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 (S) 240.14a-11(c) or (S) 240.14a-12
L. B. FOSTER COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
L.B. FOSTER COMPANY
415 Holiday Drive
[LOGO OF L.B. FOSTER COMPANY] Pittsburgh, Pennsylvania 15220
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 2002
To the Stockholders:
L.B. Foster Company will hold its annual stockholders' meeting at
the Radisson Hotel Green Tree, 101 Marriott Drive, Pittsburgh,
Pennsylvania on Wednesday, May 15, 2002 at 11:00 a.m., local time,
for the purposes of:
1. Electing a board of six directors for the ensuing year.
2. Approving the appointment of Ernst & Young LLP as our
independent auditors for 2002.
3. Any other matters that properly come before the stockholders
at the meeting.
Only holders of record of common stock at the close of business on
March 29, 2002 will be entitled to vote at the meeting or at any
adjournment thereof. The stock transfer books will not be closed.
The list of stockholders entitled to vote will be available for
examination by any stockholder, during ordinary business hours, at
the Company's principal executive offices, 415 Holiday Drive,
Pittsburgh, Pennsylvania, 15220, for a period of ten days prior to
the meeting.
Your vote at the annual meeting is important to us. Please vote
your shares of common stock by completing the enclosed proxy card
and returning it to us in the enclosed envelope.
David L. Voltz
Secretary
Pittsburgh, Pennsylvania
April 15, 2002
L.B. FOSTER COMPANY
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of L.B. Foster Company (the "Company") for
use at the annual meeting of stockholders to be held May 15, 2002 and at any
adjournment thereof. This proxy statement, the enclosed form of proxy and the
Company's 2001 Annual Report were mailed to stockholders on or about April 15,
2002. Any proxy given pursuant to this solicitation may be revoked at any time
before its use by written notice of revocation delivered to the Company at its
principal executive offices, 415 Holiday Drive, Pittsburgh, Pennsylvania
15220, attention: Secretary, or by attendance at the meeting and voting in
person.
The presence, in person or by proxy, of the record holders of a majority of
the Company's outstanding common stock is necessary to constitute a quorum. On
March 29, 2002, the record date for entitlement to vote at the meeting, there
were 9,480,988 shares of common stock outstanding. A quorum will therefore
require the presence, in person or by proxy, of the holders of at least
4,740,495 shares. Where a stockholder's proxy or ballot indicates that no vote
is to be cast on a particular matter (including broker non-votes) the shares
of such stockholders are nevertheless counted as being present at the meeting
for the purposes of the vote on that matter.
Only holders of record of the common stock at the close of business on March
29, 2002, are entitled to notice of and to vote at the meeting or at any
adjournment thereof. Such stockholders will have one vote for each share held
on that date. The common stock does not have cumulative voting rights.
Directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting. The appointment of Ernst &
Young LLP as the Company's independent auditors for 2002 and other matters
shall require that more votes be cast in favor of the proposal than are cast
against the proposal.
If the enclosed form of proxy is properly executed and returned, it will be
voted as directed. If no directions are given, the proxy will be voted FOR the
election of the six nominees named herein as directors and FOR approval of
Ernst & Young LLP as our independent auditors for 2002.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited personally or by telephone or
telegram by officers or employees of the Company. The Company does not expect
to pay any compensation for the solicitation of proxies, but under
arrangements made with brokers, custodians, nominees and fiduciaries to send
proxy material to the beneficial owners of shares held by them, the Company
may reimburse them for their expenses.
Stock Ownership
The following table shows the number of shares of common stock beneficially
owned by:
. each person who has reported beneficial ownership of more than 5% of the
Company's common stock;
. each director or nominee for director;
. each executive officer named in the Summary Compensation Table on page 8;
and
. all directors and executive officers as a group.
Information concerning the owners of more than 5% of the Company's common
stock is based upon their reports furnished to the Company and may not be
current.
