation
Table" in the section entitled "Executive Compensation-Summary of Cash and
Certain Other Compensation," above. Mr. Guzzi's bonus for 2004 was awarded in
accordance with the terms of the Guzzi Letter Agreement and was paid in its
entirety in cash. For 2005, a maximum annual bonus based on the achievement of
objective performance goals for the Company for each of the executive officers
has been established. However, the actual bonus payable to each such executive
officer may be less than the maximum in the sole discretion of the Compensation
Committee. 20% of any bonus will be payable in phantom stock units, the value of
which will be payable two years following the award of such bonus and will be
based upon the value of an equal number of shares of Common Stock at the end of
such two year period.
STOCK OPTIONS. The Company's stock options are intended to provide
executive officers with the promise of long-term rewards which appreciate in
value with the positive performance of the Company, thus, directly aligning
executive and stockholder interests. Such options are exercisable over a period
of time. As previously reported, in 2004 each executive officer was granted
stock options pursuant to the terms of his Prior Employment Agreement and with
respect to Mr. Guzzi, the Guzzi Letter Agreement. In 2005, options were granted
to the executive officers, other than Mr. Guzzi, based on a percentage of the
respective executive's base salary. Such percentage was determined by the
Compensation Committee based on the recommendation of its outside compensation
consultants, taking into account the availability of options under the benefit
plans of the Company, and prior practice. Stock option grants are further
described in the "Summary Compensation Table" in the section entitled "Executive
Compensation-Summary of Cash and Certain Other Compensation," above. The
Compensation Committee will consider the grant to executive officers of options
or other equity based awards annually.
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OTHER COMPENSATION. The executive officers also participate in the
Company's Retirement and Savings Plan as well as the medical, life and
disability insurance plans generally available to all employees. In addition, in
2004 under the terms of their respective Prior Employment Agreements, each of
Messrs. MacInnis, Cammaker, Chesser and Matz received certain personal benefits,
including an allowance for leasing of an automobile, reimbursement for monthly
dues in a club suitable for entertaining Company clients, and life insurance in
an amount equal to approximately three times his annual compensation, which
personal benefits have continued during 2005.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Compensation Committee
reviews and approves all aspects of the compensation of the Company's Chief
Executive Officer, including the base salary, bonus, stock options and personal
benefits. Such compensation is based upon the performance of the Company, his
individual performance, executive compensation levels at Comparable Companies,
and the desire to retain his services. At the beginning of each year, the
Compensation Committee sets criteria for Mr. MacInnis' performance goals in
order to link the bonus component of Mr. MacInnis' compensation to the
performance of the Company. Such measures are in compliance with Section 162(m)
of the Internal Revenue Code as described below under "Section 162(m)". In 2004,
such performance goals were based upon the Company's net income. Following the
end of each year, the Compensation Committee evaluates the Company and the Chief
Executive Officer's actual performance for each year in light of the performance
goals set at the beginning of the year, and together with the other independent
directors, determines his bonus. For 2004, Mr. MacInnis received a bonus of
$875,000, of which a portion was paid in restricted stock units, as described in
footnote 1 to the "Summary Compensation Table" in the section entitled
"Executive Compensation-Summary of Cash and Certain Other Compensation," above.
OTHER EXECUTIVE OFFICERS. The Compensation Committee also reviews and
determines compensation levels for the other executive officers and other
officers and employees of the Company and each of its subsidiaries whose
proposed base salary is $400,000 or more, no less than annually, based on the
factors described above under "Base Salary". As described above, the
compensation package for the executive officers has included a base salary,
bonus, stock options, and personal benefits. At the beginning of 2004, the
Compensation Committee, based on recommendations of the Chief Executive Officer,
set performance goals for each of the executive officers, based on both
subjective and objective criteria and linked to the performance of the Company
and the individual. Following the end of 2004, the amount of the annual bonus
paid to each of the executive officers (other than Mr. MacInnis) was based upon
the Committee's evaluation of the Company's and executive's performance in light
of such goals. Together with the other independent directors, the Committee also
is responsible for approving any employment, severance or similar agreements
with such individuals.
ADMINISTRATION OF PLANS. The Compensation Committee is charged with
making recommendations to the Board of Directors with respect to all incentive
compensation plans and equity-based plans for officers and other employees of
the Company and its subsidiaries and also administers the Company's 1994
Management Stock Option Plan, the Executive Stock Bonus Plan, the 2003
Management Stock Incentive Plan, and the Key Executive Incentive Bonus Plan. The
entire Board determines the amount, if any, of the Company's matching
contributions under the 401(k) part of its Retirement and Savings Plan. While
other compensation decisions generally are not submitted to the Board, it has
the ultimate power and authority with respect to compensation matters.
SECTION 162(m). Section 162(m) of the Code provides that the deduction
by a publicly-held corporation for compensation paid in a taxable year to the
Chief Executive Officer and any of the other four most highly compensated
executive officers whose compensation is required to be reported in the "Summary
Compensation Table" is limited to $1,000,000 per officer, subject to certain
exceptions. The Compensation Committee has taken, and intends to continue to
take, such actions as are necessary to reduce, if not eliminate, the Company's
non-deductible compensation expense, while maintaining, to the extent possible,
the flexibility which the Compensation Committee believes to be an important
element of the Company's executive compensation program.
By: Compensation and Personnel Committee
Stephen W. Bershad, Chairperson
Larry J. Bump
Albert Fried, Jr.
Michael T. Yonker
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PERFORMANCE GRAPH
The following performance graph compares the Company's total
stockholder return on its Common Stock from January 1, 2000 to December 31, 2004
as compared to the Russell 2000 Index and the Dow Jones Heavy Construction
Index.
The following performance graph assumes $100 was invested on January 1,
2000 in Common Stock of the Company and in each of the indices and assumes
reinvestment of all dividends.
[THE DATA BELOW REPRESENTS A GRAPH IN THE PRINTED REPORT]
Russell 2000 Dow Jones Heavy
EMCOR Index Construction Index
12/31/99 100 100 100
106.51 106.8 80
127.05 102.47 100
142.47 103.29 100
12/31/00 139.73 95.8 110
167.29 86.11 126.5
198.08 95.74 149.52
174.79 82.21 142.05
12/31/01 248.77 96.78 136.36
317.81 98.62 145.86
321.64 87.35 129.87
272.33 68.94 103.52
12/31/02 290.47 75.9 111.98
270.68 73.95 119.74
270.25 90.41 126.42
190.63 101.49 138.62
12/31/03 240.55 110.33 146.99
201.1 108.96 146.07
240.99 116.89 151.59
206.14 108.96 145.16
12/31/04 247.56 126.8 172.72
AUDIT AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2004, included in the Company's annual report on Form 10-K for that year.
The Audit Committee has reviewed and discussed these audited financial
statements with management and the Company's independent auditors, Ernst & Young
LLP.
The Audit Committee has discussed with Ernst & Young LLP the matters
required to be discussed by Statement of Auditing Standards No. 61 (Codification
of Statements on Auditing Standards, AUss.380).
The Audit Committee has received the written disclosures and letter
from Ernst & Young LLP required by Independence Standards Board Standard No. 1
("Independence Discussions with Audit Committees"), as amended, and has
discussed with Ernst & Young LLP that firm's independence from the Company. The
Audit Committee has also concluded that the provision to the Company by Ernst &
Young LLP of audit and non-audit services, as described under the table of
"Fees" in the Section entitled "Ratification of Appointment of Independent
Auditors," is compatible with the independence of Ernst & Young LLP.
Based on the review and discussions referred to above in this report,
the Audit Committee recommended to the Company's Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2004 for filing with the Securities
and Exchange Commission.
By: Audit Committee
David A. B. Brown, Chairperson
Stephen W. Bershad
Larry J. Bump
Richard F. Hamm, Jr.
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PROPOSAL NO. 2 - APPROVAL OF ADOPTION OF THE 2005
MANAGEMENT STOCK INCENTIVE PLAN
The Board of Directors has adopted, subject to stockholder approval,
the 2005 Management Stock Incentive Plan (the "2005 Management Plan").
Stockholder approval of Proposal No. 2 will constitute approval of (i)
the performance criteria upon which performance-based awards may be based under
the 2005 Management Plan in those instances in which such awards are intended to
be deductible by the Company under Section 162(m) of the Internal Revenue Code
of 1986, as amended or any successor statute thereto (the "Code"), (ii) the
annual per participant limit of 200,000 shares on grants of options and the
annual per participant limit of 200,000 shares on grants of stock appreciation
rights, (iii) the annual per participant limit of 100,000 shares on grants of
performance-based awards that are restricted stock or other stock-based awards,
(iv) the annual per participant limit of $5,000,000 for other performance-based
stock-based awards that are not denominated or payable in shares of Common Stock
and (v) the class of employees eligible to receive awards under the 2005
Management Plan. See "Tax Status of 2005 Management Plan Awards--Section 162(m),
below."
The Company believes that the 2005 Management Plan will motivate those
employees and prospective employees who are selected to participate in the Plan
("participants") of the Company and its affiliates to exert their best efforts
on behalf of the Company and its affiliates and that the Company will benefit
from the added interest which such employees will have in the welfare of the
Company as a result of their proprietary interest in the Company's success. The
type and number of awards to be granted and the recipients in any year under the
2005 Management Plan are not currently determinable. The description of the 2005
Management Plan set forth below is a summary, does not purport to be complete
and is qualified in its entirety by reference to the provisions of the 2005
Management Plan itself. The complete text of the 2005 Management Plan is
attached as Exhibit B to this Proxy Statement.
