PROXY STATEMENT
2007 ANNUAL MEETING OF STOCKHOLDERS
October 31, 2007
This
proxy statement, notice of the 2007 Annual Meeting of Stockholders (the “Annual
Meeting”), and accompanying proxy are being furnished to you as a stockholder
of Kaiser Group Holdings, Inc., a Delaware corporation (the “Company” or “Kaiser
Holdings”), in connection with the Annual Meeting, which is to be held on
Wednesday, October 31, 2007, at the time and place and for the purposes
set forth in the accompanying notice of the meeting. The record date for determining stockholders
entitled to vote at the Annual Meeting is the close of business on
September 4, 2007 (the “Record Date”).
The
Company’s Board of Directors (the “Board of Directors” or the “Board”) is
making this proxy solicitation. A proxy
card is included with this mailing. If
your shares are registered in your name, the proxy card shows the number of
shares of Kaiser Group Holdings, Inc. Common Stock, par value $0.01 per
share (“Common Stock”), that you owned as of the Record Date. There were no shares of Preferred Stock, par
value $0.01 per share, outstanding as of the Record Date. All properly executed proxy cards received
before the polls are closed at the Annual Meeting, and not revoked or
superseded, will be voted at the Annual Meeting in accordance with the
instructions indicated by those proxy cards.
Please
complete and sign the enclosed proxy card and return it to the Company as soon
as possible. If you change your mind after you return your proxy card, you may
revoke it at any time, including at the Annual Meeting. You may revoke your proxy by mailing a second
(or subsequent) proxy card to the Company’s stock transfer agent for receipt
prior to the closing of the polls at the Annual Meeting, or by voting on the
ballot provided to stockholders at the Annual Meeting. Unless a proxy is revoked, all proxy cards
that are properly executed and received at or prior to the Annual Meeting will
be voted in accordance with the instructions indicated by those proxy
cards. Unless a contrary instruction is
indicated in the proxy card, or if the proxy card is properly executed but the
voting “box” is left blank, it will be voted FOR the election of directors as
nominated and in the discretion of the person(s) named as the proxy if any
other business properly comes before the Annual Meeting.
The
Company’s Annual Report for the year ended December 31, 2006 (the “2006 Annual
Report”), the notice of Annual Meeting, this proxy statement and the enclosed
proxy card initially will be mailed in a single envelope to stockholders on or
about September 28, 2007. The
Company has borne the cost of preparing, assembling, and mailing these
items. Directors, officers, and
employees of the Company may solicit proxies on behalf of the Company by telephone
and personal interview without special compensation.
The
Company will deliver copies of the proxy statement and the 2006 Annual Report
to brokerage firms and other custodians, nominees, and fiduciaries for
forwarding to beneficial owners of Common Stock. The Company will reimburse those brokerage
firms, custodians, nominees, and fiduciaries for their expenses in connection
with forwarding these materials.
VOTING SECURITIES OF THE COMPANY
Holders
of shares of Common Stock issued and outstanding as of the Record Date are
entitled to vote at the Annual Meeting.
There were 1,790,890 shares
of Common Stock issued and outstanding as of the Record Date. Each share of Common Stock is entitled to one
vote per share.
The
presence at the Annual Meeting, in person or by proxy, of the holders of a
majority of the shares of stock outstanding at the close of business on the
Record Date will constitute a quorum.
Submitted
proxies reflecting broker non-votes or abstentions will be deemed present at
the Annual Meeting in determining the presence of a quorum. Broker non-votes occur when a person holding
shares through a bank or brokerage account does not provide instructions as to
how his or her shares should be voted, and the broker does not exercise
discretion to vote those shares on a particular matter.
The
affirmative vote of the holders of a plurality of the number of shares present
in person or represented by proxy and entitled to vote at the Annual Meeting is
required for the election of directors.
1
A
list of stockholders will be available for inspection at least ten days prior
to the Annual Meeting at the Company’s offices, 9300 Lee Highway, Fairfax,
Virginia 22031.
FORWARD-LOOKING STATEMENTS
This
proxy statement contains, and our periodic filings with the Securities and
Exchange Commission (the “Commission”) and written or oral statements made by
our officers and directors to the press, potential investors, securities
analysts and others, may contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 (the “Securities Act”) and of
Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).
These forward-looking statements are not historical facts, but rather are
predictions, and generally can be identified by use of statements that include
terms such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan”
or “foresee” or other words or phrases of similar import. Similarly,
statements that describe or contain information related to matters such as our
intent, belief, or expectation with respect to financial performance, claims
resolution, cash availability, stock redemption plans, contract awards and
performance, de-registering the Common Stock, potential acquisitions and joint
ventures
and cost-cutting measures
are forward-looking statements. These forward-looking statements often reflect
a number of assumptions and involve known and unknown risks, uncertainties and
other factors that could cause our actual results to differ materially from
those currently anticipated in these forward-looking statements. In light
of these risks and uncertainties, including those described below, the
forward-looking events might or might not occur.
2
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The
Company’s Bylaws provide that the number of directors shall not be less than
one and give the Board the authority to determine the actual number of
directors. There are four directorships
on the Company’s Board. The Board of
Directors currently consists of three members; one vacancy was created by the
resignation of Mr. Jon Bennett from the Board, effective January 31, 2007. The Board of Directors has nominated
Mr. Douglas W. McMinn, Mr. Mark S. Tennenbaum and Mr. Frank E.
Williams, Jr. for election to terms expiring at the next Annual Meeting of
Stockholders, or until their successors are duly elected. A successor to Mr. Bennett has not yet
been identified. The Board of Directors
has determined that Mr. Tennenbaum and Mr. Williams are both
independent, as defined in the Company’s Corporate Governance Principles and as
discussed further below under “Corporate Governance—Director Independence.” Mr. McMinn, our President and Chief
Executive Officer, is an employee director and therefore not independent as
defined in the Company’s Corporate Governance Principles.
Nominees
for Election to the Board of Directors for Terms Expiring at the next Annual
Meeting of Stockholders
Douglas
W. McMinn, 60, has been President and Chief Executive Officer of Kaiser
Holdings since September 2004. Mr. McMinn
has been a director of Kaiser Holdings since September 2004 and also
serves on the Board of Managers of Kaiser-Hill Company, LLC, the joint venture
owned equally by Kaiser Holdings and CH2M Hill Companies Ltd.
Mr. McMinn has been a senior officer of the Company and its
predecessors for more than 19 years.
Mr. McMinn is the Chief Executive Officer of Global
Trade & Invest, Inc., a firm which he co-founded to engage in
international trading activities and to provide consulting assistance to
companies doing business internationally.
Mr. McMinn served in the United States
Government as a staff member in the National Security Council and as an
Assistant Secretary of State for Economic and Business Affairs, U.S. Department
of State, from 1985 to 1987. Mr. McMinn owns 500 shares of Common Stock.
Mark S. Tennenbaum, 48, has been a director of
Kaiser Holdings since September 2004. Since January 2006, Mr. Tennenbaum
has served as Managing Partner of AM Golf LLC, which owns and manages a
public, eighteen-hole golf course. Since
September 2004, Mr. Tennenbaum has served as the Chief Financial Officer
of Saratoga Partners, which owns and manages an apartment complex in Tempe, Arizona. From 2001 to 2004, Mr. Tennenbaum was a
private investor. Prior to that, Mr. Tennenbaum
was a co-founder, director and chief financial officer of FrontBridge
Technologies, Inc., a privately-held provider of secure managed messaging
services acquired by Microsoft in 2005, from its inception in 1999 until 2001. Mr. Tennenbaum beneficially owns 200,000
shares of Common Stock held
by
the Mark S. Tennenbaum Investment Trust. Entities controlled by Mr. Tennenbaum’s
father, Michael E. Tennenbaum, and brother, Andrew R. Tennenbaum, are
significant holders of the Company’s Common Stock.