Number of
Table 1 Shares Percent of
Stock Ownership Owned (a) Shares (b)
- --------------- --------- ----------
More Than 5% Stockholders:
Dimensional Fund Advisors Inc. (c) 801,600(d) 8.45%
Royce and Associates (c) 721,300 7.61%
Directors:
Lee B. Foster II 438,325 4.51%
Stan L. Hasselbusch 174,525 1.82%
Henry J. Massman IV 25,261 0.27%
Diane B. Owen -- --
John W. Puth 91,176 0.96%
William H. Rackoff 56,178 0.59%
Richard L. Shaw 52,178 0.55%
Certain Executive Officers:
Alec C. Bloem 42,103 0.44%
Senior Vice President--Concrete Products
David L. Voltz 57,803 0.61%
Vice President, General Counsel and Secretary
Samuel K. Fisher 41,354 0.43%
Senior Vice President--Rail Product Management
All Directors and Executive Officers as a Group 1,155,236 11.39%
- ------
(a) This column shows the number of shares with respect to which the named
person or group had direct or indirect sole or shared voting or investment
power, whether or not beneficially owned. It
2
also includes shares which the named person or group had the right to
acquire within 60 days
after March 29, 2002 through the exercise of stock options (232,500 for Mr.
Foster, 20,000 for Mr. Massman, 45,000 for Mr. Puth, 30,000 for Mr.
Rackoff, 45,000 for Mr. Shaw, 123,000 for Mr. Hasselbusch, 23,550 for Mr.
Bloem, 28,750 for Mr. Voltz, 32,250 for Mr. Fisher and 664,375 for the
directors and executive officers of the Company as a group).
(b) The percentages in this column are based on the assumption that any shares
which the named person has the right to acquire within 60 days after March
29, 2002 have been acquired and are outstanding.
(c) The address of Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, CA 90401 and the address of Royce and Associates,
Inc. is 1414 Avenue of Americas, New York, NY 10019.
(d) These shares reportedly are owned by investment advisory clients for which
Dimensional Fund Advisors Inc. serves as investment manager.
3
ELECTION OF DIRECTORS
A board of six directors is to be elected to serve until the next annual
meeting of stockholders and until their successors are elected and qualified.
Information concerning the nominees is set forth below. The nominees, other
than Ms. Owen, are currently serving on the Board of Directors.
Nominee
-------
Lee B. Foster II Mr. Foster, age 55, has been a director of the Company
since 1990. He was the Chief Executive Officer of the
Company from May 1990 until January 2002. Mr. Foster is a
director of Wabtec Corporation, a manufacturer of
components for locomotives, freight cars and passenger
transit vehicles. Wabtec Corporation also provides
aftermarket services, including locomotive and freight car
maintenance.
Stan L. Hasselbusch Mr. Hasselbusch, age 54, has been Chief Executive Officer
and a director of the Company since January 2002, and
President of the Company since March 2000. He served as
Vice President - Construction and Tubular Products of the
Company from December 1996 to December 1998 and as Chief
Operating Officer from January 1999 until he was named
Chief Executive Officer in January 2002.
Henry J. Massman IV Mr. Massman, age 39, has been a director of the Company
since November 1998. He has been President and Chief
Executive Officer of Massman Construction Co., Inc., a
heavy civil, bridge and marine contractor, since 1988.
Diane B. Owen Ms. Owen, age 46, was nominated to be a Director in March,
2002. She has been Vice President - Corporate Audit of
H.J. Heinz Company (Heinz), an international food company,
since May 2000 and was Vice President - Strategy
Development for Heinz from January 2000 to April 2000. She
served as Vice President and Chief Financial Officer of
Starkist Foods, Inc. from September 1998 to January 2000
and held the same position with Weight Watchers
International, Inc. from 1995 to September 1998; both
companies are subsidiaries of Heinz.
