SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MICHAEL BAKER CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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MICHAEL BAKER CORPORATION
P.O. BOX 12259
PITTSBURGH, PENNSYLVANIA 15231
April 24, 2003
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
DEAR SHAREHOLDER:
We invite you to attend the annual meeting of shareholders of Michael Baker
Corporation, on April 24, 2003, at 10:00 a.m. in Houston, Texas.
This booklet includes the formal notice of the meeting and the proxy
statement. The proxy statement tells you more about the items we will vote on at
the meeting. It also explains how the voting process works and gives personal
information about our director candidates.
Whether or not you plan to attend, please promptly complete, sign, date and
return your proxy card in the enclosed envelope, or you may vote over the
internet or by telephone by following the instructions found on the proxy card,
so that we may vote your shares in accordance with your wishes and so that
enough shares are represented to allow us to conduct the business of the annual
meeting. Mailing your proxy(s) or voting over the internet or by telephone does
not affect your right to vote in person if you attend the annual meeting.
Sincerely yours,
H. JAMES MCKNIGHT
Secretary
April 1, 2003
NOTICE OF 2003 ANNUAL MEETING
DATE, TIME AND PLACE
- April 24, 2003
- 10:00 a.m.
- Holiday Inn Select, 14703 Park Row, Houston, Texas 77079
(281) 558-5580
PURPOSE
- Elect eight directors to serve for a one year term
- Approve new Long-Term Incentive Compensation Plan
- Conduct other business if properly raised
PROCEDURES
- Please complete the enclosed proxy card requested by the Board.
- Only shareholders of record on March 20, 2003 receive notice of and may
vote at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE OR VOTE OVER THE INTERNET OR BY
TELEPHONE.
H. JAMES MCKNIGHT
Secretary
April 1, 2003
CONTENTS
GENERAL..................................................... 1
COMMON STOCK OWNERSHIP...................................... 2
Director and Executive Officer Stock Ownership............ 2
Other Owners of More than 5%.............................. 3
Section 16(a) Beneficial Ownership Reporting.............. 3
PROPOSAL 1 -- ELECT DIRECTORS............................... 4
Director Nominees......................................... 4
Directors' Compensation................................... 5
The Board and Committees.................................. 5
The Executive Committee................................... 5
The Audit Committee....................................... 5
The Audit Committee Report................................ 6
The Compensation Committee................................ 6
Compensation Committee Interlocks and Insider
Participants........................................... 6
The Compensation Committee Report......................... 7
The Governance and Nominating Committee................... 8
The Health, Safety, Environmental and Compliance
Committee.............................................. 9
Summary Compensation Table................................ 9
2002 Option Grants........................................ 10
2002 Aggregate Option Exercises and Year-End Option
Values................................................. 10
Equity Compensation Plan Information...................... 10
Employment Continuation Agreements........................ 11
Related Party Transactions................................ 11
Stock Performance Graph................................... 11
PROPOSAL 2 -- APPROVE NEW LONG-TERM INCENTIVE COMPENSATION
PLAN...................................................... 12
Summary of the 2003 Long-Term Incentive Compensation
Plan................................................... 12
OTHER INFORMATION........................................... 15
Other Business............................................ 15
Independent Accountants................................... 15
Audit Fees................................................ 15
Financial Information Systems Design and Implementation
Fees................................................... 15
All Other Fees............................................ 15
Expenses of Solicitation.................................. 15
Shareholder Proposals for Next Year....................... 15
i
GENERAL
We have sent you this booklet and proxy on or about April 1, 2003 because
the Board of Directors of Michael Baker Corporation is soliciting your proxy to
vote at the Company's 2003 annual meeting of shareholders.
WHO MAY VOTE
Shareholders of Michael Baker Corporation as reflected in our stock records
at the close of business on March 20, 2003 may vote. You have one vote for each
share of Michael Baker Corporation common stock you own. You have cumulative
voting rights in the election of directors. Cumulative voting entitles you to
that number of votes in the election of directors equal to the number of shares
you hold of record multiplied by the total number of directors to be elected,
and to cast the whole number of your votes for one nominee or distribute them
among any two or more nominees as you choose. Shares represented by proxies,
unless otherwise indicated on the proxy card, will be voted cumulatively in such
manner that the number of shares voted for each nominee (and for any substitute
nominated by the Board of Directors if any nominee listed becomes unable or is
unwilling to serve) will be as nearly equal as possible. The eight nominees
receiving the highest number of affirmative votes cast at the annual meeting by
the holders of common stock voting in person or by proxy, a quorum being
present, will be elected as directors.
HOW TO VOTE
You may vote in person at the meeting or by proxy. Shareholders of record
have a choice of voting by proxy over the internet, by telephone, or by using a
traditional proxy card. If you hold shares through someone else such as a
stockbroker, you may get material from them asking how you want to vote. Please
check your proxy card or the information forwarded by your bank, stockbroker or
other holder of record to see which options are available to you. We recommend
you vote by proxy even if you plan to attend the meeting. You can always change
your vote at the meeting.
HOW A PROXY WORKS
Giving us a proxy means you authorize us to vote your shares in accordance
with your directions. If you give us a proxy, but do not make any selections,
your shares will be voted in favor of our director candidates and the adoption
of the 2003 Long-Term Incentive Compensation Plan.
You may receive more than one proxy or voting card depending on how you
hold your shares. Shares registered in your name are generally covered by one
card. If you hold shares through someone else, such as a stockbroker, you may
get material from them asking how you want to vote.
CHANGING YOUR VOTE
You may revoke your proxy before it is voted by submitting a new proxy with
a later date, by voting in person at the meeting or by notifying our Secretary
in writing.
COMMON STOCK OUTSTANDING
As of the close of business on March 20, 2003, there were 8,303,123 shares
of Michael Baker Corporation common stock issued and outstanding.
QUORUM AND VOTING INFORMATION
In order to conduct the business of the meeting, we must have a quorum.
This means at least a majority of the outstanding shares eligible to vote must
be represented at the meeting, either in person or by proxy. You are considered
a part of the quorum if you submit a properly signed proxy card, vote over the
internet or vote by telephone.
If a quorum is present at the meeting, votes with respect to the election
of directors will be counted as discussed above. Approval of the adoption of the
2003 Long-Term Incentive Compensation Plan requires the
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affirmative vote of a majority of the votes cast upon the proposal by the
holders of Michael Baker Corporation Common Stock. Approval of any other matter
that properly comes before the Board requires the favorable vote of the holders
of shares representing the majority of the votes cast at the annual meeting (in
person or by proxy) unless the matter requires more than a majority vote under
statute or our bylaws. Under Pennsylvania law, an abstention or broker non-vote
is not a vote cast and will not be counted in determining the number of votes
required for approval, but will be counted in determining the presence of a
quorum.
COMMON STOCK OWNERSHIP
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP
Under the proxy rules of the Securities and Exchange Commission a person
beneficially owns Michael Baker Corporation common stock if the person has the
power to vote or dispose of the shares, or if such power may be acquired, by
exercising options or otherwise, within 60 days. The table below shows how much
Michael Baker Corporation common stock is beneficially owned as of March 20,
2003 by directors, nominees for director, the chief executive officer, the four
other highest paid executive officers in 2002 and all directors and executive
officers as a group. Each person has sole voting power and sole dispositive
power unless indicated otherwise.
SHARES PERCENT
EXECUTIVE OFFICER OWNED(1)(2) OF CLASS
----------------- ----------- --------
Donald P. Fusilli, Jr. 96,138 1.2%
H. James McKnight 13,986 *
William P. Mooney 17,244 *
James B. Richards, Jr. 26,346 *
John D. Whiteford 25,949 *
SHARES PERCENT
NON-EMPLOYEE DIRECTOR/NOMINEE OWNED(2)(3) OF CLASS
----------------------------- ----------- --------
Robert N. Bontempo 12,000 *
Nicholas P. Constantakis 17,500 *
William J. Copeland 15,800 *
Roy V. Gavert, Jr. 13,500 *
Thomas D. Larson 7,255 *
John E. Murray, Jr. 12,000 *
Richard L. Shaw 95,132(4) 1.1%
Directors and Executive Officers as a Group 388,069(1)(4) 4.7%
(17 persons)
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*Less than 1%
(1) Includes the number of shares of common stock indicated for each of the
following persons or group which are allocated to their respective accounts
as participants in the ESOP and as to which they are entitled to give
binding voting instructions to the trustee of the ESOP: Mr. Fusilli 26,279
shares, Mr. McKnight 1,926 shares, Mr. Richards 2,820 shares, Mr. Whiteford
8,737 shares and directors and officers as a group 56,344 shares. ESOP
holdings have been rounded to the nearest full share.
(2) Includes options that are exercisable on or within 60 days of March 20, 2003
as follows: Dr. Bontempo 8,000 shares, Mr. Constantakis 5,000 shares, Mr.