DESCRIPTION OF THE 2005 MANAGEMENT PLAN
ADMINISTRATION. The 2005 Management Plan is administered by the
Compensation and Personnel Committee of the Board of Directors (the
"Compensation Committee"), which may delegate its duties and powers in whole or
in part to any subcommittee consisting solely of at least two individuals who
are intended to qualify as "non-employee directors" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended (or any successor
rule thereto) and, to the extent required by Section 162(m) of the Code,
"outside directors" within the meaning thereof. The Compensation Committee is
authorized to interpret the 2005 Management Plan, to establish, amend and
rescind any rules and regulations relating to the 2005 Management Plan, and to
make any other determinations that it deems necessary or desirable for the
administration of the 2005 Management Plan.
SHARES SUBJECT TO THE PLAN. The total number of shares of Common Stock
which may be issued under the 2005 Management Plan is 600,000. As of April 20,
2005, the closing price on The New York Stock Exchange of a share of Common
Stock was $44.86.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The Compensation Committee
may award non-qualified or incentive stock options for federal income tax
purposes. Options granted under the 2005 Management Plan shall be vested and
exercisable at such times and upon such terms and conditions as may be
determined by the Compensation Committee, but in no event shall an option be
exercisable more than ten years after it is granted. The maximum number of
shares of Common Stock covered by options that may be granted during any
calendar year to any participant shall be 200,000.
The exercise price per share of Common Stock for any option awarded
shall not be less than 100% of the fair market value of a share of Common Stock
on the date the option is granted. To the extent permitted by the Compensation
Committee, the exercise price of an option may be paid (a) in cash or its
equivalent, (b) in shares of Common Stock having a fair market value equal to
the aggregate exercise price and satisfying such other requirements as may be
imposed by the Compensation Committee; provided, that such shares have been held
by the participant for no less than six months, (c) partly in cash and partly in
shares of Common Stock, or (d) if there is a public market for the shares at
such time, through the delivery of irrevocable
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instructions to a broker to sell shares of Common Stock obtained upon the
exercise of the option and to deliver promptly to the Company an amount out of
the proceeds of the sale equal to the aggregate exercise price for the shares of
Common Stock being purchased.
The Compensation Committee may grant stock appreciation rights
independent of or in conjunction with an option. The maximum number of shares of
Common Stock covered by a stock appreciation right that may be granted during
any calendar year to any participant shall be 200,000. The exercise price of a
stock appreciation right shall not be less than the fair market value of the
Common Stock on the date the stock appreciation right is granted; provided,
however, that, in the case of a stock appreciation right granted in conjunction
with an option, the exercise price may not be less than the exercise price of
the related option. Each stock appreciation right granted independent of an
option shall entitle a participant upon exercise to an amount equal to (i) the
excess of (A) the fair market value on the exercise date of one share of Common
Stock over (B) the per share exercise price, times (ii) the number of shares of
Common Stock covered by the stock appreciation right. Each stock appreciation
right granted in conjunction with an option shall entitle a participant to
surrender the option and to receive an amount equal to (i) the excess of (A) the
fair market value on the exercise date of one share of Common Stock over (B) the
per share exercise price, times (ii) the number of shares of Common Stock
covered by the option which is surrendered. Payment shall be made in shares of
Common Stock or in cash or partly in Common Stock and partly in cash (with any
Common Stock valued at fair market value), as shall be determined by the
Compensation Committee.
NO REPRICING. The 2005 Management Plan prohibits the repricing of
options or stock appreciation rights.
RESTRICTED STOCK AND OTHER STOCK-BASED AWARDS. The Compensation
Committee shall determine the number of shares of restricted stock to grant to a
participant, the duration of the period during which, and the conditions, if
any, under which the restricted stock may be forfeited to the Company and the
other terms and conditions of restricted stock awards.
The Compensation Committee, in its sole discretion, may grant stock
awards, unrestricted stock and other awards that are valued in whole or in part
by reference to, or are otherwise based on the fair market value of, the Common
Stock. Such other stock-based awards may be in such form, and dependent on such
conditions, as the Compensation Committee shall determine, including, without
limitation, the right to receive, or vest with respect to, one or more shares of
Common Stock (or the equivalent cash value of such shares of Common Stock) upon
the completion of a specified period of service, the occurrence of an event
and/or the attainment of performance objectives.
SECTION 162(m) OF THE CODE. Certain stock awards (including restricted
stock awards) and other stock-based awards granted under the 2005 Management
Plan may be granted in a manner designed to make them deductible by the Company
under Section 162(m) of the Code. Such awards ("Performance-Based Awards") shall
be based upon one or more of the following criteria: (i) consolidated earnings
before or after taxes (including earnings before interest, taxes, depreciation
and amortization); (ii) net income; (iii) operating income; (iv) earnings per
share; (v) book value per share; (vi) return on stockholders' equity; (vii)
expense management; (viii) return on investment; (ix) improvements in capital
structure; (x) profitability of an identifiable business unit or product; (xi)
maintenance or improvement of profit margins; (xii) stock price; (xiii) market
share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working
capital; and (xviii) return on assets. With respect to Performance-Based Awards,
(a) the Compensation Committee shall establish the objective performance goals
applicable to a given period of service no later than 90 days after the
commencement of such period of service (but in no event after 25% of such period
of service has elapsed) and (b) no awards shall be granted to any participant
for a given period of service until the Compensation Committee certifies that
the objective performance goals (and any other material terms) applicable to
such period have been satisfied. The maximum amount of Performance-Based Awards
that may be granted during a calendar year to any participant shall be: (x) with
respect to stock awards and other stock-based awards that are denominated or
payable in shares, 100,000 shares of Common Stock and (y) with respect to stock
awards and other stock-based awards that are not denominated or payable in
shares, $5,000,000.
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ADJUSTMENTS UPON CERTAIN EVENTS. In the event of any stock dividend or
split, reorganization, recapitalization, merger, share exchange or any other
similar transaction, the Compensation Committee, in its sole discretion, may
adjust (i) the number or kind of shares or other securities issued or reserved
for issuance pursuant to the 2005 Management Plan or pursuant to outstanding
awards, (ii) the maximum number of shares for which awards (including limits
established for restricted stock or other stock-based awards) may be granted
during a calendar year to any participant, (iii) the exercise price of any
option or stock appreciation right and/or (iv) any other affected terms of such
awards.
Upon the occurrence of a change in control of the Company (as defined
in the 2005 Management Plan), the 2005 Management Plan provides that the
Compensation Committee may (A) accelerate, vest or cause the restrictions to
lapse with respect to all or any portion of an award or (B) cancel awards for
fair value or (C) provide for the issuance of substitute awards that will
substantially preserve the otherwise applicable terms of any affected awards
previously granted thereunder as determined by the Compensation Committee in its
sole discretion or (D) provide that for a period of at least 30 days prior to
the change in control, such options or stock appreciation rights shall be
exercisable as to all shares subject thereto and that upon the occurrence of the
change in control, such options shall terminate.
AMENDMENT AND TERMINATION. The Board of Directors may amend, alter or
discontinue the 2005 Management Plan, but no amendment, alteration or
discontinuation shall be made (a) without the approval of the stockholders of
the Company, if such action would, (i) increase the total number of shares
reserved for the purposes of the 2005 Management Plan or increase the maximum
number of shares of restricted stock or other stock-based awards that may be
awarded thereunder or the maximum number of shares for which awards may be
granted to any participant during a calendar year or (ii) modify the provisions
relating to repricing of options or stock appreciation rights, the exercise
prices of options, or the period during which awards of shares shall vest, or
(b) without the consent of a participant, if such action would diminish any of
the rights of the participant under any award previously granted to the
participant under the 2005 Management Plan. No awards may be made under the 2005
Management Plan after ten years from the date of its approval by stockholders.
TAX STATUS OF 2005 MANAGEMENT PLAN AWARDS
INTRODUCTION. The following discussion of the federal income tax status
of awards under the 2005 Management Plan is based on present federal tax laws
and regulations and does not purport to be a complete description of the federal
income tax laws. Participants may also be subject to certain state and local
taxes which are not described below.
INCENTIVE STOCK OPTIONS. If the option is an incentive stock option, no
income is realized by the participant upon grant or exercise of the option, and
no deduction is available to the Company at such time except that upon exercise
the excess of the fair market value of the Common Stock over the exercise price
of the option is an item of tax preference potentially subject to the
alternative minimum tax. If the Common Stock purchased upon the exercise of an
incentive stock option is held by a participant for at least two years from the
date of the grant of such option and for at least one year after exercise, upon
disposition of the shares, any resulting gain is taxed at long-term capital
gains rates. If the Common Stock purchased pursuant to the option is disposed of
before the expiration of such periods, any gain on the disposition of the
shares, up to the difference between the fair market value of the Common Stock
at the time of exercise and the exercise price of the option, is taxed at
ordinary rates as compensation paid to the participant, and the Company is
entitled to a deduction for an equivalent amount. Any amount realized by the
participant in excess of the fair market value of the stock at the time of
exercise is taxed at capital gains rates.
