-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jYvKtax7KU+jPGd0FgcohxXfbMlQxld5s87eencorEquno1Y8qu6PrV713DHw/vS ruisTO4irGxMgEgq/aanDg== 0000094328-94-000032.txt : 19940705 0000094328-94-000032.hdr.sgml : 19940705 ACCESSION NUMBER: 0000094328-94-000032 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940131 FILED AS OF DATE: 19940509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEWART & STEVENSON SERVICES INC CENTRAL INDEX KEY: 0000094328 STANDARD INDUSTRIAL CLASSIFICATION: 3510 IRS NUMBER: 741051605 STATE OF INCORPORATION: TX FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-08493 FILM NUMBER: 94526590 BUSINESS ADDRESS: STREET 1: 2707 N LOOP W CITY: HOUSTON STATE: TX ZIP: 77008 BUSINESS PHONE: 7138687700 MAIL ADDRESS: STREET 1: P O BOX 1637 CITY: HOUSTON STATE: TX ZIP: 77251-1637 DEF 14A 1 1994 PROXY MATERIALS SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 STEWART & STEVENSON SERVICES, INC. (Name of Registrant as Specified In Its Charter) STEWART & STEVENSON SERVICES, INC. (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2). [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ______________________________________________________________________ 2) Aggregate number of securities to which transaction applies: ______________________________________________________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: ______________________________________________________________________ 4) Proposed maximum aggregate value of transaction: ______________________________________________________________________ [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ______________________________________________________________________ 2) Form, Schedule or Registration Statement No.: ______________________________________________________________________ 3) Filing Party: ______________________________________________________________________ 4) Date Filed: ______________________________________________________________________ STEWART & STEVENSON SERVICES, INC. 2707 North Loop West P.O. Box 1637 Houston, Texas 77251-1637 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 14, 1994 TO OUR SHAREHOLDERS: The 1994 Annual Meeting of the Shareholders of Stewart & Stevenson Services, Inc., a Texas corporation (the "Company"), will be held in the Texas Commerce Center Auditorium, 601 Travis Street, Houston, Texas on Tuesday, June 14, 1994, at 10:00 a.m., local time, for the following purposes: 1. To elect four directors to the Board of Directors to hold office until the expiration of their terms and until their respective successors have been duly elected and qualified; 2. To ratify the appointment of Arthur Andersen & Co. as the independent public accountants of the Company for the fiscal year ending January 31, 1995; and 3. To transact such other business as may properly come before the meeting and any adjournment thereof. Shareholders of record at the close of business on April 26, 1994, are entitled to notice of and to vote at the Annual Meeting. By Order of the Board of Directors, LAWRENCE E. WILSON Vice President and Secretary Dated: Houston, Texas May 9, 1994 ________________ YOUR VOTE IS IMPORTANT. PLEASE DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING. YOUR PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED. STEWART & STEVENSON SERVICES, INC. 2707 North Loop West P.O. Box 1637 Houston, Texas 77251-1637 ________________ PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS June 14, 1994, and Adjournments ____________________ Approximate date proxy material first sent to shareholders: May 9, 1994 ____________________ SOLICITATION, VOTING AND REVOCABILITY OF PROXIES The proxy furnished herewith, for use only at the Annual Meeting of Shareholders to be held June 14, 1994, and any and all adjournments thereof, is solicited by the Board of Directors of Stewart & Stevenson Services, Inc. (the "Company"). Such solicitation is being made by mail and may also be made in person or by telephone by officers, directors and regular employees of the Company, and arrangements may be made with brokerage houses or other custodians, nominees and fiduciaries to send proxy material to their principals. All expenses incurred in this solicitation of proxies will be paid by the Company. The presence of the holders of a majority of the issued and outstanding shares of Common Stock entitled to vote, either in person or represented by proxy, is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Proxies that withhold authority to vote for a nominee or abstain from voting on any matter are counted for the purpose of determining whether a quorum is present. Broker non-votes, which may occur when a broker or nominee has not received timely voting instructions on certain proposals, are not counted for the purpose of determining whether a quorum is present. If there are not sufficient shares represented at the meeting to constitute a quorum, the meeting may be adjourned until a specified future date to allow the solicitation of additional proxies. Directors are elected by a plurality of the votes cast at the meeting. The four nominees that receive the greatest number of votes will be elected even though the number of votes received may be less than a majority of the shares represented in person or by proxy at the meeting. Proxies that withhold authority to vote for a nominee will not prevent the election of such nominee if other shareholders vote for such nominee. The