Copeland 9,000 shares, Mr. Fusilli 69,859 shares, Mr. Gavert 9,000 shares,
Dr. Larson 3,000 shares, Mr. McKnight 12,060 shares, Mr. Mooney 17,244
shares, Dr. Murray 8,000 shares, Mr. Shaw 82,927 shares, Mr. Richards 23,526
shares, Mr. Whiteford 17,212 and all directors and officers as a group
283,465 shares.
(3) Includes the following restricted stock in which the Directors do not have
dispositive power until restrictions lift as follows: Mr. Shaw 2,000 shares,
Dr. Bontempo 2,000 shares, Mr. Constantakis 2,000 shares, Mr. Copeland 2,000
shares, Mr. Gavert 2,000 shares, Dr. Larson 2,000 shares, Dr. Murray 2,000
shares.
(4) Includes 2,000 shares gifted to Mr. Shaw's spouse for which Mr. Shaw
disclaims beneficial ownership.
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OTHER OWNERS OF MORE THAN 5%
The following table shows shareholders who are known to the Company to be a
beneficial owner of more than 5% of Michael Baker Corporation's common stock as
of December 31, 2002.
SHARES OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK(1) OF CLASS
------------------------------------ --------------- --------
Michael Baker Corporation 2,993,445(1) 35.7%
Employee Stock Ownership Plan
Michael Baker Corporation
P. O. Box 12259
Pittsburgh, PA 15231-0259
Dalton, Greiner, Hartman, Maher & Co. 451,500(2) 5.38%
565 Fifth Avenue
Suite 2101
New York, NY 10017
Dimensional Fund Advisors Inc. 458,814(3) 5.47%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
---------------
(1) Under regulations of the Securities and Exchange Commission, a person who
has or shares voting or investment power with respect to a security is
considered a beneficial owner of the security. Voting power is the power to
vote or direct the voting of shares, and investment power is the power to
dispose of or direct the disposition of shares. Unless otherwise indicated
in the other footnotes below, each person has sole voting power and sole
investment power as to all shares listed opposite such person's name. The
ESOP requires the trustee to vote the shares held by the trust in accordance
with the instructions from the ESOP participants for all shares allocated to
such participants' accounts. Allocated shares for which no such instructions
are given and shares not allocated to the account of any employee are voted
by the trustee in the same proportion as the votes for which participant
instructions are given. In the case of a tender offer, allocated shares for
which no instructions are given are not voted or tendered, and shares not
allocated to the account of any employee are voted by the trustee in the
same proportion as the votes for which participant instructions are given.
(2) According to Schedule 13G filed January 28, 2003, Dalton, Greiner, Hartman
Maher & Co. has the right to dispose of 451,500 shares of common stock and
the right to vote 444,165 of such shares.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as an investment manager to
certain other commingled group trusts and separate accounts. These
investment companies, trusts and accounts are the "Funds" according to the
Schedule 13G, filed February 7, 2003, by Dimensional. In its role as
investment advisor or manager, Dimensional possesses voting and/or
investment power over the securities of Michael Baker Corporation described
in the Schedule 13G that are owned by the Funds. All securities reported in
this schedule are owned by the Funds. Dimensional disclaims beneficial
ownership of such securities.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers to file reports of beneficial ownership and changes in
beneficial ownership of Michael Baker Corporation stock. Directors and officers
must furnish us with copies of these reports. Based on these copies and
directors' and executive officers' representations, we believe all directors and
executive officers complied with the requirements in 2002.
3
PROPOSAL 1 -- ELECT DIRECTORS
Eight directors will be elected for a one-year term expiring on the date of
the next annual meeting of shareholders or until their respective successors
have been elected and qualified.
Your proxy will be voted FOR the election of these nominees unless you
withhold authority to vote for any one or more of them. If any nominee is unable
or unwilling to stand for election, your proxy authorizes us to vote for a
replacement nominee if the Board names one.
THE BOARD RECOMMENDS YOU VOTE "FOR" EACH OF THE FOLLOWING CANDIDATES.
DIRECTOR NOMINEES
The following table sets forth certain information regarding the nominees
as of March 20, 2003. All of the nominees were elected directors by the
Company's shareholders at the 2002 Annual Meeting. Except as otherwise
indicated, each nominee has held the principal occupation listed or another
executive position with the same entity for at least the past five years.
Robert N. Bontempo Professor at Columbia University School of Business since
Age 44 July 1994. Formerly: Assistant Professor of International
Director since 1997 Business at Columbia University Graduate School of Business
from July 1989 to July 1994.
Nicholas P. Constantakis Retired. Formerly: Partner, Andersen Worldwide SC
Age 63 (independent public accountants and consultants) from June
Director since 1999 1961 to September 1997. Director or Trustee of the Federated
Fund Complex.
William J. Copeland Retired. Formerly: Chairman of the Board of the Company;
Age 84 Vice Chairman of the Board of PNC Financial Corp. and
Director since 1983 Pittsburgh National Bank. Director Emeritus of the Federated
Fund Complex.
Donald P. Fusilli, Jr. President and Chief Executive Officer since April 2001.
Age 51 Formerly: President and Chief Operating Officer since May
Director since 2001 2000; Executive Vice President -- Energy since 1994; other
positions with the Company since 1973.
Roy V. Gavert, Jr. Retired. Formerly: President and Chief Executive Officer of
Age 69 Kiplivit North America, Inc. (manufacturing) since July
Director since 1988 1995; Chairman of World Class Processing, Inc.
(manufacturing); Chief Executive Officer of Horton Company
(manufacturer of valves for household appliances); Executive
Vice President, Westinghouse Electric Corporation. Director
Fincom, Inc. and Control Power Corporation.
Thomas D. Larson Self employed (consultant). Formerly: Administrator, United
Age 74 States Federal Highway Administration until January 1992;
Director since 1993 Secretary of the Pennsylvania Department of Transportation;
and Professor of Engineering, The Pennsylvania State
University.
John E. Murray, Jr. Chancellor Duquesne University since 2001; Professor of Law
Age 70 of Duquesne University since prior to 1995. Formerly:
Director since 1997 President of Duquesne University since prior to 1995.
Director or Trustee of the Federated Fund Complex.
Richard L. Shaw Chairman of the Board since 1993. Formerly: Chief Executive
Age 75 Officer from September 1999 to April 2001; President and
Director since 1965 Chief Executive Officer of the Company from September 1993
through September 1994; President and Chief Executive
Officer of the Company from April 1984 to May 1992.
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DIRECTORS' COMPENSATION
Compensation for non-employee directors has been set as follows since May
2001:
- Annual retainer -- $17,000;
- Attendance at each regularly scheduled or special meeting of the Board of
Directors -- $1,000;
- Attendance at a Board of Directors committee meeting -- $750;
- Telephonic attendance at a Board of Directors or committee
meeting -- $100;
- Additional annual retainer for Chairman of the Board of
Directors -- $5,000; and
- Additional annual retainer for committee chairmen -- $2,500.
In addition, non-employee directors participate in the 1996 Nonemployee
Directors' Stock Incentive Plan, which provides long-term incentive compensation
to eligible directors. Under this plan, each member of the Board of Directors
who is not an employee of the Company or any of its subsidiaries is granted
1,000 restricted shares and an option to purchase 2,000 shares of common stock
on the first business day following the Annual Meeting of Shareholders.
See also "Related Party Transactions" on page 11.
THE BOARD AND COMMITTEES
The Board met seven times during 2002. All directors attended at least 75%
of all meetings of the Board and the committees on which they served in 2002.
The Board committees that help the Board fulfill its responsibilities are
discussed below.
THE EXECUTIVE COMMITTEE
The Executive Committee of the Board of Directors, consisting of Mr. Shaw
as Chairman, and Mr. Copeland, Mr. Fusilli and Dr. Murray, held one meeting in
2002. The Executive Committee has all the powers and the right to exercise all
the authority of the Board of Directors in the management of the business and
affairs of Michael Baker Corporation.
THE AUDIT COMMITTEE
The Audit Committee, consisting of Dr. Bontempo as Chairman, and Mr.
Constantakis and Dr. Larson, held seven meetings in 2002. The Board of Directors
in its best business judgment has concluded that all Audit Committee members are
independent as defined by the American Stock Exchange listing standards. The
Audit Committee acts under a written charter which was amended by the Board of
Directors on February 21, 2002. The functions performed by the Audit Committee
include:
- recommending the independent accountants subject to the approval of the
Board of Directors,
- reviewing with the independent accountants the plan for, and the results
of, the auditing engagement,
- approving professional services to be provided by the independent
accountants before the services are performed,
- reviewing the independence of the independent accountants,
- discussing the Company's financial statements with the independent
accountants and management, and
- reviewing the Company's system of internal accounting controls.
The Audit Committee has considered whether the independent public
accountant's provision of non-audit related services is compatible with
maintaining the independence of the independent public accountants.
