SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
URS CORPORATION
----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[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 transactions applies:
(2) Aggregate number of securities to which transactions 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:
URS CORPORATION
100 California Street, Suite 500
San Francisco, California 94111-4529
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 21, 2000
TO THE STOCKHOLDERS OF URS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of URS
CORPORATION, a Delaware corporation, will be held on March 21, 2000 at 9:30
a.m. local time at The Ritz-Carlton Hotel, 600 Stockton Street, San Francisco,
California for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the selection of PricewaterhouseCoopers LLP as our independent
auditors for the fiscal year ending October 31, 2000.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on February 3,
2000, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ Kent P. Ainsworth,
-------------------------
Kent P. Ainsworth,
Secretary
San Francisco, California
February 15, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE
YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE
PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN
IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
URS CORPORATION
100 California Street, Suite 500
San Francisco, California 94111-4529
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 21, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of URS
Corporation, a Delaware corporation, for use at its Annual Meeting of
Stockholders to be held on March 21, 2000, at 9:30 a.m. local time (the "Annual
Meeting"), or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at The Ritz- Carlton Hotel, 600 Stockton Street, San
Francisco, California. We intend to mail this proxy statement and accompanying
proxy card on or about February 15, 2000, to all stockholders entitled to vote
at the Annual Meeting.
Solicitation
We will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. We may
reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of URS.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on
February 3, 2000 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on February 3, 2000, 16,127,030 shares of
Common Stock were outstanding and entitled to vote.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. Proxies may be revoked by any of the
following actions:
* filing a written notice of revocation with our Secretary at our principal
executive office (100 California Street, Suite 500, San Francisco,
California 94111-4529);
* filing with our Secretary at our principal executive office (100
California Street, Suite 500, San Francisco, California 94111-4529) a
properly executed proxy showing a later date; or
* attending the meeting in person and voting (attendance at the meeting
will not, by itself, revoke the proxy).
1
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in our
proxy statement and form of proxy for our 2001 Annual Meeting of Stockholders
pursuant to Rule 14a-8 of the Securities and Exchange Commission is October 18,
2000. Unless a stockholder who wishes to bring a matter before the stockholders
at our 2001 Annual Meeting notifies us of such matter prior to January 2, 2001,
management will have discretionary authority to vote all shares for which it
has proxies in opposition to such matter. We advise you to review our By-Laws,
which contain additional requirements regarding advance notice of stockholder
proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
Directors are elected by a plurality (excess of votes cast over opposing
nominees) of the votes cast by those stockholders present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of a substitute nominee proposed by our Board of
Directors. Each person nominated for election has agreed to serve if elected,
and management has no reason to believe that any nominee will be unable to
serve.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
Nominees
The nominees and certain information about them are set forth below:
Name Age Principal Occupation/Position
- ------------------------------------------------ ----- ----------------------------------------
Richard C. Blum .............................. 64 Vice Chairman of the Board
Armen Der Marderosian ........................ 62 Director
Admiral S. Robert Foley, Jr., USN (Ret.) ...... 71 Director
Marie L. Knowles .............................. 53 Director
Martin M. Koffel .............................. 60 Chief Executive Officer, President and
Chairman of the Board
Richard B. Madden .............................. 70 Director
Jean-Yves Perez .............................. 54 Director and Executive Vice President,
Business Development
Richard Q. Praeger ........................... 75 Director
Irwin L. Rosenstein ........................... 63 Director and President,
General Engineering Group
William D. Walsh .............................. 69 Director
Richard C. Blum has served as Chairman and President, Richard C. Blum &
Associates, Inc., the sole general partner of BLUM Capital Partners, L.P., a
merchant banking and equity investment management firm since 1975; as Vice
Chairman of the Board of Directors and financial consultant to URS Corporation
since 1975; as a Director of Northwest Airlines Corporation since 1989; as a
Director of Shaklee Corporation since 1990; as a Director of CB Richard Ellis
since 1993; as the Co-Chairman of Newbridge Capital since 1997; as a Director
of Glenborough Realty Trust, Inc. since 1998; and as a Director of Playtex
Products, Inc. since 1998.
Armen Der Marderosian has served as a Director of URS Corporation since
1994. Mr. Der Marderosian served as Executive Vice President, Technology and
Systems, GTE Corporation, from 1998 to December 1999 and served as Senior Vice
President of GTE Corporation from 1995 to 1997. Mr. Der Marderosian served as
Executive Vice President and General Manager, GTE Government Systems
Corporation, from 1993 to 1995.
2
Admiral S. Robert Foley, Jr., USN (Ret.) has served as a Director of URS
Corporation since 1994; as Senior Advisor/Consultant to Raytheon Corporation
from 1993 to October 1999; as Vice President, Raytheon International Inc. and
as President, Raytheon Japan from 1995 to 1998; as a Director of Frequency
Electronics since 1999; as a Director of RSI Inc. since 1998; as a Director of
SAGE Laboratories since 1998; as a Director of Filtronics Solid State since
1998; and as a Director of Cheng Engineering since 1999.
Marie L. Knowles has served as a Director of URS Corporation since 1999.
Ms. Knowles has served as Executive Vice President and Chief Financial Officer
of ARCO since 1996 and as a Director from 1996 to 1998, as Senior Vice
President of ARCO from 1993 to 1996, as Vice President and Controller of ARCO
from 1990 to 1993 and as president of ARCO Transportation from 1993 to 1996.
Ms. Knowles has served as a Director of Phelps Dodge Corp. since 1994; as a
Director of Vastar Resources, Inc. since 1996; and as a Director of America
West Holdings Corporation since 1999.
Martin M. Koffel has served as Chief Executive Officer, President and
Director of URS Corporation since May 1989. Mr. Koffel has served as Chairman
of the Board of URS Corporation since June 1989.
Richard B. Madden has served as a Director of URS Corporation since 1992;
as Retired Chairman and Chief Executive Officer since 1994 and a Director from
1971 through 1999 of Potlatch Corporation; as a Director of PG&E Corporation
since 1996 and of Pacific Gas and Electric Company since 1977; and as a
Director of CNF Transportation Inc. since 1992.
Jean-Yves Perez has served as Executive Vice President, Business
Development since November 1998 and as a Director of URS Corporation since
1997. Mr. Perez served as President of Woodward-Clyde Group, Inc. a division of
URS Corporation, from November 1997 to October 1998 and as President and Chief
Executive Officer of Woodward-Clyde Group, Inc. from 1987 to October 1997.
Richard Q. Praeger has served as a Director of URS Corporation since 1970.
Mr. Praeger has been a management and engineering consultant since 1974; he has
been the owner of Transition Books, a book store, since 1979; and served as
President, URS/Madigan-Praeger, Incorporated prior to November 1974.
Irwin L. Rosenstein has served as President, General Engineering Group
since November 1998. Mr. Rosenstein has served as Vice President of URS
Corporation since 1987 and as a Director of URS Corporation since February
1989. Mr. Rosenstein served as President of URS Greiner, URS Corporation's
former principal operating division, from November 1997 to October 1998. Mr.
Rosenstein served as President of URS Consultants, Inc., URS Corporation's
former principal operating division, from February 1989 to October 1997.