NON-QUALIFIED OPTIONS. If the option is a non-qualified option, no
income is realized by the participant at the time of grant of the option, and no
deduction is available to the Company at such time. At the time of exercise
(other than by delivery of Common Stock to the Company), ordinary income is
realized by the participant in an amount equal to the excess, if any, of the
fair market value of the shares of Common Stock on the date of exercise over the
exercise price, and the Company receives a tax deduction for the same amount. If
an option is exercised by delivering Common Stock to the Company, a number of
shares received by the participant equal to the number of shares so delivered
will be received free of tax and will have a tax basis
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and holding period equal to the shares so delivered. The fair market value of
additional shares received by the participant will be taxable to the participant
as ordinary income (and the Company will receive a corresponding deduction), and
the participant's tax basis in such shares will be their fair market value on
the date of exercise. Upon disposition, any appreciation or depreciation of the
Common Stock after the date of exercise is treated as capital gain or loss.
STOCK APPRECIATION RIGHTS. No income is realized by the participant at
the time a stock appreciation right is awarded, and no deduction is available to
the Company at such time. When the right is exercised, ordinary income is
realized by the participant in the amount of the cash or the fair market value
of the Common Stock received by the participant, and the Company shall be
entitled to a deduction of equivalent value.
RESTRICTED STOCK AND OTHER AWARDS. Subject to Section 162(m) of the
Code, discussed below, the Company receives a deduction and the participant
recognizes taxable income equal to the fair market value of the restricted stock
at the time the restrictions on the restricted stock awarded lapse, unless the
participant elects to recognize such income immediately by so electing not later
than 30 days after the date of the grant by the Company to the participant of a
restricted stock award as permitted under Section 83(b) of the Code, in which
case both the Company's deduction and the participant's inclusion in income
occur on the grant date. The value of any part of any other award distributed to
participants shall be taxable as ordinary income to such participants in the
year in which such stock, cash or other consideration is received, and, subject
to Section 162(m) of the Code, the Company will be entitled to a corresponding
tax deduction.
SECTION 162(m). Section 162(m) of the Code generally disallows a tax
deduction to public companies for compensation over $1,000,000 paid to the Chief
Executive Officer and the four other most highly compensated executive officers
in any year. Qualifying performance-based compensation is not subject to such
deduction limit if certain requirements are met. One requirement is stockholder
approval of (i) the performance criteria upon which performance-based awards may
be based, (ii) the annual per-participant limits on grants and (iii) the class
of employees eligible to receive awards. In the case of Performance-Based
Awards, other requirements are that objective performance goals and the amounts
payable upon achievement of the goals be established by a committee of at least
two outside directors and that no discretion be retained to increase the amount
payable under the awards. In the case of options and stock appreciation rights,
other requirements are that the option or stock appreciation right be granted by
a committee of at least two outside directors and that the exercise price of the
option or stock appreciation right be not less than fair market value of the
Common Stock on the date of grant.
ADOPTION OF PROPOSAL NO. 2
The Company believes that its best interests will be served by the
approval of Proposal No. 2. The 2005 Management Plan will enable the Company to
be in a position to continue to grant long-term incentive awards to employees,
including those who through promotions and development of the Company's business
will be entrusted with new and more important responsibilities, while
preserving, where appropriate, the tax deductibility of these awards.
Approval of Proposal No. 2 requires the affirmative vote of a majority
of shares of Common Stock represented at the Annual Meeting and entitled to vote
thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF ADOPTION OF THE 2005
MANAGEMENT PLAN.
PROPOSAL NO. 3 - APPROVAL OF ADOPTION OF THE
2005 STOCK PLAN FOR DIRECTORS
The Board of Directors has adopted, subject to stockholder approval,
the 2005 Stock Plan for Directors (the "2005 Directors' Stock Plan"). The
Company believes that the 2005 Directors' Stock Plan will provide incentives to
non-employee directors to put forth maximum efforts for the success of the
Company's business and strengthen their desire to remain with the Company. It is
also expected that such incentives and the opportunity to acquire a proprietary
interest in the Company will enable the Company to attract other desirable
non-employee directors. The number of shares to be awarded and the recipients in
any year under
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the 2005 Directors' Stock Plan are not currently determinable. The description
of the 2005 Directors' Stock Plan set forth below is a summary, does not purport
to be complete and is qualified in its entirety by reference to the provisions
of the 2005 Directors' Stock Plan itself. The complete text of the 2005
Directors' Stock Plan is attached as Exhibit C to this Proxy Statement.
DESCRIPTION OF THE 2005 DIRECTORS' STOCK PLAN
SHARES SUBJECT TO THE PLAN. The total number of shares of Common Stock
which may be issued under the 2005 Directors' Plan is 26,000.
SHARES. In general, the 2005 Directors' Stock Plan provides that each
non-employee director (a "Director"), who desires to participate in the 2005
Directors' Stock Plan, may elect prior to the first day of each calendar year,
commencing with 2006, to receive his annual non-cash $40,000 retainer in shares
of Common Stock. One-half of such shares shall be delivered promptly to the
Director following the commencement of the year in respect of which the election
is made (the "Applicable Year") and the other half (the "Unvested Shares"),
which shall be registered in the Director's name, shall be held by the Company
until one year thereafter at which time such Unvested Shares are to be delivered
to him, together with any dividends or distribution paid or made thereon
("Distributions"). However, the Director shall not be entitled to the Unvested
Shares and related Distributions if he ceases to be a Director of the Company
during the Applicable Year for any reason prior to a Change of Control (as
defined in the 2005 Director Stock Plan). In such case, such Unvested Shares,
together with any Distributions thereon, shall be forfeited and retained by the
Company.
The aggregate number of shares that a Director shall be entitled to as
his non-cash retainer for a calendar year (other than in the case of a director
who is elected to the Board after the first business day of a calendar year)
shall be determined by dividing $40,000 by the fair market value of a share of
Common Stock as of the first business day of the Applicable Year and increasing
such resulting number by 20 percent. In the case of an individual who is not a
Director as of the first business day of a calendar year but who becomes a
Director during the course of such calendar year ("New Director") and who
desires to participate in the 2005 Directors' Stock Plan, such New Director must
make his election to receive shares of Common Stock on or before his election to
the Board of Directors; provided, however, in his or her case the annual
non-cash $40,000 retainer shall be pro-rated based on the number of whole or
partial months remaining in such year and the number of shares of Common Stock
to which he shall be entitled shall be based upon the fair market value of the
Common Stock as of the date of his election to the Board. In such case, one-half
of the Shares to which the New Director is entitled shall be delivered to him
promptly, and the other one-half shall be Unvested Shares and delivered to him
on the first anniversary of the date he is first elected to the Board.
ADJUSTMENTS UPON CERTAIN EVENTS. In the event of any stock dividend or
split, reorganization, recapitalization, merger, share exchange or any other
similar transaction, the Board of Directors, in its sole discretion, may adjust
the number or kind of shares or other securities reserved for issuance pursuant
to the 2005 Directors' Stock Plan.
AMENDMENT AND TERMINATION. The Board of Directors may amend, alter or
discontinue the 2005 Directors' Stock Plan, but no amendment, alteration or
discontinuation shall be made without the approval of the stockholders of the
Company, if such action would increase the total number of shares reserved for
the purposes of the 2005 Directors' Stock Plan, change the class of participants
in the 2005 Directors' Stock Plan, or materially increase the benefits to
participants.
TAX STATUS OF 2005 DIRECTORS' STOCK PLAN AWARDS
The following discussion of the federal income tax status of shares
under the 2005 Directors' Stock Plan is based on present federal tax laws and
regulations and does not purport to be a complete description of the federal
income tax laws. Non-employee directors may also be subject to certain state and
local taxes which are not described below.
The Company is entitled to a deduction and the Director recognizes
taxable income as ordinary income equal to the fair market value of shares he is
granted at the time of the grant except that with respect to Unvested Shares no
deduction may be taken by the Company and no taxable income is recognized by the
Director until
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the date(s) the Unvested Shares and Distributions thereon vest and become
payable, respectively, at which time the Company receives a deduction and the
Director recognizes taxable income equal to the fair market value of the
Unvested Shares on such date(s). However, the Director may elect to recognize
income with respect to Unvested Shares on the grant date by so electing no later
than 30 days after the date of the grant as permitted under Section 83(b) of the
Internal Revenue Code of 1986, as amended, in which case both the Company's
deduction for, and the Director's inclusion in income of, the fair market value
of Unvested Shares, occur on the grant date. Upon disposition, any appreciation
or depreciation of the Common Stock after the date as of which such shares are
taxed at ordinary income rates is treated as capital gain or loss.
ADOPTION OF PROPOSAL NO. 3
The Company believes that its best interests will be served by the
approval of Proposal No. 3. The 2005 Directors' Stock Plan will enable the
Company to stimulate the efforts of non-employee directors on behalf of the
Company and strengthen their desire to remain with the Company.
Approval of Proposal No. 3 requires the affirmative vote of a majority
of shares of Common Stock represented at the Annual Meeting and entitled to vote
thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF ADOPTION OF THE 2005 STOCKPLAN FOR DIRECTORS.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS (PROPOSAL 4)
The Audit Committee, which is comprised entirely of independent
directors, has appointed Ernst & Young LLP, certified public accountants, as the
Company's independent auditors for 2005, subject to ratification by stockholders
and presents this selection to the stockholders for ratification. If the
stockholders do not approve the appointment of Ernst & Young LLP, the
solicitation of other independent auditors will be considered by the Audit
Committee. Ernst & Young LLP has acted as the Company's independent auditors
since May 14, 2002.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting to respond to appropriate questions and will have an opportunity
to make a statement if they desire to do so.
