DANIELSON HOLDING CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Danielson
Holding Corporation (the "Company") will be held on Wednesday, May 21, 1997,
at the New York Marriott East Side Hotel, 525 Lexington Avenue (between 48th &
49th Streets), New York, New York 10017 at 10:00 a.m. local time (the "Annual
Meeting"), for the following purposes:
1. To elect nine directors of the Company to serve for the ensuing year and
until their successors are elected;
2. To confirm the appointment of KPMG Peat Marwick LLP as the independent
certified public accountants for the Company for the year ending
December 31, 1997; and
3. To transact such other business as may properly come before the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 9, 1997 are
entitled to notice of, and to vote at, the meeting and any adjournments
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
DANIELSON HOLDING CORPORATION
IAN M. KIRSCHNER
Secretary
New York, New York
April 14, 1997
YOUR VOTE IS IMPORTANT
To ensure your representation at the meeting, you are urged to mark, sign,
date and return the enclosed proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. To revoke a proxy, you must
submit to the Secretary of the Company, prior to voting, either a signed
instrument of revocation or a duly executed proxy bearing a date or time
later than the proxy being revoked. If you attend the meeting, you may vote
in person even if you previously returned a proxy.
DANIELSON HOLDING CORPORATION
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1997
TABLE OF CONTENTS
PAGE
----
VOTING RIGHTS AND SOLICITATION OF PROXIES................................. 1
Record Date and Share Ownership......................................... 1
Voting and Quorum....................................................... 1
Proxies and Revocation of Proxies....................................... 2
Other Proposals......................................................... 2
PRINCIPAL STOCKHOLDERS.................................................... 2
Principal Stockholders.................................................. 2
Officers and Directors.................................................. 3
Section 16(a) Beneficial Ownership Reporting Compliance................. 4
ELECTION OF DIRECTORS..................................................... 4
Committees.............................................................. 7
Compensation of Directors............................................... 8
Attendance at Board of Directors Meetings............................... 8
EXECUTIVE OFFICERS........................................................ 8
EXECUTIVE COMPENSATION.................................................... 9
Summary Compensation Table.............................................. 9
Option/SAR Grants in Last Fiscal Year................................... 10
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Op-
tion Values............................................................ 10
Compensation Committee Interlocks and Insider Participation............. 10
Board of Directors Compensation Committee Report on Executive Compensa-
tion................................................................... 10
Performance Graph....................................................... 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................ 13
CONFIRMATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS............. 13
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS................................. 14
DANIELSON HOLDING CORPORATION
767 THIRD AVENUE
NEW YORK, NEW YORK 10017-2023
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ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
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PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Danielson Holding Corporation (the
"Company"), to be voted at the Annual Meeting of Stockholders of the Company
to be held on Wednesday, May 21, 1997, at the New York Marriott East Side
Hotel, 525 Lexington Avenue (between 48th and 49th Streets), New York, New
York 10017, at 10:00 a.m. local time (the "Annual Meeting"), and any
postponement or adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders and described therein.
This Proxy Statement and the enclosed form of proxy are first being sent to
stockholders commencing on or about Monday, April 14, 1997.
The expenses of soliciting proxies for the Annual Meeting are to be paid by
the Company. Solicitation of proxies may be made by means of personal calls
upon, or telephonic or electronic communications with, stockholders or their
personal representatives by Directors, officers, and employees of the Company
who will not be specially compensated for such services. In addition, the
Company has retained Georgeson & Co., Inc., Wall Street Plaza, New York, New
York 10005, to assist in the solicitation of proxies, the cost of which is
anticipated to be approximately $5,000, plus reimbursement of expenses.
Although there is no formal agreement to do so, the Company may reimburse
banks, brokerage houses and other custodians, nominees and fiduciaries for
their reasonable expenses in forwarding this Proxy Statement to stockholders
whose common stock is held of record by such entities.
VOTING RIGHTS AND SOLICITATION OF PROXIES
RECORD DATE AND SHARE OWNERSHIP
The Board of Directors of the Company has fixed the close of business on
April 9, 1997 as the record date for the determination of the stockholders
entitled to receive notice of, and to vote at, the Annual Meeting (the "Record
Date"). The only outstanding class of stock of the Company is its common
stock, par value $0.10 per share ("Common Stock"). On the Record Date, there
were 15,366,338 shares of Common Stock issued and outstanding.
VOTING AND QUORUM
Each share of Common Stock, the only securities of the Company entitled to
vote at the Annual Meeting, will be entitled to one vote at the Annual
Meeting, except that, pursuant to the provisions of the Certificate of
Incorporation of the Company, voting for Directors may be cumulative if, prior
to the voting, any stockholder gives notice of such stockholder's intention to
vote cumulatively. In the event of cumulative voting, each stockholder may
give any one candidate a number of votes equal to the number of Directors to
be elected multiplied by the number of shares held by such stockholder, or may
distribute such votes on the same principle among as many candidates as the
stockholder elects. The presence at the Annual Meeting, in person or by proxy,
of the holders of a majority of the total number of shares of Common Stock
outstanding on the Record Date will constitute a quorum for the transaction of
business by such holders at the Annual Meeting. Where a quorum is present, the
vote of the holders of a majority of shares of Common Stock present in person
or represented by proxy and entitled to vote will decide any question voted
upon, and the nine nominees for Director receiving the highest number of votes
(i.e., a plurality) will be elected as Directors. If any votes are withheld,
such withheld votes will be excluded entirely from the vote and will have no
effect. Abstentions will have no effect on the election of Directors but, for
purposes of determining whether a proposal has received a majority vote,
abstentions will be included in the vote totals with the result that an
abstention will have the same effect as a negative vote. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy (so-called "broker non-votes"), those
shares of Common Stock will not be included in the vote totals and, therefore,
will have no effect on the vote.