John W. Puth Mr. Puth, age 73, has been a director of the Company since
1977. He is a managing member of J.W. Puth Associates, LLC
and a general partner of BVCF III and BVCF IV
(institutional venture capital funds) and a general
partner of JDA Partners LP (an investment partnership).
Mr. Puth is a director of BWAY Corporation (a container
manufacturer), US Freightways, Inc. (trucking logistics
and freight forwarding), A.M. Castle, Inc. (metal
fabrication and distributor) and several private
manufacturing companies.
William H. Rackoff Mr. Rackoff, age 53, has been a director of the Company
since 1996. Mr. Rackoff has been President of Asko, Inc.,
which manufactures custom engineered tooling for the
metalworking industry, since 1991 and became Chief
Executive Officer of Asko, Inc. in 1995.
4
The foregoing nominees were nominated by the Board of Directors and have
expressed their willingness to serve as directors if elected. However, should
any of such persons be unavailable for election, the proxies (except for
proxies that withhold authority to vote for directors) will be voted for such
substitute nominee or nominees as may be chosen by the Board of Directors, or
the number of directors may be reduced by appropriate action of the Board.
Board and Committee Meetings
The Board of Directors held 10 meetings during 2001. Each nominee who was a
director during 2001 attended more than seventy-five percent of the total
number of meetings held during 2001 by the Board of Directors and the
committees of the Board on which he served.
Messrs. Puth (Chairman) and Foster constitute the Executive Committee of the
Board of Directors. The Audit Committee is composed of Messrs. Shaw
(Chairman), Puth and Rackoff, the Personnel & Compensation Committee is
composed of Messrs. Puth (Chairman), Massman and Shaw, and the Option
Committee is composed of Messrs. Puth, Rackoff and Shaw. Messrs. Puth, Shaw,
Rackoff and Massman are "independent" as defined in Rule 4200(a) of the
National Association of Securities Dealers' listing standards.
The Audit Committee, which held two meetings during 2001, is responsible for
reviewing, with the independent auditors and management, the work and findings
of the auditors as well as the effectiveness of the Company's internal
auditing department and the adequacy of the Company's internal controls and
the accounting principles employed in financial reporting. The Personnel &
Compensation Committee, which met on 6 occasions in 2001, is responsible for
reviewing and approving all general employee benefit programs and recommending
for approval officer compensation and organizational changes. The Option
Committee, which met 3 times in 2001, is responsible for the administration of
the Company's stock option plan. The Company has no standing nominating
committee of the Board of Directors. The Executive Committee did not meet in
2001.
Directors' Compensation
Outside directors are paid a base annual fee plus $1,000 for each board
meeting attended and $500 for each committee meeting attended. The cash
component of the base annual fee was reduced from $14,000 to $7,000 on July 1,
2000 and commencing on July 1, 2000 each outside director receives restricted
Company stock valued at $3,500 in both July and January. No compensation is
paid for participating in special telephonic meetings or executing unanimous
consents in lieu of meetings. Each outside director automatically is awarded
annually a non-qualified option to acquire up to 5,000 shares of the Company's
common stock after the annual stockholders' meeting and following the annual
meeting in 2001 Messrs. Massman, Rackoff, Puth and Shaw were each awarded an
option to acquire up to 5,000 shares of the Company's common stock at $3.65
per share. Management directors receive no separate compensation for their
services as directors.
5
APPROVAL OF APPOINTMENT OF AUDITORS
The firm of Ernst & Young LLP has served as the Company's independent
auditors since 1990 and has been appointed as the Company's independent
auditors for the fiscal year ending December 31, 2002. The Board of Directors
recommends a vote FOR approval of this appointment.
Audit Fees
Ernst & Young LLP's audit fees and expenses for the 2001 fiscal year were
$132,600.
All Other Fees
The Company also paid Ernst & Young LLP an additional $27,650 for audit
related services during 2001. Audit related services generally include pension
audits, accounting consultations, and services relating to business
acquisitions or divestitures, and SEC registration statements.