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THE AUDIT COMMITTEE REPORT
The Audit Committee is responsible for reviewing the Company's financial
reporting process on behalf of the Board of Directors. Management of the Company
has the primary responsibility for the financial statements and the reporting
process, including the system of internal controls. In the performance of our
oversight function, we meet with management periodically to consider the
adequacy of the Company's internal controls and the objectivity of its financial
reporting. We meet privately with the independent public accountants, who have
unrestricted access to the Audit Committee. Specifically, we have reviewed and
discussed the consolidated balance sheet of Michael Baker Corporation and
subsidiaries as of December 31, 2002, and the related consolidated statements of
income, shareholders investment and cash flows, for the year then ended, with
management of the Company and the independent public accountants. These
financial statements, which are the responsibility of the Company's management,
are included in the Company's annual report to shareholders and in the Company's
annual report on Form 10-K as filed with the Securities and Exchange Commission.
They have been audited by PricewaterhouseCoopers LLP, independent public
accountants, and their report thereon, which accompanies the financial
statements, is an important part of the Company's reporting responsibility to
its shareholders. Based on our review of the financial statements and the
discussions with Company management and the independent public accountants, we
are responsible for making a recommendation to the Board of Directors of the
Company regarding inclusion of the audited financial statements in the Company's
annual report on Form 10-K.
We have met with the independent public accountants and discussed the
matters that they are required to communicate to us by Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as amended. These items
include, but are not limited to, significant issues identified during the audit
such as management judgments and accounting estimates, accounting policies,
proposed audit adjustments, financial statement disclosure items and internal
control issues, and if there were any disagreements with management or
difficulties encountered in performing the audit.
The Company's independent public accountants also provided us with written
disclosures required by Independence Standards Board Statement No. 1
(Independence Discussions with Audit Committees). We have met with and discussed
the independent public accountants' independence.
Based on our review and discussions, we have recommended to the Company's
Board of Directors that the aforementioned 2002 audited financial statements be
included in the Company's annual report on Form 10-K for filing with the
Securities and Exchange Commission.
As part of the ongoing oversight process, the Audit Committee has been
closely monitoring the significant regulatory activities of the SEC and AMEX
during the 2002 fiscal year. In order to ensure compliance with all of the new
and pending rules and regulations, the Audit Committee has sought and received
the advice of legal counsel and the advice of the Company's independent public
accountants. The Audit Committee has reviewed its existing charter, policies and
procedures and is positioning itself to adopt and implement appropriate policies
and procedures in a timely manner, and to update its charter accordingly.
Respectfully submitted,
Robert N. Bontempo Nicholas P. Constantakis Thomas D. Larson
THE COMPENSATION COMMITTEE
The Compensation Committee, consisting of Mr. Gavert as Chairman, and Dr.
Bontempo and Dr. Larson, held six meetings in 2002. The Compensation Committee
reviews and recommends to the Board the compensation of senior executives and
directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPANTS
The members of the Compensation Committee in 2002, Mr. Gavert as Chairman,
Dr. Bontempo and Dr. Larson, are non-employee directors. During 2002, no
executive officer of the Company served on a compensation committee (or other
board committee performing equivalent functions) or on the board of
6
directors of any entity (other than the Company's Board of Directors) related to
any member of the Company's Board of Directors.
EVEN IF MICHAEL BAKER CORPORATION'S PREVIOUS FILINGS UNDER THE SECURITIES
LAWS INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, THE FOLLOWING
REPORT AND THE STOCK PERFORMANCE GRAPH ON PAGES 11 AND 12 ARE NOT INCORPORATED
BY REFERENCE INTO ANY SUCH FILINGS.
THE COMPENSATION COMMITTEE REPORT
Introduction. Decisions regarding compensation of the Company's executives
generally are made by the Compensation Committee of the Board. In 2002, the
Compensation Committee consisted of Mr. Gavert as the Chairman and Drs. Bontempo
and Larson.
All recommendations of the Compensation Committee relating to compensation
of the Company's executive officers are reviewed and approved by the full Board.
Set forth below is a report submitted by Mr. Gavert and Drs. Bontempo and Larson
in their capacity as the Board's Compensation Committee addressing the Company's
compensation policies for 2002 as they affected executive officers of the
Company.
Compensation Philosophy. The Company's philosophy on compensation places a
share of employee compensation "at risk", thereby rewarding employees based on
the overall performance of the Company. The Company's "Line-of-Sight" annual
incentive compensation plan adopted in 2001 utilizes this philosophy. The
following are the Company compensation objectives:
- to attract and retain executive officers and other key employees of
outstanding ability, and to motivate all employees to perform to the full
extent of their abilities;
- to ensure that pay is competitive with other leading companies in the
Company's industries;
- to reward executive officers and other key employees for corporate, group
and individual performance; and
- to ensure that total compensation to the executive officers as a group is
not disproportionate when compared to the Company's total employee
population.
Compensation. The Compensation Committee retains the services of William
M. Mercer, a compensation consulting firm, to assist the Committee in connection
with performance of its duties. William M. Mercer provides ongoing advice to the
Committee with respect to the reasonableness of compensation paid to executive
officers of the Company. In addition, William M. Mercer reviews director's
compensation and assists in the development of incentive compensation plans and
policies.
Effective April 25, 2001, when Mr. Fusilli succeeded Mr. Shaw as Chief
Executive Officer, Mr. Shaw entered into a Consulting Agreement to provide for
Mr. Shaw's performance of consulting services to the Company until April 26,
2003 with annual compensation equal to 25% of his salary of $425,006 in effect
on April 25, 2001. In addition, pursuant to the Consulting Agreement, the
Company covers the costs of health insurance and maintains a life insurance
policy for Mr. Shaw. The Agreement also provides for a supplemental retirement
benefit of $5,000 per month commencing at the expiration of the Agreement.
During 2002, life insurance premiums were paid on Mr. Shaw's behalf in the
amount of $45,022. During 2003, the Company agreed to extend the term of this
Agreement for two years until April 26, 2005.
On April 25, 2001, Mr. Fusilli became the President and Chief Executive
Officer of the Company at an annual base salary of $400,000. On February 18,
2003 Mr. Fusilli's salary was increased to $410,000, effective April 1, 2003.
The Compensation Committee believes this salary is in line with the Company's
philosophy for executive officers and is in accord with the responsibilities of
Mr. Fusilli as Chief Executive Officer. In addition to his base salary, Mr.
Fusilli may be awarded a bonus by the Compensation Committee based on the
Committee's evaluation of Mr. Fusilli's performance. In assessing Mr. Fusilli's
performance, the Compensation Committee reviews a variety of areas affecting the
Company's performance for which Mr. Fusilli is held accountable such as
leadership, strategic planning, financial results, succession planning, human
resources, communications, and external and Board relations. The Committee did
not award a bonus to Mr. Fusilli for
7
fiscal year 2002. No stock options were granted to Mr. Fusilli or any other
executive officers in 2003 for fiscal year 2002 performance.
The Company applies a compensation program consisting of base salary,
annual incentive compensation and long-term incentive compensation. In
determining base salaries for 2002, the Compensation Committee reviewed the
relationship of an executive's compensation to that of other executive officers
of the Company, similar executive officers in comparable companies, and the
Company's current and projected growth and profitability performance. In
determining annual and long-term incentive compensation, the Compensation
Committee reviewed the Company's performance in 2002.
The Chief Executive Officer recommends to the Compensation Committee salary
adjustments for executive officers. The Committee reviews these recommendations
in light of the above referenced factors. A final comparison is made to verify
that the total percentage increase in compensation paid to the executive
officers as a group is not disproportionate to the percentage increase
applicable to other Company employee groups.
In keeping with its philosophy of placing a portion of employee
compensation "at-risk", the Committee administers the Company's 2001
"Line-of-Sight" Incentive Compensation Plan, in which all employees have an
opportunity to participate on an annual basis. Under the Plan, the Committee
established a Company performance goal measured by earnings per share and
revenue. Upon achievement of the Company earnings per share performance goal and
other Company goals established based upon an employee's group within the Plan,
the employee may receive payment of an incentive award up to the amount of a
pre-established incentive target. The incentive targets are based upon market
comparisons to ensure that incentive compensation opportunities are competitive
with other leading companies in the Company's industries or lines of business.
Providing an incentive compensation payment opportunity contingent upon the
achievement of the Company's performance goals facilitates the objective of
establishing a clear line-of-sight between the overall performance of the
Company and the individual contribution of each employee.
1995 Stock Incentive Plan. The 1995 Stock Incentive Plan provides long-term
incentive compensation to eligible employees. Stock options awarded under the
Plan are based on the Compensation Committee's judgment concerning the position
and responsibilities of the employee being considered, the nature and value of
his or her services, his or her current contribution to the long-term success of
the Company, the employee's cash compensation, the expected rate of appreciation
in the value of the stock option, and any other factors which the Compensation
Committee may deem relevant. No stock options were granted by the Committee in
2003 for 2002 performance.
