UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S) 240.14a-11(c) or (S) 240.14a-12
CH2M HILL Companies, Ltd.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
1999 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Notice of Annual Meeting
General Information....................................................... 1
Item 1--Election of Directors............................................. 3
Corporate Governance...................................................... 5
Committees of the Board............................................... 5
Directors' Compensation............................................... 7
Security Ownership by Directors, Executive Officers and Certain
Significant Shareholders................................................. 8
Report of the Compensation and Work Force Committee....................... 8
Compensation Committee Interlocks and Insider Participation............... 9
Executive Compensation
Summary Compensation Table............................................ 10
Option Grants in the Last Fiscal Year................................. 11
Fiscal Year-End Option Values......................................... 11
1999 Long-Term Incentives............................................. 11
Retirement Plans...................................................... 12
Stock Performance Graph............................................... 13
Certain Relationships and Related Transactions............................ 13
Item 2--Payroll Deduction Stock Purchase Plan............................. 15
Item 3--Appointment of Independent Certified Public Accountant............ 15
Item 4--Other Business.................................................... 15
Section 16 (a) Beneficial Ownership Reporting Compliance.................. 15
Shareholder Proposals for 2001 Annual Meeting............................. 16
CH2M HILL COMPANIES, LTD.
6060 South Willow Drive
Greenwood Village, CO 80111
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- -------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of CH2M
HILL Companies, Ltd. will be held on Monday, May 8, 2000 at 11:00 A.M.
Mountain Daylight Time, at CH2M HILL's headquarters, 6060 South Willow Drive,
Greenwood Village, Colorado for the following purposes:
1. To elect three Directors to serve for a three (3) year term expiring in
2003 until their successors are elected and qualified, and elect another
Director to fulfill the remaining two years of the term vacated by a
deceased member of the Board.
2. To ratify the Payroll Deduction Stock Purchase Plan ("PDSPP"). The PDSPP
is intended to attract, retain and motivate employees of CH2M HILL and
CH2M HILL subsidiaries by providing such employees with means to acquire
an ownership interest in CH2M HILL's common stock at a discount.
3. To ratify the appointment of Arthur Andersen LLP as the independent
certified public accountants of CH2M HILL for the fiscal year ending
December 31, 2000.
4. To transact any other business which may properly come before the meeting
at the time and place scheduled or, should the meeting be adjourned, at
such time and place as it may be resumed.
Only shareholders of record at the close of business on March 31, 2000 will
be entitled to vote at this meeting or at any postponements or adjournments
thereof.
Your proxy is very important. You may vote your shares by completing and
returning the accompanying proxy card or by voting electronically via the
Internet or by telephone. Please see the accompanying instructions for more
details on electronic and telephonic voting. The proxy is revocable at any
time prior to its use and the giving of your proxy will not affect your right
to vote the shares you hold in your name if you decide to attend and vote at
the meeting.
This notice is given pursuant to direction of the Board of Directors.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Samuel H. Iapalucci
Samuel H. Iapalucci
Chief Financial Officer and
Corporate Secretary
Greenwood Village, Colorado
CH2M HILL COMPANIES, LTD.
6060 South Willow Drive
Greenwood Village, Colorado 80111
- -------------------------------------------------------------------------------
PROXY STATEMENT
- -------------------------------------------------------------------------------
General Information
This proxy statement is being furnished to shareholders of CH2M HILL
Companies, Ltd. ("CH2M HILL") in connection with the solicitation of proxies
for use at the 2000 Annual Meeting of Shareholders of CH2M HILL to be held on
May 8, 2000, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The record date for
determining shareholders entitled to vote at the 2000 Annual Meeting is March
31, 2000.
This proxy statement and the accompanying materials are being mailed to
shareholders on or about April 5, 2000.
What is the Purpose of the Annual Meeting?
At our annual meeting, shareholders will have the opportunity to act upon
the matters discussed in the accompanying Notice of Annual Meeting of
Shareholders. In addition to customary items such as the election of directors
and ratification of accountants, shareholders are being requested to approve
the Payroll Deduction Stock Purchase Plan. CH2M HILL's management also will
report on CH2M HILL financial results and respond to questions from
shareholders.
What Information Will I Receive?
We have included in this mailing a copy of the 1999 Annual Report to
Shareholders on Form 10-K. The Annual Report includes audited financial
statements for the fiscal year ending December 31, 1999 and other information
about CH2M HILL. The Annual Report is not a part of the Proxy materials and it
is not subject to Federal Securities Regulations 14A or 14C or subject to the
liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
Who Can Attend the Meeting?
All shareholders of record as of March 31, 2000, or their duly appointed
proxies, may attend the meeting.
Who is Entitled to Vote?
Only shareholders of record at the close of business on the record date,
which was March 31, 2000, are entitled to vote at the meeting. Such
shareholders will be able to vote only CH2M HILL shares of common stock that
they held on the record date. Each outstanding share entitles its holder to
cast one vote on each matter to be voted upon.
What Constitutes a Quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to
1
conduct its business. As of the record date, 29,539,260 shares of CH2M HILL's
common stock were outstanding. Proxies received but marked as abstentions will
be included in the calculation of the number of shares considered to be
present at the meeting.
How Do I Vote?
If you are a record holder of CH2M HILL shares as of March 31, 2000 and
complete and properly sign the accompanying proxy card and return it as
instructed on the card, it will be voted as you direct. You may also vote your
shares on the internet at www.proxyvote.com or by using the telephone voting
line at 1-800-690-6903. If you attend the meeting, you may deliver your
completed proxy card in person.
