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SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ý |
Filed by a Party other than the Registrant o |
Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-12
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Kaiser Group Holdings, Inc. |
(Name of Registrant as Specified In Its Charter) |
N/A |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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(5) |
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Total fee paid:
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid:
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(2) |
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Form, Schedule or Registration Statement No.:
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Filing Party:
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(4) |
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Date Filed:
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KAISER GROUP HOLDINGS, INC.
9302 Lee Highway
Fairfax, Virginia 22031
Dear Shareholder:
The
2003 Annual Meeting of Shareholders (the "Annual Meeting") of Kaiser Group Holdings, Inc. (the "Company") will be held on Wednesday, May 7, 2003, at the Company's
principal executive offices, 9302 Lee Highway, Fairfax, Virginia 22031-1207. The matters on the meeting agenda are described on the following pages. The meeting will start promptly
at 10:30 a.m.
This
year you are being asked to elect four directors, each to a one-year term expiring at the 2004 Annual Meeting of Shareholders, and until their successors are duly
elected, and to approve the Company's 2002 Equity Compensation Plan.
If
you were a shareholder of record on March 26, 2003, you will receive a proxy card for the shares of Kaiser Group Holdings, Inc. Common Stock, par value $0.01 per share,
and Preferred Stock, par value $0.01 per share, you hold in your own name. To vote your shares, you must mail back your proxy card so that it is received by the Company's stock transfer agent before
the close of business on Wednesday, April 30, 2003. Please use the enclosed postage-paid, addressed envelope to vote your shares.
A
very high percentage of our shareholders hold their stock in street name, which means that the shares are registered in their brokers' names rather than in the shareholders' names. If
you want to vote your street-name shares personally, you must contact your broker directly in order to obtain a proxy issued to you by your broker. A broker letter that identifies you as a
shareholder is not the same thing as a broker-issued proxy. If you fail to bring a broker-issued proxy to the meeting, you will not be able to vote your broker-held shares at the Annual
Meeting.
We
urge you to mail your proxy card to our stock transfer agent as promptly as possible using the envelope provided. Please mail your proxy card whether or not you plan to attend the
Annual Meeting. Giving your proxy will not affect your right to vote the shares you hold in your own name if you decide to attend the Annual Meeting.
The
Company's principal executive offices are located in Fairfax, Virginia, near the Vienna station on the Orange Line of the Washington, DC area Metro.
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Sincerely, |
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/s/ JOHN T. GRIGSBY, JR. |
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John T. Grigsby, Jr. President and Chief Executive Officer |
April 4, 2003 |
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Kaiser Group Holdings, Inc.:
The
2003 Annual Meeting of Shareholders (the "Annual Meeting") of Kaiser Group Holdings, Inc. (the "Company") will be held at the Company's principal executive offices,
9302 Lee Highway, Fairfax, Virginia 22031-1207, on Wednesday, May 7, 2003, at 10:30 a.m., Eastern Daylight Time, for the following purposes:
- 1.
- To
elect four directors, each to a one-year term expiring at the 2004 Annual Meeting of Shareholders, and until their successors are duly elected;
- 2.
- To
approve the Company's 2002 Equity Compensation Plan; and
- 3.
- To
act on such other matters as may properly come before the meeting or any adjournment thereof.
A
proxy card is included with this Proxy Statement and Annual Report mailing. In accordance with the Company's Bylaws, the Board of Directors has fixed the close of business on
Wednesday, March 26, 2003, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting and at any adjournment thereof.
Your
proxy is important. Even if you hold only a few shares, and whether or not you expect to attend the Annual Meeting in person, you are requested to date, sign, and mail the proxy
card you receive in the postage-paid envelope that is provided. If you wish to have someone other than the persons named on the enclosed proxy card vote for you, you may cross out their
names on your proxy card and insert the name of another person who will be at the meeting. You then must give your signed proxy card to that person; otherwise he or she cannot vote on your behalf at
the meeting. The giving of your proxy will not affect your right to vote the shares you hold in your own name if you decide to attend and vote at the meeting.
This
notice is given pursuant to direction of the Board of Directors.
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/s/ MARIJO L. AHLGRIMM |
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Marijo L. Ahlgrimm Secretary |
Fairfax, Virginia
April 4, 2003 |
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Table of Contents
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Page
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PROXY STATEMENT |
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1 |
VOTING SECURITIES OF THE COMPANY AND CERTAIN SHAREHOLDERS |
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1 |
PROPOSAL 1ELECTION OF DIRECTORS |
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3 |
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Nominees for Election to the Board of Directors |
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Information Regarding the Board of Directors |
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Certain Business Relationships |
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EXECUTIVE COMPENSATION |
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6 |
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Summary Compensation Table |
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Option Grants in 2002 and Aggregated Option Exercises in 2002 and December 31, 2002 Option Values |
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Employment Contracts and Termination of Employment Arrangements |
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REPORT OF COMPENSATION COMMITTEE |
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8 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
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9 |
PROPOSAL 2APPROVAL OF 2002 EQUITY COMPENSATION PLAN |
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9 |
AUDIT COMMITTEE REPORT AND INDEPENDENT ACCOUNTANT |
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14 |
COMPARISON OF TOTAL SHAREHOLDER RETURN |
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17 |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
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18 |
OTHER MATTERS |
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18 |
A copy of the Company's Annual Report on Form 10-K for the year ended December 31, 2002 as filed with the Securities and Exchange Commission ("SEC"), will be sent
without charge to any shareholder of record or beneficial owner of shares of the Company's Common Stock and Preferred Stock upon receipt of a written request addressed to: Marijo L. Ahlgrimm,
Executive Vice President, Chief Financial Officer and Secretary, Kaiser Group Holdings, Inc., 9302 Lee Highway, Fairfax, Virginia 22031-1207. Provided with the copy of the Report will be
a list of the exhibits to the Report filed with the SEC by the Company. Any such exhibits will be provided to any Company shareholder upon payment of the cost noted next to each exhibit on the
list.
i
PROXY STATEMENT
This Proxy Statement is furnished to shareholders of Kaiser Group Holdings, Inc. (the "Company" or "Kaiser Holdings") in connection with the solicitation
of proxies for use at the 2003 Annual Meeting of Shareholders (the "Annual Meeting") to be held on Wednesday, May 7, 2003, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The record date for determining shareholders entitled to vote at the Annual Meeting is March 26, 2003 (the "Record Date").
A
proxy card is included with this Proxy Statement and Annual Report mailing, and your proxy is solicited by the Board of Directors of the Company. If your shares are registered in your
name, the proxy card shows the number of shares of Kaiser Group Holdings, Inc. Common Stock, par value $0.01 per share ("Common Stock"), and Preferred Stock, par value $0.01 per share
("Preferred Stock"), that you own as of March 26, 2003. As explained in the accompanying notice, you must mail your proxy card in sufficient time for it to be received by the Company's stock
transfer agent before the close of business on Wednesday, April 30, 2003.
Please
complete and sign the enclosed proxy card and return it to the Company as soon as possible. If you change your mind after you return your proxy card, you can revoke it at any
time, including at the May 7, 2003 meeting. You may revoke your proxy by mailing a second (or subsequent) proxy card to the Company's stock transfer agent for receipt prior to the meeting, or
by voting on the ballot provided to shareholders at the Annual Meeting. Unless a proxy is revoked, all proxy cards that are properly executed and received at or prior to the Annual Meeting will be
voted in accordance with what is written on the cards. Unless a contrary instruction is indicated in the proxy card, or if the proxy card is properly executed but the voting "boxes" are left blank, it
will be voted FOR the election of directors as nominated, FOR the approval of the 2002 Equity Compensation Plan and in the discretion of the person(s) named as the proxy if any other business properly
comes before the meeting.
The
Annual Report of the Company for the year ended December 31, 2002 (including financial statements), the Notice of Annual Meeting, this Proxy Statement, and the enclosed proxy
card initially were mailed in a single envelope to shareholders on or about April 4, 2003. The Company has borne the cost of preparing, assembling, and mailing these items. Directors, officers,
and employees of the Company may solicit proxies on behalf of the Company by telephone and personal interview without special compensation.
The
Company will deliver copies of the Annual Report and proxy material to brokerage firms and other custodians, nominees, and fiduciaries for forwarding to beneficial owners of the
Company's Common Stock and Preferred Stock. The Company will reimburse those brokerage firms, custodians, nominees, and fiduciaries for their expenses in connection with forwarding these materials.
VOTING SECURITIES OF THE COMPANY AND CERTAIN SHAREHOLDERS
The Company's Common Stock and Preferred Stock issued and outstanding as of the Record Date are entitled to vote at the Annual Meeting. There were 1,594,062
shares of Common Stock and 854,631 shares of Preferred Stock issued and outstanding as of the Record Date. Each share of Common Stock is entitled to one vote per share. Holders of Preferred Stock are
generally entitled to vote with holders of Common Stock on all matters submitted to a vote of shareholders, including the election of directors, with each share of Preferred Stock being entitled to
one-tenth of a vote.
The
Bylaws of the Company provide that the holders of shares of stock with a majority of the voting power of the outstanding shares entitled to vote at the Annual Meeting must be present
in person or represented by proxy in order for a quorum to exist for the transaction of business at that meeting. Assuming that such a quorum is present for the May 7, 2003 meeting, a plurality
of the votes cast at the meeting, in person or by proxy, will determine the election of the directors and the approval
1
or disapproval of the 2002 Equity Compensation Plan. Abstentions and broker non-votes will be counted as present for the purpose of computing the quorum, but will not be counted as
affirmative votes.
Security Ownership of Certain Beneficial Owners
A person is deemed to be a beneficial owner of the Company's equity securities if that person has voting and/or investment power with respect to such equity
securities or has the right to acquire such equity securities within 60 days. The following table sets forth information regarding each person known by the Company to beneficially own 5% or
more of the outstanding shares of Common Stock and Preferred Stock of the Company.
Name and Address of Beneficial Owners of More Than 5% of the Common Stock of the Company
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Amount and Nature of
Beneficial Ownership
of Shares of
Common Stock
of the Company
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Amount and Nature of
Beneficial Ownership
of Shares of
Preferred Stock
of the Company
(*Less than 1%)
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Percent of
Common Stock
of the Company
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Percent of
Preferred Stock
of the Company
(*Less than 1%)
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James D. Bennett
Bennett Restructuring Fund, L.P.
2 Stamford Plaza, Suite 1501
281 Tresser Boulevard
Stamford, CT 06901 |
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219,848 |
(a) |
144,784 |
(a) |
13.8 |
% |
16.9 |
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Michael E. Tennenbaum
Tennenbaum & Co., LLC
11100 Santa Monica Boulevard, Suite 210
Los Angeles, CA 90025 |
|
752,899 |
(b) |
54,079 |
(c) |
47.2 |
% |
6.3 |
% |
John Hancock Financial Services, Inc.