-24-
FEES
The aggregate fees for professional services rendered for the Company
by Ernst & Young LLP for the years ended December 31, 2004 and 2003 were as
follows:
Services Provided Fee Amount
-----------------------------------------------------------------------
2004 2003
---- ----
Audit Fees(1) ................ $3,917,008 $1,850,000
Audit Related Fees(2) ........ $ 99,000 $ 105,000
Tax Fees(3) .................. $ 169,000 $ 418,000
All Other Fees(4) ............ $ 5,000 $ 136,000
---------- ----------
Total .................... $4,190,008 $2,509,000
----------------------------------------------------------------------
-----------------
(1) Fees in connection with the annual audit of the Company's annual financial
statements, including in 2004 attestation on the Company's internal
control over financial reporting, the issuance of consents with respect to
Registration Statements on Form S-8, reviews of the financial statements
included in the Company's quarterly reports on Form 10-Q, and statutory
audits.
(2) Fees rendered for employee benefit plan audits and also includes for 2004
fees for a specified audit procedures report and for 2003 fees for
consulting services related to Section 404 of the Sarbanes-Oxley Act of
2002.
(3) Fees for services related to tax compliance, including consulting
services, the preparation of tax returns, tax planning and tax advice.
(4) Software subscriptions and for 2003 also includes fees for Health
Insurance Portability and Accountability Act compliance review.
AUDIT COMMITTEE PRE-APPROVAL PROCEDURES
The 2004 and 2003 audit and non-audit services provided by Ernst &
Young LLP were approved by the Audit Committee. The non-audit services which
were approved by the Audit Committee were also reviewed by the Audit Committee
to ensure compatibility with maintaining the auditors' independence.
The Audit Committee has implemented pre-approval policies and
procedures related to the provision of audit and non-audit services. Under these
procedures, the Audit Committee pre-approves both the type of services to be
provided by Ernst & Young LLP and the estimated fees related to those services.
During the approval process, the Audit Committee considers the impact of the
types of services and the related fees on the independence of the auditors. The
services and fees must be deemed compatible with the maintenance of the
auditors' independence, including compliance with the rules and regulations of
the Securities and Exchange Commission. The Chairperson of the Audit Committee
may pre-approve permissible services that arise between Audit Committee meetings
provided that the decision to pre-approve services is reported at the next
scheduled Audit Committee meeting.
ADOPTION OF PROPOSAL NO. 4
The Company believes that its best interests will be served by the
approval of Proposal No. 4.
Approval of Proposal No. 4 requires the affirmative vote of a majority
of the shares of the Common Stock represented at the Annual Meeting and entitled
to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR 2005.
-25-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file initial reports
of ownership and reports of change in ownership of Common Stock and other equity
securities of the Company with the Securities and Exchange Commission and to
furnish copies of such statements to the Company.
To the Company's knowledge and based solely upon a review of such
reports, during the fiscal year 2004 all such reports relating to share
ownership were timely filed.
OTHER MATTERS
RELATED TRANSACTIONS. During 2004, the Company provided facilities
services in the ordinary course of business to an affiliate of FMR Corp. FMR
Corp. beneficially owned more than 5% of the outstanding shares of the Common
Stock as of December 31, 2004. Such services were provided on substantially the
same terms as those provided to unrelated third parties for comparable services.
Prior to joining the Company, Anthony J. Guzzi, President and Chief
Operating Officer of the Company, was President of the North American
Distribution and Aftermarket Division of Carrier Corporation ("Carrier").
Carrier is a manufacturer and distributor of commercial and residential HVAC and
refrigeration systems and equipment and a provider of aftermarket service and
components of its own products and those of other manufacturers in both the HVAC
and refrigeration industries. From time to time, the Company has purchased and
will continue to purchase equipment and parts from Carrier, and has retained and
will continue to retain the services of Carrier, in the ordinary course of
business on terms and conditions negotiated on an arm's length basis.
STOCKHOLDER PROPOSALS. Stockholders' proposals must be received by the
Company at its headquarters in Norwalk, Connecticut on or before December 28,
2005 in order to be considered for inclusion in next year's Proxy Statement.
The Company's bylaws set forth advance notice provisions and procedures
to be followed by stockholders who wish to bring business before an annual
meeting of stockholders or who wish to nominate candidates for election to the
Board of Directors. A stockholder may propose business to be included in the
agenda of an annual meeting only if written notice of such stockholder's intent
is given to the Secretary of the Company, not earlier than 90 days nor later
than 60 days in advance of the anniversary of the date of the immediately
preceding annual meeting, or if the date of the annual meeting occurs more than
30 days before or 60 days after the anniversary of such immediately preceding
annual meeting, not later than the close of business on the later of (a) the
sixtieth day prior to such annual meeting and (b) the tenth day following the
date on which a public announcement of the date of such meeting is first made.
Each such notice must set forth certain background and other information
specified in the bylaws, including a description of the proposed business and
the reasons for conducting such business at the annual meeting.
A stockholder may nominate candidates for election to the Board of
Directors at an annual meeting only if written notice of such stockholder's
intent to make such nomination is given to the Secretary of the Company not
earlier than 90 days nor later than 60 days in advance of the anniversary of the
date of the immediately preceding annual meeting, or if the date of the annual
meeting occurs more than 30 days before or 60 days after the anniversary of such
immediately preceding annual meeting not later than the close of business on the
later of (a) the sixtieth day prior to such annual meeting and (b) the tenth day
following the date on which a public announcement of the date of such meeting is
first made. Each such notice must set forth certain background and other
information specified in the bylaws.
The time limits described above also apply in determining whether
notice is timely for purposes of Rule 14a-4(c)(1) under the Securities Exchange
Act of 1934 relating to exercise of discretionary voting authority, and are
separate from and in addition to the Securities and Exchange Commission's
requirements that a stockholder must meet to have a proposal included in the
Company's proxy statement.
-26-
OTHER INFORMATION
The cost of soliciting proxies will be borne by the Company. The
Company expects to solicit proxies primarily by mail. Proxies also may be
solicited personally and by telephone by certain officers and regular employees
of the Company. D.F. King & Co., Inc. has been retained for solicitation of all
brokers and nominees for a fee of $7,500, plus customary out-of-pocket expenses.
The Company may reimburse brokers and other nominees for their expenses in
communicating with the persons for whom they hold Common Stock.
The Board of Directors is aware of no other matters that are to be
presented to the stockholders for formal action at the Annual Meeting. If,
however, any other matters properly come before the meeting or any adjournments
thereof, it is the intention of the persons named in the enclosed proxy to vote
in accordance with their judgment on such matters.
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER OF RECORD ON APRIL 20,
2005, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2004 (EXCLUDING EXHIBITS) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE SUPPLIED WITHOUT CHARGE. REQUESTS SHOULD BE DIRECTED
TO SHELDON I. CAMMAKER, SECRETARY, EMCOR GROUP, INC., 301 MERRITT SEVEN,
NORWALK, CONNECTICUT 06851.
BY ORDER OF THE BOARD OF DIRECTORS
SHELDON I. CAMMAKER
SECRETARY
April 27, 2005
-27-
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Exhibit A
EMCOR GROUP, INC.
STANDARDS FOR DETERMINING DIRECTOR INDEPENDENCE
It is the policy of the Board of Directors that a substantial majority
of Directors be independent of the Company and of the Company's management. For
a Director to be deemed "independent," the Board shall affirmatively determine
that the Director has no material relationship with the Company (either directly
or as a partner, stockholder or officer of an entity that has a relationship
with the Company). This determination shall be disclosed in the proxy statement
for each annual meeting of the Company's stockholders. In making this
determination, the Board shall apply the following standards:
o A Director who is an employee, or whose immediate family member is
an executive officer, of the Company shall not be deemed independent
until three years after the end of such employment relationship.
o A Director who receives, or whose immediate family member receives,
more than $100,000 per year in direct compensation from the Company,
other than director and committee fees and pension or other forms of
deferred compensation for prior service (provided such compensation
is not contingent in any way on continued service), shall not be
deemed independent until three years after he or she ceases to
receive more than $100,000 in such compensation.
o A Director who is affiliated with or employed by, or whose immediate
family member is affiliated with or employed in a professional
capacity by, a present or former internal or external auditor of the
Company shall not be deemed independent until three years after the
end of the affiliation or the employment or auditing relationship.
o A Director who is employed, or whose immediate family member is
employed, as an executive officer of another company where any of
the Company's current executive officers serve on that company's
compensation committee shall not be deemed independent until three
years after the end of such service or the employment relationship.
o A Director who is a significant equity holder, an executive officer,
general partner, or employee, or whose immediate family member is a
significant equity holder, an executive officer or general partner,
of any entity that makes payments to, or receives payments from, the
Company for property or services in an amount which, in any single
fiscal year of such entity, exceeds 2% of such other entity's
consolidated gross revenues, shall not be deemed independent until
three years after falling below such threshold.
o A Director who is a significant equity holder, an executive officer,
general partner or employee, or whose immediate family member is a
significant equity holder, an executive officer or general partner,
of an entity to which the Company was indebted at the end of the
Company's fiscal year in an aggregate amount in excess of 2% of the
Company's total consolidated assets at the end of such fiscal year,
shall not be deemed independent until three years after falling
below such threshold.
o A Director who is a significant equity holder, an executive officer,
general partner or employee, or whose immediate family member is a
significant equity holder, an executive officer or partner, of an
entity which was indebted to the Company at the end of such entity's
fiscal year in an aggregate amount in excess of 2% of such entity's
total consolidated assets at the end of such fiscal year, shall not
be deemed independent until three years after falling below such
threshold.
o A Director who is, or whose immediate family member is, an executive
officer (or who serves in a comparable position) of a tax-exempt
entity that receives significant contributions (i.e. more than
$200,000 or more than 2% of the annual contributions received by the
entity in a single fiscal year of the tax-exempt entity, whichever
amount is lower) from the Company, any
A-1
executive officer or any immediate family member of an executive
officer shall not be deemed independent until three years after
falling below such threshold, unless such contributions were
approved in advance by the Board of Directors.