Can I Change My Vote After I Return My Proxy Card?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with the Secretary of CH2M
HILL either a notice of revocation or a duly executed proxy bearing a later
date as long as it is received by the deadline. The powers of the proxy
holders will be suspended if you attend the meeting in person and so request,
although attendance at the meeting will not by itself revoke a previously
granted proxy.
How Do I Vote My Plan Shares?
If you participate in the CH2M HILL Employee Stock Plan, or the CH2M HILL
Retirement and Tax-Deferred Savings Plan ("401(k) Plan"), you have the right,
if you choose, to instruct the trustee of each Plan in which you participate
how to vote the shares of common stock credited to your Plan account as well
as a pro-rata portion of common stock credited to the accounts of other Plan
participants and beneficiaries for which no instructions are received. Your
instructions to the trustee of a Plan should be made by completing and mailing
the instruction card mailed to you with this proxy statement. The trustee of a
Plan will vote your shares in accordance with your duly executed instructions
which must be received by the trustee no later than 5:00 p.m. Mountain
Daylight Time on May 5, 2000. If you do not send instructions regarding the
voting of common stock credited to your Plan account(s), such shares shall be
voted pro rata to the voting instruction of other Plan participants. You may
also revoke previously given instructions by filing with the trustee of a Plan
no later than 5:00 p.m. Mountain Daylight Time on May 5, 2000 either written
notice of revocation or a properly completed and signed voting instruction
bearing a date later than the date of the prior instructions.
How will my proxy be voted?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors as discussed in this proxy
statement. With respect to any other matter that properly comes before the
meeting, the proxy holders will vote as recommended by the Board of Directors
or, if no recommendation is given, in their own discretion.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes and
abstentions. Automatic Data Processing, Inc. has been retained by CH2M HILL to
act as the inspector of election for the meeting.
How are abstentions treated?
A properly executed proxy marked "ABSTAIN," with respect to any matter will
not be voted on that matter, although they will be counted for purposes of
determining whether there is a quorum. Accordingly, an abstention may have the
effect of a negative vote.
2
How will proxies be solicited?
Proxies will be solicited by mail. The cost of solicitation of the proxies
will be paid by CH2M HILL. Officers, directors and regular employees of CH2M
HILL, without additional compensation, also may solicit proxies by further
mailing, by telephone or personal conversations. CH2M HILL has no plans to
retain any firms or otherwise incur any extraordinary expense in connection
with the solicitation.
Item 1. Election of Directors
The bylaws provide that the Board of Directors shall consist of at least
nine and no more than thirteen directors and shall be subject to change
pursuant to resolutions of the Board of Directors. The current number of
directors is eleven. The bylaws provide that the directors shall be elected to
three-year staggered terms by dividing the directors into three classes as
equal in number as possible. At each annual meeting the same number of
directors shall be elected for a three-year term as the number whose term
expires. Each director shall serve until his respective successor is elected
and qualified. A decrease in the number of directors shall not shorten the
term of any incumbent director.
Pursuant to CH2M HILL's bylaws, the Nominating Committee proposes Robert G.
Card, Susan D. King and Ralph R. Peterson for election as directors for three
year terms expiring in 2003 and until their successors are elected and
qualified or their earlier retirement, death, resignation or removal. In
addition, the Nominating Committee recommends that Joseph A. Ahearn be elected
to complete Craig Zeien's remaining term, which expires in 2002. Robert G.
Card, Susan D. King, Ralph R. Peterson and Joseph A. Ahearn will be standing
for election. The four nominees who receive the most votes will be elected as
directors. To the best knowledge of the Board of Directors, all of the
nominees are, and will be, able and willing to serve. In the event that any of
the four nominees listed below should become unavailable to stand for election
at the Annual Meeting, the proxy holders intend to vote for such other person,
if any, as may be designated by the Board of Directors, in the place and stead
of any nominee unable to serve.
Nominees for Election as Directors
Joseph A. Ahearn, 63, has served as a Director of CH2M HILL for one previous
term from May 1996 to April 1999, and as a Senior Vice President since 1995.
Mr. Ahearn has served as President of the Transportation business of CH2M
HILL, Inc. since 1996 and as the Eastern Regional Manager of CH2M HILL, Inc.
from 1994 until 1996.
Robert G. Card, 47, has served on the Board of Directors for two previous
terms from 1992 to 1994 and from 1996 to 1998. Since 1997, Mr. Card has served
as the President of Kaiser-Hill, LLC, the CH2M HILL joint venture company with
Kaiser Group International, Inc. managing the Rocky Flats Project. Kaiser-
Hill, LLC recently signed an extension contract with the U.S. Department of
Energy for the closure of the Rocky Flats site, anticipated to be 2006. Mr.
Card has also served as a Senior Vice President of CH2M HILL since 1995.
Susan D. King, 44, has served as a Director of CH2M HILL since 1997. Ms.
King has served as the Chief Financial Officer of Industrial Design
Corporation since 1993, and as its Secretary and Treasurer since 1995.
Ralph R. Peterson, 55, has served as President and Chief Executive Officer
of CH2M HILL since 1991. Mr. Peterson also serves as a Director of Kaiser-
Hill, LLC and of Standard Insurance Company.
3
The Board of Directors recommends a vote FOR the above nominees for election
as directors.
Continuing Directors
Philip G. Hall, 58, has served as Chairman of the Board of Directors of CH2M
HILL since 1992, and as a director since 1987. Mr. Hall has served as Senior
Vice President of CH2M HILL since 1995, and as its Southwest Regional Manager
since 1997.
James J. Ferris, 56, has served as a Director of CH2M HILL since 1998, and
as a Senior Vice President since 1995. Dr. Ferris has served as President of
the Energy, Environment and Systems business since 1995 and President of CH2M
HILL Constructors, Inc. since 1994. He served as President and Chief Executive
Officer of Ebasco Environmental from 1989 until 1994. Dr. Ferris also serves
as a director of Kaiser-Hill, LLC.