William D. Walsh has served as a Director of URS Corporation since 1988;
as Chairman of Sequoia Associates LLC, a private investment firm, since 1982;
as Chairman of the Board, Consolidated Freightways Corporation since 1996 and a
Director of Consolidated Freightways, Inc. from 1994 to 1996; as Chairman of
the Board of Newell Industrial Corporation since 1988; as Chairman of the Board
of Newell Manufacturing Corp. since 1988; as Chairman of the Board of Clayton
Group, Inc. since 1996; as a Director of Newcourt Credit Group from 1993 to
1999; as a Director of Golden Valley Farms LLC from 1996 to 1999; as a Director
of Basic Vegetable Products since 1990; as a Director of Crown Vantage, Inc.
since 1996; as a Director of Unova, Inc. since 1997; as a Director of Bemiss
Jason since 1998; as Chairman of the Board of Champion Road Machinery from 1988
to 1997; as a Director of National Education Corporation from 1982 to 1997; and
as a Director of Ameriscape, Inc. since 1999.
Board Committees and Meetings
During fiscal year 1999, the Board of Directors held five meetings. The
Board of Directors has a Compensation/Option Committee, an Audit Committee and
a Board Affairs Committee. Each Director, other than Richard C. Blum, attended
at least 75 percent of the aggregate of (1) the total number of the meetings of
the Board of Directors (held during the period for which he or she has been a
Director) and (2) the total number of meetings held by all the committees of
the Board of Directors on which he or she served (during the periods that he or
she served). Mr. Blum attended three regular meetings of the Board of Directors
held during fiscal year 1999; however, he was unable to attend two meetings due
to his travel schedule.
3
The Compensation/Option Committee consists of Mr. Madden, Chairman and Mr.
Walsh. The Compensation/Option Committee held six meetings during fiscal year
1999. The primary responsibilities of the Compensation/Option Committee are to
approve remuneration plans and other executive benefits and to administer our
incentive compensation plans, our Employee Stock Purchase Plan and the 1999
Equity Incentive Plan.
The Audit Committee consists of Mr. Der Marderosian, Chairman, Mr.
Praeger, Ms. Knowles and Admiral Foley. The Audit Committee held three meetings
during fiscal year 1999. The primary responsibilities of the Audit Committee
are to direct and approve the scope of the auditor's annual examination of our
consolidated financial statements, review with the auditors our financial
results, discuss any outstanding issues with the auditors and our management,
approve the auditor's fee and provide general oversight regarding our financial
reporting and internal control systems. In addition, the Audit Committee
reviews special issues.
The Board Affairs Committee consists of Mr. Walsh, Chairman and Messrs.
Koffel and Madden. The Board Affairs Committee held one meeting during fiscal
year 1999. The primary responsibilities of the Board Affairs Committee are to
identify, evaluate, review and recommend qualified candidates to the entire
Board of Directors, to recommend to the Board of Directors prior to each annual
meeting of stockholders (or other meeting of stockholders at which Directors
are to be elected) a slate of nominees, to recommend an individual or
individuals to fill any vacancy on the Board of Directors, and to make an
annual assessment of the performance of the Board of Directors (including
committees) and present the results to the Board of Directors with any
recommendations to improve the effectiveness or the balance of expertise of the
members. The Board Affairs Committee also has responsibility to conduct
periodic reviews of our corporate governance guidelines and other corporate
governance issues that may, from time to time, merit consideration by the
entire Board of Directors. The Board Affairs Committee will consider nominees
recommended by security holders. Any security holder who wishes to recommend a
nominee for membership on our Board of Directors must submit such nomination in
writing to Mr. William D. Walsh, Chairman of the Board Affairs Committee, in
care of URS at our principal executive offices. All such nominations will be
thoroughly reviewed by the Board Affairs Committee.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as our
independent auditors for the fiscal year ending October 31, 2000 and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. PricewaterhouseCoopers
LLP has audited our financial statements since 1988. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
our independent auditors is not required by our By-laws or otherwise. However,
the Board is submitting the selection of PricewaterhouseCoopers LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of URS and our
stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of PricewaterhouseCoopers LLP Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
4
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our Common Stock and Series B Exchangeable Convertible
Preferred Stock ("Series B Stock") as of January 3, 2000 (including Common
Stock available upon the exercise of stock options exercisable on or prior to
March 2, 2000) by each person owning beneficially more than 5 percent of our
Common Stock, each director and the executive officers. The Series B Stock
votes together with our Common Stock as if it has been converted into Common
Stock. To our knowledge, the persons named in the table have sole voting and
investment power with respect to all Common Stock and Series B Stock shown as
beneficially owned by them, subject to applicable community property laws and
except as otherwise noted.
Beneficial Ownership(1)
-------------------------------------------
Number of Number
Shares of of Shares
Common Pecent of Series
Beneficial Owner Name and Address Stock of Total B Stock
- -------------------------------------------- ----------- ------------------- -----------
BLUM Capital Partners, L.P.(2)
909 Montgomery Street
San Francisco, CA 94133 .................. 3,177,025 19.89% 4,818,114
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, WI 53202 974,764 6.10% 0
FMR Corp.
82 Devonshire Street
Boston, MA 02109-3614 .................. 1,382,200 8.65% 0
Richard C. Blum(3) ........................ 24,475 * 0
Armen Der Marderosian(4) .................. 6,634 * 0
Admiral S. Robert Foley, Jr., USN (Ret.) . 5,000 * 0
Marie L. Knowles ........................ 0 -- 0
Martin M. Koffel(5) ..................... 484,019 2.95% 0
Richard B. Madden(6) ..................... 13,634 * 0
Jean-Yves Perez(7) ........................ 132,051 * 0
Richard Q. Praeger(8) ..................... 18,845 * 0
Irwin L. Rosenstein(9) .................. 74,114 * 0
William D. Walsh(10) ..................... 30,134 * 0
Kent P. Ainsworth(11) ..................... 195,800 1.21% 0
Joseph Masters(12) ........................ 22,068 * 0
All Officers and Directors as a group
(15 persons)(13) ........................ 4,191,172 25.09% 4,181,114
Common Stock and
Series B Stock
Percent Combined Voting
Beneficial Owner Name and Address of Total Power Percentage
- -------------------------------------------- ---------- ----------------------------------
BLUM Capital Partners, L.P.(2)
909 Montgomery Street
San Francisco, CA 94133 .................. 100% 38.45%
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, WI 53202 -- 4.69%
FMR Corp.
82 Devonshire Street
Boston, MA 02109-3614 .................. -- 6.65%
Richard C. Blum(3) ........................ -- *
Armen Der Marderosian(4) .................. -- *
Admiral S. Robert Foley, Jr., USN (Ret.) . -- *
Marie L. Knowles ........................ -- --
Martin M. Koffel(5) ..................... -- 2.28%
Richard B. Madden(6) ..................... -- *
Jean-Yves Perez(7) ........................ -- *
Richard Q. Praeger(8) ..................... -- *
Irwin L. Rosenstein(9) .................. -- *
William D. Walsh(10) ..................... -- *
Kent P. Ainsworth(11) ..................... -- *
Joseph Masters(12) ........................ -- *
All Officers and Directors as a group
(15 persons)(13) ........................ 100% 41.86%
<FN>
- ------------
* Less than one percent.
(1) As of January 3, 2000, there were 15,974,830 shares of our Common Stock
outstanding. Our Series B Stock votes as if it had been converted into
Common Stock, and as of January 3, 2000, there were 4,818,114 shares
outstanding on an as-if-converted basis. Percentages are calculated with
respect to a holder of options exercisable prior to March 2, 2000 as if
such holder had exercised its options. Option shares held by other holders
are not included in the percentage calculation with respect to any other
stockholder.
