UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 Section 240.14a-12
MATRIX SERVICE COMPANY
(Name of Registrant as Specified in its Charter)
--------------------------
(Name(s) 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.
(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
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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.
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MATRIX SERVICE COMPANY
10701 East Ute Street
Tulsa, Oklahoma 74116
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of the Stockholders of
Matrix Service Company, a Delaware corporation (the "Company"), will be held at
Bank One, First National Tower, 15 East Fifth St., 41st Floor, Tulsa, Oklahoma,
on the 18th day of October, 2000, at 10:00 a.m., Central Standard time, for the
following purposes:
1. To elect six directors to serve until the annual stockholders'
meeting in 2001 or until their successors have been elected and
qualified;
2. To amend the Company's Certificate of Incorporation to
increase the Company's authorized Common Stock, par value $.01 per
share from 15 million shares to 30 million shares;
3. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for fiscal 2001; and
4. To act upon such other business as may properly come before
the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on September 5,
2000, as the record date (the "Record Date") for determining stockholders
entitled to notice of and to vote at the meeting and any adjournment thereof.
Only stockholders of record on the Record Date are entitled to notice of and to
vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
Michael J. Hall
Secretary
September 15, 2000
Tulsa, Oklahoma
================================================================================
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS
OF WHETHER YOU PLAN TO ATTEND. THEREFORE PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT THE MEETING AND WISH TO DO SO YOU
MAY REVOKE THE PROXY AND VOTE IN PERSON.
================================================================================
MATRIX SERVICE COMPANY
10701 East Ute Street
Tulsa, Oklahoma 74116
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Matrix
Service Company (the "Company") for use at the Annual Meeting of Stockholders to
be held on October 18, 2000, and at any adjournments thereof. The Annual Meeting
will be held at 10:00 a.m., Central Standard time, at Bank One, First National
Tower, 15 East Fifth St., 41st Floor, Tulsa, Oklahoma. If the accompanying proxy
is properly executed and returned, the shares it represents will be voted at the
meeting in accordance with the directions noted thereon or, if no direction is
indicated, it will be voted in favor of the proposals described in this proxy
statement. In addition, the proxy confers authority in the persons named in the
proxy to vote, in their discretion, on any other matters properly presented at
the Annual Meeting. The Board of Directors is not currently aware of any other
such matters. Any stockholder giving a proxy has the power to revoke it at any
time before it is voted by written notice or by execution of a subsequent proxy
sent to Michael J. Hall, Secretary, Matrix Service Company, 10701 East Ute
Street, Tulsa, Oklahoma 74116. The proxy also may be revoked if the stockholder
is present at the meeting and elects to vote in person.
The approximate date on which this Proxy Statement and the accompanying
proxy will first be sent to stockholders is September 15, 2000.
VOTING SECURITIES
At the close of business on the Record Date there were 8,618,766 shares of
the Company's common stock, par value $0.01 per share (the "Common Stock"),
outstanding. Each outstanding share of Common Stock is entitled to one vote upon
each of the matters to be voted on at the meeting. The presence, in person or by
proxy, of at least a majority of the outstanding shares of Common Stock is
required for a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 5, 2000, certain
information with respect to the shares of Common Stock beneficially owned by (i)
each person known by the Company to own beneficially five percent or more of its
outstanding shares of Common Stock, (ii) each director and director nominee of
the Company, (iii) each executive officer of the Company named in the Summary
Compensation Table herein and (iv) all directors, director nominees and
executive officers of the Company as a group. Except as described below, each of
the persons listed below has sole voting and investment power with respect to
the shares listed.
Identity of Beneficial Owner Number of Shares Percent of Class
- ---------------------------- ---------------- ----------------
David L. Babson & Company Incorporated (1) 998,100 11.58
One Memorial Drive
Cambridge, MA 02142-1300
Century Management (2) 768,090 8.91
1301 Capitol of Texas Highway, Suite B228
Austin, TX 78746
Dimensional Fund Advisors, Inc. (3) 643,800 7.47
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Heartland Advisors, Inc. (4) 600,000 6.96
790 North Milwaukee Street
Milwaukee, WI 53202
Hugh E. Bradley (5) 37,500 *
Michael J. Hall (5) 87,667 *
Robert A. Peterson (5) 22,500 *
Bradley S. Vetal (5) 87,961 *
John S. Zink (5) 67,500 *
Vance R. Davis (5) 14,400 *
John S. Newmeister (5) 13,500 *
Glen W. Rogers (5) (6) 27,045 *
All directors and executive officers as a group 395,223 4.44
(12 persons) (5)
* Indicates ownership of less than one percent of the outstanding shares of
common stock.
(1) According to Schedule 13G dated February 7, 2000.
(2) According to Schedule 13G dated February 14, 2000. Includes shares held in
managed portfolio accounts as to which beneficial ownership is disclaimed.
(3) According to Schedule 13G dated February 3, 2000. Includes shares held in
managed portfolio accounts as to which beneficial ownership is disclaimed.
(4) According to Schedule 13G dated January 26, 2000.