Jerry D. Geist, 65, has served as a Director of CH2M HILL since 1989. Mr.
Geist has been Chairman of Santa Fe Center Enterprises, Inc. since 1990 and
Chief Executive Officer of Howard International Utilities from 1990 through
1999. Mr. Geist is also Chairman and CEO of Energy & Technology Company, Ltd.
and he serves on the Board of Directors of the Davis Family of Mutual Funds.
Michael D. Kennedy, 50, has served as a Director of CH2M HILL since 1998 and
as a Senior Vice President since 1995. Mr. Kennedy served as the Northwest
Regional Manager of CH2M HILL, Inc. from 1993 to 1998. Mr. Kennedy served as
the Portland Regional Manager of CH2M HILL, Inc. from 1987 until 1992 and the
Western Regional Business Development Director from 1992 until 1993.
Michael Y. Marcussen, 47, has served as a Director of CH2M HILL since 1998.
Mr. Marcussen has served as the European Manager for CH2M HILL IDC Industrial
Ltd., Dublin, Ireland since 1997 and has been an employee of Industrial Design
Corporation since 1993.
Jill T. Shapiro Sideman, 60, has served as a Director since 1999 and has
served as a Vice President and Client Service Manager of CH2M HILL, Inc. since
1993.
Barry L. Williams, 55, has served as a Director of CH2M HILL since 1995. He
has been President of Williams Pacific Ventures, Inc., a consulting firm,
since 1987. Mr. Williams has served as Senior Mediator for JAMS/Endispute
since 1993 and a visiting lecturer for the Haas Graduate School of Business,
University of California since 1993. Mr. Williams has acted as a general
partner of WDG, a California limited partnership, since 1987 and a general
partner of Oakland Coliseum Joint Venture since 1998. He also serves on the
board of directors of PG&E, Corp., Northwestern Mutual Life Insurance Company,
Newhall Land & Farming Company, Simpson Manufacturing Company, USA Group,
Inc., R.H. Donnelly & Co. and several not-for-profit organizations.
Other Executive Officers
Kenneth F. Durant, 62, served as a Director of CH2M HILL from May 1995 to
April 1999 and as a Senior Vice President since 1997. Mr. Durant has served as
the President of Industrial Design Corporation, a subsidiary of CH2M HILL,
since its formation in 1985.
Donald S. Evans, 49, served as a Director of CH2M HILL from May 1997 to
April 1999 and as a Senior Vice President since 1997. Mr. Evans has served as
the President of the Water business and the Operations and Maintenance
business since 1985.
Samuel H. Iapalucci, 47, has served as Senior Vice President, Chief
Financial Officer and Secretary of CH2M HILL since 1994.
E. Kent Robinson, 60, has served as a Senior Vice President of CH2M HILL,
Inc. since 1995.
4
CH2M HILL's executive officers are Joseph A. Ahearn, Kenneth F. Durant,
Donald S. Evans, James J. Ferris, Philip G. Hall, Samuel H. Iapalucci, Michael
D. Kennedy, Ralph R. Peterson and E. Kent Robinson.
Corporate Governance
During the year ended December 31, 1999 ("Fiscal 1999"), the Board of
Directors held five meetings. Average attendance at such meetings of the Board
of Directors was 100%. During Fiscal 1999, all Directors attended at least 99%
of the aggregate of the meetings of the Board of Directors and committees of
the Board of Directors on which they served.
Committees of the Board
The Board of Directors has various standing committees, which are discussed
below.
Audit and Finance Committee
The Audit and Finance Committee held four meetings during Fiscal 1999. The
current members are Robert W. Bailey, Ralph F. Cox, Donald S. Evans, Jerry D.
Geist, Philip G. Hall, Susan D. King, Katherine M. Lombardo, Michael Y.
Marcussen, Ralph R. Peterson, Jill T. Shapiro Sideman and Barry L. Williams
(Chairman).
The Audit and Finance Committee is primarily concerned with CH2M HILL's
financial processes and internal control environment. Its responsibilities
include (i) reviewing and evaluating the work and performance of CH2M HILL's
internal auditors and its independent accountants and making recommendations
to the Board of Directors regarding the selection of CH2M HILL's independent
accountants; (ii) conferring with CH2M HILL's independent accountants and its
internal auditors and financial officers to monitor CH2M HILL's internal
accounting methods and procedures and evaluating any recommended changes
therefrom; (iii) reviewing legislative or other business environment change
conditions which could have a noticeable impact on CH2M HILL's financial
controls and future operations; (iv) reviewing all acquisitions and/or
investments that are valued in excess of $0.5 million; (v) reviewing all
capital expenditures with unit costs of $0.5 million or more and monitoring
capital expenditures relative to annual capital plans; and (vi) monitoring
various financial measurement for the Company relative to established
financial policies.
Compensation and Work Force Committee
The Compensation and Work Force Committee held four meetings during Fiscal
1999. The current members are Joseph A. Ahearn, Ralph F. Cox, Kenneth F.
Durant, Donald S. Evans, James J. Ferris, Jerry D. Geist (Chairman), Philip G.
Hall, Ralph R. Peterson and Barry L. Williams. Ralph F. Cox serves as the
consultant to the committee and actively participates in committee meetings on
a regular basis.
The Compensation and Work Force Committee, in addition to other
responsibilities, is responsible for the executive compensation programs,
including the Chief Executive Officer, Chairman of the Board and the executive
officers, and recommending to the Board of Directors the amount of awards to
be made to the Chief Executive Officer, Chairman of the Board, and the
executive officers. The outside compensation consultants who advise the
Committee and management on compensation matters will be selected by the
Committee.