(2) Richard C. Blum is the President, Chairman and majority stockholder of
Richard C. Blum & Associates, Inc. Richard C. Blum & Associates, Inc. is
the sole general partner of BLUM Capital
5
Partners, L.P. The number of shares represents 996 shares owned directly by
BLUM Capital Partners, L.P. and 2,568,855 shares owned directly by five
limited partnerships for which BLUM Capital Partners, L.P. serves as the
sole general partner and two investment advisory clients for which BLUM
Capital Partners, L.P. exercises voting and investment discretion. One of
the investment advisory clients is The Common Fund, 450 Post Road East,
Westport, CT 06881-0969, which owns 1,077,980 shares, or 6.75 percent of
the outstanding Common Stock, directly. Richard C. Blum & Associates, Inc.
and BLUM Capital Partners, L.P. disclaim beneficial ownership of the shares
owned directly by such partnerships and investment advisory clients except
to the extent of any pecuniary interest therein. Richard C. Blum &
Associates, Inc. is affiliated with RCBA Strategic Partners, L.P., which
holds Series B Stock. The Series B Stock votes as if it were converted into
shares of our Common Stock. Richard C. Blum & Associates, Inc., BLUM
Capital Partners, L.P. and RCBA Strategic Partners, L.P. disclaim
beneficial ownership of the shares owned directly by them or their
affiliates except to the extent of any pecuniary interest therein.
(3) Includes 12,021 shares held directly, 2,454 shares held as beneficiary of
the RCB Keogh Plan, and currently exercisable options. Does not include
shares held by BLUM Capital Partners, L.P. or entities managed by BLUM
Capital Partners, L.P., which Mr. Blum may be deemed to own indirectly in
his capacity as the President, Chairman and majority stockholder of
Richard C. Blum & Associates, Inc., in its capacity as the sole general
partner of BLUM Capital Partners, L.P. Mr. Blum disclaims beneficial
ownership of these shares except to the extent of any pecuniary interest
therein.
(4) Includes 4,634 shares held directly and currently exercisable options.
(5) Includes 55,019 shares held directly and currently exercisable options.
(6) Includes 9,634 shares held directly and currently exercisable options.
(7) Includes 118,711 shares held directly and currently exercisable options.
(8) Includes 8,845 shares held directly and currently exercisable options.
(9) Includes 2,114 shares held directly and currently exercisable options.
(10) Includes 22,134 shares held directly and currently exercisable options.
(11) Includes 35,000 restricted shares held directly and currently exercisable
options.
(12) Includes 101 shares held directly and currently exercisable options.
(13) Includes shares held by BLUM Capital Partners, L.P. and by entities
managed by BLUM Capital Partners, L.P., which Mr. Blum may be deemed to
own indirectly in his capacity as the majority stockholder of Richard C.
Blum & Associates, Inc., in its capacity as the sole general partner of
BLUM Capital Partners, L.P. Mr. Blum disclaims beneficial ownership of
these shares except to the extent of any pecuniary interest therein.
</FN>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires our directors and executive officers, and persons who own more than
ten percent of a registered class of our equity securities, to file with the
SEC initial reports of ownership and reports of changes in ownership of our
Common Stock and other equity securities. Officers, directors and greater than
ten percent stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports
furnished to the us and written representations that no other reports were
required, during the fiscal year ended October 31, 1999, our officers,
directors and greater than 10 percent beneficial owners complied with all of
their Section 16(a) filing requirements except for the following filings:
* Admiral S. Robert Foley, Jr., USN (Ret.) filed his Form 4 for March 1999
on April 15, 1999, five days late; and
* Mr. Ainsworth filed his March 1999 Form 4 in a timely fashion, but it was
declared by the SEC to be deficient due to typographical error on May 17,
1999. It was refiled with the SEC on May 21, 1999 and is considered a late
filing.
6
Report of the Compensation Committee on Executive Compensation for Fiscal Year
1999
The Compensation/Option Committee (the "Committee") has the
responsibility, under delegated authority from our Board of Directors, for
developing, administering and monitoring our executive compensation in the long
term interests of URS and our stockholders. The Committee is composed solely of
our independent non-employee Directors. In fulfilling its responsibilities, the
Committee has used the services of independent compensation consultants.
With the approval of the Committee, we have developed compensation plans
and programs designed to attract and retain qualified key executives and senior
managers critical to our success, and also to provide such executives and
managers with performance-based incentives clearly tied to our profitability
and stockholder returns. Compensation of our executives, including the Chief
Executive Officer, consists of three basic components: base compensation,
annual bonuses and long-term incentive awards.
Base Compensation
Officer base salaries are reviewed regularly and adjusted as needed based
on individual performance and competitive practices. Base compensation for new
executives from outside URS is established through negotiation between URS and
the executive at the time the executive is first hired.
Each of our senior executives named in the following Summary Compensation
Table (the "Named Executives") has an employment agreement with us which
provides for a minimum base salary and other compensation benefits (see
"Employment Agreements"). Under such agreements, base salaries are subject to
periodic review and possible increase by the Committee, but cannot be decreased
without the Named Executive's consent. Base salaries of all other executives
and senior managers are subject to periodic review and increase or decrease by
our Chief Executive Officer at his option, within the overall framework of the
compensation policies established by the Committee.
When establishing or reviewing base compensation levels for the Named
Executives, the Committee considers numerous factors, including but not limited
to the following: (i) the qualifications of the executive; (ii) whether the
base compensation is within a reasonable range of executive pay levels at other
publicly and privately-held companies which potentially compete with us for
business and executive talent; (iii) the financial performance of those
companies relative to ours; (iv) our strategic goals for which the executive
has responsibility; and (v) the recommendations of our Chief Executive Officer
(except with respect to his own base compensation). The companies whose
compensation levels and practices are considered by the Committee for
comparison are not necessarily those identified in the stockholder return peer
group discussed in the Performance Measurement Comparison below because we
compete for executive talent with numerous companies outside that peer group.
Annual Bonus Program
In addition to base compensation, each of our executives and selected
senior managers, including the Named Executives, participates in the URS
Corporation Incentive Compensation Plan (the "Bonus Plan"). Under the Bonus
Plan, participating executives and senior managers ("Participants") can earn
annual bonuses based on formulas tied to certain predefined financial
performance targets which are established annually by the Committee. Each
Participant is assigned a "Target Bonus" at the beginning of the year expressed
as a percentage of his or her base salary. If the financial performance targets
are met, each Participant's bonus is equal to the Target Bonus. If performance
targets are not met, bonuses are determined as a declining percentage of Target
Bonuses depending on the extent of the shortfall. No bonus is paid under the
Bonus Plan if we fail to achieve predefined minimum performance levels.
Conversely, if performance targets are exceeded, then each Participant can earn
a bonus in excess of the Target Bonus determined by the extent of the
performance in excess of target, up to a maximum of two times the Target Bonus.
Mr. Koffel's Target Bonus currently is established by contract at 85
percent of his base salary. Target Bonuses for the other Named Executives are
established by either contract or the Committee. Target Bonuses for other
Participants are established annually by the Chief Executive Officer within the
overall framework of the compensation policies established by the Committee.
For the Named Executives, Target Bonuses currently range from 40 percent to 85
percent of base salary.
7
Financial performance targets under the Bonus Plan are developed initially
by the Chief Executive Officer and are approved by the Committee. Our fiscal
year net income is the sole financial measurement used to gauge individual
performance for the Named Executives, other than Mr. Perez whose financial
performance targets are based on operating profit contribution and new
business. For other Participants, measurements of operating profit
contribution, cash flow and new business are applied to the financial
performance of the operating division or unit for which the Participant has
management responsibility. However, increasing emphasis is placed on
company-wide financial performance as the Participants' responsibilities
increase. Overall financial performance thresholds must be met before any
bonuses can be earned at all participation levels.
