SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
DAMES & MOORE, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[LOGO]
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Dames & Moore, Inc. on August 11, 1997, beginning at 11:00 a.m., at the Sheraton
Grande Hotel Los Angeles, 333 South Figueroa Street, Los Angeles, California
90071.
Details of business to be conducted at the annual meeting are provided in
the enclosed Notice of Annual Meeting of Shareholders and Proxy Statement. Also
enclosed for your information is a copy of our Annual Report to Shareholders for
1997.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, REGARDLESS
OF THE SIZE OF YOUR HOLDINGS. THEREFORE, PLEASE COMPLETE AND RETURN THE ENCLOSED
PROXY CARD AS SOON AS POSSIBLE.
We hope you can attend the meeting. If you plan to do so and are a
shareholder of record, please indicate that you plan to attend the meeting on
the space provided on your proxy card.
Very truly yours,
[SIG]
George D. Leal
Chairman of the Board
June 24, 1997
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD.
DAMES & MOORE, INC.
911 WILSHIRE BOULEVARD, SUITE 700
LOS ANGELES, CALIFORNIA 90017
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 11, 1997
The Annual Meeting of the Shareholders of Dames & Moore, Inc., a Delaware
corporation (the "Company"), will be held on August 11, 1997, beginning at 11:00
a.m., at the Sheraton Grande Hotel Los Angeles, 333 South Figueroa Street, Los
Angeles, California 90071 for the following purposes:
1. To elect a Board of Directors of ten members.
2. To approve an amendment of the Company's Restated Certificate of
Incorporation to change the Company's name to Dames & Moore Group.
3. To approve an amendment of the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of preferred
stock and common stock.
4. To approve an amendment of the Company's Restated Certificate of
Incorporation to provide that the Board of Directors shall consist of not
less than eight nor more than twelve directors, with the exact number of
directors to be determined from time to time by the Board of Directors.
5. To approve an amendment of the Company's Restated Certificate of
Incorporation to eliminate the requirement of a supermajority vote by
shareholders.
6. To consider and transact such other business as may properly come before
the meeting or at any adjournment thereof.
The Board of Directors has fixed the close of business on June 13, 1997 as
the record date for determining those shareholders entitled to notice of, and to
vote at, the meeting and at any adjournment thereof.
By Order of the Board of Directors,
[SIG]
Mark A. Snell
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
June 24, 1997
Los Angeles, California
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE SO THAT YOUR SHARES
WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH YOUR INSTRUCTIONS.
DAMES & MOORE, INC.
911 WILSHIRE BOULEVARD, SUITE 700
LOS ANGELES, CALIFORNIA 90017
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 11, 1997
This Proxy Statement and the accompanying form of proxy are being mailed to
shareholders on or about June 24, 1997 in connection with the solicitation by
the Board of Directors of Dames & Moore, Inc., a Delaware corporation (the
"Company"), of proxies for use at the Annual Meeting of Shareholders of the
Company on August 11, 1997, and at any adjournment thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting.
Although the principal solicitation of proxies is being made through this
Proxy Statement, proxies may also be solicited personally, by telephone or by
mail by directors, officers or employees of the Company. Such persons will not
receive any additional compensation for their solicitation services. The Company
will pay the entire expense of preparing, printing and mailing proxy
solicitation material on behalf of the Board of Directors, including amounts
paid in reimbursement to banks, brokerage firms and others for their expenses in
forwarding soliciting material to beneficial owners of shares of the Company's
common stock, $0.01 par value ("Common Stock").
VOTING SECURITIES
The Board of Directors has fixed the close of business on June 13, 1997 as
the record date for determining those shareholders entitled to notice of, and to
vote at, the annual meeting and at any adjournment thereof. As of June 13, 1997,
there were 18,041,348 shares of Common Stock issued and outstanding and entitled
to vote at the annual meeting. The Company has no other voting securities
outstanding. Each shareholder of record is entitled to one vote per share owned
on all matters submitted to a vote of shareholders except that, as described in
more detail below, each shareholder is entitled to cumulate his or her votes in
electing directors.
Shares represented by duly executed and dated proxies in the accompanying
form and received before the annual meeting will be voted at the annual meeting.
Where a shareholder specifies a choice on the proxy with respect to any matter
to be acted upon, the shares will be voted accordingly by the proxy holders
named in the proxy. Where no choice is specified, the shares represented by the
proxy will be voted as described in this Proxy Statement with respect to the
election of directors, in favor of the other proposals described in this Proxy
Statement and in accordance with the best judgment of the proxy holders with
respect to any other business that properly comes before the annual meeting.
A shareholder has the power to revoke a proxy at any time before it is
exercised by filing with the Secretary of the Company either an instrument
revoking the proxy or a duly executed proxy bearing a later date. A proxy may
also be revoked by a shareholder who is present at the annual meeting and who
expresses a desire to vote in person.
A majority of the Company's outstanding shares of Common Stock as of June
13, 1997, represented in person or by proxy, will constitute a quorum for the
transaction of business at the annual meeting. The ten director nominees who
receive the greatest number of affirmative votes will be elected as directors of
the Company. Approval of each of the other four proposals described in this
Proxy Statement requires the affirmative vote of the holders of at least
two-thirds of the Company's outstanding shares of Common Stock.
1
Abstentions on any particular matter will be counted as present for purposes
of determining the existence of a quorum. If a broker indicates on the proxy
that it does not have discretionary authority to vote certain shares on a
particular matter (a broker non-vote), those shares will be counted as present
for purposes of determining the existence of a quorum. Neither abstentions nor
broker non-votes with respect to any specified matter will be treated as having
been voted on the matter.
PROPOSAL 1
ELECTION OF DIRECTORS
VOTING PROCEDURES
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall consist of not less than ten nor more than fifteen
directors, the exact number of directors to be determined from time to time by
resolution adopted by the directors then in office. The Board of Directors has
set the authorized number of directors at ten. Accordingly, ten directors are to
be elected at the annual meeting, each to hold office until the next annual
meeting of shareholders and the election and qualification of a successor or the
director's earlier death, resignation or removal.
Because cumulative voting is permitted in the election of the Company's
directors, each shareholder, in person or by proxy, is entitled to cast a number
of votes equal to the number of shares of Common Stock standing in such
shareholder's name as of June 13, 1997, multiplied by the number of directors to
be elected (in this case, ten). A shareholder is entitled to cast all such votes
for a single nominee for director or for any two or more nominees in such
proportion as the shareholder may decide.
If a shareholder desires to cumulate his or her votes, the accompanying
proxy should be marked to indicate clearly that the shareholder desires to
exercise the right to cumulate votes and to specify how the votes are to be
allocated among the nominees for directors. For example, a shareholder may write
next to the name of the nominee or nominees for whom the shareholder desires to
cast votes the number of votes to be cast for such nominee or nominees.
Alternatively, without exercising his or her right to vote cumulatively, a
shareholder may instruct the proxy holders not to vote for one or more nominees
by striking a line through the name(s) of such nominee or nominees.
The Board of Directors recommends that shareholders grant proxies to vote
for all ten of the nominees for directors listed below. In order to permit the
election of as many as possible of the following nominees, the Board of
Directors also recommends that shareholders do not cast their votes on a
cumulative basis. Unless marked otherwise, proxies will be voted by the proxy
holders in such a manner as to elect all or as many of the following nominees as
possible. Unless marked otherwise, proxies will give the proxy holders
discretionary authority to cumulate votes if they so choose and to allocate
votes among the nominees in such a manner as they determine is necessary in
order to elect all or as many of such nominees as possible.
If any of the nominees listed below refuses or is unable to serve as a
director, the proxy holders will vote for a substitute nominee or nominees
recommended by the Board of Directors. Each of the following nominees has agreed
to serve if elected, and the Board of Directors has no reason to believe that
any of such nominees will be unwilling or unable to serve if elected as a
director.