Total compensation for CH2M HILL executive officers consists of salary,
annual cash and stock bonuses and long-term incentives, which include stock
options and a long-term incentive bonus of cash and stock. The annual bonus
and long-term incentives introduce risk to the total executive
5
compensation programs. These compensation plans are variable, may fluctuate
significantly from year to year, and are directly tied to company and
individual performance.
The Committee annually reviews the competitiveness of CH2M HILL's executive
compensation programs within the industries in which it competes--Water,
Environmental, Microelectronics, Transportation, Operations/Maintenance and
Construction. CH2M HILL targets a level of total compensation of its
competitor group for like positions and like performance.
The Committee will review executive compensation in light of Section 162(m)
of the Internal Revenue Code which establishes a limit on the deductibility of
annual compensation for certain executive officers that exceeds $1,000,000. It
is the general intention of the Committee to meet the requirements for
deductibility under Section 162(m); however, the Committee reserves the right,
where merited by changing business conditions or an executive's individual
performance, to authorize compensation payments which may not be fully
deductible by CH2M HILL. The Committee will reexamine this policy on an
ongoing basis.
The Compensation and Work Force Committee is also responsible for issuing
reports required by the Securities and Exchange Commission regarding CH2M
HILL's compensation policies applicable to the Chief Executive Officer and the
four other most highly compensated executive officers.
Executive Committee
The Executive Committee held two meetings during Fiscal 1999. The current
members are Kenneth F. Durant, Jerry D. Geist, Philip G. Hall (Chairman),
Ralph R. Peterson and Barry L. Williams. Ralph F. Cox is a non-voting
participant and consultant to the committee and actively participates in
committee meetings on a regular basis. The Executive Committee, except as
limited by Oregon law, may exercise any of the powers and perform any of the
duties of the Board of Directors if delegated by the Board of Directors.
Nominating Committee
The Nominating Committee held two meetings during Fiscal 1999. The current
members are Kenneth F. Durant, Philip G. Hall (Chairman), Joan M. Miller,
Ralph R. Peterson, and Cliff G. Thompson. The Nominating Committee's
responsibilities include: (i) establishing a procedure for identifying
nominees for election as directors to the Board of Directors; (ii) reviewing
and recommending to the Board of Directors criteria for membership on the
Board and; (iii) proposing nominees to fill vacancies on the Board of
Directors as they occur. CH2M HILL's by-laws provide that shareholders may
nominate directors outside of the Nominating Committee process.
Ownership and Incentive Compensation Committee
The Ownership and Incentive Compensation Committee held four meetings during
Fiscal 1999. The current members are Joseph A. Ahearn, Kenneth F. Durant,
Donald S. Evans, James J. Ferris, Steven D. Guttenplan, Philip G. Hall,
Michael D. Kennedy (Chairman), Susan D. King, Michael Y. Marcussen, Ralph R.
Peterson, Jill T. Shapiro Sideman and Cliff G. Thompson.
The Ownership and Incentive Compensation Committee's responsibilities
include: (i) the development of policies and procedures for the Board of
Directors approval governing the ownership and incentive compensation programs
for CH2M HILL; (ii) monitoring the stock ownership program; (iii) the
utilization of funds for employee incentive plans; (iv) monitoring the long-
term incentive program; (v) monitoring the activities of, and acting on
recommendations from, the Stock Option Management Committee; (vi) acting in
synergy with the Compensation and Work Force Committee to support their
6
approvals of executive compensation; (vii) acting in synergy with the Audit
and Finance Committee, and as an extension of the Board of Directors, to
oversee the application of the policies and procedures; (viii) recommending
Board of Director action as appropriate to achieve CH2M HILL's mission and
goals.
Strategic Planning Group
The Strategic Planning Group held two meetings during Fiscal 1999. The
current members are Joseph A. Ahearn, Keith Alexander, Ralph F. Cox, Kenneth
F. Durant, Donald S. Evans, James J. Ferris, Jerry D. Geist, Philip G. Hall
(Chairman), Samuel H. Iapalucci, Michael D. Kennedy, Susan D. King, Michael Y.
Marcussen, Ralph R. Peterson, E. Kent Robinson, Jill T. Shapiro Sideman and
Barry L. Williams. The Strategic Planning Group's responsibilities include
reviewing the long-range plans of CH2M HILL.
Outside Director Search/Review Committee
The Outside Director Search/Review Committee held five meetings during
Fiscal 1999. The current members are Keith Alexander, James J. Ferris, Jerry
D. Geist, Philip G. Hall (Chairman), Susan D. King, Ralph R. Peterson and
Barry Williams. The Outside Director Search/Review Committee's
responsibilities include seeking qualified candidates for director who are not
employees of CH2M HILL and whose backgrounds and expertise will add valuable
skills and perspectives to the Board of Directors.
Directors' Compensation
Non-employee directors of CH2M HILL receive an annual retainer of $21,000
and an additional $4,000 for each committee on which they serve as the
chairman. CH2M HILL also pays non-employee directors a meeting fee of $1,000
for attendance at each Board of Directors meeting and $1,000 per day for
attendance at committee meetings. Directors are reimbursed for expenses
incurred in connection with attendance at meetings and other CH2M HILL
functions. Non-employee directors are eligible to receive a discretionary cash
bonus, which for 1999 was $12,600.
Security Ownership of Certain Shareholders and Management
The following tables set forth information regarding the ownership of all
classes of CH2M HILL's securities as of March 31, 2000, by (a) any person or
group known to have ownership of more than five percent of the common stock
and (b) beneficial ownership by directors and executive officers individually
and as a group.