Frank E. Williams, Jr., 73, has served on the Board
of Directors since December 2002, is Chairman of the Board of Directors of
Kaiser Holdings, and also serves on the Board of Managers of Kaiser-Hill
Company, LLC, the joint venture owned equally by Kaiser Holdings and CH2M Hill
Companies Ltd. Mr. Williams
currently serves as Chairman and principal
owner of Williams Enterprises of Georgia, Inc., a holding company
controlling six subsidiaries active in various facets of the steel
industry. In addition, Mr. Williams
serves as Chairman, CEO, and 50-percent owner of Bosworth Steel
Erectors, Inc., a major erector of steel products in the Southwestern
United States, and Chairman and a major shareholder of Wilfab, Inc., a
fabricator of structural steel.
Mr. Williams is also Managing Partner and principal owner of
Structural Concrete Products, LLC, a manufacturer of pre-stressed concrete
building systems, and of Industrial Alloy Fabricators, LLC, a fabricator of
alloy plate products for the pulp and chemical industries. He serves as a member of the Board of
Directors of Capital Bank, N.A. and Diamondhead Casino Corporation. Mr. Williams currently serves as a
director of Williams Industries, Inc. of Manassas, Virginia, a company he
founded and of which served as President, CEO and Chairman until
November 1994. Williams
Industries, Inc. is a public Nasdaq-listed company that owns five
subsidiaries active in the steel industry, including Williams Bridge Co., one
of the largest fabricators of steel plate for bridge structures in the
Mid-Atlantic region. Mr. Williams also
currently serves as a member of the Committee of Equity Holders in the Chapter
11 bankruptcy proceedings of Global Power Equipment Group. Mr. Williams
beneficially owns 17,950 shares of Common Stock.
The Board
of Directors recommends that the stockholders vote FOR the nominees set forth
above.
3
CORPORATE GOVERNANCE
Corporate Governance Principles and Code of
Conduct
The
Company’s Board of Directors has adopted Corporate Governance Principles for
the Board of Directors and a Corporate Code of Conduct, including Policies on
Securities Law Compliance and Transactions in Company Securities. The Code of Conduct applies to all employees,
officers and directors and includes, but is not limited to, the substance of
the code of ethics required by applicable rules of the Commission
.
These documents are
available on the Company’s website at:
www.kaisergroup.com
.
Director Independence
Each year, the Board of Directors determines the
independence of each director according to the definition of independence
included in the Company’s Corporate Governance Principles, which are available
on the Company’s website at
www.kaisergroup.com
. The Board has determined that Mr. Tennenbaum
and Mr. Williams are independent directors.
In addition, Mr. Bennett was determined to be independent during his
service on the Board in 2006. The
Corporate Governance Principles consider an independent director to be a
non-employee director. However, in
addition to this status, the Board of Directors may also consider other
material factors that could limit a director nominee’s ability to remain
independent. In 2006, the Board
considered the Common Stock holdings of Mr. Tennenbaum and his family members,
who then collectively owned 42.1% of the outstanding Company’s Common
Stock. Following this consideration, the
Board determined that Mr. Tennenbaum was independent.
Communications with the Board of Directors; Board
Attendance at Annual Meeting
The
Company does not have a formal process for stockholders to send communications
to the Board. Communications addressed
to the Board of Directors as a whole, or to individual directors, in care of
the Company at the Company’s executive offices, 9300 Lee Highway, Fairfax,
Virginia 22031, will be forwarded promptly to the addressee(s) of such
communications.
The
Company does not have a policy with respect to Board members’ attendance at the
Annual Meeting. However, the Company’s
practice is to hold a meeting of the Board of Directors immediately following
each annual meeting, and Board members typically attend the annual meeting as
well. All members of the Board of
Directors were present at the annual meeting of stockholders held on March 2,
2006.
STANDING
COMMITTEES OF THE BOARD
To assist the Board of Directors in carrying out its responsibilities,
the Board has delegated certain authority to two committees, the current
memberships of which are as follows.
Each of the committees is composed of the Company’s two independent
directors, as defined in the Company’s Corporate Governance Principles.
Committees of the Board of Directors
|
Compensation Committee
|
|
Audit
Committee
|
|
|
|
|
|
Mr. Tennenbaum,
Chairman
|
|
Mr. Williams,
Chairman
|
|
|
|
|
|
Mr. Williams
|
|
Mr. Tennenbaum
|
Audit Committee
The
Audit Committee is responsible for the selection, and reviews and accepts the
reports, of the Company’s independent registered public accounting firm,
PricewaterhouseCoopers LLP (“PwC”) for fiscal year 2005 and Stegman & Company
(“Stegman”) for fiscal year 2006. The
Audit Committee met four times during the year ended December 31, 2005 and six
times during the year ended December 31, 2006.
The Audit Committee operates under a written charter adopted by the
Board of Directors and was established in accordance with Section 3(a)(58)(A)
of the Exchange Act. The Board has
concluded that Mr. Tennenbaum, an independent director, is the financial expert
on the Audit Committee. The Charter of
the Audit Committee of the Board of Directors is attached to this proxy
statement as Annex A.
4
Independent Registered Public Accounting Firm
On August 21, 2006, the
Audit Committee was informed by PwC that PwC was resigning as the Company’s
independent auditor effective August 21, 2006. The reports of PwC on the Company’s
consolidated financial statements for the fiscal years ended December 31, 2004
and 2005 did not contain an adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2004 and
2005 and the subsequent interim period from January 1, 2006 through August 21,
2006, (i) there were no disagreements between the Company and PwC on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of PwC, would have caused PwC to make reference to the subject
matter of the disagreement(s) in connection with its reports on the
consolidated financial statements for such periods, and (ii) there were no “reportable
events” as such term is defined in Item 304(a)(1)(v) of Regulation S-K.
On October 21, 2006, the Board of Directors engaged
Stegman to audit the Company’s consolidated financial statements for the fiscal
year ending December 31, 2006. The
Company had not consulted with Stegman during the Company’s two most recently
completed fiscal years or through October 24, 2006 regarding the application of
accounting principles to specific transactions, either completed or proposed,
or the type of audit opinion that might be rendered on the financial statements
of the Company as well as any matters or reportable events described in Items
304(a)(2)(i) or (ii) of Regulation S-K.
The Company is not asking stockholders to approve the engagement of
Stegman at the 2007 Annual Meeting.
Audit
Committee Report Relating to the Fiscal Year Ended December 31, 2005 and
2006
The
Audit Committee of the Board of Directors of Kaiser Group Holdings, Inc. (the “Company”)
has reviewed and discussed with PricewaterhouseCoopers LLP (“PwC”) the audited
consolidated financial statements of the Company contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2005 and
with Stegman & Company (“Stegman”) the audited consolidated financial
statements of the Company contained in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2006. The Audit Committee has also discussed with
PwC (with respect to the year ended December 31, 2005) and Stegman (with
respect to the year ended December 31, 2006) the matters required to be
discussed pursuant to Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended (AICPA,
Professional
Standards
, Vol. 1. AU Section 380), as adopted by the PCAOB in Rule
3200T, which includes, among other things, matters related to the conduct of
the audit of the Company’s consolidated financial statements.
The
Audit Committee has received and reviewed the written disclosures and the
letter from each of PwC and Stegman required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), as adopted by the PCAOB in Rule 3600T, and
has discussed with each of PwC and Stegman its independence with respect to the
Company.