PROXIES AND REVOCATION OF PROXIES
Proxies in the enclosed form are solicited by the Board of Directors of the
Company in order to provide each stockholder an opportunity to vote on all
matters scheduled to come before the Annual Meeting, whether or not the
stockholder attends in person. All proxies received pursuant to this
solicitation will be voted except as to matters where authority to vote is
specifically withheld or the holder has elected to abstain and, where a choice
is specified as to the proposal, they will be voted in accordance with such
specification. In the absence of specific directions, properly executed
proxies will be voted "FOR" (i) the nominees for election as Directors of the
Company listed below; and (ii) confirmation of the appointment of KPMG Peat
Marwick LLP as the Company's independent certified public accountants for the
current fiscal year. Any stockholder giving a proxy has the power to revoke
the proxy prior to its exercise. A proxy may be revoked (a) by delivering to
the Secretary of the Company at or prior to the Annual Meeting an instrument
of revocation or a duly executed proxy bearing a date or time later than the
date or time of the proxy being revoked or (b) at the Annual Meeting if the
stockholder is present and elects to vote in person. Mere attendance at the
Annual Meeting will not serve to revoke a proxy.
OTHER PROPOSALS
The Board does not know of any matter other than the foregoing that is
expected to be presented for consideration at the Annual Meeting. However, if
other matters properly come before the Annual Meeting, the persons named in
the accompanying proxy intend to vote thereon in accordance with their
judgment.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock as
of April 9, 1997 of (a) each Director, (b) each executive officer, and (c)
each person known by the Company to own beneficially more than five percent of
the outstanding shares of Common Stock. The Company believes that, except as
otherwise stated, the beneficial holders listed below have sole voting and
investment power regarding the shares reflected as being beneficially owned by
them.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF CLASS /1/
-------------------- --------------------
PRINCIPAL STOCKHOLDERS
Commissioner of Insurance 1,803,235/2/,/3/ 11.7
of the State of
California................
c/o Geoffrey A. Nicholls
Deputy Trustee
Mission Insurance
Companies' Trusts
3333 Wilshire Boulevard--
3rd Floor
Los Angeles, CA 90010
Martin J. Whitman......... 2,321,024/2/,/4/,/5/,/6/ 14.9
c/o Danielson Holding
Corporation
767 Third Avenue
New York, NY 10017-2023
James P. Heffernan........ 1,372,980/2/,/5/,/6/ 8.8
c/o WHR Management
Company, L.P.
2 Park Place
Bronxville, NY 10708
Whitman Heffernan & Rhein 1,054,996/2/ 6.9
Workout Fund, L.P. .......
c/o WHR Management
Company, L.P.
2 Park Place
Bronxville, NY 10708
Third Avenue Value Fund... 803,669/2/ 5.2
767 Third Avenue
New York, NY 10017-2023
2
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF CLASS /1/
-------------------- --------------------
OFFICERS AND DIRECTORS
Martin J. Whitman......... 2,321,024/2/,/4/,/5/,/6/ 14.9
David M. Barse............ 17,582/7/ *
Joseph F. Porrino......... 56,667/8/ *
Frank B. Ryan............. 48,667/8/ *
Eugene M. Isenberg........ 69,924/9/ *
Wallace O. Sellers........ 36,666/10/ *
Anthony G. Petrello....... 0/11/ *
Stanley J. Garstka........ 11,008/11/ *
Timothy C. Collins........ 0/11/ *
Michael T. Carney......... 17,582/7/ *
Ian M. Kirschner.......... 4,000/12/ *
All Officers and Directors
as a Group (11 persons).. 2,583,118/13/ 16.3
- --------
* Percentage of shares beneficially owned does not exceed one percent of the
outstanding Common Stock.
(1) Share percentage ownership is rounded to nearest tenth of one percent and
reflects the effect of dilution as a result of outstanding options to the
extent such options are, or within 60 days will become, exercisable. As of
April 9, 1997 (the date as of which this table was prepared), there were
exercisable options outstanding to purchase 1,257,084 shares of Common
Stock. Shares underlying any option which was exercisable on April 9, 1997
or becomes exercisable within the next 60 days are deemed outstanding only
for purposes of computing the share ownership and share ownership
percentage of the holder of such option.
(2) In accordance with provisions of DHC's Certificate of Incorporation, all
certificates representing shares of Common Stock beneficially owned by
holders of five percent or more of Common Stock are owned of record by
DHC, as escrow agent, and are physically held by DHC in that capacity.
(3) Beneficially owned by the Commissioner of Insurance of the State of
California in his capacity as trustee for the benefit of holders of
certain deficiency claims against certain trusts which assumed liabilities
of certain present and former insurance subsidiaries of DHC.
(4) Includes 803,669 shares beneficially owned by Third Avenue Value Fund
("TAVF"), an investment company registered under the Investment Company
Act of 1940; 104,481 shares beneficially owned by Martin J. Whitman & Co.,
Inc. ("MJW&Co"), a private investment company; and 72,641 shares
beneficially owned by Mr. Whitman's wife and three adult family members.
Mr. Whitman controls the investment adviser of TAVF, and may be deemed to
own beneficially a five percent equity interest in TAVF. Mr. Whitman is
the principal stockholder in MJW&Co, and may be deemed to own beneficially
the shares owned by MJW&Co. Mr. Whitman disclaims beneficial ownership of
the shares of Common Stock owned by TAVF, MJW&Co, and Mr. Whitman's family
members.
(5) Includes 1,054,996 shares of Common Stock beneficially owned by Whitman
Heffernan & Rhein Workout Fund, L.P. ("WHR Fund"), an investment limited
partnership. Each of Messrs. Whitman and Heffernan is a general partner of
the partnership that is the general partner of WHR Fund. Each disclaims
beneficial ownership of the shares owned by the WHR Fund.
(6) Includes shares underlying currently exercisable options to purchase an
aggregate of 210,000 shares of Common Stock at an exercise price of $3.00
per share.
(7) Includes shares underlying options to purchase an aggregate of 17,582
shares of Common Stock at an exercise price of $5.6875 per share, which
become exercisable within the next 60 days. Does not include shares
underlying options to purchase an aggregate of 32,418 shares of Common
Stock at an exercise price of $5.6875 per share which are not currently
exercisable nor become exercisable within the next 60 days.
(8) Includes shares underlying currently exercisable options to purchase an
aggregate of 46,667 shares of Common Stock at an exercise price of $3.63
per share.