ratification of Arthur Andersen & Co. as the Company's independent public accountants requires the affirmative vote of a majority of the shares represented in person or by proxy at the meeting. Proxies that abstain from voting on this proposal have the same effect as a vote against this proposal. Any shareholder executing a proxy retains the right to revoke it by signing and delivering a proxy bearing a later date, by giving notice of revocation in writing to the Secretary of the Company at any time prior to its use, or by voting in person at the meeting. All properly executed proxies received by the Company and not revoked will be voted at the meeting, or any adjournment thereof, in accordance with the specifications of the shareholder. If no instructions are specified on the proxy, shares represented thereby will be voted FOR the election of the four nominees herein and FOR the ratification of Arthur Andersen & Co. as the Company's independent public accountants for the fiscal year ending January 31, 1995. VOTING SECURITIES AND OWNERSHIP THEREOF BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT At the close of business on April 26, 1994, the Company had outstanding 32,945,190 shares (not including treasury shares) of Common Stock, without par value. Each outstanding share of Common Stock is entitled to one vote with respect to each of the four director positions and one vote with respect to the approval of the independent public accountant. Cumulative voting is not permitted under the Company's Articles of Incorporation. Shareholders of record at the close of business on April 26, 1994 are entitled to vote at or to execute proxies relating to the Annual Meeting of Shareholders. The following table lists the beneficial ownership of shares of the Company's Common Stock by all persons and groups known by the Company to own beneficially more than 5% of the outstanding shares of the Company's Common Stock entitled to vote, by each director and nominee, by the Chief Executive Officer and four highest compensated executive officers, and by all directors and officers as a group. As of February 28, 1994, the Company had no parent and none of the directors, nominees or officers of the Company owned any equity security issued by the Company's subsidiaries other than director's qualifying shares. Information with respect to officers, directors and their families is as of February 28, 1994 and is based on the books and records of the Company and information obtained from each individual. Information with respect to institutional shareholders is based upon the Schedule 13G filed by such shareholders with the Securities and Exchange Commission as of December 31, 1993. Unless otherwise stated, the business address of each individual or group is the same as the address of the Company's principal executive office.
Amount and Nature of Beneficial Ownership ____________________________________________________________________________ Sole Shared Sole Shared Right To Acquire Name of Voting Voting Investment Investment Beneficial Percent of Individual or Group Power Power Power Power Ownership Class ________________________________ __________ __________ __________ __________ ________________ __________ 5% SHAREHOLDERS Northern Trust Corporation 50 South LaSalle Street Chicago, Illinois 60675 1,352,209 83,175 1,567,714 320,070 -0- 5.8 INDIVIDUAL DIRECTORS AND NOMINEES C. Jim Stewart II 511,378 197,640 491,378 217,640 -0- 2.2 J. Carsey Manning 600 -0- 600 -0- -0- Donald E. Stevenson 600,204 940 600,204 940 -0- 1.8 Robert H. Parsley 2,248 -0- 2,248 -0- -0- Jack W. Lander, Jr. 6,000 -0- 6,000 -0- -0- Robert L. Hargrave 40,439 -0- 40,439 -0- 2,500 James H. Elder, Jr. 3,000 -0- 3,000 -0- -0- Bob H. O'Neal 34,055 -0- 34,055 -0- 3,750 Jack T. Currie 6,000 -0- 6,000 -0- -0- Robert S. Sullivan -0- -0- -0- -0- -0- EXECUTIVE OFFICERS Bob H. O'Neal 34,055 -0- 34,055 -0- 3,750 Robert L. Hargrave 40,439 -0- 40,439 -0- 2,500 Richard R. Stewart 132,600 -0- 132,600 -0- 2,500 Garth C. Bates, Jr. 84,083 -0- 70,307 13,776 7,500 C. LaRoy Hammer 36,800 -0- 36,800 -0- 7,500 ALL DIRECTORS AND OFFICERS (18 Persons) 2,628,053 198,615 2,594,277 232,391 42,500 8.6 Less than 1%.
ELECTION OF DIRECTORS The Board of Directors of the Company consists of twelve directors, divided into three classes of four members. At each Annual Meeting of Shareholders, one class is elected to hold office for a term of three years. Mr. William H. Greehey resigned from the Board of Directors, during 1993 and Mr. Donald J. Atwood died in April of 1994. The Board of Directors intends to elect two people to fill the vacancies on Class II as soon as appropriate candidates are identified and have agreed to serve on the Board of Directors of the Company. Proxies received by the Company will not be voted to fill the vacancies on Class II. The individuals set forth below have been nominated for election to the Board of Directors at the meeting, to serve as the Class III Directors until 1997. The Class I and Class II Directors will continue to serve until the expiration of their terms. THE BOARD OF DIRECTORS RECOMMENDS THAT THE NOMINEES LISTED BELOW BE ELECTED BY THE SHAREHOLDERS. UNLESS OTHERWISE SPECIFIED, ALL PROPERLY EXECUTED PROXIES RECEIVED BY THE COMPANY WILL BE VOTED AT THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF FOR THE ELECTION OF THE PERSONS WHOSE NAMES ARE LISTED IN THE FOLLOWING TABLE AS NOMINEES FOR THE CLASS III DIRECTORS.
