SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
URS CORPORATION
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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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1) Title of each class 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
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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
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was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
6) Amount previously paid:
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9) Date Filed:
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URS CORPORATION
100 California Street, Suite 500
San Francisco, California 94111-4529
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 20, 2001
TO THE STOCKHOLDERS OF URS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of URS
CORPORATION, a Delaware corporation, will be held on March 20, 2001, at 9:30
a.m. local time at the Mandarin Oriental Hotel, 222 Sansome Street, San
Francisco, California for the following purposes:
1. To elect directors to serve for the ensuing year and until their successors
are elected.
2. To ratify the selection of PricewaterhouseCoopers LLP as our independent
auditors for the fiscal year ending October 31, 2001.
3. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 22,
2001, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ Kent P. Ainsworth
Kent P. Ainsworth,
Secretary
San Francisco, California
February 1, 2001
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ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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URS CORPORATION
100 California Street, Suite 500
San Francisco, California 94111-4529
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 20, 2001
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
URS Corporation, a Delaware corporation, for use at its Annual Meeting of
Stockholders to be held on March 20, 2001, at 9:30 a.m. local time (the "Annual
Meeting"), or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at the Mandarin Oriental Hotel, 222 Sansome Street, San
Francisco, California. We intend to mail this proxy statement and accompanying
proxy card on or about February 1, 2001, to all stockholders entitled to vote at
the Annual Meeting.
SOLICITATION
We will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. We may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of URS.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
January 22, 2001, will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on January 22, 2001, 17,039,785 shares of
Common Stock were outstanding and entitled to vote.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Annual
Meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. Proxies may be revoked by any of
the following actions:
o filing a written notice of revocation with our Secretary at our
principal executive office (100 California Street, Suite 500, San
Francisco, California 94111-4529);
o filing a properly executed proxy showing a later date with our
Secretary at our principal executive office (100 California
Street, Suite 500, San Francisco, California 94111-4529); or
o attending the meeting and voting in person (attendance at the
meeting will not, by itself, revoke the proxy).
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in our
proxy statement and form of proxy for our 2002 annual meeting of stockholders
pursuant to Rule 14a-8 of the Securities and Exchange Commission is September
24, 2001. Unless a stockholder who wishes to bring a matter before the
stockholders at our 2002 annual meeting of stockholders notifies us of such
matter prior to December 18, 2001, management will have discretionary authority
to vote all shares for which it has proxies in opposition to such matter. We
advise you to review our By-Laws, which contain additional requirements
regarding stockholder proceedings and director elections.
2
PROPOSAL 1
ELECTION OF DIRECTORS
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of a substitute nominee proposed by our Board of
Directors. Each person nominated for election has agreed to serve if elected,
and management has no reason to believe that any nominee will be unable to
serve.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set
forth below:
PRINCIPAL OCCUPATION/
NAME AGE POSITION
Richard C. Blum ............................ 65 Vice Chairman of the Board
Armen Der Marderosian ...................... 66 Director
Admiral S. Robert Foley, Jr., USN (Ret.).... 72 Director
Marie L. Knowles ........................... 54 Director
Martin M. Koffel ........................... 61 Chief Executive Officer, President and
Chairman of the Board
Richard B. Madden .......................... 71 Director
Jean-Yves Perez ............................ 55 Executive Vice President, Business Development,
General Engineering Group and Director
Richard Q. Praeger ......................... 76 Director
Irwin L. Rosenstein ........................ 64 President, General Engineering Group and Director
William D. Walsh ........................... 70 Director
Richard C. Blum has served as Vice Chairman of the Board of Directors
since 1975. Mr. Blum has served as Chairman and President, Richard C. Blum &
Associates, Inc., the sole general partner of BLUM Capital Partners, L.P., a
merchant banking and equity investment management firm since 1975; as a Director
of Northwest Airlines Corporation since 1989; as a Director of Shaklee
Corporation since 1990; as a Director of CB Richard Ellis Services, Inc. since
1993; as the Co-Chairman of Newbridge Capital since 1997; as a Director of
Glenborough Realty Trust, Inc. since 1998; as a Director of Playtex Products,
Inc. since 1998; as a Director of KFB Newbridge Advisors, Co. since 2000; as a
Director of KFB Newbridge Control Corp. since 2000; as a Director of KFB
Co-Investment I, Co. since 2000; as a Director of Korea First Bank since 2000;
and as a Director of the Egyptian Strategic Fund since 2000.
Armen Der Marderosian has served as a Director of URS Corporation since
1994. Mr. Der Marderosian served as President and Chief Executive Officer of GTE
Government Systems Corporation from 1995 to 1999, as Executive Vice President
and General Manager of same from 1993 to 1995 and as Vice President of same from
1963 to 1995. Mr. Der Marderosian served as Executive Vice President, Technology
and Systems, GTE Corporation, from 1998 to December 1999 and as Senior Vice
President of same from 1995 to 1997.
Admiral S. Robert Foley, Jr., USN (Ret.) has served as a Director of
URS Corporation since 1994. Admiral Foley served as Senior Advisor/Consultant to
Raytheon Corporation from 1998 to 2000; as Vice President, Raytheon
International Inc. from 1995 to 1998; and as President, Raytheon Japan from 1995
to 1998. Admiral Foley has served as a Director of Frequency Electronics since
1999; as a Director of RSI Inc. since 1998; as a Director of SAGE Laboratories
since 1998; as a Director of Filtronics Solid State since 1998; and as a
Director of Cheng Engineering since 1999.
3
Marie L. Knowles has served as a Director of URS Corporation since
1999. Prior to Ms. Knowles' retirement in June 2000, she served as Executive
Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO)
(diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice
President of ARCO and President of ARCO Transportation Company. She served as a
Director of ARCO from 1996 to 1998. Currently, she serves as a Trustee of the
Fidelity Funds (2000), Director of Phelps Dodge Corporation (copper mining and
manufacturing, 1994), and America West Holdings Corporation (aviation and travel
services, 1999), and previously served as a Director of ARCO Chemical
Corporation and Vastar Resources, Inc.
Martin M. Koffel has served as Chief Executive Officer, President and
Director of URS Corporation since May 1989 and as Chairman of the Board of URS
Corporation since June 1989. Mr. Koffel has served as a Director of McKesson
HBOC, Inc. since 2000.
Richard B. Madden has served as a Director of URS Corporation since
1992. Mr. Madden served as Chief Executive Officer of Potlach Corporation from
1971 to 1994 and as a Director of same from 1971 to 1999; as a Director of PG&E
Corporation from 1996 to 2000; and as a Director of Pacific Gas and Electric
Company from 1977 to 2000. Mr. Madden has served as a Director of CNF
Transportation Inc. since 1992.
Jean-Yves Perez has served as Executive Vice President, Business
Development, General Engineering Group, since November 1998 and as a Director of
URS Corporation since 1997. Mr. Perez served as President of Woodward-Clyde
Group, Inc. after it became a division of URS Corporation from November 1997 to
October 1998 and as President and Chief Executive Officer of Woodward-Clyde
Group, Inc. from 1987 to October 1997.
Richard Q. Praeger has served as a Director of URS Corporation since
1970. Mr. Praeger has been a management and engineering consultant since 1974
and has owned Transition Books, a book store, since 1979. Mr. Praeger served as
President, URS/Madigan-Praeger, Incorporated prior to November 1974.
Irwin L. Rosenstein has served as President, General Engineering Group
since November 1998, as Vice President of URS Corporation since 1987 and as a
Director of URS Corporation since February 1989. Mr. Rosenstein served as
President of URS Greiner, URS Corporation's former principal operating division,
from November 1997 to October 1998 and as President of URS Consultants, Inc.,
URS Corporation's former principal operating division, from February 1989 to
October 1997.