Security Ownership of Certain Shareholders
The following table presents information as of March 31, 2000, concerning
the only known shareholder who owns five percent or more of common stock.
Title
of Number of Percent
Name and Address of Shareholder Class Shares Held of Class
- ------------------------------- ------ ------------ --------
Trustees of the CH2M HILL Employee Stock Plan..... Common 10,946,010(1) 37.1%
6060 S. Willow Dr.
Greenwood Village, CO 80111
- --------
(1) Common shares are held of record by the Trustees for the accounts of
participants in the Employee Stock Plan and will be voted in accordance
with instructions received from participants. Shares as to which no
instructions are received will be voted in the same proportions.
7
Security Ownership of Directors, Director Nominees and Executive Officers
The following table sets forth information as of March 31, 2000 as to the
beneficial ownership of CH2M HILL's equity securities by each director,
director nominee, executive officer and by all directors, director nominees,
and executive officers as a group. None of the individuals listed below owns
more than one percent of the outstanding shares of CH2M HILL. As a group, all
directors, director nominees, and executive officers own six percent of the
outstanding shares of CH2M HILL.
Common Total
Stock Common Stock Common
Held Held Stock
Name of Beneficial Owner Directly Indirectly(1) Held
- ------------------------ --------- ------------- ---------
Joseph A. Ahearn............................ 44,002 3,501 47,503
Robert G. Card.............................. 128,300 29,287 157,587
Kenneth F. Durant........................... 250,622 27,733 278,355
Donald S. Evans............................. 194,406 511 194,917
James J. Ferris............................. 73,174 3,158 76,332
Jerry D. Geist.............................. -- -- --
Philip G. Hall.............................. 256,940 32,225 289,165
Samuel H. Iapalucci......................... 77,639 3,077 80,716
Michael D. Kennedy.......................... 76,957 17,793 94,750
Susan D. King............................... 63,778 7,525 71,303
Michael D. Marcussen........................ 13,420 -- 13,420
Ralph R. Peterson........................... 279,515 30,570 310,085
E. Kent Robinson............................ 104,529 16,746 121,275
Jill T. Shapiro Sideman..................... 15,035 5,448 20,483
Barry L. Williams........................... -- -- --
All directors, director nominees, and
executive officers as a group (15 people).. 1,578,317 177,574 1,755,891
- --------
(1) Includes common stock held through the Employee Stock Plan, the 401(k)
Plan, and the deferred compensation plan trusts. Shares are vested, except
for shares held indirectly by Mr. Iapalucci, who indirectly holds 312
unvested shares.
Report Of Compensation and Work Force Committee on Executive Compensation
Since its inception, CH2M HILL has been an employee-owned company. CH2M
HILL's compensation policies, plans and programs are designed to attract,
retain and motivate the Board of Directors and executive officers required to
achieve its business objectives and increase shareholder value. CH2M HILL
seeks to implement this employee ownership philosophy by closely aligning the
financial interest of CH2M HILL's employees, including executive officers,
with the financial interest of its shareholders.
The outside Directors on the Compensation and Work Force Committee have the
responsibility to approve the salaries and incentive compensation for the
executive officers of CH2M HILL and, to recommend to the Board of Directors
the Chief Executive Officer and Chairman of the Board salary and incentive
compensation, including stock options for the executive officers of CH2M HILL.
These determinations are made in light of individual, corporate and business
unit performance, the performance or our competitors and other similar
businesses, and relevant market compensation data.
The compensation policy of CH2M HILL, which is endorsed by the Compensation
and Work Force Committee, is that a substantial portion of the total
compensation of executive officers be related to and contingent upon their
individual contribution and performance, the performance of business units
under their management, and the performance of CH2M HILL as a whole. In this
way, CH2M HILL
8
seeks to encourage continuing focus on increasing CH2M HILL's revenue,
profitability and shareholder value, while at the same time motivating its
executive officers to perform to the fullest extent of their abilities.
CH2M HILL has continued to set the annual salaries of its executive officers
at or below competitive levels and continues to cause a significant portion of
an executive officer's compensation to consist of annual and long term
incentive compensation which are variable and closely tied to corporate,
business unit and individual performance. As a result, much of an executive
officer's total compensation is "at risk" and dependent on performance during
the prior fiscal year.
An executive officer's incentive compensation may consist of cash, fully
vested stock and stock options or a combination of these components.
Generally, an annual bonus and stock options are given after the end of the
fiscal year based on individual, corporate and business unit performance for
such fiscal year and an executive officer's respective responsibilities,
strategic and operational goals and levels of historic and anticipated
performance. By awarding part of the bonuses in stock and stock options, CH2M
HILL seeks to encourage individuals to remain with CH2M HILL and continue to
focus on the long-term performance of CH2M HILL and on increasing shareholder
value. Further, the exercise price of all stock options granted is equal to
the price of the common stock on the date of grant. Therefore, such stock
options only have value to the extent that the price of CH2M HILL's stock
increases during the term of the stock option.
The Compensation and Work Force Committee believes that the compensation
policies, plans and programs CH2M HILL has implemented, and which the
Compensation and Workforce Committee endorses, have encouraged management's
focus on the long-term financial performance of CH2M HILL and have contributed
to achieving CH2M HILL's technical and financial success.
Compensation Committee Interlocks and Insider Participation
The members of CH2M HILL's Compensation and Work Force Committee of the
Board of Directors are Joseph A. Ahearn, Ralph F. Cox, Kenneth F. Durant,
Donald S. Evans, James J. Ferris, Jerry D. Geist, Philip G. Hall and Barry L.
Williams. All members of the Compensation and Work Force Committee except
Ralph F. Cox, Jerry D. Geist and Barry L. Williams are officers of CH2M HILL.