3
(9) Includes 20,088 shares owned by Mentor Partnership, a partnership
controlled by Mr. Isenberg, and 28 shares owned by Mr. Isenberg's wife.
Also includes shares underlying currently exercisable options to purchase
an aggregate of 46,666 shares of Common Stock at an exercise price of $3.63
per share.
(10) Includes shares underlying options to purchase an aggregate of 26,666
shares of Common Stock at an exercise price of $7.00 per share, which
become exercisable within the next 60 days. Does not include shares
underlying options to purchase an aggregate of 13,334 shares of Common
Stock at an exercise price of $7.00 per share which are not currently
exercisable nor become exercisable within the next 60 days.
(11) Does not include shares underlying options to purchase an aggregate of
40,000 shares of Common Stock at an exercise price of $5.50 per share
which are not currently exercisable nor become exercisable within the
next 60 days.
(12) Includes shares underlying options to purchase an aggregate of 2,500
shares of Common Stock at an exercise price of $5.6875 per share, which
become exercisable within the next 60 days. Does not include shares
underlying options to purchase an aggregate of 2,500 shares of Common
Stock at an exercise price of $5.6875 per share which are not currently
exercisable nor become exercisable within the next 60 days.
(13) In calculating the percentage of shares owned by officers and Directors
as a group, the shares of Common Stock underlying all options which are
beneficially owned by officers and Directors and which are currently
exercisable or become exercisable within the next 60 days are deemed
outstanding.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires DHC's
Directors and executive officers, and persons who own more than ten percent of
a registered class of the DHC's equity securities, to file with the Securities
and Exchange Commission and the American Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of DHC. Officers, Directors and greater than ten-percent
stockholders are required by Federal securities regulations to furnish DHC
with copies of all Section 16(a) forms they file.
To DHC's knowledge, based solely upon review of the copies of such reports
furnished to DHC and written representations that no other reports were
required, except for one Form 3 with respect to Mr. Collins (not involving any
transaction), all Section 16(a) filing requirements applicable to DHC's
officers, Directors and greater than ten percent beneficial owners were
complied with on a timely basis for the fiscal year ended December 31, 1996.
ELECTION OF DIRECTORS
A board of nine Directors will be elected at the Annual Meeting by the
holders of Common Stock, to hold office until their successors have been
elected and qualified. It is intended that, unless authorization to do so is
withheld, the proxies will be voted "FOR" the election of the Director
nominees named below, each of whom currently is a Director of the Company.
Each nominee has consented to be named in this Proxy Statement and to serve as
a Director if elected. However, if any nominee shall become unable to stand
for election as a Director at the Annual Meeting, an event not now anticipated
by the Board, the proxy will be voted for a substitute designated by the Board
or, if no substitute is selected by the Board prior to or at the Annual
Meeting, for a motion to reduce the membership of the Board to the number of
nominees available. In the event that additional persons are nominated for
election as Directors and a stockholder elects to vote shares cumulatively,
the proxy holders intend to vote all proxies received by them in such a manner
in accordance with cumulative voting as will assure the election of as many of
the nominees listed below as possible, with any required selection among such
nominees to be determined by the proxy holders.
The nominees are listed on the following pages with brief statements of
their principal occupations and other information. A listing of the nominees'
beneficial ownership of Common Stock appears on the preceding pages under
"PRINCIPAL STOCKHOLDERS." All of the nominees for Director were elected to
their present terms
4
as Directors by the stockholders at the Annual Meeting of Stockholders of the
Company held on September 17, 1996. The information concerning the nominees
and their security holdings has been furnished by such nominees to the
Company.
The Board of Directors unanimously recommends that the stockholders vote
"FOR" the nominees listed below:
DIRECTOR
DIRECTOR AGE PRINCIPAL OCCUPATION SINCE
- -------- --- -------------------- --------
Martin J. Whitman........ 72 Chairman of the Board and Chief 1990
Executive Officer of DHC
David M. Barse........... 34 President and Chief Operating Officer of 1996
DHC
Eugene M. Isenberg....... 67 Chairman of the Board and Chief 1990
Executive Officer of Nabors Industries,
Inc.
Joseph F. Porrino........ 52 Executive Vice President of the New 1990
School for Social Research
Frank B. Ryan............ 60 Professor of Mathematics and 1990
Computational and Applied Mathematics
at Rice University
Wallace O. Sellers....... 67 Vice Chairman and Director of Enhance 1995
Financial Services Group, Inc.
Anthony G. Petrello...... 42 President and Chief Operating Officer of 1996
Nabors Industries, Inc.
Stanley J. Garstka....... 53 Deputy Dean and Professor in the 1996
Practice of Management at Yale
University School of Management
Timothy C. Collins....... 40 Chief Executive Officer and Senior 1996
Managing Director of Ripplewood
Holdings LLC
The term of office of each person elected as a Director will continue until
the next Annual Meeting of Stockholders or until his successor has been
elected. There is no family relationship between any nominee for election as a
Director and any other nominee for election as a Director or executive officer
of the Company.
Mr. Whitman is the Chairman of the Board, Chief Executive Officer and a
Director of DHC. Since 1974, Mr. Whitman has been the President and
controlling stockholder of M.J. Whitman & Co., Inc. (now known as Martin J.
Whitman & Co., Inc.) ("MJW&Co") which, until August 1991, was a registered
broker-dealer. From August 1994 to December 1994, Mr. Whitman served as the
Managing Director of M.J. Whitman, L.P. ("MJWLP"), then a registered broker-
dealer which succeeded to the broker-dealer business of MJW&Co. Since January
1995, Mr. Whitman has served as the Chairman and Chief Executive Officer (and,
until June 1995, as President) of M. J. Whitman, Inc. ("MJW"), which succeeded
at that time to MJWLP's broker-dealer business. Also since January 1995, Mr.