2
NOMINEES TO THE BOARD OF DIRECTORS
The following persons have been nominated for election as directors at the
1997 annual meeting:
NAME AGE CURRENT POSITION WITH THE COMPANY
- - ----------------- --- -----------------------------------------------
Ursula M. Burns 39 Nominee for Director
Robert F. Clarke 55 Nominee for Director
Arthur C. Darrow 53 Chief Executive Officer, President and Director
Gary R. Krieger 46 Vice President and Nominee for Director
George D. Leal 63 Chairman of the Board
A. Ewan Macdonald 55 Nominee for Director
Anthony R. Moore 51 Director
Michael R. Peevey 59 Director
Harald Peipers 69 Director
Robert M. Perry 65 Executive Vice President and Director
Ursula M. Burns is Vice President and General Manager, Departmental Copier
Unit within the Office Document Products Group of Xerox Corporation. Prior to
her assignment to this position in 1997, Ms. Burns served as Vice President of
three other Xerox business groups from 1992 to 1996, as Executive Assistant to
the Chairman and Chief Executive Officer of Xerox Corporation from 1991 to 1992
and in various other positions with Xerox Corporation from 1982 to 1991. Ms.
Burns has bachelor's and master's degrees in mechanical engineering from
Polytechnic Institute of New York and Columbia University, respectively.
Robert F. Clarke is President and Chief Executive Officer and a director of
Hawaiian Electric Industries, the parent company of Hawaiian Electric Company
and other non-utility subsidiaries. Prior to his election as President and Chief
Executive Officer in 1991, he served as Group Vice President from 1988 to 1990
and as Vice President of Strategic Planning from 1987 to 1988. He has a
bachelor's degree in economics and a master's degree in business administration
from the University of California, Berkeley.
Arthur C. Darrow has been employed by the Company since 1973. He has served
as a director since 1994 and as Chief Executive Officer and President since
1995. Between 1993 and 1994, he served as President and Chief Operating Officer;
between 1991 and 1993, as Senior Vice President -- Western North America
Division; and between 1988 and 1991, as the Company's Western Region General
Manager and Division Manager -- Western North America. Mr. Darrow has bachelor's
and master's degrees in geology from the University of California, Santa
Barbara.
Gary R. Krieger has been employed by the Company since 1988 as Corporate
Head of Health & Safety and has served as Vice President and Manager of Health
Consulting Services since 1991. He has a bachelor's degree in English literature
and chemistry and a medical degree from the University of North Carolina, Chapel
Hill; and a master's degree in public health from Johns Hopkins University. Dr.
Krieger completed a residency in internal medicine at the Mayo Clinic.
George D. Leal has been employed by the Company since 1959. He has served as
Chairman of the Board since 1981, and served as Chief Executive Officer from
1981 through 1994. He is a director of BW/ IP, Inc. Mr. Leal has bachelor's and
master's degrees in civil engineering from Santa Clara University and the
California Institute of Technology, respectively, and a master's degree in
business administration from the University of Chicago.
A. Ewan Macdonald retired as Chairman and Chief Executive Officer of Del
Monte Foods, a consumer products company, in 1994. He served as the Chairman and
Chief Executive Officer of Del Monte Foods from 1990 to 1994, as President and
Chief Executive Officer from 1987 to 1990 and as
3
Marketing Director from 1985 to 1987. He has a master's degree in economics from
the University of Edinburgh, Scotland.
Anthony R. Moore has been Chairman, Corporate Finance at BZW, the investment
banking division of the Barclays Group, since 1996. He served previously as
Chief Executive of Investment Banking Services at BZW from 1994 to 1996, as a
Member of the Board of Bankers Trust International from 1992 to 1994 and as a
Member of the Management Committee of County NatWest Limited from 1991 to 1992.
Mr. Moore has served as a director of the Company since 1995. From 1983 to 1991,
Mr. Moore served in a number of senior positions for Goldman Sachs & Co. He
attended Worthing College and has a bachelor's degree from the University of
Exeter, United Kingdom.
Michael R. Peevey has served as President of New Energy Ventures, Inc. since
1995. He retired in 1993 as President and a director of Edison International,
Inc. and its subsidiary, Southern California Edison Company, a position he
accepted in 1990. He was an Executive Vice President of these companies from
1985 to 1990. He has served as a director of the Company since 1993, and he is
also a director of Electro Rent Corporation, Amerigon Incorporated and Ocal,
Inc. Mr. Peevey has bachelor's and master's degrees in economics from the
University of California, Berkeley.
Harald Peipers has served as a director of the Company since 1985. Dr.
Peipers is an Attorney-at-Law in Essen, Germany. He served as a member of the
Board of Executive Directors of Hochtief Aktiengesellschaft vorm. Gebr. Helfmann
("Hochtief AG"), a German corporation engaged in civil engineering and
construction, between 1975 and 1994. He has a doctorate degree in law from the
University of Heidelberg, is a director of Keller Group plc, and is Vice
Chairman of the Board of Directors of Athens International Airport S.A.
Robert M. Perry has been employed by the Company since 1955. He has served
as a director since 1981, and as an Executive Vice President since 1991. Between
1978 and 1995, he served as Chief Financial Officer. He has a bachelor of
science degree in civil engineering from the University of Michigan.
John P. Trudinger and Richard C. Tucker, who currently serve as directors,
are not nominees for reelection. Their service as directors will terminate upon
the election of ten directors at the annual meeting.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The business of the Company is managed by and under the direction of the
Board of Directors as provided by the laws of Delaware, the Company's state of
incorporation. During the fiscal year ended March 28, 1997, the Board of
Directors met five times. Each current director attended more than 75 percent of
the aggregate number of meetings of the Board of Directors held during the
period for which he was a director and meetings of the committees of the Board
held during the periods he served on such committees.
The Audit Committee of the Board of Directors reviews the scope of the
independent public auditors' examination and related fees, the accounting
principles applied by the Company in financial reporting, the scope of internal
auditing procedures and the adequacy of internal controls. Michael R. Peevey
currently is the Chairman and sole member of the Audit Committee, although
Norman A. Barkeley also served on the Audit Committee prior to his resignation
in May 1997. The committee met three times during the 1997 fiscal year.
The Compensation Committee administers the Company's Long-Term Incentive
Plan. The Compensation Committee also establishes the salary and bonus of the
Company's Chief Executive Officer and approves the salaries and bonuses of the
Company's other executive officers. The Compensation Committee's report on
Executive Compensation is contained in a subsequent section of this Proxy
Statement. Michael R. Peevey (Chairman) and Anthony R. Moore are the members of
the Compensation Committee. The Compensation Committee met four times during the
1997 fiscal year.
4
The Executive Action Committee of the Board of Directors is permitted to
approve certain contracts and to take various other specified actions on behalf
of the Board of Directors between meetings of the Board. The members of the
Executive Action Committee are George D. Leal, Robert M. Perry, Arthur C. Darrow
and Richard C. Tucker. The Executive Action Committee did not hold any meetings
during the 1997 fiscal year.
The Board of Directors is responsible for the nomination of candidates for
election as directors. In March 1995, the Board appointed a Nominating Committee
to establish criteria for desired qualifications of director candidates,
evaluate and recommend qualified candidates for nomination, and recommend
directors for membership on the various Board committees. Recommendations of the
Nominating Committee are subject to the approval of the Board of Directors. The
members of the Nominating Committee are Anthony R. Moore (Chairman), Michael R.