John Hancock Place
P.O. Box 111
Boston, MA 02117 |
|
81,949 |
(d) |
* |
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5.1 |
% |
* |
|
- (a)
- The
information with respect to 219,848 shares of Common Stock beneficially owned by James D. Bennett is based on a Report on Form 4 dated November 2002, which
was filed with the SEC on December 11, 2002. The information with respect to 144,784 shares of Preferred Stock was reported to the Company by James D. Bennett on March 31, 2003.
- (b)
- The
information with respect to 752,899 shares of Common Stock beneficially owned by Michael E. Tennenbaum, including (1) 77,924 shares of Common Stock reported to be
beneficially owned by Tennenbaum & Co., LLC, (2) 400,000 shares of Common Stock reported to be beneficially owned by Michael E. Tennenbaum 2002 Annuity Trust,
(3) 222,105 shares of Common Stock reported to be beneficially owned by Michael E. Tennenbaum and Suzanne S. Tennenbaum, trustees of the Tennenbaum Living Trust, and
(4) 52,870 shares of Common Stock reported to be beneficially owned by Michael E. Tennenbaum, individually, is based on a Report on Form 4 dated January 29, 2003, which was
filed with the SEC on January 29, 2003.
- (c)
- The
information with respect to 54,079 shares of Preferred Stock beneficially owned by Michael E. Tennenbaum, including (1) 10,129 shares of Preferred Stock reported to
be beneficially owned by Tennenbaum & Co., LLC, (2) 65 shares of Preferred Stock reported to be beneficially owned by
2
Michael E.
Tennenbaum and Suzanne S. Tennenbaum, trustees of the Tennenbaum Living Trust, and (3) 43,885 shares of Preferred Stock reported to be beneficially owned by
Michael E. Tennenbaum, individually, is based on a Report on Form 4 dated February 12, 2003, which was filed with the SEC on February 13, 2003.
- (d)
- The
information with respect to 81,949 shares of Common Stock beneficially owned by John Hancock Financial Services, Inc. is based on a Report on Schedule 13G dated
December 31, 2001, which was filed with the SEC on February 1, 2002.
Security Ownership of Directors and Executive Officers
The following table sets forth information regarding the beneficial ownership of shares of Common Stock and Preferred Stock by each director, by current executive
officers named in the Summary Compensation Table on page 6 of this Report, and by all directors and current executive officers as a group. The information set forth below is current as of
March 7, 2003.
Certain Beneficial Owners of Shares of Common Stock of the Company
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Amount and Nature of
Beneficial Ownership
of Shares of
Common Stock
of the Company(a)
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Amount and Nature of
Beneficial Ownership
of Shares of
Preferred Stock
of the Company(a)
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Percent of
Common Stock
of the Company
(*Less than 1%)
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Percent of
Preferred Stock
of the Company
(*Less than 1%)
|
(i) |
|
Directors and Nominees for Director |
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James J. Maiwurm |
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3,000 |
|
0 |
|
* |
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* |
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Jon B. Bennett |
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2,000 |
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0 |
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* |
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* |
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John T. Grigsby, Jr. |
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3,000 |
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0 |
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* |
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* |
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Frank E. Williams, Jr. |
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8,000 |
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3,297 |
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* |
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* |
(ii) |
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Current Executive Officers |
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John T. Grigsby, Jr.
President and Chief Executive Officer |
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3,000 |
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0 |
|
* |
|
* |
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Marijo L. Ahlgrimm
Executive Vice President and Chief Financial Officer |
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0 |
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0 |
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* |
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* |
(iii) |
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All Directors and Current Executive Officers as a Group (5 Persons) |
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16,000 |
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3,297 |
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1.0 |
% |
* |
- (a)
- All
shares shown are held outright.
PROPOSAL 1ELECTION OF DIRECTORS
Jon B. Bennett, John T. Grigsby, Jr. and James J. Maiwurm have served as directors since the 2002 Annual Meeting of Shareholders. On
November 13, 2002, Mr. Frank E. Williams, Jr. was elected by the Board of Directors and became the fourth member of the Board. Consistent with the Bylaws of the Company,
the Board of Directors has fixed the size of the Board of Directors at four (4) members and has nominated Mr. Jon B. Bennett, Mr. John T. Grigsby, Jr.,
Mr. James J. Maiwurm and Mr. Frank E. Williams, Jr. for election to a one-year term ending at the 2004 Annual Meeting of Shareholders, and until their
successors are duly elected.
3
Nominees for Election to the Board of Directors
Each for a One-Year Term Expiring at the 2004 Annual Meeting of Shareholders
Jon B. Bennett, 46, director of Kaiser Holdings, has been a Director of Information Management at Devens Reserve Forces Training Area, a Department of the
Army installation, since 1998. Mr. Bennett has been a director of Kaiser Holdings since December 18, 2000. Mr. Bennett was Systems Administrator and Analyst at the then Fort
Devens from 1995 to 1997, and was the senior Budget Analyst at Fort Devens from 1990 to 1995. Mr. Bennett graduated from Bucknell University (B.A.). Entities managed by Bennett Management
Corporation, which is controlled by Mr. Bennett's brother, James Bennett, are significant holders of the Preferred Stock and Common Stock issued by Kaiser Holdings in April 2001,
as a result of being significant holders of subordinated notes of Kaiser Group International, Inc. ("Old Kaiser"). Mr. Bennett owns 2,000 shares of Common Stock and no shares of
Preferred stock.
John T.
Grigsby, Jr., 63, has been President and Chief Executive Officer of Kaiser Holdings since December 18, 2000, the effective date of Old Kaiser's Plan of
Reorganization (the "Plan"). Mr. Grigsby has been a director of Kaiser Holdings since May 2001 and also serves on the Board of Managers of Kaiser-Hill Company, LLC.
Mr. Grigsby is the President of John Grigsby and Associates, Inc., a firm which he founded in June 1984 to provide consulting assistance to financially distressed and reorganizing
companies. Mr. Grigsby has served as the Trustee for the Auto Works Creditors' Trust and has served as chief executive officer of a number of financially distressed companies, including Super
Shops, Inc., Auto Parts Club, Reddi Brake, Rose Auto Stores-Florida, Inc. as well as for a number of Chapter 11 debtors, including Pro Set, Inc., Lomas Financial
Corporation and Thomson McKinnon Securities, Inc. Mr. Grigsby owns 3,000 shares of Common Stock and no shares of Preferred stock.
James J.
Maiwurm, 54, Chairman of the Board of Directors of Kaiser Holdings, has been a partner of Squire, Sanders & Dempsey L.L.P., Washington, D.C. since
February 24, 2001. Mr. Maiwurm has been a director of Kaiser Holdings since December 18, 2000. He was President and Chief Executive Officer of Old Kaiser from April 19,
1999 until the effective date of the Plan, and served as Chairman of the Board of Directors of Old Kaiser from June 1999 until such effective date. Mr. Maiwurm serves on the Board of
Managers of Kaiser-Hill Company, LLC. From August 1998 until elected as Old Kaiser's President and Chief Executive Officer, Mr. Maiwurm was a partner of Squire,
Sanders & Dempsey L.L.P., Washington, D.C., and from 1990 to 1998 was a partner of Crowell & Moring LLP, Washington, D.C. Both law firms have served as counsel to Old
Kaiser, and Squire Sanders continues to serve as counsel to Kaiser Holdings. Mr. Maiwurm is a member of the Board of Trustees of Davis Memorial Goodwill Industries, Washington, D.C., a
non-profit entity, and the Boards of Directors of Workflow Management, Inc., an integrated graphic arts company providing documents, envelopes and commercial printing to businesses
in North American, the stock of which is traded on the NASDAQ National Market System, and Cortez III Service Corporation, a privately-held government services provider.
Mr. Maiwurm graduated from the College of Wooster (B.A.) and the University of Michigan (J.D.). Mr. Maiwurm owns 3,000 shares of Common Stock and no shares of Preferred stock.
Frank E.
Williams, Jr., 68, director of Kaiser Group Holdings, Inc., currently serves as chairman and principal owner of Williams Enterprises of
Georgia, Inc., a holding company controlling six subsidiaries active in various facets of the steel industry. In addition, Mr. Williams serves as Chairman, CEO, and
50-percent owner of Williams & Beasley Co., a major erector of steel products in the Southwestern US, and Chairman and a major shareholder of Wilfab, Inc., a fabricator of
structural steel. Mr. Williams serves as a member on the Board of Directors of Harbor Capital National Bank and Diamond Head Casino Corporation. Mr. Williams is also Managing Partner and
principal owner of Structural Concrete Products LLC (SCP), a manufacturer of prestressed concrete building systems, and
4
of Industrial Alloy Fabricators (IAF), a fabricator of alloy plate products for the pulp and chemical industries. Mr. Williams owns 8,000 shares of Common Stock and 3,297 shares of Preferred
Stock.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE NOMINEES SET FORTH ABOVE.
Information Regarding the Board of Directors
During the year ended December 31, 2002, the Board of Directors held five board meetings. All directors attended at least 75% of the 2002 meetings of the
Board of Directors and its committees they were eligible to attend.
To
assist the Board of Directors in carrying out its responsibilities, the Board of Kaiser Holdings has delegated certain authority to two committees, the current membership of which are
as follows.
Committees of the Board of Directors
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Compensation
Committee
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|
Audit
Committee
|
Mr. Bennett
Chairman
Mr. Williams |
|
Mr. Williams
Chairman
Mr. Bennett
Mr. Maiwurm |
Audit Committee. The Audit Committee is responsible for the selection, and reviews and accepts the reports, of the Company's
independent accountant. The Audit Committee met four times during the year ended December 31, 2002. The Board of Directors adopted a written charter for the Audit Committee during 2000.
Mr. Maiwurm
is not "independent" as defined in certain existing and proposed rules relating to the independence of directors because he was employed by the Company within the past
three years. Mr. Maiwurm is also a partner of Squire, Sanders & Dempsey L.L.P., a law firm that provides legal services to the Company. The Board determined to appoint
Mr. Maiwurm to the Audit Committee, notwithstanding his lack of "independence," because of the small size of the Board and in light of his background and experience.
Compensation Committee. The Compensation Committee (a) reviews and approves (or recommends to the entire Board of
Directors) the annual salary, bonus, and other benefits (direct and indirect) of the Chief Executive Officer and other executive officers, (b) reviews and submits to the full Board
recommendations concerning, and amendments to, new executive compensation or stock plans, and (c) establishes, and periodically reviews, the Company's policies in the area of management
perquisites. There were two meetings of the Compensation Committee during 2002.