2003 Long-Term Incentive Compensation Plan. In February 2003, the Board
adopted the 2003 Long-Term Incentive Compensation Plan, subject to your
approval. The new long-term incentive compensation plan is designed to award
employees for specific performance factors, which are defined in the plan, over
a three (3) year time period. The Compensation Committee and the Board believe
that this plan design provides a commitment to long-term performance. The Plan
provides for the payment of performance-based incentive awards to employees and
includes provisions that protect the Company's ability to take a tax deduction
for such awards. Payment of incentive awards will be, in part, in the form of
restricted stock, which will assist in aligning the interests of employees and
shareholders.
Respectfully submitted,
Roy V. Gavert, Jr. Robert N. Bontempo Thomas D. Larson
THE GOVERNANCE AND NOMINATING COMMITTEE
The Governance and Nominating Committee, consisting of Dr. Murray as
Chairman, and Dr. Bontempo, Mr. Constantakis and Mr. Copeland held two meetings
during 2002. The Governance and Nominating Committee considers and recommends
candidates to sit on the Board of Directors and addresses issues related to
governance relative to the Company.
8
THE HEALTH, SAFETY, ENVIRONMENTAL AND COMPLIANCE COMMITTEE
The Health, Safety, Environmental and Compliance Committee, consisting of
Dr. Larson as Chairman, and Mr. Fusilli and Mr. Gavert held three meetings in
2002. The Committee reviews and considers health, safety, environmental and
compliance issues relative to the Company.
SUMMARY COMPENSATION TABLE
This table shows the compensation for Michael Baker Corporation's Chief
Executive Officer and the four remaining most highly paid executive officers in
2002.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2)
--------------------------- ---- -------- -------- ------------ ---------------
Donald P. Fusilli (3) 2002 $400,005 $ -- 41,056 $ 11,972
President and Chief 2001 $382,696 $259,503 20,528 $ 11,060
Executive Officer 2000 $309,553 $ 50,000 -- $ 86,657
H. James McKnight 2002 $234,998 $ 25,000 19,296 $151,549
Executive Vice President 2001 $234,998 $106,719 9,648 $ 11,672
General Counsel and 2000 $215,034 $ 25,000 -- $ 11,973
Secretary
William P. Mooney(4) 2002 $240,011 $ -- 19,708 $ 858
Executive Vice President and 2001 $240,011 $108,995 9,854 $ 560
Chief Financial Officer 2000 $120,006 $ 25,000 -- $ 258
James B. Richards, Jr. 2002 $196,693 $ -- 15,192 $ 10,527
Executive Vice President 2001 $186,461 $ 84,020 7,596 $ 9,979
2000 $152,216 $ 37,003 -- $ 8,134
John D. Whiteford 2002 $196,589 $ -- 15,602 $ 10,521
Executive Vice President 2001 $190,008 $ 86,287 7,801 $ 9,633
2000 $175,833 $ 38,002 -- $ 67,309
---------------
(1) The Company granted stock options to executive officers in 2002 and 2001,
for 2001 and 2000 performance, respectively. No stock options were granted
to the executive officers in 2000 for 1999 performance.
(2) Includes matching contributions made by the Company under its 401(k) plan
paid on behalf of the following individuals in 2002, 2001 and 2000
respectively: Mr. Fusilli, $9,350, $9,350 and $10,500; Mr. McKnight, $9,350,
$9,350 and $9,651; Mr. Richards, $9,350, $9,350 and $7,023; Mr. Whiteford,
$9,350, $9,350 and $8,862. Also includes group life insurance premiums paid
by the Company on behalf of the following individuals as employees in 2002,
2001 and 2000 respectively: Mr. Fusilli, $2,622, $1,710 and $841; Mr.
McKnight, $2,322, $2,322 and $2,322; Mr. Mooney, $858, $560 and $0; Mr.
Richards, $1,177, $629 and $392; Mr. Whiteford, $283, $283 and $540.
Includes $75,316 and $57,907 in relocation expenses paid in 2000 on behalf
of Messrs. Fusilli and Whiteford, respectively. Includes $139,877 for Mr.
McKnight with respect to stock option exercises in 2002.
(3) Mr. Fusilli's Annual Compensation reflects increases based on changes in his
position during the period presented. Mr. Fusilli was elected President and
Chief Operating Officer in May 2000, and on April 25, 2001, Mr. Fusilli
became the President and Chief Executive Officer of the Company.
(4) Mr. Mooney's Annual Compensation for 2000 represents a partial year based on
his date of hire.
9
2002 OPTION GRANTS
This table shows the options granted in 2002 for 2001 performance.
POTENTIAL REALIZABLE
NO. OF % OF TOTAL VALUE AT ASSUMED
SHARES OPTIONS ANNUAL RATES OF STOCK
SUBJECT TO GRANTED APPRECIATION(1)
OPTIONS TO EMPLOYEES EXERCISE PRICE/ EXPIRATION ---------------------
NAME GRANTED IN 2002 SHARE DATE 5% 10%
---- ------------- ------------ --------------- ---------- -------- ----------
Donald P. Fusilli, Jr. 41,056 19.0% $15.6250 21-Feb-12 $403,436 $1,022,386
H. James McKnight 19,296 8.9% $15.6250 21-Feb-12 $189,612 $ 480,513
William P. Mooney 19,708 9.1% $15.6250 21-Feb-12 $193,660 $ 490,773
James B. Richards, Jr. 15,192 7.0% $15.6250 21-Feb-12 $149,284 $ 378,315
John D. Whiteford 15,602 7.2% $15.6250 21-Feb-12 $153,313 $ 388,525
---------------
(1) Based on assumed annually compounded rates of stock price appreciation over
the ten-year life of the option as permitted by the rules of the Securities
and Exchange Commission. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. There is no assurance the value realized by an
executive will be at or near the value estimated.
2002 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
This table shows the number and value of stock options exercised and
unexercised for the named executive officers.
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 2002 DECEMBER 31, 2002
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- -------- ------------------------- -------------------------------
Donald P. Fusilli, Jr. 0 0 54,463/61,559 $178,781/$41,805
H. James McKnight 20,406 $139,877 4,824/36,306 $0/$25,731
William P. Mooney 0 0 9,854/19,708 $11,948/$11,948
James B. Richards, Jr. 0 0 17,829/21,263 $42,397/$14,219
John D. Whiteford 0 0 11,361/15,603 $16,401/$9,460
---------------
(1) The value of unexercised options is based on the differences between the
exercise prices of the various option grants and the closing price of
Michael Baker Corporation's common stock on the American Stock Exchange on
December 31, 2002 of $10.95.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002 about
equity awards under our equity compensation plans and arrangements in the
aggregate.
(A) (B) (C)
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN(A))
------------- ----------------------- -------------------- -------------------------
Equity compensation plans approved
by shareholders.................. 579,854 $10.72 334,248
Equity compensation plans not
approved by shareholders......... -- -- --
Total.................... 579,854 $10.72 334,248
10
EMPLOYMENT CONTINUATION AGREEMENTS
The Company entered into Employment Continuation Agreements in October
2000, with Messrs. Fusilli, McKnight, Mooney, Richards and Whiteford. Under the
Agreements with Messrs. Fusilli, McKnight, and Mooney, the executives agree to
remain in the employ of the Company for thirty-six months following the date of
a change of control (as defined in the Agreements), and the Company agrees to
provide salary and benefits at levels commensurate with those prior to the
change of control for that period. The Agreements further provide that if the
executive's employment is terminated by reasons other than death, disability,
voluntary termination (except a voluntary termination for good reason as defined
in the Agreements), or is terminated by the Company other than for cause (as
defined in the Agreements) during that period, the Company will pay the
executives their (i) earned salary, (ii) a severance amount equal to three times
the sum of the executives' annual base salary and the average bonus for the five
fiscal years preceding the change of control, and (iii) obligations accrued
under applicable benefit plans and programs, and continue their benefits for
three years. The payments under the Agreements may be subject to reduction to
the extent that they are considered excess parachute payments under the Internal
Revenue Code. Furthermore, the executives will under certain circumstances
receive similar benefits if their employment is terminated in contemplation of a
change of control and a change of control occurs within one year following such
termination.
The Agreements with Mr. Richards and Mr. Whiteford are the same except that
the executive agrees to remain in the employ of the Company for twenty-four
months following a change of control and the severance amount is an amount equal
to two times the sum of the executive's annual base salary and the average bonus
for the five fiscal years preceding the change of control with continued
benefits for two years.
RELATED PARTY TRANSACTIONS
The Company entered into an Employment Agreement with Richard L. Shaw in
April 1988, which was supplemented in March 1992, October 1994, June 1995, March
1998 and September 1999. During 2001, Mr. Shaw, as Chief Executive Officer of
the Company until April 25, 2001, was compensated under the terms of his
Employment Agreement at an annual salary of $425,006. In addition, the Company
covered the costs of health insurance and maintained a life insurance policy for
Mr. Shaw as provided for in the Agreement. This Agreement also provided for a
supplemental retirement benefit of $5,000 per month commencing on expiration of
the Agreement. Effective April 25, 2001, Mr. Shaw retired from the position of
Chief Executive Officer of the Company, and the Company and Mr. Shaw entered
into a Consulting Agreement for Mr. Shaw's consulting services for the period
April 26, 2001 through April 26, 2003. The Consulting Agreement provides an
annual compensation equal to 25% of Mr. Shaw's previous salary of $425,006. In
addition, under the Consulting Agreement, the Company covers the costs of health
insurance and maintains a life insurance policy for Mr. Shaw. The Consulting
Agreement also provides for a supplemental retirement benefit of $5,000 per
month commencing at the expiration of the consulting term. During 2003, the
Company agreed to extend the term of this Agreement for two years until April
26, 2005.
