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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
THE KEITH COMPANIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TABLE OF CONTENTS
THE KEITH COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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TIME |
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10:30 a.m. Pacific Standard Time on Tuesday, May 17,
2005. |
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PLACE |
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19 Technology Drive, Irvine, California 92618. |
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ITEMS OF BUSINESS |
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(1) To elect members of the Board of Directors for one-year
terms. |
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(2) To ratify the appointment of KPMG LLP as our
independent registered public accounting firm for the year
ending December 31, 2005. |
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RECORD DATE |
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You can vote if at the close of business on March 21, 2005,
you were a shareholder of the Company. |
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PROXY VOTING |
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All shareholders are cordially invited to attend the Annual
Meeting in person. However, to ensure your representation at the
Annual Meeting, we urge you to vote promptly by signing and
returning the enclosed proxy card, or if you hold your shares in
street name, by accessing the World Wide Web site indicated on
your proxy card to vote via the Internet. |
April 8, 2005
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Gary C. Campanaro, Secretary |
THE KEITH COMPANIES, INC.
19 Technology Drive
Irvine, California 92618
PROXY STATEMENT
These proxy materials are delivered in connection with the
solicitation by the Board of Directors of The Keith Companies,
Inc., a California corporation, which we refer to in this Proxy
Statement as the Company, we, or
us, of proxies to be voted at our 2005 Annual
Meeting of Shareholders (the Meeting) and at any
adjournments or postponements of this Meeting.
You are invited to attend the Meeting on Tuesday, May 17,
2005, beginning at 10:30 a.m. Pacific Standard Time. The
Meeting will be held at our offices at 19 Technology Drive,
Irvine, California 92618.
This Proxy Statement, form of proxy and voting instructions are
being mailed starting April 12, 2005. Our 2004 Annual
Report, which is not a part of the proxy soliciting material, is
enclosed.
Shareholders Entitled to Vote
Holders of our common stock at the close of business on
March 21, 2005, are entitled to receive this notice and to
vote their shares at the Meeting. As of that date, there were
7,936,133 shares of common stock outstanding, and
approximately 43 holders of record. Each share of common stock
is entitled to one vote on each matter properly brought before
the Meeting.
How to Vote. It is important that your shares be
represented and voted at the Meeting. You can vote your shares
by completing and returning the proxy card sent to you.
Internet Voting by Shares Held in Street Name. A number
of brokerage firms and banks offer Internet voting options. The
Internet voting procedures are designed to authenticate
shareholders identities, to allow shareholders to give
their voting instructions and to confirm that shareholders
instructions have been recorded properly. Specific instructions
to be followed by owners of shares of common stock held in
street name are set forth on your Proxy card. Shareholders
voting via the Internet should understand that there may be
costs associated with electronic access, such as usage charges
from telephone companies and Internet access providers that must
be borne by the shareholder.
Revocation of Proxies
You can revoke your proxy at any time before it is exercised by:
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written notice to the Secretary of the Company; |
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timely delivery of a valid, later-dated proxy or a later-dated
vote on the Internet; or |
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if you are a shareholder of record, voting by ballot at the
Meeting. |
List of Shareholders
The names of shareholders of record entitled to vote at the
Meeting will be available at the Meeting and for ten days prior
to the Meeting for any purpose germane to the Meeting, between
the hours of 9:00 a.m. and 5:00 p.m., at our principal
executive offices by contacting the Secretary of the Company.
Required Vote
The presence of the holders of a majority of the outstanding
shares of common stock entitled to vote at the Meeting, present
in person or represented by proxy, is necessary to constitute a
quorum. Abstentions and broker non-votes are counted
as present for purposes of determining a quorum. A broker
non-vote occurs when a broker holding shares for a
beneficial owner does not vote on a particular proposal because
the broker
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does not have discretionary voting power for that particular
item and has not received instructions from the beneficial owner.
Under The Nasdaq National Market rules, if you are a beneficial
owner and your broker holds your shares in its name, the broker
is permitted to vote your shares on the election of directors
and the approval of KPMG LLP as our independent registered
public accounting firm even if the broker does not receive
voting instructions from you. Your broker may not vote your
shares on any other matters absent instructions from you.
A plurality of the votes cast either in person or represented by
proxy is required for the election of directors. This means that
the five persons receiving the highest number of affirmative
votes will be elected as members of the Board of Directors.
Abstentions are counted for purposes of the election of
directors as a no vote. Broker non-votes are not
counted.
Under the Companys Amended and Restated Bylaws, a majority
of the votes cast either in person or represented by proxy must
vote for the ratification of KPMG LLP as our
independent registered public accounting firm. Abstentions are
counted for purposes of ratification of KPMG as a no
vote. Broker non-votes are not counted.
The shares represented by all valid proxies received will be
voted in accordance with the instructions specified therein.