(5) Includes the following shares of common stock that are issuable upon the
exercise of stock options that are exercisable within 60 days after September 5,
2000: Mr. Bradley - 37,500 shares; Mr. Hall - 52,667 shares; Mr. Peterson -
12,500 shares; Mr. Vetal - 61,143 shares; Mr. Zink - 37,500 shares; Mr. Davis -
13,600 shares; Mr. Newmeister - 12,400 shares; Mr. Rogers - 22,000 shares; 12
Directors and Executive Officers as a group - 275,710 shares.
(6) Mr. Rogers is deemed to beneficially own 360 shares held by his spouse.
PROPOSAL NUMBER 1: Election of Directors
The Board of Directors has nominated and urges you to vote "For" the
election of the six nominees identified below who have been nominated to serve
as directors until the next Annual Meeting of Stockholders or until their
successors are duly elected and qualified. Proxies solicited hereby will be
voted "For" all six nominees unless stockholders specify otherwise in their
proxies. The affirmative vote of the holders of a plurality of the Common Stock
present in person or by proxy at the meeting is required for election of the
nominees.
If, at the time of the 2000 Annual Meeting of Stockholders, any of the
nominees should be unable or decline to serve, the discretionary authority
provided in the proxy may be used to vote for a substitute or substitutes
designated by the Board of Directors. The Board of Directors has no reason to
believe that any substitute nominee or nominees will be required.
Nominees
The nominees for director, and certain additional information with respect
to each of them, are as follows:
Hugh E. Bradley, age 71, was elected as a Director of the Company effective
on April 20, 1993. Mr. Bradley retired in October 1993. Previously he had served
as the Division Manager for Texaco Trading & Transportation, Inc., Mid-Continent
Region from 1988 to 1993. Mr. Bradley is a graduate Petroleum Engineer from the
Colorado School of Mines.
Michael J. Hall, age 56, has served as Vice President Finance and Chief
Financial Officer of the Company since November 1998. Prior to working for
Matrix, Mr. Hall was Vice President and Chief Financial Officer for Pexco
Holdings, Inc. from 1994 to 1997 and Vice President Finance and Chief Financial
Officer for Worldwide Sports & Recreation, Inc., an affiliated company, from
1996 to 1997. From 1984 to 1994, Mr. Hall worked for T.D. Williamson, Inc., as
Senior Vice President, Chief Financial and Administrative Officer, and Director
of Operations, Europe, Africa and Middle East Region. Mr. Hall graduated Summa
Cum Laude from Boston College with a degree in Accounting and earned his MBA
with honors from Stanford Graduate School of Business.
Paul K. Lackey, age 57, is President of The University of Oklahoma - Tulsa
and Senior Vice President of the OU system. Prior to joining OU in August 1999,
Mr. Lackey was a key member of Governor Frank Keating's administration. He was
the Governor's Chief of Staff from February 1997 to July 1999. From 1995 to
1997, he served as the Oklahoma Cabinet Secretary of Health and Human Services.
Before his service in state government, Mr. Lackey was President of Flint
Industries, an oil and gas services and commercial construction firm. He was
appointed Chief Financial Officer for Flint in 1977, later became Chief
Operating Officer and, ultimately, President. He is a past Chairman of the
Metropolitan Tulsa Chamber of Commerce. A graduate of the University of
Mississippi with a B.S. in Mathematics, Mr. Lackey earned his Master's Degree in
Business Administration from the University of Texas. He served in the U.S. Army
as an artillery officer.
Robert A. Peterson, age 48, has served as Director of the Company since
October 1998. Mr. Peterson has served as Chief Executive Officer of Melton Truck
Lines, Inc. since July 1991 when he acquired the company. Prior to that, he
served as President of GlasTran, Inc., a company he founded in July 1989. Mr.
Peterson holds a Bachelor of Arts Degree in Economics and a Masters of Business
Administration from the University of Southern California. He is a Certified
Public Accountant. Mr. Peterson is on the Board of Directors of the Metropolitan
Tulsa Chamber of Commerce, an active supporter of the Boy Scouts of America, the
United Way, and various other professional organizations.
Bradley S. Vetal, age 44, has served as President, Chief Executive Officer
and Director of the Company since March 1999. Mr. Vetal has been with the
Company since January 1987 and has served as President of Matrix Service, Inc.
since June 1, 1992. From June 1996 to March 1999 Mr. Vetal was Vice
President-Tank Division of Matrix Service Company and responsible for all AST
operations. From June 1991 through May 1992, Mr. Vetal served as Vice President
of Eastern Operations of Matrix Service Mid-Continent, Inc. Mr. Vetal graduated
Cum Laude from the University of Michigan with a degree in Mechanical
Engineering.
John S. Zink, age 71, was elected as a director of the Company effective on
April 20, 1993. He is Founder and past President of Zeeco, Inc., Chairman of the
John Zink Foundation and past President and Chairman of the John Zink Company.