Whitman has served as the Chairman and Chief Executive Officer of M.J. Whitman
Holding Corp. ("MJWHC"), the parent of MJW and other affiliates. Since March
1990, Mr. Whitman has been the Chairman of the Board, Chief Executive Officer
and a Director (and, since January 1991, the President) of Third Avenue Trust
and its predecessor, Third Avenue Value Fund, Inc. (together with its
predecessor, "Third Avenue Trust"), an open-end management investment company
registered under the Investment Company Act of 1940 and containing multiple
investment series, and EQSF Advisers, Inc. ("EQSF"), Third Avenue Trust's
investment adviser. Until April 1994, Mr. Whitman also served as the Chairman
of the Board, Chief Executive Officer and a Director of Equity Strategies
Fund, Inc., previously a registered investment company. Mr. Whitman is a
Managing Director of Whitman Heffernan Rhein & Co., Inc. ("WHR"), an
investment and financial advisory firm which he founded with James P.
Heffernan and C. Kirk Rhein, Jr. during the first quarter of 1987. Since March
1991, Mr. Whitman has served as a Director of Nabors Industries, Inc., a
publicly-traded company. From March 1993 through February 1996, Mr. Whitman
served as a director of Herman's Sporting Goods, Inc.,
5
a retail sporting goods chain, which filed a voluntary petition under Chapter
11 of the United States Bankruptcy Code on April 26, 1996. Mr. Whitman also
serves as a Director of the Company's subsidiaries, including National
American Insurance Company of California ("NAICC") and KCP Holding Company
("KCP"). Mr. Whitman co-authored the book The Aggressive Conservative
Investor. Mr. Whitman is a Distinguished Faculty Fellow in Finance at the Yale
University School of Management. Mr. Whitman graduated from Syracuse
University magna cum laude in 1949 with a Bachelor of Science degree and
received his Masters degree in Economics from the New School for Social
Research in 1956. Mr. Whitman is a Chartered Financial Analyst.
Mr. Barse has been the President, Chief Operating Officer and a Director of
DHC since July 1996 and a director of NAICC since August 1996. Since June
1995, Mr. Barse has been the President of each of MJW and MJWHC. Since April
1995, he has been an Executive Vice President and Chief Operating Officer of
Third Avenue Trust and EQSF. Mr. Barse joined the predecessors of MJW and
MJWHC in December 1991 as General Counsel. Mr. Barse was previously an
attorney with the law firm of Robinson Silverman Pearce Aronsohn & Berman LLP.
Mr. Barse received a Bachelor of Arts in Political Science from George
Washington University in 1984 and a Juris Doctor from Brooklyn Law School in
1987.
Mr. Isenberg, since 1987, has been Chairman and Chief Executive Officer of
Nabors Industries, Inc., a publicly-traded oil and gas drilling company listed
on the American Stock Exchange ("Nabors"). Beginning in 1996, Mr. Isenberg
commenced his term as a Governor of the AMEX. From 1969 to 1982, Mr. Isenberg
was Chairman of the Board and principal stockholder of Genimar Inc., a steel
trading and building products manufacturing company. From 1955 to 1968, Mr.
Isenberg was employed in various management capacities with the Exxon Corp.
Mr. Isenberg graduated from the University of Massachusetts in 1950 with a
Bachelor of Arts degree in Economics and from Princeton University in 1952
with a Masters degree in Economics.
Mr. Porrino has been Executive Vice President of the New School for Social
Research since September 1991. Prior to that time, Mr. Porrino was a partner
in the New York law firm of Putney, Twombly, Hall & Hirson, concentrating his
practice in the area of labor law. Mr. Porrino received a Bachelor of Arts
degree from Bowdoin College in 1966, and was awarded a Juris Doctor degree
from Fordham University School of Law in 1970.
Dr. Ryan, since August 1990, has been a Professor of Mathematics and
Computational and Applied Mathematics at Rice University. Since March 1996,
Dr. Ryan has served as a Director of Sequoia Systems, Inc., a computer systems
company, the capital stock of which is traded on NASDAQ. Since March 1995, Dr.
Ryan has served as a Director of America West Airlines, Inc., a publicly-
traded company listed on the New York Stock Exchange. From August 1990 to
February 1995, Dr. Ryan also served as Vice President-External Affairs at Rice
University. For two years ending August 1990, Dr. Ryan was the President and
Chief Executive Officer of Contex Electronics Inc., a subsidiary of Buffton
Corporation, the capital stock of which is publicly traded on the American
Stock Exchange. Prior to that, and beginning in 1977, Dr. Ryan was a Lecturer
in Mathematics at Yale University, where he was also the Associate Vice
President in charge of institutional planning. Dr. Ryan obtained a Bachelor of
Arts degree in Physics in 1958 from Rice University, a Masters degree in
Mathematics from Rice in 1961, and a Doctorate in Mathematics from Rice in
1965.
Mr. Sellers is Vice-Chairman and a Director of Enhance Financial Group, Inc.
("Enhance Group"), a financial services corporation the capital stock of which
is publicly traded on the New York Stock Exchange. Until December 31, 1994,
Mr. Sellers was the President and Chief Executive Officer of Enhance Group,
from its inception in 1986, as well as its principal subsidiaries, Enhance
Reinsurance Company and Asset Guaranty Insurance Company, from their
inceptions in 1986 and 1988, respectively. From 1987 to 1994, Mr. Sellers
served as a Director, and from 1992 to 1993 as the Chairman, of the
Association of Financial Guaranty Insurors in New York. Mr. Sellers received a
Bachelor of Arts degree from the University of New Mexico in 1951 and a
Masters degree in Economics from New York University ("NYU") in 1956. Mr.
Sellers attended the Advanced Management Program at Harvard University in 1975
and is a Chartered Financial Analyst.
6
Mr. Petrello has been the President and Chief Operating Officer of Nabors
since 1992 and has been a director of Nabors and a member of the Executive
Committee of its board of directors since 1991. Mr. Petrello was formerly a
partner with the law firm Baker & McKenzie, which he had been with since 1979.
In 1986, Mr. Petrello was named Managing Partner of Baker & McKenzie's New
York Office and served in that capacity until 1991 when he resigned as a
partner in such law firm. Mr. Petrello continues as Of Counsel to Baker &
McKenzie. Mr. Petrello received a Bachelor of Science degree and a Masters
degree from Yale University in 1976 and a Juris Doctor from Harvard University
in 1979.
