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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
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Comfort Systems, USA, Inc.
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(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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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:
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(4) Date Filed:
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COMFORT SYSTEMS USA, INC.
777 POST OAK BOULEVARD, SUITE 500
HOUSTON, TEXAS 77056
April 19, 2001
To Our Stockholders:
You are cordially invited to attend the annual meeting of the stockholders
of Comfort Systems USA, Inc., which will be held on May 25, 2001 at the
DoubleTree Hotel, 2001 Post Oak Boulevard, Houston, Texas, 77056, at 11:00 a.m.
At this meeting stockholders are being asked to elect three Class I
directors to serve for three years.
Please read the proxy statement, which describes the proposals to be voted
on and also presents other important information. When you have finished reading
the statement, please promptly mark, sign, and return your proxy card in the
enclosed envelope to ensure that your shares will be represented.
We hope that many of you will be able to attend the meeting in person. I
look forward to seeing you there.
Sincerely yours,
/s/ WILLIAM F. MURDY
WILLIAM F. MURDY
Chairman of the Board, and
Chief Executive Officer
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COMFORT SYSTEMS USA, INC.
777 POST OAK BOULEVARD, SUITE 500
HOUSTON, TEXAS 77056
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 2001
Notice is hereby given that the 2001 Annual Meeting of Stockholders (the
"Meeting") of Comfort Systems USA, Inc. (the "Company") will be held at the
DoubleTree Hotel, 2001 Post Oak Boulevard, Houston, Texas, 77056, at 11:00 a.m.,
on Friday, May 25, 2001 for the following purposes:
1. To elect three Class I directors to serve until the 2004 Annual
Meeting of Stockholders.
2. To transact any other business that may properly come before the
meeting.
Stockholders of record at the close of business on April 13, 2001 are
entitled to notice of and to vote at the Meeting. A list of stockholders
entitled to vote at the Meeting will be open to examination by stockholders at
the Meeting and during normal business hours from May 1, 2001 to the date of the
Meeting at the principal executive offices of the Company located at 777 Post
Oak Boulevard, Suite 500, Houston, Texas 77056.
If you are unable to attend, please sign and date the enclosed proxy and
return it promptly in the enclosed envelope.
By Order of the Board of Directors
/s/ WILLIAM GEORGE
WILLIAM GEORGE
Senior Vice President, General
Counsel
and Secretary
April 19, 2001
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. PLEASE SIGN AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING IN PERSON.
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COMFORT SYSTEMS USA, INC.
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ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2001
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PROXY STATEMENT
The Annual Report to Stockholders and the Company's Annual Report on Form
10-K for the Company's fiscal year ended December 31, 2000 each accompany this
proxy statement. This proxy statement and the enclosed proxy are being mailed to
stockholders on the same date as the date of the Notice of Annual Meeting of
Stockholders.
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Comfort Systems USA, Inc. (the "Company"), to be voted at the Annual Meeting
of Stockholders (the "Meeting") to be held at the DoubleTree Hotel, 2001 Post
Oak Boulevard, Houston, Texas, 77056, at 11:00 a.m. on Friday, May 25, 2001, or
at any adjournment thereof. A proxy may be revoked by a stockholder at any time
before it is voted by (i) returning to the Company another properly signed proxy
bearing a later date, (ii) delivering a written revocation to the Secretary of
the Company or (iii) attending the Meeting or any adjourned session thereof and
voting the shares covered by the proxy in person. Shares represented by the
enclosed form of proxy properly executed and returned, and not revoked, will be
voted at the Meeting by the person named in the proxy for the proposals set
forth below.
The Company will pay the expense of soliciting proxies. Officers and
regular employees of the Company (who will receive no compensation in addition
to their regular salaries) may solicit proxies. In addition to the solicitation
of proxies by use of the mails, the Company may use the services of its officers
and regular employees to solicit proxies personally and by mail, telephone and
telegram from brokerage houses and other stockholders. The Company will
reimburse brokers and other persons for their reasonable charges and expenses in
forwarding soliciting materials to their principals.
The holders of record of shares of the common stock, $.01 par value per
share (the "Common Stock"), and of the restricted voting common stock, $.01 par
value per share (the "Restricted Common Stock"), of the Company at the close of
business on April 13, 2001 (the "Record Date") are entitled to receive notice of
and to vote at the Meeting. As of the Record Date, the Company had issued and
outstanding 35,987,161 shares of Common Stock and 1,393,612 shares of Restricted
Common Stock, for a total of 37,380,773 shares outstanding. Each share of Common
Stock is entitled to one vote on each matter before the Meeting and each share
of Restricted Common Stock is entitled to .55 of one vote on each matter before
the Meeting, other than Proposal 1, Election of Class I Directors. Holders of
Restricted Common Stock are not eligible to vote for directors other than one
Class II director, whose term does not expire until the year 2002.
Consistent with Delaware law and the Company's Bylaws, a majority of the
shares entitled to be cast on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter. Votes cast by
proxy or in person at the meeting will be counted by two persons appointed by
the Company to act as election inspectors for the meeting. In the absence of
contrary instructions, the persons named as proxies will vote FOR all nominees
listed in Proposal 1.
With respect to Proposal 1, the three nominees for election as Class I
directors receiving the greatest number of votes properly cast on behalf of
holders of Common Stock for the election of directors at the Meeting will be
elected. The election inspectors will count shares of Common Stock represented
by proxies that withhold authority to vote for a nominee for election as a
director only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum.
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PROPOSAL NUMBER 1
ELECTION OF CLASS I DIRECTORS
The Board of Directors is divided into three classes, as nearly equal in
number as possible, with each class serving a three-year term. At each Annual
Meeting of Stockholders, one class of directors will be elected for a full term
of three years to succeed that class of directors whose terms are expiring. The
Board of Directors is currently divided into three classes of three directors,
with the term of each class expiring at the Annual Meeting of Stockholders in
2001, 2002 and 2003, respectively. All officers serve at the discretion of the
Board of Directors.