Mr. Zink graduated from Oklahoma State University with a degree in Mechanical
Engineering. Mr. Zink belongs to the Mechanical Engineering Scholastic
Fraternity, Pi Tau Sigma, and has been inducted into the O.S.U. Engineering Hall
of Fame. He is a registered Professional Engineer. Mr. Zink is also a director
of Unit Corporation, a drilling and energy company.
The Board of Directors recommends that the stockholders vote "For" the
election of each of the above named nominees.
The Board of Directors and its Committees
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors on the Board shall be fixed from time to time by the Board
of Directors but shall not be less than three nor more than 15 persons. The
Board has fixed its size at six members. Directors hold office until the next
annual meeting of the stockholders of the Company or until their successors have
been elected and qualified. Vacancies may be filled by recommendations from the
Corporate Governance Committee and a majority vote by the remaining directors.
The Company's Board of Directors met 4 times during fiscal year 2000. During
fiscal year 2000, each member of the Board of Directors attended 100% of the
meetings of the Board of Directors and the committees of which he was a member,
with the exception of Mr. Zink who attended 80% of the meetings of the Board of
Directors and the committees of which he was a member.
The Board has three standing committees:
Corporate
Audit Compensation Governance
------------- ------------------- ---------------
Members: Bradley Bradley Bradley
Peterson Peterson Vetal
Zink Zink Zink
The Audit Committee's functions include making recommendations concerning
the engagement of independent auditors, reviewing with the independent auditors
the plan and results of the auditing engagement, reviewing professional services
provided by the independent auditors, reviewing the independence of the
independent auditors, considering the range of audit and nonaudit fees and
reviewing the adequacy of the Company's internal accounting controls. The Audit
Committee held 6 meetings during fiscal 2000.
The Compensation Committee's functions include reviewing executive salary
and bonus structure and approving salary and bonus awards to key executives, and
administering the Company's stock option plans and making grants thereunder. The
Compensation Committee held 6 meetings during fiscal 2000 and took certain
actions by unanimous written consent in lieu of meetings.
The Corporate Governance Committee was established to make nominations and
recommendations to the Board of Directors for individuals to be presented to the
stockholders for election to the Board of Directors. The Corporate Governance
Committee held no meetings during fiscal 2000.
Holders of Common Stock wishing to recommend a person for consideration as
nominee for election to the Board can do so in accordance with the Company's
Bylaws by giving timely written notice to the Secretary of the Company at 10701
East Ute Street, Tulsa, Oklahoma 74116, giving each such nominee's name,
address, appropriate biographical information, a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or person), and any other information that would
be required in a proxy statement. Any such recommendation should be accompanied
by a written statement from the person recommended, giving his or her consent to
be named as a nominee and, if nominated and elected, to serve as a director. A
notice must be delivered to the Secretary not later than 80 days prior to the
date of any annual or special meeting; provided, however, that in the event that
the date of such annual or special meeting was not publicly announced by the
Company more than 90 days prior to the meeting, notice by the stockholder must
be delivered to the Secretary of the Company not later than the close of
business on the tenth day following the day on which public announcement of the
date of such meeting is communicated to the stockholders. Such notice to the
Secretary must set forth the name and address of the stockholder who intends to
make the nomination and a representation that the stockholder is a holder of
record of stock of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice.
Director Compensation
Directors of the Company are reimbursed for out-of-pocket expenses incurred
in attending the Board of Directors and committee meetings. In addition, each of
the Directors who are not employees of the Company receive $7,000 plus $1,000
for each meeting they attend in person and $500 for each teleconference Board of
Directors meeting attended and $500 for each committee meeting attended either
in person or by telephone. In addition, each outside Director is annually
granted options to purchase 5,000 shares of the Company's Common Stock under the
Matrix Service Company 1995 Nonemployee Directors' Stock Option Plan.
Executive Officers of the Company
George L. Austin, age 34, has served as Vice President of Financial
Planning & Reporting since April 1999. Mr. Austin previously served as Vice
President of Finance for Flint Energy Construction Company from February 1994 to
March 1999. Mr. Austin was an Audit Manager with Ernst & Young LLP. Mr. Austin
has a Bachelor of Science Degree from Oklahoma State University. Mr. Austin is a
Certified Public Accountant, a member of the American Institute of Certified
Public Accountants and the Financial Executives Institute.
Rick W. Cherf, age 43, has served as Vice President of Construction
Services since March 1999. Mr. Cherf is responsible for the overall performance
of the Construction Services group and is part of the executive management team
of the Company. During his eight year tenure at Colt Construction Company he has
served as Project Manager to Vice President. He has been involved with major
capital projects and plant maintenance turnarounds internationally. His past
employers include Dillingham Corporation, Enserch Corporation and Ebasco. Mr.
Cherf has a Bachelor of Science Degree in Construction Technology and a Bachelor
of Arts Degree in Business Administration, Labor Relations from the University
of Washington. Mr. Cherf serves as a board member of the ABC Industrial
Contractor's Council.