For purposes of these Guidelines, the term:
o "immediate family" includes a person's spouse, parents, children,
siblings, mothers and fathers-in-law, sons and daughters-in-law,
brothers and sisters-in-law and anyone (other than domestic
employees) sharing a person's home, but excluding any person who is
no longer an immediate family member as a result of legal separation
or divorce, or death or incapacitation.
o "Company" includes any parent or subsidiary in a consolidated group
with the Company.
o "significant" equity holder of an entity means a holder of 10% or
more of such entity's equity.
The Board shall undertake an annual review of the independence of all
non-employee Directors. In advance of the meeting at which this review occurs,
each non-employee Director shall be asked to provide the Board with full
information regarding the Director's business and other relationships with the
Company to enable the Board to evaluate the Director's independence.
Directors have an affirmative obligation to inform the Board of any
material changes in their circumstances or relationships that may impact their
designation by the Board as "independent." This obligation includes all business
relationships between, on the one hand, Directors or members of their immediate
family, and, on the other hand, the Company.
A-2
Exhibit B
2005 MANAGEMENT STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to aid the Company and its Affiliates in
recruiting and retaining employees and to motivate such employees to exert their
best efforts on behalf of the Company and its Affiliates by providing incentives
through the granting of Awards. The Company expects that it will benefit from
the added interest which such key employees will have in the welfare of the
Company as a result of their proprietary interest in the Company's success.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) "ACT" means the Securities Exchange Act of 1934, as amended, or
any successor thereto.
(b) "AFFILIATE" means any entity that is consolidated with the
Company for financial reporting purposes or any other entity
designated by the Board in which the Company or an Affiliate has
a direct or indirect interest of at least forty percent (40%).
(c) "AWARD" means an Option, Stock Appreciation Right, Share of
Restricted Stock or Other Stock-Based Award granted pursuant to
the Plan.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CHANGE IN CONTROL" means the occurrence of any of the following
events:
(i) any person or persons acting in concert (excluding Company
benefit plans) becomes the beneficial owner of securities
of the Company having at least 25% of the voting power of
the Company's then outstanding securities (unless the event
causing the 25% threshold to be crossed is an acquisition
of voting common securities directly from the Company,
other than upon the conversion of convertible debt
securities or other securities and/or the exercise of
options or warrants); or
(ii) any merger or other business combination involving the
Company, sale of substantially all of the Company's assets
or combination of the foregoing transactions (the
"Transactions") other than a Transaction immediately
following which the stockholders of the Company and any
trustee or fiduciary of any Company employee benefit plan
immediately prior to the Transaction own at least 65% of
the voting power, directly or indirectly, of (A) the
surviving corporation in any such merger or other business
combination; (B) the purchaser of the Company's assets; or
(C) both the surviving corporation and the purchaser in the
event of any combination of Transactions; or
(iii) within any 24 month period, the persons who were directors
immediately before the beginning of such period (the
"Incumbent Directors") shall cease (for any reason other
than death) to constitute at least a majority of the Board
or the board of directors of a successor to the Company.
For this purpose, any director who was not a director at
the beginning of such period shall be deemed to be an
Incumbent Director if such director was elected to the
Board by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified
as Incumbent Directors (so long as such director was not
nominated by a person who has expressed an intent to effect
a Change in Control or engage in a proxy or other control
contest).
(f) "CODE" means the Internal Revenue Code of 1986, as amended, or
any successor thereto.
(g) "COMMITTEE" means the Compensation and Personnel Committee of the
Board.
(h) "COMPANY" means EMCOR Group, Inc., a Delaware corporation.
B-1
(i) "EFFECTIVE DATE" means the date the adoption of the Plan by the
Board is approved by the Company's stockholders.
(j) "EXERCISE PRICE" means the purchase price per Share under the
terms of an Option as determined pursuant to Section 6(a).
(k) "FAIR MARKET VALUE" means, on a given date, (i) if there should
be a public market for the Shares on such date, the average of
the high and low prices of the Shares on the New York Stock
Exchange or, if the Shares are not listed or admitted on any
national securities exchange, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such
date as quoted on the National Association of Securities Dealers
Automated Quotation System (or such market in which such prices
are regularly quoted) (the "NASDAQ"), or, if no sale of Shares
shall have been reported on the New York Stock Exchange or quoted
on the NASDAQ on such date, then the immediately preceding date
on which sales of the Shares have been so reported or quoted
shall be used, and (ii) if there should not be a public market
for the Shares on such date, the Fair Market Value shall be the
value established by the Committee in good faith.
(l) "ISO" means an Option that is also an incentive stock option
granted pursuant to Section 6(d).
(m) "OPTION" means a stock option granted pursuant to Section 6.
(n) "OTHER STOCK-BASED AWARDS" means awards granted pursuant to
Section 9.
(o) "PARTICIPANT" means an employee or prospective employee of the
Company or an Affiliate who is selected by the Committee to
participate in the Plan.
(p) "PERFORMANCE-BASED AWARDS" means certain Other Stock-Based Awards
granted pursuant to Section 9(b).
(q) "PLAN" means the 2005 Management Stock Incentive Plan, as amended
from time to time.
(r) "RESTRICTED STOCK" means any Share granted under Section 8.
(s) "SHARES" means shares of common stock of the Company, $.01 par
value per share.
(t) "STOCK APPRECIATION RIGHT" means a stock appreciation right
granted pursuant to Section 7.
(u) "SUBSIDIARY" means a subsidiary corporation, as defined in
Section 424(f) of the Code (or any successor section thereto), of
the Company.
3. SHARES SUBJECT TO THE PLAN
The total number of Shares which may be issued under the Plan is
600,000. The Shares may consist, in whole or in part, of unissued Shares or
treasury Shares. The issuance of Shares or the payment of cash upon the exercise
of an Award or in consideration of the cancellation or termination of an Award
shall reduce the total number of Shares available under the Plan as applicable.
Stock Appreciation Rights to be settled in Shares shall also reduce the total
number of Shares available under the Plan regardless of the actual number of
Shares issued upon settlement of the Stock Appreciation Rights. Shares which are
subject to Awards which terminate or lapse without the payment of cash
consideration or Shares may be granted again under the Plan.
4. ADMINISTRATION
(a) The Plan shall be administered by the Committee, which may
delegate its duties and powers in whole or in part to any
subcommittee thereof consisting solely of at least two
individuals who are intended to qualify as "Non-Employee
Directors" within the meaning of Rule 16b-3 under the Act (or any
successor rule thereto) and, to the extent required by Section
162(m) of the Code (or any successor section thereto), "outside
directors" within the meaning thereof.
(b) Awards may, in the discretion of the Committee, be made under the
Plan in assumption of, or in substitution for, outstanding awards
previously granted by the Company or its Affiliates. The number
of Shares underlying such substitute awards shall be counted
against the aggregate number
B-2
of Shares available for Awards under the Plan. The Committee is
authorized to interpret the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any
other determinations that it deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect
or supply any omission or reconcile any inconsistency in the Plan
in the manner and to the extent the Committee deems necessary or
desirable. Any decision of the Committee in the interpretation
and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned (including, but
not limited to, Participants and their beneficiaries or
successors). The Committee shall have the full power and
authority to make, and establish the terms and conditions of, any
Award to any person eligible to be a Participant, consistent with
the provisions of the Plan and to waive any such terms and
conditions at any time (including, without limitation,
accelerating or waiving any vesting conditions).
(c) The Committee shall require payment in cash of any amount it may
determine to be necessary to withhold for federal, state, local
or other taxes as a result of the exercise, grant or vesting of
an Award. Unless the Committee specifies otherwise, the
Participant may elect to pay a portion or all of such withholding
taxes by (a) delivery in Shares or (b) having Shares withheld by
the Company with a Fair Market Value equal to the minimum
statutory withholding rate from any Shares that would have
otherwise been received by the Participant.
5. LIMITATIONS
(a) No Award may be granted under the Plan after the tenth
anniversary of the Effective Date, but Awards granted prior to
such tenth anniversary may extend beyond that date.
(b) No Option or Stock Appreciation Right, once granted hereunder,
may be repriced.
6. TERMS AND CONDITIONS OF OPTIONS
The maximum number of Shares covered by Options that may be awarded
during any calendar year to any Participant shall be 200,000. Options granted
under the Plan shall be, as determined by the Committee, non-qualified or
incentive stock options for federal income tax purposes, as evidenced by the
related Award agreements, and shall be subject to the foregoing and the
following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:
(a) EXERCISE PRICE. The Exercise Price per Share shall be determined
by the Committee, but shall not be less than 100% of the Fair
Market Value of the Shares on the date an Option is granted.
(b) EXERCISABILITY. Options granted under the Plan shall be
exercisable at such time and upon such terms and conditions as
may be determined by the Committee, but in no event shall an
Option be exercisable more than ten years after the date it is
granted, except as provided in Section 16 of the Plan.