Mr. Garstka has been Deputy Dean at the Yale University School of Management
(the "Yale School of Management") since November, 1995 and has been a
Professor in the Practice of Management at the Yale School of Management since
1988. Mr. Garstka was the Acting Dean of the Yale School of Management from
August 1994 to October 1995, and an Associate Dean of the Yale School of
Management from 1984 to 1994. Mr. Garstka has served on the Board of Trustees
of MBA Enterprises Corps, a non-profit organization, since 1991 and on the
Board of Trustees of The Foote School in New Haven, Connecticut since 1995.
From 1988 to 1990, Mr. Garstka served as a director of Vyquest, Inc., a
publicly-traded company listed on the American Stock Exchange. Mr. Garstka was
a Professor in the Practice of Accounting from 1983 to 1988, and an Associate
Professor of Organization and Management from 1978 to 1983, at the Yale School
of Management. Mr. Garstka has also authored numerous articles on accounting
and mathematics. Mr. Garstka received a Bachelor of Arts degree in Mathematics
from Wesleyan University in Middletown, Connecticut in 1966, a Masters degree
in Industrial Administration in 1968 from Carnegie Mellon University and a
Doctorate in Operations Research in 1970 from Carnegie Mellon University.
Mr. Collins has been the Chief Executive Officer and Senior Managing
Director of Ripplewood Holdings LLC, a private investment firm, since October
1995. From January 1990 to September 1995, Mr. Collins was the Senior Managing
Director of Onex Investment Corp., a private investment firm. Since April
1994, Mr. Collins has been a director of Scotsman Industries, Inc., a
publicly-traded company listed on the New York Stock Exchange. Mr. Collins is
also a director of Dayton Superior Corporation (NYSE) and is a trustee of
DePauw University. Mr. Collins received a Bachelor of Arts degree in
Philosophy from DePauw University in 1978, and a Masters in Private and Public
Management from the Yale School of Management in 1982.
COMMITTEES
The Board of Directors has an Audit Committee, a Compensation Committee, an
Executive Committee, and a Review Committee. The Board does not have a
nominating committee or a committee performing the functions of a nominating
committee.
The Audit Committee consists of Messrs. Porrino, Ryan and Garstka. The Audit
Committee held two meetings in 1996. The Audit Committee is primarily
responsible for reviewing and evaluating the Company's accounting principles
and its system of internal accounting controls. The Audit Committee also
recommends engagement of the Company's independent public accountants.
The Compensation Committee consists of Messrs. Porrino, Ryan and Sellers.
The Compensation Committee held three meetings in 1996. The Compensation
Committee reviews, and makes recommendations to the Board of Directors
concerning, the Company's executive compensation policy.
The Executive Committee consisted of Mr. Whitman and James P. Heffernan and
C. Kirk Rhein, Jr. until the death of Mr. Rhein and the resignation of Mr.
Heffernan as a director of the Company, and held no meetings in 1996. The
Executive Committee currently has vacancies and will not meet until such
vacancies have been filled. The Executive Committee has the authority to
conduct the business affairs of the Company, subject to the Company's Bylaws
and applicable law.
The Review Committee, which consists of Messrs. Porrino and Ryan, reviews
and determines potential conflicts of interest relative to investment
opportunities. The Review Committee held no meetings in 1996.
7
COMPENSATION OF DIRECTORS
During 1996, each Director who was not an officer or employee of the Company
or its subsidiaries received compensation of $2,500 for each Board meeting
attended, whether in person or by telephone. For attendance at Board meetings
during 1996, each of Mr. Porrino, Mr. Sellers and Dr. Ryan received $17,500,
Mr. Isenberg received $15,000, each of Messrs. Petrello and Garstka received
$5,000 and Mr. Collins received $2,500, plus, in each case, reimbursement of
reasonable expenses. Directors who are officers or employees of the Company or
its subsidiaries receive no fees for service on the Board. No attendance fee
is paid to any Directors with respect to any committee meetings. Each of Mr.
Porrino and Dr. Ryan owns options to purchase 46,667 shares of Common Stock,
and Mr. Isenberg owns options to purchase 46,666 shares of Common Stock, in
each case at an exercise price of $3.63 per share (the arithmetic average of
the closing prices of the Common Stock on the American Stock Exchange for the
30 days prior to the date of grant, September 16, 1991). Mr. Sellers owns
options to purchase 40,000 shares of Common Stock at an exercise price of
$7.00 per share (the mean of the high and low prices of the Common Stock on
the American Stock Exchange on the date of grant, April 25, 1995). Each of
Messrs. Petrello, Garstka and Collins owns options to purchase 40,000 shares
of Common Stock, in each case at an exercise price of $5.50 per share (the
mean of the high and low prices of the Common Stock on the American Stock
Exchange on the date of grant, September 17, 1996). All of these options
expire ten years after the date of grant and become exercisable in three equal
annual installments commencing on the first anniversary of the date of grant
and on each of the next two anniversaries thereafter. All of the options held
by Messrs. Porrino and Isenberg and Dr. Ryan are currently exercisable. None
of such Directors has exercised any options to date. 13,333 of the options
held by Mr. Sellers is currently exercisable and an additional 13,333 become
exercisable within 60 days.
ATTENDANCE AT BOARD OF DIRECTORS MEETINGS
The Board held seven meetings during 1996. Except for Mr. Collins, who
attended one of the two meetings held during the period for which he was a
Director, no Director attended less than 75 percent of the aggregate number of
meetings of the Board of Directors held during the period for which he was a
Director during 1996 and all committees of the Board on which he served during
the period that he served during 1996.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
NAME AGE PRINCIPAL POSITION WITH THE COMPANY
- ---- --- -----------------------------------
Martin J. Whitman.................. 72 Chairman of the Board, Chief Executive
Officer and a Director
David M. Barse..................... 34 President, Chief Operating Officer and a
Director
Michael T. Carney.................. 43 Chief Financial Officer and Treasurer
Ian M. Kirschner................... 41 General Counsel and Secretary
For additional information about Messrs. Whitman and Barse, see "ELECTION OF
DIRECTORS" above.