The three nominees for election as Class I directors are William F. Murdy,
Herman E. Bulls, and Mark P. Shambaugh (collectively the "Nominees"). The
Nominees presently serve as three directors designated as Class I directors and
their current terms expire at the Meeting. The enclosed proxy cannot be voted
for more than three persons by holders of Common Stock.
If elected, each nominee would serve for a term of three years expiring at
the 2004 Annual Meeting of Stockholders, or until his or her respective
successor is elected and qualified to serve. It is expected that all of the
Nominees will be able to serve, but if any Nominee is unable to serve, the
proxies reserve discretion to vote, or refrain from voting, for a substitute
nominee.
NOMINEES
Set forth below is certain information concerning each of the Nominees:
WILLIAM F. MURDY, 59
Director
William F. Murdy is a Class I director of the Company. Mr. Murdy, has
served as Chairman of the Board and Chief Executive Officer of Comfort Systems
since June 2000. Prior to joining the Company he served as Interim President and
Chief Executive Officer of Club Quarters, a privately-owned chain of membership
hotels. From January 1998 through July 1999, Mr. Murdy served as President,
Chief Executive Officer and Chairman of the Board of LandCare USA, a
publicly-traded commercial landscape and tree services company. He was primarily
responsible for the organization of LandCare USA and its listing as a publicly-
traded company on the New York Stock Exchange in July 1998. LandCare USA was
acquired in July 1999 by another publicly-traded company specializing in
services to homeowners and commercial facilities. From 1989 through December
1997, Mr. Murdy was President and Chief Executive Officer of General Investment
& Development Co., a privately-held real estate operating company. From 1981 to
1989, Mr. Murdy served as the Managing General Partner of the Morgan Stanley
Venture Capital Fund. From 1974 to 1981, Mr. Murdy served as the Senior Vice
President and Chief Operating Officer, among other positions, of Pacific
Resources, Inc., a publicly traded company involved primarily in petroleum
refining and marketing. Mr. Murdy is a graduate of the United States Military
Academy at West Point and of the Harvard Business School.
HERMAN E. BULLS, 45
Director
Herman E. Bulls is a Class I director of the Company. Mr. Bulls is
Executive Vice President and Chief Operating Officer of Green Park Financial,
one the nation's largest Fannie Mae apartment lenders. From March 1998 to
September 2000, Mr. Bulls was a Managing Director for Jones Lang LaSalle, an
international full service real estate firm. From 1989 until 1998 he held
several positions with the predecessor organization, LaSalle Partners. Prior to
his employment with Jones Lang LaSalle he served over eleven years of active
duty service with the United States Army, and currently holds the rank of
Lieutenant Colonel in the Army Reserve. Mr. Bulls is a graduate of the United
States Military Academy at West Point and of the Harvard Business School.
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MARK P. SHAMBAUGH, 48
Director
Mark P. Shambaugh, P.E. is a Class I director of the Company. He has been
employed by Shambaugh & Son, L.P., a Texas limited partnership which is an
entity that is wholly owned by the Company, since 1976, serving as its Chief
Executive Officer since 1989. Mr. Shambaugh is also a Vice Chairman of the Board
of Directors of the Design-Build Institute of America. Mr. Shambaugh is a
graduate of Purdue University.
OTHER DIRECTORS
Following is certain information concerning each of the other persons who
currently serve as directors. Messrs. Beittenmiller, Hess, Harter and Wagner
serve as Class II directors whose terms expire in 2002, Messrs. Giardinelli,
Powers and Costantini serve as Class III directors whose terms expire in 2003.
J. GORDON BEITTENMILLER, 42
Director, Chief Financial Officer and Executive Vice President
J. Gordon Beittenmiller, has served as Executive Vice President, Chief
Financial Officer and a director of Comfort Systems since May 1998, and was
Senior Vice President, Chief Financial Officer and a director of Comfort Systems
from February 1997 to April 1998. From 1994 to February 1997, Mr. Beittenmiller
was Corporate Controller of Keystone International, Inc. ("Keystone"), a
publicly-traded manufacturer of industrial valves and actuators, and served
Keystone in other financial positions from 1991 to 1994. From 1987 to 1991, he
was Vice President -- Finance of Critical Industries, Inc., a publicly-traded
manufacturer and distributor of specialized safety equipment. From 1982 to 1987,
he held various positions with Arthur Andersen LLP. Mr. Beittenmiller is a
Certified Public Accountant. Mr. Beittenmiller is a graduate of The Pennsylvania
State University.
VINCENT J. COSTANTINI, 44
Director
Vincent J. Costantini is a Class III director of the Company. Mr.
Costantini is founder and managing partner of the recently formed Roseview
Capital Partners LLC, a real estate, merchant banking and investment advisory
company. Prior to forming Roseview Capital Partners, from March to December 2000
Mr. Costantini served as Partner and Group Chief Executive Officer of The
O'Neill Companies, one of the largest privately held commercial real estate
development firms in the nation. Prior to joining The O'Neill Companies, he
served as a member of the management committee of Lend Lease Real Estate
Investments Inc., the largest real estate investment advisor in the world,
following their purchase of Boston Financial. From 1995 to the first quarter of
2000, Mr. Costantini was President and Chief Operating Officer of Boston
Financial. Prior to that time Mr. Costantini served as Chief Financial Officer
and head of acquisitions for General Investment & Development Co., a
privately-held real estate operating company. Mr. Costantini is a graduate of
St. Joseph's University.
ALFRED J. GIARDINELLI , JR., 52
Director
Alfred J. Giardinelli, Jr. is a Class III director of the Company. He has
been the President of Eastern Heating & Cooling, Inc., a New York corporation
that is a wholly owned subsidiary of the Company, since 1982, and has been a
director of the Company since 1997. Mr. Giardinelli is a graduate of Florida
State University.