Voting on Other Matters
If other matters are properly presented at the Meeting for
consideration, the persons named in the proxy will have the
discretion to vote on those matters for you. At the date this
Proxy Statement went to press, we did not know of any other
matters to be raised at the Meeting.
Available Information
We maintain a website with the address www.keithco.com.
We make available free of charge, through our website via a
hyperlink to a third party service, our Notice of Annual Meeting
and Proxy Statement and the 2004 Annual Report, and any
amendments to these filings, as soon as reasonably practicable
after we electronically file that material with, or furnish that
material to, the Securities and Exchange Commission, which we
refer to in this Proxy Statement as the SEC..
Cost of Proxy Solicitation
We will pay the cost of soliciting proxies. Proxies may be
solicited on our behalf by directors, officers, or employees in
person or by telephone, electronic transmission, and facsimile
transmission.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and persons who own
more than 10% of a registered class of our equity securities to
file with the SEC initial reports of ownership and reports of
changes in ownership of our common stock. Directors, executive
officers and greater-than-ten percent holders are required by
the SECs regulations to send us copies of all of the
Section 16(a) reports they file. Based solely upon a review
of the copies of the forms sent to us and the representations
made by the reporting persons to us, we believe that during the
fiscal year ended December 31, 2004, our directors,
executive officers and greater-than-ten percent holders complied
with all filing requirements under Section 16(a) of the
Securities Exchange Act.
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ITEM 1:
ELECTION OF DIRECTORS
Item 1 is the election of five members of the Board of
Directors. At the Meeting, five directors will be elected, each
for a one-year term.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the nominees named below. If any
nominee is unwilling to serve as a director at the time of the
Meeting, the proxies will be voted for such other nominee(s) as
shall be designated by the then current Board of Directors to
fill any vacancy. We have no reason to believe that any nominee
will be unable or unwilling to serve if elected as a director.
The Board of Directors proposes the election of the following
nominees as directors:
Aram H. Keith
Gary C. Campanaro
George Deukmejian
Christine D. Iger
Edward R. Muller
If elected, the foregoing five nominees are expected to serve
until the 2006 Annual Meeting of Shareholders or their earlier
death, disability, removal, or resignation. The five nominees
for election as directors at the Meeting who receive the highest
number of affirmative votes will be elected.
The principal occupation and certain other information about the
nominees and certain executive officers are set forth on the
following pages.
The Board of Directors Unanimously Recommends a Vote
FOR the Election of the Nominees Listed Above.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth biographical information for each
director and executive officer as of March 31, 2005.
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George Deukmejian |
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George Deukmejian joined our board of directors in July 1999.
Mr. Deukmejian was the Governor of the State of California,
serving in that office from January 1983 until January 1991.
Following his departure from the Governors office, he
joined the law firm of Sidley & Austin in its Los
Angeles office where he practiced as a partner until July 1999
and where he practiced as Senior Counsel from July 1999 until
his retirement in July 2000. Prior to his election as Governor,
Mr. Deukmejian served from 1979 to 1982, as the Attorney
General of the State of California and from 1963 to 1978, served
in the California State Legislature. Mr. Deukmejian
currently serves on the board of directors of Health Net of
California, a subsidiary of Health Net, Inc. He also serves as a
Deputy Trustee of the Golden Eagle Insurance Trust in
Liquidation. Mr. Deukmejian received a B.A. in Sociology
from Siena College and a J.D. from St. Johns University Law
School. |
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Director Since: 1999 Age: 76 |
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Member: Compensation Committee (Chair) and Audit Committee |
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Christine D. Iger |
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Christine D. Iger joined our board of directors in July 1999.
Ms. Iger is founder and president of Southern California
based Iger & Associates, a government relations
consulting company. She served as a partner in the international
law firm of Manatt, Phelps & Phillips in the government
and real estate practice from August 2001 through September
2003. She was the chief executive officer of the Building
Industry Association of Southern California, Orange County
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1989 through 2001. Prior to joining that organization, she was
an appellate lawyer for the Attorney General of the State of
California from 1981 to 1983, and served as the director of the
California Department of Housing and Community Development from
1983 to 1989. Ms. Iger is a former board member of the
Federal National Mortgage Association (Fannie Mae) and the
California Housing Finance Agency (Cal HFA). She previously
served on the Board of Directors and compensation committee of
Tustin based Sunwest Bank. Ms. Iger received a B.A. in
English from California State University at San Diego and a
J.D. from Western State University, College of Law. |
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Director Since: 1999 Age: 52 |
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Member: Compensation Committee and Audit Committee |
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Edward R. Muller |
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Edward R. Muller, a private investor, joined our board of
directors in July 2001. Mr. Muller was president and chief
executive officer of Edison Mission Energy, a wholly owned
subsidiary of Edison International, from 1993 until 2000. During
his tenure, Edison Mission Energy was engaged in developing,
owning and operating independent power production facilities
worldwide. From 1999 to 2000, Mr. Muller was Deputy
Chairman of the Board of Directors of Contact Energy Ltd., a New
Zealand electric generation company partially owned by Edison
Mission Energy. Mr. Muller serves on the boards of
directors of GlobalSantaFe Corporation, Interval, Inc., Ormat
Technologies, Inc., REI Holding Co. (formerly RealEnergy, Inc.),
RigNet, Inc. and Strategic Data Corp. Mr. Muller received
an A.B. from Dartmouth College and a J.D. from the Yale Law
School. |
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Director Since: 2001 Age: 53 |
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Member: Audit Committee (Chair) |
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Aram H. Keith |
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Aram H. Keith co-founded our company in March 1983 and has
served as our chief executive officer and chairman of the board
since that time. Mr. Keith also served as our president
from 1983 to 1999. Mr. Keith is the president and sole
director of the majority of our subsidiaries. Mr. Keith has
been a California licensed civil engineer since 1972. He also
holds civil engineering licenses in the states of Arizona,
Colorado, Nevada, and Texas. Mr. Keith received a B.S. in
Civil Engineering from California State University at Fresno. |
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Director Since: 1983 Age: 60 |
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Gary C. Campanaro |
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Gary C. Campanaro has served as our chief financial officer
since joining our Company in January 1998, as a director since
July 1998, and as our secretary since April 1999.