Compensation of Non-employee Directors. Directors who are not employees of the Company ("Non-employee
Directors") are paid $1,000 for attendance at each meeting of the Board of Directors; they are paid $500 for attendance at each meeting of a committee of the Board of Directors of which the director
is a member. Effective January 1, 2003, the Chairperson of each committee is paid $750 for attendance at each Board committee meeting. In addition, each Non-employee Director
receives an annual retainer of $18,000 (increased to $20,000 effective January 1, 2003), payable in advance in quarterly installments, and is reimbursed for expenses incurred in connection with
Board service. Effective in January 2002 the Company adopted a practice of granting 1,000 shares of Common Stock to individuals who were members of the Company's Board of Directors during
January of each year. Assuming shareholder approval of the 2002 Equity Compensation Plan at the Annual Meeting, in the future such grants will be made pursuant to the terms of that plan. Directors who
are employees of the Company do not receive separate cash compensation for their service as directors.
5
Certain Business Relationships
Mr. Maiwurm, a director of the Company, is a partner of Squire, Sanders & Dempsey L.L.P., which serves as counsel to the Company. The dollar amount
of fees paid to Squire Sanders by the Company did not exceed 5% of Squire Sanders' gross revenues during its last full fiscal year.
EXECUTIVE COMPENSATION
The following table shows the compensation received by each person who served as executive officers of the Company during 2002, and the executive officers that
were serving as of December 31, 2002.
SUMMARY COMPENSATION TABLE
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|
Annual Compensation
|
|
All Other
Compensation
|
Name, Principal Position and Period Ended December 31,
|
|
Salary ($)
|
|
Bonus
($)(a)
|
|
Other
Annual
Compensation
|
|
(c)(d)
|
John T. Grigsby, Jr.,
President and Chief Executive Officer(c) |
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
$ |
213,461 |
|
$ |
250,000 |
|
$ |
4,900 |
(b) |
$ |
28,000 |
2001 |
|
$ |
361,541 |
|
|
0 |
|
|
0 |
|
$ |
28,958 |
2000 |
|
$ |
67,693 |
|
|
0 |
|
|
0 |
|
$ |
1,354 |
Marijo L. Ahlgrimm,
Executive Vice President and Chief Financial Officer(d) |
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
$ |
27,856 |
|
|
0 |
|
|
0 |
|
$ |
6,964 |
2001 |
|
$ |
180,768 |
|
$ |
25,000 |
|
|
0 |
|
$ |
36,802 |
2000 |
|
$ |
173,984 |
|
|
0 |
|
|
0 |
|
$ |
173,756 |
- (a)
- Cash
bonuses are reported for the year of service for which the cash bonus was earned, even if pre-paid or paid in a subsequent year.
- (b)
- Represents
the fair market value of 2,000 shares of Common Stock granted to Mr. Grigsby on January 15, 2002.
- (c)
- For
a description of the terms of an employment agreement entered into between Mr. Grigsby and the Company, see the discussion under "Employment Contracts and Termination of
Employment Arrangements" below. The amounts shown under "All Other Compensation" for Mr. Grigsby comprise the following:
2002 |
|
$ |
28,000 |
|
Company match under the Company's Section 401(k) Plan |
2001 |
|
$ |
26,250 |
|
Company match under the Company's Section 401(k) Plan |
|
|
$ |
2,708 |
|
Company Retirement Plan contribution for 2000 made in January 2001 |
2000 |
|
$ |
1,354 |
|
Company match under the Company's Section 401(k) Plan |
- (d)
- For
a description of the terms of the employment arrangements between Ms. Ahlgrimm and the Company, see the discussion under "Employment Contracts and Termination of Employment
6
Arrangements"
below. The amounts shown under "All Other Compensation" for Ms. Ahlgrimm comprise the following:
2002 |
|
$ |
6,964 |
|
Company match under the Company's Section 401(k) Plan |
2001 |
|
$ |
26,250 |
|
Company match under the Company's Section 401(k) Plan |
|
|
$ |
10,552 |
|
Company Retirement Plan contribution for 2000 made in January 2001 |
2000 |
|
$ |
2,660 |
|
Company match under the Company's Section 401(k) Plan |
|
|
$ |
9,896 |
|
Company Retirement Plan contribution for 1999 made in September 2000 |
|
|
$ |
161,200 |
|
Severance payment made in accordance with bankruptcy proceedings |
Option Grants in 2002 and Aggregated Option Exercises in 2002 and December 31, 2002 Option Values
There were no option grants to any of the named executive officers identified in the Summary Compensation Table on page 6 of this Proxy Statement during
the year ended December 31, 2002. There were no exercises of outstanding stock options held by any of the named executive officers identified in the Summary Compensation Table on page 6
of this Proxy Statement prior to December 18, 2000, upon which date any unexercised stock options were cancelled pursuant to Old Kaiser's bankruptcy Plan. There were no unexercised stock
options outstanding for stock of the Company as of December 31, 2002.
Employment Contracts and Termination of Employment Arrangements
John T. Grigsby, Jr. The Company entered into an employment agreement with Mr. Grigsby for his services as President and Chief Executive
Officer of Kaiser Holdings commencing on the effective date of Old Kaiser's bankruptcy Plan, December 18, 2000. The length of employment will be for an "evergreen" period of twelve months, such
that the remaining term of the agreement shall at all times be twelve months. In addition to delineating Mr. Grigsby's areas of responsibility, the agreement provides for a base annual salary
of $400,000, subject to adjustment from time to time throughout its duration. Either party may terminate the agreement, with or without "cause" or "good reason", upon sixty (60) days' prior
written notice. Effective January 1, 2002, Mr. Grigsby's salary was adjusted to $210,000. Mr. Grigsby is entitled to a bonus, up to a maximum of $500,000, based on the successful
resolution of claims in the Old Kaiser bankruptcy proceedings. In September 2002, Mr. Grigsby's employment agreement was amended to provide for incentive compensation equal to 5% of
(a) recoveries received after January 1, 2002 from certain claims, (b) assets made available to the Company from its captive insurance company in excess of $4 million, and
(c) monies from the
Company's claims reserve fund in excess of $9 million used to redeem the Company's Preferred Stock, provided that the total incentive
compensation payable to Mr. Grigsby in connection with these achievements will not exceed $200,000.
Marijo L.
Ahlgrimm. Payments to Ms. Ahlgrimm set forth in the Summary Compensation Table through August 31, 2001 were made pursuant to an employment agreement with
the Company that has expired. Effective September 1, 2001, Ms. Ahlgrimm became a variable part-time employee and is compensated at an hourly rate of $108 per hour.
7
REPORT OF COMPENSATION COMMITTEE
Through November 2002, the Compensation Committee was comprised of Messrs. Bennett and Maiwurm (Chair). Effective December 1, 2002, the Board
of Directors elected a new Compensation Committee of the Board of Directors comprised of Jon B. Bennett (Chair) and Frank E. Williams, Jr., neither of whom are, or have been,
employees of the Company.
The
Company's employee compensation policy is tailored to its unusual circumstances, which involve principally the management and resolution of claims arising out of the continuing
bankruptcy proceedings relating to Old Kaiser, negotiations and proceedings relating to the Nova Hut project, and participating in the affairs of Kaiser-Hill Company, LLC. The
Company's goal is to retain a sufficient number of employees necessary to carry out these activities and evaluate other opportunities the Company may want to pursue. The Board of Directors and the
Compensation Committee believe it is in the best interest of the Company to retain a small number of appropriately incentivized key employees knowledgeable of the business and affairs of Old Kaiser
and the ongoing bankruptcy claims resolution process.
The
Compensation Committee reviews the annual salary, incentive compensation and other benefits paid to the President and Chief Executive Officer and other persons designated as
executive officers under applicable SEC rules and regulations. In this connection, the Compensation Committee reviews employment agreements and other employment-related arrangements (both proposed and
existing) with persons who are or will become executive officers.
The
Compensation Committee annually reviews and approves the compensation of the Company's President and Chief Executive Officer. Effective upon the effectiveness of the Bankruptcy Plan
of Old Kaiser, the Company entered into an employment agreement with John T. Grigsby, Jr. as described on page 7 of this Proxy Statement. As described above, the Company
determined that signing an employment agreement with Mr. Grigsby, and securing his services to the Company for an "evergreen" period of twelve months, was in the best interest of the Company
and its stakeholders. The agreement recognized that the level of effort required on the part of Mr. Grigsby would likely be reduced with the passage of time, and expressly contemplated that
Mr. Grigsby's base compensation would be adjusted by mutual agreement of Mr. Grigsby and the Board of Directors of the Company from time to time. Consistent with this understanding,
Mr. Grigsby's base compensation was reduced from $400,000 per annum to $300,000 per annum effective June 30, 2001. Effective January 1, 2002, Mr. Grigsby's salary was
further reduced to $210,000.
Mr. Grigsby's
agreement contemplated that an appropriate incentive compensation program would be put in place for Mr. Grigsby. In May 2001, Mr. Grigsby's
employment agreement with the Company was amended to provide for incentive compensation equal to 5% of the amount by which total Class 4 Allowed Claims in Old Kaiser's bankruptcy proceeding are
less than $150,000,000, provided that such incentive compensation would not exceed $500,000. Consistent with the Company's desire to incentivize Mr. Grigsby and align his interests with those
of the shareholders, in September 2002 Mr. Grigsby's employment agreement was further amended to provide for incentive compensation equal to 5% of (a) recoveries received after
January 1, 2002 from certain claims, (b) assets made available to the Company from its captive insurance company in excess of $4 million, and (c) monies from the Company's
claims reserve fund in excess of $9 million used to redeem the Company's Preferred Stock, provided that the total incentive compensation payable
to Mr. Grigsby in connection with these achievements will not exceed $200,000.
In
November 2002, in light of the progress made in resolution of Class 4 Allowed Claims in Old Kaiser's bankruptcy proceedings, the Compensation Committee approved payment
to Mr. Grigsby of one-half of the bonus payable in connection with the resolution of such claims, or $250,000.
8
Finally,
the Company has adopted a practice of granting to Mr. Grigsby shares of Common Stock effective in January of each year, commencing in January of 2002. In
January 2002 Mr. Grigsby was granted 2,000 shares of Common Stock, and effective January 2003 he was granted an additional 1,000 shares of Common Stock. It is currently
anticipated that Mr. Grigsby and each member of the Board of Directors will continue to be granted 1,000 shares of Common Stock in January of each year. Assuming shareholder approval of the
2002 Equity Compensation Plan, in the future such grants will be made under that plan.
Submitted
by the Compensation Committee
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of Kaiser Holdings during January through November of 2002 was comprised of James J. Maiwurm and
Jon B. Bennett, neither of whom were
employees of the Company. James J. Maiwurm, currently a director of the Company, formerly held the position of President and Chief Executive Officer of Old Kaiser. Mr. Maiwurm ceased
holding such positions on December 18, 2000, the effective date of Old Kaiser's bankruptcy Plan. Mr. Maiwurm, a director of the Company, is a partner of Squire, Sanders &
Dempsey L.L.P., which serves as counsel to the Company.