Vance R. Davis, age 40, has served as Vice President of Tank Maintenance
and Repair - Union Operations for the Company since June 1997. Mr. Davis served
as Regional Manager from June 1994 to June 1997. Mr. Davis has served as a
Project Manager and Operations Manager for the Houston Region from April 1988 to
June 1994. Prior to joining the Company, Mr. Davis worked in various capacities
for Pasadena Erectors, Advance Tank & Construction Company, Kamyr Installations,
Graver Tank & Manufacturing and Tank Service, Inc.
John S. Newmeister, age, 52, has served as Vice President of Marketing for
the Company since May 2000 and previously as Vice President of Tank
Construction. Prior to working for the Company, Mr. Newmeister worked for
Pitt-Des Moines, Inc. for 24 years holding numerous positions, including
President of Hydrostorage, Inc. Mr. Newmeister holds a Bachelor of Science
Degree in Civil Engineering from University of Iowa.
Bradley J. Rinehart, age 36, has served as Vice President of Tank
Maintenance & Repair -Non-Union Operations for the Company since May 1997;
Regional Manager - Michigan Region from April 1991 to April 1997; Operations
Manager - Michigan Region from January 1990 to March 1991; Project Manager -
Michigan Region from January 1988 to December 1989. Mr. Rinehart holds a
Bachelor of Science Degree in Construction Science from the University of
Oklahoma.
Glen W. Rogers, age 50, has served as Vice President of Products, Technical
& Support Services for the Company since June 1997. Mr. Rogers served as Vice
President of Operations for the Company from October 1993 to May 1997. From
March 1992 to October 1993, Mr. Rogers served as Vice President of Construction
managing a $23 million dollar grass roots terminal project in Cushing, Oklahoma
for Matrix Service, Inc. Previous to working for the Company, Mr. Rogers was an
Engineering Manager for Williams Pipeline Company from October 1984 to March
1992. Mr. Rogers worked for Edeco, Inc. from March 1979 to October 1984 serving
as Senior Project Engineer. Mr. Rogers holds a Bachelor of Science Degree in
Civil Engineering from Kansas State University. Mr. Rogers is a member of the
American Society of Civil Engineering and the National Society of Professional
Engineers.
James P. Ryan, age 45, has served as Vice President of the Plant Services
Division since October 1999. Mr. Ryan is responsible for West Coast AST
Operations, Turnarounds and Plant Maintenance operations. Mr. Ryan has 21 years
of construction related experience in the area of heavy industrial construction.
Mr. Ryan was a 1979 graduate from Purdue University in Civil Engineering.
Previous employers include MW Kellogg, Kiewit Industrial Co. and Hoffman
Construction Company. Prior to employment with Matrix, Mr. Ryan provided
independent consulting services to the Power industry.
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding compensation
paid or accrued during each of the Company's last three fiscal years to the
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers (the "Named Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
-------------------------------------------------------------------------------
Awards Payouts
------------------------------------
Other Long-Term
Annual Restricted Securities Incentive All other
Name and Fiscal Compensation Stock Underlying Payout Compensation
Principal Position Year Salary ($) Bonus ($) ($) (1) Award(s) Options/SARs ($) ($)
- ------------------------------------------------------------------------------------------------------------------------
Bradley S. Vetal (2) 2000 215,402 91,664 -
Chairman of Board, 1999 181,651 89,000 N/A N/A 185,000 N/A N/A
President and 1998 169,610 - 10,000
Chief Executive Officer
Michael J. Hall 2000 165,400 49,915 -
Vice President Finance 1999 113,835 19,375 N/A N/A 100,000 N/A N/A
and 1998 - - -
Chief Financial Officer
John S. Newmeister 2000 135,371 21,600 -
Vice President Marketing 1999 129,599 10,000 N/A N/A 4,000 N/A N/A
1998 123,360 - 4,000
Glen W. Rogers 2000 127,731 22,700 -
Vice President Technical 1999 122,651 47,096 N/A N/A 10,000 N/A N/A
Support & Product 1998 117,513 - -
Services
Vance R. Davis 2000 119,970 26,900 -
Vice President Tank 1999 107,965 43,298 N/A N/A 10,000 N/A N/A
Maintenance & Repair - 1998 105,110 - 10,000
Union
(1) During each of the three years ended May 31, 1998, 1999 and
2000, perquisites for each individual named in the Summary
Compensation Table aggregated less than 10% of the total annual salary
and bonus reported for such individual in the Summary Compensation
Table, or $50,000, if lower. Accordingly, no such amounts are included
in the Summary Compensation Table.
(2) The bonus paid to Mr. Vetal in fiscal year 1999 was the
result of his performance as Vice President-Tank Division. No bonus
was awarded to Mr. Vetal for his role as President and Chief Executive
Officer, a position he assumed in March 1999.
Stock Option Grants During Fiscal 2000
During the fiscal year ended May 31, 2000, no options to purchase Common
Stock were granted.
Option Exercises and Holdings
The following table sets forth information with respect to the Named
Officers identified in the Summary Compensation Table concerning the exercise of
stock options and the value of unexercised options held as of the end of fiscal
year 2000.