Long-Term Incentive Awards
We have adopted the 1999 Equity Incentive Plan (the "1999 Plan") to
provide executives and other key employees with equity-based incentives to
maximize stockholder value. Awards under the 1999 Plan can be stock options,
performance restricted stock or restricted stock, all of which are designed
both to encourage recipients to focus on critical long-range objectives and
award recipients with an equity stake in URS, thereby closely aligning their
interests with those of our stockholders.
Recipients generally fall into five different groups: corporate
management, division managers, office managers, key technical staff, and key
administrative staff, and the size of awards are generally consistent within
each of these groups. The Committee periodically considers whether and when to
approve specific awards under the 1999 Plan based on the recommendations of the
Chief Executive Officer. Factors considered include the executive's or key
employee's position with URS, his or her performance and responsibilities and
the long-term incentive award levels of comparable executives and key employees
at companies which compete with us for executive and managerial talent.
However, the 1999 Plan does not provide any formulaic method for weighing these
factors. Finally, the Committee weighs how much grants under long-term
stockholder plans can potentially dilute our outstanding common stock in
comparison to other publicly-traded companies that potentially compete with us
for business and executive talent.
Chief Executive Officer Compensation
The compensation of Mr. Koffel during fiscal year 1999 was determined on
the same basis as discussed above: he received his base salary under the terms
of his employment agreement and he participated in the Bonus Plan with a Target
Bonus of 60 percent of his base salary. Our net income in fiscal year 1999
exceeded target levels, and as a result Mr. Koffel received a bonus of $650,958
under the payout formula of the Bonus Plan. On December 14, 1999, the Committee
approved an increase to Mr. Koffel's base compensation from $550,000 to
$750,000 per year and an increase of his target Bonus from 60% to 85%, in
recognition of both our performance and our increased size following the
acquisition of Dames & Moore Group and a review of competitive practices at
other companies.
In December 1997, in order to provide additional financial incentives for
Mr. Koffel to remain employed by us, the Committee awarded him 50,000 shares of
restricted stock under our 1991 Stock Incentive Plan (the "1991 Plan") which
were scheduled to vest on the third, fourth and fifth anniversaries of the
grant, and also approved a contingent grant of up to 50,000 shares of
performance restricted stock which Mr. Koffel could earn based on the
cumulative total returns to our stockholders during the periods ending on the
third, fourth and fifth anniversaries of the award. The issuance of the Series
B Stock to RCBA Strategic Partners, L.P. in connection with the acquisition of
Dames and Moore Group (the "Series B Issuance") constituted a "Change in
Control" under the terms of Mr. Koffel's employment agreement and the
restricted stock and performance restricted stock grants, and as a result all
100,000 of these shares became fully issued and vested in October 1999
following approval by our stockholders of the Series B Issuance.
On March 23, 1999, on the recommendation of the Committee, our Board of
Directors approved special supplemental compensation for Martin Koffel to
recognize Mr. Koffel's significant contributions to our growth and success
during the past decade, to induce him to continue as our Chief Executive
Officer through his expected retirement at age 65 and to incentivize him to
continue to increase stockholder value. This special supplemental compensation,
described in greater detail under "Employment Agreements" below, includes
option grants for an aggregate of 500,000 shares under the 1991 Plan and the
8
1999 Plan and a supplemental executive retirement plan. The Committee's
recommendation and the Board's decision were based on the growth in our income
and stockholder value and a review of competitive practices.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), which was added to the Code by the Omnibus Budget Reconciliation Act
of 1993, precludes the deduction by a publicly held corporation for
compensation paid to certain employees to the extent that such compensation
exceeds $1,000,000, except for compensation paid under a written binding
contract in existence on February 17, 1993 and performance-based compensation.
The Internal Revenue Service has issued regulations for Section 162(m), which
provide that performance-based compensation will not be subject to the
deduction limit if (i) it is payable solely on account of the attainment of
pre-established, objective performance goals, (ii) the performance goals are
established by a compensation committee composed solely of two or more "outside
directors", (iii) the material terms of the performance goals under which the
compensation is to be paid are disclosed to and approved by stockholders before
payment, and (iv) the compensation committee certifies that the performance
goals have been satisfied before payment.
Because of our significant growth and the concomitant increase in the
levels of executive compensation for our Chief Executive Officer and the other
Named Executives, in December 1998 our Board of Directors approved the
Committee's recommendation that the Bonus Plan be submitted to our stockholders
for approval so that bonuses paid to Participants under the Plan could qualify
as performance-based compensation for purposes of Section 162(m). Our
stockholders approved the Bonus Plan at our March 1999 Annual Meeting, so annual
bonuses paid under the Bonus Plan can qualify as performance-based compensation.
The specific restricted stock and performance restricted stock grants awarded to
Mr. Koffel and Mr. Ainsworth in December 1997, which accelerated and became
fully vested in October 1999 due to the Series B Issuance as described above,
were not submitted for stockholder approval. Consequently, these grants do not
qualify as performance-based compensation, and the Section 162(m) regulations
will affect the preparation of our tax filings for fiscal year 1999. The
Committee will continue to consider ways to maximize the deductibility of
executive compensation, while retaining the flexibility to compensate executive
officers in a manner deemed appropriate relative to their performance and to
competitive compensation levels and practices at other companies.
Respectfully Submitted,
THE COMPENSATION/OPTION COMMITTEE
Richard B. Madden, Chairman
William D. Walsh
Compensation/Option Committee Interlocks and Insider Participation
As noted above, the Compensation/Option Committee is comprised of two
non-employee directors: Messrs. Madden and Walsh. No member of the
Compensation/Option Committee is or was formerly one of our officers or
employees. No interlocking relationship exists between the Board of Directors
or Compensation/Option Committee and the board of directors or compensation
committee of any other company, nor has such interlocking relationship existed
in the past.
9
Compensation and Option/SAR Tables
The following tables set forth certain information regarding the salary
and benefits paid during each of the three most recent fiscal years, and
options granted by URS in the most recent fiscal year, to its Chief Executive
Officer and its four most highly compensated executive officers (other than the
Chief Executive Officer) for services rendered to URS and its subsidiaries.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
------------------------------------------
Annual Compensation Awards(2) Payouts
------------------------------- -------------------------------- ---------
Other
Annual Restricted Securities
Name and Compen- Stock Underlying LTIP All Other
Principal Salary Bonus sation Awards Options/ Pay- Compen-
Position Year ($) ($) ($)1 ($)(3) SARs(#) outs($) sation($)
- ---------------------- --------- ---------- ---------- --------- ------------------- ------------ --------- -----------------
Martin M. Koffel 1999 $542,480 $650,958 $2,182 $ 4,344,500(4) 300,000 0 $ 40,474(6)
Chairman of the 1998 489,750 520,738 2,715 703,125(5) 66,000 0 16,727
Board; Chief 1997 415,000 446,644 2,712 0 36,000 0 42,146
Executive Officer;
President
Irwin L. Rosenstein 1999 $384,117 $384,117 $4,279 0 27,000 0 $ 9,121(7)
President, General 1998 342,711 243,305 3,532 0 27,000 0 8,363
Engineering Group 1997 315,000 214,980 429 0 24,000 0 13,529
Jean-Yves Perez 1999 $327,895 $233,740 0 0 20,000 0 $ 4,482 (9)
Executive Vice 1998(8) 310,000 184,687 0 0 20,000 0 10,917
President, Business 1997 0
Development
Kent P. Ainsworth 1999 $300,479 $300,479 $1,038 $ 1,149,500(10) 27,000 0 $ 4,512(12)
Executive Vice 1998 268,370 237,793 3,210 351,563(11) 27,000 0 3,274
President; Chief 1997 220,000 157,850 0 0 20,000 0 1,500
Financial Officer;
Secretary
Joseph Masters, 1999 $186,321 111,740 $1,341 0 10,000 0 $ 4,098(13)
Vice President and 1998 165,000 73,100 0 0 15,000 0 1,602
General Counsel 1997 151,000 55,132 0 0 2,400 0 1,100
<FN>
- ------------
(1) The amounts in this column primarily represent automobile allowances.