Peevey and Richard C. Tucker. The Nominating Committee met eight times during
the 1997 fiscal year. In connection with future shareholders' meetings, the
Board of Directors and the Nominating Committee will consider director
nominations recommended by the Company's shareholders but have not established
formal procedures for the submission of such recommendations.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
With respect to each person known by the Company to be the beneficial owner
of more than five percent of its Common Stock, each director and nominee for
director of the Company, each of the executive officers named in the Summary
Compensation Table presented below and all directors and executive officers of
the Company as a group, the following table sets forth the number of shares of
Common Stock beneficially owned as of March 31, 1997 by each such person or
group and the percentage of the outstanding shares of the Company's Common Stock
beneficially owned as of March 31, 1997 by each such person or group. Unless
otherwise indicated, each of the following shareholders has, to the Company's
knowledge, sole voting and investment power with respect to the shares
beneficially owned, except to the extent that such authority is shared by
spouses under applicable law.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS PERCENT OF COMMON STOCK
OF BENEFICIALLY OWNED AS OF
NAME OF BENEFICIAL OWNER MARCH 31, 1997 MARCH 31, 1997
- - --------------------------------------------------------------- ----------------------- ---------------------------
DIRECTORS
Arthur C. Darrow (1)........................................... 278,498 1.5
George D. Leal (2)............................................. 434,151 2.4
Anthony R. Moore............................................... 3,400 *
Michael R. Peevey (3).......................................... 6,666 *
Harald Peipers................................................. 500 *
Robert M. Perry (4)............................................ 372,102 2.1
John P. Trudinger (5).......................................... 135,667 *
Richard C. Tucker (6).......................................... 173,100 *
NOMINEES WHO ARE NOT CURRENTLY DIRECTORS
Ursula M. Burns................................................ 0 0
Robert F. Clarke............................................... 2,000 *
Gary R. Krieger (7)............................................ 16,806 *
A. Ewan Macdonald.............................................. 0 0
NAMED EXECUTIVE OFFICERS NOT INCLUDED ABOVE**
Kevin J. Freeman (8)........................................... 41,577 *
Henry Klehn, Jr. (9)........................................... 403,608 2.2
Peter G. Rowley (10)........................................... 139,998 *
William D. Webb (11)........................................... 175,787 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(15 persons) (12)............................................ 2,299,527 12.7
5
- - ------------------------
* Owns less than 1% of the Company's outstanding shares of Common Stock.
** Mr. Darrow is also a named executive officer.
(1) Information presented for Mr. Darrow includes 173,467 shares owned by the
Darrow Family Trust, of which Mr. Darrow is trustee. Information presented
for Mr. Darrow also includes 24,625 shares that he has the right to acquire
through the exercise of stock options within 60 days.
(2) Information presented for Mr. Leal includes 19,000 shares owned by the
George and Mary Ann Leal Foundation, a charitable non-profit corporation,
and as to which Mr. Leal may be deemed the beneficial owner. Mr. Leal is
President and Chairman of the Board of the foundation and, subject to the
approval and supervision of the foundation's Board of Directors, is
responsible for directing the voting and disposition of these shares. Mr.
Leal has no pecuniary interest in these shares and disclaims beneficial
ownership of them. Information presented for Mr. Leal also includes 28,875
shares that he has the right to acquire through the exercise of stock
options within 60 days.
(3) Information presented for Mr. Peevey includes 1,666 shares that he has the
right to acquire through the exercise of stock options within 60 days.
(4) Information presented for Mr. Perry includes 2,109 shares owned by the
Perry Trusts, of which Mr. Perry is the trustee. Information presented for
Mr. Perry also includes 20,075 shares that he has the right to acquire
through the exercise of stock options within 60 days.
(5) Information presented for Mr. Trudinger includes 10,000 shares owned by
his spouse and as to which Mr. Trudinger may be deemed the beneficial
owner. Mr. Trudinger disclaims beneficial ownership of these shares.
Information presented for Mr. Trudinger also includes 8,090 shares that he
has the right to acquire through the exercise of stock options within 60
days. Mr. Trudinger is not a nominee for reelection as a director.
(6) Information presented for Mr. Tucker includes 19,200 shares that he has
the right to acquire through the exercise of stock options within 60 days.
Mr. Tucker is not a nominee for reelection as a director.
(7) Information presented for Dr. Krieger includes 11,365 shares that he has
the right to acquire through the exercise of stock options within 60 days.
(8) Information presented for Mr. Freeman includes 17,825 shares that he has
the right to acquire through the exercise of stock options within 60 days.
(9) Information presented for Mr. Klehn includes 20,800 shares owned by the
Klehn Family Foundation, a charitable non-profit corporation, and as to
which Mr. Klehn may be deemed the beneficial owner. Mr. Klehn is President
and Chairman of the Board of the Klehn Family Foundation and, subject to
the approval and supervision of the foundation's Board of Directors, is
responsible for directing the voting and disposition of these shares. Mr.
Klehn has no pecuniary interest in these shares and disclaims beneficial
ownership of them. Information presented for Mr. Klehn also includes 22,075
shares that he has the right to acquire through the exercise of stock
options within 60 days.
(10) Information presented for Mr. Rowley includes 8,450 shares that he has the
right to acquire through the exercise of stock options within 60 days.
(11) Information presented for Mr. Webb includes 15,325 shares that he has the
right to acquire through the exercise of stock options within 60 days.
(12) Information presented for the directors and executive officers as a group
includes a total of 195,646 shares that certain of such persons have the
right to acquire through the exercise of stock options within 60 days and
49,800 shares as to which beneficial ownership is disclaimed.
6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and regulations adopted
thereunder require the Company's directors and executive officers and persons
who own more than ten percent of the outstanding shares of the Company's Common
Stock to file with the Securities and Exchange Commission, the New York Stock
Exchange and the Company initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Based
solely upon (a) the Company's review of Forms 3, 4 and 5 (and any amendments
thereto) that were furnished to the Company pursuant to Section 16(a) and
applicable regulations by the foregoing persons and (b) written representations
by such reporting persons, the Company believes that all applicable Section
16(a) filing requirements were complied with on a timely basis by these
reporting persons with respect to the Company's most recent fiscal year, except
that: (1) John P. Trudinger, a director, reported four stock sales on Form 5
which were not previously reported on Form 4 on a timely basis; (2) Michael R.
Peevey, a director, reported on a Form 5 filed with respect to the Company's
1997 fiscal year an option grant that was received during the 1996 fiscal year;
and (3) DM Investors, Inc., a Delaware corporation formerly known as Hochtief,
Inc. ("Hochtief"), Hochtief AG (its parent corporation) and RWE
Aktiengesellschaft (the majority owner of Hochtief AG) did not file a Form 4 on
a timely basis with respect to the sale to the Company of 3,700,000 shares of
Common Stock.
COMPENSATION OF DIRECTORS
The Company pays each of its non-employee directors an annual retainer fee
of $18,000 plus $1,000 per day for each Board meeting or committee meeting
attended by the director. Each non-employee director who chairs a Board
committee receives an additional annual retainer of $3,000 for each committee
chaired. Retainer fees are paid in arrears at fiscal year-end and may be taken
in cash, applied to the purchase of Company stock, or deferred under the terms
of the Dames & Moore, Inc. Deferred Compensation Plan. Meeting fees are payable
currently or may be deferred or applied to the purchase of stock. Non-employee
directors also are reimbursed for actual out-of-pocket travel expenses in
connection with attendance at Board or committee meetings.
Under the terms of the Company's 1995 Stock Option Plan for Non-Employee
Directors, each newly elected non-employee director receives an option grant on
the first business day which follows the date of the conclusion of the annual
meeting to purchase 5,000 shares of Common Stock at an exercise price equal to
100 percent of the fair market value of the stock as of the grant date. Each
continuing non-employee director on subsequent reelection receives an annual
option grant to purchase 1,000 shares of Common Stock on the same date and at
the same exercise price described in the preceding sentence.