In
November 2002, the Board of Directors elected a new Compensation Committee of the Board of Directors comprised of Jon B. Bennett as Chairperson and Frank E.
Williams, Jr., neither of whom are, or have previously been, employees of the Company.
PROPOSAL 2APPROVAL OF 2002 EQUITY COMPENSATION PLAN
General Information
On September 20, 2002, the Board of Directors of the Company approved the Kaiser Group Holdings, Inc. 2002 Equity Compensation Plan (the "Equity
Plan"), subject to approval by the shareholders. The purpose of the Equity Plan is to advance the long-term interest of the Company by (i) motivating key personnel by means of
long-term incentive compensation, (ii) furthering the identity of interests of participants with those of the shareholders of the Company through the ownership and performance of
Common Stock, and (iii) permitting the Company to attract and retain directors and key personnel upon whose judgment the successful conduct of the business of the Company largely depends. A
copy of the Equity Plan is attached to this Proxy Statement as Exhibit A.
The
Equity Plan authorizes the granting of options, which may be either Incentive Stock Options as defined under Section 422 of the Code of 1986, as amended (the "Code") ("ISOs")
or Non-Qualified Stock Options ("NQSOs"), stock appreciation rights ("SARs"), restricted stock awards ("RSAs"), phantom stock awards and performance shares to directors, eligible officers
and key employees of the Company and its subsidiaries upon such terms and subject to the conditions set forth in the Equity Plan. The Equity Plan authorizes the issuance of shares, options and other
equity instruments equivalent to 150,000 shares of Common Stock. Reference to an "Option" in this section means a NQSO or ISO.
As
described above under "Election of DirectorsInformation Regarding the Board of DirectorsCompensation of Non-Employee Directors" and "Report of
the Compensation Committee", the Company has adopted a practice of granting to each member of the Board of Directors (including the President and Chief Executive Officer, Mr. Grigsby) 1,000
shares of Common Stock in January of each year. Assuming shareholder approval of the Equity Plan, the Company plans to register with the
9
Securities and Exchange Commission the shares, options and other equity interests that may be granted under the Equity Plan, and future annual grants of shares to members of the Board of Directors
will be made under the Equity Plan.
At
the present time, absent an expansion of the Company's business activities, the Company does not have plans to make grants under the Equity Plan that are materially in excess of the
number of shares previously granted to members of the Board of Directors. However, the Board of Directors believes that grants to members of the Board of Directors and officers of the Company should
be made pursuant to a plan approved by the shareholders that includes a cap on the number of shares, options and other equity interests that may be granted thereunder.
Summary Description of Equity Plan
Administration. The Equity Plan is administered under the supervision of the Compensation Committee of the Board of Directors
(the "Committee").
Eligibility. Any Key Employee (as defined in the Equity Plan) or director of the Company is eligible to become a participant
in the Equity Plan.
Shares Available. Subject to the provisions of the Equity Plan providing for proportional adjustments in the event of various
changes in the capitalization of the Company, no more than the equivalent of 150,000 shares of authorized but unissued Common Stock may be issued pursuant to the Equity Plan. Any shares of Common
Stock that are not issued prior to the expiration of such awards will again be available for award under the Equity Plan, provided, however, that any portion of any award that has been settled by the
payment of cash or the issuance of shares of Common Stock, or a combination thereof, shall not be available for re-grant under the Equity Plan.
Adjustments. The Equity Plan provides for adjustments in the number of shares subject to the Equity Plan and subject to
outstanding ISOs, NQSOs, SARs, RSAs, phantom stock awards, or performance shares at the direction of the Committee, in the event of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the corporation structure or shares of the Company.
Termination and Amendments. The Board of Directors may terminate or amend the Equity Plan at any time. Except as provided
under "Adjustments" above, no amendment will, without the approval of the shareholders: (a) materially increase the benefits accruing to participants under the Equity Plan,
(b) materially increase the number of shares of Common Stock which may be issued under the Equity Plan, or (c) materially modify the requirements as to eligibility for participation in
the Equity Plan. Moreover, no action may be taken by the Company (without the consent of the participant) that will impair the validity of any award then outstanding or that will prevent any ISOs
issued or to be issued under this Equity Plan from being "incentive stock options" as defined under Section 422 of the Code or any successor provision.
Stock Options. Stock option awards may be granted in the form of ISOs and NQSOs. An option shall be exercisable in whole or
in such installments as may be determined by the Committee; provided, however, that no stock option shall be exercisable more than ten years after the date of grant. The Committee shall establish the
exercise price of the stock option, but such price may not be less than the per share fair market value of the Common Stock on the date of the grant, subject to certain adjustments.
Stock
options issued in the form of ISOs are also subject to certain additional limitations. ISOs shall be granted only to employees and must be granted within ten years of the date of
the Equity Plan. The aggregate fair market value of Common Stock with respect to which ISOs may become exercisable by an employee in any calendar year may not exceed $100,000 or such other number as
may
10
be applicable under the Code. Any incentive stock option granted to an employee who owned shares of the Company possessing more than 10% of the combined voting power of all classes of shares of the
Company, or of a parent or subsidiary of the Company, shall have an option price that is at least one hundred ten percent (110%) of the fair market value of the shares and shall not be exercisable
after five years from the date of grant.
Upon
exercise, a participant may pay the option exercise price of an ISO or NQSO in cash, or shares of Common Stock, SARs or a combination of the foregoing, or such other consideration
as the Committee may deem appropriate.
Stock Appreciation Rights. The Committee may grant participants SARs unrelated to options or related to options granted under
the Equity Plan. Upon exercise of a SAR, the participant is entitled to receive payment of an amount equal to the appreciation in market value of the shares as to which the SAR is awarded, as measured
by the difference between the price of such shares stated in the award (or option exercise price if the SAR is related to an option) and the fair market value of such shares at the date of exercise.
Restricted Stock Awards. The Committee may grant participants RSAs of shares of Common Stock. RSAs shall be subject to such
terms, conditions, restrictions or limitations as the Committee deems appropriate, including restrictions on transferability, requirements of continued employment or
individual performance or the financial performance of the Company. The Committee may grant to the participant to whom such restricted shares are awarded all or any of the rights of a shareholder with
respect to such shares, including the right to vote the shares and receive dividends.
Phantom Stock. The Committee may grant participants phantom stock awards, which entitle the participant to receive the market
value or the appreciation in value of an equivalent number of shares of Common Stock on a settlement date determined by the Committee. The Committee may, consistent with the Equity Plan, determine
such other terms, conditions, restrictions or limitations, if any, on any phantom stock award.
Performance Shares. The Committee may grant participants performance shares, which entitle the participant to receive a
certain number of shares of Common Stock based upon the participant's attainment of a predetermined performance target. The Committee may, consistent with the Equity Plan, determine such other terms,
conditions, restrictions or limitations, if any, on any award of performance shares.
Change in Control.
Stock Options. In the event of a "change in control" of the Company, ISOs or NQSOs not otherwise exercisable shall become fully
exercisable and, in
the discretion of the Committee, (a) the options shall be assumed, or an equivalent option substituted, by any successor corporation to the Corporation, or (b) the Company shall make
provisions for the Participant to exercise the options for a minimum of ten days prior to the change in control as to all shares subject to the options.
Stock Appreciation Rights. In the event of a "change in control" of the Company, SARs that are related to options shall become
exercisable to the
extent that the related stock option is exercisable. SARs that are unrelated to options that are not otherwise exercisable shall become fully exercisable upon such change of control.
Restricted Stock Awards. In the event of a "change of control" of the Company, all restrictions previously established with respect to
RSAs will
conclusively be deemed to have been satisfied, and participants will be entitled to have issued to them the shares of Common Stock described in the applicable award agreement.
11
Phantom Stock Awards. In the event of a "change of control" of the Company, all restrictions previously established with respect to
phantom stock
awards will conclusively be deemed to have been satisfied, and participants will be entitled to receive payment of cash or Common Stock as described in the applicable award agreement.
Performance Shares. In the event of a "change of control" of the Company, all previously established performance targets with respect to
performance
shares will conclusively be deemed to have been met, and participants will be entitled to have issued to them the pro-rata portion of the shares of Common Stock and/or cash as described in
the applicable award agreement.
Payment. Except as otherwise set forth above, the award agreements may provide that payment of awards may be made in cash,
Common Stock, a combination of cash and Common Stock, or any other form of property as the Committee shall determine. Further, the award agreements may provide for payment in the form of a lump sum or
installments, as determined by the Committee.
Federal Income Tax Effects of Incentive Stock Options. Counsel for the Company has advised that for federal income tax
purposes, under the existing statutes, regulations, and authorities:
(a) No
taxable income will result to an employee upon the grant of an ISO. Upon the exercise of an ISO, any excess of the fair market value of the Common Stock over the
option price is a tax preference item that may result in the imposition of the alternative minimum tax in the year of exercise. However, if any of such shares are disposed of by the employee in a
disqualifying disposition in the same taxable year as the exercise, there will be no item of tax preference as to such disposed shares, although the optionee will recognize ordinary income as
discussed below in paragraph (c). In cases where the exercise of the option does produce an item of tax preference, the basis of the shares of Common Stock for purposes of the alternative
minimum tax will include the amount of such tax preference item.
(b) On
the subsequent sale of the shares of Common Stock acquired by the exercise of an ISO, gain or loss will be recognized in an amount equal to the difference between the
amount realized on the sale and the employee's tax basis in the shares of Common Stock sold. The tax basis of the shares of Common Stock acquired solely for cash will be equal to the amount of cash
paid. If an ISO is exercised using previously acquired stock (or stock and cash) in payment, the employee's tax basis for the number of the shares of Common Stock received equal to the number used in
payment shall be the same as the employee's basis in the stock used as payment. The employee's aggregate tax basis in any additional shares of Common Stock received will be equal to the amount of cash
paid (if any).
(c) If
a disposition of the shares of Common Stock does not take place until more than two years after grant and more than one year after exercise of the option, any gain or
loss realized will be treated as long-term capital gain or loss. Under such circumstances, the Company will not be entitled to a deduction for income tax purposes in connection with the
exercise of the option. If a disposition occurs within two years after grant or one year after exercise of the option, the difference between the fair market value of the Common Stock on the date of
exercise (or, in certain cases, the amount realized on disposition if less than the market value on the date of exercise) and the employee's tax basis in the shares of Common Stock sold is taxable as
compensation income to the employee and is deductible by the Company for federal income tax purposes. Any additional amount realized on the disposition will be taxed as either long-term or
short-term capital gain.