CLASS III NOMINEES FOR TERM EXPIRING IN 1997 Director Name and Principal Occupation Age Since _______________________________________________________ ___ ________ C. JIM STEWART II ............................ 68 1955 Chairman of the Board of the Company. Retired Chief Executive Officer of the Company. JACK W. LANDER, JR. .......................... 68 1982 Chairman of the Board of Merchants Bank-Houston and Chairman of the Board and director for its holding company, Gulf Southwest Bancorp, Inc., in Houston, Texas. BOB H. O'NEAL .................................... 59 1988 President and Chief Executive Officer of the Company. Serves as a director of Lufkin Industries, Inc. JACK T. CURRIE ............................... 65 1988 Personal investments. Retired Managing Director of Mason Best Company, a merchant banking firm in Houston, Texas and retired Vice Chairman of Rotan Mosle Financial Corp., an investment banking firm in Houston, Texas. Serves as a director for American Indemnity Financial Corp.; American National Growth Fund, Inc.; American National Income Fund Inc. and Triflex Fund Inc.
CLASS I DIRECTORS WHOSE TERM EXPIRES IN 1995 Director Name and Principal Occupation Age Since _______________________________________________________ ___ ________ J. CARSEY MANNING ..................................... 68 1973 Retired Senior Vice President of the Company. DONALD E. STEVENSON ................................... 50 1975 Vice President of the Company. ROBERT H. PARSLEY ........................ 71 1976 Partner in Butler & Binion, L.L.P., attorneys in Houston, Texas. ROBERT S. SULLIVAN ............................... 50 1992 Dean, Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania. Previously, Associate Dean for Research and Academic Affairs, The University of Texas at Austin, Austin, Texas.
CLASS II DIRECTORS WHOSE TERM EXPIRES IN 1996 Director Name and Principal Occupation Age Since _______________________________________________________ ___ ________ ROBERT L. HARGRAVE ............................... 53 1984 Group Vice President, Chief Financial Officer and Treasurer of the Company. JAMES H. ELDER, JR. .......................... 69 1986 Personal investments. Retired Chairman, President and Chief Executive Officer of Anderson, Greenwood & Co., a manufacturer of industrial valves and instrumentation in Houston, Texas. Serves as a director for Battle Mountain Gold Company. Member of Executive Committee. Member of Compensation and Management Development Committee. Member of Audit Committee. Member of Nominating Committee.
The Board of Directors believes that each of the nominees will be willing and able to serve. If any such person is unable to serve for good cause, or is unwilling to serve for any reason, proxies will be voted for the election of another person selected by the Nominating Committee of the Board of Directors. All of the above nominees are presently serving as directors of the Company. Each nominee and current director has been employed for more than five years either as shown in the foregoing table or in various executive capacities with the Company. All nominees were last elected as a director at the 1991 Annual Meeting. The Audit Committee of the Board of Directors reviews with the Company's independent public accountants the plan, scope and results of the annual audit; reviews with the Company's independent public accountants and internal auditors the procedures for and results of internal auditing and controls; and reviews with management the effectiveness of various operational policies and controls. The Audit Committee recommends to the Board of Directors the employment of independent public accountants and considers, in general, the audit services to be performed by such public accountants and the possible effect on the independence of the public accountants from the performance of non-audit services. The Audit Committee held three meetings during the fiscal year ended January 31, 1994 ("Fiscal 1993"). The Compensation and Management Development Committee recommends the total compensation payable by the Company to its Chief Executive Officer, subject to approval by those members of the Board of Directors that are not and never have been an officer of the Company or its subsidiaries, and approves the form and amount of total compensation paid or payable by the Company to its other executive officers; grants options pursuant to the Company's stock option plans; conducts such investigations and studies as it deems necessary; and considers management succession and related matters. See the Report of the Compensation and Management Development Committee elsewhere herein. The Compensation and Management Development Committee held three meetings during Fiscal 1993. The Nominating Committee selects nominees for the Board of Directors of the Company. The Nominating Committee considers nominees submitted by the members of the Board of Directors, the officers of the Company and the Company's shareholders. Nominees for the Board of Directors may be submitted to the Chairman of the Nominating Committee at the Company's executive offices for consideration by the Nominating Committee. The Nominating Committee held one meeting during Fiscal 1993. The Board of Directors held five meetings during Fiscal 1993. During the last full fiscal year no director attended fewer than 75% of the aggregate of (a) the total number of meetings of the Board of Directors (held during the period for which he was a director) and (b) the total number of meetings held by all committees of the Board of Directors on which he served (during the periods that he served). Executive Officers The names, ages and positions of all the executive officers of the Company are listed below. Each officer was last elected as an executive officer at the meeting of directors immediately following the 1993 Annual Meeting of Shareholders except for Mr. Brown who was elected on April 12, 1994. The term of office of each executive officer will expire at the meeting of directors following the 1994 Annual Meeting of Shareholders and when a successor is elected and qualifies. There exist no arrangements or understandings between any officer and any other person pursuant to which the officer was selected.