Mr. Carney was the Chief Financial Officer ("CFO") of the Company from
August 1990 until March 1996 and has been the CFO of the Company and a
director of NAICC since August 1996. Since 1990, Mr. Carney has served as
Treasurer and CFO of TAVF and EQSF and, since 1989, as CFO of WHR, as well as
MJW&Co., and MJW and MJWHC and their predecessors. From 1990 through April
1994, Mr. Carney also served as CFO of Carl Marks Strategic Investments, L.P.;
and from 1989 through April 1994, Mr. Carney served as Treasurer and CFO of
Equity Strategies Fund. From 1988 to 1989, Mr. Carney was the Director of
Accounting of Smith New Court, Carl Marks, Inc., and, from 1986 to 1988, Mr.
Carney served as the Controller of Carl Marks & Co., Inc. Mr. Carney graduated
from St. John's University in 1981 with a Bachelor of Science degree in
Accounting.
8
Mr. Kirschner has been the General Counsel and Secretary of DHC since August
1996. Mr. Kirschner has also served as General Counsel and Secretary of MJWHC
and MJW since January 1996 and of TAVF and EQSF since January 1997. From
February 1993 to June 1995, Mr. Kirschner was a Vice President, the General
Counsel and Secretary of 2 I Inc., a then NASDAQ Small-Cap listed holding
company. Mr. Kirschner has been practicing law since 1979, and was Of Counsel
to Morgan, Lewis & Bockius, from October, 1990 to October, 1992. Mr. Kirschner
obtained a Bachelor of Arts degree from the State University of New York at
Binghamton in 1976 and a Juris Doctor from Boston University School of Law in
1979.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table presents certain information
relating to compensation paid by DHC for services rendered in 1996 by the
Chief Executive Officer, the former Chief Executive Officer and two other
former executive officers of DHC as of the last day of the fiscal year whose
cash compensation for such year exceeded $100,000. No other executive officers
of DHC received compensation in excess of $100,000 for fiscal year 1996. Only
those columns which call for information applicable to DHC or the individuals
named for the periods indicated have been included in such table.
ANNUAL LONG TERM
COMPENSATION COMPENSATION
--------------------- ------------
AWARDS
------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY(A) BONUS(B) OPTIONS COMPENSATION
POSITION YEAR ($) ($) (#) ($)
- ------------------ ---- --------- -------- ------------ ------------
Martin J. Whitman....... 1996 $ 200,000 -0- -0-
Chairman of the Board & 1995 $ 200,000 -0- -0-
Chief Executive Officer 1994 $ 75,000 $100,000 -0-
C. Kirk Rhein, Jr....... 1996 $ 116,667 -0- -0-
President & Chief Execu-
tive Officer(c) 1995 $ 200,000 -0- -0-
1994 $ 75,000 $100,000 -0-
James P. Heffernan...... 1996 $ 116,667 -0- -0- $ 83,333
Chief Financial
Officer(d) 1995 $ 200,000 -0- -0-
1994 $ 75,000 $100,000 -0-
Lisa D. Levey........... 1996 $ 114,960 -0- 15,000 $ 72,917
General Counsel &
Secretary(e) 1995 $ 158,675(f) $100,000(f) -0-
1994 $ 125,175(f) $100,000(f) -0-
- --------
(a) Amounts shown indicate cash compensation earned and received by executive
officers in the year shown. Executive officers also participate in DHC
group health insurance.
(b) Amounts shown indicate bonuses earned, if any, with respect to services to
DHC in the fiscal year shown whether or not paid in such fiscal year.
(c) Mr. Rhein was President and Chief Executive Officer until his death in the
crash of TWA Flight 800 on July 17, 1996. Annual Compensation reflects
compensation paid through that date. For information regarding additional
payments made to the estate of Mr. Rhein, see "Certain Relationships and
Related Transactions."
(d) Mr. Heffernan was the Chief Financial Officer until his resignation on
July 29, 1996. At that time, Mr. Heffernan entered into an employment
agreement with DHC pursuant to which he was paid the amount set forth
under All Other Compensation during 1996.
(e) Ms. Levey was the General Counsel and Secretary until her resignation on
July 31, 1996. Ms. Levey entered into a severance agreement with DHC
pursuant to which she was paid the amount set forth under All Other
Compensation during 1996.
(f) Amounts shown reflect portion of compensation allocated to DHC based upon
percentage of time spent in connection with DHC matters.
9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table presents certain information relating to the grants of
stock options made during 1996 to the named executive officers of DHC. The
options were granted under DHC's 1995 Stock and Incentive Plan. Pursuant to
rules of the Securities and Exchange Commission, the table also shows the
value of the options granted at the end of the option term (through October
31, 1997) if the stock price were to appreciate annually by 5% and 10%,
respectively. There is no assurance that the stock price will appreciate at
the rates shown in the table. Only those tabular columns which call for
information applicable to DHC or the named individuals have been included in
such table.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
---------------------------------------------- ----------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ---------- -----------
Martin J. Whitman....... -0-
C. Kirk Rhein, Jr....... -0-
James P. Heffernan...... -0-
Lisa D. Levey........... 15,000 0.94 $6.6875 10/31/97* 9,185 18,768
- --------
* In connection with the termination of her employment, the expiration date of
the options granted to Ms. Levey, which would otherwise have terminated
three months after the date of termination, was extended to October 31,
1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table presents certain information relating to the value of
unexercised stock options as of the end of 1996, on an aggregated basis, owned
by the named executive officers of DHC as of the last day of the fiscal year.
None of such officers who owned options to purchase Common Stock during 1996
exercised any of such options during 1996. Only those tabular columns which
call for information applicable to DHC or the named individuals have been
included in such table.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-
OPTIONS AT FISCAL YEAR- MONEY OPTIONS
END AT FISCAL YEAR-END
(#) ($)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Martin J. Whitman........... 210,000 -0- $420,000 -0-
C. Kirk Rhein, Jr........... 210,000 -0- $420,000 -0-
James P. Heffernan.......... 210,000 -0- $420,000 -0-
Lisa D. Levey............... 15,000 -0- -0- -0-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, none of the persons who served as members of the Compensation
Committee of DHC's Board of Directors also was, during that year or
previously, an officer or employee of DHC or any of its subsidiaries or had
any other relationship requiring disclosure herein.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
during 1996, was comprised of three independent (i.e., non-employee)
directors. The Committee provided the following report on executive
compensation during 1996 as required by applicable securities regulations:
10
"Due to unusual and tragic circumstances during 1996, the Committee was
required to make two separate determinations regarding executive compensation
for 1996. However, the Committee's overriding goal continues to be to
structure compensation in a way that will attract and retain highly qualified
executives who will conduct the business of the Company in a manner that will
maximize stockholder value.