(d) If
the option price of an ISO is paid by using shares of Common Stock which were themselves acquired upon the exercise of an ISO ("Payment Shares") and the Payment
Shares have not been held for more than one year from exercise and two years from grant, the transfer of such Payment Shares to exercise an ISO will be treated as a "disposition" of such Payment
Shares.
12
Upon such disposition, the excess of the fair market value of the Payment Shares on the date they had originally been acquired (or, if less, the fair market value of the Payment Shares on the date of
disposition) over the employee's tax basis in such Payment Shares is taxable as compensation income to the employee and is deductible by the Company.
Federal Income Tax Effects of Nonstatutory Stock Options. Counsel for the Company has advised that for federal income tax
purposes, under the existing statutes, regulations, and authorities:
(a) No
taxable income will result to an employee upon the grant of a NQSO.
(b) Upon
the exercise of a NQSO by an employee, the employee will recognize ordinary income in an amount equal to the excess of the fair market value of the Common Stock at
the date of exercise over the option price. If payment of the option price is made by delivering shares of Common Stock with a fair market value equal to such option price, the employee will realize
ordinary income in an amount equal to the fair market value of the "additional shares" received (i.e., the excess of the number of shares of Common
Stock received over the number surrendered) less any cash paid on exercise of the option (which is the same amount of ordinary income as if the option price were paid entirely in cash). Such ordinary
income constitutes compensation income subject to withholding, and is deductible by the Company on its tax return.
(c) On
the subsequent sale of the shares of Common Stock, gain or loss will be recognized in an amount equal to the difference between the tax basis thereof and the amount
realized on such sale. The tax basis of the shares of Common Stock acquired by a cash payment of the option price (and the tax basis of any "additional shares" received where the option price is paid
by delivering shares of
Common Stock) will be the fair market value thereof on the date of exercise. The tax basis of the shares of Common Stock received equal in number to those surrendered where the option price is paid by
delivering shares of Common Stock will be the same as that of the shares of Common Stock surrendered. If the shares of Common Stock are held for more than one year, any such gain or loss will be
treated as long-term capital gain or loss.
Federal Income Tax Effects of Stock Appreciation Rights. As to SARs, counsel for the Company has advised that for federal
income tax purposes, under the existing statutes, regulations, and authorities:
(a) No
taxable income will result upon the grant of a SAR.
(b) If
an employee surrenders either an ISO or a NQSO or portion thereof upon the exercise of a SAR, the employee will recognize compensation income (subject to withholding)
in an amount equal to the sum of the cash received and the fair market value of the Common Stock received. The Company will be entitled to a deduction in the same amount.
(c) On
the subsequent sale of the shares of Common Stock acquired by exercise of a SAR, gain or loss will be recognized in an amount equal to the difference between the fair
market value of the Common Stock on the date of exercise and the amount realized on such sale. If the shares of Common Stock are held for more than one year, any such gain or loss will be treated as
long-term capital gain or loss.
Federal Income Tax Effects of Restricted Stock Awards. As to RSAs, counsel for the Company has advised that for federal
income tax purposes, under the existing statutes, regulations, and authorities:
(a) No
taxable income will result to an employee upon the grant of a RSA.
(b) The
employee would generally realize compensation income (subject to withholding) in the year the shares of Common Stock covered by the award become free of
restrictions, in an amount equal to the fair market value of the shares on the date they become free of restrictions.
(c) The
Company would receive an equivalent deduction.
13
(d) If
the employee later sells the stock, any further gain would be capital gain.
(e) An
employee may elect, pursuant to Section 83(b) of the Code, to be taxed with respect to a RSA at the time of grant, based on the value of the Common Stock at
such time. Such election must be filed within thirty (30) days of the grant. If such an election is filed, the Company will be entitled to an equivalent deduction at such time.
Federal Income Tax Effects of Phantom Stock Awards. As to phantom stock, counsel for the Company has advised that for federal
income tax purposes, under the existing statutes, regulations, and authorities,
(a) No
taxable income will result to a participant upon the grant of a phantom stock award.
(b) The
employee would generally realize compensation income (subject to withholding) in the year in which the settlement date of the phantom stock award occurs, in an
amount equal to the sum of the cash received and the fair market value of any shares of Common Stock received.
(c) The
Company would receive an equivalent deduction.
Federal Income Tax Effects of Performance Shares. As to performance shares, counsel for the Company has advised that for
federal income tax purposes, under the existing statutes, regulations, and authorities:
(a) No
taxable income will result to a participant upon the grant of a performance shares.
(b) The
employee will recognize compensation income (subject to withholding) in an amount equal to the sum of the cash received and the fair market value of any shares of
Common Stock received.
(c) The
Company will be entitled to a deduction in the same amount.
Awards Under the Equity Plan. No awards of ISOs, NQSOs, SARs, RSAs, phantom stock awards or performance share awards have
been issued under the Equity Plan prior to the solicitation of shareholder approval.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE 2002 EQUITY COMPENSATION PLAN. AN AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES PRESENT IN PERSON OR REPRESENTED BY
PROXY AT THE ANNUAL MEETING IS REQUIRED FOR APPROVAL OF THIS PROPOSAL.
AUDIT COMMITTEE REPORT AND INDEPENDENT ACCOUNTANT
The Audit Committee has reviewed and discussed with the Company's management and PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") the audited
consolidated financial statements of the Company contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. The Audit Committee has also
discussed with PricewaterhouseCoopers the matters required to be discussed pursuant to SAS No. 61Codification of Statements on Auditing Standards, AU Section 380, as
modified or supplemented, which includes, among other things, matters related to the conduct of the audit of the Company's consolidated financial statements.
The
Audit Committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers required by Independence Standards Board No. 1 (Independence
Discussions with Audit Committees), as may be modified or supplemented, and has discussed with PricewaterhouseCoopers its independence from the Company.
14
The
Company's Audit Committee has not yet enacted pre-approval policies and procedures for audit and non-audit services. Therefore, the disclosure herein does not
include pre-approval policies and procedures and related information. However, consistent with rules presently in effect and to become effective later this year, the Company is disclosing
below fees paid to PricewaterhouseCoopers during the past two fiscal years under the heading "Independent Accountant's Fees." The Audit Committee has considered and determined that the provision of
services represented by the fees disclosed below is compatible with maintaining the independence of PricewaterhouseCoopers.
Based
on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the
Company's
Annual Report on Form 10-K for the year ended December 31, 2002, as filed with the SEC on March 31, 2003.
Submitted
by the Audit Committee
The information contained in the above report shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission, nor shall such
information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.
15
Aggregate fees for professional services rendered by PricewaterhouseCoopers as of or for the years ended December 31, 2002 and 2001, were:
|
|
Fiscal 2002
|
|
Fiscal 2001
|
Audit Fees |
|
|
|
|
|
|
|
Annual audit of Kaiser Group Holdings, Inc.** |
|
$ |
70,000 |
|
$ |
70,750 |
|
Audit of Kaiser Netherlands, BV** |
|
|
|
|
|
28,070 |
|
Quarterly review procedures** |
|
|
27,375 |
|
|
29,865 |
|
Registration Statement on Form S-4 |
|
|
31,350 |
|
|
|
|
|
|
|
|
|
|
|
128,725 |
|
|
128,685 |
|
|
|
|
|
Audit Related Fees |
|
|
|
|
|
|
|
Employee benefit plans |
|
|
|
|
|
43,250 |
|
HR consultingCzech Republic |
|
|
|
|
|
7,887 |
|
|
|
|
|
|
|
|
|
|
|
51,137 |
|
|
|
|
|
Tax Fees |
|
|
|
|
|
|
|
Tax compliance work |
|
|
|
|
|
300,000 |
|
Expatriate tax services |
|
|
6,323 |
|
|
31,140 |
|
Tax consultingCzech Republic |
|
|
13,470 |
|
|
4,685 |
|
Other |
|
|
|
|
|
1,365 |
|
|
|
|
|
|
|
|
19,793 |
|
|
337,190 |
|
|
|
|
|
All Other Fees |
|
|
|
|
|
|
|
Financial Information Systems Design and Implementation Fees |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
148,518 |
|
$ |
517,012 |
|
|
|
|
|
- **
- The
amounts included in Audit Fees are the fees billed for the respective years for the annual audit of the Company's financial
statements and the review of quarterly financial statements and regulatory filings. The amounts included in each of the other categories are the fees billed in the respective years.
A representative of PricewaterhouseCoopers will be present at the Annual Meeting. The representative will be given an opportunity to make a statement if he or she
desires to do so and will be available to answer appropriate questions from shareholders.
16
COMPARISON OF TOTAL SHAREHOLDER RETURN
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2002
The
graph plots cumulative total return on a $100 investment in Kaiser Group Holdings, Inc. Common Stock for the past five years. The S&P 500 Index and group of peer issuers are
shown for comparison and include reinvestment of dividends where applicable. The peer issuers were selected because of the similarity of business elements and contracts held with the U.S. Department
of Energy. These peer issuers include the following six companies: Flour Corporation, Foster Wheeler Ltd., Jacobs Engineering Group, Inc., The Shaw Group, Inc., TRC
Companies, Inc. and Washington Group International, Inc.
|
|
Cumulative Total Return
|
|
|
1998
|
|
1999
|
|
2000
|
|
2001
|
|
2002
|
Kaiser Group Holdings, Inc. |
|
$ |
33.82 |
|
$ |
8.82 |
|
$ |
0.35 |
|
$ |
1.72 |
|
$ |
2.36 |
S&P 500 |
|
$ |
210.84 |
|
$ |
255.22 |
|
$ |
231.98 |
|
$ |
166.24 |
|
$ |
97.11 |
Peer Issuers Only |
|
$ |
63.62 |
|
$ |
64.19 |
|
$ |
49.66 |
|
$ |
79.30 |
|
$ |
89.89 |
Peer Issuers plus Kaiser Group Holdings, Inc. |
|
$ |
63.27 |
|
$ |
63.47 |
|
$ |
49.02 |
|
$ |
78.83 |
|
$ |
89.09 |
17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The U.S. Securities and Exchange Commission (the "SEC") requires public companies to tell their shareholders when certain persons fail to report their
transactions in the company's equity securities to the SEC on a timely basis. Based upon a review of SEC Forms 3, 4, and 5 furnished to the Company, and based on representations that no
Forms 3, 4, and 5 other than those already filed were required to be filed, the Company believes that all Section 16(a) filing requirements applicable to officers, directors and
beneficial owners of more than 10% of the equity securities of Kaiser Holdings were timely met during the year ended December 31, 2002.