The
Company’s policies with respect to pre-approval of non-audit services to be
provided by the Company’s independent accountants are discussed below. The Company is disclosing below fees paid to
PwC and Stegman during the past three fiscal years under the heading “Audit and
Non-Audit Fees.”
Based
on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements for the year ended December 31, 2005 be included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2005, as
filed with the Securities and Exchange Commission on March 28, 2006 and that
the audited consolidated financial statements for the year ended December 31,
2006 be included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2006, as filed with the Securities and Exchange
Commission on March 30, 2007.
Submitted by the Audit Committee
Frank
E. Williams, Jr.—Chairman
Mark S. Tennenbaum
The
information contained in the above report shall not be deemed to be “soliciting
material” or to be “filed” with the Commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act or
the Exchange Act, except to the extent that the Company specifically
incorporates it by reference in such filing.
5
Audit and
Non-Audit Fees
PwC served as the Company’s
independent registered public accounting firm
until August 21, 2006. Stegman served as the Company’s independent
registered public accounting firm beginning October 21, 2006.
Audit
Fees
: Audit fees were
for professional services rendered for the audit of the Company’s annual
financial statements for the years ended December 31, 2005 and 2006 and the
reviews of the financial statements included in the Company’s quarterly reports
on Form 10-Q for the years ended December 31, 2005 and 2006.
Tax
Fees
: Tax fees were
for services related to consulting services provided by PwC and rendered during
the year ended December 31, 2004.
Neither PwC nor Stegman provided any tax services to the Company during
the years ended December 31, 2005 and 2006.
|
Audit Fees
|
|
Fiscal 2006
|
|
Fiscal 2005
|
|
Fiscal 2004
|
|
|
|
|
|
|
|
|
|
|
|
PwC
|
|
|
|
|
|
|
|
|
Annual audit of
Kaiser Group Holdings, Inc.
|
|
$
|
3,500
|
|
$
|
105,500
|
|
$
|
80,000
|
|
|
Quarterly review
procedures
|
|
$
|
27,400
|
|
$
|
37,700
|
|
$
|
30,000
|
|
|
Total
|
|
$
|
30,900
|
|
$
|
143,200
|
|
$
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
Stegman
|
|
|
|
|
|
|
|
|
Annual audit of
Kaiser Group Holdings, Inc.
|
|
$
|
39,586
|
|
N/A
|
|
N/A
|
|
|
Quarterly review
procedures
|
|
$
|
10,000
|
|
N/A
|
|
N/A
|
|
|
Total
|
|
$
|
49,586
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Tax
Fees
|
|
|
|
|
|
|
|
|
Tax compliance
work
|
|
—
|
|
—
|
|
—
|
|
|
Tax
consulting—Canada
|
|
—
|
|
—
|
|
$
|
7,459
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
80,486
|
|
$
|
143,200
|
|
$
|
117,459
|
|
Policies
With Respect to Approval and Pre-Approval of Non-Audit Services
The
Audit Committee’s responsibilities include review and pre-approval of all audit
and non-audit services performed by the independent registered public
accounting firm. In exercising that
responsibility with respect to proposed engagements for non-audit services, the
Audit Committee’s Charter
requires
the Committee to give paramount consideration to the question of whether
engagement of the independent registered public accounting firm to perform
those services is likely to create a risk that the independence of the
independent registered public accounting firm may be impaired. To that end, the Audit Committee endeavors to
exercise its discretion in a manner that will avoid or minimize the risk of
impairing the independence of the Company’s independent registered public
accounting firm.
The
Audit Committee will typically be inclined to approve requests to engage the
independent registered public accounting firm to provide those types of
non-audit services that are closely related to the audit services performed by
the independent registered public accounting firm, such as audit-related
services, tax-compliance/return-preparation services, and “due diligence”
services relating to transactions that the Company may consider from time to
time. Because such non-audit services
bear a close relationship to the audit services provided by the independent
registered public accounting firm, the Audit Committee believes that such
services will not ordinarily present a material risk of impairing the independence
of the independent registered public accounting firm, subject to the Audit
Committee’s policy concerning the total amount payable to the independent
registered public accounting firm for non-audit services with respect to any
fiscal year.
Between
meetings of the Audit Committee, the Chairman of the Audit Committee is
authorized to review and, where consistent with this policy, to pre-approve
non-audit services proposed to be performed by the independent registered
public accounting firm that are budgeted for fees of $25,000 or less. The Chairman must report any pre-approval
decisions to the Audit Committee as soon as practicable and in any event at its
next scheduled meeting.
6
Presence at Annual Meeting
A
representative of Stegman will be present at the Annual Meeting. The representative will be given an
opportunity to make a statement if he or she desires to do so and will be
available to answer appropriate questions from stockholders.
Compensation Committee
The
Compensation Committee (a) reviews and approves (or recommends to the
entire Board of Directors) the annual salary, bonus and other benefits (direct
and indirect) of the Chief Executive Officer and the other executive officer,
(b) reviews and submits to the full Board recommendations concerning, and
amendments to, new executive compensation or stock plans, and
(c) establishes, and periodically reviews, the Company’s policies in the
area of management perquisites.
The
Compensation Committee is currently composed of two directors, Mr. Tennenbaum
and Mr. Williams. During 2006, the
Compensation Committee was composed of three members, Mr. Bennett, Mr.
Tennenbaum and Mr. Williams. Mr. Bennett
was the Chairman of the Compensation Committee in 2006; he resigned as a
director and the Chairman of the Compensation Committee effective January 31,
2007. On the same day, Mr. Tennenbaum
was appointed as the Chairman of the Compensation Committee by the Board and
continues to serve in this role. There
are currently no specific qualifications to serve on the Compensation
Committee, which the Board considers appropriate given the small size of the
Board, the limited number of employees of the Company and the Company’s unique
situation.
The Compensation Committee
met one time during the year ended December 31, 2005 and four
times during the year ended December 31, 2006. All three Committee members participated in
the meetings held in 2006, and the Chairman of the Compensation Committee was
responsible for setting the agenda of each Committee meeting. The Compensation Committee did not meet in
executive session in 2006. The Company’s
named executive officers neither attended any Compensation Committee meetings
in 2006 nor participated in any compensation decisions in 2006. However, Mr. McMinn and Dr. Burakow did play
a role in the assessment and design of compensation programs, plans and awards
for the Company’s executives. The
Compensation Committee did not retain any outside advisers in 2006.
The Compensation Committee
currently operates according to a charter which was adopted on March 19,
2007. The Compensation Committee’s
charter provides the Compensation Committee with the authority to:
·
Oversee the Company’s compensation structure,
policies and programs and assess whether the Company’s compensation structure
establishes appropriate incentives for management and employees;
·
Administer and make recommendations to the
Board with respect to the Company’s incentive compensation and equity-based
compensation plans that are subject to Board approval;
·
Review and approve corporate goals and
objectives relevant to the compensation of the CEO, evaluate the CEO’s
performance in light of the goals and objectives and set compensation based on
this evaluation;
·
Set compensation for other executives based
on the CEO’s recommendation;
·
Approve stock option and other incentive
awards for the Company’s executives;
·
Review and approve the design of other
benefit plans pertaining to the Company’s executives;
·
Review and recommend employment and
agreements and severance agreements for executives (including change of control
provisions);
·
Approve, amend or modify terms of any
compensation or benefit plan that does not require stockholder approval;
·
Review and discuss with management the
Compensation Discussion and Analysis and related SEC disclosure included in the
Company’s annual report and proxy statement, recommend to the Board whether the
Compensation Discussion and Analysis should be included in the Company’s annual
report and proxy
7
statement and prepare the Compensation Committee’s report to be
included in the Company’s annual report and proxy statement;
·
Review the compensation of directors for
service on the Board and Board committees, and recommend any changes to this
compensation; and
·
Review succession plans relating to positions
held by the Company’s executives and make recommendations for people to fill
these positions.