William D. Walsh has served as a Director of URS Corporation since
1988. Mr. Walsh has served as Chairman of Sequoia Associates LLC, a private
investment firm since 1982; as Chairman of the Board, Consolidated Freightways
Corporation since 1996 and as a Director of Consolidated Freightways, Inc. from
1994 to 1996; as Chairman of the Board of Newell Industrial Corporation since
1988; as Chairman of the Board of Clayton Group, Inc. since 1996; as a Director
of Crown Vantage, Inc. since 1996; as a Director of Unova, Inc. since 1997; as a
Director of Bemiss Jason since 1998; and as a Director of Ameriscape, Inc. since
1999. Mr. Walsh served as a Director of Basic Vegetable Products from 1990 to
2000; as a Director of Golden Valley Farms LLC from 1996 to 1999; as a Director
of Newcourt Credit Group from 1993 to 1999; as a Director of National Education
Corporation from 1992 to 1997; and as Chairman of the Board of Champion Road
Machinery from 1988 to 1997.
4
BOARD COMMITTEES AND MEETINGS
During fiscal year 2000, the Board of Directors held four meetings. The
Board of Directors has a Compensation/Option Committee, an Audit Committee, a
Board Affairs Committee and a Non-Officer Option Committee. Each Director, other
than Richard C. Blum, attended at least 75% of the aggregate of (1) the total
number of the meetings of the Board of Directors (held during the period for
which he or she has been a Director) and (2) the total number of meetings held
by all the committees of the Board of Directors on which he or she served
(during the periods that he or she served). Mr. Blum attended two regular
meetings of the Board of Directors held during fiscal year 2000; however, he was
unable to attend two meetings due to his travel schedule.
The Compensation/Option Committee consists of Mr. Madden, Chairman, and
Mr. Walsh. The Compensation/Option Committee held four meetings during fiscal
year 2000. The primary responsibilities of the Compensation/Option Committee are
to approve remuneration plans and other executive benefits and to administer the
incentive compensation plans maintained by URS and our subsidiaries, including
our Employee Stock Purchase Plan and the 1999 Equity Incentive Plan.
The Audit Committee consists of Mr. Der Marderosian, Chairman, Mr.
Praeger and Ms. Knowles. The Audit Committee held four meetings during fiscal
year 2000. The primary responsibilities of the Audit Committee are to meet with
our independent auditors at least annually to review the results of the annual
audit and to discuss the financial statements, including the independent
auditors' judgment about the quality of accounting principles, the
reasonableness of significant judgments and the clarity of the disclosures in
the financial statements. Additionally, the Audit Committee meets with our
independent auditors to review the interim financial statements prior to the
filing of our Quarterly Reports on Form 10-Q, recommends to the Board the
independent auditors to be retained, oversees the independence of the
independent auditors, evaluates the independent auditors' performance, receives
and considers the independent auditors' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls, including our system to monitor and manage business risk and
legal and ethical compliance programs, prepares the Audit Committee Report for
inclusion in our proxy statement and meets with our General Counsel to discuss
legal matters that may have a material impact on the financial statements or our
compliance policies. All members of our Audit Committee are independent within
the meaning of the rules of the New York Stock Exchange.
The Board Affairs Committee consists of Mr. Walsh, Chairman, and
Messrs. Koffel and Madden. The Board Affairs Committee held two meetings during
fiscal year 2000. The primary responsibilities of the Board Affairs Committee
are to identify, evaluate, review and recommend qualified candidates for
director to the entire Board of Directors, to recommend to the Board of
Directors prior to each annual meeting of stockholders (or other meeting of
stockholders at which Directors are to be elected) a slate of nominees, to
recommend an individual or individuals to fill any vacancy on the Board of
Directors, and to make an annual assessment of the performance of the Board of
Directors (including committees) and present the results to the Board of
Directors with any recommendations to improve the effectiveness or the balance
of expertise of the members. The Board Affairs Committee also has responsibility
to conduct periodic reviews of our corporate governance guidelines and other
corporate governance issues that may, from time to time, merit consideration by
the entire Board of Directors. The Board Affairs Committee will consider
nominees recommended by security holders. Any security holder who wishes to
recommend a nominee for membership on our Board of Directors must submit such
nomination in writing to Mr. William D. Walsh, Chairman of the Board Affairs
Committee, in care of URS at our principal executive office. All such
nominations will be thoroughly reviewed by the Board Affairs Committee.
The Non-Officer Option Committee consists of Mr. Koffel. The
Non-Officer Option Committee held two meetings during fiscal year 2000. The sole
responsibility of the Non-Officer Option Committee is to approve grants of stock
options to non-executive employees under the terms of the 1999 Equity Incentive
Plan subject to numerical limits and other parameters established by the Board
of Directors from time to time.
5
REPORT OF THE AUDIT COMMITTEE FOR FISCAL YEAR 2000(1)
The Audit Committee has the responsibility, under delegated authority
from our Board of Directors, for providing independent, objective oversight of
URS's accounting functions and internal controls. The Audit Committee is
composed of independent directors and acts under a written charter adopted and
approved by the Board of Directors in March 2000. Each of the members of the
Audit Committee is independent as defined by URS's internal policy and the rules
of the New York Stock Exchange. A copy of the Audit Committee Charter is
attached to this Proxy Statement as Appendix A.
The Audit Committee oversees URS'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 systems of
internal controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed, with management, the audited financial statements of URS
included in the 2000 Annual Report to Stockholders including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of 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, the
independent auditors' judgments as to the quality, not just the acceptability,
of URS's 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 discussed with the independent auditors the
auditors' independence from management and URS, including the matters in the
written disclosures required by the Independence Standards Board.
The Audit Committee discussed with URS's independent and internal
auditors the overall scope and plans for their respective audits. The Audit
Committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of URS's internal controls and the overall quality of URS's
financial reporting. The Audit Committee held four meetings during fiscal year
2000.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board of Directors
approved) that the audited financial statements of URS be approved and included
in the URS Annual Report on Form 10-K for the year ended October 31, 2000 to be
filed with the Securities and Exchange Commission. The Audit Committee and the
Board of Directors also have recommended, subject to stockholder approval, the
selection of the PricewaterhouseCoopers LLP as independent auditors.
Respectfully Submitted,
THE AUDIT COMMITTEE
Armen Der Marderosian, Chairman
Marie L. Knowles
Richard Q. Praeger
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(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any of our
filings under the Securities Act of 1933, as amended, or the Exchange Act
whether made before or after the date of this Proxy Statement and irrespective
of any general incorporation language therein.
6
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as our
independent auditors for the fiscal year ending October 31, 2001, and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited our financial statements since 1988.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP
as our independent auditors is not required by our By-Laws or otherwise.
However, the Board is submitting the selection of PricewaterhouseCoopers LLP to
the stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board, in their discretion, may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of URS and our
stockholders.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the Annual Meeting
will be required to ratify the selection of PricewaterhouseCoopers LLP.
Abstentions will be counted toward the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
7
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our Common Stock and Series B Exchangeable Convertible
Preferred Stock ("Series B Stock") as of January 2, 2001, including Common Stock
available upon the exercise of stock options exercisable on or prior to March 1,
2001, by each person owning beneficially more than five percent of the Common
Stock, each director and the executive officers. The Series B Stock votes
together with our Common Stock as if it had been converted into Common Stock. To
our knowledge, the persons named in the table have sole voting and investment
power with respect to all Common Stock shown as beneficially owned by them,
subject to applicable community property laws and except as otherwise noted.
Beneficial Ownership (1)
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Number of Common Stock and
Number of Shares of Series B Stock
Shares of Percent Series B Percent Combined Voting
Beneficial Owner Name and Address Common Stock of Total Stock of Total Power Percentage
- ------------------------------------- ------------ -------- --------- -------- ----------------
BLUM Capital Partners, L.P. (2) 3,081,265 18.25% 5,215,300 100% 37.55%
909 Montgomery Street
San Francisco, CA 94133
Heartland Advisors, Inc. 974,764 5.77% 0 -- 4.41%
790 North Milwaukee Street
Milwaukee, WI 53202
FMR Corp. 1,461,200 8.66% 0 -- 6.61%
82 Devonshire Street
Boston, MA 02109-3614
Richard C. Blum (3) 27,788 * 0 -- *
Armen Der Marderosian (4) 9,947 * 0 -- *
Admiral S. Robert Foley, Jr., USN 6,581 * 0 -- *
(Ret.) (5)
Marie L. Knowles (6) 3,313 * 0 -- *
Martin M. Koffel (7) 639,016 3.72% 0 -- 2.86%
Richard B. Madden (8) 16,947 * 0 -- *
Jean-Yves Perez (9) 150,378 * 0 -- *
Richard Q. Praeger (10) 22,158 * 0 -- *
Irwin L. Rosenstein (11) 158,447 * 0 -- *
William D. Walsh (12) 33,447 * 0 -- *
Kent P. Ainsworth (13) 329,133 1.93% 0 -- 1.48%
Joseph Masters (14) 37,068 * 0 -- *
All Officers and Directors as a group 4,706,028 26.71% 5,215,300 100% 43.45%
(15 persons) (15)
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* Less than one percent.