Officer Name Age Position Since ___________________ ___ _________________________________________________________ _______ Bob H. O'Neal 59 President & Chief Executive Officer 1981 Robert L. Hargrave 53 Group Vice President, Chief Financial Officer & Treasurer 1980 Richard R. Stewart 44 Group Vice President (Engineered Power Systems) 1986 Garth C. Bates, Jr. 45 Group Vice President (Distribution) 1991 C. LaRoy Hammer 57 Group Vice President (Tactical Vehicle Systems) 1980 T. Michael Andrews 53 Vice President 1982 Donald E. Stevenson 50 Vice President 1984 Keith T. Stevenson 47 Vice President 1986 C. Jim Stewart III 45 Vice President 1988 Lawrence E. Wilson 41 Vice President & Secretary 1989 Bobby W. Brown 64 Vice President 1994
Each of the officers listed above, except Messrs. Garth C. Bates, Jr. and Bobby W. Brown have been employed by the Company in an executive capacity for more than five years. Garth C. Bates, Jr. was appointed General Manager of the Distribution Division in February 1991 and elected to his present position in April 1991. Prior to February 1991, Mr. Bates served as President of Stewart & Stevenson Power, Inc., the Company's wholly-owned subsidiary based in Denver, Colorado, for more than five years. Bobby W. Brown was elected to his current position on April 12, 1994. He previously served as the Company's Director of Human Resources, Insurance and Risk Management for more than five years. Richard R. Stewart and C. Jim Stewart III are sons of Mr. C. Jim Stewart II, the Chairman of the Board of Directors of the Company. Garth C. Bates, Jr. is a nephew of Mr. C. Jim Stewart II and a first cousin of Richard R. Stewart and C. Jim Stewart III. Keith T. Stevenson is the brother, and T. Michael Andrews is a first cousin, of Mr. Donald E. Stevenson, a director of the Company. These persons and other members of the Stewart family and the Stevenson family could be deemed "control persons" with respect to the Company as such term is defined in the rules and regulations of the Securities and Exchange Commission. Transactions with Management and Certain Business Relationships The Company leases certain land and buildings from associates of one of its directors. Mr. J. Carsey Manning's brother, Joe Manning, Jr., and his nephew, Joe Manning IV, lease land and a building to the Company for payments of $4,100 per month through April 30, 1996. Mr. Joe Manning, Jr. together with an unrelated person leases land and a building to the Company for $4,270 per month under a lease which will expire March 31, 1997. In addition, Mr. Joe Manning, Jr., Trustee, leases land and a building to the Company for $2,500 per month under a lease which will expire on December 31, 1995. Mr. Miles McInnis, a former officer and director of the Company, and Mrs. Faye Manning Totsch, Mr. J. Carsey Manning's mother, lease land and a building to the Company for $6,500 per month under a lease which will expire April 14, 1997. The Board of Directors believes that the terms of each of these leases have been at least as fair to the Company as could have been obtained from nonaffiliated persons. Director Robert H. Parsley is a partner in the law firm of Butler & Binion, L.L.P. in Houston, Texas, which the Company retained during the last fiscal year and proposes to retain during the current fiscal year. EXECUTIVE COMPENSATION The following Summary Compensation Table shows the aggregate compensation paid or accrued by the Company during each of the last three fiscal years to or for the Company's current Chief Executive Officer and each of the four highest compensated executive officers.
SUMMARY OF COMPENSATION Long Term Annual Compensation Compensation ______________________________________ __________________ Other All Name and Year ended Annual Options LTIP Other Principal Position January 31 Salary Bonus Compensation Granted Payout Compensation ______________________ __________ ________ ________ ____________ _______ ______ ____________ Bob H. O'Neal President & Chief Executive Officer 1994 $298,077 $350,000 15,000 -0- -0- 1993 199,519 300,000 -0- -0- -0- 1992 174,615 185,000 30,000 -0- -0- Robert L. Hargrave Group Vice President, Chief Financial Officer & Treasurer 1994 179,423 140,000 10,000 -0- -0- 1993 149,712 170,000 -0- -0- -0- 1992 134,846 160,000 20,000 -0- -0- Richard R. Stewart Group Vice President (Engineered Power Systems) 1994 198,750 220,000 10,000 -0- -0- 1993 134,712 250,000 -0- -0- -0- 1992 119,692 219,000 20,000 -0- -0- Garth C. Bates, Jr. Group Vice President (Distribution) 1994 159,231 160,000 10,000 -0- -0- 1993 119,615 130,000 -0- -0- -0- 1992 98,536 120,000 20,000 -0- -0- C. LaRoy Hammer Group Vice President (Tactical Vehicle Systems) 1994 164,423 160,000 -0- -0- -0- 1993 134,712 160,000 10,000 -0- -0- 1992 119,846 180,000 10,000 -0- -0- The total amount of all perquisites and other personal benefits, securities or property paid or accrued by the Company is less than 10% of the total of annual salary and bonus. There have been no amounts paid or accrued with respect to above-market or preferential earnings on restricted stock, options, SARs or deferred compensation or with respect to earnings on long-term incentive plans or tax reimbursements. Except for purchases pursuant to the Stewart & Stevenson Employee Stock Purchase Plan, participation in which is available to all employees, there were no purchases of any security of the Company for less than the fair market value thereof on the date of purchase.