OTHER MATTERS
The 2004 Annual Meeting of Shareholders of the Company has not yet been scheduled, but is presently expected to be held during May or June 2004.
Nominations of persons for election as directors of the Company may be made by or at the direction of the directors, by any nominating committee or other person
appointed by the directors, or by any shareholder of the Company entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in Section 2.2
of the Company's Bylaws. Such nominations, other than those made by or at the direction of the directors, must be made pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a shareholder's notice must be received at the Company's principal executive offices, 9302 Lee Highway, Fairfax, Virginia 22031, not less than 60 days nor more than
90 days prior to the meeting. In the event that less than 75 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, to be timely the notice
must be received not later than the close of business on the fifteenth day following the date on which such
notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. A shareholder's notice of nomination must set forth:
(a) as
to each person who is not an incumbent director whom a shareholder proposes to nominate for election or re-election as a director:
(i) the
name, age, business address, and residence address of such person,
(ii) the
principal occupation or employment of such person,
(iii) the
class and number of shares of capital stock of the Company which are beneficially owned by such person, and
(iv) any
other information relating to such person that is required to be disclosed in solicitation for proxies for elections of directors pursuant to the rules and
regulations of the SEC under the Securities Exchange Act of 1934, as amended, and
(b) as
to the shareholder giving the notice:
(i) the
name and record address of such shareholder, and
(ii) the
class and number of shares of capital stock of the Company which are beneficially owned by such shareholder.
Such
notice shall be accompanied by the written consent of each proposed nominee to serve as a director of the Company if elected. The Company may require any proposed nominee to furnish
such other information as reasonably may be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company. Persons nominated by shareholders for
election as a director will not be eligible to serve as a director unless nominated in accordance with the foregoing procedures.
18
Shareholders interested in submitting a proposal for inclusion in the proxy materials for the 2004 Annual Meeting of Shareholders may do so by following the
procedures prescribed in SEC Rule 14a-8 and Section 1.4 of the Company's Bylaws. To be properly brought before a meeting of shareholders, business must be
(a) specified in the notice of the meeting given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board
of Directors, or (c) otherwise properly brought before the meeting by a shareholder. In addition to the requirements of SEC Rule 14a-8, for business to be properly brought
before a meeting of shareholders by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, such notice must be received at the
Company's principal executive offices, 9302 Lee Highway, Fairfax, Virginia 22031, not less than 60 days nor more than 90 days prior to the meeting. In the event that less than
75 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, to be timely notice must be received by the Company not later than the close of business
on the fifteenth day following the date on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. A shareholder's notice with respect to
other business to be brought before the 2004 Annual Meeting by such shareholder must set forth as to each matter of business:
(a) a
brief description of such business and the reasons for conducting it at the meeting,
(b) the
name and address of the shareholder proposing such business,
(c) the
class, series, and number of shares of the capital stock of the Company beneficially owned by such shareholder, and
(d) any
material interest of such shareholder in such business.
19
Proxy Solicited on Behalf of the Board of Directors of the Company for the
Annual Meeting of Shareholders on Wednesday, May 7, 2003
P
R
O
X
Y |
|
The undersigned hereby constitutes and appoints Jon B. Bennett and Frank E. Williams, Jr. and each of them, his true and lawful agents and proxies with full powers of substitution in each, to represent the
undersigned at the Annual Meeting of Shareholders of KAISER GROUP HOLDINGS, INC., 9302 Lee Highway, Fairfax, Virginia on Wednesday, May 7, 2003, at 10:30 a.m., and at any adjournments thereof, on all matters coming before said
meeting.
This Proxy, when properly executed, will be voted in the manner directed by the Shareholder. If no direction is given, this Proxy will be voted FOR all nominees listed in item 1 and FOR item 2, approval of
the 2002 Equity Compensation Plan |
ý |
|
Please mark your votes as in this example |
The Board of Directors recommends a vote FOR the election of each director.
|
|
|
|
FOR all nominees
(except as marked
to the contrary |
|
WITHHELD
AUTHORITY
to vote for all
nominees |
|
|
|
|
1. |
|
ELECTION OF DIRECTORS |
|
o |
|
o |
|
Jon B. Bennett
John T. Grigsby, Jr.
James J. Maiwurm and
Frank E. Williams, Jr. |
(Instruction: If you wish to withhold authority to vote for any individual nominee, line through the nominee's name listed above.) |
|
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
|
2. |
|
APPROVAL OF THE 2002 EQUITY COMPENSATION PLAN |
|
o |
|
o |
|
o |
|
|
NOTE: Please sign the full name in which your stock is registered. Joint owners must sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
The
signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof.
EXHIBIT A
KAISER GROUP HOLDINGS, INC.
2002 EQUITY COMPENSATION PLAN
(Adopted September 20, 2002; Approved by
Shareholders , 2003)
1. Purpose
The purpose of the Plan is to advance the long-term interests of Kaiser Group Holdings, Inc. by (i) motivating key personnel by means of
long-term incentive compensation, (ii) furthering the identity of interests of participants with those of the shareholders of the Corporation through the ownership and performance
of the Common Stock of the Corporation, and (iii) permitting the Corporation to attract and retain directors and key personnel upon whose judgment the successful conduct of the business of the
Corporation largely depends. Toward this objective, the Committee may grant stock options, stock appreciation rights, restricted stock awards, phantom stock and/or performance shares to key employees
of, and consultants to, the Corporation and its Subsidiaries, and to non-employee directors of the Corporation, on the terms and subject to the conditions set forth in the Plan.
2. Definitions
2.1 "Administrative
Policies" means the administrative policies and procedures adopted and amended from time to time by the Committee to administer the Plan.
2.2 "Award"
means any form of stock option, stock appreciation right, restricted stock award, phantom stock or performance share granted under the Plan, whether singly, in
combination, or in tandem, to a Participant by the Committee pursuant to such terms, conditions, restrictions and limitations, if any, as the Committee may establish by the Award Agreement or
otherwise.
2.3 "Award
Agreement" means a written agreement with respect to an Award between the Corporation and a Participant establishing the terms, conditions, restrictions and
limitations applicable to an Award. To the extent an Award Agreement is inconsistent with the terms of the Plan, the Plan shall govern the rights of the Participant thereunder.
2.4 "Board"
means the Board of Directors of the Corporation.
2.5 "Change
In Control" means a change in control of the Corporation of a nature that would be required to be reported (assuming such event has not been previously reported)
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act (or a successor provision thereto), provided that, without limitation, a Change In Control
shall be deemed to have occurred at such time after September 20, 2002 as (i) any "person", within the meaning of
Section 14(d) of the Exchange Act, becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 50% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors cease for any
reason to constitute at least a majority thereof unless the election or the nomination for election, by the Corporation's shareholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the beginning of the period.
2.6 "Change
In Control Price" means the higher of (i) the mean of the high and low trading prices for the Corporation's Common Stock on the Stock Exchange on the date
of determination of the Change In Control or (ii) the highest price per share actually paid for the Common Stock in connection with the Change In Control of the Corporation.
2.7 "Code"
means the Internal Revenue Code of 1986, as amended from time to time.
A-1
2.8 "Committee"
means the Compensation Committee of the Board, or such other committee designated by the Board, authorized to administer the Plan under Section 3
hereof. The Committee, in its discretion, may delegate to a senior executive officer of the Corporation all or part of the Committee's authority and duties with respect to Awards to individuals who
are not subject to the
reporting and other provisions of Section 16 of the Exchange Act. In the event of any such delegation, references herein to the "Committee" shall, to the extent of such permitted delegation, be
deemed to be references to such senior executive officer as well. The Committee may revoke or amend the terms of a delegation at any time, but such action shall not invalidate any prior actions of any
such senior executive officer that were consistent with the terms of the Plan.
2.9 "Common
Stock" means Common Stock, par value $.01, of the Corporation.
2.10 "Corporation"
means Kaiser Group Holdings, Inc.
2.11 "Exchange
Act" means the Securities Exchange Act of 1934, as amended.
2.12 "Key
Employee" means an employee of the Corporation or a Subsidiary who holds a position of responsibility in a managerial, administrative or professional capacity, or
a consultant to the Corporation, in either case whose performance, as determined by the Committee in the exercise of its sole and absolute discretion, can have a significant effect on the growth,
profitability and success of the Corporation.
2.13 "Participant"
means any individual to whom an Award has been granted by the Committee under this Plan.
2.14 "Plan"
means the Kaiser Group Holdings, Inc. 2002 Equity Compensation Plan, as amended from time to time.
2.15 "Stock
Exchange" means the exchange, automatic quotation system or such other market price reporting system on which the Common Stock is traded or quoted designated by
the Committee after it determines that such other system is both reliable and reasonably accessible.
2.16 "Subsidiary"
means a corporation or other business entity in which the Corporation directly or indirectly owns fifty percent (50%) or more of the voting equity.
3. Administration
(a) The
Plan shall be administered under the supervision of the Committee composed of not less than two directors, each of whom shall be a "Non-Employee
Director" under Rule 16b-3 under the Exchange Act or any successor rule or act.
(b) Members
of the Committee shall serve at the pleasure of the Board of Directors, and may resign by written notice filed with the Chairman or the Secretary of the
Corporation.
(c) A
vacancy in the membership of the Committee shall be filled by the appointment of a successor member by the Board of Directors. Until such vacancy is filled, the
remaining members shall constitute a quorum and the action at any meeting of a majority of the entire Committee, or an action unanimously approved in writing, shall constitute action of the Committee.
Subject to the express provisions of this Plan, the Committee shall have conclusive authority to construe and interpret the Plan, any Award Agreement entered into hereunder and to establish, amend and
rescind Administrative Policies for the administration of this Plan and shall have such additional authority as the Board of Directors may from time to time determine to be necessary or desirable.
4. Eligibility
Any Key Employee or director of the Corporation is eligible to become a Participant in the Plan.
A-2
5. Shares Available
(a) Shares
of Common Stock available for issuance under the Plan may be authorized and unissued shares or treasury shares. Subject to the adjustments provided for in
Sections 17 and 18 hereof:
(i) The
maximum number of shares of Common Stock available for grant of Awards under the Plan during shall be 150,000;
(ii) Not
more than 125,000 shares of Common Stock shall be available for the award of incentive stock options under the Plan; and
(iii) The
maximum number of shares that may be covered by stock options granted under the Plan to any Participant in any one calendar year shall be 35,000.