9
EXECUTIVE COMPENSATION
The following table sets forth information regarding annual incentive
compensation for the chief executive officer and the other four most highly
compensated executive officers of CH2M HILL.
Summary Compensation Table(1)
Long-Term
Annual Compensation Compensation
----------------------- ------------
(a) (b) (c) (d) (g) (i)
Securities
Name and principal Underlying All other
position Year Salary(2) Bonus(2) Options compensation(3)
- ------------------ ---- --------- -------- ------------ ---------------
Ralph R. Peterson ....... 1999 $471,435 $290,000 28,350 $ 9,381
President & Chief 1998 471,138 344,802 -- 9,352
Executive Officer 1997 456,715 293,631 -- 18,599
Donald S. Evans ......... 1999 305,219 185,000 24,750 6,998
Senior Vice President 1998 305,654 148,860 -- 6,874
1997 278,640 95,538 -- 6,621
James J. Ferris ......... 1999 302,519 185,000 24,750 7,893
Senior Vice President 1998 278,191 165,400 -- 9,764
1997 256,868 122,264 -- 73,252
Samuel H. Iapalucci ..... 1999 299,645 165,000 24,750 7,013
Senior Vice President, 1998 308,389 190,404 -- 7,147
CFO, Secretary 1997 275,520 148,162 -- 71,880
Philip G. Hall .......... 1999 305,053 110,000 17,780 8,556
Senior Vice President 1998 316,786 128,157 -- 8,112
1997 299,120 175,687 -- 29,285
- --------
(1) Certain columns have been omitted because they are not applicable to CH2M
HILL.
(2) Amounts shown include compensation earned by executive officers, whether
paid during or after such year, or deferred at the election of those
officers.
(3) Amounts shown for 1999 include:
Group Term Life
and Split-
Employee Defined dollar Life
Stock 401(k) Contribution Insurance
Plan Plan Pension Plan Premiums
-------- ------ ------------ ---------------
Ralph R. Peterson........... $1,753 $1,248 $2,400 $3,980
Donald S. Evans............. 1,563 1,248 2,400 1,787
James J. Ferris............. 1,563 1,248 2,400 2,682
Samuel H. Iapalucci......... 1,753 1,248 2,400 1,612
Philip G. Hall.............. 1,563 1,248 2,400 3,345
CH2M HILL has not entered into employment agreements with its executive
officers who serve at the pleasure of CH2M HILL's Board of Directors.
Therefore, since compensation for executive officers is comprised of salary,
bonus and other incentive compensation, some of which are based on year-end
performance results, CH2M HILL does not know the aggregate amount of
compensation that will be paid to its executive officers in the current fiscal
year.
10
Option Grants in the Last Fiscal Year
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Price
Number of Appreciation
Securities Percent of Total for Option
Underlying Options Granted Exercise or Term
Options Granted to Employees in Base Price Expiration -------------
Name (#) Fiscal Year ($/sh) Date 5% 10%
---- --------------- ---------------- ----------- ---------- ------ ------
Ralph R. Peterson....... 28,350 * $4.31 2/12/04 33,758 74,597
Donald S. Evans......... 24,750 * $4.31 2/12/04 29,742 65,125
James J. Ferris......... 24,750 * $4.31 2/12/04 29,742 65,125
Samuel H. Iapalucci..... 24,750 * $4.31 2/12/04 29,742 65,125
Philip G. Hall.......... 17,780 * $4.31 2/12/04 21,172 46,784
- --------
* Less than 1%
Fiscal Year-End Option Values
No options were exercised by the Chief Executive Officer and the other four
most highly compensated executive officers of CH2M HILL during the fiscal year
ended December 31, 1999. No options listed in this table were in-the-money at
the end of the fiscal year ended December 31, 1999.
Number of Securities
Underlying Unexercised
Options at FY-End (#)
-------------------------
Name Exercisable Unexercisable
---- ----------- -------------
Ralph R. Peterson............................... -- 28,350
Donald S. Evans................................. -- 24,750
James J. Ferris................................. -- 24,750
Samuel H. Iapalucci............................. -- 24,750
Philip G. Hall.................................. -- 17,780
1999 Long-Term Incentives
The following table sets forth information regarding long-term incentive
plan opportunities that were granted to the chief executive officer and the
other four most highly compensated executive officers of CH2M HILL. This long-
term incentive plan was established effective January 1, 1999 and will be paid
out on or after the 3-year award period ending December 31, 2001. There are no
payouts in years 1999 and 2000. The payment of the awards will be 60% in
common stock, valued at the date of payment, and 40% cash. The criteria for
payout is based on specific long-term goals of earnings growth and strategic
imperatives for CH2M HILL as well as individual goals.
Long-Term Incentive Awards in 1999(1)(2)
Estimated Future Payouts
Under Non-Stock Price-Based
Plans
-----------------------------
(a) (c) (d) (e) (f)
Period Until
Name Payout Threshold Target Maximum
---- ------------ --------- -------- ----------
Ralph R. Peterson................. 3 years $ 0 $542,400 $1,084,800
Donald S. Evans................... 3 years $ 0 171,600 343,200
James J. Ferris................... 3 years $ 0 174,000 348,000
Samuel H. Iapalucci............... 3 years $ 0 174,000 348,000
Philip G. Hall.................... 3 years $ 0 183,000 366,000
11
- --------
(1) Certain columns have been omitted because they are not applicable.