Mr. Campanaro is also the chief financial officer and
secretary of each of our subsidiaries. In addition, since March
2002, Mr. Campanaro has served as the treasurer of one of
our subsidiaries. Mr. Campanaro joined CB Commercial Real
Estate Group, Inc. (now CB Richard Ellis), a commercial real
estate brokerage firm, in November 1992 as a vice president of
the financial consulting group and became senior vice president,
managing officer of the financial consulting group in February
1995 and also began serving on the operation management board of
CB Commercial Real Estate Group Inc. Mr. Campanaro served
in those positions until he joined our Company. From July 1988
to November 1992, Mr. Campanaro held various accounting,
finance and real estate positions with CKE Restaurants, Inc., an
owner and operator of a restaurant chain. Mr. Campanaro
began his professional career with KPMG LLP and is licensed by
the State of California as a certified public accountant and as
a real estate broker. He is a member of the American Institute
of Certified Public Accountants. Mr. Campanaro received a
B.S. in Accounting from the University of Utah. |
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Director Since: 1998 Age: 44 |
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Eric C. Nielsen |
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Eric C. Nielsen has served as our president since July 1999 and
as our chief operating officer since March 2001. He was
appointed as a member of our board of directors in July 2001 and
served in that capacity until our 2003 Annual Meeting of
Shareholders. Prior to July 1999, Mr. Nielsen served as the
president of our Orange County division since November 1994.
Mr. Nielsen joined us in November 1985 as senior designer
and became a vice president, engineering and mapping in July
1990. Mr. Nielsen received a B.S. in Civil Engineering from
California Polytechnic State University and is a registered
engineer in the states of California, Colorado, and Hawaii. |
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Age: 44 |
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Thomas E. Braun |
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Thomas E. Braun has served as our president of Real Estate
Development Services since March 2004. Prior to March 2004,
Mr. Braun served as president of our Orange County division
since January 2000. Mr. Braun also served as regional
president of the Los Angeles and Ventura divisions since March
2002. Mr. Braun joined our company in December 1985 as a
senior designer and became vice president of engineering in
October 1995. Mr. Braun received both a B.S. in Civil
Engineering and an M.S. in Water Resources engineering from
California State University, Long Beach. He is registered as a
professional engineer in the state of California. |
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Age: 42 |
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Robert J. Ohlund |
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Robert J. Ohlund has served as our president of Public Works/
Infrastructure Services since November 2004. Prior to November
2004, Mr. Ohlund was employed at Tetra Tech, Inc. since
January 1998 and served as the vice president and director of
Construction Management/ ISG1 at the time of his departure. From
June 1993 to December 1997, Mr. Ohlund served as vice
president and a director of Daniel Boyle Engineering, Inc.
Mr. Ohlund has been a member of the Orange County Water
Association since 1983, was elected to the board of directors
from 1994 to 2000, and also has been a member of the American
Water Works Association for over twenty years, a member of the
American Society of Civil Engineers, and was appointed to the
Board of Advisors for the Urban Water Institute. Mr. Ohlund
earned a B.S. Civil Engineering degree from the University of
Southern California in 1983 and is a Registered Civil Engineer
in the State of California. |
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Age: 43 |
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Dean J. Palumbo |
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Dean J. Palumbo has served as our president of Energy/
Industrial Services since January 1, 2005. Prior to January
2005, Mr. Palumbo served as president of our Scottsdale,
Arizona Division since January 2004, and president of our Palm
Desert Division since April 2001. Prior thereto,
Mr. Palumbo served as vice president of our Palm Desert
Division since October 1998. Mr. Palumbo joined our company
in November of 1997, as the director of Surveying Services in
our Palm Desert division. Mr. Palumbo was the sole
proprietor of his own consulting firm providing civil
engineering, land surveying and land planning services from 1991
through November 1997. Mr. Palumbo has an A.A.S. degree in
Civil Engineering and continued coursework in civil engineering
at Rochester Institute of Technology in Rochester, N.Y. and at
Arizona State University in Phoenix, Arizona. Mr. Palumbo
is a registered Professional Land Surveyor in the states of
California and Colorado. |
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Age: 39 |
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FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
Director Independence
Our Board of Directors is comprised of a majority of independent
directors. The Board of Directors has determined that George
Deukmejian, Christine D. Iger, and Edward R. Muller are
independent directors as defined in the Nasdaq listing standards.