(c) EXERCISE OF OPTIONS. Except as otherwise provided in the Plan or
in an Award agreement, an Option may be exercised for all, or
from time to time any part, of the Shares for which it is then
exercisable. For purposes of this Section 6, the exercise date of
an Option shall be the date a notice of exercise is received by
the Company, together with provision for payment of the full
purchase price in accordance with this Section 6(c). The purchase
price for the Shares as to which an Option is exercised shall be
paid to the Company, at the election of the Committee, pursuant
to one or more of the following methods: (i) in cash or its
equivalent (e.g., by check); (ii) in Shares having a Fair Market
Value equal to the aggregate Exercise Price for the Shares being
purchased and satisfying such other requirements as may be
imposed by the Committee; provided, that such Shares have been
held by the Participant for no less than six months (or such
other period as established from time to time by the Committee in
order to avoid adverse accounting treatment applying generally
accepted accounting principles); (iii) partly in cash and partly
in such Shares; or (iv) if there is a public market for the
Shares at such time, through the delivery of irrevocable
instructions to a broker to sell Shares obtained upon the
exercise of the Option and to deliver promptly to the Company an
amount out of the proceeds of such sale equal
B-3
to the aggregate Exercise Price for the Shares being purchased.
No Participant shall have any rights to dividends or other rights
of a stockholder with respect to Shares subject to an Option
until the Participant has given written notice of exercise of the
Option, paid in full for such Shares and, if applicable, has
satisfied any other conditions imposed by the Committee pursuant
to the Plan.
(d) ISOS. The Committee may grant Options under the Plan that are
intended to be ISOs. Such ISOs shall comply with the requirements
of Section 422 of the Code (or any successor section thereto). No
ISO may be granted to any Participant who, at the time of such
grant, owns more than ten percent of the total combined voting
power of all classes of stock of the Company or of any
Subsidiary, unless (i) the Exercise Price for such ISO is at
least 110% of the Fair Market Value of a Share on the date the
ISO is granted and (ii) the date on which such ISO terminates is
a date not later than the day preceding the fifth anniversary of
the date on which the ISO is granted. Any Participant who
disposes of Shares acquired upon the exercise of an ISO either
(I) within two years after the date of grant of such ISO or (II)
within one year after the transfer of such Shares to the
Participant, shall notify the Company of such disposition and of
the amount realized upon such disposition. All Options granted
under the Plan are intended to be ISOs, unless the applicable
Award agreement expressly states that the Option is intended to
be a nonqualified stock option. If an Option is intended to be an
ISO, and if for any reason such Option (or portion thereof) shall
not qualify as an ISO, then, to the extent of such
nonqualification, such Option (or portion thereof) shall be
regarded as a nonqualified stock option granted under the Plan;
provided that such Option (or portion thereof) otherwise complies
with the Plan's requirements relating to nonqualified stock
options. In no event shall any member of the Committee, the
Company or any of its Affiliates (or their respective employees,
officers or directors) have any liability to any Participant (or
any other Person) due to the failure of an Option to qualify for
any reason as an ISO.
(e) ATTESTATION. Wherever in this Plan or any agreement evidencing an
Award a Participant is permitted to pay the Exercise Price of an
Option or taxes relating to the exercise of an Option by
delivering Shares, the Participant may, subject to procedures
satisfactory to the Committee, satisfy such delivery requirement
by presenting proof of beneficial ownership of such Shares, in
which case the Company shall treat the Option as exercised
without further payment and shall withhold such number of Shares
from the Shares acquired by the exercise of the Option.
7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
(a) GRANTS. The Committee may grant (i) a Stock Appreciation Right
independent of an Option or (ii) a Stock Appreciation Right in
connection with an Option, or a portion thereof. A Stock
Appreciation Right granted pursuant to clause (ii) of the
preceding sentence (A) may be granted at the time the related
Option is granted or at any time prior to the exercise or
cancellation of the related Option, (B) shall cover the same
number of Shares covered by an Option (or such lesser number of
Shares as the Committee may determine) and (C) shall be subject
to the same terms and conditions as such Option except for such
additional limitations as are contemplated by this Section 7 (or
such additional limitations as may be included in an Award
agreement). The maximum number of Shares covered by Stock
Appreciation Rights that may be awarded during any calendar year
to any Participant shall be 200,000.
(b) TERMS. The exercise price per Share of a Stock Appreciation Right
shall be an amount determined by the Committee but in no event
shall such amount be less than the Fair Market Value of a Share
on the date the Stock Appreciation Right is granted; provided,
however, that, notwithstanding the foregoing, in the case of a
Stock Appreciation Right granted in conjunction with an Option,
or a portion thereof, the exercise price may not be less than the
Exercise Price of the related Option. Each Stock Appreciation
Right granted independent of an Option shall entitle a
Participant upon exercise to an amount equal to (i) the excess of
(A) the Fair Market Value on the exercise date of one Share over
(B) the exercise price per Share, times (ii) the number of Shares
covered by the Stock Appreciation Right. Each Stock Appreciation
Right granted in
B-4
conjunction with an Option, or a portion thereof, shall entitle a
Participant to surrender to the Company the unexercised Option,
or any portion thereof, and to receive from the Company in
exchange therefor an amount equal to (I) the excess of (x) the
Fair Market Value on the exercise date of one Share over (y) the
Exercise Price per Share, times (II) the number of Shares covered
by the Option, or portion thereof, which is surrendered. Payment
shall be made in Shares or in cash, or partly in Shares and
partly in cash (any such Shares valued at such Fair Market
Value), all as shall be determined by the Committee. Stock
Appreciation Rights may be exercised from time to time upon
actual receipt by the Company of written notice of exercise
stating the number of Shares with respect to which the Stock
Appreciation Right is being exercised. The date a notice of
exercise is received by the Company shall be the exercise date.
No fractional Shares will be issued in payment for Stock
Appreciation Rights, but instead cash will be paid for a fraction
or, if the Committee should so determine, the number of Shares
will be rounded downward to the next whole Share.
(c) LIMITATIONS. The Committee may impose, in its discretion, such
conditions upon the exercisability or transferability of Stock
Appreciation Rights as it may deem fit.
8. RESTRICTED STOCK
(a) GRANT. Subject to the provisions of the Plan, the Committee shall
determine the number of Shares of Restricted Stock to be granted
to each Participant, the duration of the period during which, and
the conditions, if any, under which, the Restricted Stock may be
forfeited to the Company, and the other terms and conditions of
such Awards.
(b) TRANSFER RESTRICTIONS. Shares of Restricted Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered,
except as provided in the Plan or the applicable Award agreement.
Certificates issued in respect of Shares of Restricted Stock
shall be registered in the name of the Participant and deposited
by such Participant, together with a stock power endorsed in
blank, with the Company. After the lapse of the restrictions
applicable to such Shares of Restricted Stock, the Company shall
deliver such certificates to the Participant or the Participant's
legal representative.
(c) DIVIDENDS. Dividends paid on any Shares of Restricted Stock may
be paid directly to the Participant, withheld by the Company
subject to vesting of the Restricted Shares pursuant to the terms
of the applicable Award agreement, or may be reinvested in
additional Shares of Restricted Stock, as determined by the
Committee in its sole discretion.
(d) PERFORMANCE-BASED GRANTS. Notwithstanding anything to the
contrary herein, certain Shares of Restricted Stock granted under
this Section 8 may, at the discretion of the Committee, be
granted in a manner which is deductible by the Company under
Section 162(m) of the Code (or any successor section thereto).
The restrictions applicable to a such Restricted Stock shall
lapse based wholly or partially on the attainment of written
performance goals approved by the Committee for a performance
period established by the Committee (i) while the outcome for
that performance period is substantially uncertain and (ii) by
the earlier of (A) 90 days after the commencement of the
performance period to which the performance goal relates or (B)
the number of days which is equal to 25 percent of the relevant
performance period. The performance goals, which must be
objective, shall be based upon one or more of the criteria set
forth in Section 9(b) below. The Committee shall determine in its
discretion whether, with respect to a performance period, the
applicable performance goals have been met with respect to a
given Participant and, if they have, shall so certify.
9. OTHER STOCK-BASED AWARDS
(a) GENERALLY. The Committee, in its sole discretion, may grant or
sell Awards of Shares and Awards that are valued in whole or in
part by reference to, or are otherwise based on the Fair Market
Value of, Shares ("Other Stock-Based Awards"). Such Other
Stock-Based Awards shall be in such form, and dependent on such
conditions, as the Committee shall determine,
B-5
including, without limitation, the right to receive, or vest with
respect to, one or more Shares (or the equivalent cash value of
such Shares) upon the completion of a specified period of
service, the occurrence of an event and/or the attainment of
performance objectives. Other Stock-Based Awards may be granted
alone or in addition to any other Awards granted under the Plan.
Subject to the provisions of the Plan, the Committee shall
determine the number of Shares to be awarded to a Participant
under (or otherwise related to) such Other Stock-Based Awards;
whether such Other Stock-Based Awards shall be settled in cash,
Shares or a combination of cash and Shares; and all other terms
and conditions of such Awards (including, without limitation, the
vesting provisions thereof and provisions ensuring that all
Shares so awarded and issued shall be fully paid and
non-assessable).