AGGREGATED STOCK OPTION EXERCISES IN YEAR ENDING MAY 31, 2000
AND OPTION VALUES AT MAY 31, 2000
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Stock Options
Options at May 31, 2000 (#) at May 31, 2000 (1) ($)
--------------------------------------------------------------------
Shares Value
Acquired On Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
Bradley S. Vetal 5,715 22,152 54,143 150,857 27,070 (2) 108,280 (2)
Michael J. Hall - - 29,334 70,666 10,898 (3) 31,923 (3)
John S. Newmeister - - 11,600 3,200 11,000 (4) 800 (4)
Glen W. Rogers - - 20,000 8,000 500 (5) 2,000 (5)
Vance R. Davis - - 11,600 8,000 4,100 (6) 2,000 (6)
(1) Value was calculated by subtracting the applicable exercise
price from the fair market value of the Company's Common Stock on May
31, 2000, which was $4.63 (last trading day of fiscal year) based on
the average of the high and low sales price of the Common Stock on May
31, 2000 on the Nasdaq National Market, multiplied by the number of
shares underlying the unexercised options.
(2) Mr. Vetal holds options to purchase 30,000 shares at an
exercise price of $3.78, 7,000 shares at an exercise price of $4.38
and 17,143 shares at an exercise price of $5.63 that were exercisable
in fiscal 2000. Mr. Vetal also holds options to purchase 120,000
shares at an exercise price of $3.78, 28,000 shares at an exercise
price of $4.38, and 2,857 shares at an exercise price of $5.63 at May
31, 2000.
(3) Mr. Hall holds options to purchase 6,000 shares at an
exercise price of $3.78 and 23,334 shares at an exercise price of
$4.38 that were exercisable in fiscal 2000. Mr. Hall also holds
options to purchase 24,000 shares at an exercise price of $3.78 and
46,666 shares at an exercise price of $4.38 at May 31, 2000.
(4) Mr. Newmeister holds options to purchase 10,800 shares at an
exercise price of $3.63 and 800 shares at an exercise price of $4.38
that were exercisable in fiscal 2000. Mr. Newmeister also holds
options to purchase 3,200 shares at an exercise price of $4.38 at May
31, 2000.
(5) Mr. Rogers holds options to purchase 2,000 shares at an
exercise price of $4.38 and 18,000 shares at an exercise price of
$5.63 that were exercisable in fiscal 2000. Mr. Rogers also holds
options to purchase 8,000 shares at an exercise price of $4.38 at May
31, 2000.
(6) Mr. Davis holds options to purchase 3,600 shares at an
exercise price of $3.63, 2,000 shares at an exercise price of $4.38
and 6,000 shares at an exercise price of $5.63 that were exercisable
in fiscal 2000. Mr. Davis also holds options to purchase 8,000 shares
at an exercise price of $4.38 at May 31, 2000.
Report of the Compensation Committee of the Board of Directors
The Compensation Committee ("Committee") of the Board of Directors of the
Company currently consists of Hugh E. Bradley, Robert A. Peterson, and John S.
Zink, all of whom are independent directors who are not employees and who
qualify as non-employee directors for purposes of Rule 16b-3 adopted under the
Securities Exchange Act of 1934. The Committee is responsible for evaluating the
performance of the Chief Executive Officer and the Chief Financial Officer
("Named Executive Officers"), determining the compensation of the Named
Executive Officers and administering the Company's stock option plan under which
grants may be made to employees of the Company. The Committee has furnished the
following report on executive compensation for the fiscal year ending May 31,
2000.
The annual compensation package of the Named Executive Officers primarily
consists of (i) a cash salary which reflects the responsibilities relating to
the position and individual performance, (ii) variable performance awards
payable in cash and tied to the individual's and the Company's performance
against pre-established financial measures and (iii) long-term stock-based
incentive awards which strengthen the relationship between the interests of the
Named Executive Officers and the interests of the Company's stockholders.
In determining the level and composition of compensation for each Named
Executive Officer, the Committee takes into account various qualitative and
quantitative indicators of each officer's performance. The Committee's
objectives in determining compensation are to allow the Company to attract,
motivate and retain the executive personnel necessary for the Company's success
and to provide an executive compensation program comparable to that offered by
the companies with which the Company competes for such management personnel.
Although no specific target has been established, the Committee generally seeks
to set salaries at or below the average of a range in comparison to peer group
companies based upon experience of the Named Executive Officers. In setting
salaries, the Compensation Committee considers its peer group to be certain
companies with market capitalizations similar to that of the Company. This peer
group does not necessarily include the companies comprising the Standard and
Poor's Engineering and Construction Index reflected in the performance graph in
this Proxy Statement, which is the industry categorization the Company has been
placed in by its market makers. In evaluating the performance of the Named
Executive Officers, the Committee takes into consideration such factors as total
operating income (TOI) based on a fiscal budget plan which is reviewed by the
Committee and economic value added (EVA) which takes into consideration how
total assets and long-term debt are managed by the Named Executive Officers.