(Footnotes continued on next page)
8
(Footnotes continued from previous page)
(1) As of January 2, 2001, there were 16,879,336 shares of our Common Stock
outstanding. Our Series B Stock votes as if it had been converted into
Common Stock, and as of January 2, 2001, there were 5,215,300 shares
outstanding on an as-if-converted basis. Percentages are calculated with
respect to a holder of options exercisable prior to March 1, 2001, as if
such holder had exercised its options. Option shares held by other holders
are not included in the percentage calculation with respect to any other
stockholder.
(2) Richard C. Blum is the President, Chairman and majority stockholder of
Richard C. Blum & Associates, Inc. Richard C. Blum & Associates, Inc. is
the sole general partner of BLUM Capital Partners, L.P. The number of
shares represents 15,306 shares owned directly by BLUM Capital Partners,
L.P. and 3,065,959 shares owned directly by six limited partnerships for
which BLUM Capital Partners, L.P. serves as the sole general partner and
three investment advisory clients for which BLUM Capital Partners, L.P.
exercises voting and investment discretion as to all such shares. One of
the investment advisory clients is The Common Fund, 15 Old Danbury Road,
Wilton, CT 06897-0812, which owns 1,077,980 shares, or 6.39% of the
outstanding Common Stock, directly. Richard C. Blum & Associates, Inc. is
affiliated with RCBA Strategic Partners, L.P., which holds Series B Stock
for the account of its Value Opportunities Fund and Multi-Strategy Equity
Fund. The Series B Stock votes as if it were converted into shares of our
Common Stock. Richard C. Blum & Associates, Inc., BLUM Capital Partners,
L.P. and RCBA Strategic Partners, L.P. disclaim beneficial ownership of the
shares owned directly by such partnerships and investment advisory clients
except to the extent of any pecuniary interest therein.
(3) Includes 13,753 shares held directly, 2,454 shares held as beneficiary of
the RCB Keogh Plan and 11,581 shares underlying stock options that are
exercisable on or prior to March 1, 2001. Does not include shares held by
BLUM Capital Partners, L.P. or entities managed by BLUM Capital Partners,
L.P., which Mr. Blum may be deemed to own indirectly in his capacity as the
President, Chairman and majority stockholder of Richard C. Blum &
Associates, Inc., in its capacity as the sole general partner of BLUM
Capital Partners, L.P. Mr. Blum disclaims beneficial ownership of these
shares except to the extent of any pecuniary interest therein.
(4) Includes 3,581 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(5) Includes 1,581 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(6) Includes 1,581 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(7) Includes 175,000 restricted shares held directly and 285,000 shares
underlying stock options that are exercisable on or prior to March 1, 2001.
(8) Includes 5,581 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(9) Includes 31,667 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(10) Includes 1,581 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(11) Includes 25,000 restricted shares held directly and 131,333 shares
underlying stock options that are exercisable on or prior to March 1, 2001.
(12) Includes 11,313 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(13) Includes 135,000 restricted shares held directly and 194,133 shares
underlying stock options that are exercisable on or prior to March 1, 2001.
(14) Includes 36,967 shares underlying stock options that are exercisable on or
prior to March 1, 2001.
(15) Includes shares held by BLUM Capital Partners, L.P. and by entities managed
by BLUM Capital Partners, L.P., which Mr. Blum may be deemed to own
indirectly in his capacity as the majority stockholder of Richard C. Blum &
Associates, Inc., in its capacity as the sole general partner of BLUM
Capital Partners, L.P. Richard C. Blum & Associates, Inc. is affiliated
with RCBA Strategic Partners, L.P., which holds Series B Stock for the
account of its Value Opportunities Fund and Multi-Strategy Equity Fund. The
Series B Stock votes as if it were converted into shares of our Common
Stock. Richard C. Blum & Associates, Inc., BLUM Capital Partners, L.P. and
RCBA Strategic Partners, L.P. disclaim beneficial ownership of the shares
owned directly by such partnerships and investment advisory clients except
to the extent of any pecuniary interest therein.
9
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of our Common Stock and other
equity securities. Officers, directors and greater than 10% stockholders are
required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to us and written representations that no other reports were
required, during the fiscal year ended October 31, 2000, all officers, directors
and greater than 10% beneficial owners were in compliance with applicable
Section 16(a) filing requirements.
10
REPORT OF THE COMPENSATION/OPTION COMMITTEE ON EXECUTIVE COMPENSATION FOR FISCAL
YEAR 2000(1)
The Compensation/Option Committee (the "Compensation Committee") has
the responsibility, under delegated authority from our Board of Directors, for
developing, administering and monitoring our executive compensation in the long
term interests of URS and our stockholders. The Compensation Committee is
composed solely of our independent non-employee directors. In fulfilling its
responsibilities, the Compensation Committee has used the services of
independent compensation consultants.
With the approval of the Compensation Committee, we have developed
compensation plans and programs designed to attract and retain qualified key
executives and senior managers critical to our success, and also to provide such
executives and managers with performance-based incentives clearly tied to our
profitability and stockholder returns. Compensation of our executives, including
the Chief Executive Officer, consists of three basic components: base
compensation, annual bonuses and long-term incentive awards.
Base Compensation
Officer base salaries are reviewed regularly and adjusted as needed
based on individual performance and competitive practices. Base compensation for
new executives hired from outside URS is established through negotiation between
URS and the executive at the time the executive is first hired.
Each of our senior executives named in the following Summary
Compensation Table (the "Named Executives") has an employment agreement with us
that provides for a minimum base salary and other compensation benefits (see
"Employment Agreements"). Under such agreements, base salaries are subject to
periodic review and possible increase by the Compensation Committee, but cannot
be decreased without the Named Executive's consent. Base salaries of all other
executives and senior managers are subject to periodic review and increase or
decrease by our Chief Executive Officer, at his option, within the overall
framework of the compensation policies established by the Compensation
Committee.
When establishing or reviewing base compensation levels for the Named
Executives, the Compensation Committee considers numerous factors, including but
not limited to the following: (a) the qualifications of the executive; (b)
whether the base compensation is within a reasonable range of executive pay
levels at other publicly and privately held companies which potentially compete
with us for business and executive talent; (c) the financial performance of
those companies relative to ours; (d) our strategic goals for which the
executive has responsibility; and (e) the recommendations of our Chief Executive
Officer (except with respect to his own base compensation). The companies whose
compensation levels and practices are considered by the Compensation Committee
for comparison are not necessarily those identified in the stockholder return
peer group discussed in the Performance Measurement Comparison below because we
compete for executive talent with numerous companies outside that peer group.
Annual Bonus Program
In addition to base compensation, each of our executives and selected
senior managers, including the Named Executives, participate in the URS
Corporation Incentive Compensation Plan (the "Bonus Plan"). Under the Bonus
Plan, participating executives and senior managers ("Participants") can earn
annual bonuses based on formulas tied to certain predefined financial
performance targets that are established annually by the Compensation Committee.
Each Participant is assigned a "Target Bonus" at the beginning of the year,
expressed as a percentage of his or her base salary. If the financial
performance targets are met, each Participant's bonus is equal to the Target
Bonus. If performance targets are not met, bonuses are determined as a declining
percentage of Target Bonuses depending on the extent of the shortfall. No bonus
is paid under the Bonus Plan if we fail to achieve predefined minimum
performance levels. Conversely, if performance targets are exceeded, then each
Participant can earn a bonus in excess of the Target Bonus determined by the
extent of the performance in excess of target, up to a maximum of two times the
Target Bonus.
- --------------------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any of our
filings under the Securities Act of 1933, as amended, or the Exchange Act
whether made before or after the date of this Proxy Statement and irrespective
of any general incorporation language therein.