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GARY E. HESS, 53
Director, President and Chief Operating Officer
Gary E. Hess, has served as President and Chief Operating Officer since
September 2000 and Executive Vice President and Chief Operating Officer of
Comfort Systems since June 1999. He served as Senior Vice President-Operations
from February 1999 to May 1999. In March 2000, the Board of Directors
unanimously elected Mr. Hess as a Class II Director of Comfort Systems. He
served Comfort Systems as regional director of its Northeast region from August
1998 to January 1999. Prior to that, he was employed by Hess Mechanical
Corporation, a wholly-owned subsidiary of the Company, since 1980, serving as
Chairman and Chief Executive Officer. Mr. Hess was President of Associated
Builders and Contractors during 1996 and was selected as their 1997 Contractor
of the Year. Mr. Hess is a graduate of Ohio University.
STEVEN S. HARTER, 38
Director
Steven S. Harter has been a director of the Company since December 1996 and
is the director (Class II) elected by the holders of the Restricted Common
Stock. Mr. Harter is President of Notre Capital Ventures III, LLC ("Notre"), a
consolidator of highly fragmented industries. Prior to becoming President of
Notre, Mr. Harter was President of Notre Capital Ventures II, LLC from August
1995 to March 1999, and Senior Vice President of Notre Capital Ventures, Ltd.
from June 1993 through July 1995. From April 1989 to June 1993, Mr. Harter was
Director of Mergers and Acquisitions for Allwaste. From May 1984 to April 1989,
Mr. Harter was a certified public accountant with Arthur Andersen LLP. Mr.
Harter also serves as director of Metals USA, Inc. and was a director of Coach
USA, Inc. until September 15, 1999, when Coach USA was acquired by Stagecoach
Holdings plc. Mr. Harter is a graduate of Mount Union College.
ROBERT J. POWERS, 61
Director
Robert J. Powers is a Class III director of the Company. In December 1999,
he retired from Quality Air Heating & Cooling, Inc., a Michigan corporation
("Quality") which is a wholly owned subsidiary of the Company. Mr. Powers was
employed at Quality from 1977 to 1999, serving as its President beginning in
1988. Mr. Powers has been a director of the Company since 1997. Mr. Powers is a
graduate of Western Michigan University.
ROBERT D. WAGNER, JR., 59
Director
Robert D. Wagner, Jr. is a Class II director of the Company. From May 1999
to March 2001, he served as a Managing Director of Arthur Andersen's Global
Energy Corporate Finance Group. Prior to joining Arthur Andersen, from July 1998
to April 1999 Mr. Wagner was a Managing Director and Partner of M2 Capital
Partners, a merchant banking firm specializing in private equity investment and
financial advisory with the exploration and production sector. From 1989 to June
1998, Mr. Wagner was a Managing Director of Bankers Trust/BT Alex Brown in their
Energy Corporate Finance Group. Prior to his employment with Bankers Trust/BT
Alex Brown, Mr. Wagner was Executive Vice President of First City National Bank
of Houston's energy division, and later, the special loans division. Mr. Wagner
is a graduate of Holy Cross College and the Graduate School of Business at New
York University.
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BOARD OF DIRECTORS AND COMMITTEES
During the year ended December 31, 2000, the Board of Directors of the
Company held four meetings. Each director attended at least 75% of the meetings
of the Board and the Board Committees of which he is a member that took place
during his term of office.
The Board of Directors has established an Audit Committee, a Compensation
Committee, an Executive Committee, a Finance Committee, a Governance and
Nominating Committee and an Option Approval Committee. The members of the Audit
Committee are Mr. Costantini, Mr. Bulls and Mr. Harter. The members of the
Compensation Committee are Messrs. Bulls, Costantini, Harter and Powers. The
Members of the Executive Committee are Messrs. Murdy, Beittenmiller, Costantini,
Harter, and Shambaugh. The members of the Financing Committee are Messrs.
Beittenmiller, Costantini, Harter and Wagner. The members of the Option Approval
Committee are Messrs. Costantini and Bulls. The members of the Governance and
Nominating Committee are Messrs. Murdy, Bulls, Giardinelli, Hess and Shambaugh.
None of the Audit or Compensation Committee members is an executive officer or
employee of the Company, nor has any been such at any time while serving on
those committees.
The Audit Committee, which held four meetings during 2000, reviews with
management and the independent public accountants the Company's annual financial
statements, the scope of the audit, any comments made by the independent public
accountants and such other matters as the Audit Committee deems appropriate. In
addition, the Audit Committee reviews the performance and retention of the
Company's independent auditors and reviews with management such matters relating
to compliance with corporate policies as the Audit Committee deems appropriate.
The Compensation Committee, which held four meetings during 2000,
administers the Company's stock option and stock purchase plans and sets the
compensation of the Company's executive officers.
The Executive Committee, which held two meetings during 2000, has been
established by the Board of Directors to have the authority, responsibilities
and powers of the Board, whenever the Board shall not be at meeting, except that
the Executive Committee does not have the authority to (i) amend or repeal any
action of the Board of Directors which by its terms are not subject to repeal by
the Executive Committee, (ii) amend the Bylaws of the Company, (iii) amend the
Certificate of Incorporation of the Company, (iv) recommend to the stockholders
the sale, lease or exchange of all or substantially all of the Company's stock,
property or assets, (v) dissolve or recommend the dissolution of the Company,
(vi) fill a vacancy on the Board of Directors or any committee thereof, (vii)
remove any officer of the Company, or (viii) take any action which may not be
delegated by the Board of Directors pursuant to the General Corporation Law of
the State of Delaware.
The Finance Committee, which held no meetings during 2000, is empowered by
the board to consult with management and give guidance to the Board on all
matters pertaining to the Company's capital structure.
The recently formed Governance an Nominating Committee is empowered by the
Board to evaluate the structure and membership of the Board, evaluate new
members as appropriate with an emphasis on diversity of viewpoint and
background, review the compensation structure and meeting frequency and content,
and to make recommendations to the Board on all such matters.
The Option Approval Committee, which held no meetings in 2000, is
responsible for approving grants of stock options under the Company's equity
incentive plans.
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DIRECTOR COMPENSATION
Directors who are also employees of the Company or one of its subsidiaries
do not receive additional compensation for serving as directors. Each director
who is not an employee of the Company or one of its subsidiaries receives a fee
of $2,000 for attendance at each Board of Directors meeting and $1,000 for each
committee meeting (unless held on the same day as a Board of Directors meeting).