Grants and Exercises of Stock Options and Stock Appreciation Rights The Company has two stock option plans. The 1988 Nonstatutory Stock Option Plan (the "1988 Plan") authorizes the grant of options to employees, including officers, to purchase an aggregate of up to 1,800,000 shares of Common Stock and provides that limited stock appreciation rights may be granted in connection with such options. The 1993 Nonofficer Stock Option Plan (the "1993 Plan") authorizes the grant of options to employees other than officers of the Company to purchase an aggregate of up to 415,000 shares of Common Stock. Stock appreciation rights may not be granted under the 1993 Plan. The recipients and terms of options granted pursuant to the stock option plans are determined by the Compensation and Management Development Committee of the Board of Directors, none of whom are employees of the Company or eligible for any benefits under the plans. During 1993, the Company granted options to purchase an aggregate of 63,000 shares of Common Stock under the 1988 Plan and options to purchase an aggregate of 115,000 shares of Common Stock under the 1993 Plan. No limited stock appreciation rights were granted under the 1988 Plan during 1993 or during any previous fiscal year. The following tables set forth information as to options under the Company's stock option plans granted to or exercised by the individuals described in the Summary Compensation Table during 1993 and the value of all outstanding options owned as of January 31, 1994 by the individuals named in the Summary Compensation Table.
OPTION/SAR GRANTS DURING FISCAL 1993 Potential Realizable Value at Assumed Annual Rates of Stock Price Individual Grants Appreciation for Option Term _______________________________________________________ ___________________________________ % of Total Exercise Options Price Options Granted to per Expiration Name Granted Employees share Date 5% 10% _________________________________ ___________ __________ _________ __________ ____________ ______________ Bob H. O'Neal 15,000 8.4 $32.625 3/16/03 $ 307,765 $ 779,938 Robert L. Hargrave 10,000 5.6 32.625 3/16/03 205,177 519,958 Richard R. Stewart 10,000 5.6 32.625 3/16/03 205,177 519,958 Garth C. Bates, Jr. 10,000 5.6 32.625 3/16/03 205,177 519,958 C. LaRoy Hammer -0- -0- N/A N/A N/A N/A All Employees, including officers 178,000 100.0 32.625 3/16/03 3,652,148 9,255,261 All options become exercisable in four 25% cumulative annual installments commencing on March 16, 1994. All options are exercisable at the closing market price on the date of grant.
OPTION/SAR EXERCISES DURING FISCAL 1993 AND YEAR-END VALUES Number of Unexercised Value of Unexercised In-the- Options at Money Options at January 31, 1994 January 31, 1994 _____________________________ _____________________________ Shares Acquired on Value Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable _________________________________ ___________ __________ ___________ _____________ ___________ _____________ Bob H. O'Neal 15,000 $ 495,000 -0- 30,000 $ -0- $ 654,375 Robert L. Hargrave 10,000 287,500 -0- 20,000 -0- 436,250 Richard R. Stewart 10,000 311,250 -0- 20,000 -0- 436,250 Garth C. Bates, Jr. -0- -0- 5,000 10,000 143,750 436,250 C. LaRoy Hammer -0- -0- 5,000 12,500 121,250 291,875 All Employees, including officers 171,000 5,592,331 79,000 399,100 2,214,438 8,607,476
Retirement Plans The Company has a defined benefit Pension Plan (the "Pension Plan") under which benefits are determined primarily by average final base salary and years of service. The Pension Plan covers substantially all of its full-time employees, including officers, and, subject to certain limitations described below, bases pension benefits on 1.5% of (a) the employee's highest five-year average base salary out of the last ten years or (b) $235,840 ($150,000 in 1994 and thereafter), whichever is lower, times the employee's years of credited service. The Internal Revenue Code of 1986, as amended, limited benefits that may be paid under the Pension Plan to $115,641 per year in 1993. The Company has a Supplemental Executive Retirement Plan (the "SERP") under which certain key executives will receive retirement benefits in addition to those provided under the Pension Plan. The Compensation and Management Development Committee determines which executive officers are eligible for benefits under the SERP. Supplemental benefits are based upon the average final compensation and years of service without regard to the limitations imposed by the Internal Revenue Code of 1986, as amended, and using the total of base salary and bonus to compute final average compensation. Benefits under the SERP are limited to an amount such that the aggregate of all retirement benefits paid under the Pension Plan and the SERP will not exceed 75% of the executive's final average base salary not including bonus payments. The following table sets forth the estimated annual benefits payable upon retirement to persons in specified compensation and years-of-service classification pursuant to the Stewart & Stevenson Employee Pension Plan and the Stewart & Stevenson Supplemental Executive Retirement Plan.
Estimated Annual Retirement Benefit Years of Service _______________________________________________________________________________ Final Average Compensation 20 25 30 35 40 45 __________________________ _________ _________ _________ _________ _________ _________ $ 100,000 $ 25,536 $ 31,920 $ 38,304 $ 45,060 $ 52,560 $ 60,060 200,000 55,536 69,420 83,304 97,560 112,560 127,560 300,000 85,536 106,920 128,304 150,060 172,560 195,060 400,000 115,536 144,420 173,304 202,560 232,560 262,560 500,000 145,536 181,920 218,304 255,060 292,560 330,060 600,000 175,536 219,420 263,304 307,560 352,560 397,560 700,000 205,536 256,920 308,304 360,060 412,560 465,060 800,000 235,536 294,420 353,304 412,560 472,560 532,560 Computation of estimated annual retirement benefit based on a straight-line annuity for the life of the employee, net of base Social Security benefits under the Social Security law currently in effect, assuming the employee retires in 2000 at age 65.