Meetings and Committees
The Board of Directors held ten meetings and took action by
written consent on three occasions during fiscal 2004. The Board
of Directors has an Audit Committee and a Compensation
Committee. We do not have a standing nominating committee; the
independent members of our Board of Directors perform the
functions of a nominating committee, as described below.
The Audit Committee currently consists of George Deukmejian,
Christine D. Iger, and Edward R. Muller. Each Audit Committee
member is independent within the meaning of the applicable
Nasdaq listing standards and applicable rules and regulations
promulgated by the SEC. Mr. Muller is an Audit Committee
financial expert within the meaning of the applicable Nasdaq
listing standards and SEC rules. The Audit Committee represents
and assists the Board with the oversight of the integrity of the
Companys financial statements and internal controls, and
the Companys compliance with legal and regulatory
requirements. In addition, the Audit Committee is responsible
for:
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appointing and retaining, and terminating when appropriate, the
independent registered public accounting firm; |
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setting the independent registered public accounting firms
compensation, and pre-approving all audit services to be
provided by the independent registered public accounting firm; |
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establishing policies and procedures for the engagement of the
independent registered public accounting firm to provide
permitted non-audit services and pre-approving the performance
of any permitted non-audit services; and |
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establishing procedures for the receipt, retention, and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters,
and the confidential, anonymous submission by the Companys
employees of concerns regarding questionable accounting or
auditing matters. |
The role and responsibilities of the Audit Committee are more
fully set forth in a written charter adopted by the Board of
Directors, and amended in 2004, a copy of which is attached to
this Proxy Statement as Appendix A. The Audit Committee
held nine meetings and took no action by written consent during
2004.
The Compensation Committee currently consists of George
Deukmejian and Christine D. Iger. Each Compensation Committee
member is independent within the meaning of the applicable
Nasdaq listing standards as currently in effect. The
Compensation Committee acts pursuant to a written charter
adopted by the Board, which was amended in March 2005. Prior to
that time, the Compensation Committee considered and made
recommendations to the Board of Directors regarding executive
compensation. Under the amended charter, the Committee is
responsible for establishing all elements of executive
compensation and administering the Companys stock option
and executive incentive compensation plans. The Compensation
Committee held seven meetings and took action by written consent
on one occasion during fiscal 2004.
We do not have a standing nominating committee. Our Board of
Directors does not believe that it is necessary for us to have a
standing nominating committee since we have a relatively small
board and our independent directors will serve in the capacity
of a nominating committee when necessary. All of our directors
participate in the consideration of director nominees. But,
consistent with applicable Nasdaq listing standards, each
director nominee must be selected or recommended for the
Boards selection by a majority of the independent
directors of our Board. In considering candidates for
directorship, the Board considers the entirety of each
candidates credentials and does not have any specific
minimum qualifications that must be
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met in order to be recommended as a nominee. The Board does
believe, however, that all Board members should have the highest
character and integrity, a reputation for working constructively
with others, sufficient time to devote to Board matters and no
conflict of interest that would interfere with their performance
as a director of a public corporation.
Our Board may employ a variety of methods for identifying and
evaluating nominees for director, including shareholder
recommendations. Periodically, the Board assesses its size, the
need for particular expertise on the Board, and whether any
vacancies are expected due to retirement or otherwise. If
vacancies are anticipated or otherwise arise, the Board will
consider various potential candidates for director who may come
to the Boards attention through current Board members,
professional search firms or consultants, shareholders, or other
persons. The Board may hire and pay a fee to consultants or
search firms to assist in the process of identifying and
evaluating candidates. In 2004, no professional search firms or
consultants were needed and, accordingly, no fees were paid in
this regard to professional search firms or consultants in 2004.
The Board does not evaluate candidates differently based on who
made the recommendation for consideration.
Shareholders who wish to nominate a director for election at an
annual shareholder meeting must submit their recommendations at
least 120 days before the date of the next scheduled annual
meeting of shareholders. Shareholders may recommend candidates
for consideration by the Board by writing to our Corporate
Secretary at 19 Technology Drive, Irvine, California 92618,
giving the candidates name, contact information,
biographical data, and qualifications. A written statement from
the candidate consenting to be named as a candidate and, if
nominated and elected, to serve as a director should accompany
any shareholder recommendation. There were no director
candidates put forward by shareholders for consideration at the
Meeting.