Directors are also reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or committees thereof.
In addition, the Company's 1997 Non-Employee Directors' Stock Plan (the
"Directors' Plan"), which was adopted by the Board of Directors and approved by
the Company's stockholders in March 1997, provides for (i) the automatic grant
to each non-employee director serving at the consummation of the Company's
initial public offering (which closed in July 1997) of an option to purchase
10,000 shares, (ii) the automatic grant to each non-employee director after the
initial public offering of an option to purchase 10,000 shares upon such
person's initial election as a director and (iii) an automatic annual grant to
each non-employee director of an option to purchase 5,000 shares at each annual
meeting of stockholders thereafter at which such director is re-elected or
remains a director, unless such annual meeting is held within three months of
such person's initial election as a director. All options have an exercise price
per share equal to the fair market value of the Common Stock on the date of
grant, are immediately vested and expire on the earlier of ten years from the
date of grant or one year after termination of service as a director. The
Directors' Plan also permits non-employee directors to elect to receive, in lieu
of cash directors' fees, shares or credits representing "deferred shares" at
future settlement dates, as selected by the director. The number of shares or
deferred shares received will equal the number of shares of Common Stock which,
at the date the fees would otherwise be payable, will have an aggregate fair
market value equal to the amount of such fees. Of the 250,000 shares of Common
Stock initially available under the Directors' Plan, 125,000 remained available
as of April 15, 2001.
Each director who was in office at the time of the initial public offering
has also been indemnified by the Company as more particularly described in the
section that follows entitled "COMPENSATION OF EXECUTIVE OFFICERS."
The three nominees for election as Class I directors receiving the greatest
number of votes properly cast on behalf of holders of Common Stock for the
election of directors at the Meeting will be elected. The persons named in the
enclosed proxy intend to vote each share as to which a proxy has been properly
executed and returned (and not revoked) in favor of the election as a Class I
director of each of the nominees named below, unless authority to vote for the
election of any of such nominees is withheld by marking the proxy to that
effect. The election inspectors will count shares of Common Stock represented by
proxies that withhold authority to vote for one or more nominees for election as
a director only as shares that are present and entitled to vote on the matter
for purposes of determining the presence of a quorum, but withholding authority
to vote for one or more nominees will not have any effect on the outcome of
voting on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS ELECTION OF THE NOMINEES DESCRIBED IN PROPOSAL
NUMBER 1.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of shares of Common Stock and Restricted Common Stock as of
April 13, 2001 (i) individually by the Chief Executive Officer, each of the four
other most highly paid executive officers of the Company in 2000 as named in the
Summary Compensation Table (the "Named Executive Officers") and all directors of
the Company and (ii) by all executive officers and directors of the Company as a
group. The following table also sets forth certain information with respect to
the beneficial ownership of shares of Common Stock as reported on schedules
filed with the Securities and Exchange Commission ("SEC") and includes each
person known to the Company to be the beneficial owner of more than five percent
of the outstanding Common Stock or Restricted Common Stock. Except as noted
below, each of the persons listed has sole investment and voting power with
respect to the shares indicated.
RESTRICTED
COMMON STOCK COMMON STOCK
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED(1)
------------------- -------------------
NAME NUMBER PERCENT NUMBER PERCENT
- ---- -------- -------- --------- -------
William F. Murdy................................ 15,000 *%
Steven S. Harter(2)............................. 827,034 60.0% 80,000 *
Mark P. Shambaugh............................... 1,493,500 4.2
Robert J. Powers(3)............................. 1,262,000 3.5
Gary E. Hess(4)................................. 383,588 1.1
Alfred J. Giardinelli, Jr. ..................... 313,216 *
J. Gordon Beittenmiller(5)...................... 195,000 *
Reagan S. Busbee(6)............................. 173,500 *
William George III(7)........................... 105,001 *
Herman E. Bulls(8).............................. 10,000 *
Vincent J. Costantini(8)........................ 10,000 *
Robert D. Wagner, Jr.(8)........................ 10,000 *
All executive officers and directors as a group
(14 persons).................................. 827,034 60.0% 4,131,704 11.5%
T. Rowe Price Associates, Inc.(9)............... 2,818,000 7.8%
P.O. Box 17218
Baltimore, MD 21297-7218
Dimensional Fund Advisors Inc.(9) .............. 2,801,000 7.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
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Except as noted, the address of each person is c/o Company, 777 Post Oak
Boulevard, Suite 500, Houston, Texas 77056.
* Less than 1%.
(1) Shares shown include shares that could be acquired upon exercise of options
that vest within 60 days. Such options were issued pursuant to the 1997 Long
Term Incentive Plan.
(2) Includes 827,034 shares of Restricted Common Stock held in a partnership as
to which Mr. Harter is a general partner and 25,000 shares of Common Stock
issuable upon exercise of options granted under the Directors' Plan.
(3) Includes 210,000 shares held by the Powers Family Foundation, a charitable
entity, as to which he disclaims beneficial ownership, and 10,000 shares of
Common Stock issuable upon exercise of options granted under the Directors'
Plan.
(4) Includes 307,788 shares held by a corporation of which Mr. Hess owns a
majority of the outstanding capital stock and 32,000 shares issuable upon
exercise of currently exercisable options.
(5) Includes 78,000 shares issuable upon exercise of currently exercisable
options.
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(6) Includes 71,000 shares issuable upon exercise of currently exercisable
options.
(7) Includes 56,000 shares issuable upon exercise of currently exercisable
options.
(8) Includes 10,000 shares of Common Stock issuable upon exercise of options
granted under the Directors' Plan.
(9) These securities are owned by various individual and institutional investors
which the listed stockholder serves as investment adviser with power to
direct investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Securities Exchange Act the listed
stockholder is deemed to be a beneficial owner of such securities; however,
the listed stockholder expressly disclaims that it is, in fact, the
beneficial owner of such securities.