The annual base salary of each of the Company's executive officers at the
beginning of 1996, C. Kirk Rhein, Jr., President and Chief Executive Officer,
Martin J. Whitman, Chairman of the Board and Chief Investment Officer, James
P. Heffernan, Chief Financial Officer, and Lisa D. Levey, General Counsel and
Secretary, was kept constant with the level established in 1995, $200,000 for
each of Messrs. Rhein, Whitman and Heffernan and $175,000 for Ms. Levey. In
light of the extensive efforts of each of these executives in identifying and
negotiating potential transactions on behalf of the Company, which had
culminated in an agreement by the Company to acquire Midland Financial Group,
Inc. ("Midland"), and the additional responsibilities which would have
resulted from the consummation of the Midland transaction, the Committee
believed that it was appropriate to maintain these compensation levels for its
executive officers.
While on Company business relating to the Midland transaction, Mr. Rhein,
along with William Story, the President of the Company's main subsidiary, was
killed in the crash of TWA Flight 800. As a result of the crash, in which the
President of Midland was also killed, the proposed merger of Midland into the
Company was terminated by the mutual consent of DHC and Midland. At this time,
Mr. Whitman was named the Chief Executive Officer of the Company, Mr.
Heffernan resigned as a Director and Chief Financial Officer (although he
remained employed by the Company), Ms. Levey resigned, and David M. Barse,
Michael T. Carney and Ian M. Kirschner were brought on as President, Chief
Financial Officer and General Counsel and Secretary, respectively, of the
Company.
In light of the compensation which the Company agreed to pay to the estate
of Mr. Rhein and to Mr. Heffernan and Ms. Levey, see "Certain Relationships
and Related Transactions" below, and the Company's desire not to take
significant additional cash out of the Company in the form of executive
compensation, the annual base salary of each of Mr. Barse and Mr. Carney was
set at $75,000 and the base salary of Mr. Kirschner was set at $50,000 (with
no additional cash compensation being paid to any of them during 1996). The
Company was able to obtain these executives at this level of compensation in
part because they are also employed by affiliates of the Company.
Nevertheless, the Committee believes that these compensation levels were
appropriate initial levels to compensate these individuals for the extensive
amount of work that would be required of them in order for the Company to
realize the value that it seeks for its stockholders.
In addition to the cash compensation of its executives, the Company granted
stock options during the year under its 1995 Stock and Incentive Plan (the
"1995 Plan"). On January 15, 1996, the Committee granted options to purchase
an aggregate of 158,900 shares of the Company's Common Stock at an exercise
price of $6.6875 per share (the mean of the high and low prices of the Common
Stock on the American Stock Exchange on the date of grant). The options were
granted to employees of the Company (including Ms. Levey), as well as to
certain key employees of the Company's then two main subsidiaries, National
American Insurance Company of California ("NAICC") and Danielson Trust
Company. In connection with the change in management, on September 19, 1996,
the Committee granted additional options to purchase an aggregate of 125,000
shares of Common Stock at an exercise price of $5.6875 per share (the mean of
the high and low prices of the Common Stock on the American Stock Exchange on
the date of grant) to certain employees of the Company. Of these options,
50,000 were granted to each of Mr. Barse and Mr. Carney and 5,000 were granted
to Mr. Kirschner. On December 17, 1996, the Committee granted options to
purchase an aggregate of 35,000 shares of Common Stock at an exercise price of
$4.9375 per share (the mean of the high and low prices of the Common Stock on
the American Stock Exchange on the date of grant) to employees of NAICC as an
additional reward for their efforts under very trying circumstances during
1996.
In making determinations regarding compensation, the Committee does not rely
upon quantitative measures or other measurable objective indicia, such as
earnings or specifically weighted factors or compensation formulae. In light
of the fact that the Company, at the parent-company level, is a holding
company with a small
11
staff responsible for numerous and diverse areas of the Company's business and
management, and given the high level of awareness each executive has of the
others' activities and contributions, the Committee evaluates executive
performance and reaches compensation decisions based, in part, upon the
recommendations of the Company's executives.
Finally, the Committee notes that Section 162(m) of the Internal Revenue
Code, in most circumstances, limits to $1 million the deductibility of
compensation, including stock-based compensation, paid to top executives by
public companies. None of the 1996 compensation paid to the executive officers
named in the Summary Compensation Table exceeded the threshold for
deductibility under Section 162(m)."
The Compensation Committee:
Joseph F. Porrino
Frank B. Ryan
Wallace O. Sellers
PERFORMANCE GRAPH
The following graph sets forth a comparison of the semiannual percentage
change in the Company's cumulative total stockholder return on Common Stock
with the Standard & Poor's 500 Stock Index* and the AMEX Industrial
(Financial) Index.** The foregoing cumulative total returns are computed
assuming (i) an initial investment of $100, and (ii) the reinvestment of
dividends at the frequency with which dividends were paid during the
applicable years. The Company has never paid any dividend on shares of Common
Stock. The graph below reflects comparative information for the five fiscal
years of the Company beginning with the close of trading on December 31, 1991
and ending December 31, 1996. The foregoing information is presented in
tabular format immediately following the graphic presentation. The stockholder
return reflected below is not necessarily indicative of future performance.
[PERFORMANCE GRAPH APPEARS HERE]
[PLOT POINTS CAN BE FOUND ON NEXT PAGE]
- --------
* The Standard & Poor's 500 Stock Index is a capitalization-weighted index of
500 stocks designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries.