Other directors receive no remuneration for serving as directors other than
reimbursement of travel expenses.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows aggregate cash and long-term compensation paid or
accrued for each of the last three fiscal years to the Chief Executive Officer
and the four other most highly compensated executive officers of the Company.
LONG-TERM
COMPENSATION
AWARDS
-------------
SECURITIES
ANNUAL COMPENSATION (1) UNDERLYING
----------------------- OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SARS (#) COMPENSATION ($)(2)
- - ---------------------------- --------- ---------- ----------- ------------- -------------------
Arthur C. Darrow 1997 $ 400,000 $ 0 0 $ 8,724
Chief Executive Officer and 1996 374,712 90,000 0 8,661
President 1995 273,557 95,000 16,000 8,698
Peter G. Rowley 1997 263,000 0 0 0
Senior Vice President 1996 228,243 60,000 0 0
1995 217,157 22,000 5,000 0
Henry Klehn, Jr. 1997 240,000 0 0 8,805
Executive Vice President 1996 209,039 55,000 0 6,858
1995 203,846 52,000 9,500 7,877
Kevin J. Freeman 1997 230,000 0 0 9,313
Senior Vice President 1996 218,077 60,000 0 7,022
1995 203,846 67,000 12,500 8,190
William D. Webb 1997 220,000 0 0 30,879
Senior Vice President 1996 165,000 39,000 6,000 67,721
1995 160,000 30,000 5,000 15,514
- - ------------------------
(1) The dollar value of perquisites and other personal benefits, if any, for
each of the named executive officers was less than the reporting thresholds
established by the Securities and Exchange Commission.
(2) The compensation reported under All Other Compensation includes Company
contributions to the Capital Accumulation Plan, a defined contribution
retirement plan, made during the 1995, 1996 and 1997 fiscal years and
payments to equalize cost-of-living expenses, relocation costs and certain
other expenses related to international assignment. With respect to the 1997
fiscal year: all amounts reported for Messrs. Darrow and Klehn represent
contributions to the Capital Accumulation Plan; the Company paid $750 to Mr.
Freeman with respect to his relocation and contributed $8,563 on his behalf
to the Capital Accumulation Plan; and the Company paid $21,872 to Mr. Webb
with respect to his relocation and contributed $9,007 on his behalf to the
Capital Accumulation Plan.
OPTION/SAR GRANTS DURING THE 1997 FISCAL YEAR
As discussed in the Report of the Compensation Committee on Executive
Compensation, no stock options were awarded to executive officers during the
1997 fiscal year, other than an option granted to a newly hired executive as an
inducement to accept employment with the Company. No stock appreciation rights
("SARs") were granted during the year.
8
AGGREGATED OPTION/SAR EXERCISES DURING THE 1997 FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information with respect to the exercise of
stock options during the fiscal year ended March 28, 1997 by the executive
officers named in the Summary Compensation Table and with respect to unexercised
"in-the-money" stock options outstanding as of March 28, 1997. In-the-money
stock options are options for which the exercise price is less than the market
price of the underlying stock on a particular date. No executive officer or any
other employee of the Company held or exercised any SARs at any time during the
1997 fiscal year.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS HELD AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
SHARES ACQUIRED -------------------------- --------------------------
NAME ON EXERCISE (#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------- ----------------- ----------------- ----------- ------------- ----------- -------------
Arthur C. Darrow 0 0 20,625 14,000 $ 3,500 $ 10,500
Peter G. Rowley 0 0 7,200 4,650 1,094 3,281
Henry Klehn, Jr. 0 0 19,700 9,025 2,078 6,234
Kevin J. Freeman 0 0 14,700 10,750 2,734 8,203
William D. Webb 0 0 12,575 11,250 1,094 13,781
- - ------------------------
(1) These values are based on a price of $12.875 per share, the closing price of
the Common Stock on the New York Stock Exchange on March 28, 1997.
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
On April 1, 1997, the Company and Mr. Darrow entered into an employment
agreement with a term of four years for Mr. Darrow's employment as Chief
Executive Officer and President of the Company. During this period, Mr. Darrow's
annual base salary will not be less than $400,000, unless he agrees to a
reduction, and will be subject to review and potential adjustment to a higher
level no less frequently than annually. During the term of employment, Mr.
Darrow is eligible to receive a cash bonus based upon the Company's achievement
of certain operating and/or financial goals, and he is eligible to participate
in any equity-based incentive compensation plan or program approved by the Board
of Directors. The agreement requires the Company to purchase and maintain term
life insurance in the amount of $3,000,000 on Mr. Darrow's life, with death
benefits payable to beneficiaries designated by him. The agreement also
specifies that Mr. Darrow is required to own directly or through trusts for his
benefit a number of shares of the Company's Common Stock with a fair market
value of at least $1,600,000 or four times his base salary if base salary is
adjusted.
The employment agreement provides that, if Mr. Darrow's employment is
terminated by the Company without cause or by Mr. Darrow for good reason (which
includes assignment of any duties inconsistent with his position, authority or
responsibilities or a failure by the Company to comply with any provisions of
the agreement), he will receive a severance benefit equal to two times the sum
of his base salary and target bonus. Mr. Darrow is eligible for the same
severance benefit if he voluntarily terminates his employment in the thirteenth
month following a change-in-control of the Company. However, if Mr. Darrow's
employment is terminated by the Company within two years after a
change-in-control or if he terminates for good reason within two years after a
change-in-control, he will receive a severance benefit equal to three times the
sum of his base salary and target bonus.
Under the terms of the agreement, a change-in-control is deemed to have
occurred if (a) another individual, entity or group becomes the beneficial owner
of thirty percent or more of the combined voting power of the outstanding
securities of the Company entitled to vote in the election of directors, (b)
current members of the Board of Directors cease to constitute at least
two-thirds of the Board unless individuals becoming directors were approved by
Mr. Darrow and a majority of the directors comprising the incumbent Board, (c)
the Company's shareholders approve a reorganization, merger or consolidation in
9
which the individuals and entities that are beneficial owners of the capital
stock and voting securities of the Company will not beneficially own more than
seventy percent of the capital stock and voting securities of the Company after
the transaction, or (d) there is a complete liquidation or dissolution of the
Company or a sale or other disposition of all or substantially all of the
Company's assets, excluding certain transfers of assets to another corporation
which is controlled by the Company's shareholders.
The Company has not entered into employment agreements, severance agreements
or change-in-control arrangements with any of the other executive officers who
are named in the Summary Compensation Table.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In line with the Company's objective to maximize long-term return to its
shareholders, the Compensation Committee (the "Committee") annually reviews and
adjusts, as required, the compensation of the Company's executive officers. The
Committee believes that maintaining appropriate compensation policies and
programs is an important factor in attracting, motivating and retaining
effective senior executives. A significant portion of each executive's annual
and long-term compensation is linked directly to performance. Moreover, the
Company requires that senior executives and other officers hold significant
stock positions in the Company, thereby making their long-term interests
compatible with those of public shareholders.
In fiscal 1997, the Committee reexamined the compensation policies and
programs available to executive officers. The Committee concluded that the
specific components of the program were appropriate but that total compensation
should more clearly and directly reflect year-to-year improvement in Company
performance and enhancement of shareholder value as the result of improved
performance. Accordingly, the Company's operating plan for fiscal 1997 and the
individual performance targets for the Company's executive officers were set at
levels that, if achieved, would represent substantially improved performance
over fiscal 1996. As a means of further linking compensation to enhancement of
shareholder value, the Committee determined that performance-based incentive
compensation should be paid primarily in restricted stock rather than as a cash
bonus.