11
Mr. Koffel's Target Bonus currently is established by contract at 100%
of his base salary. Target Bonuses for the other Named Executives are
established by either contract or the Compensation Committee. Target Bonuses for
other Participants are established annually by the Chief Executive Officer
within the overall framework of the compensation policies established by the
Compensation Committee. For the Named Executives, Target Bonuses currently range
from 40% to 100% of base salary.
Financial performance targets under the Bonus Plan are developed
initially by the Chief Executive Officer and are approved by the Compensation
Committee. Our fiscal year net income before dividends is the sole financial
measurement used to gauge individual performance for the Named Executives except
for Messrs. Rosenstein and Perez whose financial performance target is based on
operating profit contribution. For other Participants, measurements of operating
profit contribution, cash flow and new business are applied to the financial
performance of the operating division or unit for which the Participant has
management responsibility. However, increasing emphasis is placed on
company-wide financial performance as the Participants' responsibilities
increase. At all participation levels, overall financial performance thresholds
must be met before any bonuses can be earned.
Long-Term Incentive Awards
We have adopted the 1999 Equity Incentive Plan (the "1999 Plan") to
provide executives and other key employees with equity-based incentives to
maximize stockholder value. Awards under the 1999 Plan can take the form of
stock options, performance restricted stock or restricted stock, all of which
are designed both to encourage recipients to focus on critical long-range
objectives and award recipients with an equity stake in URS, thereby closely
aligning their interests with those of our stockholders.
Recipients generally fall into five different groups: corporate
management, division managers, office managers, key technical staff and key
administrative staff, and the size of awards are generally consistent within
each of these groups. The Compensation Committee periodically considers whether
and when to approve specific awards under the 1999 Plan based on the
recommendations of the Chief Executive Officer. Factors considered include the
executive's or key employee's position with URS, his or her performance and
responsibilities and the long-term incentive award levels of comparable
executives and key employees at companies that compete with us for executive and
managerial talent. However, the 1999 Plan does not provide any formulaic method
for weighing these factors. Finally, the Compensation Committee weighs how much
grants under long-term stockholder plans can potentially dilute our outstanding
Common Stock in comparison to other publicly traded companies that potentially
compete with us for business and executive talent.
Chief Executive Officer Compensation
The compensation of Mr. Koffel during fiscal year 2000 was determined
on the same basis as discussed above: he received his base salary of $750,000
under the terms of his employment agreement and he participated in the Bonus
Plan with a Target Bonus of 85% of his base salary. Mr. Koffel's base salary and
bonus were increased to $800,000 and 100%, respectively, in December 2000. Mr.
Koffel also continues to participate in the supplemental executive retirement
plan described below (see "Employment Agreements").
In December 1997, in order to provide additional financial incentives
for Mr. Koffel to remain employed by us, the Compensation Committee awarded him
50,000 shares of restricted stock under our 1991 Stock Incentive Plan (the "1991
Plan") which were scheduled to vest on the third, fourth and fifth anniversaries
of the grant, and also approved a contingent grant of up to 50,000 shares of
performance restricted stock which Mr. Koffel could earn based on the cumulative
total returns to our stockholders during the periods ending on the third, fourth
and fifth anniversaries of the award. The issuance of the Series B Stock to RCBA
Strategic Partners, L.P. in connection with the acquisition of Dames and Moore
Group (the "Series B Issuance") constituted a "Change in Control" under the
terms of Mr. Koffel's employment agreement and the restricted stock and
performance restricted stock grants, and as a result all 100,000 of these shares
became fully issued and vested in October 1999 following approval by our
stockholders of the Series B Issuance.
On March 20, 2000, the Compensation Committee approved additional
long-term incentive compensation for Mr. Koffel under the 1999 Plan. This
compensation took the form of a restricted stock award for 175,000 shares. The
Compensation Committee's decision was based on the growth in our revenues and
income, the positioning of URS for future growth in enterprise value and a
review of competitive practices.
12
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") precludes the deduction by a publicly held corporation for compensation
paid to certain employees to the extent that such compensation exceeds
$1,000,000, except for compensation paid under a written binding contract in
existence on February 17, 1993, and performance-based compensation. The Internal
Revenue Service has issued regulations for Section 162(m), which provide that
performance-based compensation will not be subject to the deduction limit if (a)
it is payable solely on account of the attainment of pre-established, objective
performance goals; (b) the performance goals are established by a compensation
committee composed solely of two or more "outside directors"; (c) the material
terms of the performance goals under which the compensation is to be paid are
disclosed to and approved by stockholders before payment; and (d) the
compensation committee certifies that the performance goals have been satisfied
before payment.
Because of our significant growth and the concomitant increase in the
levels of executive compensation for our Chief Executive Officer and the other
Named Executives, our Board of Directors approved the Compensation Committee's
recommendation that the Bonus Plan be submitted to our stockholders for
approval, and our stockholders subsequently approved the Bonus Plan at the 1999
Annual Meeting. Because of this approval by our stockholders, bonuses paid to
Participants under the Bonus Plan can qualify as performance-based compensation
for purposes of Section 162(m). The Compensation Committee will continue to
consider ways to maximize the deductibility of executive compensation while
retaining the flexibility to compensate executive officers in a manner deemed
appropriate relative to their performance and to competitive compensation levels
and practices at other companies.
Respectfully Submitted,
THE COMPENSATION/OPTION COMMITTEE
Richard B. Madden, Chairman
William D. Walsh
COMPENSATION/OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Compensation Committee is comprised of two
non-employee directors: Messrs. Madden and Walsh. No member of the Compensation
Committee is or was formerly one of our officers or employees. No interlocking
relationship exists between the Board of Directors or Compensation Committee and
the board of directors or compensation committee of any other company, nor has
such interlocking relationship existed in the past.
13
COMPENSATION AND OPTION/SAR TABLES
The following tables set forth certain information regarding the salary
and benefits paid during each of the three most recent fiscal years, and options
granted by URS in the most recent fiscal year, to its Chief Executive Officer
and its four most highly compensated executive officers (other than the Chief
Executive Officer) for services rendered to URS and its subsidiaries.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------------------------------
Annual Compensation Awards (2) Payouts
------------------------------------- -------------------------- --------
Other Securities
Annual Restricted Underlying LTIP All Other
Name and Salary Bonus Compensation Stock Awards Options/ Payouts Compensation
Principal Position Year ($) ($) ($)(1) ($)(3) SARs (#) ($) ($)
- ------------------- ---- -------- -------- ------------ ------------ ---------- -------- ------------
Martin M. Koffel 2000 $752,420 $695,856 $5,995 $2,526,563(4) 200,000 $0 $41,750(7)
Chairman of the 1999 542,480 650,958 2,182 4,344,500(5) 300,000 0 56,677
Board; Chief 1998 489,750 520,738 2,715 703,125(6) 66,000 0 16,727
Executive Officer;
President
Irwin L. Rosenstein 2000 $440,003 $288,042 $5,995 $ 360,938(8) 100,000 0 $10,846(9)
President, General 1999 379,171 384,117 4,279 0 27,000 0 9,121
Engineering Group 1998 342,711 243,305 3,532 0 27,000 0 8,363
Jean-Yves Perez 2000 $360,006 $212,899 0 0 35,000 0 $ 4,704(10)
Executive Vice 1999 327,895 233,740 0 0 20,000 0 4,482
President, General 1998 310,000 184,687 0 0 20,000 0 10,917
Engineering Group
Kent P. Ainsworth 2000 $381,214 $249,701 $3,281 $1,443,750(11) 100,000 0 $ 4,751(14)
Executive Vice 1999 311,133 300,479 1,038 1,149,500(12) 27,000 0 4,512
President; Chief 1998 268,370 237,793 3,210 351,563(13) 27,000 0 3,274
Financial Officer;
Secretary
Joseph Masters 2000 $241,604 $104,801 $2,987 0 25,000 0 $ 4,430(15)
Vice President and 1999 186,321 111,740 1,341 0 10,000 0 4,098
General Counsel 1998 165,000 73,100 0 0 5,000 0 1,602
(1) The amounts in this column primarily represent automobile allowances.