** The AMEX Industrial (Financial) Index ("AIFI") is maintained by the AMEX.
As described by the AMEX, the AIFI is one of eight industrial subindexes of
the AMEX Market Value Index, which is a capitalization-weighted index
reflecting the performance of AMEX-traded common shares, American
Depositary Receipts and warrants.
12
DANIELSON HOLDING AMEX INDUSTRIAL STANDARD & POOR'S
(DATE) CORPORATION (FINANCIAL) INDEX 500 STOCK INDEX
------ ----------------- ----------------- -----------------
12/31/91.......... $100.00 $100.00 $100.00
6/30/92.......... 74.19 103.12 97.85
12/31/92.......... 93.55 112.04 104.46
6/30/93.......... 170.97 114.83 108.02
12/31/93.......... 212.90 120.40 111.83
6/30/94.......... 170.97 118.41 106.52
12/31/94.......... 196.77 109.07 110.11
6/30/95.......... 203.23 124.42 130.61
12/31/95.......... 177.42 142.51 147.67
6/30/96.......... 172.58 149.92 160.79
12/31/96.......... 129.03 169.65 177.60
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In recognition of the death of C. Kirk Rhein, Jr., while serving as
President and Chief Executive Officer of DHC, DHC intends to pay to Mr.
Rhein's widow, as a death benefit, Mr. Rhein's 1996 base salary through July
31, 1999.
In recognition of the death of William R. Story, a former Director of DHC
and the former President and Chief Executive Officer of NAICC while serving as
such, NAICC paid to Mr. Story's widow, as a death benefit, Mr. Story's base
salary through December 31, 1996 and intends to pay to her $200,000 in each of
1997 and 1998. NAICC has also transferred to Mr. Story's widow ownership of a
1995 Lexus automobile which was owned by NAICC and had been used by Mr. Story
as an officer of NAICC.
Effective as of July 29, 1996, DHC entered into an Employment Agreement with
James P. Heffernan, then the Chief Financial Officer of the Company, which
provides for DHC's continued employment of Mr. Heffernan through July 31,
1999. Mr. Heffernan will have the duties and responsibilities assigned to him
by, and will report directly to, the Chief Executive Officer of DHC. Mr.
Heffernan will receive a salary of $200,000 per year through the term of such
agreement and is entitled to participate in all DHC employee benefit plans and
programs.
Lisa D. Levey resigned as an officer of DHC effective August 1, 1996. In
connection with Ms. Levey's resignation, DHC entered into a Severance
Agreement with Ms. Levey which provides that during the period through July
31, 1997, Ms. Levey will receive her 1996 annual base salary and will
participate, at DHC's expense, in DHC's employee benefit plans.
DHC shares certain personnel and facilities with several affiliated and
unaffiliated companies (including M.J. Whitman, Inc., a broker-dealer of which
Mr. Whitman is the Chairman and Chief Executive Officer and Mr. Barse is the
President and Chief Operating Officer), and certain expenses are allocated
among the various entities. Personnel costs are allocated based upon actual
time spent on DHC's business or upon fixed percentages of compensation. Costs
relating to office space and equipment are allocated based upon fixed
percentages. Inter-company balances are reconciled and reimbursed on a monthly
basis.
CONFIRMATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected KPMG Peat Marwick LLP as independent certified
public accountants to audit the books and records of the Company for the
current fiscal year and recommends that the stockholders confirm such
selection. KPMG Peat Marwick LLP served in that capacity with respect to 1996.
In the event of a negative vote, the Board of Directors will reconsider its
selection. A representative of KPMG Peat Marwick LLP is expected to be present
at the Annual Meeting, to have the opportunity to make a statement and to
respond to appropriate questions from stockholders.
13
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders of the Company must be received by the Company for
inclusion in the Proxy Statement and form(s) of proxy relating to such Annual
Meeting no later than December 31, 1997. Stockholder proposals should be
directed to the attention of the Secretary of the Company at the address of
the Company set forth on the first page of this Proxy Statement. Timely
receipt of a stockholder's proposal will satisfy only one of various
conditions established by the SEC for inclusion in the Company's proxy
materials.
By Order of the Board of Directors
Danielson Holding Corporation
Ian M. Kirschner
Secretary
April 14, 1997
14
DANIELSON HOLDING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints David M. Barse and Ian M. Kirschner, or
either of them, with power of substitution, attorneys and proxies to represent
the undersigned at the Annual Meeting of Stockholders of DANIELSON HOLDING
CORPORATION ("Danielson"), to be held on May 21, 1997 at The New York Marriott
East Side Hotel, New York, New York at 10:00 a.m.. New York time, or at any
adjournment thereof, to vote all shares of Danielson common stock, $0.10 par
value per share, which the undersigned is entitled to vote as designated below
and upon such other business that may properly come before the meeting.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR THE PROPOSALS AND, IN THE DISCRETION OF THE PROXY
HOLDERS, ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
1. The election of the following persons as Directors of Danielson to serve
until the next Annual Meeting of Stockholders and until their respective
successors shall be duly elected and qualified:
Nominees: Martin J. Whitman; David M. Barse; Joseph F. Porrino; Eugene M.
Isenberg; Frank B. Ryan; Wallace O. Sellers; Stanley J. Garstka;
Timothy C. Collins and Anthony G. Petrello.
[_] FOR all nominees
[_] AGAINST as to all nominees
[_] FOR except for vote withheld from
the following nominees:
--------------------------------------
2. Confirmation of the selection of KPMG Peat Marwick LLP as independent
certified public accountants for Danielson for the fiscal year ending
December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To vote and otherwise represent the shares on any other matters which may
properly come before the meeting or any adjournments thereof, according to
their decision and in their discretion.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE STOCKHOLDER'S SPECIFICATIONS HEREON. IN THE ABSENCE OF SUCH
SPECIFICATION, THE PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND
"FOR" CONFIRMATION OF THE SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
Date: _____________________ , 1997
----------------------------------
----------------------------------
PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON AND DATE. IF THE
SHARES ARE HELD JOINTLY, EACH
HOLDER SHOULD SIGN. WHEN SIGNING
AS AN ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN
OR AS AN OFFICER SIGNING FOR A
CORPORATION, PLEASE GIVE FULL
TITLE UNDER SIGNATURE.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.