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth information with respect to compensation
paid to or accrued on behalf of the Named Executive Officers for 1998 and 1999
and for 2000, unless otherwise noted. Mr. Ferreira is also included because he
was the Chief Executive Officer for a portion of 2000. All of the Named
Executive Officers have been granted stock options.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER(1) OPTIONS COMPENSATION(2)
- --------------------------- ---- -------- ------- -------- ------------ ---------------
William F. Murdy............. 2000 $208,000 -- $ 50,000 500,000 --
Chairman of the Board, and
Chief Executive Officer
Fred M. Ferreira............. 2000 $ 75,000 -- $300,000 -- $3,750
Formerly Chairman of the 1999 $150,000 -- -- -- $3,571
Board, Chief Executive
Officer 1998 $150,000 -- -- -- --
and President
Gary E. Hess................. 2000 $250,000 -- $ 9,000 125,000 $5,971
President and 1999 $199,167 -- $ 9,000 40,000 $4,536
Chief Operating Officer
J. Gordon Beittenmiller...... 2000 $250,000 -- -- 125,000 $3,750
Executive Vice President, 1999 $150,000 -- -- 20,000 $3,571
and Chief Financial Officer 1998 $150,000 -- -- --
William George, III.......... 2000 $190,000 $47,500 -- 75,000 $4,408
Senior Vice President and 1999 $150,000 $20,000 -- 15,000 $1,667
General Counsel 1998 $150,000 -- -- -- --
Reagan S. Busbee............. 2000 $153,000 $40,000 75,000 $3,281
Senior Vice President 1999 $125,000 $20,000 -- 15,000 $2,895
1998 $125,000 -- -- -- --
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(1) Reflects a signing and relocation bonus of $50,000 to Mr. Murdy, severance
of $300,000 for Mr. Ferreira, and an automobile allowance of $750 per month
for Mr. Hess in 1999 and 2000.
(2) Reflects matching contributions under a 401(k) plan.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of stock
options during the last fiscal year to each of the Named Executive Officers. No
stock appreciation rights were granted during the last fiscal year.
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ----------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
- ---- ---------- ------------- -------- ---------- ------------ -------------
William F. Murdy................. 500,000 13.5% $3.81 6/28/10 $ 0 $750,000
Fred M. Ferreira................. -- -- -- -- -- --
Gary E. Hess..................... 50,000 1.3% $6.00 04/04/07 $ 0 $ 0
75,000 2.0% $2.88 11/01/10 $39,000 $182,250
J. Gordon Beittenmiller.......... 50,000 1.3% $6.00 04/04/07 $ 0 $ 0
75,000 2.0% $2.88 11/01/10 $39,000 $182,250
Reagan S. Busbee................. 25,000 0.7% $6.00 04/04/07 $ 0 $ 0
50,000 1.3% $2.88 11/01/10 $26,000 $121,500
William George, III.............. 25,000 0.7% $6.00 04/04/07 $ 0 $ 0
50,000 1.3% $2.88 11/01/10 $26,000 $121,500
- ---------------
(1) These stock options, which were granted pursuant to the Company's 1997 Long
Term Incentive Plan, were granted at the fair market value of the underlying
option shares on the date of grant. The option granted to Mr. Murdy will
vest at the rate of 33.33% per year, commencing on the first anniversary of
the date of grant, and will expire at the earliest of ten years from the
date of grant or three months following termination of employment. The first
grant for each individual except Mr. Murdy will vest at the rate of 20% per
year, commencing on the first anniversary of the date of grant, and will
expire at the earliest of seven years from the date of grant or three months
following termination of employment. The remaining options granted will vest
at the rate of 25% per year, commencing on the first anniversary of the date
of grant, and will expire at the earliest of ten years from the date of
grant or three months following termination of employment. In the event of a
change in control of the Company, all options would become exercisable in
full. Stock options reported consist of non-qualified stock options.
(2) These numbers are based upon the fair market value of one share of the
Common Stock on December 31, 2000 ($2.125), less the exercise price of
in-the-money options on that date. The dollar amounts under these columns
are the result of calculations at the 5% and 10% annual appreciation rates
set by the SEC for illustrative purposes, and are not intended to forecast
future financial performance or possible future appreciation in the price of
the Common Stock.
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OPTION EXERCISES IN LAST FISCAL YEAR
The following table sets forth information concerning the fiscal year-end
value of unexercised stock options held by the Named Executive Officers during
the last fiscal year. There were no option exercises by Named Executive Officers
during 2000.
AGGREGATED FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
-------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------------- ----------- -------------
William F. Murdy..................... 0 500,000 $0 $0
Fred M. Ferreira..................... 0 0 $0 $0
Gary E. Hess......................... 26,000 139,000 $0 $0
J. Gordon Beittenmiller.............. 78,000 167,000 $0 $0
Reagan S. Busbee..................... 71,000 119,000 $0 $0
William George, III.................. 56,000 109,000 $0 $0
- ---------------
(1) These numbers are based upon the fair market value of one share of the
Common Stock on December 31, 2000 ($2.125), less the exercise price of
in-the-money options at the end of 2000.
EMPLOYMENT AGREEMENTS; COVENANTS NOT TO COMPETE; CHANGE OF CONTROL;
INDEMNIFICATION
During 2000, the Company's five most highly compensated executive officers
were Messrs. Murdy, Hess, Beittenmiller, George, and Busbee.
On June 27, 2000 Mr. Murdy entered into an employment agreement with the
Company and on January 2, 2001 Mr. Hess entered into an employment agreement
with the Company. Mr. Murdy's employment agreement provides for an annual base
salary of $400,000, and Mr. Hess's agreement provides for an annual base salary
of $250,000. Each employment agreement is for a term of three years, and unless
terminated or not renewed by the Company or the employee, the term will continue
thereafter on a year-to-year basis on the same terms. The current terms would
renew or expire in June 2003, and January 2004, respectively. The agreement
provides that, in the event of a termination of employment by the Company with
out cause, Mr. Murdy would receive from the Company an amount equal to the
greater of base salary for the remaining term or for one (1) year, and Mr. Hess
would receive an amount equal to the base salary for one (1) year. In the event
of a change in control of the Company (as defined in the employment agreement)
the Employee may elect to terminate his employment and receive an amount equal
to two (2) times his annual base salary then in effect. Each employment
agreement contains a covenant not to compete with the Company for two years
immediately following termination of employment. In the event of a change in
control, the non-competition provisions apply for a period of one (1) year
immediately following the effective date of termination.