6
REPORT OF THE AUDIT COMMITTEE
Management has the primary responsibility for the financial statements and
the reporting process. Pursuant to its written charter, adopted by the Board
of Directors, the Audit Committee oversees the Company's financial reporting
process on behalf of the Board of Directors. In fulfilling its oversight
responsibilities, the Committee reviewed with management the audited financial
statements of the Company for the year ended December 31, 2001 and discussed
the accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The Committee reviewed with Ernst & Young LLP, 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 accounting principles
and such other matters as are required to be discussed with the Committee
under generally accepted auditing standards. In addition, the Committee has
discussed with Ernst & Young LLP the auditors' independence from management
and the Company including the matters in the written disclosures required by
the Independence Standards Board. The Committee considered the compatibility
of nonaudit services with the auditors' independence and concluded that Ernst
& Young LLP's independence had not been impaired.
The Committee discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The Committee meets
with the independent auditors, with and without management present, to discuss
the results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Committee held two meetings during fiscal year 2001. The Committee's Chairman
also discussed the results of Ernst & Young LLP's quarterly review procedures
with Ernst & Young LLP, the Company's Chief Executive Officer and Controller
prior to the Company's release of quarterly financial information.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2001 for filing with the Securities and Exchange
Commission. The Committee and the Board have also appointed Ernst & Young LLP
as the Company's independent auditors for the year ending December 31, 2002.
AUDIT COMMITTEE
Richard L. Shaw, Chairman
John W. Puth
William H. Rackoff
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding the compensation of the
Company's five most highly paid executive officers (the "Named Executive
Officers").
Long-Term
Annual Compensation Compensation Awards
------------------------------ ---------------------
Restricted
Other Annual Stock Options/ All Other
Name and Bonus Compensation Awards SARs Compensation
Principal Position Year Salary ($) ($)(1) ($)(2) ($)(3) (# shares) ($)(4)
- ------------------ ---- ---------- ------ ------------ ---------- ---------- ------------
Lee B. Foster II 2001 307,916 -- * -- 50,000 22,810
Chairman 2000 307,000 62,258 * 17,252 100,000 28,332
1999 292,000 73,353 * 18,858 -- 29,376
Stan L. Hasselbusch 2001 227,833 -- * -- 100,000 13,771
President and Chief 2000 225,000 45,629 * 12,644 50,000 17,750
Executive Officer 1999 200,000 50,241 * 12,919 -- 18,162
Alec C. Bloem 2001 196,250 8,000 * -- 15,000 8,027
Sr. Vice President-- 2000 186,250 28,832 * 5,219 25,000 10,627
Concrete Products 1999 168,250 25,372 99,781(5) 5,236 15,000 9,142
David L. Voltz 2001 148,125 -- 15,514(6) -- 10,000 7,566
Vice President, General 2000 142,500 18,303 * 5,072 10,000 10,236
Counsel and Secretary 1999 135,000 27,073 6,117 -- 10,556
Samuel K. Fisher 2001 146,667 -- * -- 10,000 7,189
Sr. Vice President-- 2000 134,583 13,656 * 3,784 3,500 8,678
Rail Product Management 1999 118,462 10,333 * 2,586 -- 9,423
- ------
(1) The amounts included in this column for 2001 are discretionary bonus
payments as the Company did not pay a Bonus pursuant to the 2001 Bonus
Plan. The amounts included in this column for 2000 include, in addition to
cash, the value at $3.25 per share of the Company's Stock issued to the
named executive officers pursuant to the Company's 2000 bonus plan. The
stock is subject to forfeiture, if, subject to certain exceptions, the
recipient's employment with the Company terminates within two years after
the date of the stock's issuance. The amounts for 1999 include $4 1/16 per
share of the Company's Common Stock issued to the named executive officers
pursuant to the Company's 1999 bonus plan.