The Compensation Committee’s
charter is attached to this proxy statement as Annex B.
Compensation
Discussion and Analysis
Compensation
Philosophy
The
Compensation Committee makes compensation decisions based on the Company’s
employee compensation policy, which is tailored to reflect the Company’s
unusual circumstances—the small size of the Company and the nature of the
Company’s current business, which involves the management and resolution of
claims arising out of the continuing bankruptcy proceedings relating to Kaiser
Group International, Inc., negotiations and proceedings relating to the
Nova Hut project, participating in the affairs of Kaiser-Hill and exploring
strategic alternatives for the Company.
The Company’s main compensation goal is to retain a sufficient number of
employees to carry out its responsibilities and to evaluate other opportunities
that the Company may wish to pursue in the future. The Board and the Compensation Committee
believe it to be in the best interests of the Company to retain a small number
of knowledgeable employees and provide these employees with appropriate incentives.
As a result, the
Compensation Committee operates under a compensation philosophy that provides
the Company’s named executive officers with several elements of compensation,
including: (1) competitive base salary; (2) a yearly cash bonus to reward
outstanding performance; (3) insurance benefits; and (4) 401(k) plan
contributions.
In addition to the
compensation discussed above, the Compensation Committee can utilize the
Company’s 2002 Equity Compensation Plan to provide additional compensation. The
2002 Equity Compensation Plan allows the Compensation Committee to award stock
options, stock appreciation rights, restricted stock awards, and phantom stock
and/or performance shares to key employees, consultants and directors. The 2002
Equity Compensation Plan was implemented to align the goals of the executives
and directors with those of the Company’s stockholders. To date, all grants made under the 2002
Equity Compensation Plan have been made in the form of shares of Common Stock.
Setting Named Executive
Officer Compensation
In order to assist the
Compensation Committee with its compensation decisions, the performance of the
Company’s executive officers is frequently reviewed throughout the year. Each
quarter, the Board evaluates the performance of our named executive officers.
The Compensation Committee also performs an annual evaluation of executive
performance and the salary and bonus programs for each named executive
officer. As a result of the Compensation
Committee’s evaluation, the Compensation Committee determines annual bonuses
for the executives at the end of each calendar year. The Compensation Committee has sole
discretion to increase or decrease the bonuses paid to the named executive
officers each year. At the end of each
fiscal year, the Compensation Committee also evaluates the success of its
compensation policies, by examining the Company’s ability to retain and provide
appropriate incentives to key executives consistent with industry standards for
a public company of Kaiser Holdings’ unique situation.
Fiscal Year 2006 Compensation
Actions
Prior to December 2006, Mr.
McMinn and Dr. Burakow were serving as named executive officers without
employment agreements. In November 2005,
the Compensation Committee set compensation for Mr. McMinn and Dr. Burakow by
evaluating performance, gauging the market for senior executive talent and
reviewing past pay and performance records. The Compensation Committee examined
several metrics during this review, including the success in resolution of
outstanding bankruptcy claims and the capture of earnings from the Company’s
50% ownership in the Kaiser-Hill company.
8
On November 11, 2005, the
Compensation Committee determined that, effective September 9, 2005, Mr. McMinn’s
compensation for services as President and CEO should include several features:
(1) a base salary of $235,000; (2) an annual bonus, not to exceed $235,000; (3)
an annual grant of 1,000 shares of Common Stock for service as a director; and
(4) a severance package that would provide for six month’s salary (effective
September 9, 2004) plus one month’s salary for each subsequent six months
employed with the Company, up to a maximum severance payment of one year’s
salary. In addition, the Compensation
Committee awarded Mr. McMinn 2,000 shares of Common Stock on November 11, 2005,
which represented 1,000 shares for Mr. McMinn’s service on the Board of
Directors and a one-time grant of 1,000 shares in lieu of an oral agreement
(made when Mr. McMinn was made CEO of the Company) to grant Mr. McMinn 5,000
options to purchase Common Stock.
In addition, on November 11,
2005, the Compensation Committee determined that, effective September 9, 2005,
Dr. Burakow’s compensation for services as Senior Vice-President and Treasurer
should include several features: (1) a base salary of $180,000; (2) an annual
bonus, not to exceed $180,000; and (3) a severance package that would provide
for six month’s salary (effective September 9, 2004) plus one month’s salary
for each subsequent six months employed with the Company, up to a maximum
severance payment of one year’s salary.
On October 9, 2006, the
Company and the Compensation Committee determined that it was in the Company’s
best interests to enter into three-year employment agreements with Mr. McMinn
and Dr. Burakow, in order to retain their services as the Company emerges from
Chapter 11 bankruptcy. These agreements also serve to incentivize Mr. McMinn
and Dr. Burakow not to leave the Company for more lucrative employment
opportunities at other companies. The
employment agreements provide for salary and bonus payments, along with
insurance benefits and contributions to each employee’s 401(K) plans (the
maximum contribution permitted under prevailing law and regulations, which in
2006 was $44,000). These agreements also
provide for post-termination payments and severance benefits, in addition to
health care coverage until Mr. McMinn’s 64
th
and Dr. Burakow’s 62
th
birthdays, which the Company believes to be
appropriate based on the Company’s circumstances. Under the employment agreements, the annual
cash bonuses will be determined by the Compensation Committee each year. The employment agreements also contain
non-solicit and non-competition provisions; as the Company looks into new
business opportunities, the Compensation Committee determined it was important
to limit the executives’ ability to leave the Company and work for a competing
business entity. Pursuant to these
employment agreements, the Compensation Committee reviewed management’s
analysis of Mr. McMinn and Dr. Burakow’s performance and approved 2006 cash
bonus payments of $225,000 for each of these named executive officers.
As part of the Compensation
Committee’s negotiations with Mr. McMinn and Dr. Burakow regarding these
agreements, the Compensation Committee also agreed to develop a long term incentive
plan in fiscal 2007. The Compensation
Committee has not yet created this incentive plan.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee,
which is composed solely of independent members of the Board of Directors,
assists the Board in fulfilling its oversight responsibility relating to, among
other things, establishing and reviewing compensation of the Company’s
executive officers. In this context, the
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis section of this proxy statement with management, including our
Chief Executive Officer, Douglas W. McMinn and our Chief Financial Officer,
Nicholas Burakow. Based upon this review
and discussion, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis section be included in
the Company’s annual report on Form 10-K for the fiscal year ended December 31,
2006 and this proxy statement.
Compensation Committee
Mark S. Tennenbaum—Chairman
Frank E. Williams, Jr.
9
EXECUTIVE COMPENSATION
The following table shows the compensation received by
each person who served as an executive officer of the Company during 2006, and
the executive officers that were serving as of December 31, 2006.