(2) Mr. Koffel, Mr. Ainsworth and Mr. Rosenstein have disposed of shares of our
Common Stock, both in cashless transactions with URS and in market
transactions, in connection with exercises of stock options, the vesting of
restricted stock and the payment of withholding taxes due with respect to
such exercises and vesting. Mr. Koffel, Mr. Ainsworth, Mr. Rosenstein,
other Named Executives and other officers of URS may continue to dispose of
shares of our Common Stock in this manner and for similar purposes.
(Footnotes continued on next page)
14
(Footnotes continued from previous page)
(3) The aggregate number and value as of October 31, 2000 of each of the Named
Executive's restricted share holdings are as follows: Mr. Koffel, 175,000
shares, $2,242,188; Mr. Rosenstein, 25,000 shares, $320,313; Mr. Ainsworth,
135,000 shares, $1,729,688; Mr. Perez, 0 shares, $0; Mr. Masters, 0 shares,
$0. Dividends will be paid on such restricted stock if and when declared on
our Common Stock.
(4) On March 20, 2000, Mr. Koffel was granted the right to receive 175,000
shares of restricted stock which are scheduled to vest in equal fifths on
March 20, 2001, 2002, 2003, 2004 and 2005.
(5) On December 16, 1997, Mr. Koffel was granted the right to receive 50,000
shares of restricted stock if certain performance targets were met during
the years 2000, 2001 and 2002. Upon the issuance of the Series B Stock to
RCBA Strategic Partners, L.P. on October 12, 1999, the grant of such shares
accelerated and they became fully vested.
(6) On December 16, 1997, Mr. Koffel was awarded 50,000 shares of restricted
stock which were scheduled to vest in equal thirds on December 16, 2000,
2001 and 2002. Upon the issuance of the Series B Stock to RCBA Strategic
Partners, L.P. on October 12, 1999, the grant of such shares accelerated
and they became fully vested.
(7) Consists of matching contributions of $3,400 paid pursuant to our Defined
Contribution Plan, a $2,899 inflation adjustment (based on a cost of living
index) to amounts previously credited under the Selected Executives
Deferred Compensation Plan and $35,451 of term life and disability
insurance premiums paid pursuant to Mr. Koffel's employment agreement.
(8) On March 20, 2000, Mr. Rosenstein was granted the right to receive 25,000
shares of restricted stock which are scheduled to vest in equal fourths on
March 20, 2001, 2002, 2003 and 2004.
(9) Consists of matching contributions of $3,400 paid pursuant to the Defined
Contribution Plan, a $6,011 inflation adjustment (based on a cost of living
index) to amounts previously credited under the Selected Executives
Deferred Compensation Plan and $1,435 of term life and disability insurance
premiums.
(10) Consists of matching contributions of $3,400 paid pursuant to our Defined
Contribution Plan and $1,304 of term life and disability insurance
premiums.
(11) On March 20, 2000, Mr. Ainsworth was granted the right to receive 100,000
shares of restricted stock which are scheduled to vest in equal fourths on
March 20, 2001, 2002, 2003 and 2004. The table does not reflect the grant
of 35,000 restricted shares to Mr. Ainsworth on July 12, 1999 which are
scheduled to vest two-thirds on July 12, 2001 and one-third on July 12,
2002.
(12) On December 16, 1997, Mr. Ainsworth was granted the right to receive 25,000
shares of restricted stock if certain performance targets were met during
the years 2000, 2001 and 2002. Upon the issuance of the Series B Stock to
RCBA Strategic Partners, L.P. on October 12, 1999, the grant of such shares
accelerated and they became fully vested.
(13) On December 16, 1997, Mr. Ainsworth was awarded 25,000 shares of restricted
stock which were scheduled to vest in equal thirds on December 16, 2000,
2001 and 2002. Upon the issuance of the Series B Stock to RCBA Strategic
Partners, L.P. on October 12, 1999, the grant of such shares accelerated
and they became fully vested.
(14) Consists of matching contributions of $3,400 paid pursuant to our Defined
Contribution Plan and $1,351 of term life and disability insurance
premiums.
(15) Consists of matching contributions of $3,400 paid pursuant to our Defined
Contribution Plan and $1,030 of term life and disability insurance
premiums.
15
STOCK OPTION GRANTS AND EXERCISES
We grant options to our executive officers under our 1999 Equity
Incentive Plan. Prior to October 12, 1999, we granted options to our executive
officers under our 1991 Incentive Plan. As of January 2, 2001, options to
purchase a total of 3,581,284 shares were outstanding under both the 1999 Equity
Incentive Plan and the 1991 Incentive Plan. No shares remain available for grant
under the 1991 Incentive Plan, and options to purchase 744,000 shares remain
available for grant under the 1999 Equity Incentive Plan. There were a total of
1,613,017 shares granted to employees in fiscal year 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------ Potential Realizable
Number of % of Total Value at Assumed
Securities Options/ Annual Rates of
Underlying SARs Stock Price
Options/ Granted to Exercise Appreciation for
SARs Employees Or Base Option Term
Granted in Fiscal Price Expiration --------------------------
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
- ---------------- ---------- ---------- -------- ---------- ---------- ----------
Mr. Koffel 200,000 12.40% $21.4375 11/5/09 $2,696,386 $6,833,171
Mr. Rosenstein 100,000 6.20 21.4375 11/5/09 1,348,193 3,416,585
Mr. Perez 15,000 0.93 21.4375 11/5/09 202,229 512,488
Mr. Perez 10,000 0.62 13.8125 3/20/10 86,866 220,136
Mr. Ainsworth 100,000 6.20 21.4375 11/5/09 1,348,193 3,416,585
Mr. Masters 15,000 0.93 21.4375 11/5/09 202,229 512,488
Mr. Masters 10,000 0.62 13.8125 3/20/10 86,866 220,136
16
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End(#) FY-End ($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- ----------------- --------------- ------------ -------------- ---------------
Mr. Koffel 0 $0 529,000 $2,976,408
400,000 0
Mr. Rosenstein 0 0 131,333 311,688
93,667 0
Mr. Perez 0 0 31,667 0
33,333 0
Mr. Ainsworth 0 0 194,133 486,975
66,667 0
Mr. Masters 0 0 36,966 74,531
28,333 0
(1) Based on 2000 fiscal year-end share price equal to $12.8125.
17
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
During fiscal year 2000, the non-employee members of our Board of
Directors received the stock fee described below, an annual cash fee of $15,000
plus an attendance fee of $2,000 for each Board of Directors meeting attended in
person and a fee of $500 for participation in any Board of Directors meeting by
telephone. Non-employee Directors who are members of a committee of the Board
received $625 for each committee meeting attended in person and a fee of $500
for participation in any committee meeting by telephone. The Chairman of each
committee also received an additional $625 per meeting. On July 18, 2000, the
Board of Directors approved increases to both the per-meeting attendance fee and
the per-meeting committee Chairman fee to $1,000 from the current $625,
effective for the October 2000 committee meetings. Employee members of the Board
of Directors did not receive any fees.
Pursuant to the terms of the Non-Executive Directors Stock Grant Plan
approved at the annual meeting of stockholders held on March 25, 1997, each
non-employee member of our Board of Directors (currently Messrs. Blum, Der
Marderosian, Madden, Praeger and Walsh, Ms. Knowles and Admiral Foley) who was
re-elected to serve as a Director at each annual stockholder meeting also
received a grant of Common Stock at such meeting. The Non-Executive Directors
Stock Grant Plan originally provided that each non-employee Director would
receive that number of shares of Common Stock determined by dividing $15,000 by
the closing price of the Common Stock on the date of the annual meeting of
stockholders, rounded down to the nearest whole share. On December 16, 1997, the
Board of Directors amended the Non-Executive Directors Stock Grant Plan to
increase the numerator to $25,000.
On July 13, 1999, the Board of Directors adopted the 1999 Equity
Incentive Plan and it was approved by our stockholders on October 12, 1999.