The five-year average compensation of the individuals listed in the Summary Compensation Table differs from the present salary and bonus listed in the Summary Compensation Table as a result of changes in the rate of pay during the average period. The following table sets forth the years of credited service, average compensation and average base salary for each of the individuals listed in the Summary Compensation Table.
Years of Average Total Average Name Service Compensation Base Salary ___________________ ________ _____________ ___________ Bob H. O'Neal 29 $384,689 $193,289 Robert L. Hargrave 26 296,912 142,912 Richard R. Stewart 22 327,232 122,015 Garth C. Bates, Jr. 23 176,831 100,831 C. LaRoy Hammer 36 254,796 127,796
Compensation of Directors During Fiscal 1993, directors whose principal occupation is other than employment with the Company were compensated at the rate of $16,000 per year plus $1,000 for each meeting of the Board of Directors and each committee meeting attended and $500 for each telephone meeting attended. The directors were also reimbursed for any out-of-pocket expenses incurred to attend meetings. Non-employee directors with 60 months of continuous service will receive $1,000 per month for a period equivalent to service on the Board of Directors up to a maximum of 120 months, commencing on the month following their 70th birthday or the date such director ceases to serve on the Board, whichever is later. Compensation Committee Interlocks and Insider Participation No person serving on the Compensation and Management Development Committee during Fiscal 1993 is or has ever been an officer of the Company or any of its subsidiaries, and no executive officer of the Company is serving or has ever served on a board of directors or compensation committee of any entity, one of whose executive officers now serves, or at any time in Fiscal 1993 served, on the Board of Directors or Compensation and Management Development Committee of the Company. The Company's Compensation and Management Development Committee presently consists of Messrs. Jack W. Lander, Jr. and Robert S. Sullivan. Mr. James H. Elder, Jr. and former directors, Messrs. James E. Knott, Donald J. Atwood and William E. Greehey, also served on the Compensation and Management Development Committee during Fiscal 1993. SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors, upon recommendation of the Audit Committee, has appointed Arthur Andersen & Co. as independent public accountants of the Company for the year ending January 31, 1995. So far as is known to the Company, neither such firm nor any of its associates has any relationship with the Company or any affiliate of the Company other than the usual relationship that exists between independent public accountants and clients. A representative of Arthur Andersen & Co. will be present at the meeting to make a statement if such representative desires and to respond to appropriate questions. THE BOARD OF DIRECTORS RECOMMENDS THAT THE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JANUARY 31, 1995 BE RATIFIED BY THE SHAREHOLDERS. UNLESS OTHERWISE INDICATED, ALL PROPERLY EXECUTED PROXIES RECEIVED BY THE COMPANY WILL BE VOTED FOR SUCH RATIFICATION AT THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF. An adverse vote will be considered a direction to the Audit Committee to select other independent public accountants in the following year. OTHER BUSINESS As of this date, the Board of Directors is not aware that any other matters are to be presented for action at the Annual Meeting. THE PROXY FORM SENT HEREWITH, IF EXECUTED AND RETURNED, GIVES DISCRETIONARY AUTHORITY TO THE EXTENT PERMITTED BY LAW WITH RESPECT TO ANY OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING. FORM 10-K FOR FISCAL 1993 THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY SHAREHOLDER ENTITLED TO VOTE AT THE ANNUAL MEETING A COPY OF ITS MOST RECENT ANNUAL REPORT ON FORM 10-K UPON RECEIPT OF A REQUEST THEREFOR. SUCH REQUESTS SHOULD BE DIRECTED TO: LAWRENCE E. WILSON VICE PRESIDENT & SECRETARY P.O BOX 1637 HOUSTON, TEXAS 77251-1637 (713) 868-7700 SHAREHOLDER PROPOSALS FOR THE 1995 ANNUAL MEETING Shareholders may submit proposals for the 1995 Annual Meeting by sending such proposals to the attention of the Corporate Secretary. In order to be considered for inclusion in the proxy statement for the 1995 Annual Meeting, such proposals should be received by the Company on or before January 9, 1995. By Order of the Board of Directors, LAWRENCE E. WILSON Vice President and Secretary Dated: Houston, Texas May 9, 1994 Notwithstanding any statement contained in a previous filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, neither the Performance Graph set forth below nor the Report of the Compensation and Management Development Committee that follows is incorporated by reference into any such filing. PERFORMANCE OF STEWART & STEVENSON COMMON STOCK The following graph compares the cumulative total shareholder return on the Company's Common Stock, to the cumulative total shareholder return of the Standard & Poor's 500 Stock Index and the cumulative total shareholder return of the Standard & Poor's Machinery-Diversified Index for the Company's last five fiscal years. The graph assumes that the value of an investment in the Company's Common Stock and each index was $100 on January 31, 1989 and that all dividends were reinvested. [PERFORMANCE GRAPH]
Year Ended January 31, _________________________________________________ 1989 1990 1991 1992 1993 1994 ____ ____ ____ ____ ____ ____ Stewart & Stevenson Services, Inc. 100 178 242 378 475 637 Standard & Poor's 500 Stock Index 100 114 124 152 168 190 Standard & Poor's Machinery - Diversified Index 100 116 111 122 131 188