All incumbent directors attended 75% or more of all the meetings
of the Board of Directors and those committees on which he or
she served in fiscal 2004. The Company encourages, but does not
require, all incumbent directors and director nominees to attend
our annual meetings of shareholders. At our 2004 Annual Meeting
of Shareholders, all five directors then in office were in
attendance.
Shareholder Communications with the Board of Directors
Shareholders may communicate with the Board of Directors by
sending a letter to Board of Directors of The Keith Companies,
Inc., c/o Office of the Corporate Secretary, 19 Technology
Drive, Irvine, California 92618. All communications must contain
a clear notation indicating that they are a
Shareholder Board Communication or
Shareholder Director Communication and
must identify the author as a shareholder. The office of the
Corporate Secretary will receive the correspondence and forward
it to the Chairman of the Board or to any individual director or
directors to whom the communication is directed, unless the
communication is unduly hostile, threatening, illegal, does not
reasonably relate to our Company or our business, or is
similarly inappropriate. The office of the Corporate Secretary
has authority to discard any inappropriate communications or to
take other appropriate actions with respect to any inappropriate
communications.
Directors Compensation
The Company pays its non-employee directors an annual retainer
of $20,000 plus $2,000 per day for any day during which the
member has personally attended any shareholder, board or
committee meeting. The non-employee directors are also paid
$1,000 per day for any day during which the member has
personally participated on a telephonic conference call for a
board or committee meeting. The Chairman of our Audit Committee
receives an additional annual retainer of $2,000 in recognition
of his increased responsibility and service. In addition, our
non-employee directors are reimbursed for out-of-pocket expenses
incurred for their services as a director of our Company.
Commencing in 2003, our non-employee directors receive an annual
issuance of options to purchase 2,000 shares of our
common stock for their services as a director. The options to
our non-employee directors vest in two equal annual installments
beginning on the first anniversary of the grant date and are
exercisable at a price equal to the fair market value of the
underlying stock on the grant date.
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Compensation Committee Interlocks and Insider
Participation
During fiscal 2004, the Compensation Committee of our Board of
Directors consisted of George Deukmejian and Christine D. Iger.
Neither of these individuals was an officer or employee of the
Company at any time during fiscal 2004. During fiscal 2004, no
executive officer of the Company served as a member of the board
of directors or Compensation Committee of any entity that has or
had during fiscal 2004 one or more executive officers serving as
a member of our Board of Directors or Compensation Committee.
ITEM 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors recommended and
the Board of Directors has selected, the firm of KPMG LLP to
continue as our independent registered public accounting firm
for the current fiscal year ending December 31, 2005. KPMG
LLP served as the independent registered public accounting firm
utilized by us during the fiscal year ended December 31,
2004. We anticipate that a representative of KPMG LLP will
attend the Meeting for the purpose of responding to appropriate
questions. At the Meeting, a representative of KPMG LLP will be
afforded an opportunity to make a statement if he or she so
desires.
The ratification of KPMG LLP as the Companys independent
registered public accounting firm for the fiscal year ending
December 31, 2005, will require the affirmative vote of a
majority of the shares of common stock present or represented
and entitled to vote at the Meeting. All Proxies will be voted
to approve the appointment unless a contrary vote is indicated
on the enclosed proxy card.
The Board of Directors Unanimously Recommends a Vote
FOR the Ratification of the Appointment of KPMG LLP
as the Companys Independent Registered Public Accounting
Firm.
Audit and Non-Audit Fees
The following table presents fees for professional audit
services rendered by KPMG LLP for the audit of the
Companys annual financial statements for the years ended
December 31, 2004, and December 31, 2003, and fees
billed for other services rendered by KPMG LLP during those
periods.
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Fiscal Year Ended | |
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December 31, | |
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2003 | |
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2004 | |
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Audit fees:(1)
|
|
$ |
143,500 |
|
|
$ |
488,500 |
|
|
|
(1) |
Includes aggregate fees billed by KPMG LLP for the audit of the
Companys annual financial statements and the reviews of
the financial statements included in the Companys
Quarterly Reports on Form 10-Q of $143,500 in 2003 and
$184,900 in 2004. In 2004, audit fees also include the aggregate
fees billed by KPMG LLP for the audit of internal control over
financial reporting, which totaled $303,600. |
Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Registered Public
Accounting Firm
Consistent with SEC policies regarding auditor independence, the
Audit Committee has responsibility for appointing, setting
compensation, and overseeing the work of the independent
registered public accounting firm. In recognition of this
responsibility, the Audit Committee has established a policy to
pre-approve all audit and permissible non-audit services
provided by the independent registered public accounting firm.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, as to the Chief Executive
Officer and as to each of the other most highly compensated
executive officers whose compensation exceeded $100,000 during
the last fiscal year, information concerning all compensation
paid for services to the Company in all capacities for each of
the three years ended December 31 indicated below. We refer
to these officers as the Named Executive Officers.