STOCK PERFORMANCE GRAPH
The line graph compares, for the five year period commencing December 31,
1997, the yearly percentage change in the cumulative total shareholder return on
the Company's common stock with the cumulative total return of the S&P 500
Index, the Russell 2000 Index, the Philadelphia Oil Service Index and a peer
group identified by the Company to best approximate the Company's lines of
business. In future Proxy Statements, the Company will no longer compare itself
to the S&P 500 Index, as it believes the Russell 2000 Index and the Philadelphia
Oil Service Index better represent the Company's market capitalization and lines
of business.
The peer group was selected to include publicly-traded companies engaging
in one or more of the company's lines of business: civil infrastructure
engineering, construction management, and operations and maintenance. The peer
group consists of Tetra Tech, Inc., and URS Corporation.
11
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MICHAEL BAKER CORPORATION, THE S&P 500 INDEX, THE RUSSELL 2000 INDEX,
THE PHILADELPHIA OIL SERVICE INDEX, AND A PEER GROUP
(5 YEAR CUMULATIVE TOTAL RETURN COMPARISON GRAPH)
* $100 invested on 12/31/97 in stock or index and assumes reinvestment of
dividends. Fiscal year ending December 31.
PROPOSAL 2 -- APPROVE NEW LONG-TERM INCENTIVE COMPENSATION PLAN
On February 19, 2003, the Board adopted the 2003 Long-Term Incentive
Compensation Plan (the "Incentive Plan") to supplement the Company's 1995 Stock
Incentive Plan and 2001 "Line-of-Sight" Incentive Compensation Plan, subject to
your approval. The Incentive Plan includes, among other things, the requirement
to pay incentive awards in the form of cash and restricted stock and provisions
that protect the Company's ability to take a tax deduction for performance-based
awards made under the Incentive Plan, in conformance with section 162(m) of the
Internal Revenue Code (the "Code") and related regulations, in case certain
executive officers who are awardees individually have more than $1,000,000 of
compensation in any one year. In accordance with Code section 162(m), if you do
not approve the Incentive Plan as proposed in this Proxy Statement no awards
would be made under the Incentive Plan to the chief executive officer or any of
the other four highest compensated executive officers of Michael Baker
Corporation.
The Board thinks you should approve the new Incentive Plan because it
encourages eligible employees to increase their efforts to help make Michael
Baker Corporation more successful and to remain with the Company by providing
them the opportunity to earn incentive payments upon the achievement of
established performance goals. The Incentive Plan will also assist in aligning
the interests of employees and shareholders through the payment of incentive
awards partially in the form of restricted stock.
The following is a summary of the main features of the 2003 Long-Term
Incentive Compensation Plan; however, you may want to read the whole Incentive
Plan before voting, which is attached hereto as Exhibit A.
SUMMARY OF THE 2003 LONG-TERM INCENTIVE COMPENSATION PLAN
The purpose of the Incentive Plan is to provide for an incentive payment
opportunity to key employees of Michael Baker Corporation and its subsidiaries,
which may be earned upon the achievement of established performance goals over a
three (3) year time period. By placing a portion of compensation at risk and by
providing an incentive payment opportunity based upon long-term performance
goals, the Company can reward performance based on the overall performance of
the Company and the individual contribution of each employee.
12
ADMINISTRATION
The Incentive Plan will be administered by the Compensation Committee (the
"Committee") of the Company's Board of Directors. The Committee will be
comprised solely of "outside directors" within the meaning of Code section
162(m) and non-employee directors within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. The Committee will have the power
to designate eligible employees for participation, determine the performance
goals and incentive targets, approve payment of all incentive awards, review and
approve amendments, and make all necessary determinations under the Incentive
Plan. Decisions of the Committee regarding the Incentive Plan are final and
conclusive.
ELIGIBILITY
Participants under the Incentive Plan will be any employees of the Company
or its subsidiaries, including the Company's President and Chief Executive
Officer and any other senior executive officers who are, or may be, "covered
employees" as defined in Code section 162(m)(3). The Company estimates that
approximately 15 senior officers will be eligible to participate in the
Incentive Plan.
PERFORMANCE PERIODS AND PERFORMANCE GOALS
There will be three-year performance periods under the Incentive Plan. A
new performance period will begin on January 1 of each calendar year and end on
December 31 three years thereafter. Within ninety (90) days after the beginning
of each performance period, the Committee will establish specific performance
goals for the period. The performance goals are the specific targets and
objectives established by the Committee under one or more, or a combination of,
absolute values or rates of change in any of the following objective Company and
individual participant performance measures.
- Company performance measures will be based upon one or more of the following
performance measures: earnings per share, earnings per share growth rates,
return on total capital, stock price, revenues, revenues from operations,
costs, net income, operating income, operating margin, cash flow, market
share, return on equity, return on assets and total shareholder return.
- Participant performance measures will be based upon one or more of the
following performance measures: number of accounts, gross margin, workers'
compensation claims, budgets, cost per hire, turnover rate, training costs and
expenses.
The Committee will establish one of the Company performance goals as the
threshold Company performance goal. In general, the threshold Company
performance goal must be achieved in all calendar years within the performance
period in order for incentive awards to be earned at the end of the performance
period. However, with respect to the first performance period, the incentive
awards are paid annually, as described below, and the threshold Company
performance goal must be achieved in each year in which payment of incentive
awards is made.
At the commencement of each performance period, the Committee will also
establish a schedule of incentive targets, setting forth the amount to be paid
based on the extent to which the performance goals for the performance period
are actually achieved. The incentive targets will be expressed as a percentage
of the participants' base salary, or other measure specified by the Committee,
in effect at the time the performance goal is established. Results against the
performance goals will be determined and measured by an objective calculation
method established by the Committee at the time of establishment of the
performance goals, except that the Committee may determine, at the time the
performance goals are established, that unusual items or certain specified
events or occurrences, including changes in accounting standards or tax laws and
the effects of non-operational or extraordinary items as defined by generally
accepted accounting principles, will be excluded from the calculation of the
performance goal.
Payment of any incentive award under the Incentive Plan is contingent upon
the attainment of the pre-established performance goals. The amount of any
incentive award paid may not exceed the incentive target established. The
Committee may not increase any incentive target or incentive award payable. The
Committee may, however, reduce or eliminate any incentive target or incentive
award payable, provided that
13
the action will not result in any increase in the amount of any incentive target
or incentive award payable to any other Incentive Plan participant.
PAYMENT OF INCENTIVE AWARDS
Except for the first performance period, incentive awards will be paid 50
percent in cash and 50 percent in Company stock by March 30 of the year
following the end of the performance period and after the Committee has
determined and certified in writing the extent to which the performance goals
were attained and the incentive awards were earned. One-half of the stock is
subject to restrictions and the risk of forfeiture if the participant's
employment is terminated for any reason prior to the first year anniversary of
the performance period, and is held in escrow by the Company until the risk of
forfeiture lapses.
For the first performance period, incentive awards will be paid by March 30
of each calendar year within the performance period and after the Committee has
determined and certified in writing the extent to which the performance goals
were attained and the incentive awards were earned. For the first calendar year
within the first performance period, incentive awards will be paid in cash. For
the second calendar year within the first performance period, incentive awards
will be paid 50 percent in cash and 50 percent in Company stock. For the third
calendar year within the first performance period, incentive awards will be paid
in Company stock. In each case that a payment is made in Company stock, one-half
of the stock is subject to restrictions and the risk of forfeiture if the
participant's employment is terminated for any reason prior to the first year
anniversary of the end of the calendar year for which the payment was paid, and
is held in escrow by the Company until the risk of forfeiture lapses.
The aggregate number of shares that may be awarded under the Incentive Plan
is 750,000 shares, subject to proportionate adjustment in the event of stock
splits and similar events. The maximum amount of cash compensation that can be
paid to any participant with respect to any performance period under the
Incentive Plan is $500,000 and the maximum number of shares of Company stock
that can be granted to any participant with respect to any performance period is
50,000 shares. The actual amount of compensation to be paid to participants
under the Incentive Plan is not determinable in advance because it is
substantially uncertain whether the minimum levels of performance necessary to
achieve any level of incentive award under the Incentive Plan, and what levels
of performance, will be realized. Additionally, the Committee has retained
discretion to reduce or eliminate the incentive awards payable to any
participant under the Incentive Plan.