Base compensation is established through negotiation between the Company
and the Named Executive Officer at the time the executive is hired, or named to
the executive position, and then subsequently (in general annually) when such
officer's base compensation is subject to review or reconsideration. Base
salaries after the initial year will be determined by the Compensation Committee
after review of the officer's performance. In establishing or reviewing base
compensation levels for each Named Executive Officer, the Committee, in
accordance with its general compensation policy, considers numerous factors,
including the responsibilities relating to the position, the qualifications of
the executive and the relevant experience the individual brings to the Company,
strategic goals for which the executive has responsibility, and compensation
levels of other companies at a comparable stage of development to compete with
the Company for business and executive talents. No predetermined weights are
given to any such factors. The salaries for each of the Named Executive Officers
in fiscal year 2000 were set taking into account these factors in accordance
with the Company's general compensation policy discussed above.
In addition to each Named Executive Officer's base compensation, the
Committee may award cash bonuses and/or grant awards under the Company's Stock
Option Plan to Named Executive Officers depending on the extent to which certain
defined personal and corporate performance goals are achieved. Such corporate
performance goals include revenue and earnings targets of the Company, as
discussed above.
The Chief Executive Officer's compensation is the responsibility of the
Compensation Committee. Based upon the Compensation Committee's assessment of
Mr. Vetal's ability to effectively lead the Company into the future as
determined by his past performance and experience with the Company's business
and markets, the Compensation Committee determined that Mr. Vetal's compensation
package would consist of the following: (i) annual base salary of $215,402 and
(ii) annual bonus target of 70% of annual salary based upon the Company
achieving specific TOI and EVA targets as discussed above. For the past year,
the Chief Executive Officer's bonus resulted in a 42% of salary bonus with an
achieved TOI of 93% of plan and an achieved EVA of 97% of plan.
The Chief Financial Officer's compensation is the responsibility of the
Compensation Committee. Based upon the Compensation Committee's assessment of
Mr. Hall's ability to effectively lead the Company into the future as determined
by his past performance and experience with the Company's business and markets,
the Compensation Committee determined that Mr. Hall's compensation package would
consist of the following: (i) annual base salary of $165,400 and (ii) annual
bonus target of 50% of annual salary based upon the Company achieving specific
TOI and EVA targets as discussed above. For the past year, the Chief Financial
Officer's bonus resulted in a 30% of salary bonus with an achieved TOI of 93% of
plan and an achieved EVA of 97% of plan.
Equity incentives are not limited to executive officers. Grants of stock
options are made to management and staff of the Company in amounts determined by
the Compensation Committee. The amounts of such grants are determined based on
the individual employee's position with the Company and his or her potential
ability to beneficially impact the performance of the Company. By giving
management and staff a stake in the financial performance of the Company, the
Compensation Committee's goal is to provide incentives to these employees of the
Company to enhance the financial performance of the Company and, thus,
stockholder value.
All salaried employees of the Company, including the Named Executive
Officers, are eligible to receive long-term stock based incentive awards under
the Company's Stock Option Plan as a means of providing such individuals with a
continuing proprietary interest in the Company. Such grants further the mutual
interests of the Company's employees and its stockholders by providing
significant incentives for such employees to achieve and maintain high levels of
performance. The Company's Stock Option Plan enhances the Company's ability to
attract and retain the services of qualified individuals. Factors considered in
determining whether such awards are granted includes the employee's position in
the Company, his or her performance and responsibilities, the number of options,
if any, currently held, and the vesting schedule of any such options. The
Committee has adopted an established schedule for the issuance of options, with
designated option grants for specific salary grades over a 3-year period.
On January 3, 2000, the Compensation Committee approved severance
agreements for both Mr. Vetal and Mr. Hall that would be triggered if a "change
in control" in the ownership of the Company resulted in any "adverse personal
action" against Mr. Vetal or Mr. Hall. Copies of these agreements are exhibits
to the Company's annual report on Form 10-K.
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
Members of the Compensation Committee
Hugh E. Bradley
Robert A. Peterson
John S. Zink
Report of the Audit Committee of the Board of Directors
The Audit Committee has:
o Reviewed and discussed the audited financial statements with
management
o Discussed with the independent auditors the matters required to
be discussed by SAS 61.
o Received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard
No. 1, and has discussed with the independent auditors the auditors'
independence.
o Based on the review and discussions above, recommended to the
Board of Directors that the audited financial statements be included
in the Company's Annual Report on Form 10-K for the last fiscal year
for filing with the Securities and Exchange Commission.
The Board of Directors has determined that the members of the Audit
Committee are independent. The Audit Committee has adopted a written charter.
The charter is included as Exhibit A to this proxy statement.
Members of the Audit Committee:
Hugh E. Bradley
Robert A. Peterson
John S. Zink
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filling under the Securities Act of 1944, as amended, or
under the Securities Exchange Act of 1934, as amended, except to the extent that
the Company specifically incorporated this information by reference, and shall
not otherwise be deemed filed under such acts.
Certain Transactions
Mr. Robert Peterson, a director, is the Chief Executive Officer of Melton
Truck Lines, Inc., a transportation company that has provided trucking services
to Matrix Service Company. During fiscal year 2000, Melton Truck Lines, Inc.
billed Matrix Service Company $314,152 and Matrix Service Company is current on
its open account obligations, which are the same terms as all other Melton Truck
Lines' customers.
Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than ten percent
of the Common Stock, to file initial reports of ownership and reports of changes
in ownership (Forms 3, 4 and 5) of the Common Stock with the Securities and
Exchange Commission (the "SEC") and the NASDAQ Stock Market. Officers, directors
and greater than 10 percent stockholders are required by SEC regulations to
furnish the Company with copies of all such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company and on written representations by
certain reporting persons, the Section 16(a) filing requirements were satisfied
by the Company's directors, officers and ten percent stockholders.
PROPOSAL NUMBER 2: To Increase Authorized Common Stock
The Board of Directors of the Company has unanimously adopted resolutions
approving, declaring advisable and recommending adoption by the stockholders of
an amendment to the Company's Certificate of Incorporation to increase the
authorized shares of the Company's Common Stock from 15,000,000 shares to
30,000,000 shares.
As of September 5, 2000, the Company had 9,642,638 shares of Common Stock
issued. Also on the date, the Company had 1,139,322 shares of Common Stock
subject to outstanding options under the Company's Stock Option Plans.
Accordingly, the Company has issued or reserved for issuance more than 71.8% of
the authorized Common Stock, and, thus, a limited number of shares would be
available to the Company for use in connection with any future corporate needs.
The lack of authorized Common Stock available for issuance would limit the
Company's ability to effectuate future stock splits or dividends. The Company
would also be unnecessarily restricted in its ability to pursue opportunities
for future acquisitions, mergers, financings and other corporate transactions.
The Board of Directors believes that the increase in the authorized shares of
Common Stock is necessary to provide the Company with the flexibility to pursue
the types of opportunities described above without the added delay and expense
of obtaining stockholder approval each time an opportunity requiring the
issuance of shares may arise.
This proposal could have an anti-takeover effect, although that is not its
intention. For example, if the Company were the subject of a hostile takeover
attempt, it could try to impede the takeover by issuing shares of Common Stock,
thereby diluting the voting power of the other outstanding shares and increasing
the potential cost of the takeover. The availability of this defensive strategy
to the Company could discourage unsolicited takeover attempts, thereby limiting
the opportunity for the stockholders to realize a higher price for their shares
than is generally available in the public markets. The Board of Directors is not
aware of any attempt, or contemplated attempt, to acquire control of the Company
and this proposal is not being presented with the intent that it be utilized as
a type of anti-takeover device.
The additional shares of Common Stock to be authorized by adoption of the
amendment to the Certificate of Incorporation would have rights identical to the
current outstanding shares of Common Stock of the Company. Adoption of the
proposed amendment to the Certificate of Incorporation would not affect the
rights of the holders of current outstanding shares of Common Stock.
Under applicable Delaware law, the affirmative vote of the holders of a
majority of the Common Stock outstanding on the record date is required to adopt
the proposed amendment to the Certificate of Incorporation. As a result,
abstentions and broker non-votes are effectively equivalent to votes against
this proposal. Unless otherwise instructed, properly executed Proxies that are
timely received and not subsequently revoked, but not marked, will be voted in
favor of the proposed amendment to the Certificate of Incorporation. If the
proposal is approved, the Company intends to file an amendment to the
Certificate of Incorporation shortly after the meeting. The amendment to the
Certificate of Incorporation will be effective immediately upon acceptance of
filing by the Secretary of State of the State of Delaware. The Board of
Directors would then be free to issue the newly authorized shares of Common
Stock without further action on the part of the stockholders, subject to
transactions requiring stockholder approval pursuant to the Company's
Certificate of Incorporation or Delaware law.
Attached as Exhibit B to this Proxy Statement is the text of the proposed
amendment to the Company's Certificate of Incorporation.
The Board of Directors recommends a vote "For" the proposal to increase the
authorized Class A Common Stock.
PROPOSAL NUMBER 3: Selection of Auditors
The Board of Directors has reappointed the firm of Ernst & Young LLP as the
Company's independent public accountants for the fiscal year ending May 31,
2001, subject to ratification by the Company's stockholders. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting of
Stockholders and will have an opportunity to make a statement, if they desire to
do so, and to respond to appropriate questions from those attending the meeting.
Ernst & Young LLP has served as auditors for the Company since 1984.
The affirmative vote of holders of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting is required to
ratify the appointment of Ernst & Young LLP as the independent accountants for
fiscal 2001.
The Board of Directors recommends a vote "For" ratification of Ernst & Young's
appointment.
Proposals of Stockholders
A proposal of a stockholder intended to be presented at the next annual
meeting of stockholders must be received at the Company's principal executive
offices no later than May 31, 2001, if the proposal is to be considered for
inclusion in the Company's proxy statement relating to such meeting.
PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MATRIX SERVICE COMPANY,
THE NASDAQ COMPOSITE INDEX
AND THE S & P ENGINEEERING & CONSTRUCTION INDEX
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Cumulative Total Return
5/31/1995 5/31/1996 5/30/1997 5/29/1998 5/31/1999 5/31/2000
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Matrix Service $100 $143 $206 $185 $96 $111
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S&P Engineering & Construction $100 $131 $119 $115 $83 $82
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Nasdaq Composite $100 $145 $164 $208 $292 $402
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Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data from
Bloomberg Financial Markets.
*$100 invested on May 31, 1995 in the Company's Common Stock. Includes
reinvesting of dividends, where applicable. The Company's fiscal year ends May
31.
The performance graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this graph by reference, and shall not otherwise be
deemed filed under such acts.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as to future stock
performance.
Financial Information
A copy of the Company's Annual Report on Form 10-K, including any financial
statements and schedules and exhibits thereto, may be obtained without charge by
written request to Michael J. Hall, Vice President Finance, Matrix Service
Company, 10701 East Ute Street, Tulsa, Oklahoma 74116.
Other Matters
The cost of solicitation of these proxies will be borne by the Company. In
addition to solicitation by mail, certain directors, officers, and regular
employees of the Company may solicit proxies by telecopy, telephone, and
personal interview.
By Order of the Board of Directors
Michael J. Hall
September 15, 2000
Tulsa, Oklahoma
Exhibit A
---------
AUDIT COMMITTEE CHARTER
Organization
This charter governs the operations of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
board of directors. The committee shall be appointed by the board of directors
and shall comprise 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. 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 as
defined under NASD regulations.
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, 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 committee to maintain free and open
communication between the committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts, for this purpose.
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 report the results of
their 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 committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The 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 shall be 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 committee may supplement them as
appropriate.
o The 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
shareholders. The committee shall have the ultimate authority and responsibility
to evaluate and, where appropriate, replace the independent auditors. The
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. Annually, the committee shall review and recommend
to the board the selection of the Company's independent auditors, subject to
shareholders' approval.
o The 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 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 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 committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the Company's
Quarterly Report on Form 10-Q. Also, the committee shall discuss the results of
the quarterly review and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards. The chair of the committee may represent the entire committee for the
purposes of this review.
o The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on Form
10-K (or the annual report to shareholders 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 committee
shall discuss the results of the annual audit and any other matters required to
be communicated to the committee by the independent auditors under generally
accepted auditing standards.
Exhibit B
---------
The first sentence of Article Fourth of the Restated Certificate of
Incorporation of Matrix Service Company shall be amended to read in its entirety
as follows:
"The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 35 million,
consisting of 5 million shares of Preferred Stock, par value $.01 per
share (hereinafter called "Preferred Stock"), and 30 million shares of
Common Stock, par value of $.01 per share (hereinafter called "Common
Stock")."
PROXY PROXY
MATRIX SERVICE COMPANY
CUSIP 57685310
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints BRADLEY S. VETAL, MICHAEL J.
HALL, and each or either of them, lawful attorneys and proxies of the
undersigned, with full power of substitution and re-substitution, for and in the
name, place and stead of the undersigned, to attend the Annual Meeting of
Stockholders of Matrix Service Company (herein the "Company") to be held at Bank
One, First National Tower, The Board Room, 41st Floor, 15 East Fifth Street,
Tulsa, Oklahoma, on the 18th day of October, 2000 at 10:00 a.m., Central
Standard Time, and any adjournment(s) thereof, with all powers the undersigned
would possess if personally present and to vote thereat, as specified herein,
the number of shares the undersigned would be entitled to vote if personally
present.
In accordance with their discretion, said attorneys and proxies are authorized
to vote upon such other business as may properly come before the meeting or any
adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
================================================================================
ENVELOPE.
========
Every properly signed proxy will be voted in accordance with the specification
made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS
1, 2, & 3. All prior proxies are hereby revoked.
PROPOSAL 1: ELECTION OF DIRECTORS (INSTRUCTION: To withhold authority to vote for any
FOR all nominees (except as marked WITHHOLD AUTHORITY individual nominee, strike a line through the nominee's
to the contrary) to vote for all nominees name in the list below.)
listed to the right
[ ] [ ] Hugh E. Bradley, Michael J. Hall, Paul K. Lackey, Robert A.
Peterson, Bradley S. Vetal, John S. Zink
PROPOSAL 2: TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO If authority to vote FOR any nominee is not withheld, this
INCREASE THE COMPANY'S AUTHORIZED COMMON STOCK, PAR VALUE $.01 PER proxy will be voted for such nominee.
SHARE FROM 15 MILLION SHARES TO 30 MILLION SHARES
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 3: TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR 2001
(Please sign exactly as name appears hereon. When signing
as attorney, executor, administrator, trustee, guardian,
etc., give full title as such. For joint accounts, each
FOR AGAINST ABSTAIN joint owner should sign.)
[ ] [ ] [ ]
This proxy will also be voted in accordance with the
discretion of the proxies or proxy on any other business.
Receipt is hereby acknowledged of the Notice of Annual
Meeting and Proxy Statement of the Company dated
September 15, 2000.
* NOTE * SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF
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(Signature)
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(Signature if held jointly)
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(Date)