(b) PERFORMANCE-BASED AWARDS. Notwithstanding anything to the
contrary herein, certain Other Stock-Based Awards granted under
this Section 9 and performance-based grants of Shares of
Restricted Stock may be granted in a manner which is deductible
by the Company under Section 162(m) of the Code (or any successor
section thereto) ("Performance-Based Awards"). A Participant's
Performance-Based Award shall be determined based on the
attainment of written performance goals approved by the Committee
for a performance period established by the Committee (I) while
the outcome for that performance period is substantially
uncertain and (II) by the earlier of (A)90 days after the
commencement of the performance period to which the performance
goal relates or (B) the number of days which is equal to 25
percent of the relevant performance period. The performance
goals, which must be objective, shall be based upon one or more
of the following criteria: (i) consolidated earnings before or
after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating
income; (iv) earnings per Share; (v) book value per Share; (vi)
return on shareholders' equity; (vii) expense management; (viii)
return on investment; (ix) improvements in capital structure; (x)
profitability of an identifiable business unit or product; (xi)
maintenance or improvement of profit margins; (xii) stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi)
cash flow; (xvii) working capital; and (xviii) return on assets.
The foregoing criteria may relate to the Company, one or more of
its Subsidiaries or one or more of its divisions or units, or any
combination of the foregoing, and may be applied on an absolute
basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall
determine. In addition, to the degree consistent with Section
162(m) of the Code (or any successor section thereto), the
performance goals may be calculated without regard to
extraordinary items. The Committee shall determine whether, with
respect to a performance period, the applicable performance goals
have been met with respect to a given Participant and, if they
have, shall so certify and ascertain the amount of the applicable
Performance-Based Award. No Performance-Based Awards will be paid
for such performance period until such certification is made by
the Committee. The amount of the Performance-Based Award actually
paid to a given Participant may be less than the amount
determined by the applicable performance goal formula, at the
discretion of the Committee. The amount of the Performance-Based
Award determined by the Committee for a performance period shall
be paid to the Participant at such time as determined by the
Committee in its sole discretion after the end of such
performance period; provided, however, that a Participant may, if
and to the extent permitted by the Committee and consistent with
the provisions of Section 162(m) of the Code, elect to defer
payment of a Performance-Based Award. Notwithstanding the
foregoing, the maximum amount of Performance-Based Awards that
may be granted during a calendar year to any Participant shall be
(x) with respect to Other Stock-Based Awards and Awards of Shares
of Restricted Stock, that are denominated or payable in shares,
100,000 shares and (y) with respect to Other Stock-Based Awards
that are not denominated or payable in shares, $5,000,000.
10. VESTING
Notwithstanding anything to the contrary herein (other than the
provisions of Section 11 hereof), no Award of Shares shall vest in full prior to
three years from the date of grant thereof if a condition to such vesting is
based, in whole or in part, upon the passage of time, and if the vesting of an
Award of Shares is
B-6
based, in whole or in part, upon the performance of the Company's shares or any
aspect of the Company's operations, such performance shall be measured over a
period of no less than one year from the grant of such Award.
11. ADJUSTMENTS UPON CERTAIN EVENTS
Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to all Awards granted under the Plan:
(a) GENERALLY. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or
split, reorganization, recapitalization, merger, consolidation,
spin-off, combination, combination or transaction or exchange of
Shares or other corporate exchange, or any distribution to
shareholders of Shares other than regular cash dividends or any
transaction similar to the foregoing, the Committee in its sole
discretion and without liability to any person may make such
substitution or adjustment, if any, as it deems to be equitable,
as to (i) the number or kind of Shares or other securities issued
or reserved for issuance pursuant to the Plan or pursuant to
outstanding Awards, (ii) the maximum number of Shares for which
Awards (including limits established for Restricted Stock or
Other Stock-Based Awards) may be granted during a calendar year
to any Participant, (iii) the Exercise Price or exercise price of
any Stock Appreciation Right and/or (iv) any other affected terms
of such Awards.
(b) CHANGE IN CONTROL. In the event of a Change in Control after the
Effective Date, the Committee may, but shall not be obligated to,
(i) accelerate, vest or cause the restrictions to lapse with
respect to, all or any portion of an Award or (ii) cancel Awards
for fair value (as determined in the sole discretion of the
Committee) which, in the case of Options and Stock Appreciation
Rights, may equal the excess, if any, of value of the
consideration to be paid in the Change in Control transaction to
holders of the same number of Shares subject to such Options or
Stock Appreciation Rights (or, if no consideration is paid in any
such transaction, the Fair Market Value of the Shares subject to
such Options or Stock Appreciation Rights) over the aggregate
exercise price of such Options or Stock Appreciation Rights or
(iii) provide for the issuance of substitute Awards that will
substantially preserve the otherwise applicable terms of any
affected Awards previously granted hereunder as determined by the
Committee in its sole discretion or (iv) provide that for a
period of at least 30 days prior to the Change in Control, such
Options or Stock Appreciation Rights shall be exercisable as to
all Shares subject thereto and that upon the occurrence of the
Change in Control, such Options or Stock Appreciation Rights
shall terminate and be of no further force and effect.
12. NO RIGHT TO EMPLOYMENT OR AWARDS
The granting of an Award under the Plan shall impose no obligation on
the Company or any Affiliate to continue the employment of a Participant and
shall not lessen or affect the Company's or Subsidiary's right to terminate the
employment of such Participant. No Participant or other person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards. The terms and
conditions of Awards and the Committee's determinations and interpretations with
respect thereto need not be the same with respect to each Participant (whether
or not such Participants are similarly situated).
13. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of the Company
and a Participant, including without limitation, the estate of such Participant
and the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.
B-7
14. NONTRANSFERABILITY OF AWARDS
Unless otherwise determined by the Committee, an Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution. An Award exercisable after the death of a
Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.
15. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made, (a) without the approval of
stockholders of the Company, if such action would (except as is provided in
Section 11 of the Plan), (i) increase the total number of Shares reserved for
the purposes of the Plan or the maximum number of Shares for which Awards may be
granted to any Participant or (ii) materially modify requirements for
participation in the Plan, (b) without the consent of a Participant, if such
action would diminish any of the rights of the Participant under any Award
theretofore granted to such Participant under the Plan or (c) without the
approval of stockholders of the Company (i) to Section 5(b), relating to
repricing of Options or Stock Appreciation Rights, (ii) to Section 6(a),
relating to the exercise price of stock options, or (iii) to Section 10,
relating to vesting of Awards of Shares; provided, however, that the Committee
may amend the Plan in such manner as it deems necessary to permit the granting
of Awards meeting the requirements of the Code or other applicable laws.
16. INTERNATIONAL PARTICIPANTS
With respect to Participants who reside or work outside the United
States of America and who are not (and who are not expected to be) "covered
employees" within the meaning of Section 162(m) of the Code, the Committee may,
in its sole discretion, amend the terms of the Plan or Awards with respect to
such Participants in order to conform such terms with the requirements of local
law or to obtain more favorable tax or other treatment for a Participant, the
Company or an Affiliate.
17. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of Delaware without regard to conflicts of laws.
18. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of the Effective Date.
B-8
Exhibit C
2005 STOCK PLAN FOR DIRECTORS
OF
EMCOR GROUP, INC.
1. PURPOSE. The purpose of this Plan is to enhance the Company's ability
to attract and retain talented individuals to serve as members of the
Board and to promote a greater alignment of interests between members
of the Board and the stockholders of the Company.
2. DEFINITIONS. The following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
(a) "Act" means the Securities Exchange Act of 1934, as amended, or
any successor thereto.
(b) "Award" means Shares that a Director elects to receive in respect
of his annual non-cash retainer as provided herein.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means the occurrence of any of the following
events:
(i) any person or person acting in concert (excluding Company
benefit plans) becomes the beneficial owner of securities
of the Company having at least 25% of the voting power of
the Company's then outstanding securities (unless the event
causing the 25% threshold to be crossed is an acquisition
of voting common securities directly from the Company,
other than upon the conversion of convertible debt
securities or other securities and/or the exercise of
options or warrants); or
(ii) any merger or other business combination involving the
Company, sale of substantially all of the Company's assets
or combination of the foregoing transactions (the
"TRANSACTIONS") other than a Transaction immediately
following which the stockholders of the Company and any
trustee or fiduciary of any Company employee benefit plan
immediately prior to the Transaction own at least 65% of
the voting power, directly or indirectly, of (A) the
surviving Company in any such merger or other business
combination; (B) the purchaser of the Company's assets; or
(C) both the surviving Company and the purchaser in the
event of any combination of Transactions; or
(iii) within any 24-month period, the persons who were directors
immediately before the beginning of such period (the
"INCUMBENT DIRECTORS") shall cease (for any reason other
than death) to constitute at least a majority of the Board
or the board of directors of a successor to the Company.
For this purpose, any director who was not a director at
the beginning of such period shall be deemed to be an
Incumbent Director if such director was elected to the
Board by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified
as Incumbent Directors (so long as such director was not
nominated by a person who has expressed an intent to effect
a Change of Control or engage in a proxy or other control
contest).
(e) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto.
(f) "Company" means EMCOR Group, Inc., a Delaware corporation.
(g) "Distributions" means dividends paid and distributions made in
respect of Unvested Shares prior to the delivery of such Unvested
Shares to the Director.
(h) "Director" means any member of the Board not employed by the
Company or any subsidiary thereof.
(i) "Effective Date" means the date the adoption of the Plan by the
Board is approved by the Company's stockholders.
(j) "Election Date" means the date of election to the Board of a New
Director.