Effective July 13, 1999, the grants of Common Stock described above that were
previously made under the Non-Executive Directors Stock Grant Plan are now made
under the 1999 Equity Incentive Plan and no further grants will be made under
the Non-Executive Directors Stock Grant Plan. In addition, on July 18, 2000, the
Board of Directors approved an additional benefit for non-executive Directors
consisting of annual grants of stock options under the 1999 Equity Incentive
Plan determined by dividing $25,000 by the closing price of the Common Stock on
the date of the annual meeting of stockholders, rounded down to the nearest
whole share. These options vest immediately upon grant and are exercisable
during a ten year term. The annual stock options were granted to non-executive
Directors in July 2000 and will be granted to non-executive Directors who are
elected or re-elected to the Board of Directors concurrent and commencing with
the 2001 Annual Meeting of Stockholders and at each subsequent annual meeting of
stockholders.
Non-employee Directors who were elected prior to December 17, 1996 also
are entitled to participate, at our expense, in a medical benefit plan. Based
upon our costs, the annualized monetary value of this benefit to those
non-employee Directors participating in fiscal year 2000 was in the range
between $4,136 and $6,097 depending on the age of the participants and eligible
family members. We also maintain a policy whereby non-employee Directors may be
hired on an as-needed basis from time to time as consultants for special
projects at the rate of up to $3,000 per day (plus reasonable expenses) upon the
recommendation of the Chairman of the Board or any officer designated by the
Chairman of the Board.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Richard C. Blum & Associates, Inc. is affiliated with RCBA Strategic
Partners, L.P. RCBA Strategic Partners, L.P. holds Series B Stock, which has
voting rights as if it were converted into shares of our Common Stock. Taking
account of the voting rights of the Series B Stock, BLUM Capital Partners, L.P.
and its affiliates are the beneficial owners of approximately 38% of our
outstanding Common Stock.
During fiscal year 2000, Admiral Foley, one of our Directors, received
an aggregate of $63,690 in connection with consulting services provided to us.
18
EMPLOYMENT AGREEMENTS
Martin M. Koffel
Mr. Koffel executed an evergreen employment agreement with us in
December 1991 under which he receives an annual base salary determined by the
Compensation/Option Committee (the "Compensation Committee") based on relevant
factors outlined in their Compensation/Option Committee Report above. The
agreement also specifies that Mr. Koffel is eligible for a target bonus equal to
at least 60% of his base salary. Mr. Koffel's current base salary is $800,000
per year, and his target bonus percentage is 100% of his base salary.
On October 13, 1998, following a recommendation made by the
Compensation Committee, the Board of Directors approved an amendment to Mr.
Koffel's employment agreement to provide for a tax gross-up payment to Mr.
Koffel to offset the cost of excise taxes that could be imposed if his
employment is terminated following a Change in Control (as defined below) and if
any resulting severance payments due Mr. Koffel are considered to be "excess
parachute payments" subject to excise tax under Sections 280G and 4999 of the
Internal Revenue Code. Mr. Koffel also receives reimbursement for the cost of
term life insurance with a face amount equal to up to four times his base salary
and a tax gross-up payment to offset the cost of all income and employment taxes
imposed on him because of such reimbursement.
Mr. Koffel's employment agreement provides that if we terminate his
employment for any reason other than cause or his death or disability, we will
pay a severance payment equal to 150% of the sum of his then-current base salary
and target bonus. If Mr. Koffel voluntarily resigns his employment within one
year following a Change in Control (as defined below) or if Mr. Koffel is
terminated for any reason other than for cause at any time after a Change in
Control, he becomes entitled to a special severance payment equal to 300% of the
sum of his then-current base salary and target bonus. In addition, all awards
held by Mr. Koffel under any of our incentive, deferred compensation, bonus,
stock and similar plans, to the extent unvested, will become vested immediately
upon a Change in Control. A "Change in Control" is defined in the agreement to
mean:
o a change in control required to be reported pursuant to Item 6(e)
of Schedule 14A of Regulation 14A under the Exchange Act;
o any person acquiring 20% or more of our voting power; or
o two-thirds or more of our directors not having served on our Board
of Directors for 24 months prior to the change in control.
On or about May 10, 1996, Heartland Advisors, Inc. ("Heartland"), one
of our stockholders, purchased additional shares of Common Stock, which
increased Heartland's ownership of outstanding Common Stock from approximately
19% to approximately 22% (the "Heartland Transaction"), resulting in a technical
Change in Control under Mr. Koffel's employment agreement and the terms of stock
options granted to Mr. Koffel under our 1991 Stock Incentive Plan. As a result,
the special severance payment is payable to Mr. Koffel if he is terminated for
any reason other than for cause at any time during the term of his employment
agreement. In addition, the options previously granted to Mr. Koffel in 1994,
1995 and 1996 under our 1991 Stock Incentive Plan are now fully vested.
On October 12, 1999, RCBA Strategic Partners, L.P. acquired shares of
our Series B Stock (the "Series B Issuance"). These shares of Series B Stock
vote as if they had been converted into our Common Stock. Therefore, BLUM
Capital Partners, L.P. and its affiliates now hold approximately 38% of the
voting power of our Common Stock. As a result of the Series B Issuance, a Change
in Control occurred under Mr. Koffel's employment agreement, and the stock
options for 102,000 shares granted to Mr. Koffel in 1997 and 1998 as well as the
100,000 shares of restricted stock and performance restricted stock granted to
Mr. Koffel in 1997, became fully vested.
On March 23, 1999, our Board of Directors approved special supplemental
compensation for Mr. Koffel to recognize his significant contributions to our
growth and success during the past decade, to induce him to continue as our
Chief Executive Officer through his expected retirement at age 65 and to
incentivize him to continue to increase stockholder value. This special
supplemental compensation includes:
o a grant of options for 300,000 shares under our 1991 Stock
Incentive Plan;
19
o a grant of options for an additional 200,000 shares under our 1999
Equity Incentive Plan; and
o a supplemental executive retirement plan ("SERP").
The options for 300,000 shares have an exercise price of $15.75 per
share, the closing price of our Common Stock on the day preceding the grant, and
will vest over five years at the rate of 20% on each anniversary of the grant
date. The options for the additional 200,000 shares have an exercise price of
$21.4375, the closing price of our Common Stock on the day preceding the grant,
and will vest as if they had been granted at the same time as the 300,000 share
options. Both the 300,000 share options and the 200,000 share options will be
exercisable during a three-year period following Mr. Koffel's retirement. The
options also will vest immediately and become exercisable in full upon a Change
in Control (as defined below).
Effective July 13, 1999, Mr. Koffel entered into the above-mentioned
SERP. Under the terms of the SERP, we provide him with an annual lifetime
retirement benefit. Benefits are based on Mr. Koffel's final average annual
compensation and his age at the time of employment termination. "Final average
compensation" means the average of Mr. Koffel's salary plus target bonus
established for him under our incentive compensation program during the
consecutive 36 months in his final 120 months of employment in which such
average was the highest. Estimated annual benefits are as follows:
AGE AT TERMINATION OF EMPLOYMENT
---------------------------------------------------------------------------
FINAL AVERAGE 61 65
COMPENSATION OR YOUNGER 62 63 64 OR OLDER
------------- ---------- -------- -------- -------- --------
$ 700,000 $ 70,000 $140,000 $210,000 $280,000 $350,000
750,000 75,000 150,000 225,000 300,000 375,000
800,000 80,000 160,000 240,000 320,000 400,000
850,000 85,000 170,000 255,000 340,000 425,000
900,000 90,000 180,000 270,000 360,000 450,000
950,000 95,000 190,000 285,000 380,000 475,000
1,000,000 100,000 200,000 300,000 400,000 500,000
1,050,000 105,000 210,000 315,000 420,000 525,000
1,100,000 110,000 220,000 330,000 440,000 550,000
1,150,000 115,000 230,000 345,000 460,000 575,000
1,200,000 120,000 240,000 360,000 480,000 600,000
1,250,000 125,000 250,000 375,000 500,000 625,000
1,300,000 130,000 260,000 390,000 520,000 650,000
As of October 31, 2000, Mr. Koffel had attained age 61, and his final
average compensation was $1,217,401.
Benefits under the SERP shown in the above table are computed on the
basis of an annuity for the life of Mr. Koffel, with a guarantee of payments for
at least ten years. The SERP provides for an offset for Social Security benefits
to which Mr. Koffel becomes entitled, but such offsets are not reflected in the
figures in the above table.