(b) For
purposes of calculating the number of shares of Common Stock deemed to be granted hereunder, each Award, whether denominated in stock options, stock appreciation
rights, restricted stock, performance shares or phantom stock, shall be deemed to be a grant of a number of shares of Common Stock equal to the number of shares represented by the stock options,
shares of restricted stock, performance shares, shares of phantom stock or stock appreciation rights set forth in the Award, provided, however:
(i) in
the case of any Award as to which the exercise of one right nullifies the exercisability of another (including, by way of illustration the grant of a stock option
with Tandem SARs (as hereinafter defined)), the number of shares deemed to have been granted shall be the maximum number of shares (and/or cash equivalents) that could have been acquired upon the
maximum exercise or settlement of the Award; and
(ii) in
the case of performance share awards providing for payments in excess of 100% of the number of shares set forth in the Award Agreement, the number of shares granted
shall be deemed to be the maximum number of shares (and/or the cash equivalent thereof) issuable under the Award at the highest level of performance.
(c) Any
shares for which an Award is granted hereunder that are released from such Award for any reason shall become available for other Awards to be granted under the Plan.
Notwithstanding the foregoing, for purposes of calculating the number of shares available for regrant in any year, the portion of any Award that has been settled by the payment of cash or the issuance
of shares of Common Stock, or a combination thereof, shall not be available for re-grant under the Plan, irrespective of the value of the settlement or the method of its payment. The
settlement of an Award shall not be deemed to be the grant of an Award hereunder.
6. Term
The Plan shall become effective as of September 20, 2002 subject to approval of the Plan by the Corporation's shareholders. No Awards shall be exercisable
or payable before approval of the Plan has been obtained from the Corporation's shareholders. Any Award made under the Plan prior to the date of approval by the shareholders shall be void if
shareholder approval is not obtained.
7. Participation
The Committee shall select, from time to time, Participants from directors and those Key Employees who, in the opinion of the Committee, can further the Plan's
purposes, and the Committee shall determine the type or types of Awards to be made to the Participant. The terms, conditions and restrictions of each Award shall be set forth in an Award Agreement.
A-3
8. Stock Options
(a) Grants. Awards may be granted in the form of stock options. Stock options may be incentive stock options
within the meaning of section 422 of the Code or non-statutory stock options (i.e., stock options which are not incentive stock options), or a combination of both, or any particular
type of tax advantage option authorized by the Code from time to time.
(b) Terms and Conditions of Options. An option shall be exercisable in whole or in such installments and at such
times as may be determined by the Committee; provided, however, that no stock option shall be exercisable more than ten (10) years after the date
of grant thereof. The option exercise price shall be established by the Committee, but such price shall not be less than the per share fair market value of the Common Stock, as determined by the
Committee, on the date of the stock option's grant subject to adjustment as provided in Sections 17 or 18 hereof.
(c) Restrictions Relating to Incentive Stock Options. Stock options issued in the form of incentive stock
options shall, in addition to being subject to all applicable terms, conditions, restrictions and/or limitations established by the Committee, comply with section 422 of the Code. Incentive
Stock Options shall be granted (i) only to employees of the Corporation and its subsidiaries within the meaning of section 424 of the Code and (ii) within ten (10) years
after the date of adoption of this Plan. The aggregate fair market value (determined as of the date the option is granted) of shares with respect to which incentive stock options are exercisable for
the first time by an individual during any calendar year (under this Plan or any other plan of the Corporation or any Subsidiary which provides for the granting of incentive stock options) may not
exceed $100,000 or such other number as may be applicable under the Code from time to time. Any incentive stock option that is granted to any employee who is, at the time the option is granted, deemed
for purposes of section 422 of the Code, or any successor provision, to own shares of the Corporation possessing more than ten percent of the total combined voting power of all classes of
shares of the Corporation or of a parent or subsidiary of the Corporation, shall have an option exercise price that is at least one hundred ten percent (110%) of the fair market value of the shares at
the date of grant and shall not be exercisable after the expiration of five years from the date it is granted.
(d) Additional Terms and Conditions. The Committee may, by way of the Award Agreement or otherwise, establish
such other terms, conditions, restrictions and/or limitations, if any, on any stock option Award, provided they are not inconsistent with the Plan.
(e) Payment. Upon exercise, a Participant may pay the option exercise price of a stock option in cash or shares
of Common Stock, Stock Appreciation Rights or a combination of the foregoing, or such other consideration as the Committee may deem appropriate. The Committee shall establish appropriate methods for
accepting Common Stock and may impose such conditions as it deems appropriate on the use of such Common Stock to exercise a stock option.
9. Stock Appreciation Rights
(a) Grants. Awards may be granted in the form of stock appreciation rights ("SARs"). SARs shall entitle the
recipient to receive a payment equal to the appreciation in market value of a stated number of shares of Common Stock from the price stated in the Award Agreement to the market value of the Common
Stock on the date of exercise or surrender. An SAR may be granted in tandem with all or a portion of a related stock option under the Plan ("Tandem SARs"), or may be granted separately ("Freestanding
SARs"). A Tandem SAR may be granted either at the time of the grant of the related stock option or at any time thereafter during the term of the stock option. An SAR may be exercised no sooner than
six months after it is granted. In the case of SARs granted in tandem with stock options granted prior to the grant of such SARs, the appreciation in value shall be appreciation from the option
exercise price of such related stock option to the market value of the Common Stock on the date of exercise.
A-4
(b) Terms and Conditions of Tandem SARs. Subject to limitations contained in the preceding paragraph, a Tandem
SAR shall be exercisable to the extent, and only to the extent, that the related stock option is exercisable. Upon exercise of a Tandem SAR as to some or all of the shares covered by an Award, the
related stock option shall be cancelled automatically to the extent of the number of SARs exercised, and such shares shall not thereafter be eligible for grant under Section 5 hereof.
(c) Terms and Conditions of Freestanding SARs. Freestanding SARs shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee. The base price of a Freestanding SAR shall also be determined by the Committee; provided,
however, that such price shall not be less that the fair market value of the Common Stock, as determined by the Committee, on the date of the award of the Freestanding SAR.
(d) Deemed Exercise. The Committee may provide that an SAR shall be deemed to be exercised at the close of
business on the scheduled expiration date of such SAR, if at such time the SAR by its terms is otherwise exercisable and, if so exercised, would result in a payment to the participant.
(e) Additional Terms and Conditions. The Committee may, consistent with the Plan, by way of the Award Agreement
or otherwise, determine such other terms, conditions, restrictions and/or limitations, if any, on any SAR Award, including but not limited to determining the manner in which payment of the
appreciation in value shall be made.
10. Restricted Stock Awards
(a) Grants. Awards may be granted in the form of Restricted Stock Awards. Restricted Stock Awards shall be
awarded in such numbers and at such times as the Committee shall determine.
(b) Award Restrictions. Restricted Stock Awards shall be subject to such terms, conditions, restrictions, or
limitations as the Committee deems appropriate including, by way of illustration but not by way of limitation, restrictions on transferability, requirements of continued employment or individual
performance or the financial performance of the Corporation. The Committee may modify, or accelerate the termination of, the restrictions applicable to a Restricted Stock Award under such
circumstances as it deems appropriate.
(c) Rights as Shareholders. During the period in which any restricted shares of Common Stock are subject to the
restrictions imposed under the preceding paragraph, the Committee may, in its discretion, grant to the Participant to whom such restricted shares have been awarded all or any of the rights of a
shareholder with respect to such shares, including, by way of illustration but not by way of limitation, the right to vote such shares and to receive dividends.
(d) Evidence of Award. Any Restricted Stock Award granted under the Plan may be evidenced in such manner as the
Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates.
11. Phantom Stock
(a) Grants. Awards may be granted in the form of Phantom Stock Awards. Phantom Stock Awards shall entitle the
Participant to receive the market value or the appreciation in value of an equivalent number of shares of Common Stock on a settlement date determined by the Committee.
(b) Additional Terms and Conditions. The Committee may, consistent with the plan, by way of Award Agreement or
otherwise, determine such other terms, conditions, restrictions or limitations, if any, on any Award of Phantom Stock.
A-5
12. Performance Shares
(a) Grants. Awards may be granted in the form of performance shares. "Performance Shares" means interests the
entitlement to which is based upon the attainment of predetermined Performance Targets as hereinafter defined during a Performance Period as hereinafter defined. At the end of the Performance Period,
Performance Shares shall be converted into Common Stock (or Common Stock and cash, as determined by the Award Agreement) and distributed to Participants based upon such entitlement.
(b) Performance Criteria. The Committee may grant an Award of Performance Shares to Participants as of the first
day of each Performance Period. As used herein, the term "Performance Period" means the period during which a Performance Target is measured and the term "Performance Target" means the predetermined
goals established by the Committee. A Performance Target will be established at the beginning of each Performance Period. If at the end of the Performance Period, the Performance Target is fully met,
the Performance Shares will be converted 100% into shares of Common Stock (or the cash equivalent thereof, as determined by the Award Agreement) and issued to the Participant. Award payments in excess
of 100% shall be permitted based upon an attainment in excess of 100% of the Performance Target. If the Performance Target has not been fully met, Performance Shares will be converted and delivered
only to the extent, if any, provided at the time of the grant of such Award for conversion based upon partial attainment of the Performance Target and the balance of the Performance Shares will be
forfeited to the Corporation and available for reissuance pursuant to Section 5 hereof. Award payments made in cash rather than the issuance of Common Stock shall not, by reason of such payment
in cash, result in additional shares being available for reissuance pursuant to Section 5 hereof.
(c) Additional Terms and Conditions. The Committee may, consistent with the terms of this Plan, by way of the
Award Agreement or otherwise, determine the manner of payment of Awards of Performance Shares and other terms, conditions, restrictions or limitations, if any, on any Award of Performance Shares.
13. Payment of Awards
Except as otherwise provided herein Award Agreements may provide that, at the discretion of the Committee, payment of Awards may be made in cash, Common Stock, a
combination of cash and Common Stock, or any other form of property as the Committee shall determine. Further, the terms of Award Agreements may provide for payment of Awards in the form of a lump sum
or installments, as determined by the Committee.
14. Dividends and Dividend Equivalents
If an Award is granted in the form of a Restricted Stock Award, Phantom Stock Award or a Freestanding SAR, the Committee may choose, at the time of the grant of
the Award, to include as part of such Award an entitlement to receive dividends or dividend equivalents, subject to such terms, conditions, restrictions or limitations, if any, as the Committee may
establish. Dividends and dividend equivalents shall be paid in such form and manner and at such time as the Committee shall determine. All dividends or dividend equivalents which are not paid
currently may, at the Committee's discretion, accrue interest or be reinvested into additional shares of Common Stock.
15. Termination of Employment
The Committee may adopt Administrative Policies determining the entitlement of Participants who cease to be employed by either the Corporation or Subsidiary
whether because of death, disability, resignation, termination or retirement pursuant to an established retirement plan or policy of the
A-6
Corporation or of its applicable Subsidiary. Such matters may also be dealt with under the terms of Award Agreements.