On June 27, 1997, each of Messrs. Ferreira, Beittenmiller, George and
Busbee entered into an employment agreement with the Company providing for an
annual base salary of $150,000, except for Mr. Busbee, whose annual base salary
was $125,000. Each employment agreement is for a term of three years, and unless
terminated or not renewed by the Company or by the employee, the term will
continue thereafter on a year-to-year basis on the same terms. The current term
for those still employed will renew or expire in June 2002. The agreement
provides that, in the event of a termination of employment by the Company
without cause, the employee will receive an amount equal to base for one (1)
year. In the event of a change in control of the Company, if the employee is not
given at least five days' notice, of the successor's intent to continue the
employee's employment after such change in control, the employee may elect to
terminate his employment and receive an amount equal to three (3) times the
amount he would receive pursuant to a termination without cause. The
non-competition provisions of the employment agreement do not apply to a
10
14
termination without such notice. In the event the employee is given at least
five days' notice of the successor's intent to continue the employee's
employment after such change in control, the employee may elect to terminate his
employment and receive two times the amount he would receive pursuant to a
termination without cause. In such event, the non-competition provisions of the
employment agreement would apply for two years from the effective date of
termination. Each employment agreement contains a covenant not to compete with
the Company for two years immediately following termination of employment or, in
the case of a termination by the Company without cause, for one (1) year.
Each executive officer and director of the Company who was in office at the
time of the initial public offering has entered into an Indemnification
Agreement with the Company whereby the Company indemnifies each against actions
taken in good faith on behalf of the Company.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company oversees the
Company's financial reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial statements and the
reporting process including the Company's internal controls. In fulfilling its
oversight responsibilities, the Audit Committee has reviewed the audited
financial statements in the Annual Report with management. The discussion
explored the quality, not just the acceptability, of the accounting principles,
the reasonableness of significant judgments, and the clarity of each of the key
disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
controls, reporting and accounting principles and such other matters as are
required to be discussed with the Audit Committee under generally accepted
auditing standards. In addition, the Audit Committee has reviewed and discussed
with the independent auditors the auditors' independence from management and the
Company including all written disclosures required by the Independence Standards
Board.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee meets regularly with the auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls, and the content and quality of the Company's
financial reporting. In reliance on the review and discussions, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report of Form 10-K for the fiscal year
ended December 31, 2000 and for filing with the Securities and Exchange
Commission.
The members of the Audit Committee have been determined to be independent
and financially literate (as independence and financial literacy is defined by
the New York Stock Exchange listing standards) by the Board of Directors. A copy
of the Audit Committee Charter as adopted by the Board of Directors is attached
to the Proxy Statement as Annex A.
Vincent J. Costantini (Chairman)
Steven S. Harter
Herman E. Bulls
11
15
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting compensation relating
to officers of the Company.
Nearly four years ago, the Company was founded by entrepreneurs who pooled
their talents and resources. At the time of its founding, the Company's
executive officers were founding members who had worked without pay prior to the
Company going public and in return had received an ownership interest in the
Company. At that time, the compensation philosophy was to rely on enterprise
value as the primary motivating factor for executive performance and retention.
Consequently, salaries were initially set at modest levels for companies of
similar size and characteristics.
Subsequent to the Company's formation two individuals have joined the
Company's executive officer corps in key positions. Mr. Hess was a former
subsidiary owner who was promoted to become first the Chief Operating Officer,
and then the President of the Company in August 2000. As a result of the sale of
his company to Comfort Systems, he had a significant equity interest and a
relatively low base salary compared to his past income and to presidents of
companies of similar size and characteristics. Mr. Murdy joined the Company in
July of 2000 as its newly appointed Chairman of the Board and Chief Executive
Officer. At the time he accepted his position, a decision was made that in order
to align long term interest with shareholders his compensation should have
options as its most significant component. Based on his belief in the enterprise
value of the Company, Mr. Murdy accepted cash compensation in an amount that the
Committee believes was at low end of the range for comparable responsibilities,
particularly in light of his documented experience, background and
accomplishments.
Compensation for executive officers in 2000 consisted of three components:
base salary, options and bonuses. Substantially all current executive officers
have employment agreements that establish a minimum annual salary. During 2000
all of the Company's executive officers received a significant new grant of
options. Mr. Murdy received options to purchase 500,000 shares upon his election
as Chief Executive Officer and Chairman of the Board. In late 2000, an aggregate
of 300,000 options were granted to five individuals excluding Mr. Murdy with
existing options because the previous options granted to these individuals were
at exercise prices significantly higher than year end 2000 market value. The new
grants were for a number of options that was somewhat less than half of the
number of existing options held by each such existing officer.
After the close of 2000, the Committee did not award bonuses to any of its
three highest compensated executive officers, despite its belief that their work
had been distinguished in difficult circumstances. None of these officers has
ever received a bonus from the Company. Although the Compensation Committee was
grateful for the loyalty and efforts of the officers that remained with the
Company through difficult circumstances, it accepted Mr. Murdy's recommendation
that it was not appropriate to award such bonuses due to stock performance. The
Company did award discretionary bonuses totaling $125,000, as provided for by
its plan, to certain other executive officers to reward their performance during
the year.
Because of the Company's recent stock performance, the Committee has chosen
to continue to rely to a great extent on the loyalty and commitment of its
officers, and on their belief in the enterprise value of the Company in order to
retain their services. The Compensation Committee believes that in order for the
Company to be successful in the future it will need to retain its most talented
officers and attract additional high quality leaders. In order to accomplish
these goals, the Committee expects to increasingly implement base salaries that
are competitive with other companies of similar size and characteristics,
however, the Committee plans to continue to use Company performance as its most
significant criteria for determining incentive compensation. In addition, the
Committee will continue to seek to align the interests of management and
stockholders by encouraging stock ownership through its equity incentive plans.