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Long Term | |
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Compensation | |
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| |
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Annual Compensation | |
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Number of | |
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Fiscal Year | |
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| |
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Restricted | |
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Securities | |
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Name and |
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Ended | |
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Other | |
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Stock | |
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Underlying | |
|
All Other | |
Principal Position |
|
December 31, | |
|
Salary | |
|
Bonus | |
|
Compensation | |
|
Awards(1) | |
|
Options | |
|
Compensation(2) | |
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| |
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| |
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| |
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| |
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| |
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| |
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Aram H. Keith
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2004 |
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$ |
461,011 |
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$ |
33,999 |
(3) |
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$ |
8,200 |
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Chief Executive
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2003 |
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|
$ |
388,233 |
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$ |
34,478 |
(3) |
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40,000 |
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$ |
8,000 |
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Officer & Chairman
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2002 |
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$ |
374,100 |
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$ |
26,736 |
(3) |
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30,000 |
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$ |
8,000 |
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of the Board
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Eric C. Nielsen
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2004 |
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$ |
300,575 |
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$ |
75,000 |
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$ |
28,011 |
(4) |
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$ |
104,775 |
(5) |
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|
$ |
8,200 |
|
|
President & Chief
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2003 |
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|
$ |
219,252 |
|
|
$ |
10,000 |
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|
$ |
25,031 |
(4) |
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$ |
102,900 |
(5) |
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|
30,000 |
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|
$ |
8,000 |
|
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Operating Officer
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2002 |
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|
$ |
204,663 |
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$ |
15,805 |
(4) |
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20,000 |
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$ |
8,000 |
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Gary C. Campanaro
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2004 |
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|
$ |
300,575 |
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|
$ |
75,000 |
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$ |
22,312 |
(6) |
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$ |
104,775 |
(5) |
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|
|
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$ |
8,200 |
|
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Chief Financial
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2003 |
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|
$ |
219,252 |
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|
$ |
17,000 |
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$ |
20,694 |
(6) |
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$ |
102,900 |
(5) |
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|
30,000 |
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|
$ |
8,000 |
|
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Officer & Secretary
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2002 |
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|
$ |
204,663 |
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|
|
|
|
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$ |
16,690 |
(6) |
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|
|
|
|
|
20,000 |
|
|
$ |
8,000 |
|
|
Thomas E. Braun(7)
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2004 |
|
|
$ |
261,976 |
|
|
$ |
75,000 |
|
|
$ |
9,140 |
(8) |
|
$ |
177,375 |
(9) |
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$ |
8,200 |
|
|
President of Real
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Estate Development
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Services
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Jerald H. Evans(10)
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2004 |
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$ |
170,962 |
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$ |
7,340 |
(11) |
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$ |
6,838 |
|
|
President of Energy/
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Industrial Services
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(1) |
The Company does not currently pay dividends. If in the future,
dividends are declared, they will be payable on the restricted
stock reported in this table in the same manner and to the same
extent as dividends may be payable on other shares of our common
stock. |
|
(2) |
Represents matching contributions made by us under our 401(k)
plan. |
|
(3) |
For fiscal 2004, this amount includes a $24,000 auto allowance
and $8,300 in membership dues paid by us on behalf of
Mr. Keith; for fiscal 2003, this amount includes a $21,000
auto allowance and $8,463 in membership dues paid by us on
behalf of Mr. Keith; for fiscal 2002, this amount includes
an $18,000 auto allowance and $8,471 in membership dues paid by
us on behalf of Mr. Keith. |
|
(4) |
For fiscal 2004, this amount includes an $18,000 auto allowance
and $4,865 in payout of accrued vacation; for fiscal 2003, this
amount includes a $15,000 auto allowance and $4,635 in payout of
accrued vacation; for fiscal 2002, this amount includes a
$12,000 auto allowance. |
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|
(5) |
For fiscal 2004, these amounts reflect 7,500 shares of
restricted common stock granted multiplied by the closing market
price of our common stock on the date of grant. For fiscal 2003,
these amounts reflect 10,000 shares of restricted common
stock granted multiplied by the closing market price of our
common stock on the date of grant. The number and value of the
aggregate restricted stock holdings for each of these executives
at December 31, 2004, was 14,167 shares and $246,364,
respectively. |
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|
(6) |
For fiscal 2004, this amount includes an $18,000 auto allowance;
for fiscal 2003, this amount includes a $15,000 auto allowance;
for fiscal 2002, this amount includes a $12,000 auto allowance. |
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|
(7) |
In March 2004, Mr. Braun was promoted to the position of
President of Real Estate Development Services. The annual salary
shown is for the full year. |
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|
(8) |
For fiscal 2004, this amount includes a $9,000 auto allowance. |
9
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(9) |
This amount reflects 12,500 shares of restricted common
stock granted multiplied by the closing market price of our
common stock on the date of grant. The number and value of the
aggregate restricted stock holdings for this executive at
December 31, 2004, was 12,500 shares and $217,375,
respectively. |
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|
(10) |
Mr. Evans was appointed President Emeritus of Energy/
Industrial Services effective January 1, 2005 through his
retirement date of January 31, 2005. |
|
(11) |
For fiscal 2004, this amount includes a $7,200 auto allowance. |
Option Grants in Fiscal 2004
There were no stock options granted to the Named Executive
Officers in fiscal 2004.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table sets forth, for each of the Named Executive
Officers, certain information regarding the exercise of stock
options during fiscal 2004, the number of shares of common stock
underlying stock options held at fiscal year-end and the value
of options held at fiscal year-end based upon the last reported
sales price of the common stock on The Nasdaq National Market on
December 31, 2004 ($17.39 per share).