AMENDMENT OR TERMINATION OF INCENTIVE PLAN
The Company may amend or terminate the Incentive Plan at any time. Because
the Company has retained the discretion to change specific performance targets,
shareholder re-approval of the Incentive Plan will be required at five-year
intervals in the future under the regulations issued under Code section 162(m).
ADDITIONAL INFORMATION
The Company expects to award performance-based compensation under the
Incentive Plan, which is exempt from the $1,000,000 annual deduction limit (for
Federal income tax purposes) of compensation paid by public corporations to each
of the corporation's chief executive officer and four other most highly
compensated executive officers in each fiscal year, which limit is imposed by
Code section 162(m). Because of ambiguities and uncertainties as to the
application and interpretation of Code section 162(m) and the regulations issued
thereunder, no assurance can be given, notwithstanding the Company's efforts,
that compensation intended by the Company to satisfy the requirements for
deductibility under Code section 162(m) does in fact do so.
VOTE REQUIRED
Approval of the adoption of the Incentive Plan requires the affirmative
vote of a majority of the votes cast upon the proposal by the holders of Common
Stock voting in person or by proxy. Under the Pennsylvania Business Corporation
Law, an abstention or broker non-vote is not a vote cast and will not be counted
in determining the number of votes required for approval, though it will be
counted in determining the presence of a quorum.
14
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE ADOPTION OF THE 2003 LONG-TERM INCENTIVE COMPENSATION PLAN.
OTHER INFORMATION
OTHER BUSINESS
We do not expect any business to come before the meeting other than the
election of directors and the adoption of the new 2003 Long-Term Incentive
Compensation Plan. If other business is properly raised, your proxy authorizes
its holder to vote according to their best judgment.
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected the independent
accounting firm of PricewaterhouseCoopers LLP, ("PwC"), to examine the financial
statements of the Company for 2003.
PwC audited the financial statements of the Company for 2002. The Board of
Directors expects that representatives of PwC will be present at the annual
meeting and, while the representatives do not currently plan to make a statement
at the meeting, they will be available to respond to appropriate questions.
AUDIT FEES
Michael Baker Corporation was billed $304,400 in aggregate fees by PwC for
the professional services rendered for the audit of Michael Baker Corporation's
financial statements for the year ended December 31, 2002, and the reviews of
its financial statements included in its Forms 10-Q for the 2002 fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PwC did not bill Michael Baker Corporation for any financial information
systems design and implementation fees for services rendered during 2002.
ALL OTHER FEES
In addition to the audit fees described above, PwC billed Michael Baker
Corporation $59,937 in aggregate fees for other professional services rendered
in 2002. These fees were primarily for tax services.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, in a limited number of instances, officers, directors and
other employees of the Company may, for no additional compensation, solicit
proxies in person or by telephone to vote for all nominees.
SHAREHOLDER PROPOSALS FOR NEXT YEAR
To be eligible for inclusion in next year's proxy for the 2004 annual
meeting of shareholders, the deadline for shareholder proposals to be received
by our Secretary is December 2, 2003. In connection with the 2004 annual meeting
of shareholders, if we do not receive notice of a matter or proposal to be
considered, on or before February 15, 2004, or in accordance with Section 2.01.1
of our By-Laws with respect to nominations of candidates for election as
directors, then the persons appointed by the Board of Directors to act as
proxies for such annual meeting will be allowed to use their discretionary
voting authority with respect to any such matter or proposal raised at the 2004
annual meeting.
By order of the Board of
Directors,
H. JAMES MCKNIGHT
Secretary
15
EXHIBIT A
MICHAEL BAKER CORPORATION
2003 LONG-TERM INCENTIVE COMPENSATION PLAN
SECTION 1. Purpose. The purpose of the Michael Baker Corporation 2003
Long-Term Incentive Compensation Plan (the "Plan") is to provide for an
incentive payment opportunity to key employees of Michael Baker Corporation (the
"Company") and its subsidiaries, which may be earned upon the achievement of
established performance goals. By providing an incentive payment opportunity
based upon performance goals and by placing a portion of compensation at risk,
the Company can reward performance based on the overall performance of the
Company and the individual contribution of each employee.
SECTION 2. Effective Date. The effective date of this Plan is January 1,
2003, provided that the Plan is approved by shareholders of the Company prior to
the payment of any compensation hereunder. The Plan will remain in effect from
year to year (each calendar year shall be referred to herein as a "Plan Year")
until formally amended or terminated in writing by the Company's Board of
Directors (the "Board").
SECTION 3. Administration of the Plan.
SECTION 3.01. Committee. The Plan shall be administered by a Committee
(the "Committee") appointed by the Board and consisting of not less than two
members of the Board, each of whom at the time of appointment to the Committee
and at all times during service as a member of the Committee shall be both (1) a
"non-employee director" as then defined under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rule and
(2) an "outside director" as then defined in the regulations under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor provision. The Committee shall interpret the Plan and prescribe such
rules, regulations and procedures in connection with the operations of the Plan
as it shall deem to be necessary and advisable for the administration of the
Plan consistent with the purposes of the Plan. The Committee shall keep records
of action taken at its meetings. A majority of the Committee shall constitute a
quorum at any meeting, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all members
of the Committee, shall be the acts of the Committee.
SECTION 3.02. Determinations. The Committee shall determine the Incentive
Targets, Incentive Awards and Performance Goals as defined in Sections 5.01,
5.02 and 5.03 of the Plan and designate the employees who are to participate in
the Plan.
SECTION 3.03. Notice of Participation. Each employee who has been
designated to participate in the Plan shall receive a written notice, in the
form prescribed by the Committee, informing the employee that he or she has been
selected to be a Participant (a "Participant") in the Plan and specifying the
period for which such designation is to remain in effect. No employee shall have
the right to become a Participant and shall not be a Participant until the date
specified in the notice. Designation of participation does not guarantee a
Participant that an Incentive Award will be earned.
SECTION 4. Eligibility, Termination, New Participants.
SECTION 4.01. Eligibility. Any employee of the Company or any subsidiary,
including any employee who is a "covered employee", as defined in Section
162(m)(3) of the Code and the regulations promulgated thereunder, shall be
eligible to participate in the Plan upon written designation by the Committee as
provided in Section 3.03.
SECTION 4.02. Termination of Employment. Except as provided in Section
4.03 of the Plan, a Participant whose employment with the Company and all
subsidiaries is terminated prior to the payment of an Incentive Award or Awards
will forfeit all right to such unpaid Incentive Awards.
SECTION 4.03. Death, Disability or Retirement. If, during a Performance
Period, as defined in Section 5.04 of the Plan, a Participant dies or becomes
disabled, within the meaning of Section 22(e)(3) of the Code, or retires at age
65 or older under and pursuant to any retirement plan of the Company, the
Participant, or his or her estate, shall be entitled to receive a partial
Incentive Award for the portion of the
Performance Period during which the Participant was employed, provided that the
applicable Performance Goals for such Performance Period are achieved and, in
the case of retirement or disability, the Participant is not employed in any
capacity by any competitor of the Company or is otherwise then engaging in
competitive activities with the Company. In the case of any partial Incentive
Award payment, such amounts shall be paid as provided in Section 6 of the Plan.
SECTION 4.04. New Participants. Except as provided in this Section 4.04,
an employee who is not a Participant as of the first day of a Performance Period
shall not become a Participant for that Performance Period. New employees of the
Company or any subsidiary hired during a Performance Period, and employees
promoted during the Performance Period who were not eligible to participate in
the Plan at the beginning of the Performance Period, may, as determined by the
Committee in its discretion, become a Participant during a Performance Period
and participate in the Plan for such Performance Period on a pro-rata basis if
the employee becomes a Participant effective not later than 90 days after the
beginning of the Performance Period.
SECTION 5. Incentive Targets, Incentive Awards, Performance Goals and
Performance Periods.
SECTION 5.01. Incentive Targets. Each Participant under the Plan shall be
assigned an incentive target (an "Incentive Target"), which may be expressed as
a percentage of the Participant's base salary or other measure prescribed by the
Committee, as related to the level of achievement that may be attained over the
performance period. Incentive Targets shall be determined within 90 days after
the commencement of each Performance Period and approved by the Committee.
SECTION 5.02. Incentive Awards. Incentive awards ("Incentive Awards") may
be earned by Participants during a Performance Period; provided, however, that
(a) no Incentive Award may exceed the Participant's Incentive Target established
for the actual level of achievement attained over the performance period and (b)
payment of any Incentive Award under the Plan shall be contingent upon (i) the
achievement of the Threshold Company Performance Goal (measured at 80% of
target), as defined in Section 5.03(a) of the Plan, for each Plan Year within
the Performance Period, (ii) the achievement of any applicable Company
Performance Goals, as defined in Section 5.03(a) of the Plan, and (iii) the
achievement of any applicable Participant Performance Goals, as defined in
Section 5.03(b) of the Plan. Notwithstanding clause (b)(i) of the preceding
sentence, with respect to the First Performance Period, as defined in Section
5.04 of the Plan, the Threshold Company Performance Goal (measured at 80% of
target), need only be achieved for the individual Plan Years within the
Performance Period in order for an Incentive Award for such Plan Years to be
paid pursuant to Section 6.01 of the Plan.