(2) The Target amounts for the first two years of the long-term incentive plan
are adjusted to reflect 1.5 times what the Target will be when it begins
the payouts in year 3 and thereafter. For example, beginning in year 3 the
Target and Maximum amounts for the Chief Executive Officer and the other
four most highly compensated executive officers, based on 1999 salaries,
are estimated to be the following beginning in 2001:
Name Threshold Target Maximum
---- --------- -------- --------
Ralph R. Peterson............................. $ 0 $361,600 $723,200
Donald S. Evans............................... 0 114,400 228,800
James J. Ferris............................... 0 116,000 232,000
Samuel H. Iapalucci........................... 0 116,000 232,000
Philip G. Hall................................ 0 122,000 244,000
Retirement Plans
Messrs. Peterson and Hall are participants in the CH2M HILL Pension Plan.
Benefits under the CH2M HILL Pension Plan are equal to 1% of 1987-1991 average
base compensation (up to $150,000) multiplied by years of credited service
prior to 1992 plus 1% of each year's base compensation (up to $150,000) for
each year of credited service from January 1, 1992 through December 31, 1993.
Plan benefits were frozen as of December 31, 1993. The estimated annual
benefits payable at the earliest age when a participant may retire with an
unreduced benefit (age 65) are $37,849 to Mr. Peterson, $34,955 to Mr. Hall.
Mr. Evans is a participant in the CH2M HILL Pension Plan with respect to
credited service prior to May 1, 1986 and he is a participant in the OMI
Retirement Plan with respect to credited service from May 1, 1986 through
December 31, 1995. The normal retirement benefits under the OMI Retirement
Plan are equal to 1.5% of average compensation (up to the IRS limit) for the
first 20 years of credited service plus 0.5% of average compensation (up to
the IRS limit) for years of service in excess of 20. Mr. Evans' benefit under
the OMI plan was frozen as of December 31, 1995 upon his transfer from
employment covered by the Plan. The estimated annual benefits payable to Mr.
Evans at the earliest age when a participant may retire with an unreduced
benefit (age 65) are $12,771 from the CH2M HILL Pension Plan and $23,521 from
the OMI Retirement Plan, or a total of $36,292.
Mr. Ferris and Mr. Iapalucci are not participants in a CH2M HILL Pension
Plan.
Change of Control Arrangements
The Board of Directors authorized CH2M HILL to enter into Change of Control
Agreements with the Chief Executive Officer, his direct reports, employee-
directors, and the General Counsel of CH2M HILL. The provisions of these
agreements are described in the Certain Relationships and Related Transactions
section of this Proxy Statement.
12
Stock Performance Graph
The following graph shows the total shareholder return on CH2M HILL's common
stock from September 7, 1999 (the date CH2M HILL's registration with the
Securities and Exchange Commission became effective) until December 31, 1999,
for (i) CH2M HILL's common stock, (ii) the Standard & Poor's Composite--500
Stock Index and (iii) the companies in the Environmental Financial Consulting
Group's engineering/consulting industry index.
The graph assumes the investment of $100 in CH2M HILL common stock and in
each of the indexes on September 7, 1999 and reinvestment of all dividends.
S&P 500
CH2M HILL EFCG Index
--------- ------ -------
9/7/99 100.00 100.00 100.00
9/30/99 100.00 92.77 95.10
10/31/99 100.00 91.94 101.12
11/30/99 100.00 93.68 103.17
12/31/99 100.00 97.08 109.25
Certain Relationships and Related Transactions
Related Transaction. CH2M HILL owns a 40% interest in Dan Engineering A/S, a
Dutch company. The aggregate purchase price of our interest in Dan Engineering
was $255,000. Michael Y. Marcussen, who is one of our Directors, owns 40% of
Dan Engineering. Dan Engineering was founded in 1985 by Mr. Marcussen and a
partner and specializes in the design, construction and operation of non-
ferrous metal smelting equipment and plants, particularly tin and lead
smelters.
Change of Control Agreements. The Board of Directors authorized CH2M HILL to
enter into Change of Control Agreements with the Chief Executive Officer, his
direct reports, employee-directors, and the General Counsel of CH2M HILL (each
hereafter a "COC Executive"). The provisions of these agreements will become
effective if and when there is a Change of Control (as that term is defined
below) of CH2M HILL and, with respect to most benefits, only if the COC
Executive is terminated within twenty four months of such Change of Control.
All of the Change of Control Agreements will
13
continue in effect through March 31, 2001. The Agreements will automatically
renew for successive one-year terms unless CH2M HILL gives notice to the COC
Executives that it does not intend to extend the Agreement or intends to
change its terms (such notice cannot be given during the pendency of a
potential Change of Control). If a Change of Control occurs, the expiration
date of the Agreements will automatically extend for twenty-four months beyond
the month in which the Change of Control occurs.
Under the Change of Control Agreements, CH2M HILL will provide each COC
Executive with the following benefits at the time the Change of Control event
occurs:
. Immediate vesting in all retirement plans and of all outstanding
options;
. Pro-rata payout of amounts payable under the Short Term Incentive Plan
for the year of termination; and
. Pro-rata payout of amounts payable under the Long-Term Incentive Plan.
CH2M HILL will provide each COC Executive with the following additional
benefits in the event of termination of their employment (actual or
constructive and other than for cause) by CH2M HILL or its successor in
interest within twenty-four months of a Change of Control:
. Lump-sum payment in the amount equal to 2.99 times the sum of (i) annual
base salary in effect at the time the Change of Control occurs and (b)
target annual incentive bonus payable under the Short Term Incentive
Plan for the CEO and direct reports;
. Lump-sum payment in the amount equal to 1.5 times the sum of (i) annual
base salary in effect at the time the Change of Control occurs and (b)
target annual incentive bonus payable under the Short Term Incentive
Plan for the other Executives;
. Continuation of health benefits for 36 months for CEO and direct reports
and continuation for 18 months for other COC Executives.