With this modification, the compensation program for the Chief Executive
Officer (the "CEO") and other executive officers consists of base salary, annual
incentive compensation awarded primarily in restricted stock and long-term
incentive compensation. A previous requirement for share retention as the basis
for being eligible to receive incentive compensation is in the process of being
replaced by a requirement for specific share ownership by executive officers.
EXECUTIVE OFFICER COMPENSATION
In establishing executive officer compensation levels for fiscal 1997, the
Committee examined compensation paid to executives within the engineering
services industry. The Committee recognized that few engineering firms are
comparable overall to the Company in size, scope of operations and performance
characteristics. Accordingly, several executive compensation surveys were also
examined to obtain corroborating data for firms of comparable size in other
industries. After reviewing these sources of compensation data, the Committee
exercised considerable subjective judgment in establishing executive officer
compensation levels for fiscal 1997.
The Committee judged that the base salary levels of nine of the Company's
ten executive officers, including the CEO, were generally in line with the
median salaries paid to executives holding positions of comparable
responsibility. Salary increases granted by the Committee to nine executive
officers ranged from zero to 15.2 percent, and averaged 6.3 percent. A tenth
executive officer received a salary increase of 33.3 percent upon promotion to
Senior Vice President and assignment as a Division Manager.
10
A significant change was made in the form of annual incentive compensation
awards that will be made available to executive officers. Executive officers'
performance was judged based on measurement of results achieved against
objectives set in the Company's fiscal 1997 operations plan. The aspects of
performance that were evaluated included achieving targets for revenue growth,
improvement in quality of services provided to clients, increases in market
share, human resource development and profitability. Of these factors, the most
heavily weighted were those relating to revenue growth (excluding acquisitions)
and profit. After evaluating performance, the Committee determined that no
incentive compensation should be paid to any executive officer due to the
failure of the Company to meet the operating objectives set at the beginning of
the year.
With one exception, no long-term incentive compensation in the form of
options was awarded to executive officers in fiscal 1997. The one exception
pertains to an award of options granted to a newly hired executive as an
inducement to accept employment with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
At the beginning of fiscal 1997, the Company's net revenue base increased
approximately 12 percent as the result of two acquisitions. In recognition of
the greater scope and complexity of the CEO's responsibilities, the Committee
set the CEO's base salary at $400,000, which represented a salary increase of
5.3 percent. The Committee's judgment was that this salary level was competitive
with salary compensation offered by firms of comparable size both within and
outside the engineering services industry.
In evaluating the CEO's performance for purposes of incentive awards, the
Committee took several factors into account. Among these factors, the following
were considered most relevant: (a) execution of the Company's strategic plan;
(b) meeting planned revenue and profit objectives for fiscal 1997; (c) meeting
personal performance objectives; and (d) enhancement of shareholder value
through stock price appreciation. As previously stated, for the executive
officers as a group, and in spite of the fact that the CEO's performance was
judged satisfactory in other respects, no incentive compensation was awarded to
the CEO due to the Company's failure to meet fiscal 1997 planned profit
objectives.
SHARE OWNERSHIP
Upon the conversion from a limited partnership to a publicly held
corporation in March 1992, the former partners who became officers of the
Company acquired significant holdings of the Company's stock. At that time, the
Board of Directors adopted a policy that encouraged all officers to retain a
substantial percentage of the acquired shares as a means of aligning the
interests of the Company's key management and professional personnel with the
interests of the Company's public shareholders.
With the recent recruitment or promotion of key executives who were not
significant shareholders at the time of the 1992 public offering, the Board of
Directors and the Compensation Committee have concluded that the policy on share
retention should be replaced by a policy which establishes a share ownership
objective that is a function of organizational position and base salary. Meeting
this objective within a prescribed period of time will be a requisite for an
executive officer to participate in the Company's incentive compensation
program. This policy will be developed during fiscal 1998 and will be supported
by the Committee's decision to grant incentives in the form of restricted stock
rather than cash bonuses. However, as the first step in this process, the CEO's
employment contract (summarized in the preceding section of this Proxy
Statement) requires that the CEO own Company stock valued at $1,600,000, or four
times base salary if salary is adjusted.
INTERNAL REVENUE CODE RESTRICTIONS
Effective in 1994, Internal Revenue Code Section 162(m) generally precludes
a publicly held corporation from taking a tax deduction for compensation in
excess of $1,000,000 that is paid to its Chief Executive
11
Officer or any of its four other highest paid executive officers. Certain
performance-based compensation is not subject to the deduction limit if
specified requirements are satisfied.
It is the policy of the Committee that, under ordinary circumstances, the
Company's compensation programs should be structured in a manner that is
designed to comply with the requirements of Section 162(m) and any regulations
promulgated thereunder in order to ensure the full deductibility of all
compensation paid to the Company's executive officers. The Committee will
reexamine its policy with respect to Section 162(m) on an ongoing basis.
COMPENSATION COMMITTEE
Michael R. Peevey, Chairman
Anthony R. Moore
12
STOCK PERFORMANCE GRAPH
The following graph sets forth the Company's cumulative total shareholder
return on its Common Stock as compared to the S&P 500 Index, a peer group of
seven environmental companies (Peer Group 1 in the graph) and a peer group of
three engineering and construction companies (Peer Group 2 in the graph) based
upon an assumed initial investment of $100 in each of the Common Stock, the S&P
500 Index and the two peer groups. The graph covers the period from March 27,
1992 through March 28, 1997 (the last day of the Company's most recent fiscal
year). The stock price performance shown below is not necessarily indicative of
future price performance, and the companies in the peer groups are not
necessarily comparable for any purpose other than the graph.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG DAMES & MOORE, INC., S&P 500
INDEX AND PEER GROUPS(1)(2)
1992 1993 1994 1995 1996 1997
- - ----------------------------------------------------------------------------------------
Dames & Moore 100.00 87.65 91.20 57.73 54.02 63.70
S&P 500 Index 100.00 115.23 116.93 135.13 178.51 213.89
Peer Group 1 100.00 82.68 52.60 44.93 44.57 35.58
Peer Group 2 100.00 89.74 89.32 79.92 101.04 99.05
- - ------------------------
(1) In addition to an assumption of an investment of $100 at the opening of
business on March 27, 1992 in each of the Common Stock, the S&P 500 Index
and the two peer groups, the graph assumes the
13
reinvestment of all dividends. Investment in the peer groups is weighted by
relative market capitalization.
(2) The environmental peer group of publicly held companies (Peer Group 1)
excludes the Company and includes Emcon; Fluor Daniel/GTI; Harding Lawson
Associates, Inc.; ICF Kaiser International, Inc.; International Technology
Corporation; URS Corp.; and Roy F. Weston, Inc. (Class A). The engineering
and construction peer group of publicly held companies (Peer Group 2)
excludes the Company and includes Jacobs Engineering Group, Inc.; Stone &
Webster, Inc.; and Michael Baker Corp. Gilbert Associates, Inc., which was
previously included in the Proxy Statement's peer group of companies, is
excluded from this year's graph since it is no longer in the environmental
business. Greiner Engineering, Inc., which was previously included in the
Proxy Statement's peer group of companies, is excluded from this year's
graph since it was acquired by URS Corporation in 1996. All of the companies
that are included in Peer Groups 1 and 2 (plus Gilbert Associates, Inc. and
Greiner Engineering, Inc.) were included in one peer group in the Company's
Proxy Statement for its 1996 fiscal year. That peer group has been divided
into two peer groups for purposes of this Proxy Statement in order to
illustrate the Company's performance against (a) the environmental companies
that it has traditionally held to be its primary competition since its 1992
initial public offering and (b) the engineering and construction peer group
that has elements similar to some of the Company's recent acquisitions. The
combined peer group against which the Company compared itself in previous
performance graphs had a total cumulative return of (24.3) percent compared
to the Company's return of (36.3) percent.