Herman E. Bulls, CHAIRMAN
Vincent J. Costantini
Steven S. Harter
Robert J. Powers
12
16
STOCK PERFORMANCE GRAPH
The following stock price performance graph compares the cumulative total
return on the Common Stock with the cumulative total return of the Standard &
Poor's Composite 500 Index and of a peer group consisting of the companies in
the Russell 2000, from June 27, 1997, the date of the Company's initial public
offering, through December 31, 2000, assuming a $100 initial investment in each
case.
[PERFORMANCE CHART]
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6/27/97 12/31/97 12/31/98 12/31/99 12/31/00
- ------------------------------------------------------------------------------------
Comfort Systems USA,
Inc. FIX 100.00 151.92 137.50 56.73 16.35
S&P 500 100.00 110.30 141.82 171.67 156.04
RUSSELL 2000 100.00 111.80 108.95 132.11 128.12
NOTE: Performance is reported annually, assumes $100 invested on June 27, 1997,
and includes reinvestment of dividends through the end of fiscal year 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Mercadante, Harter and Ms. Sanders, none of whom is or was an
executive officer or employee of the Company during 1998, 1999 or 2000, served
on the Compensation Committee during 2000. Messrs. Bulls, Costantini and Powers
joined the Compensation Committee in the first quarter of 2001, replacing Mr.
John Mercadante and Ms. Diane Day Sanders. The Board of Directors has
constituted an Options Approval Committee composed of Messrs. Bulls and
Costantini.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
certain large stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
13
17
In reviewing the various reports filed with respect to beneficial ownership
under Section 16(a), it was determined that Mr. Murdy and Mr. Giardinelli's Form
4 for a purchase of Company shares in October and November 2000 respectively
were not prepared and delivered in a timely manner.
AUDIT FEES
Arthur Andersen LLP was the Company's independent auditor during 2000 and
billed the Company an aggregate of $808,720 in fees and expenses for
professional services rendered in connection with the audit of the Company's
financial statements for 2000 and the reviews of the financial statements
included in each of the Company's Quarterly Reports on Form 10-Q. Arthur
Andersen LLP did not provide any services related to financial information
systems design and implementation during 2000. In addition, Arthur Andersen LLP
billed the Company an aggregate of $634,888 for other professional services
rendered to the Company including primarily tax advisory and employee benefit
plan related services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Hess Mechanical Corporation, a Delaware corporation ("Hess"), leases its
office and warehouse space in Upper Marlboro, Maryland from Gary E. Hess. The
lease expires on April 1, 2003, and provides for an annual rental of $200,000.
Hess is responsible for taxes, maintenance and insurance related thereto. The
Company believes that the rent for such property does not exceed fair market
value.
Shambaugh & Son, L.P., a Texas limited partnership ("Shambaugh"), leases
its principal offices and warehouse space in Fort Wayne, Indiana from Mark
Shambaugh, who is a director of the Company. During the year, in a transaction
that was reviewed and approved by the disinterested members of the Board of
Directors, Mr. Shambaugh, as landlord, expanded the premises at his expense by
approximately 20,400 square feet. Rent on the additional premises was calculated
on a basis negotiated prior to the acquisition of Shambaugh. Shambaugh performed
certain work on the construction at prices that were determined to be consistent
with fair market value. The lease expires on October 31, 2008, and, including
the additional space, the annual rental is $904,700 with annual consumer price
index increases. The Company also leases from Mr. Shambaugh two additional
facilities in Fort Wayne, Indiana, and one additional facility in each of South
Bend, Indiana and Lafayette, Indiana. The additional leases also expire on
October 31, 2008 and provide for annual rentals of $133,680, $12,000, $44,740
and $27,250, respectively, with annual consumer price index increases. Shambaugh
is responsible for taxes, maintenance and insurance related thereto.
Gant/Shambaugh Group LLC, a construction management company in which Mr.
Shambaugh owns a 49% interest, subcontracted work totaling $10.0 million during
2000 to Shambaugh. Mr. Shambaugh also owns CH Kraus L.L.C., a sheetmetal
fabricator that sold sheetmetal fabrication products and services to Shambaugh
totaling $9.6 million during 2000. Shambaugh also leases from Shambaugh Private
Carrier Corporation, an Indiana corporation owned by Mr. Shambaugh,
semi-tractors at an annual rental rate of $114,000 per year. The Company
believes these transactions were entered into at fair market value.
At the time that Mr. Ferreira, the former Chief Executive Officer and
Chairman of the Company, departed from the Company, the Company paid Mr.
Ferreira $300,000 in severance and entered into a consulting agreement with Mr.
Ferreira for $50,000 per year for a five year term. Subsequently, in late 2000
the Company was negotiating the sale of the assets of a small residential
plumbing operation in Aspen, Colorado to a third party. The Company tentatively
agreed to sell the operation to that party for $300,000, however, the
transaction failed when financing was not obtained by the prospective purchaser.
Mr. Ferreira learned of the failed transaction and indicated that he was willing
to purchase the assets on the same or equally advantageous terms. Mr. Ferreira
subsequently purchased the operation for total consideration of $350,000, which
included cash and totally offsetting payments owed to Mr. Ferreira under the
consulting agreement described above. The Company believes these transactions
were entered into at fair market value.
Mr. D. F. Miller, a recently appointed executive officer of the Company was
formerly a member of Innovative Leadership Partners, a training organization
that provided services to the Company. During 2000, the Company paid an
aggregate of $349,400 to that organization for training seminars it provided.
14
18
See the previous section entitled "COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION" for other information required to be disclosed here.
Any future transactions with directors, officers, employees or affiliates
of the Company or its subsidiaries are anticipated to be minimal and will be
approved in advance by a majority of disinterested members of the Board of
Directors.