SECTION 5.03. Performance Goals.
(a) Company Performance Goals. Within 90 days after the commencement of
the Performance Period, the Committee shall establish specific performance goals
("Company Performance Goals") for the Company, which may be based upon one or
more of the following objective performance measures and expressed in either, or
a combination of, absolute values or rates of change: earnings per share,
earnings per share growth rates, return on total capital, stock price, revenues,
revenues from operations, costs, net income, operating income, operating margin,
cash flow, market share, return on equity, return on assets and total
shareholder return. The Committee shall designate one or more of such Company
Performance Goals as the threshold Company Performance Goal (the "Threshold
Company Performance Goal") and the weighting among the various Company
Performance Goals established. Except as provided in the last sentence of
Section 5.02 of the Plan with respect to the First Performance Period, in order
for any Incentive Awards to be paid to Participants with respect to a
Performance Period, the Threshold Company Performance Goal established by the
Committee for such Performance Period (measured at 80% of target) must be
achieved for each Plan Year within the Performance Period.
(b) Participants' Performance Goals. Within 90 days after the commencement
of the Performance Period, the Committee shall establish specific performance
goals for individual Participants (the "Participant Performance Goals"), which
may be based upon one or more of the following objective performance measures
and expressed in either, or a combination of, absolute values or rates of
change: number of accounts, gross margin, workers' compensation claims, budgets,
cost per hire, turnover rate, training costs and expenses.
2
(c) Calculation. When the Company Performance Goals and Participants'
Performance Goals are established, the Committee shall also specify the manner
in which the level of achievement of such Company and Participant Performance
Goals shall be calculated and the weighting assigned to such Performance Goals.
The Committee may determine that unusual items or certain specified events or
occurrences, including changes in accounting standards or tax laws and the
effects of non-operational or extraordinary items as defined by generally
accepted accounting principles, shall be excluded from the calculation.
SECTION 5.04. Performance Periods. Unless otherwise determined by the
Committee, there shall be three year Performance Periods under the Plan. A new
Performance Period shall commence on the first day of each Plan Year and end on
December 31 of the third year of such Performance Period. The first Performance
Period under the Plan shall commence on January 1, 2003 and end on December 31,
2005 (the "First Performance Period"), and each succeeding Performance Period
shall commence on January 1 of each successive Plan Year and end on December 31
of the third year of such Performance Period.
SECTION 5.05. Discretion. The Committee shall have no discretion to
increase any Incentive Target or Incentive Award payable that would otherwise be
due upon attainment of the Performance Goals, or otherwise modify any
Performance Goals associated with a Performance Period, but the Committee may in
its discretion reduce or eliminate such Incentive Target or Incentive Award;
provided, however, that the exercise of such negative discretion shall not be
permitted to result in any increase in the amount of any Incentive Target or
Incentive Award payable to any other Participant.
SECTION 5.06. Determination of Incentive Award. The amount of a
Participant's Incentive Award for a Plan Year, if any, shall be determined by
the Committee or its delegate in accordance with the level of achievement of the
applicable Performance Goals, the Participant's Incentive Target for such level
of achievement and the other terms of the Plan, and shall be communicated in
writing to the Participant within 90 days following the end of the Performance
Period to which such Incentive Award relates or, with respect to levels of
achievement attained for any Plan Year within a Performance Period, communicated
periodically as may be determined by the Committee. Prior to any payment of the
Incentive Awards hereunder, the Committee shall determine and certify in writing
the extent to which the Performance Goals and other material terms of the Plan
were satisfied.
SECTION 5.07. Maximum Incentive Awards. Notwithstanding any other
provision of this Plan, the maximum amount payable in cash to any one
Participant under the Plan with respect to any Performance Period shall be
$500,000 and the maximum number of shares of Common Stock granted to any one
Participant under the Plan with respect to any Performance Period shall be
50,000 shares. The limitation in the preceding sentence shall be interpreted and
applied in a manner consistent with Section 162(m) of the Code. The aggregate
maximum number of shares of Common Stock which may be issued under the Plan is
750,000, subject to the adjustment and substitution as set forth in Section 7.
If shares of Common Stock are forfeited to the Company pursuant to the
restrictions applicable, the shares so forfeited shall not again be available
for purposes of the Plan unless during the period such shares were outstanding,
the grantee received no dividends or other "benefits of ownership" from such
shares. The shares which may be issued under the Plan may be either authorized
but unissued shares or treasury shares or partly each, as shall be determined
from time to time by the Board.
SECTION 6. Payment to Participants.
SECTION 6.01. Timing of Payment. An Incentive Award for a Performance
Period shall be paid to the Participant, or in the case of death to the
Participant's beneficiary, on or before March 30th of the year following the end
of such Performance Period, except in the case of the Incentive Awards for the
First Performance Period, which shall be paid on or before March 30th of the
year following the end of each Plan Year within the First Performance Period.
SECTION 6.02. Beneficiary Designation. A Participant may file a completed
designation of beneficiary form with the Committee or its delegate in the form
prescribed. Such designation may be made, revoked or changed by the Participant
at any time before the earlier of death or receipt of any unpaid Incentive
Awards, but such designation of beneficiary will not be effective and supersede
all prior designations until it is received and acknowledged by the Committee or
its delegate. If the Committee has any doubt as to the proper
3
beneficiary to receive payments hereunder, the Committee shall have the right to
withhold such payments until the matter is finally adjudicated. However, any
payment made in good faith shall fully discharge the Committee, the Company, its
subsidiaries and the Board from all further obligations with respect to that
payment.
SECTION 6.03. Form of Payment. Except as provided in the second
succeeding sentence, payment of Incentive Awards shall be made 50% in cash and
50% in Common Stock of the Company. One-half of the Common Stock payment shall
be subject to restrictions and risk of forfeiture in the event the Participant's
employment with the Company and all of its subsidiaries is terminated for any
reason prior to the first year anniversary of the end of the Performance Period
to which such payment of Common Stock relates, and shall be held in escrow by
the Company until lapse of such risk of forfeiture. Payment of Incentive Awards
for the First Performance Period shall be paid (i) in cash with respect to the
First Plan Year within the First Performance Period; (ii) 50% in cash and 50% in
Common Stock of the Company with respect to the second Plan Year within the
First Performance Period; and (iii) in Common Stock with respect to the third
Plan Year within the First Performance Period; provided, however, that all such
Common Stock shall be subject to restrictions and risk of forfeiture in the
event the Participant's employment with the Company and all of its subsidiaries
is terminated for any reason prior to the first year anniversary of the end of
the Plan Year to which such payment of Common Stock relates, and shall be held
in escrow by the Company until lapse of such risk of forfeiture.
SECTION 6.04. Tax Withholding. All Incentive Awards and bonuses, whether
or not deferred under the Plan, shall be subject to Federal income, FICA, and
other tax withholding as required by applicable law.
SECTION 7. Adjustment and Substitution of Shares. If a dividend or other
distribution shall be declared upon the Common Stock payable in shares of Common
Stock, the number of shares of Common Stock which may be issued under the Plan
but are not then subject to outstanding Incentive Awards and the maximum number
of shares as to which shares may be granted during any Performance Period under
Section 5.07, shall be adjusted by adding thereto the number of shares of Common
Stock which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the shareholders entitled to
receive such stock dividend or distribution. Shares of Common Stock so
distributed with respect to any shares held in escrow shall also be held by the
Company in escrow and shall be subject to the same restrictions as are
applicable to the shares on which they were distributed.
If the outstanding shares of Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, or cash or other property,
whether through reorganization, reclassification, recapitalization, stock
split-up, combination of shares, merger or consolidation, then there shall be
substituted for each share of Common Stock which may be issued under the Plan
but which is not then subject to any outstanding Incentive Award, the number and
kind of shares of stock or other securities or property into which each
outstanding share of the Common Stock shall be so changed or for which each such
share shall be exchangeable. Unless otherwise determined by the Committee in its
discretion, any such stock or securities, as well as any other property, into or
for which any shares held in escrow shall be changed or exchangeable in any such
transaction shall also be held by the Company in escrow and shall be subject to
the same restrictions as are applicable to the shares in respect of which such
stock, securities, or other property was issued or distributed.
If the outstanding shares of the Common Stock shall be changed in value by
reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash, or extraordinary distribution
to shareholders of the Common Stock, (a) the Committee shall make any
adjustments to any then outstanding Incentive Award which it determines are
equitably required to prevent dilution or enlargement of the rights of
Participants which would otherwise result from any such transaction, and (b)
unless otherwise determined by the Committee in its discretion, any stock,
securities, or other property distributed with respect to any shares held in
escrow or for which any shares held in escrow shall be exchanged in any such
transaction shall also be held by the Company in escrow and shall be subject to
the same restrictions as are applicable to the shares in respect of which such
stock, securities, or other property was distributed or exchanged.