For purposes of the Change of Control Agreements, a "Change of Control" is
defined generally to include:
. Acquisition of 25% (or more) of the voting securities of CH2M HILL;
. A significant merger or consolidation where CH2M HILL shareholders hold
less than 75% of all shares outstanding of the surviving company; a
change in the majority of the Board of Directors, not otherwise
recommended by the Board of Directors, during the course of one fiscal
year; and
. Liquidation or dissolution of CH2M HILL, or direct or indirect sale or
other disposition of all or substantially all of the assets of CH2M
HILL.
14
Item 2. Payroll Deduction Stock Purchase Plan
Effective November 12, 1999, the Board of Directors adopted a Payroll
Deduction Stock Purchase Plan. The purpose of the plan is to enhance
shareholder value by attracting, retaining and motivating employees of CH2M
HILL and its subsidiaries by providing such employees with a means to acquire
an interest in CH2M HILL's success. The total number of shares of common stock
of CH2M HILL that may be issued under the plan is 1,000,000 shares of common
stock. The plan provides for periodic sales of the common stock of CH2M HILL
through the CH2M HILL internal market to employees commencing in 2000. All
employees of CH2M HILL are eligible to participate in the plan as CH2M HILL
implements it through various subsidiaries. Employees who elect to participate
in the plan do so by means of payroll deductions equal to not less than 1
percent and not more than 10 percent of their base salary. Employees receive a
10% discount on the market price of CH2M HILL stock purchased through the
plan. Employees may discontinue their participation in the plan at any time
and may withdraw all amounts withheld pursuant to PDSPP or may elect to
decrease their participation at any time before the plan acquires shares on
their behalf.
Since the Board of Directors believes that a payroll deduction stock purchase
plan is desirable to attract, retain and motivate employees of CH2M HILL, the
Board of Directors recommends that the shareholders vote FOR ratification of
the payroll deduction stock purchase plan as described above.
Item 3. Appointment of Independent Certified Public Accountant
The Board of Directors has appointed Arthur Andersen LLP, independent
certified public accountants, to audit the consolidated financial statements
of CH2M HILL for the fiscal year ending December 31, 2000, and recommends that
the shareholders vote in favor of the ratification of such appointment. In the
event of a negative vote on such ratification, the Board of Directors will
reconsider its selection.
The Board of Directors recommends that you vote FOR this proposal.
Item 4. Other Business
In addition to the proposals described above, shareholders may be asked to
transact such other business that may properly come before the Annual Meeting
and any postponement(s) or adjournment(s). CH2M HILL presently is not aware of
any such business at the time this proxy is being sent to you.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and related rules of
the Securities and Exchange Commission require CH2M HILL's directors and
executive officers to file reports of their ownership and changes in ownership
of CH2M HILL common stock with the Commission. The Legal Department at CH2M
HILL generally prepares these reports on the basis of information obtained
from each Director and executive officer. Based on such information, CH2M HILL
believes that all reports required by Section 16(a) of the Exchange Act to be
filed by its Directors and executive officers during 1999 were filed on time.
15
Shareholder Proposals For the 2001 Annual Meeting
Any shareholder proposals intended to be presented at the 2001 Annual
Meeting of Shareholders and included in CH2M HILL's proxy statement for such
meeting must be received by CH2M HILL no later than January 2, 2001 in order
to be considered for inclusion in CH2M HILL's Proxy Statement and form of
proxy relating to that meeting. To be so included, a proposal must also comply
with all applicable provisions of Rule 14a-8 under the Securities Exchange Act
of 1934.
UPON WRITTEN REQUEST, WITHOUT CHARGE TO EACH SHAREHOLDER OF RECORD AS OF MARCH
31, 2000, WE WILL PROVIDE A COPY OF CH2M HILL'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. ANY SUCH REQUESTS SHOULD BE DIRECTED TO CH2M HILL'S
SECRETARY AT CH2M HILL'S EXECUTIVE OFFICES SET FORTH IN THIS PROXY STATEMENT.
April 5, 2000
16
PROXY
CH2M HILL Companies, Ltd.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
APRIL 5, 2000
The undersigned shareholder of CH2M HILL Companies, Ltd. (the "Company") hereby
appoints Ralph R. Peterson, Samuel H. Iapalucci and Philip G. Hall, and each of
them with full power of substitution to each, the true and lawful attorneys,
agents and proxyholders of the undersigned, and hereby authorizes them to
represent and vote, as specified herein, all of the shares of Common Stock of
the Company held of record by the undersigned on March 31, 2000, at the Annual
Meeting of Shareholders of the Company to be held on May 8, 2000 (the "Annual
Meeting") at 11 a.m. (Mountain Daylight Time) at 6060 South Willow Drive,
Greenwood Village, Colorado and any adjournments or postponements thereof.
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
[ ] MARK HERE TO VOTE ON ALL MATTERS AS THE BOARD OF DIRECTORS RECOMMENDS.
1. ELECTION OF DIRECTORS:
[ ] FOR the four nominees listed below, except as indicated
[ ] WITHHOLD AUTHORITY to vote for the four nominees listed below
If you wish to withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list below:
Ralph R. Peterson Susan D. King Robert G. Card Joseph A. Ahearn
2. PROPOSAL TO APPROVE THE PAYROLL DEDUCTION STOCK PURCHASE PLAN ("PDSPP").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
INDEPENDENT AUDITORS OF CH2M HILL FOR THE FISCAL YEAR ENDING DECEMBER 31,
2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name appears hereon.
Please mark, sign and date this proxy and return it promptly whether you plan to
attend the meeting or not.
______________________________________________
SIGNATURE(s)
Date: _________________, 2000