The 300,000 share options, the 200,000 share options and the SERP
contain a definition of Change in Control that parallels the definition
contained in Mr. Koffel's employment agreement described above; provided,
however, that the following events shall not constitute a Change in Control:
o The beneficial ownership by a person of 20% or more but less than
a majority of our combined voting power if such beneficial
ownership was acquired in the ordinary course of such person's
business and not with the purpose or effect of changing or
influencing the control of us, and if such person is eligible to
file a short-form statement on Schedule 13G under Rule 13d-1 under
the Exchange Act;
20
o The beneficial ownership by a person of 20% or more of our
combined voting power as a result of a reduction in the aggregate
number of outstanding shares constituting our voting power, and
any decrease thereafter in such person's ownership of securities,
shall be disregarded until such person increases in any manner,
directly or indirectly, such person's beneficial ownership of any
of our securities; and
o The beneficial ownership by the Richard C. Blum & Associates, Inc.
and any affiliates (collectively, the "RCBA Group") of 20% or more
of our combined voting power unless and until (a) the RCBA Group
is or becomes the beneficial owner of 20% or more of our combined
voting power, excluding their holdings of Series B Stock, (b) the
RCBA Group becomes the beneficial owner of more than 50% of our
combined voting power, including their holdings of Series B Stock
or (c) a third party not affiliated with the RCBA Group directly
or indirectly acquires control of the RCBA Group.
Irwin L. Rosenstein
Mr. Rosenstein executed an evergreen employment agreement with URS
Corporation Consultants, Inc. in September 2000 under which he receives an
annual base salary determined by the Compensation Committee based on relevant
factors outlined in their Compensation/Option Committee Report above. Mr.
Rosenstein's current base salary is $465,000, and his target bonus percentage is
65% of his base salary.
If we terminate Mr. Rosenstein's employment for any reason other than
cause or his death or disability, or if he voluntarily resigns his employment
for certain specified reasons, we will pay a severance payment equal to 100% of
his base compensation in effect on the date of employment termination plus all
accrued but unpaid vacation. He is also credited with one additional year of
service under certain of our executive compensation programs.
Under the terms of his employment agreement, Mr. Rosenstein is entitled
to a Change in Control severance payment of 200% of the sum of his then-current
base salary and target bonus if, within six months after a Change in Control,
Mr. Rosenstein voluntarily resigns his employment for certain specified reasons
or is terminated for any reason. Mr. Rosenstein is also entitled to the Change
in Control severance payment if he voluntarily resigns his employment for any
reason within the 30-day period following the date six months from the date of
the Change in Control. In addition, all awards held by Mr. Rosenstein under any
of our incentive, deferred compensation, bonus, stock and similar plans, to the
extent unvested, will become vested immediately upon a Change in Control. The
agreement also provides for a tax gross-up payment to Mr. Rosenstein to offset
the cost of excise taxes that could be imposed if his employment is terminated
following a Change in Control and if any resulting severance payments due to him
are considered to be "excess parachute payments" subject to excise tax under
Sections 280G and 4999 of the Code. The definition of Change in Control in Mr.
Rosenstein's employment agreement parallels the definition in Mr. Koffel's
employment agreement and incorporates the exceptions described above in
connection with Mr. Koffel's share options and SERP.
Jean-Yves Perez
Mr. Perez executed an evergreen employment agreement with URS Greiner
Woodward-Clyde Group, Inc. in November 1997 under which he receives an annual
base salary determined by the Compensation Committee, based on relevant factors
outlined in their Compensation/Option Committee Report above. Mr. Perez's
current base salary is $380,000, and his target bonus percentage is 50% of his
base salary.
If, during the first half of the employer's fiscal year, we terminate
Mr. Perez's employment for any reason other than cause or his death or
disability, or if Mr. Perez voluntarily resigns his employment in the event that
his salary is reduced or his employer breaches its obligation to employ him in
an executive position as described in the employment agreement, Mr. Perez is
entitled to a severance payment equal to 100% of his then-current base salary
plus all accrued but unpaid vacation at the time of such termination. If such a
termination of employment occurs during the second half of the employer's fiscal
year, Mr. Perez is entitled to a severance payment equal to 120% of his
then-current base salary plus all accrued but unpaid vacation at the time of
such termination.
If Mr. Perez's employment is terminated within one year following a
Change in Control, he will be entitled to receive a severance payment equal to
200% of his then-current base salary. A Change in Control is defined in the
employment agreement as the acquisition by any person of 51% or more of his
employer's or our then-outstanding securities having the right to vote at
elections of directors; provided, however, that any change in the relative
beneficial ownership of our securities as a result of a reduction in the
aggregate number of outstanding shares constituting our voting power, and any
decrease thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly or indirectly,
such person's beneficial ownership of any of our securities.
21
On October 13, 1998, following a recommendation made by the Committee,
the Board of Directors approved an amendment to Mr. Perez' employment agreement
to provide for a tax gross-up payment to Mr. Perez to offset the cost of excise
taxes that could be imposed if his employment is terminated following a Change
in Control and if any resulting severance payments due are considered to be
"excess parachute payments" subject to excise tax under Sections 280G and 4999
of the Code.
Kent P. Ainsworth
Mr. Ainsworth executed an evergreen employment agreement with us in
September 2000 under which he receives an annual base salary determined by the
Compensation Committee, based on relevant factors outlined in their
Compensation/Option Committee Report above. Mr. Ainsworth's current base salary
is $425,000, and his target bonus percentage is 65% of his base salary.
If we terminate Mr. Ainsworth's employment for any reason other than
cause or his death or disability, or if he voluntarily resigns his employment
for certain specified reasons, we will pay a severance payment equal to 100% of
his base compensation in effect on the date of employment termination plus all
accrued but unpaid vacation. He is also credited with one additional year of
service under certain of our executive compensation programs.
Under the terms of his employment agreement, Mr. Ainsworth is entitled
to a Change in Control severance payment of 200% of the sum of his then-current
base salary and target bonus if, within six months after a Change in Control,
Mr. Ainsworth voluntarily resigns his employment for certain specified reasons
or is terminated for any reason. Mr. Ainsworth is also entitled to the Change in
Control severance payment if he voluntarily resigns his employment for any
reason within the 30-day period following the date six months from the date of
the Change in Control. In addition, all awards held by Mr. Ainsworth under any
of our incentive, deferred compensation, bonus, stock and similar plans, to the
extent unvested, will become vested immediately upon a Change in Control. The
agreement also provides for a tax gross-up payment to Mr. Ainsworth to offset
the cost of excise taxes that could be imposed if his employment is terminated
following a Change in Control and if any resulting severance payments due to him
are considered to be "excess parachute payments" subject to excise tax under
Sections 280G and 4999 of the Code. The definition of Change in Control in Mr.
Ainsworth's employment agreement parallels the definition in Mr. Koffel's
agreement and incorporates the exceptions described above in connection with Mr.
Koffel's share options and SERP.
Joseph Masters
Mr. Masters executed an evergreen employment agreement with us in
September 2000 under which he receives an annual base salary determined by the
Compensation Committee, based on relevant factors outlined in their
Compensation/Option Committee Report above. Mr. Masters's current base salary is
$255,000, and his target bonus percentage is 40% of his base salary.
If we terminate Mr. Master's employment for any reason other than
cause or his death or disability, or if he voluntarily resigns his employment
for certain specified reasons, we will pay a severance payment equal to 100% of
his base compensation in effect on the date of employment termination, plus all
accrued but unpaid vacation. He is also credited with one additional year of
service under certain of our executive compensation programs.
Under the terms of his employment agreement, Mr. Masters is entitled to
a Change in Control severance payment of 200% of the sum of his then-current
base salary and target bonus if, within six months after a Change in Control,
Mr. Masters voluntarily resigns his employment for certain specified reasons or
is terminated for any reason. Mr. Masters is also entitled to the Change in
Control severance payment if he voluntarily resigns his employment for any
reason within the 30-day period following the date six months from the date of
the Change in Control. In addition, all awards held by Mr. Masters under any of
our incentive, deferred compensation, bonus, stock and similar plans, to the
extent unvested, will become vested immediately upon a Change in Control. The
agreement also provides for a tax gross-up payment to Mr. Masters to offset the
cost of excise taxes that could be imposed if his employment is terminated
following a Change in Control and if any resulting severance payments due to him
are considered to be "excess parachute payments" subject to excise tax under
Sections 280G and 4999 of the Code. The definition of Change in Control in Mr.