(2) Mr. Koffel and Mr. Ainsworth have disposed of shares of our Common Stock
in connection with cashless exercises of stock options and the payment of
withholding taxes on such exercises and on the grant and vesting of
restricted stock. Mr. Koffel, Mr. Ainsworth and certain other Named
Executives may continue to dispose of shares of our Common Stock in this
manner and for similar purposes.
(3) The aggregate number and value as of October 31, 1999 of each of the Named
Executive's restricted share holdings are as follows: Mr. Koffel, 0
shares, $0; Mr. Rosenstein, 0 shares, $0; Mr. Ainsworth, 35,000 shares,
$630,000; Mr. Perez, 0 shares, $0; Mr. Masters 0 shares, $0. Dividends
will be paid on such restricted stock if and when declared on our Common
Stock.
(4) On December 16, 1997, Mr. Koffel was granted the right to receive 50,000
shares of restricted stock if certain performance targets were met during
the years 2000, 2001 and 2002. Upon the issuance of the Series B Stock to
RCBA Strategic Partners, L.P., the grant of such shares accelerated and
they became fully vested.
(5) On December 16, 1997, Mr. Koffel was awarded 50,000 shares of restricted
stock which were scheduled to vest in equal thirds on December 16, 2000,
2001 and 2002. These shares became fully vested upon the issuance of the
Series B Stock to RCBA Strategic Partners, L.P.
10
(6) Consists of matching contributions of $3,200 paid pursuant to our Defined
Contribution Plan, a $2,161 inflation adjustment (based on a cost of
living index) to amount previously credited under the Selected Executives
Deferred Compensation Plan and $35,113 of term life and disability
insurance premiums paid pursuant to Mr. Koffel's employment agreement.
(7) Consists of matching contributions of $3,200 paid pursuant to the Defined
Contribution Plan, a $4,480 inflation adjustment (based on a cost of
living index) to amounts previously credited under the Selected Executives
Deferred Compensation Plan and $1,441 of term life and disability
insurance premiums.
(8) Mr. Perez has been employed by URS since November 1, 1997.
(9) Consists of matching contributions of $3,200 paid pursuant to our Defined
Contribution Plan and $1,282 of term life and disability insurance
premiums.
(10) On December 16, 1997, Mr. Ainsworth was granted the right to receive
25,000 shares of restricted stock if certain performance targets were met
during the years 2000, 2001 and 2002. Upon the issuance of the Series B
Stock to RCBA Strategic Partners, L.P., the grant of such shares
accelerated and they became fully vested.
(11) On December 16, 1997, Mr. Ainsworth was awarded 25,000 shares of
restricted stock which were scheduled to vest in equal thirds on December
16, 2000, 2001 and 2002. These shares became fully vested upon the
issuance of the Series B Stock to RCBA Strategic Partners, L.P
(12) Consists of matching contributions of $3,200 paid pursuant to our Defined
Contribution Plan and $1,312 of term life and disability insurance
premiums.
(13) Consists of matching contributions of $3,214 paid pursuant to our Defined
Contribution Plan and $884 of term life and disability insurance premiums.
</FN>
STOCK OPTION GRANTS AND EXERCISES
We grant options to our executive officers under our 1999 Equity Incentive
Plan. Prior to October 12, 1999, we granted options to our executive officers
under our 1991 Incentive Plan. As of January 3, 2000, options to purchase a
total of 3,279,377 shares were outstanding under both the 1999 Equity Incentive
Plan and the 1991 Incentive Plan. No shares remain available for grant under
the 1991 Incentive Plan, and options to purchase 613,000 shares remain
available for grant under the 1999 Equity Incentive Plan. There were a total of
835,500 shares granted to employees in fiscal year 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
--------------------------- Potential Realizable
Number of % of Total Value at Assumed
Securities Options/ Annual Rates of
Underlying SARs Stock Price
Options/ Granted to Exercise Appreciation for
SARs Employees Or Base Option Term
Granted in Fiscal Price Expiration ----------------------------
Name (#) Year (S/Sh) Date 5%($) 10%($)
- ----------------------- ------------ ------------ ---------- ------------ ------------ -------------
Mr. Koffel ............ 300,000 35.91% $ 15.75 3/22/09 $7,696,527 $12,255,433
Mr. Rosenstein ...... 27,000 3.23 15.75 3/22/09 692,687 1,102,989
Mr. Perez ............ 20,000 2.39 15.75 3/22/09 513,102 817,029
Mr. Ainsworth ......... 27,000 3.23 15.75 3/22/09 692,687 1,102,989
Mr. Masters ......... 10,000 1.20 15.75 3/22/09 256,551 408,514
11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End(#) FY-End($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
- ---------------------- ----------------- ------------- ----------------- -----------------
Mr. Koffel ......... 100,000 $2,358,000 429,000 $5,085,290
300,000 675,000
Mr. Rosenstein ...... 0 0 122,000 1,044,710
53,000 182,670
Mr. Perez ............ 0 0 6,667 15,001
33,333 108,749
Mr. Ainsworth ...... 0 0 160,800 1,182,630
0 0
Mr. Masters ......... 0 0 21,967 176,267
18,333
60,967
<FN>
- ----------------
(1) Based on 1999 fiscal year-end share price equal to $18.00.
</FN>
EXECUTIVE COMPENSATION
Compensation of Directors
During fiscal year 1999, the non-employee members of our Board of
Directors received the stock fee described below, an annual cash fee of $15,000
plus an attendance fee of $2,000 for each Board of Directors meeting attended
in person and a fee of $500 for participation in any Board of Directors meeting
by telephone. Non-employee Directors who are members of a committee of the
Board received $625 for each committee meeting attended in person and a fee of
$500 for participation in any committee meeting by telephone. The Chairman of
each committee received an additional $625 per meeting. Employee members of the
Board of Directors did not receive any fees.
Pursuant to the terms of the Non-Executive Directors Stock Grant Plan,
approved at the annual meeting of stockholders held on March 25, 1997, each
non-employee member of our Board of Directors (currently Messrs. Blum, Der
Marderosian, Madden, Praeger and Walsh, Ms. Knowles and Admiral Foley) who is
re-elected to serve as a Director at each annual stockholder meeting also
receives a grant of Common Stock at such meeting. The Non-Executive Directors
Stock Grant Plan originally provided that each non-employee Director would
receive that number of shares of Common Stock determined by dividing $15,000 by
the closing price of the Common Stock on the date of the annual meeting of
stockholders, rounded down to the nearest whole share; on December 16, 1997 the
Board of Directors amended the Non-Executive Directors Stock Grant Plan to
increase the numerator to $25,000. Prior to the approval of the Non-Executive
Directors Stock Grant Plan, upon the conclusion of each annual meeting of
stockholders, each non-employee Director who was re-elected to serve as a
Director automatically received an option to purchase 1,000 shares under the
1991 Plan (such annual grants of options to non-employee Directors were
eliminated pursuant to the amended and restated 1991 Plan approved at the
annual meeting of stockholders held on March 25, 1997).
On July 13, 1999, the Board of Directors adopted the 1999 Equity Incentive
Plan, and it was approved by our stockholders on October 12, 1999. Effective
July 13, 1999, the grants of Common Stock described above that were previously
made under the Non-Executive Directors Stock Grant Plan will be made under the
1999 Equity Incentive Plan and no further grants will be made under the
Non-Executive Directors Plan. The terms of the grants made under the 1999
Equity Incentive Plan will be identical to the terms of the grants made under
the Non-Executive Directors Plan.