(2) The amounts disclosed in this column include the value of Company provided
term life insurance, leased car, Executive Medical Reimbursement Plan,
relocation expenses and country club dues and fees.
(3) Amounts included in this column are also included in the amounts listed in
the Bonus column under the Annual Compensation portion of the Table. The
Company did not issue stock under the 2001 Bonus Plan. As of December 31,
2001, Mr. Foster held 9,950 shares of stock valued at $44,775, Mr.
Hasselbusch held 7,071 shares of stock valued at $31,820, Mr. Bloem held
2,895 shares of
8
stock valued at $13,028, Mr. Voltz held 2,920 shares of stock valued at
$13,140 and Mr. Fisher held 1,739 shares of stock valued at $7,825
(4) The amounts disclosed in this column include the Company contributions to
the L.B. Foster Company Voluntary Investment Plan and the Supplemental
Executive Retirement Plan.
(5) This amount includes relocation expenses in the amount of $92,363.
(6) This amount includes club dues and fees of $2,515 and $10,730 for a leased
car.
* The total is less than 10% of the executive's total salary and bonus for
the year.
Option Grants
The following table provides information on stock options granted to the
Named Executive Officers in 2001:
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Shares Options Price Appreciation
Underlying Granted to Exercise for Option Term ($)
Options Employees or Base Expiration ----------------------
Name Granted in 2001 Price ($/Sh) Date 5% 10%
- ---- ---------- ---------- ------------ ---------- ---------- -----------
Lee B. Foster II 20,000 (a) 5.95% 2.75 02/01/11 34,589 87,656
Lee B. Foster II 30,000 (a) 8.93% 3.65 05/08/11 68,864 174,515
Stan L. Hasselbusch 20,000 5.95% 2.75 02/01/11 34,589 87,656
Stan L. Hasselbusch 30,000 8.93% 3.65 05/08/11 68,864 174,515
Stan L. Hasselbusch 50,000 14.88% 4.75 12/11/11 149,362 378,514
Alec C. Bloem 6,000 1.79% 2.75 02/01/11 10,377 26,297
Alec C. Bloem 9,000 2.68% 3.65 05/08/11 20,659 52,354
David L. Voltz 4,000 1.19% 2.75 02/01/11 6,918 17,351
David L. Voltz 6,000 1.79% 3.65 05/08/11 13,773 34,903
Samuel K. Fisher 4,000 1.19% 2.75 02/01/11 6,918 17,351
Samuel K. Fisher 6,000 1.79% 3.65 05/08/11 13,773 34,903
- ------
(a) Other than with respect to options granted to Mr. Foster, each option
vests at the rate of 25% per year, commencing one year after the date of
grant, and is exercisable until ten years after the date of the grant. Mr.
Foster's options are fully vested and also are exercisable until ten years
after the date of the grant.
9
Option Exercises and Year-End Option Values
The following table provides information on option exercises in 2001 by the
Named Executive Officers and such officers' unexercised options at December
31, 2001. The Company has not awarded any stock appreciation rights.
Number of Shares
Underlying Unexercised Value of Unexercised
Shares Options at Fiscal In-the-Money Options at
Acquired on Year-End (#) Fiscal Year-End ($)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
Lee B. Foster II -- -- 232,500 -- 117,400 --
Stan L. Hasselbusch -- -- 98,000 150,000 42,140 63,500
Alec C. Bloem -- -- 21,250 43,750 7,525 38,325
David L. Voltz -- -- 23,750 21,250 10,900 13,000
Samuel K. Fisher -- -- 27,250 40,750 10,706 30,119
10
PERSONNEL & COMPENSATION COMMITTEE
AND OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The three member Personnel & Compensation Committee (the "Compensation
Committee") of the Board of Directors is composed of non-employee directors
and is generally responsible for determining the compensation of the Company's
executive officers, except for decisions made by the Option Committee
concerning stock option awards. The decisions by the Compensation Committee
are then reviewed by the full Board. This report is submitted by Messrs.