AUDIT MATTERS
The Board of Directors selected the firm of Arthur Andersen LLP, certified
public accountants, as auditors for the Company for the fiscal year ending
December 31, 2001. A representative of Arthur Andersen LLP is expected to be
present at the Meeting with the opportunity to make a statement if he or she
desires and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
The Company's Bylaws establish procedures, including advance notice
procedures, with regard to the nomination other than by or at the direction of
the Board of Directors, of candidates for election as directors and with regard
to certain matters to be brought before meetings of stockholders of the Company.
In accordance with the Company's Bylaws, a proposal submitted for consideration
at the 2001 Annual Meeting of Stockholders will be considered untimely if it has
not been received by the Company at its principal executive offices by the close
of business on the 60th day prior to the first anniversary of the Meeting. The
Bylaws also contain procedures for regulation of the order of business and
conduct of stockholder meetings, the authority of the presiding officer and
attendance at such meetings.
Proposals of stockholders submitted for consideration at the 2002 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices not later than December 1, 2001 in order to be considered for
inclusion in the Company's proxy material for that meeting.
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the
Meeting which is not referred to in the accompanying Notice of Annual Meeting.
Should any such matters be presented, the persons named in the proxy intend to
take such action in regard to such matters as in their judgment seems advisable.
FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's Annual Report to Stockholders and the Annual Report
on Form 10-K filed with the SEC, accompany this proxy statement.
15
19
ANNEX A
AUDIT COMMITTEE CHARTER
The Audit Committee shall have the authority to select, direct, evaluate,
and, if appropriate, replace the independent accountants and the Company's
ranking internal audit officer, each of whom shall each be directly accountable
to the Company's Board of Directors through the Audit Committee.
The duties and responsibilities of the Audit Committee of this Board of
Directors, acting as representatives of the Company's shareholders, are as
follows:
1. To review with the Chief Executive Officer, Chief Financial Officer
and the principal financial and accounting personnel of the Company, as
appropriate:
A. The quality of services provided by the independent public
accountants (the "independent accountants"); any non-audit services
provided by the independent accountants and their fees for such
services; the fees of the independent accountants for audit services;
the scope of the audit; and the views of such personnel as to the
continuation of the independent accountants.
B. The general policies and procedures utilized by the Company with
respect to internal accounting controls.
C. Any proposed changes in significant accounting methods or
practices.
D. The staffing of the Company's financial and accounting
functions, including, where necessary, the internal auditing function.
2. To review with the independent accountants:
A. The scope of their audit, its conformity with generally accepted
auditing standards, and the cost of the audit.
B. Any significant variations in the accounting policies followed
by the Company from those generally followed by companies in a similar
or generally similar business.
C. The adequacy of the Company's internal accounting controls.
D. Any limitations placed upon the independent accountants by
Company personnel and the degree of cooperation.
E. Received by the independent accountants from Company personnel
during the audit.
F. Any proposed changes in significant accounting methods or
practices; and any significant new accounting practices or rules as they
relate to the Company.
G. The Company's staffing of its financial and accounting functions
including, where appropriate, the internal auditing function.
3. To report to the full Board of Directors as to the activities of
the Audit Committee, including:
A. The results of its discussions with personnel of the Company and
the independent accountants.
B. The recommendations of the Audit Committee regarding the
independent accountants to be selected by the Board, fees to be paid to
the independent accountants for their audit and non-audit services and
the independence of the auditors.
4. To review with appropriate Company personnel and the independent
accountants the audit results and any management letter submitted by the
independent accountants, including any exceptions, any significant year-end
adjustments, any significant transactions not a normal part of the
Company's business, any detected weaknesses and any corrective actions
taken or recommended to be taken.
5. To review with appropriate Company personnel and the independent
accountants the procedures to be followed by the independent accountants in
reviewing the Company's quarterly financial statements.
6. To review the financial statements contained in the Quarterly and
Annual Reports to Stockholders before they are submitted for distribution
to the stockholders; and to review the financial statements contained in
Forms 10-Q and 10-K before their filing with the SEC.
20
COMFORT SYSTEMS USA, INC.
ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS OF COMFORT SYSTEMS USA, INC.
The undersigned hereby appoints Gary E. Hess and William George III, and
each of them individually, as proxies with full power of substitution, to
vote, as designated on the reverse, all shares of Common Stock and
Restricted Common Stock of Comfort Systems USA, Inc. that the undersigned
is entitled to vote at the Annual Meeting of Stockholders thereof to be
held on May 25, 2001, or at any adjournment or postponement thereof.
ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE
DIRECTED, WILL BE VOTED "FOR" PROPOSAL 1 (ALL NOMINEES) AND IN ACCORDANCE
WITH THE DISCRETION OF THE PERSON VOTING THIS PROXY WITH RESPECT TO ANY
OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING. ANY EXECUTED PROXY
WHICH DOES NOT DESIGNATE A VOTE SHALL BE DEEMED TO GRANT AUTHORITY FOR ANY
ITEM NOT DESIGNATED.
(TO BE SIGNED ON REVERSE SIDE)
21
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
COMFORT SYSTEMS USA, INC.
MAY 25, 2001
* PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED *
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[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as marked to the for all nominees
contrary below)* listed at right
PROPOSAL 1: NOMINEES:
ELECTION [ ] [ ] William F. Murdy
OF THREE Herman E. Bulls
CLASS III DIRECTORS FOR TERMS Mark P. Shambaugh
EXPIRING IN 2004
* INSTRUCTION: To withhold authority to
vote for one or more nominees, write the
nominee's name on the line provided below:
- ------------------------------------------
You hereby revoke all previous proxies given. You may revoke this proxy at any
time prior to a vote thereon. Receipt of the accompanying Proxy Statement, the
Annual Report on Form 10-K, and the Annual Report of Comfort Systems USA, Inc.
for the fiscal year ended December 31, 2000 is hereby acknowledged.
Please check the following box if you plan to attend the annual
meeting of stockholders in person. [ ]
PLEASE COMPLETE, SIGN, AND PROMPTLY MAIL IN THE ENCLOSED ENVELOPE.
Signature Dated: 2001
------------------------------------------------- -----------
NOTE: Please sign exactly as your name appears on this card. Joint owners
should each sign. Executors, administrators, trustees and similar persons
should give their full titles.
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