Non-employee Directors who were elected prior to December 17, 1996 also
are entitled to participate, at our expense, in a medical benefit plan. Based
upon our costs, the annualized monetary value of
12
this benefit to those non-employee Directors participating in fiscal year 1999
was in the range between $4,114 and $6,075 depending on the ages of the
participants and eligible family members. We also maintain a policy whereby
non-employee Directors may be hired on an as-needed basis from time to time as
consultants for special projects at the rate of up to $3,000 per day (plus
reasonable expenses) upon the recommendation of the Chairman of the Board or
any officer designated by the Chairman of the Board.
Certain Relationships and Related Transactions
Prior to July 13, 1999, Richard C. Blum, one of our Directors, received
$60,000 per year for services provided under a consulting agreement with us. In
addition, we paid $90,000 per year to BLUM Capital Partners, L.P. under a
separate consulting agreement. On July 13, 1999, Mr. Blum voluntarily
terminated the consulting agreements. Mr. Blum is the majority stockholder of
Richard C. Blum & Associates, Inc. Richard C. Blum & Associates, Inc., in its
capacity as the sole general partner of BLUM Capital Partners, L.P., indirectly
through several entities, holds 7,995,139 shares, or approximately 38 percent,
of our outstanding Common Stock.
Richard C. Blum & Associates, Inc. is affiliated with RCBA Strategic
Partners, L.P. RCBA Strategic Partners, L.P. holds Series B Stock, which has
voting rights as if it were converted into shares of our Common Stock. Taking
account of the voting rights of the Series B Stock, BLUM Capital Partners, L.P.
and its affiliates are the beneficial owners of approximately 38 percent of our
outstanding Common Stock.
Employment Agreements
Martin M. Koffel
Mr. Koffel has an evergreen employment agreement with us, executed in
December 1991, under which Mr. Koffel receives an annual base salary determined
by the Compensation/Option Committee (the "Committee"), based on relevant
factors outlined in their Compensation/Option Committee Report above. The
agreement also specifies that Mr. Koffel is eligible for a target bonus equal
to at least 60 percent of his base salary, or such higher percentage as may be
established by the Committee. On December 14, 1999, the Committee approved an
increase in Mr. Koffel's base compensation from $550,000 to $750,000 per year
and an increase in his target bonus to 85 percent of his base salary, both
effective November 1, 1999.
On October 13, 1998, following a recommendation made by the Committee, the
Board of Directors approved an amendment to Mr. Koffel's employment agreement
to provide for a tax gross-up payment to Mr. Koffel to offset the cost of
excise taxes that could be imposed if his employment is terminated following a
Change in Control, as defined below, and any resulting severance payments due
Mr. Koffel are considered to be "excess parachute payments" subject to excise
tax under Sections 280G and 4999 of the Internal Revenue Code, and to reimburse
Mr. Koffel for the cost of term life insurance with a face amount equal to up
to four times his base salary and to provide for a tax gross-up payment to Mr.
Koffel to offset the cost of all income and employment taxes imposed on Mr.
Koffel because of such reimbursement. Accordingly, Mr. Koffel and URS entered
into an Amendment to Employment Agreement dated as of October 13, 1998
reflecting such amendments.
Mr. Koffel's employment agreement provides that if his employment is
terminated by us without cause, other than by reason of death or disability, we
will pay a severance payment equal to 150 percent of his then-current base
salary and his then-current target bonus. If Mr. Koffel voluntarily resigns his
employment within one year following a Change in Control, as defined below, or
if Mr. Koffel is terminated for any reason other than for cause at any time
after a Change in Control, he becomes entitled to a special severance payment
equal to 300 percent of the sum of his then-current base salary and his
then-current target bonus. In addition, all awards held by Mr. Koffel under any
of our incentive, deferred compensation, bonus, stock and similar plans, to the
extent unvested, will become vested immediately upon a Change in Control. A
"Change in Control" is defined in the agreement to include:
* a change in control required to be reported pursuant to Item 6(e) of
Schedule 14A of Regulation 14A under the Exchange Act;
* any person acquiring 20 percent or more of our voting power; or
13
* more than two-thirds of our directors not having served on our Board of
Directors for 24 months prior to the change in control.
On or about May 10, 1996, Heartland Advisors, Inc., or Heartland, one of
our stockholders, purchased additional shares of common stock, which increased
Heartland's ownership of outstanding common stock from approximately 19 percent
to approximately 22 percent (the "Heartland Transaction"), resulting in a
technical Change in Control under Mr. Koffel's employment agreement and the
terms of stock options granted to Mr. Koffel under our 1991 Stock Incentive
Plan. As a result, the special severance payment is payable to Mr. Koffel if he
is terminated for any reason other than for cause at any time during the term
of his employment agreement. In addition, the options previously granted to Mr.
Koffel in 1994, 1995 and 1996 under our 1991 Stock Incentive Plan are now fully
vested.
On October 12, 1999, RCBA Strategic Partners, L.P. acquired shares of our
Series B Stock (the "Series B Issuance"). These shares of Series B Stock vote
as if they had been converted into our Common Stock. Therefore, BLUM Capital
Partners, L.P. and its affiliates now hold approximately 38 percent of our
Common Stock. As a result of the Series B Issuance, a Change in Control
occurred under Mr. Koffel's employment agreement, and the stock options for
56,000 shares granted to Mr. Koffel in 1997 and 1998, and the 100,000 shares of
restricted stock and performance restricted stock granted to Mr. Koffel in
1997, became fully vested.
On March 23, 1999, our Board of Directors approved special supplemental
compensation for Martin Koffel. Its purpose is to recognize Mr. Koffel's
significant contributions to our growth and success during the past decade, to
induce him to continue as our Chief Executive Officer through his expected
retirement at age 65 and to incentivize him to continue to increase stockholder
value. This special supplemental compensation includes:
* a grant of options for 300,000 shares under the 1991 Stock Incentive
Plan;
* a grant of options for an additional 200,000 shares under our 1999
Equity Incentive Plan; and
* a supplemental executive retirement plan ("SERP").
The options for 300,000 shares have an exercise price of $15.75 per share,
the closing price of our Common Stock on the day preceding the grant, and will
vest over five years at the rate of 20 percent on each anniversary of the grant
date. The options for the additional 200,000 shares have an exercise price of
$21.4375, the closing price of our common stock on the day preceding the grant,
and will vest as if they had been granted at the same time as the 300,000 share
options. Both the 300,000 share options and the 200,000 share options will be
exercisable during a three-year period following Mr. Koffel's retirement. The
options also will vest immediately and become exercisable in full upon a Change
in Control, as defined below.
14
Effective July 13, 1999, Mr. Koffel entered into the SERP. Under the terms
of the SERP, we will provide him with an annual lifetime retirement benefit.
Benefits are based on Mr. Koffel's final average annual compensation and his
age at the time of employment termination. "Final average compensation" means
the average of Mr. Koffel's salary plus target bonus established for him under
our incentive compensation program during the consecutive 36 months in his
final 120 months of employment in which such average was the highest. Estimated
annual benefits are as follows:
Age at Termination of Employment
----------------------------------------------------------------
Final Average 61 65
Compensation or Younger 62 63 64 or Older
- --------------------- ------------ ---------- ---------- ---------- ----------
$ 500,000 $ 50,000 $100,000 $150,000 $200,000 $250,000
550,000 55,000 110,000 165,000 220,000 275,000
600,000 60,000 120,000 180,000 240,000 300,000
650,000 65,000 130,000 195,000 260,000 325,000
700,000 70,000 140,000 210,000 280,000 350,000
750,000 75,000 150,000 225,000 300,000 375,000
800,000 80,000 160,000 240,000 320,000 400,000
850,000 85,000 170,000 255,000 340,000 425,000
900,000 90,000 180,000 270,000 360,000 450,000
950,000 95,000 190,000 285,000 380,000 475,000
1,000,000 100,000 200,000 300,000 400,000 500,000
1,050,000 105,000 210,000 315,000 420,000 525,000
1,100,000 110,000 220,000 330,000 440,000 550,000
As of October 31, 1999, Mr. Koffel had attained age 60, and his final
average compensation was $1,021,857.