C-1
(k) "Fair Market Value" means, on a given date, (i) if there should
be a public market for the Shares on such date, the average of
the high and low prices of the Shares on the New York Stock
Exchange or, if the Shares are not listed or admitted on any
national securities exchange, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such
date as quoted on the National Association of Securities Dealers
Automated Quotation System (or such market in which such prices
are regularly quoted) (the "NASDAQ"), or, if no sale of Shares
shall have been reported on the New York Stock Exchange or quoted
on the NASDAQ on such date, then the immediately preceding date
on which sales of the Shares have been so reported or quoted
shall be used, and (ii) if there should not be a public market
for the Shares on such date, the Fair Market Value shall be the
value established by the Committee in good faith.
(l) "Issue Date" means the first day of each calendar year commencing
with the 2006 calendar year on which the New York Stock Exchange
is open for trading, except in the case of a New Director, in
which case "Issue Date" means with respect to such New Director,
for the year in which he is first elected a Director, his
Election Date or if such day is not a day on which the New York
Stock Exchange is open for trading the next succeeding day on
which it is open for trading.
(m) "New Director" means a Director who is not serving as a Director
on the first business day of a calendar year but who is elected
to the Board subsequent to such date.
(n) "Plan" means the 2005 Stock Plan for Directors, as amended from
time to time.
(o) "Securities Act" means the Securities Act of 1933, as amended, or
any successor thereto.
(p) "Share" means a share of common stock of the Company, $.01 par
value per share.
(q) "Subsidiary" means a subsidiary corporation, as defined in
Section 424(f) of the Code (or any successor section thereto), of
the Company.
(r) "Unvested Shares" shall have the meaning set forth in Section 5
hereof.
3. PARTICIPANTS. The class of persons who are potential recipients of
Awards issued under the Plan consists of Directors. The Directors to
whom Awards are issued under the Plan and the number of Shares issuable
in respect of Awards shall be determined in accordance with the terms
and conditions of the Plan.
4. SHARES. Subject to the provisions of Section 7, the aggregate number of
Shares that may be issued under the Plan is 26,000 Shares, all of which
may be either treasury shares or unissued shares. If any Unvested
Shares are forfeited by a Director and returned to the Company for any
reason, that number of shares will no longer be charged against the
limitation provided for herein and may again be subject to Awards.
5. ELECTION OF AN AWARD. Each Director who is to serve as a Director as of
the first business day of a calendar year (commencing with 2006) may
elect, prior to the commencement of such calendar year, to be granted
an Award in respect of his annual non-cash $40,000 retainer equal to
the whole number of Shares determined by dividing $40,000 by the Fair
Market Value of a Share on the applicable Issue Date and increasing
such resulting number by 20%; such election shall be made in writing
and delivered to the Secretary of the Company or his designee no later
than the last day of the calendar year immediately preceding the
calendar year in respect of which the election is made. With respect to
each Award, one-half of such Shares shall be delivered promptly to the
Director and one-half of such shares ("Unvested Shares") shall be
registered in the Director's name but held by the Company, together
with Distributions. However, each New Director may elect, with respect
to the first calendar year in which he is elected a director of the
Company, on or prior to his Election Date, to be granted an Award, in
respect of a pro rata portion of his annual non-cash $40,000 retainer,
equal to the whole number of Shares determined by dividing such pro
rata portion of his $40,000 non-cash retainer by the Fair Market Value
of a Share on the Issue Date and increasing such resulting number by
20%; such election shall be made in writing and delivered to the
Secretary of the Company or his designee on or before the Election Date
of such New Director. With respect to such Award, one-half of such
Shares shall be delivered promptly to the New Director and one-half
shall be Unvested Shares.
C-2
6. VESTING AND FORFEITURE OF UNVESTED SHARES; RECEIPT OF SHARES. Unvested
Shares issued in the name of a Director shall vest and be delivered to
him on the first anniversary of the Issue Date. Upon termination of a
Director's Board service prior to a Change of Control, any of his/her
Unvested Shares, together with any Distributions thereon, that have not
yet vested shall be forfeited and retained by the Company and the
Director shall have no right to receive such Unvested Shares or any
Distributions. Following vesting of Unvested Shares, such Unvested
Shares and Distributions shall no longer be forfeitable.
7. ADJUSTMENT UPON CERTAIN EVENTS. Notwithstanding any provision in the
Plan to the contrary, in the event of any change in the outstanding
Shares after the Effective Date by reason of any Share dividend or
split, reorganization, recapitalization, merger, consolidation,
spin-off, combination or exchange of Shares or other corporate
exchange, or any distribution to stockholders of Shares other than
regular cash dividend or any transaction similar to the foregoing, the
Board in its sole discretion and without liability to any person may
make such substitution or adjustment, if any, as it deems to be
equitable, as to the number or kind of Shares or other securities
reserved for issuance pursuant to the Plan.
8. CHANGE OF CONTROL. Notwithstanding anything contained herein to the
contrary, except as otherwise provided in Section 9, promptly following
a Change of Control, all Unvested Shares and Distributions shall vest
and the Company shall deliver such Unvested Shares and Distributions to
a Director free of all restrictions.
9. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACT. The Company may
postpone the issuance and/or delivery of Shares pursuant hereto until
the completion of such registration or other qualification of such
Shares under any State or Federal law, rule or regulation as the
Company shall determine to be necessary or advisable. Any Director to
receive Shares pursuant hereto shall make such representations and
furnish such information as may, in the opinion of counsel for the
Company, be appropriate to permit the Company, in the light of the then
existence or non-existence with respect to such Shares of an effective
Registration Statement under the Securities Act, to issue the Shares in
compliance with the provisions of the Securities Act or any comparable
act. The Company shall have the right, in its sole discretion, to
legend any Shares or may issue stop transfer orders in respect thereof.
10. TRANSFERABILITY. Unless otherwise determined by the Board, Unvested
Shares prior to vesting and all other rights hereunder shall not be
transferable or assignable by a Director otherwise than by will or by
the laws of descent and distribution.
11. NO RIGHT TO SERVICE. Nothing contained herein shall be construed to
confer on any Director any right to continue to serve as a Director of
the Company and shall not lessen or affect the Board's or stockholders'
right to remove such Director.
12. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors and
assigns of the Company and a Director, including without limitation,
the estate of such Director and the executor, administrator or trustee
of such estate, or any receiver or trustee in bankruptcy or
representative of the Director's creditors.
13. AMENDMENTS OR TERMINATION. Except as hereinafter provided, the Board
may at any time terminate or from time to time amend the Plan as it
relates to any Shares not theretofore issued, and the Board, with the
consent of the affected holder of Shares, may at any time withdraw or
from time to time amend the Plan as it relates to any outstanding
Shares; provided, however, that any amendment by the Board which would
increase the number of Shares issuable under the Plan, change the class
of persons eligible to participate in the Plan or materially increase
the benefits to participants in the Plan shall be subject to the
approval of the stockholders of the Company.
The Plan is intended to comply with Rule 16b-3 under the Exchange Act.
Any provision inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.
14. EFFECTIVENESS OF THE PLAN. The Plan shall be effective as of the
Effective Date.
C-3
15. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to
conflicts of laws.
16. LIMITATION. No Shares may be granted under the Plan after the tenth
anniversary of the Effective Date.
C-4
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EMCOR GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS JUNE 16, 2005
The undersigned hereby appoints Frank T. MacInnis, Sheldon I. Cammaker and
Leicle E. Chesser, and each of them, with full power to act without the other
and with full power of substitution, as proxies to represent and to vote, as
directed herein, all shares the undersigned is entitled to vote at the annual
meeting of the stockholders of EMCOR Group, Inc. to be held in the Central Park
Room, The Drake Swissotel, 440 Park Avenue, New York, New York on Thursday, June
16, 2005 at 10:00 A.M. (local time), and all adjournments thereof.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
UNLESS OTHERWISE MARKED, THE PROXIES ARE APPOINTED WITH AUTHORITY TO VOTE
"FOR" ALL NOMINEES FOR ELECTION, "FOR" THE 2005 MANAGEMENT STOCK INCENTIVE PLAN,
"FOR" THE 2005 STOCK PLAN FOR DIRECTORS AND ~FOR~ THE APPOINTMENT OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS.
(Continued and to be signed on the reverse side.)
EMCOR GROUP, INC.
P.O. BOX 11343
NEW YORK, N.Y. 10203-0343
--------------------------------------------------------------------------------
^ DETACH PROXY CARD HERE ^
--------------------------------------------------------------------------------
SIGN, DATE AND RETURN THE PROXY [X[
CARD PROMPTLY USING THE VOTES MUST BE INDICATED (X)
ENCLOSED ENVELOPE. IN BLACK OR BLUE INK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1, AND "FOR"
ITEMS 2, 3 AND 4.
1. Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote for [ ] *EXCEPTIONS [ ]
listed below all nominees listed below
Nominees: F. MacInnis, S. Bershad, D. Brown, L. Bump, A. Fried, R. Hamm, M.
Yonker
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions ___________________________________________________________________
FOR AGAINST ABSTAIN
2. Approval of 2005 Management [ ] [ ] [ ]
Stock Incentive Plan.
3. Approval of 2005 Stock Plan [ ] [ ] [ ]
for Directors.
4. Appointment of Ernst & Young [ ] [ ] [ ]
LLP as Independent Auditors.
To change your address, please mark this box. [ ]
To include any comments, please mark this box. [ ]
In their discretion to vote upon other matters that may properly come before the
meeting. Please sign exactly as your name appears to the left.
When signing as attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder should sign.
_____________________________________ _________________________
Date Share Owner sign here Co-Owner sign here
--------------------------------------------------------------------------------
4908