SUMMARY COMPENSATION TABLE FOR FISCAL
YEAR 2006
|
Name and Principal Position
|
|
Salary ($)
|
|
Bonus ($)
|
|
Stock
Awards ($)
|
|
All Other
Compensation
($)
|
|
Total ($)
|
|
|
Douglas W. McMinn,
President and
Chief Executive Officer
|
|
$
|
236,961
|
|
$
|
225,000
|
|
$
|
73,600
|
(3)
|
$
|
44,222
|
(4)
|
$
|
579,783
|
|
|
Nicholas Burakow,
Executive Vice President and
Chief Financial Officer (1)
|
|
183,704
|
|
225,000
|
|
0
|
|
44,222
|
(5)
|
452,926
|
|
|
Marian P. Hamlett, Executive Vice President and
Chief Financial Officer (2)
|
|
47,115
|
|
0
|
|
0
|
|
188,055
|
(6)
|
235,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Dr. Burakow’s appointment as Executive Vice
President and Chief Financial Officer was effective April 1, 2006.
(2)
Ms. Hamlett’s employment with the Company
terminated, effective March 31, 2006.
(3)
Represents the grant date fair value of 2,000
shares awarded to Mr. McMinn on February 23, 2006, which include (i) 1,000
shares granted for Mr. McMinn’s service on the Board; and (ii) a one-time grant
of 1,000 shares, discussed in the Compensation Discussion & Analysis on
page 8 of this proxy statement.
(4)
Represents a $44,000 Company contribution to Mr.
McMinn’s 401(k) Plan and $222 for premiums paid for life insurance.
(5)
Represents a $44,000 Company contribution to Dr.
Burakow’s 401(k) Plan and $222 for premiums paid for life insurance.
(6)
Represents a $44,000 Company contribution to Ms.
Hamlett’s 401(k) Plan, a $135,000 severance payment and a $9,000 consulting fee
paid pursuant to Ms. Hamlett’s separation agreement, dated February 8, 2006,
and $55 for premiums paid on life insurance.
GRANT OF PLAN BASED AWARDS TABLE FOR FISCAL YEAR 2006
The table below shows all
plan-based awards that the Company made during 2006 to the Named Executive
Officers:
|
Name
|
|
Board
Approval
Date
|
|
Grant
Date
|
|
All Other
Stock Awards
Or Units
(#)
|
|
Grant Date Fair
Value of Stock &
Option Awards
($)
|
|
|
Douglas W. McMinn
|
|
11/10/2005
|
|
2/23/06
|
|
2,000
|
(1)
|
73,600
|
|
(1)
The
2,000 shares disclosed for Mr. McMinn were granted under the 2002 Equity
Incentive Plan and include: (i) 1,000 shares granted as compensation for his
service on the Board; and (ii) a one-time grant of 1,000 shares, in lieu of
5,000 options, which had been orally promised to Mr. McMinn upon appointment as
CEO of the Company. Mr. McMinn’s shares
have fully vested.
Employment Agreements and Termination of Employment
Arrangements
Employment
Agreement with Douglas W. McMinn
Douglas W. McMinn was
appointed as President and Chief Executive Officer of the Company effective
September 9, 2004. On December 11,
2006, the Company entered into an Executive Employment Agreement with Douglas
W. McMinn (the “McMinn Agreement”) with respect to his employment as the
President and Chief Executive Officer of the Company, effective December 4,
2006.
Under the terms of the
McMinn Agreement, Mr. McMinn has agreed to continue his service as President
and Chief Executive Officer of the Company until December 31, 2009. The McMinn
Agreement provides for a base annual salary of $245,000. The McMinn Agreement
also provides for health insurance, life insurance and disability insurance
coverage from the Company.
10
The McMinn Agreement provides
that Mr. McMinn will receive a performance bonus of $225,000 for 2006. For each of 2007, 2008 and 2009, Mr. McMinn
will be eligible to receive an annual performance bonus, which will be
determined each year at the discretion of the Compensation Committee in light
of the Company’s compensation policy.
In
addition, the McMinn Agreement provides for the following payments and accrued
benefits upon termination of the agreement prior to December 31, 2009:
·
upon termination for any
reason, including termination by the Company for “cause” or termination by Mr.
McMinn without “good reason”, Mr. McMinn will be eligible to receive his “accrued
benefits” from the Company.
·
upon termination: (1) by
the Company without cause or due to disability; (2) by Mr. McMinn due to
retirement; or (3) for good reason upon a “change of control” of the Company,
the McMinn Agreement provides that Mr. McMinn will be paid any accrued benefits
and a severance payment equal to the higher of: (a) eighteen months of
Mr. McMinn’s base salary; or (b) the base salary for the number of
months calculated by subtracting one-half of the number of months Mr. McMinn
has worked under the McMinn Agreement from thirty.
For purposes of the McMinn Agreement:
·
“Cause” means the executive’s willful neglect
or gross negligence in the performance of duties, indictment for or conviction
of a felony, gross misconduct resulting in material harm to the Company, or a
breach of the confidential information, the non-solicitation, the
non-competition, and the non-disparagement provisions of the agreement.
·
“Change in control” means the first of the
following to occur: (1) the persons who constitute the board of directors (the “Board”)
as of the effective date of the agreement (or persons approved by at least 75%
of the existing members of the Board) cease, for any reason, to constitute at
least a majority of the Board subsequent to the effective date of the
employment agreement; (2) the shareholders of the Company approve a
consolidation or merger of the Company, other than a merger of the Company in
which the holders of all classes of stock of the Company prior to the merger
hold more than 50% of all combined classes of stock of the surviving
corporation after the merger; or (3) substantially all of the Company’s assets
are sold or otherwise transferred to parties that are not within “a controlled
group of corporations” in which the Company is a member.
·
“Good reason” means that, without the
executive’s written consent, the following events occur: (1) the Company fails
to obtain assumption of the employment agreement by any successor to the
Company; (2) the relocation of the executive’s principal place of employment
more than seventy-five (75) miles from the location prior to the execution of
the employment agreement or a requirement that the executive be based anywhere
other than the principal place of business; or (3) a reduction of the executive’s
base salary.
·
“Accrued benefits” means earned but unpaid
base salary, incentive compensation earned but not yet paid, unpaid expense
reimbursements, accrued but unused vacation and any vested benefits that the
executive may have under any employee benefit plan of the Company.
The
McMinn Agreement also includes non-solicitation and non-competition terms,
which prohibit Mr. McMinn from soliciting the Company’s employees or competing
with the Company until July 18, 2011.
As of
December 31, 2006, if Mr. McMinn had been terminated from the Company, he would
have been eligible to receive the following amounts under the following
termination scenarios:
|
Reason for Termination
|
|
Payments ($)
|
|
|
Termination for
any reason, including for cause
|
|
$
|
0
|
*
|
|
Termination
without cause
|
|
602,292
|
*
|
|
Retirement
|
|
602,292
|
*
|
|
Termination upon a
change in control
|
|
602,292
|
*
|
|
|
|
|
|
|
*
Assumes
no unpaid accrued benefits due to Mr. McMinn as of December 31, 2006.
11
Employment
Agreement with Nicholas Burakow
On
December 11, 2006, the Company also entered into an Executive Employment
Agreement with Dr. Nicholas Burakow (the “Burakow Agreement”) with respect to
his employment as the Chief Financial Officer of the Company, effective
December 4, 2006.
Under
the terms of the Burakow Agreement, Dr. Burakow has agreed to continue his
service as Chief Financial Officer of the Company until December 31, 2009. The Burakow Agreement provides for a base
annual salary of $225,000. The Burakow
Agreement also provides for health insurance, life insurance and disability
insurance coverage from the Company.
The
Burakow Agreement provides that Dr. Burakow will receive a performance bonus of
$225,000 for 2006. For each of 2007,
2008 and 2009, Dr. Burakow will be eligible to receive a annual performance
bonus, which will be determined each year at the discretion of the Compensation
Committee in light of the Company’s compensation policy.