Massman, Puth and Shaw in their capacity as the Compensation Committee, and by
Messrs. Puth, Rackoff and Shaw in their capacity as the Option Committee, and
addresses the Company's compensation policies for 2001 as they were generally
applicable to the Company's executive officers and as they were specifically
applicable to Mr. Foster.
COMPENSATION POLICIES REGARDING EXECUTIVE OFFICERS
The Compensation Committee's policies are designed to enable the Company to
attract and retain qualified executives and to provide incentives for the
achievement of the Company's annual and long-term performance goals. The
vehicles for compensating and motivating executive officers include cash
compensation, stock awards, stock options, participation in a 401(k) plan, a
supplemental executive retirement plan and other benefits. The Company has not
established a policy with regard to Section 162(m) of the Internal Revenue
Code of 1986, as amended, since the Company has not and currently does not
anticipate paying compensation in excess of $1 million per annum to any
employee.
Cash Compensation
Each year the Company obtains survey data in order to determine the
competitiveness of its pay structure for senior management. The surveys
considered in determining the pay scales for 2001 were published by Watson
Wyatt Data Services and covered companies that were manufacturers of durable
goods with annual sales of up to $345 million, fabricators of metal products
with annual sales of up to $528 million, or general manufacturers with sales
of up to $355 million. The data indicates that the Company's executive
officers' average base salaries were approximately 8.2% lower than the blended
average of the median base salaries for comparable positions in the durable
goods manufacturing industry, in the metal fabricating industry and in the
general manufacturing industry.
The Company uses survey data only to establish rough guidelines for its
decisions on executive compensation. Specific decisions are then made largely
on subjective assessments of the officer's performance, the responsibilities
and importance of the officer's position within the Company and the overall
performance of the Company.
During 2001, the Company also maintained an Incentive Compensation Plan to
provide incentives and rewards for employees. No bonuses were paid under this
Plan because the Company did not achieve required levels of pre-tax income.
The Board of Directors did, however, award special discretionary bonuses to
four officers ranging from 4.07% to 9.96% of the respective recipients' base
11
salary. Survey data indicate that the current salaries plus cash incentive
compensation (excluding stock awards under the Incentive Compensation Plan)
paid to the Company's executive officers were below the blended aggregate
median cash compensation for comparable executive positions in the durable
goods manufacturing industry, metal fabricating industry and general
manufacturing industry.
Many of the companies included in the peer group used to compare shareholder
returns are substantially larger than the Company and do not necessarily
represent the Company's most direct competition for executive talent.
Consequently, the survey data used by the Compensation Committee does not
correspond to the peer group index in the five-year Total Return graph
included in the proxy statement.
Stock Option Plans
The Company's 1985 Long-Term Incentive Plan as Amended and Restated and the
1998 Long-Term Incentive Plan as Amended and Restated (the "Plans") authorize
the award of stock options and stock appreciation rights ("SAR's") to
officers, directors and key employees of the Company and its subsidiaries. The
Plans are designed to motivate participants by providing them with a direct,
financial interest in the long-term performance of the Company. The
participants and their awards are determined by the Option Committee of the
Board of Directors. The purchase price of optioned shares must be at least the
fair market value of the common stock on the date the option is granted, and
the term of options may not exceed ten (10) years. Both "incentive stock
options" and "non-qualified stock options" may be awarded under the Plans.
Stock appreciation rights may be awarded at any time prior to six months
before the stock option's expiration date and represent the right to receive
payment of an amount not exceeding the amount by which the average of the
reported high and low sales prices of the Company's common stock on the
trading day immediately preceding the date of exercise of the SAR exceeds the
option exercise price. The exercise of a SAR cancels the related stock option.