4
No adjustment or substitution provided for in this Section 7 shall require
the Company to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution. Owners of shares held in escrow shall
be treated in the same manner as owners of Common Stock not held in escrow with
respect to fractional shares created by an adjustment or substitution of shares,
except that, unless otherwise determined by the Committee in its discretion, any
other property paid in lieu of a fractional share shall be subject to
restrictions similar to those applicable to the restricted shares exchanged
therefor.
SECTION 8. Miscellaneous.
SECTION 8.01. No Recourse. If the actual level of achievement of any
Performance Goal taken into account for determination of an Incentive Award is
found to be incorrect by the Company's independent certified public accountants
or if the Threshold Company Goal is not achieved for each Plan Year within the
First Performance Period, there shall be no recourse by the Company or any
Participant. However, the Company shall have the right to reduce any subsequent
payments yet to be made under the Plan for current and future Performance
Periods.
SECTION 8.02. Merger or Consolidation. All obligations for amounts earned
but not yet paid under the Plan shall survive any merger, consolidation or sale
of all or substantially all of the Company's or a subsidiary's assets to any
entity, and be the liability of the successor to the merger or consolidation or
the purchaser of assets, unless otherwise agreed to by the parties thereto.
SECTION 8.03. Gender and Number. The masculine pronoun whenever used in
the Plan shall include the feminine and vice versa. The singular shall include
the plural and the plural shall include the singular whenever used herein unless
the context requires otherwise.
SECTION 8.04. Construction. The provisions of the Plan shall be
construed, administered and governed by the laws of the Commonwealth of
Pennsylvania, including its statute of limitations provisions, but without
reference to conflicts of law principles. Titles of Sections of the Plan are for
convenience of reference only and are not to be taken into account when
construing and interpreting the provisions of the Plan.
SECTION 8.05. Non-alienation. Except as may be required by law, neither
the Participant nor any beneficiary shall have the right to, directly or
indirectly, alienate, assign, transfer, pledge, anticipate or encumber (except
by reason of death) any amount that is or may be payable hereunder, including in
respect of any liability of a Participant or beneficiary for alimony or other
payments for the support of a spouse, former spouse, child or other dependent,
prior to actually being received by the Participant or beneficiary hereunder,
nor shall the Participant's or beneficiary's rights to benefit payments under
the Plan be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or beneficiary or to the debts, contracts, liabilities, engagements,
or torts of any Participant or beneficiary, or transfer by operation of law in
the event of bankruptcy or insolvency of the Participant or any beneficiary, or
any legal process.
SECTION 8.06. No Employment Rights. Neither the adoption of the Plan nor
any provision of the Plan shall be construed as a contract of employment between
the Company or a subsidiary and any employee or Participant, or as a guarantee
or right of any employee or Participant to future or continued employment with
the Company or a subsidiary, or as a limitation on the right of the Company or a
subsidiary to discharge any of its employees. Specifically, designation as a
Participant does not create any rights, and no rights are created under the
Plan, with respect to continued or future employment or conditions of
employment.
SECTION 8.07. Minor or Incompetent. If the Committee determines that any
Participant or beneficiary entitled to a payment under the Plan is a minor or
incompetent by reason of physical or mental disability, it may, in its sole
discretion, cause any payment thereafter becoming due to such person to be made
to any other person for his benefit, without responsibility to follow
application of amounts so paid. Payments made pursuant to this provision shall
completely discharge the Company, its subsidiaries, the Plan, the Committee and
the Board.
5
SECTION 8.08. Illegal or Invalid Provision. In case any provision of the
Plan shall be held illegal or invalid for any reason, such illegal or invalid
provision shall not affect the remaining parts of the Plan, but the Plan shall
be construed and enforced without regard to such.
SECTION 8.09. Amendment or Termination of this Plan. The Board shall have
the right to amend or terminate the Plan at any time, provided that any
termination shall automatically end all of the outstanding Performance Periods
and calculations shall be made with respect to achievement of the Performance
Goals for such Performance Periods for the purpose of determining whether any
partial Incentive Awards may be payable under the Plan; provided, further, that
in the event any partial Incentive Awards are payable, such amounts shall be
paid as soon as practicable following termination of the Plan in the form and
subject to any restrictions determined by the Committee in its sole discretion.
No employee or Participant shall have any vested right to payment of any
Incentive Award hereunder prior to its payment. The Company shall notify
affected employees in writing of any amendment or Plan termination.
SECTION 8.10. Unsecured Creditor. The Plan constitutes a mere promise by
the Company or a subsidiary to make benefit payments in the future. The
Company's and the subsidiaries' obligations under the Plan shall be unfunded and
unsecured promises to pay. The Company and the subsidiaries shall not be
obligated under any circumstance to fund their respective financial obligations
under the Plan. Any of them may, in its discretion, set aside funds in a trust
or other vehicle, subject to the claims of its creditors, in order to assist it
in meeting its obligations under the Plan, if such arrangement will not cause
the Plan to be considered a funded deferred compensation plan. To the extent
that any Participant or beneficiary or other person acquires a right to receive
payments under the Plan, such right shall be no greater than the right, and each
Participant and beneficiary shall at all times have the status, of a general
unsecured creditor of the Company or a subsidiary.
6
ANNUAL MEETING OF STOCKHOLDERS OF
MICHAEL BAKER CORPORATION
April 24, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach and mail in the envelope provided.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [ x ]
1. Elect Directors
NOMINEES:
[ ] FOR ALL NOMINEES O Robert N. Bontempo
O Nicholas P. Constantakis
[ ] WITHHOLD AUTHORITY O William Copeland
FOR ALL NOMINEES O Donald P. Fusilli, Jr.
O Roy V. Gavert, Jr.
[ ] FOR ALL EXCEPT O Thomas D. Larson
(See instructions below) O John E. Murray, Jr.
O Richard L. Shaw
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: [ ]
--------------------------------------------------------------------------------
To change the address on your account, please check the box at right
and indicate your new address in the address space above. Please note [ ]
that changes to the registered name(s) on the account may not be
submitted via this method.
FOR AGAINST ABSTAIN
2. Approve New Long-Term Incentive Compensation Plan [ ] [ ] [ ]
Signature of Stockholder Date:
------------------------------------- ------------
Signature of Stockholder Date:
------------------------------------- ------------
Note: Please sign exactly as your name or names appear on this Proxy.
When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving
full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
YOU MAY RECEIVE BETWEEN ONE AND THREE PROXY CARDS FOR COMMON
STOCK. PLEASE VOTE EACH PROXY CARD THAT YOU RECEIVE AS EACH CARD
REPRESENTS SEPARATE SHARES OF COMMON STOCK HELD BY YOU.
PROXY
MICHAEL BAKER CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Richard L. Shaw and Donald
P. Fusilli, Jr. and each or any one of them, with full power of substitution, as
Proxies to represent and to vote, as designated on the reverse, and in their
discretion on any other business which may properly come before the Annual
Meeting, all the shares of stock of Michael Baker Corporation (the "Company"),
held of record by the undersigned on March 20, 2003, at the Annual Meeting of
the Stockholders (the "Annual Meeting") to be held on April 24, 2003, or any
adjournments thereof. If this proxy card is executed and no direction is given,
such shares will be voted "FOR" Items 1 and 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
MICHAEL BAKER CORPORATION
April 24, 2003
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy
card in the envelope provided as soon
as possible.
- OR - ----------------------------------
TELEPHONE - Call toll-free 1-800-PROXIES COMPANY NUMBER
from any touch-tone telephone and follow ----------------------------------
the instructions. Have your control ACCOUNT NUMBER
number and proxy card available when ----------------------------------
call. CONTROL NUMBER
- OR - ----------------------------------
INTERNET - Access "www.voteproxy.com"
and follow the on-screen instructions.
Have your control number available
when you access the web page.
Please detach and mail in the envelope provided IF you are not
voting via telephone or the Internet.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [ x ]
1. Elect Directors
NOMINEES:
[ ] FOR ALL NOMINEES O Robert N. Bontempo
O Nicholas P. Constantakis
[ ] WITHHOLD AUTHORITY O William Copeland
FOR ALL NOMINEES O Donald P. Fusilli, Jr.
O Roy V. Gavert, Jr.
[ ] FOR ALL EXCEPT O Thomas D. Larson
(See instructions below) O John E. Murray, Jr.
O Richard L. Shaw
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here:
-------------------------------------------------------------------------------
To change the address on your account, please check the box at right
and indicate your new address in the address space above. Please note [ ]
that changes to the registered name(s) on the account may not be
submitted via this method.
FOR AGAINST ABSTAIN
2. Approve New Long-Term Incentive Compensation Plan [ ] [ ] [ ]
Signature of Stockholder Date:
------------------------------------- ------------
Signature of Stockholder Date:
------------------------------------- ------------
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by
authorized person.