In
addition, the Burakow Agreement provides for the following payments and accrued
benefits upon termination of the agreement prior to December 31, 2009:
·
upon termination for any
reason, including termination by the Company for “cause” or termination by
Dr. Burakow without “good reason”, Dr. Burakow will be eligible to
receive his “accrued benefits” from the Company.
·
upon termination: (1) by
the Company without cause or due to disability; (2) by Dr. Burakow due to retirement;
or (3) for good reason upon a “change of control” of the Company, the Burakow
Agreement provides that Dr. Burakow will be paid any accrued benefits and
a severance payment equal to the higher of: (a) eighteen months of
Dr. Burakow’s base salary; or (b) the base salary for the number of
months calculated by subtracting one-half of the number of months Dr. Burakow
has worked under the Burakow Agreement from thirty.
For purposes of the Burakow Agreement:
·
“Cause” means the executive’s willful neglect
or gross negligence in the performance of duties, indictment for or conviction
of a felony, gross misconduct resulting in material harm to the Company, or a
breach of the confidential information, the non-solicitation, the
non-competition, and the non-disparagement provisions of the agreement.
·
“Change in control” means the first of the
following to occur: (1) the persons who constitute the board of directors (the “Board”)
as of the effective date of the agreement (or persons approved by at least 75%
of the existing members of the Board) cease, for any reason, to constitute at
least a majority of the Board subsequent to the effective date of the
employment agreement; (2) the shareholders of the Company approve a
consolidation or merger of the Company, other than a merger of the Company in
which the holders of all classes of stock of the Company prior to the merger
hold more than 50% of all combined classes of stock of the surviving
corporation after the merger; or (3) substantially all of the Company’s assets
are sold or otherwise transferred to parties that are not within “a controlled
group of corporations” in which the Company is a member.
·
“Good reason” means that, without the
executive’s written consent, the following events occur: (1) the Company fails
to obtain assumption of the employment agreement by any successor to the
Company; (2) the relocation of the executive’s principal place of employment
more than seventy-five (75) miles from the location prior to the execution of
the employment agreement or a requirement that the executive be based anywhere
other than the principal place of business; or (3) a reduction of the executive’s
base salary.
·
“Accrued benefits” means earned but unpaid
base salary, incentive compensation earned but not yet paid, unpaid expense
reimbursements, accrued but unused vacation and any vested benefits that the
executive may have under any employee benefit plan of the Company.
12
The
Burakow Agreement also includes non-solicitation and non-competition terms,
which prohibit Dr. Burakow from soliciting the Company’s employees or competing
with the Company until October 1, 2011.
As of
December 31, 2006, if Dr. Burakow had been terminated from the Company, he
would have been eligible to receive the following amounts under the following
termination scenarios:
|
Reason for Termination
|
|
Payments ($)
|
|
|
Termination for
any reason, including for cause
|
|
$
|
0
|
*
|
|
|
Termination
without cause
|
|
553,125
|
*
|
|
|
Retirement
|
|
553,125
|
*
|
|
|
Termination upon a
change in control
|
|
553,125
|
*
|
|
|
|
|
|
|
|
|
|
*
Assumes
no unpaid accrued benefits due to Dr. Burakow as of December 31, 2006.
Separation
Agreement with Marian P. Hamlett
On
February 8, 2006, the Company entered into a Separation Agreement and Release
(the “Separation Agreement”) with Ms. Hamlett with respect to the
termination of her employment with the Company.
Under the terms of the Separation Agreement, Ms. Hamlett remained
employed, at her then current annual salary of $175,000, as the Company’s
Executive Vice President and Chief Financial Officer until March 31, 2006.
In
return for Ms. Hamlett’s compliance with the terms of the Separation Agreement,
the Company paid her a lump sum of $35,000, on February 17, 2006. In addition, subject to Ms. Hamlett’s
execution of an addendum attached as Exhibit A to the Separation Agreement, Ms.
Hamlett received a lump sum of $100,000, paid on April 21, 2006. Pursuant to the terms of the Addendum, Ms.
Hamlett agreed to provide consulting services to the Company for a period of
three months from the Separation Date, for consulting fees of approximately
$3,000 per month. Ms. Hamlett received
$9,000 for her consulting services in 2006.
BIOGRAPHICAL INFORMATION OF NON-DIRECTOR EXECUTIVE OFFICER
Biographical information with respect to Mr. McMinn is
set forth under “Nominees for Election to the Board of Directors for Terms
Expiring at the next Annual Meeting of Stockholders.” Biographical information with respect to the
current Executive Vice President and Chief Financial Officer is set forth
below.
Nicholas Burakow, 57, is Executive Vice President, Chief
Financial Officer, Secretary and Treasurer.
Dr. Burakow served as Senior Vice President and Treasurer of the
Company from 2000
until his appointment as
Executive Vice President and Chief Financial Officer, effective April 1,
2006. In addition, Dr. Burakow has
served as Secretary of the Company since 2006.
Dr. Burakow has been a senior officer of the Company and its predecessors
for more than 19 years. Prior to joining
the Company, Dr. Burakow served for 12 years in the U.S. Department of
State’s Foreign Service, where his last position was Director for Monetary
Affairs. Dr. Burakow is also the
President of Global Trade & Invest, Inc.,
a firm which he co-founded to engage in
international trading activities and to provide consulting assistance to
companies doing business internationally.
Dr. Burakow holds a Ph.D. in economics from the University of Notre
Dame.
13
OPERATIONS OF THE
BOARD OF DIRECTORS
Board
Meetings
During
the year ended December 31, 2005, the Board of Directors held seven board
meetings. All directors attended 75% or
more of the 2005 meetings of the Board of Directors and its committees on which
they served. During the year ended
December 31, 2006, the Board of Directors held five board meetings. All directors attended 75% or more of the
2006 meetings of the Board of Directors and its committees on which they
served.
Director Nomination Process
The Board of Directors is responsible for
nominating individuals to present to the stockholders as candidates for Board
membership and for selecting individuals to fill Board vacancies. Currently, there is one vacancy on the Board
of Directors, which resulted from the resignation of Mr. Jon Bennett from the
Board, effective January 31, 2007.
The Board of Directors is in the process of
seeking to identify candidates to fill this vacancy, but does not anticipate
that the vacancy will be filled prior to the Annual Meeting. Given the small size of the
Board, the Company’s limited operations, and the nature and number of its
stockholders, the Board has determined not to establish a Nominating and
Governance Committee.
The Board considers the mix of director
characteristics, experiences and perspectives and skills that are most
appropriate to meet the Company’s needs.
The Board will consider potential nominees submitted by stockholders in
accordance with applicable law and the Company’s Bylaws as in effect from time
to time.
The
Company’s Bylaws provide that nominations of persons for election as directors
of the Company may be made by or at the direction of the Board of Directors, by
any nominating committee or other person appointed by the directors, or by any
stockholder of the Company entitled to vote for the election of directors at
the meeting who complies with the notice procedures set forth in
Section 2.2 of the Company’s Bylaws.
Such nominations, other than those made by or at the direction of the
Board of Directors, must be made pursuant to timely notice in writing to the
Secretary of the Company. To be timely,
a stockholder’s notice must be received at the Company’s principal executive
offices, 9300 Lee Highway, Fairfax, Virginia 22031, not less than 60 days nor
more than 90 days prior to the meeting.