16. Assignment and Transfer
The rights and interests of a Participant under the Plan may not be assigned, encumbered or transferred except (a) in the event of the death of a
Participant, by will or the laws of descent and distribution, and (b) as may be explicitly set forth in an Award Agreement.
17. Adjustments Upon Changes in Capitalization
In the event of any change in the outstanding shares of Common Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination
or exchange of shares, merger, consolidation or any change in the corporate structure or shares of the Corporation, the maximum aggregate number and class of shares as to which Awards may be granted
under the Plan and the shares issuable pursuant to then outstanding Awards (and the exercise price of any outstanding stock options) shall be appropriately adjusted by the Committee, whose
determination shall be final.
18. Extraordinary Distributions and Pro-Rata Repurchases
In the event the Corporation shall at any time when an Award is outstanding make an Extraordinary Distribution (as hereinafter defined) in respect of Common Stock
or effect a ProRata Repurchase of Common Stock (as hereinafter defined), the Committee shall consider the economic impact of the Extraordinary Distribution or Pro-Rata Repurchase on
Participants and make such adjustments as it deems equitable under the circumstances. The determination of the Committee shall, subject to revision by the Board of Directors, be final and binding upon
all Participants.
(a) As
used herein, the term "Extraordinary Distribution" means any dividend or other distribution of
(i) cash,
where the aggregate amount of such cash dividend or distribution together with the amount of all cash dividends and distributions made during the preceding twelve
months, when combined with the aggregate amount of all Pro-Rata Repurchases (for this purpose, including only that portion of the aggregate purchase price of such Pro-Rata
Repurchases which is in excess of the Fair Market Value of the Common Stock repurchased during such twelve month period), exceeds ten percent (10%) of the aggregate Fair Market Value of all shares of
Common Stock outstanding on the record date for determining the shareholders entitled to receive such Extraordinary Distribution or
(ii) any
shares of capital stock of the Corporation (other than shares of Common Stock), other securities of the Corporation, evidences of indebtedness of the Corporation or
any other person or any other property (including shares of any Subsidiary of the Corporation), or any combination thereof.
(b) As
used herein "Pro-Rata Repurchase" means any purchase of shares of Common Stock by the Corporation or any Subsidiary thereof, pursuant to any tender offer
or exchange offer, subject to
Section 13(e) of the Exchange Act or any successor provision of law, or pursuant to any other offer available to substantially all holders of Common Stock; provided,
however, that no purchase of shares of the Corporation or any Subsidiary thereof made in open market transactions shall be deemed a Pro-Rata Repurchase.
19. Withholding Taxes
The Corporation or the applicable Subsidiary shall be entitled to deduct from any payment under the Plan, regardless of the form of such payment, the amount of
all applicable income and employment
A-7
tax required by law to be withheld with respect to such payment or may require the Participant to pay to it such tax prior to and as a condition of the making of such payment. The Committee may allow
a Participant to pay the amount of taxes required by law to be withheld from an Award by withholding from any payment of Common Stock due as a result of such Award, or by permitting the Participant to
deliver to the Corporation shares of Common Stock having a fair market value, as determined by the Committee, equal to the amount of such required withholding taxes.
20. Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, the Corporation shall have a no obligation to issue or deliver certificates of Common Stock
evidencing Restricted Stock Awards or any other Award payable in Common Stock prior to (a) the obtaining of any approval from any governmental agency which the Corporation shall, in its sole
discretion, determine to be necessary or advisable, (b) the admission of such shares to listing on the Stock Exchange and (c) the completion of any registration or other qualification of
said shares under any state or federal law or ruling of any governmental body that the Corporation shall, in its sole discretion, determine to be necessary or advisable.
21. No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee any right to remain in the employ of the Corporation or any Subsidiary or any director the right to
remain as a director of the Corporation. The Corporation or, in the case of employment with a Subsidiary, the Subsidiary, reserves the right to terminate the employment of any Key Employee at any
time. The adoption of this Plan shall not be deemed to give any Key Employee or any other individual any right to be selected as a Participant, to be granted any Awards hereunder or if granted an
Award in any year, to receive Awards in any subsequent year.
22. Amendment
The Corporation reserves the right to amend, modify or terminate this Plan at any time by action of its Board of Directors, or, by action of the Board of
Directors with the consent of a Participant, to amend, modify or terminate any outstanding Award or Award Agreement, except that the Corporation may not, without shareholder approval, adopt any
amendment which would (a) materially increase the benefits accruing to Participants under the Plan, (b) materially increase the number of shares of Common Stock which may be issued under
the Plan (except as specified in Section 17), or (c) materially modify the requirements as to eligibility for participation in the Plan. Moreover, no action may be taken by the
Corporation (without the consent of the Participant) that will impair the validity of any Award then outstanding or that will prevent any incentive stock options issued or to be issued under this Plan
from being "incentive stock options" as defined under section 422 of the Code or any successor provision.
23. Governing Law
The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, except as preempted by applicable Federal law.
24. Change In Control
(a) Stock Options. In the event of a Change In Control, options not otherwise exercisable at the time of a
Change In Control shall become fully exercisable immediately prior to such Change In Control and, in the discretion of the Committee, (i) the options shall be assumed, or an equivalent option
substituted, by any successor corporation to the Corporation, or (ii) the Corporation shall make
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provisions for the Participant to exercise the options for a minimum of ten (10) days prior to the Change In Control as to all shares subject to the options.
(b) Stock Appreciation Rights. In the event of a Change In Control, Tandem SARs not otherwise exercisable upon a
Change In Control shall become exercisable to the extent that the related Stock Option is exercisable. Freestanding SARs not otherwise exercisable upon a Change In Control shall also become fully
exercisable upon such Change In Control.
(i) The
Corporation shall make payment to Participants with respect to SARs in cash in an amount equal to the appreciation in the value of the SAR from the base price
specified in the Award Agreement to the Change In Control Price.
(ii) Such
cash payments to Participants shall be due and payable, and shall be paid by the Corporation, immediately upon the occurrence of such Change In Control; and
(iii) After
the payment provided for in (ii) above, Participants shall have no further rights under SARs outstanding at the time of such Change In Control.
(c) Restricted Stock Awards. In the event of a Change In Control, all restrictions previously established with
respect to Restricted Stock Awards will conclusively be deemed to have been satisfied. Participants shall be entitled to have issued to them the shares of Common Stock described in the applicable
Award Agreements, free and clear of any restriction or restrictive legend, except that if, upon the advice of counsel to the Corporation, shares of Common Stock cannot lawfully be issued without
restriction, then the Corporation shall make payment to Participants in cash in an amount equal to the Change In Control Price of the Common Stock that otherwise would have been issued:
(i) Such
cash payments to Participants shall be due and payable, and shall be paid by the Corporation, immediately upon the occurrence of such Change In Control; and
(ii) After
the payment provided for in (i) above, Participants shall have no further rights under Restricted Stock Awards outstanding at the time of such Change In Control
of the Corporation.
(d) Phantom Stock. In the event of a Change In Control:
(i) all
restrictions and conditions, if any, previously established with respect to Phantom Stock Awards will conclusively be deemed to have been satisfied and fulfilled,
and the Corporation shall make payment to Participants in cash in an amount necessary to satisfy the Participants' rights under Phantom Stock Awards in accordance with the amounts otherwise payable by
the Corporation pursuant to the Award Agreement;
(ii) Such
cash payments shall be made to Participants by the Corporation immediately prior to the occurrence of such Change In Control; and
(iii) After
the payment provided for in (ii) above, the Participants shall have no further rights under Phantom Stock Awards outstanding at the time of such change of
control of the Corporation.
(e) Performance Shares. In the event of a Change In Control:
(i) All
previously established Performance Targets will be conclusively deemed to have been met. Participants shall be entitled to a pro-rata proportion of the
shares of Common Stock which would have been issued to them upon conversion of any outstanding Performance Shares at the end of the Performance Period (based upon the applicable Performance Targets,
which are conclusively deemed to have been met by reason of the Change In Control), payable in the manner specified in subsection (ii) hereof. The pro-rata proportion of the shares
of Common Stock to be issued shall be equal to a fraction, the numerator of which is the duration of the
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Performance Period prior to such Change In Control and the denominator of which is the original length of the Performance Period;
(ii) In
lieu of issuing shares of Common Stock upon such conversion of Performance Shares, the Corporation shall make payment to Participants in cash in an amount equal to
the Change In Control Price of the shares of Common Stock that would have been issued under paragraph (i) above;
(iii) Such
cash payments to Participants shall be due and payable, and shall be paid by the Corporation, immediately upon the occurrence of such Change In Control; and
(iv) After
the payment provided for in (ii) above, the Participants shall have no further rights under awards of Performance Shares outstanding at the time of such Change In
Control of the Corporation.
(f) Miscellaneous. Upon a Change In Control, no action shall be taken which would adversely affect the rights of
any Participant or the operation of the Plan with respect to any Award to which the Participant may have become entitled hereunder on or prior to the date of the Change In Control or to which he may
become entitled as a result of such Change In Control.
25. No Right, Title, or Interest In Corporation Assets
No Participant shall have any rights as a shareholder as a result of participation in the Plan until the date of issuance of a stock certificate in his name
except, in the case of Restricted Stock Awards, to the extent such rights are granted to the Participant under Section 10(c) hereof. To the extent any person
acquires a right to receive payments from the Corporation under this Plan, such rights shall be no greater than the rights of an unsecured creditor of the Corporation.
26. Payment by Subsidiaries
Settlement of Awards to employees of Subsidiaries shall be made by and at the expense of such Subsidiary. Except as prohibited by law, if any portion of an Award
is to be settled in shares of Common Stock, the Corporation shall sell and transfer to the Subsidiary, and the Subsidiary shall purchase, the number of shares necessary to settle such portion of the
Award.
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QuickLinks
Table of Contents
PROXY STATEMENT
VOTING SECURITIES OF THE COMPANY AND CERTAIN SHAREHOLDERS
PROPOSAL 1ELECTION OF DIRECTORS
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
PROPOSAL 2APPROVAL OF 2002 EQUITY COMPENSATION PLAN
AUDIT COMMITTEE REPORT AND INDEPENDENT ACCOUNTANT
COMPARISON OF TOTAL SHAREHOLDER RETURN
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
OTHER MATTERS
Proxy Solicited on Behalf of the Board of Directors of the Company for the Annual Meeting of Shareholders on Wednesday, May 7, 2003
KAISER GROUP HOLDINGS, INC. 2002 EQUITY COMPENSATION PLAN (Adopted September 20, 2002; Approved by Shareholders , 2003)