Benefits under the SERP shown in the above table are computed on the basis
of an annuity for the life of Mr. Koffel, with a guarantee of payments for at
least ten years, and are not subject to offset for Social Security or any other
payments or benefits. Actuarially equivalent forms of payment are available
under the SERP.
The 300,000 share options, the 200,000 share options and the SERP contain
a definition of Change in Control which parallels the definition contained in
Mr. Koffel's employment agreement described above, but with certain
modifications. The acquisition or holding by a person of in excess of 20
percent but less than a majority of our voting power in the ordinary course of
such person's business and not with the purpose or effect of changing or
influencing the control of us, and otherwise in a situation where the person is
eligible to file a short-form statement on Schedule 13G under Rule 13d-1 under
the Exchange Act is excluded from the definition of Change in Control. The
Series B Stock held by RCBA Strategic Partners, L.P. and the acquisition and
holding of additional shares of our Common Stock upon the conversion of the
Series B Stock are ignored for the purpose of meeting the 20 percent threshold
outlined in the above definition of Change in Control unless and until such
shares, together with the additional holdings of Common Stock by BLUM Capital
Partners, L.P., exceed 50 percent of the voting power of our then-outstanding
Common Stock.
Irwin L. Rosenstein
Mr. Rosenstein has an evergreen employment agreement with URS Greiner
Woodward Clyde Consultants, Inc., executed in August 1991, under which Mr.
Rosenstein receives an annual base salary determined by the Committee, based on
relevant factors outlined in their Compensation/Option Committee Report above.
On November 5, 1999, the Committee increased Mr. Rosenstein's annual base
salary from $385,000 to $440,000 and increased his target bonus percentage from
50 percent to 60 percent of his base salary, both effective November 1, 1999.
The agreement also obligates his employer to maintain a $400,000 term life
insurance policy for Mr. Rosenstein and disability insurance providing him with
benefits of at least $7,000 per month in the event
15
of his disability. If Mr. Rosenstein's employment is terminated without cause
(other than by reason of death or disability) or if he voluntarily resigns his
employment in the event that his salary is reduced, he is entitled to
continuation of his base salary for one year (or until normal retirement at age
65, if less).
Also under his employment agreement, if Mr. Rosenstein ceases to be
employed within one year following a Change in Control, as defined below, Mr.
Rosenstein will be entitled to receive a severance payment equal to 200 percent
of his then current base salary. A Change in Control is defined in Mr.
Rosenstein's agreement as the acquisition by any person of 51 percent or more
of his employer's or our then outstanding securities having the right to vote
at elections of directors. The Heartland Transaction did not result in a Change
in Control under Mr. Rosenstein's employment agreement, but resulted in a
technical change in control under certain stock options granted to Mr.
Rosenstein in 1995 under the 1991 Plan. As a result, such options are now fully
vested.
On October 13, 1998, following a recommendation made by the Committee, the
Board of Directors approved an amendment to Mr. Rosenstein's employment
agreement to provide for a tax gross-up payment to Mr. Rosenstein to offset the
cost of excise taxes that could be imposed if his employment is terminated
following a change in control and any resulting severance payments due Mr.
Rosenstein are considered to be "excess parachute payments" subject to excise
tax under Sections 280G and 4999 of the Code. Accordingly, Mr. Rosenstein
entered into an Amendment to Employment Agreement dated as of October 13, 1998
reflecting such amendments.
Jean-Yves Perez
Mr. Perez executed an evergreen employment agreement with URS Greiner
Woodward-Clyde Group, Inc. in November 1997 under which Mr. Perez receives an
annual base salary determined by the Committee, based on relevant factors
outlined in their Compensation/Option Committee Report above. The agreement
also specifies that Mr. Perez is eligible for a target bonus equal to 50
percent of his base salary. On November 5, 1999, the Committee increased Mr.
Perez's annual base salary from $341,000 to $360,000, effective November 1,
1999.
If during the first half of his employer's fiscal year Mr. Perez's
employment is terminated without cause (other than by reason of death or
disability) or if Mr. Perez voluntarily resigns his employment in the event
that his salary is reduced or his employer breaches its obligation to employ
Mr. Perez in an executive position as described in the agreement, Mr. Perez is
entitled to a severance payment equal to 100 percent of his then-current base
salary plus any accrued and unpaid vacation at the time of such termination,
and if during the second half of his employer's fiscal year Mr. Perez's
employment is terminated without cause (other than by reason of death or
disability) or if Mr. Perez voluntarily resigns his employment in the event
that his salary is reduced or his employer breaches its obligation to employ
Mr. Perez in an executive position as described in the agreement, Mr. Perez is
entitled to a severance payment equal to 120 percent of his then-current base
salary plus any accrued and unpaid vacation at the time of such termination.
Also, under his employment agreement, if Mr. Perez ceases to be employed
within one year following a Change in Control, as defined below, Mr. Perez will
be entitled to receive a severance payment equal to 200 percent of his
then-current base salary. A Change in Control is defined in Mr. Perez's
agreement as the acquisition by any person of 51 percent or more of his
employer's or our then outstanding securities having the right to vote at
elections of directors.
On October 13, 1998, following a recommendation made by the Committee, the
Board of Directors approved an amendment to Mr. Perez' employment agreement to
provide for a tax gross-up payment to Mr. Perez to offset the cost of excise
taxes that could be imposed if his employment is terminated following a change
in control and any resulting severance payments due Mr. Perez are considered to
be "excess parachute payments" subject to excise tax under Sections 280G and
4999 of the Code. Accordingly, Mr. Perez entered into an Amendment to
Employment Agreement dated as of October 13, 1998 reflecting such amendments.
16
Kent P. Ainsworth
Mr. Ainsworth executed an evergreen employment agreement with us in May
1991 following his employment as our Vice President and Chief Financial Officer
in January 1991. Mr. Ainsworth receives an annual base salary determined by the
Committee, based on relevant factors outlined in their Compensation/Option
Committee Report above. On November 5, 1999, the Committee increased Mr.
Ainsworth's annual base salary from $305,000 to $355,000 and his target bonus
percentage from 50 percent to 60 percent of his base salary, both effective
November 1, 1999.
Mr. Ainsworth's employment agreement provides that if his employment is
terminated by us without cause, other than by reason of death or disability, we
will continue to pay his base salary for one year, or until normal retirement
at age 65, if less. If Mr. Ainsworth voluntarily resigns his employment both
for specified reasons and within one year following a Change in Control, as
defined above in the description of Mr. Koffel's employment agreement, or if
Mr. Ainsworth is terminated for any reason other than cause at any time after a
Change in Control, he becomes entitled to a special severance payment equal to
280 percent of his then-current base salary reduced pro rata if such
termination occurs within two years prior to normal retirement. In addition,
all awards held by Mr. Ainsworth under any of our incentive, deferred
compensation, bonus, stock and similar plans, to the extent unvested, will
become vested immediately upon a Change in Control.