In the event that less than 75 days’ notice or prior public disclosure
of the date of the meeting is given or made to stockholders, to be timely the
notice must be received not later than the close of business on the fifteenth
day following the date on which such notice of the date of the meeting was
mailed or such public disclosure was made, whichever first occurs. A stockholder’s notice of nomination must set
forth:
(a)
as to each person who
is not an incumbent director whom a stockholder proposes to nominate for
election or re-election as a director:
(i)
the name, age, business address, and
residence address of such person,
(ii)
the principal occupation or employment of
such person,
(iii)
the class and number of shares of capital stock of the Company which
are beneficially owned by such person, and
(iv)
any other information relating to such person that is required to be
disclosed in solicitation for proxies for elections of directors pursuant to
the rules and regulations of the Commission under the Exchange Act, and
(b)
as to the stockholder giving the notice:
(i)
the name and record address of such
stockholder, and
(ii)
the class and number of shares of capital
stock of the Company which are beneficially owned by such stockholder.
Such
notice shall be accompanied by the written consent of each proposed nominee to
serve as a director of the Company if elected.
The Company may require any proposed nominee to furnish such other
information as reasonably may be required by the Company to determine the eligibility
of such proposed nominee to serve as a director of the Company.
14
Persons nominated by
stockholders for election as a director will not be eligible to serve as a
director unless nominated in accordance with the foregoing procedures.
Compensation of Directors
Each independent director who is not an employee of the
Company is paid $1,000 for attendance at each meeting of the Board of Directors
and $500 for attendance at each meeting of a committee of the Board of
Directors of which the director is a member.
The chairman of each committee is paid $750 for attendance at each Board
committee meeting. In addition, each
independent director receives an annual retainer of $20,000, payable in advance
in quarterly installments, and is reimbursed for expenses incurred in
connection with Board service.
I
n
January 2002, the Company adopted a practice of making annual grants of
1,000 shares of Common Stock to each member of the Board of Directors,
including employee directors. In March
2005, the Company amended this practice to allow non-employee directors to
elect to receive shares of Common Stock or the equivalent value of such shares
in cash as of the date of grant. If a
director receives shares of Common Stock, such grants are made pursuant to the
terms of the 2002 Equity Compensation Plan.
Beginning in 2006, the annual stock grant to the Chairman of the Board
was increased to 1,250 shares or the equivalent of such shares in cash as of
the date of the grant. On October 24, 2006, the Compensation Committee
of the Board of Directors approved a 1,000 share bonus to be paid to Mr.
Williams for his service as Chairman of the Board, in recognition of his
efforts on behalf of the Company; these shares will paid to Mr. Williams in
November 2007. Other than the
stock grant (or cash equivalent) as described above, directors who are employees of the Company do not receive separate cash
compensation for their service as directors.
The table below sets forth payments made to each
independent director during the year ended December 31, 2006. Mr. McMinn’s
compensation for service on the Board of Directors is included with his
compensation in the Summary Compensation Table on page 10 of this proxy
statement.
|
Name of Independent Director(1)
|
|
Fees Earned
or Paid in
Cash ($)(3)
|
|
Stock
Awards ($)(4)
|
|
All Other
Compensation ($)
|
|
Total ($)
|
|
|
Jon B. Bennett
(2)
|
|
$
|
71,000
|
|
|
|
|
|
$
|
71,000
|
|
|
Mark S.
Tennenbaum
|
|
69,500
|
|
|
|
|
|
69,500
|
|
|
Frank E. Williams, Jr.
|
|
31,500
|
|
$
|
46,000
|
|
$
|
20,000
|
(5)
|
97,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
The compensation Mr. McMinn received for his
service on the Board in the year ended December 31, 2006 is reflected in the
Summary Compensation Table on page 10 of this proxy statement.
(2)
Mr. Bennett resigned from the Board, effective
January 31, 2007.
(3)
The amounts in this column include all cash
compensation paid to the Company’s independent directors. For Mr. Bennett, this amount includes: (i)
$40,000 in lieu of Company stock for service on the Board; (ii) a $20,000
annual retainer; and (iii) $11,000 for attendance at Board and committee meetings. For Mr. Tennenbaum, this amount includes: (i)
$40,000 in lieu of Company stock for service on the Board; (ii) a $20,000
annual retainer; and (iii) $9,500 for attendance at Board and committee
meetings. For Mr. Williams, this amount
includes: (i) a $20,000 annual retainer; and (ii) $11,500 for attendance
at Board and committee meetings.
(4)
This column represents the dollar amount of the
grant date fair value of stock awards granted during fiscal 2006. The amount disclosed for Mr. Williams
represents the 1,250 shares of Common Stock he received as Chairman of the
Board of Directors. Please see the “Security
Ownership of Certain Beneficial Owners and Management” for the aggregate
outstanding stock holdings of members of the Board of Directors.
(5)
The amount disclosed represents a retainer paid
for Mr. Williams’ service on the Kaiser-Hill Company, LLC Board of Managers.
15
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A person is deemed to be a beneficial owner of
the Company’s Common Stock if that person has voting and/or investment power
with respect to such Common Stock or has the right to acquire such Common Stock
within 60 days.
The following table sets forth information
regarding each person known by the Company to beneficially own 5% or more of
the outstanding shares of Common Stock of the Company as of September 26, 2007.
|
Name and Address of Beneficial Owners of
More Than 5% of the Common Stock of the Company
|
|
Number of Shares of
Common Stock
|
|
Percent of
Common Stock
|
|
|
|
|
|
|
|
|
|
Michael E. Tennenbaum
2951 28
th
Street, Suite 1000
Santa Monica, CA 90405
|
|
552,899
|
(a)
|
30.9
|
%
|
|
|
|
|
|
|
|
|
Andrew R. Tennenbaum Investment Trust
1318 San Ysidro Drive
Beverly Hills, CA 90210
|
|
200,000
|
(b)
|
11.2
|
%
|
|
|
|
|
|
|
|
|
Mark S. Tennenbaum Investment Trust
445 24
th
Street
Santa Monica, CA 90402
|
|
200,000
|
(c)
|
11.2
|
%
|
|
|
|
|
|
|
|
|
Bulldog
Investors
Park 80 West, Plaza Two
Saddle Brook, NJ 07663
|
|
102,635
|
(d)
|
5.73
|
%
|
(a)
As
reported on a Form 4 filed with the Commission on August 13, 2007. Includes 77,924 shares of Common Stock
reported to be held by Tennenbaum & Co., LLC, of which Michael E.
Tennenbaum is the Managing Member and 474,975 shares of Common Stock reported
to be held by Michael E. Tennenbaum and Suzanne S. Tennenbaum, as trustees of
the Tennenbaum Living Trust.
(b)
As
reported on a Form 3 dated January 5, 2006, filed with the Commission
on January 5, 2006. The trustees of
the Andrew R. Tennenbaum Investment Trust are Stephen P. Rader and John Mass.
(c)
As
reported on a report on Form 3 dated January 5, 2006, filed with the
Commission on January 5, 2006. The
trustees of the Mark S. Tennenbaum Investment Trust are Stephen P. Rader and
John Mass.
(d)
As
reported on a Schedule 13G dated September 4, 2007, filed with the Commission
on September 4, 2007. Andrew Dakos and
Phillip Goldstein, principals of Bulldog Investors, are also listed as filing
persons on the Schedule 13G.
16
The
following table sets forth information as of September 26, 2007 regarding
the beneficial ownership of shares of Common Stock by each director who served
in 2006 and the executive officers named in the Summary Compensation Table on
page 10 of this proxy statement, and by all directors and current
executive officers as a group. The
persons as to whom information is given in the table below have sole voting and
investment power over the shares beneficially owned by them, unless otherwise
noted in the footnotes following the table.