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|
Number of Securities | |
|
Value of Unexercised | |
|
|
Shares | |
|
|
|
Underlying Unexercised | |
|
In-the-Money Options at | |
|
|
Acquired | |
|
|
|
Options at December 31, 2004 | |
|
December 31, 2004 | |
|
|
on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercise | |
|
Realized | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
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| |
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| |
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| |
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| |
|
| |
|
| |
Aram H. Keith
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|
|
-0- |
|
|
|
-0- |
|
|
|
66,000 |
|
|
|
50,000 |
|
|
$ |
438,260 |
|
|
$ |
288,180 |
|
Eric C. Nielsen
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|
|
2,000 |
|
|
$ |
25,850 |
|
|
|
70,893 |
|
|
|
48,000 |
|
|
$ |
623,676 |
|
|
$ |
274,960 |
|
Gary C. Campanaro
|
|
|
-0- |
|
|
|
-0- |
|
|
|
69,982 |
|
|
|
44,000 |
|
|
$ |
631,424 |
|
|
$ |
222,920 |
|
Thomas E. Braun
|
|
|
-0- |
|
|
|
-0- |
|
|
|
24,240 |
|
|
|
8,000 |
|
|
$ |
264,568 |
|
|
$ |
69,300 |
|
Equity Compensation Plans
The following table summarizes information about the equity
securities authorized for issuance under the Companys
equity compensation plan as of December 31, 2004. The
Company has one equity compensation plan and it has been
approved by its security holders.
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Number of | |
|
|
Number of | |
|
|
|
Securities | |
|
|
Securities to Be | |
|
|
|
Available for | |
|
|
Issued upon | |
|
Weighted-Average | |
|
Future Issuance | |
|
|
Exercise of | |
|
Exercise Price of | |
|
under the Equity | |
Plan Category |
|
Outstanding Options | |
|
Outstanding Options | |
|
Compensation Plan | |
|
|
| |
|
| |
|
| |
Equity compensation plan approved by security holders
|
|
|
794,999 |
|
|
$ |
9.56 |
|
|
|
276,595 |
|
CHANGE IN CONTROL AGREEMENTS
In March 2001, our Board of Directors approved change in control
agreements with Aram H. Keith, our chief executive officer and
chairman of the board, Eric C. Nielsen, our president and chief
operating officer, and Gary C. Campanaro, our chief financial
officer, secretary and a director of our Company. These
agreements provide for severance payments to these executive
officers in certain circumstances following a change in control
of our Company. Specifically, the change in control agreements
provide that if the executive officers employment with us
terminates as a result of an involuntary or constructive
termination (as these terms are defined in the agreements) at
any time within two years following a change in control, the
executive officer will receive a one-time payment, equal to two
times the executive officers highest annual level of total
cash compensation (including any and all bonus amounts) paid by
us to that executive officer during any one of the three
consecutive calendar years (inclusive of the year of
termination) immediately prior to termination. The level of
annual cash compensation for the year in which a termination
occurs will include any bonus amounts which the executive
officer is eligible to receive during the year of termination,
whether or not the bonus was earned by the executive officer. In
addition, any unvested options previously granted to the
executive officer will immediately vest and become exercisable
as of the date of termination and remain
10
exercisable until their respective expiration date. Furthermore,
if the executive officers employment with us terminates as
a result of an involuntary or constructive termination at any
time within two years following a change in control, any
unvested restricted shares granted to these executive officers
become immediately vested. Under these change in control
agreements, for a two-year period following the termination, the
executive officer also is entitled to receive continuing health
coverage at a level commensurate to the coverage provided by us
to the executive officer immediately prior to the change in
control; all other benefits under welfare benefit plans,
practices, policies and programs provided or offered by us,
including, medical, dental, prescription, disability, employee
life, group life, accidental death and travel accident insurance
plans and programs; fringe benefits, including, without
limitation, tax and financial planning services, payment of club
dues and an automobile allowance; and a reasonable level of
outplacement services selected by the executive officer.