The Heartland Transaction resulted in a technical Change in Control under
Mr. Ainsworth's employment agreement and the terms of stock options granted to
Mr. Ainsworth under our 1991 Stock Incentive Plan. As a result, the special
severance payment is payable to Mr. Ainsworth if he is terminated for any
reason other than cause at any time during the term of his employment
agreement. In addition, the options previously granted to Mr. Ainsworth in
1994, 1995 and 1996 under our 1991 Stock Incentive Plan are now fully vested.
In addition, the Series B Issuance caused a Change in Control to occur under
Mr. Ainsworth's employment agreement, and the stock options for 51,667 shares
granted to Mr. Ainsworth in 1997 and 1998, and the 50,000 shares of restricted
stock and performance restricted stock granted to Mr. Ainsworth in 1997, became
fully vested.
On October 13, 1998, following a recommendation made by the Committee, the
Board of Directors approved an amendment to Mr. Ainsworth's employment
agreement to provide for a tax gross-up payment to Mr. Ainsworth to offset the
cost of excise taxes that could be imposed if his employment is terminated
following a change in control and any resulting severance payments due Mr.
Ainsworth are considered to be "excess parachute payments" subject to excise
tax under Sections 280G and 4999 of the Code. Accordingly, Mr. Ainsworth and
URS entered into an Amendment to Employment Agreement dated as of October 13,
1998 reflecting such amendments.
On July 12, 1999 the Committee granted to Mr. Ainsworth an additional
35,000 shares of restricted stock under the 1991 Plan. None of such shares will
vest on July 12, 2000, the first anniversary of the grant; 662|M/3 percent of
the shares will vest on July 12, 2001; and 100 percent of the shares will vest
on July 12, 2002. The grant to Mr. Ainsworth has the same Change in Control
provisions as outlined in the description of Mr. Koffel's option grants and
SERP above. Thus, the Series B Stock held by RCBA Strategic Partners, L.P. and
the acquisition and holding of additional shares of our Common Stock upon the
conversion of the Series B Stock are ignored for the purpose of meeting the 20
percent threshold contained in that definition of Change in Control unless and
until such shares, together with the additional holdings of Common Stock by
BLUM Capital Partners, L.P., exceed 50 percent of the voting power of our
then-outstanding Common Stock.
Joseph Masters
Mr. Masters executed an evergreen employment agreement with us on March
20, 1998. Under this employment agreement. Mr. Masters receives an annual base
salary determined by the Committee, based on relevant factors outlined in their
Compensation/Option Committee Report above. On November 5, 1999, the Committee
approved an increase in Mr. Masters' annual base salary from $190,000 to
$240,000 and increased his target bonus percentage from 30 percent to 40
percent of his base salary, both effective November 1, 1999.
17
Mr. Masters' employment agreement provides that if, within one year
following a Change in Control, Mr. Masters' employment with us is terminated by
us without cause, he will be entitled to receive a severance payment equal to
200 percent of his then-current base salary. Mr. Masters will also be entitled
to receive this severance benefit if he voluntarily resigns his employment with
us for specified reasons within one year following a Change in Control. Under
Mr. Master's employment agreement, Change in Control has the meaning described
above in the description of Mr. Koffel's employment agreement. In addition, if
Mr. Masters' employment with us is terminated by us without cause or if he
voluntarily resigns his employment for specified reasons and he is not entitled
to receive the severance payment described above, Mr. Masters will be entitled
to receive a severance payment equal to 100 percent of his then-current base
salary.
On October 13, 1998, following a recommendation made by the Committee, the
Board of Directors approved an amendment to Mr. Masters' employment agreement to
provide for a tax gross-up payment to Mr. Masters to offset the cost of excise
taxes that could be imposed if his employment is terminated following a change
in control and any resulting severance payments due Mr. Masters are considered
to be "excess parachute payments" subject to excise tax under Sections 280G
and 4999 of the Code. Accordingly, Mr. Masters and URS entered into an Amendment
to the Employment Agreement dated as of October 13, 1998 reflecting these
amendments.
18
Performance Measurement Comparison(1)
The following chart compares the cumulative total stockholder returns
(including reinvested dividends) from a $100 investment in Common Stock for the
last five fiscal years compared to the cumulative return of the Standard &
Poor's 500 index and a weighted average peer index. The peer index is comprised
of the following companies:
Fluor Corporation Michael Baker Corporation
Foster Wheeler Morrison Knudsen
Granite Construction Perini Corporation
Harding Lawson Associated Roy F. Weston
IT Group Stone & Webster
Jacobs Engineering STV Group
Kaiser Group International
(formerly ICF Kaiser)
Comparison of Five Year Cumulative Total Shareholder Returns
10/31/94 10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
-------- -------- -------- -------- -------- --------
Peer Group $100 $112.21 $128 $115 $129 $123.93
URS Corp. $100 $111 $148 $276 $293 $313.04
S & P 500 $100 $126 $155.96 $206 $251 $314.72
<FN>
- --------
(1) This section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any of our filings under
the 1933 Act of the 1934 Act whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
(2) Dames & Moore and Emcon Associates were included in the peer index for
fiscal 1998, but are not included this year because we acquired Dames &
Moore, and IT Group Acquired Emcon Associates. We have added Morrison
Knudsen, Perini Corporation and Granite Construction to replace them. If
Morrison Knudsen, Perini Corporation and Granite construction were excluded
from the peer index, the total shareholder return for the peer index would
have been $99 as of October 31, 1999 as opposed to the $124 total
shareholder return for the peer index with these entities included.
(3) As of February 7, 2000, the price of our Common Stock on the New York Stock
Exchange was $16.0625.
</FN>
19
Other Matters
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ Kent P. Ainsworth,
----------------------
Kent P. Ainsworth,
Secretary
February 15, 2000
A copy of our Annual Report to the Securities and Exchange Commission on
Form 10-K for the fiscal year ended October 31, 1999 is available without charge
upon written request to: Corporate Secretary, URS Corporation, 100 California
Street, Suite 500, San Francisco, California 94111-4529.
20
APPENDIX A
PROXY URS CORPORATION PROXY
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 21, 2000
The undersigned hereby appoints Kent P. Ainsworth and Carol Brummerstedt,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of URS Corproation that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of URS
Corporation to be held on Tuesday, March 21, 2000, at 9:30 a.m. local time, at
the Ritz Carlton Hotel, 600 Stockton Street, San Francisco, California, and at
any and all continuations and adjournments of that meeting, with all powers that
the undersigned would possess, if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
Unless you indicate otherwise, this Proxy will be voted for Proposals 1
and 2, as more specifically described in the proxy statement. If specific
instructions are indicated, this Proxy will be voted in accordance with your
instructions.
We recommend a vote for Proposals 1 and 2.
(Continued, and to be signed on the other side)
Please mark
your votes [X]
as indicated in
this example
WITHHOLD
Proposal 1: FOR FOR ALL
To elect the following directors to
serve for the ensuing year and [ ] [ ]
until their successors are elected:
Richard C. Blum, Armen Der Marderosian,
Admiral S. Robert Foley, Jr., USN (Ret.), Marie L. Knowles,
Martin M. Koffel, Richard B. Madden, Jean-Yves Perez,
Richard Q. Praeger, IrwinL. Rosenstein and
William D. Walsh
(Instruction: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name in the list above.)
Proposal 2: FOR AGAINST ABSTAIN
To ratify the selection of PricewaterhouseCoopers [ ] [ ] [ ]
LLP as our independent auditors for the fiscal year
ending October 31, 2000.
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
Signature(s) ________________________________ Dated ____________ , 2000
Please vote, date, sign and promptly return this proxy in the enclosed return
envelope that is postage prepaid if mailed in the United States.