PROPOSAL 2
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME TO DAMES & MOORE GROUP
On May 27, 1997, the Board of Directors adopted resolutions that approve
certain amendments to the Company's Restated Certificate of Incorporation and
which recommend that the Company's shareholders approve the proposed amendments
at the annual meeting. The proposed amendments are described below in this Proxy
Statement. Each proposed amendment requires the affirmative vote of at least
two-thirds of the Company's outstanding shares of Common Stock and, assuming
such approval is given at the annual meeting, will become effective after the
Company files with the Delaware Secretary of State a certificate that contains
each amendment.
The Board of Directors recommends that shareholders approve an amendment to
the Company's Restated Certificate of Incorporation to change the Company's name
from Dames & Moore, Inc. to Dames & Moore Group. Upon the effectiveness of the
proposed amendment, Article I of the Restated Certificate of Incorporation will
read in its entirety as follows:
Article I
Name
The name of the corporation is Dames & Moore Group (the
"Corporation").
Shareholder approval to change the Company's name from Dames & Moore, Inc.
to Dames & Moore Group is being sought in order to reflect the organization of
the Dames & Moore network of companies. As the parent corporation, the Company's
role is to provide ongoing strategy, vision and systems support, as well as
direct communications with shareholders and the financial community, for the
entire Dames & Moore family of companies. The new name is an outgrowth of the
Company's strategic plan, the mission of which is to make the Dames & Moore
network of companies a preeminent, full-service engineering, consulting and
construction management organization with revenues in excess of $1 billion by
the year 2000. Adding the word "Group" to the Company's name represents the
accumulation of all of the firm's entities and broadens our vision beyond a
one-company perspective. Dames & Moore Group will oversee
14
the aggregate of Dames & Moore's primary and ancillary businesses, or what we
call the Dames & Moore Group of companies.
Following the name change, outstanding shares of Common Stock will continue
to be represented by existing stock certificates. Therefore, shareholders should
not return their certificates to the Company or its transfer agent for the
purpose of having the new name added to the certificates.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED WILL BE VOTED FOR THE PROPOSAL.
PROPOSAL 3
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF PREFERRED STOCK AND COMMON STOCK
The Board of Directors recommends that shareholders approve an amendment to
the Company's Restated Certificate of Incorporation to increase the number of
shares of stock that the Company is authorized to issue to an aggregate of
55,000,000 shares, of which 5,000,000 shares will be Preferred Stock and
50,000,000 shares will be Common Stock. The Restated Certificate of
Incorporation currently provides for 28,000,000 authorized shares, of which
1,000,000 are Preferred Stock and 27,000,000 are Common Stock.
Upon the effectiveness of the proposed amendment, Article IV.A of the
Restated Certificate of Incorporation will read in its entirety as follows:
A. The Corporation is authorized to issue two classes of
shares of capital stock to be designated, respectively, "Preferred
Stock" and "Common Stock." The total number of shares of capital
stock which the Corporation shall have authority to issue is
55,000,000, of which 5,000,000 shares shall be Preferred Stock
with a par value of $0.01 per share and 50,000,000 shares shall be
Common Stock with a par value of $0.01 per share.
The Company's original Certificate of Incorporation, which was filed with
the Delaware Secretary of State on March 7, 1991, provided that the Company had
authority to issue an aggregate of 70,000,000 shares, of which 10,000,000 shares
were Preferred Stock with a par value of $0.01 per share and 60,000,000 shares
were Common Stock with a par value of $0.01 per share. Several months later, the
Company filed an amendment that reduced the number of authorized shares to the
current amount. The purpose of reducing the number of authorized shares was to
achieve a reduction in the annual Delaware franchise tax by authorizing fewer
shares in the Certificate of Incorporation until additional shares were needed
for various corporate purposes.
Since 1991, the Company has made several acquisitions of businesses by using
both cash and stock. As the Company continues to implement its strategic growth
plan in future years, it is anticipated that larger acquisitions are likely to
be primarily stock rather than cash acquisitions. The Company also anticipates
that shares of Common Stock will continue to be issued pursuant to its Amended
and Restated 1991 Long-Term Incentive Plan and its 1995 Stock Option Plan for
Non-Employee Directors. The additional authorized shares for which shareholder
approval is sought may be used by the Company for other purposes, including,
without limitation, the issuance of stock to obtain additional capital or the
issuance of stock in connection with stock dividends, stock splits or other
equity compensation and employee benefit plans that may be adopted in the
future.
The additional authorized shares of Common Stock may also be issued upon the
exercise of stock purchase rights ("Rights") granted in connection with the
shareholder rights plan (the "Rights Plan") that was adopted pursuant to the
Rights Agreement dated as of March 28, 1997 between the Company and ChaseMellon
Shareholder Services LLC. As provided in more detail in the summary of the
Rights Plan that the Company delivered to shareholders on approximately March
28, 1997, the Board of Directors declared a dividend of one Right for each share
of Common Stock that was outstanding on that date.
15
When exercisable, each Right will entitle the holder to purchase one
two-hundredth of a share of Series A Junior Participating Preferred Stock at a
price of $65.00, subject to the adjustment provisions of the Rights Plan. One
Right also will be issued with respect to each share of Common Stock that the
Company issues after March 28, 1997. Approximately 135,000 shares of Preferred
Stock have been reserved for issuance upon exercise of the Rights.
In general, the Rights are not exercisable until after a person or group
acquires 15 percent or more of the Company's outstanding shares of Common Stock
or makes a tender offer for 15 percent or more of such shares. Under certain
circumstances, including the acquisition by a person or group of 15 percent or
more of the Company's outstanding shares of Common Stock, the Rights Plan
permits shareholders (other than the acquiring person or group) to exercise the
Rights by purchasing shares of Common Stock at one-half market value. The Rights
are designed to assure that all shareholders receive fair and equal treatment in
the event of an unsolicited attempt to acquire the Company and to guard against
partial, two-tier or inadequate tender offers and other abusive takeover
tactics, which the Board of Directors believes are not in the best interests of
shareholders.
The added flexibility of having additional authorized shares available for
the purposes described in the preceding paragraphs without the expense and delay
of obtaining shareholder approval at the time of the issuance of additional
shares is now considered by the Board of Directors to far outweigh the cost
savings of maintaining fewer authorized shares. Assuming that the proposed
amendment is approved at the annual meeting, the Board of Directors will be
entitled to authorize the issuance of the additional shares of Common Stock and
Preferred Stock without further approval of the Company's shareholders, subject
to any applicable laws or New York Stock Exchange rules which require
shareholder approval for certain stock issuances. Among other things, the New
York Stock Exchange requires shareholder approval of certain stock issuances to
officers and directors, and in connection with significant acquisitions that
exceed specified amounts.
As of June 13, 1997, of the 27,000,000 authorized shares of Common Stock,
18,041,348 shares were outstanding, 2,251,392 shares were reserved for issuance
under the Amended and Restated 1991 Long-Term Incentive Plan and 50,000 shares
were reserved for issuance under the 1995 Stock Option Plan for Non-Employee
Directors. Thus, 6,657,260 shares of Common Stock were unissued and unreserved
as of that date. As of June 13, 1997, no shares of Preferred Stock were
outstanding although, as described previously, approximately 135,000 shares were
reserved under the Rights Plan.
The Board of Directors will be entitled to determine the dividend rates,
conversion prices, voting rights, redemption prices and other rights, privileges
and preferences of any shares of Preferred Stock that are issued in the future
out of the additional authorized shares for which shareholder approval is
sought. Shareholders do not have preemptive rights with respect to the issuance
of additional shares of Common Stock or Preferred Stock. The issuance of
additional shares of stock could have a dilutive effect on earnings per share
under certain circumstances and on existing shareholders' proportionate
ownership and voting interests in the Company.