In determining the number of options to award a participant, the Option
Committee generally takes into account, among other factors, the number of
options previously awarded to the participant
Retirement Plan
The Company maintains the L. B. Foster Company Voluntary Investment Plan, a
salary reduction plan qualifying under Section 401(k) of the Internal Revenue
Code, covering all salaried employees with over one (1) year of service.
Eligible employees may contribute up to 15% (10% maximum on a pre-tax basis)
of their compensation to the Plan, and the Company is required to contribute
1% of the employee's compensation plus $.50 for each $1.00 contributed by the
employee, subject to a maximum of from 4% to 6% of the employee's
compensation. Based upon the Company's financial performance against
predetermined criteria, the Company may be required to contribute up to an
additional $.50 for each $1.00 so contributed. The Company also may make
additional discretionary contributions to the Plan. Company contributions vest
upon completion of five (5) years of service. Beginning January 1, 2002,
Company contributions will vest upon completion of three (3) years service, as
required by "EGTRRA". The Company's contributions for 2001 to the Voluntary
Investment Plan for Messrs. Foster, Hasselbusch, Bloem, Voltz and Fisher are
included in the Summary Compensation Table. The Company also maintains a
Supplemental Executive Retirement Plan under which executive officers may
accrue benefits which approximate the benefits which the executives cannot
receive under the Voluntary Investment Plan because of Internal Revenue Code
limitations.
12
Other Compensation Plans
At various times in the past, the Company has adopted certain broad-based
employee benefit plans in which executive officers have been permitted to
participate and has adopted certain executive officer leased vehicle, life and
health insurance programs. The incremental cost to the Company of the
executive officers' benefits provided under these programs for Messrs. Bloem,
Foster, Hasselbusch, Voltz and Fisher are included in the Summary Compensation
Table, if such benefits exceeded 10% of named officer's salary and bonus for
the year. Benefits under these plans are not directly or indirectly tied to
Company performance.
MR. FOSTER'S 2001 COMPENSATION
Mr. Foster is eligible to participate in the same executive compensation
plans as are available to other executive officers. Mr. Foster's salary was
increased on June 1, 2001 to an annual salary of $325,000. Mr. Foster took a
voluntary 10% salary reduction on September 1, 2001. This was done as the
Company engaged in streamlining its administrative costs. According to data
published by Watson Wyatt Data Services, Mr. Foster's 2001 base compensation
was approximately 15.6% below the blended average of the median base salary
for chief executive officers of metal fabricating companies with median sales
of $192 million, durable goods manufacturing companies with median sales of
$244 million and general manufacturing companies with median sales of $316
million. Consistent with the Compensation Committee's general practice, there
was no special attempt to set Mr. Foster's compensation in any particular
relationship to the compensation data.
Consistent with its goal of aligning management and shareholder interests,
the Option Committee on February 2, 2001 awarded Mr. Foster options to acquire
up to 20,000 shares of the Company's common stock at a price of $2.75/share
and on May 9, 2001 awarded Mr. Foster an option to purchase 30,000 shares of
common stock at a price of $3.65/share.
Effective January 1, 2002, Mr. Foster resigned as Chief Executive Officer
and his annual salary was reduced to $165,000. Mr. Foster remains Chairman of
the Board and an employee of the Company.