Masters's employment agreement parallels the definition in Mr. Koffel's
employment agreement and incorporates the exceptions described above in
connection with Mr. Koffel's share options and SERP.
22
PERFORMANCE MEASUREMENT COMPARISON (1)
The following chart compares the cumulative total stockholder returns
(including reinvested dividends) from a $100 investment in Common Stock for the
last five fiscal years compared to the cumulative return of the Standard &
Poor's 500 index and a weighted average peer index. The peer index is comprised
of the following companies(2):
Fluor Corporation Perini Corporation
Foster Wheeler Roy F. Weston
Granite Construction Stone & Webster
IT Group STV Group
Jacobs Engineering Washington Group International
Kaiser Group International
(formerly ICF Kaiser)
Michael Baker Corporation
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
OCTOBER 1995 THROUGH OCTOBER 2000
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL].
URS Corp. S&P 500 Peer Group
--------- ------- ----------
Oct-95 100 100 100
Oct-96 133.33 123.98 112.57
Oct-97 249.02 163.67 91.27
Oct-98 264.71 199.56 86.03
Oct-99 282.35 250.66 78.79
Oct-00 200.97 265.93 73.04
(1) This section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any of our filings under
the 1933 Act or the 1934 Act whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
(2) The companies comprising the peer index are unchanged from the companies
comprising the peer index for fiscal year 1999, except that Morrison
Knudsen purchased Raytheon's engineering and construction unit and changed
its name to Washington Group International, and we have excluded Harding
Lawson from the peer index because it became part of Harding ESE, Inc., a
wholly owned subsidiary of MACTEC, a private company.
(3) As of January 25, 2001, the price of our Common Stock on the New York Stock
Exchange was $16.375.
23
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Kent P. Ainsworth
Kent P. Ainsworth,
Secretary
February 1, 2001
A copy of our Annual Report to the Securities and Exchange Commission
on Form 10-K for the fiscal year ended October 31, 2000 is available without
charge upon written request to: Corporate Secretary, URS Corporation, 100
California Street, Suite 500, San Francisco, California 94111-4529.
24
APPENDIX A
URS CORPORATION
AUDIT COMMITTEE CHARTER
Charter Overview
This charter governs the operations of the audit committee (the "Audit
Committee") of URS Corporation (the "Company"). The Audit Committee shall review
and reassess the charter at least annually, and recommend such changes as it
deems necessary or appropriate for approval of the Board of Directors of the
Company (the "Board").
Committee Organization
The members of the Audit Committee shall be appointed by the Board. The
Audit Committee shall be comprised of at least three directors, each of whom are
independent of management and the Company. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company, as determined by
the Board consistent with the rules and guidelines of the New York Stock
Exchange in effect from time to time. All committee members shall be financially
literate, or shall become financially literate within a reasonable period of
time after appointment to the committee, and at least one member shall have
accounting or related financial management expertise.
Statement of Policy
The Audit Committee shall provide assistance to the Board in fulfilling
its oversight responsibility to the stockholders, potential stockholders, the
investment community and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the internal audit function, the annual independent audit of
the Company's financial statements and the legal compliance and ethics programs
as established by management and the Board. In so doing, it is the
responsibility of the Audit Committee to maintain free and open communication
between the Audit Committee, the independent auditors, the internal auditors and
management of the Company. In discharging its oversight role, the Audit
Committee is empowered to investigate any matter brought to its attention, and
for this purpose shall have full access to all books, records, facilities and
personnel of the Company and the power to retain, at the Company's expense, such
outside counsel or other experts as the committee deems necessary or
appropriate.
Responsibilities and Processes
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and to report the
results of its activities to the Board. Management is responsible for preparing
the Company's financial statements, and the independent auditors are responsible
for auditing those financial statements. The policies and procedures of the
Audit Committee, applied in carrying out its responsibilities, should remain
flexible in order to best react to changing conditions and circumstances. The
Audit Committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices and
ethical behavior.
The following are the principal recurring processes of the Audit
Committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the Audit Committee may supplement
them as appropriate.
o The Audit Committee shall have a clear understanding with management and
the independent auditors that the independent auditors are ultimately
accountable to the Board and the Audit Committee, as representatives of the
Company's stockholders. Annually, the Audit Committee shall review and
recommend to the Board the selection of the Company's independent auditors,
subject to stockholder approval to the extent deemed appropriate by the
Board. However, the Audit Committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, replace the independent
auditors.
o The Audit Committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written
disclosures required by the Independence Standards Board.
A-1
o The Audit Committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the Audit
Committee shall discuss with management, the internal auditors and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk and legal and ethical compliance programs. Further, the Audit
Committee shall meet separately with the internal auditors and the
independent auditors, with and without management present, to discuss the
results of their examinations.
o The Audit Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Reports on Form 10-Q. Also, the Audit Committee shall
discuss the results of the quarterly review and any other matters required
to be communicated to the Audit Committee by the independent auditors under
generally accepted auditing standards. The chair of the Audit Committee may
represent the entire Audit Committee for the purposes of this review.
o The Audit Committee shall review with management and the independent
auditors the financial statements to be included in the Company's Annual
Reports on Form 10-K (or the annual reports to stockholders if distributed
prior to the filing of Form 10-K), including their judgment about the
quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments and the clarity of the disclosures
in the financial statements. Also, the Audit Committee shall discuss the
results of the annual audit and any other matters required to be
communicated to the Audit Committee by the independent auditors under
generally accepted auditing standards.
o The Audit Committee shall prepare the Audit Committee Report for inclusion
in the Company's proxy statement for its annual meeting of stockholders. In
connection with the preparation of the Report, the Audit Committee shall
advise the Board regarding independent and internal audit procedures and
compliance. In addition, the Audit Committee shall meet with the General
Counsel of the Company to discuss legal matters that may have a material
impact on the financial statements, the Company's compliance policies and
any material reports or inquiries received from regulators or government
agencies. Finally, the Audit Committee should meet at least once per year
with the Chief Financial Officer, the senior internal auditing executive
and the independent auditor in separate executive sessions.
A-2
URS CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 20, 2001
The undersigned hereby appoints KENT P. AINSWORTH and JOSEPH MASTERS, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of URS Corporation that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of URS
Corporation to be held on Tuesday, March 20, 2001, at 9:30 a.m. local time, at
the Mandarin Oriental Hotel, 222 Sansome Street, San Francisco, California, and
at any and all continuations and adjournments of that meeting, with all powers
that the undersigned would possess if personally present, upon and in respect of
the following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS YOU INDICATE OTHERWISE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2,
AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS
ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS.
WE RECOMMEND A VOTE FOR PROPOSALS 1 AND 2.
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FOLD AND DETACH HERE
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Please mark your votes as indicated in this example [X]
Proposal 1:
To elect the following FOR all nominees WITHHOLD
directors to serve for the listed to the left AUTHORITY
ensuing year and until their except as marked to vote for all nominees
successors are elected: to the contrary) listed to the left
Richard C. Blum, Armen Der [_] [_]
Marderosian, Admiral S. Robert
Foley, Jr., USN (Ret.), Marie
L. Knowles, Martin M. Koffel,
Richard B. Madden, Jean-Yves
Perez, Richard Q. Praeger,
Irwin L. Rosenstein and
William D. Walsh
Proposal 2:
To ratify the selection of PricewaterhouseCoopers LLP as our independent
auditors for the fiscal year ending October 31, 2001.
FOR [_] AGAINST [_] ABSTAIN [_]
To withhold authority to vote for any individual nominee, strike a line through
the nominee's name in the list above.
Dated:________________________________, 2001
____________________________________________
____________________________________________
Signature(s)
Please sign exactly as your name appears
hereon. If the stock is registered in
the names of two or more persons, each
should sign. Executors, administrators,
trustees, guardians and
attorneys-in-fact should add their
titles. If signer is a corporation,
please give full corporate name and have
a duly authorized officer sign, stating
title. If signer is a partnership,
please sign in partnership name by
authorized person.
PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE THAT IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
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FOLD AND DETACH HERE