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE TO THE SHAREHOLDERS OF STEWART & STEVENSON SERVICES, INC. The Compensation and Management Development Committee of the Board of Directors (the "Committee") is comprised of two independent, non-employee directors who have no "interlocking" relationships as defined by the Securities and Exchange Commission. The Committee approves the design of executive compensation programs, administers such programs and assesses their effectiveness in supporting the Company's compensation policies. The Committee also reviews and approves all salary arrangements and other executive compensation, evaluates executive performance and considers management succession and related matters. The Committee is committed to implementing a compensation program which furthers the Company's goal of emphasizing long-term shareholder value creation. To facilitate the achievement of the Company's business strategies, the Committee adheres to the following compensation policies: To strengthen the relationship between pay and performance, executives' annual and long-term compensation programs should include variable compensation that is dependent upon the level of success in meeting specified corporate and individual performance goals. To focus management on the long-term interests of shareholders, a significant portion of pay for senior executives should be comprised of long-term, "at-risk" compensation. To enable the Company to attract, retain and encourage the development of the best available executive personnel, competitive compensation opportunities should be offered. However, compensation levels should be adjusted upward if Company performance exceeds that of its peer group and adjusted downward if Company performance falls below that of its peer group. Components of Compensation In determining the total compensation levels for the Company's senior executives, the Committee refers to levels of compensation paid to executives of a comparator group of companies. This comparator group is comprised of companies similar to the Company which have national business operations and comparable sales volumes, market capitalizations, employment levels and lines of business. The selection of companies used for compensation comparison purposes is reviewed and approved by the Committee. The companies comprising the comparator group used for compensation purposes generally are not the same companies comprising the published industry index used in the Performance Graph included in this proxy statement. The Committee believes that the Company's most direct competitors for executive talent are not necessarily the same companies included in the Standard & Poor's Machinery-Diversified Index, which is used for comparing shareholder returns. The key elements of the Company's executive compensation program are base salary, annual incentives and long-term compensation. These key elements are addressed separately below. In determining each component of compensation, the Committee considers all elements of an executive's total compensation package. Base Salary Base salary comprises from 35% to 40% of the value of each named executive's compensation. Base salary levels are targeted at or below the median levels of compensation for the Company's comparator group. The Committee adjusts base salary levels to recognize historical individual base salary levels, each individual executive's expected role for the upcoming fiscal year and changes in the cost of living. Consistent with the Company's philosophy of providing competitive levels of compensation, in Fiscal 1993 the Committee adjusted base salaries from levels which were significantly below median market levels. Each executive's base salary is reviewed regularly by the Committee. Increases to base salaries are driven primarily by individual performance, which is evaluated based on sustained levels of individual contribution to the Company. The executive's experience and past performance are also considered. In making its evaluation, the Committee has assigned no particular weights to these factors. As reflected in the Summary Compensation Table, Mr. O'Neal's base salary was increased in Fiscal 1993 by $100,000 (50%). In determining Mr. O'Neal's base salary in Fiscal 1993, the Committee considered Mr. O'Neal's individual performance and his long-term contributions to the success of the Company. In addition, a significant factor in determining the increase to Mr. O'Neal's base salary in Fiscal 1993 was the comparison to base salaries of CEOs at the group of comparator companies. Annual Incentives To promote the Company's pay-for-performance philosophy and provide executives with direct financial incentives to achieve corporate, business unit and individual performance goals, the Company provides an annual bonus opportunity to executives. Annual bonuses motivate executives to maximize short-term performance as part of achieving long-term goals. In establishing bonus payments made to each executive officer, the Committee considers the following factors: (i) the aggregate total compensation paid by the comparator group of companies, (ii) the performance of the Company in comparison to other companies in the same industry and in comparison to the market as a whole, (iii) the performance of the profit centers for which the executive is responsible as compared to goals established for such profit centers and (iv) the aggregate total compensation, including salary, bonus and long-term incentives, paid to each executive. The Committee has assigned no particular weights to these factors in establishing bonus payments. Bonus payments for Fiscal 1993 were influenced by the performance of the Company compared to its industry, as reflected in the performance graph set forth elsewhere in these materials, and by the relatively low salaries paid by the Company during Fiscal 1993 compared to the salaries paid by the comparator group. Individual bonus payments were further affected by the performance of certain operating divisions. Mr. O'Neal