PERSONNEL & COMPENSATION COMMITTEE
John W. Puth, Chairman
Richard L. Shaw
Henry J. Massman IV
OPTION COMMITTEE
John W. Puth
William H. Rackoff
Richard L. Shaw
13
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG, L.B. FOSTER COMPANY, THE NASDAQ STOCK MARKET
(U.S.) INDEX AND A PEER GROUP
[Graph Appears Here]
A B C
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L.B FOSTER CO PEER GROUP NASDAQ STOCK
- ---------------------------------------------------------------
1 12/96 100 100 100
- ---------------------------------------------------------------
2 12/97 131.67 111.43 122.48
- ---------------------------------------------------------------
3 12/98 176.67 78.34 172.68
- ---------------------------------------------------------------
4 12/99 130 96.43 320.89
- ---------------------------------------------------------------
5 12/2001 66.67 75.27 193.01
- ---------------------------------------------------------------
6 12/2002 120 74.32 153.15
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* $100 INVESTED ON 12/31/96 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
The Peer Group is composed of the following steel or iron related companies
where stocks are listed on domestic securities exchanges: Ampco-Pittsburgh
Corp., Bayou Steel Corp. La Place, Bethlehem Steel Corp., Birmingham Steel
Corp., Carpenter Technology Corp., Friedman Inds. Inc., Hmi Inds. Inc.,
Keystone Cons Inds. Inc., LTV Corp. New, Matec Corp., Maverick Tube Corp.,
Meridian Natl. Corp., N S Group, Inc., Nucor Corp., Oregon Steel Mills, Inc.,
Precision Castparts Corp., Quanex Corp., Texas Inds. Inc., Tubos De Acero De
Mexico S. A., Tyler Technologies, Inc. Del., USX-US Steel Company, Weirton
Steel Corp., Whx Corp.
14
ADDITIONAL INFORMATION
Management is not aware at this time of any other matters to be presented at
the meeting. If, however, any other matters should come before the meeting or
any adjournment thereof, the proxies will be voted in the discretion of the
proxyholders.
Representatives of Ernst & Young LLP are expected to be in attendance at the
meeting to respond to appropriate questions from stockholders and will have an
opportunity to make a statement if they so desire.
Stockholders' proposals intended to be presented at the Company's 2003
annual meeting must be received by the Company no later than December 31, 2002
to be considered for inclusion in the Company's proxy statement and form of
proxy for that meeting. A nomination of a person for election as a director
and any other proposal made by a stockholder shall not be considered at a
stockholders' meeting unless written notice of the nomination or proposal has
been received by the Company's Secretary by the later of (i) the date which is
90 days in advance of the meeting date or (ii), the seventh calendar day
following the first public announcement of the date of the meeting.
Pittsburgh, Pennsylvania
April 15, 2002
15
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PROXY
L.B. FOSTER COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 15, 2002
The undersigned hereby appoints Lee B. Foster II and Stan L. Hasselbusch, and
each or any of them, to represent the L.B. Foster Company common stock of the
undersigned at the Annual Meeting of Stockholders of L.B. Foster Company to be
held at the Radisson Hotel Green Tree, 101 Marriott Drive, Pittsburgh,
Pennsylvania on May 15, 2002 at 11:00 a.m. or at an adjournment thereof.
The shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR all Nominees" in Item 1, and "FOR" Item 2. If any
other matter should come before the meeting or any adjournment thereof, this
proxy will be voted in the discretion of the proxyholders. If any nominee for
director is unavailable for election, this proxy may be voted for a substitute
nominee chosen by the Board of Directors.
(PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY)
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. Please Detach and Mail in the Envelope Provided .
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A [X] Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1,
AND "FOR" ITEM 2.
FOR all WITHHOLD AUTHORITY
Nominees to vote for all Nominees FOR AGAINST ABSTAIN
Item 1. Nominees: Les B. Foster II Item 2. Approve appointment of [_] [_] [_]
Election of [_] [_] Stan L. Hasselbusch Ernst & Young LLP as
the following Henry J. Massman IV Independent Auditors
nominees as Diane B. Owen for 2002.
Directors: John W. Puth
WITHHOLD AUTHORITY to vote for the William H. Rackoff PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
following only: (Write the name of PROMPTLY IN THE ENCLOSED ENVELOPE.)
the Nominee(s) in the space below:
_________________________________
SIGNATURE __________________________________ Date _______, 2002 ____________________________________ Date: _________________. 2002
SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as name appears on the certificate representing shares to be voted by this proxy, as shown on the label
above. When signing as executor, administrator, attorney, trustee or guardian, please sign full title as such. If a
corporation, please sign full corporate name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
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