The Company does not have any present arrangements, agreements or plans to
issue additional shares of Preferred Stock or Common Stock, except for shares of
Preferred Stock or Common Stock that may be issued upon the exercise of the
Rights and except for shares of Common Stock that may be issued pursuant to (a)
one or more acquisitions that may be negotiated and consummated in the future,
(b) the Amended and Restated 1991 Long-Term Incentive Plan and the 1995 Stock
Option Plan for Non-Employee Directors, and (c) non-employee directors'
elections to receive stock in lieu of retainer or meeting fees.
Under certain circumstances, an increase in the authorized number of shares
of Preferred Stock and Common Stock could have an anti-takeover effect by making
it more difficult for a person or group to obtain control of the Company (and
thereby remove incumbent management) by means of a tender offer, merger or other
transaction. For example, the Company's issuance of additional shares in a
public or private sale, merger or other transaction or pursuant to the exercise
of the Rights would increase the
16
number of outstanding shares and thereby dilute the equity interest and voting
power of a person who is attempting to obtain control of the Company. By
potentially discouraging initiation of an attempt by a third party to gain
control of the Company, the proposed increase in the authorized number of shares
could, under certain circumstances, limit the ability of shareholders to dispose
of their shares at the higher prices that are sometimes available in takeover
attempts or similar transactions.
Other provisions in the Company's current Restated Certificate of
Incorporation and Bylaws which could under certain circumstances have an
anti-takeover effect include (a) a limit on the maximum size of the Board of
Directors, with the exact number of directors within a specified size range to
be determined by the then-current Board, (b) a requirement of the approval of a
majority of all directors in office (rather than a simple majority of the
directors present at a Board meeting) for certain corporate actions, (c) a
requirement that newly created directorships and vacancies on the Board may be
filled only by the directors then in office, (d) a prohibition on shareholder
action by written consent in lieu of a meeting, and (e) a requirement of a
supermajority vote by shareholders in order to amend the Restated Certificate of
Incorporation or Bylaws. As discussed below in this Proxy Statement, the Board
of Directors has proposed that shareholders vote at the annual meeting to
eliminate the supermajority vote requirement.
Notwithstanding the foregoing, the proposal by the Board of Directors to
increase the number of authorized shares of stock is not being made in response
to any effort known by the Board to acquire control of the Company by means of a
merger, accumulation of stock, tender offer, solicitation in opposition to
management or otherwise, and the Board of Directors does not presently intend to
adopt or propose other anti-takeover provisions not described in this Proxy
Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED WILL BE VOTED FOR THE PROPOSAL.
PROPOSAL 4
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO PROVIDE THAT THE BOARD OF DIRECTORS SHALL CONSIST OF
NOT LESS THAN EIGHT NOR MORE THAN TWELVE DIRECTORS
The Board of Directors recommends that shareholders approve an amendment to
the Company's Restated Certificate of Incorporation to provide that the Board of
Directors shall consist of not less than eight nor more than twelve directors,
with the exact number of directors to be determined from time to time by a
majority of the directors then in office. The Restated Certificate of
Incorporation and Bylaws currently provide that the Board of Directors shall
consist of not less than ten nor more than fifteen directors, with the exact
number to be determined by a majority of the directors then in office. The Board
of Directors currently has set the number of directors at ten.
Upon the effectiveness of the proposed amendment, Article V.A of the
Restated Certificate of Incorporation will read in its entirety as follows:
A. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors, which
shall consist of not less than eight nor more than twelve
directors, with the exact number of directors to be determined
from time to time by resolution adopted by the affirmative vote of
a majority of the directors then in office.
The Board of Directors has adopted a conforming amendment to the Bylaws that
will become effective upon the effective date of the proposed amendment to the
Restated Certificate of Incorporation.
The current range in the size of the Board of Directors was included in the
original 1991 Certificate of Incorporation to reflect the ownership of the
Company at that time and the expected change in ownership resulting from the
Company's initial public offering in 1992. Specifically, Board size and
composition were
17
designed to reflect three ownership constituencies: (a) the Company's executive
officers and other officers, who would continue to own a majority of the
Company's stock; (b) Hochtief, which would hold approximately one-sixth of all
outstanding shares; and (c) public shareholders, who would hold approximately
one-fourth of all outstanding shares. Because of the desirability of
representation of each of these shareholder groups on the Board of Directors, a
large Board with flexibility for an increased or decreased number of members was
considered necessary.
Several developments since 1992 have caused the Board of Directors to
conclude that the minimum and maximum size of the Board should be decreased. The
most significant of these developments is that, in November 1996, the Company
repurchased all shares of Common Stock held by Hochtief. This eliminated the
need for representation by Hochtief on the Board of Directors. In addition, the
retirement of some of the Company's officers, along with the transfer of shares
by officers, has reduced insider share ownership to approximately 30 percent of
all outstanding shares.
Finally, the Board of Directors has concluded that a somewhat smaller Board
will be both more efficient and less costly to administer. The Board believes
that the ability to select a smaller Board should facilitate communications and
decision-making. The lower minimum number of directors could help to avoid
having to fill unexpected Board vacancies on short notice in order to meet the
minimum size requirement. If and when a vacancy occurs, the Board will be able
to conduct an organized search for a replacement, thereby preserving the high
quality of the Board. Furthermore, the present maximum of fifteen directors has
never been used by the Company and is unlikely to be used in the future.
Under certain circumstances, a reduction in the maximum size of the Board of
Directors could have an anti-takeover effect by making it more difficult for a
person or group to obtain control of the Company by electing a majority of the
Board. However, the proposal by the Board of Directors to reduce the minimum and
maximum size of the Board is not being made in response to any effort known by
the Board to acquire control of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED WILL BE VOTED FOR THE PROPOSAL.
PROPOSAL 5
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO ELIMINATE THE REQUIREMENT OF A SUPERMAJORITY
VOTE BY SHAREHOLDERS
The Board of Directors recommends that shareholders approve an amendment to
the Company's Restated Certificate of Incorporation to eliminate the requirement
of a supermajority vote by shareholders in order to amend the Restated
Certificate of Incorporation or Bylaws.
Article VIII.B of the Restated Certificate of Incorporation currently
provides that, in addition to the affirmative vote of the Board of Directors,
any provision of the Restated Certificate of Incorporation may be amended or
repealed only by the affirmative vote of the holders of at least two-thirds of
the total voting power of the Company's then-outstanding securities entitled to
vote on the amendment. Article VIII.C of the Restated Certificate of
Incorporation currently provides that the shareholders are entitled to adopt,
amend or repeal any provision of the Bylaws only upon the affirmative vote of
the holders of at least two-thirds of the total voting power of the Company's
then-outstanding securities entitled to vote on the amendment. Article VIII.C
also permits the Board of Directors to adopt, amend or repeal any provision of
the Bylaws upon the approval of a majority of the directors then in office. The
Company's Bylaws contain comparable provisions regarding their adoption,
amendment or repeal.
18
Upon the effectiveness of the proposed amendment to the Restated Certificate
of Incorporation, Article VIII.B will be deleted and Article VIII.C will be
relabeled as Article VIII.B and amended to read in its entirety as follows:
B. The Board of Directors shall have concurrent power with
the stockholders to adopt, amend or repeal the Bylaws of this
Corporation; provided, however, that no provision of the Bylaws
may be adopted, amended or repealed if the effect thereof would be
to modify or permit the circumvention of any provision of this
Certificate of Incorporation. Any adoption, amendment or repeal of
the Bylaws by the Board of Directors shall require the approval of
a majority of the directors then in office. In addition to any
affirmative vote of the holders of any particular class or series
of the capital stock of the Corporation that may be required by
law or otherwise, any adoption, amendment or repeal of any
provision of the Bylaws by the stockholders shall require the
affirmative vote of the holders of a majority of the total voting
power of the then-outstanding securities of the Corporation that
are entitled to vote generally in the election of directors,
voting together as a single class.