was paid $350,000 in connection with Fiscal 1993 performance. Mr. O'Neal's bonus is above the median of annual incentive compensation paid other executives at comparator companies, and reflects Company performance above that reported by competitors. Long-Term Incentives In keeping with the Company's philosophy of providing a total compensation package which favors at-risk components of pay, long-term incentives comprise from 25% to 30% of the value of each named executive's total compensation package. Long-term incentives are provided pursuant to the Stewart & Stevenson 1988 Nonstatutory Stock Option Plan. The Committee has elected to grant stock options as the Company's sole long-term incentive vehicle at this time. Stock options are granted at an option price not less than the fair market value of the Common Stock on the date of grant. Accordingly, stock options have value only if the stock price appreciates from the date the options are granted. This design focuses executives on the creation of shareholder value over the long term and encourages equity ownership in the Company. The size of stock option grants is based on competitive practice and is targeted to be at the median of option values granted by the comparator group. The size of the award can be adjusted based on individual performance, level of responsibility and historical award data. Overall, the Committee aims to deliver a competitive award opportunity based on the dollar value of the award granted. As a result, the number of shares underlying stock option awards varies and is dependent on the stock price on the date of grant. In Fiscal 1993, Mr. O'Neal received options to purchase 15,000 shares with an exercise price of $32.625, as is detailed in the Option Grants Table. The Committee has determined that the compensation opportunities should remain constant as long as total compensation fairly reflects overall corporate and individual achievement. Currently, Mr. O'Neal owns 34,055 shares of the Company's Common Stock and, together with the Fiscal 1993 grant, holds options to purchase an additional 30,000 shares. The Committee believes this equity interest provides an appropriate link to the interests of shareholders. Policy with Respect to the $1 Million Deduction Limit Recently enacted Section 162(m) of the Internal Revenue Code of 1986 generally limits the corporate deduction for compensation paid to executive officers named in the proxy to $1 million, unless certain requirements are met. The Committee has carefully considered the impact of this new tax code provision on the Company's incentive plans and has determined that Section 162(m) is currently inapplicable because no named executive officer is expected to receive compensation, other than performance-based compensation, in excess of $1 million in the foreseeable future. Thus, the Committee believes it is in the Company's and shareholders' best interests to retain the Committee's discretionary evaluation of individual and Company performance when determining total compensation payable to the Company's executive officers. Conclusion The Committee believes these executive compensation policies and programs serve the interests of the shareholders and the Company effectively. The various pay vehicles offered are appropriately balanced to provide increased motivation for executives to contribute to the Company's overall future success, thereby enhancing the value of the Company for the shareholders' benefit. We will continue to monitor the effectiveness of the Company's total compensation program to meet the current needs of the Company. Respectfully submitted, THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE Jack W. Lander, Jr. - Chairman Robert S. Sullivan STEWART & STEVENSON SERVICES, INC. ANNUAL MEETING OF SHAREHOLDERS-JUNE 14, 1994 COMMON STOCK PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Lawrence E. Wilson and Kyle J. Gideon, and each of them, the attorneys and proxies of the undersigned (each with power to act without the other and with power of substitution) to vote, as designated below, all shares of Common Stock, without par value, of Stewart & Stevenson Services, Inc. which the undersigned may be entitled to vote at the Annual Meeting of Shareholders to be held at the Texas Commerce Bank Auditorium, located on the corner of Texas and Travis in Houston, Texas at 10:00 a.m., on the 14th day of June, 1994 and any adjournments thereof, upon all matters which may properly come before said Annual Meeting. IF NO CHOICE IS MARKED, THE UNDERSIGNED GRANTS THE PROXIES DISCRETIONARY AUTHORITY WITH RESPECT TO THE ELECTION OF DIRECTORS AND PROPOSAL 2. UNLESS OTHERWISE SPECIFIED THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSAL 2. ANY PROXY HERETOFORE GIVEN BY THE UNDERSIGNED WITH RESPET TO SUCH STOCK IS HEREBY REVOKED. RECEIPT OF THE NOTICE OF THE ANNUAL MEETING AND PROXY STATEMENT IS HEREBY ACKNOWLEDGED. (Continued, and to be dated and signed, on reverside side) The Board of Directors recommends voting FOR all nominees listed below and FOR Item 2. 1. ELECTION OF DIRECTORS C. Jim Stewart II FOR [ ] WITHHOLD [ ] BOB H. O'NEAL [ ] WITHHOLD [ ] Jack W. Lander, Jr. FOR [ ] WITHHOLD [ ] JACK T. CURRIE [ ] WITHHOLD [ ] 2. RATIFICATION OF PUBLIC ACCOUNTANT FOR [ ] AGAINST [ ] ABSTAIN [ ] 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. PROXY DEPARTMENT NEW YORK, N.Y. 10203-0828 The signature(s) on your proxy should agree with the name(s) shown at the left. If the stock is held jointly, all joint owners should sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. Date: _______________________, 1994 _____________________________(L.S.) _____________________________(L.S.) Signature(s) of Shareholder(s) Please Sign, Date and Return this Proxy Card Promptly Using the Enclosed Envelope. Votes must be indicated (X) in Black or Blue Ink. [ ] -----END PRIVACY-ENHANCED MESSAGE-----