Unless otherwise indicated, the address of each of the persons identified
in the table below is: c/o Kaiser
Group Holdings, Inc., 9300 Lee Highway, Fairfax, VA 22031.
|
Certain Beneficial Owners of Shares of Common
Stock of the Company
|
|
Number of Shares of
Common Stock
|
|
Percent of Common Stock
(*Less than 1%)
|
|
|
(i)
|
|
Directors and
Nominees for Director
|
|
|
|
|
|
|
|
|
Jon B. Bennett (a)
|
|
1,000
|
(c)
|
*
|
|
|
|
|
Douglas W. McMinn
|
|
500
|
(d)
|
*
|
|
|
|
|
Mark S. Tennenbaum
|
|
200,000
|
(e)
|
11.2
|
%
|
|
|
|
Frank E. Williams, Jr.
|
|
17,950
|
(f)
|
1.0
|
%
|
|
(ii)
|
|
Executive
Officers other than Directors
|
|
|
|
|
|
|
|
|
Nicholas Burakow
|
|
0
|
(g)
|
*
|
|
|
|
|
Marian P. Hamlett (b)
|
|
|
|
|
|
|
(iii)
|
|
All Directors and
Executive Officers as a Group (6 Persons)
|
|
219,450
|
|
12.2
|
%
|
(a)
Mr.
Bennett resigned from the Board, effective January 31, 2007.
(b)
Ms.
Hamlett’s employment with the Company terminated effective March 31, 2006.
(c)
Based on a Form 4
dated April 29, 2005, filed with the Commission on April 29, 2005.
(d)
Based on a Form 4
dated March 30, 2006, filed with the Commission on March 30, 2006.
(e)
Shares
are held by the Mark S. Tennenbaum Investment Trust. As reported on a Form 3 dated
January 5, 2006, filed with the Commission on January 5, 2006. The trustees of the Mark S. Tennenbaum
Investment Trust are Stephen P. Rader and John Mass. The address of the trust is 445 24th Street,
Santa Monica, CA 90402.
(f)
As reported on a Form 4 dated February
27, 2006, filed with the Commission on March 1, 2006.
Includes
(1) 8,550 shares of Common Stock reported to be held by Mr. Williams,
(2) 1,000 shares of Common Stock reported to be held by the Williams
Family Foundation, (3) 5,800 shares of Common Stock reported to be held by
Williams Family LP, (4) 600 shares of Common Stock reported to be held by
Mr. Williams as trustee for minor grandchildren and (5) 2,000 shares
of Common Stock reported to be held by Mr. Williams’ spouse.
(g)
Based on a Form 3
dated April 3, 2006, filed with the Commission on April 6, 2006.
OTHER MATTERS
Certain
Relationships and Related Transactions
There were no related party
transactions in 2006.
When potential related
party transactions arise, the Board and management review such transactions and
determine if the transactions should be approved. The Company does not have formal policies
governing the review of related party transactions.
Section 16(A) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires the
Company’s executive officers, directors and beneficial owners of more than 10%
of any class of the Company’s equity securities to file with the Commission
initial reports of ownership and reports of changes in ownership of the Company’s
equity securities. Persons subject to
Section 16 are required by Commission regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company and written representations from the
persons required to file such forms with the Commission, the Company believes
that all Section 16(a) filing requirements applicable to officers,
directors, except Mr. Williams, and beneficial owners of more than 10% of the
equity securities of Kaiser Holdings were satisfied with respect to the years
ended December 31, 2006 with the following exceptions. On February 14, 2006, Mr. Williams filed an
untimely Form 4 regarding four transactions that occurred on November 17,
2005. On March 1, 2006, Mr. Williams
filed an untimely Form 4 regarding one transaction that occurred on February
23, 2006.
17
Compensation
Committee Interlocks and Insider Participation in Compensation Decisions
During 2006, the members of the Compensation Committee
were Mr. Bennett, Mr. Williams and Mr. Tennenbaum. Mr. Bennett resigned as a director effective
January 31, 2007. All members of the
Compensation Committee are independent directors, as defined in the Company’s
Corporate Governance Principles. No
member of the Compensation Committee is a current or former officer or employee
of the Company or any of the Company’s subsidiaries, and no director or
executive officer is a director or executive officer of any other corporation
that has a director or executive officer who is also a director of the Company.
Stockholder
Proposals
Stockholders
interested in submitting a proposal for inclusion in the proxy materials for
the 2008 Annual Meeting of Stockholders may do so by following the procedures
prescribed in Commission Rule 14a-8 and Section 1.4 of the Company’s
Bylaws. To be properly brought before a
meeting of stockholders, business must be (a) specified in the notice of
the meeting given by or at the direction of the Board of Directors,
(b) otherwise properly brought before the meeting by or at the direction
of the Board of Directors, or (c) otherwise properly brought before the
meeting by a stockholder. In addition to
the requirements of Commission Rule 14a-8, for business to be properly
brought before a meeting of stockholders by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the
Company. To be timely, such notice must
be received at the Company’s principal executive offices, 9300 Lee Highway,
Fairfax, Virginia 22031, not less than 60 days nor more than 90 days prior to
the meeting. In the event that less than
75 days’ notice or prior public disclosure of the date of the meeting is given
or made to stockholders, to be timely notice must be received by the Company
not later than the close of business on the fifteenth day following the date on
which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever first occurs.
A stockholder’s notice with respect to other business to be brought
before the 2008 Annual Meeting by such stockholder must set forth as to each
matter of business:
(a)
a
brief description of such business and the reasons for conducting it at the
meeting,
(b)
the
name and address of the stockholder proposing such business,
(c)
the
class, series, and number of shares of the capital stock of the Company
beneficially owned by such stockholder, and
(d)
any
material interest of such stockholder in such business.
Under the rules of the Securities and Exchange Commission, if a
stockholder would like us to include a proposal in our proxy statement and form
of proxy for presentation at our 2008 Annual Meeting of Stockholders, the
proposal must be received by us at our principal executive offices at 9300 Lee
Highway, Fairfax, Virginia 22031, to the attention of the Corporate Secretary,
no later than Sunday, May 31, 2008.
“
Householding
”
Proxy Materials
Some
banks, brokers and other nominee record holders may be participating in the
practice of “householding” proxy statements and accompanying materials. This means that only one copy of this proxy
statement and the 2006 Annual Report may have been sent to multiple
stockholders in your household. If you
would like to receive separate copies of the Company’s proxy statement and
annual report in the future, or if you are receiving multiple copies and would
like to receive only one copy for your household, you should contact your bank,
broker or other nominee record holder, or you may contact Douglas W. McMinn,
President and Chief Executive Officer, by mail to Kaiser Group
Holdings, Inc., 9300 Lee Highway, Fairfax, Virginia 22031, or by telephone
at (703) 934-3413.
Copies of the 2006 Annual Report are being mailed to
stockholders with this proxy statement.
The information incorporated by reference should be considered part of
this proxy statement, except for any information superseded by information
contained directly in this proxy statement.
The Company will provide, without charge, to each
person to whom this proxy statement is delivered, upon written request of such
person, a copy of any and all information that has been incorporated by
reference, without exhibits unless such exhibits are also incorporated by
reference in this proxy statement. You
may obtain a copy of these documents and any
18
amendments thereto by writing to Douglas W. McMinn, President and Chief
Executive Officer, at the following address: Kaiser Group Holdings, Inc.,
9300 Lee Highway, Fairfax, Virginia 22031.
These documents are also included in the Company’s
filings with the Commission, which you may access electronically at the
Commission’s website at http://www.sec.gov.
|
|
|
By Order of the Board of Directors
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Nicholas Burakow
|
|
|
|
Nicholas Burakow, PhD
|
|
|
|
Secretary
|
Fairfax,
Virginia
September 26, 2007
19