The Board of Directors has adopted a conforming amendment to the Bylaws
which will become effective upon the effective date of the proposed amendment to
the Restated Certificate of Incorporation.
After the Restated Certificate of Incorporation is amended in the manner
described above to delete the supermajority shareholder approval provision, the
Delaware General Corporation Law will govern any subsequent amendment of the
Company's Restated Certificate of Incorporation. Under current Delaware law, any
subsequent amendment will require the approval of (a) the Board of Directors and
(b) a majority of the voting power of the Company's then-outstanding securities
entitled to vote in elections of directors. Under certain circumstances, a
separate vote of a class or series of stock is also required to approve an
amendment to a corporation's certificate of incorporation. The Board of
Directors believes that it is unnecessary to summarize Delaware law in the
Restated Certificate of Incorporation and therefore recommends the deletion of
Article VIII.B.
The current supermajority shareholder voting provisions of the Restated
Certificate of Incorporation and Bylaws were included in the original 1991
Certificate of Incorporation. The Company had been a privately held partnership
since its formation in 1938. Its partnership agreement required that any
amendment to that agreement be approved by at least two-thirds of the voting
power of the partnership. Since the former partners would hold approximately 70
percent of the outstanding Common Stock following the Company's conversion to
corporate form and the initial public offering, they required the retention of
this two-thirds approval requirement as a condition for approving the transition
from a partnership to a publicly held corporation.
In November 1996, the Company repurchased all shares of Common Stock held by
Hochtief, a former partner and the Company's largest shareholder. This
repurchase, together with the retirement of some of the Company's former
partners and the transfer of shares by other former partners who currently serve
as officers of the Company, has reduced insider share ownership to approximately
30 percent of all outstanding shares. Since former partners who are still active
in the Company's business no longer own a majority of the Company's outstanding
shares of Common Stock, the Board of Directors believes that the reason for
including a supermajority voting requirement in the Company's charter documents
is no longer present. The Board of Directors believes that the interests of
shareholders can be protected through a simple majority vote requirement and,
accordingly, recommends that shareholders approve the amendment to the Restated
Certificate of Incorporation that is described above.
The elimination of the supermajority voting requirement will facilitate
future amendments of the Restated Certificate of Incorporation since the
approval of only a majority, rather than two-thirds, of the outstanding voting
securities will be required. The Board of Directors believes that this increased
flexibility is in the interests of shareholders. Although it is possible that
the elimination of the supermajority voting
19
requirement could under certain circumstances assist a person or group in
obtaining control of the Company since ownership of only a majority of the
voting securities will be required to amend the Company's charter documents, the
Board of Directors believes that the recently adopted Rights Plan will protect
the Company's shareholders against unfair takeover attempts.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED WILL BE VOTED FOR THE PROPOSAL.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP has been selected as the Company's independent public
accountants for the 1998 fiscal year. It is expected that a representative of
KPMG Peat Marwick LLP will be present at the meeting. Such representative may
make a statement if he or she desires to do so and will be available to respond
to appropriate questions.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no other business to be presented at the
annual meeting. If any other business properly comes before the annual meeting,
it is the intention of the persons named in the accompanying form of proxy or
their substitute(s) to vote on that business in accordance with their best
judgment.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Shareholders of the Company who intend to submit proposals to the Company's
shareholders at the next annual meeting of shareholders must submit such
proposals to the Company no later than February 24, 1998 in order to be included
in the Company's proxy statement and form of proxy relating to that meeting.
Such proposals must also comply with the requirements of the Securities and
Exchange Commission relating to proposals of security holders. Shareholder
proposals should be submitted in writing to the Company's principal executive
offices at: 911 Wilshire Boulevard, Suite 700, Los Angeles, California 90017,
Attention: Corporate Secretary.
By Order of the Board of Directors
[SIG]
Mark A. Snell
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
June 24, 1997
Los Angeles, California
SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING MAY OBTAIN, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED MARCH 28, 1997, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES THERETO, UPON WRITTEN REQUEST TO THE COMPANY AT: 911 WILSHIRE
BOULEVARD, SUITE 700, LOS ANGELES, CALIFORNIA 90017, ATTENTION: INVESTOR
RELATIONS. UPON WRITTEN REQUEST, THE COMPANY WILL ALSO FURNISH TO SUCH
SHAREHOLDERS A COPY OF ANY EXHIBITS TO ITS ANNUAL REPORT ON FORM 10-K FOR A FEE
OF $0.20 PER PAGE, PAYABLE IN ADVANCE. THIS FEE COVERS ONLY THE COMPANY'S
REASONABLE EXPENSES IN FURNISHING SUCH EXHIBITS.
20
[LOGO]
PRINTED ON RECYCLED PAPER
DAMES & MOORE, INC.
PROXY - ANNUAL MEETING OF SHAREHOLDERS - AUGUST 11, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned shareholder hereby appoints George D. Leal and Arthur C. Darrow,
and each of them, as proxies for the undersigned, each with the power to appoint
his substitute, to represent and to vote, as designated on the reverse side of
this proxy, all of the shares of the common stock of Dames & Moore, Inc. (the
"Company") held of record by the undersigned on June 13, 1997 at the annual
meeting of shareholders to be held on August 11, 1997 and at any adjournment
thereof.
The undersigned shareholder hereby revokes any proxy heretofore given to vote at
said meeting and any adjournment thereof. Receipt of the Notice of Annual
Meeting of Shareholders, the Proxy Statement accompanying said Notice and the
Annual Report to Shareholders for the fiscal year ended March 28, 1997 hereby is
acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE PERSONS NOMINATED AS DIRECTORS BY THE BOARD OF DIRECTORS
AND FOR PROPOSALS 2, 3, 4 AND 5 DESCRIBED ON THE REVERSE SIDE OF THIS PROXY.
I plan to attend the meeting. / /
Please mark your votes as indicated in this example. /X/
1. ELECTION OF DIRECTORS
INSTRUCTION: To withhold authority to vote for any individual nominee(s), strike
a line through the name(s) of the nominee(s) in the list below:
FOR all nominees listed (except as marked to the contrary).
Discretionary authority to cumulate votes is granted. / /
WITHHOLD AUTHORITY to vote for all nominees listed. / /
Ursula M. Burns A. Ewan Macdonald
Robert F. Clarke Anthony R. Moore
Arthur C. Darrow Michael R. Peevey
Gary R. Krieger Harald Peipers
George D. Leal Robert M. Perry
2. Proposal to amend the Restated Certificate of Incorporation to change the
Company's name to Dames & Moore Group.
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to amend the Restated Certificate of Incorporation to increase the
number of authorized shares of preferred stock and common stock.
FOR / / AGAINST / / ABSTAIN / /
4. Proposal to amend the Restated Certificate of Incorporation to provide that
the Board of Directors shall consist of not less than eight nor more than
twelve directors, with the exact number of directors to be determined by
the Board of Directors.
FOR / / AGAINST / / ABSTAIN / /
5. Proposal to amend the Restated Certificate of Incorporation to eliminate
the requirement of a supermajority vote by shareholders.
FOR / / AGAINST / / ABSTAIN / /
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE TEN NOMINEES LISTED ABOVE AND
FOR PROPOSALS 2, 3, 4 AND 5.
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Please sign exactly as the name or names appear on this proxy. When shares are
held by joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give your full title as such. If a
corporation, please sign in full corporate name by the President or another
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED: , 1997
----------------------------------
- - ----------------------------------------
(Signature)
- - ----------------------------------------
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
PLEASE MARK INSIDE THE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR
VOTES.
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