Under the change in control agreements, a change in control
means the occurrence of any of the following events:
(1) other than Aram H. Keith or his family members and
affiliates, a person becomes the beneficial owner of 20% or more
of the total voting power of our then outstanding voting
securities, (2) a change in the composition of our board of
directors occurs within a two-year period as a result of which
fewer than a majority of the directors are directors who were
serving on our board at the beginning of that two-year period,
unless the election of each director who was not a director at
the beginning of that period has been approved in advance by
directors representing at least two-thirds of the directors then
on the board who were directors at the beginning of the period,
(3) the consummation of a merger or consolidation of our
Company in which we do not survive as an independent public
company, or (4) our business or businesses for which the
executive officers services are principally performed are
disposed of by us under a partial or complete liquidation of our
Company, a sale of assets (including stock of a subsidiary), or
otherwise.
Under these change in control agreements, the executive officer
also is entitled to receive a payment by us to offset any excise
tax under the excess parachute payment provisions of
Section 4999 of the Internal Revenue Code of 1986, as
amended, which we refer to as the Code, that has
been levied against the executive officer for payments that we
have made to, or for the benefit of, that executive officer
(whether or not those payments are made pursuant to the
executive officers change in control agreement). The
payment by us will be grossed up so that after the executive
officer pays all taxes (including any interest or penalties with
respect to those taxes) on the payment, the executive officer
will receive an additional payment equal to the excise tax
imposed.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee currently is comprised of two
independent directors within the meaning of the applicable
Nasdaq listing standards. The Committee advises the Board
regarding the policies that govern the Companys
compensation programs and the compensation of executive
officers. Following review and recommendation by the Committee,
determinations pertaining to executive compensation for fiscal
2004 were submitted to the full Board of Directors for approval.
In connection with its deliberations, the Committee seeks the
views of the Chief Executive Officer with respect to appropriate
compensation levels of the other executive officers.
Total Compensation. The executive compensation program is
designed to align executive compensation with the Companys
business strategy and performance. The goals of the executive
compensation program are to: attract and retain key executives
critical to the Companys success and to motivate
executives to enhance long-term share values by providing
appropriate incentives including ownership through the
Companys Stock Option Plan.
The principal elements of total compensation paid to executives
of the Company are as follows:
Base Salary. Base salaries are designed to reflect the
position, duties, responsibilities and performance of each
executive officer, the cost of living in the area in which the
executive officer is located, and the market for base salaries
of similarly situated executives at other companies, taking into
account one or more of the
11
following: industry, size, and/or location. Base salaries are
reviewed at least annually by the Committee and adjusted as
appropriate to reflect the foregoing factors.
Annual Incentives. To reinforce the attainment of the
Companys goals and objectives, the Committee believes in
allowing for some variable incentive pay for its executive
officers. In the second quarter of 2003, the Company implemented
a discretionary bonus plan which it generally intends to
continue to offer in future years. Under this discretionary
bonus plan, the Committee may recommend that annual cash bonuses
be awarded to executive officers if the Company meets or exceeds
one or more financial performance targets established by the
Committee with respect to any year. For fiscal 2004, the
Committee determined to recommend that executive officer bonuses
be based solely on its discretion. For 2005, the Company target
is based upon a set dollar amount of income from operations
taking into account the discretionary bonus amounts for the
year. The estimated bonus amount is discretionary after the
target is met or exceeded.
Stock Option and Restricted Stock Awards. The Company
believes that awarding stock options and/or restricted shares of
common stock to its executive officers will motivate them to
focus on the Companys long-term performance. The number of
options and/or restricted shares granted to an executive officer
is based upon a number of factors, including, but not limited
to, his or her position, salary and performance, the number
and/or value of in-the-money outstanding unexercisable options,
as well as the performance and goals of the division or function
over which each executive officer has primary responsibility. In
this regard, both quantitative and qualitative factors are
considered by the Committee. Quantitative items used in
analyzing the Companys performance include revenue and
revenue growth, results of operations and an analysis of actual
levels of operating results and revenue to budgeted amounts,
taking into account overall market conditions of our industries.
Qualitative factors include an assessment of such matters as the
enhancement of the Companys image and reputation and the
offering of new services and/or the expansion into new markets.
Determination of Chief Executive Officers
Compensation. In 2004, the Chief Executive Officer received
an annual base salary of $461,000 and no cash bonus. The Chief
Executive Officer was not awarded any stock options or
restricted stock during 2004. The Committee believes the
aggregate stock ownership position of the Chief Executive
Officer is effective in aligning the interests of the Chief
Executive Officer with the long-term interests of the
shareholders. The base salary of the Chief Executive Officer was
established based upon a comparative analysis conducted by the
Committee of other chief executive officers taking into account
one or more of the following: industry, size, and/or location.
The Committee believes the Chief Executive Officers total
compensation for 2004 was reasonable and appropriate given the
performance of the Company under his leadership.
The Committee intends to continue its policy of linking
executive compensation with maximizing shareholder returns and
corporate performance to the extent possible through the
programs described above.
Omnibus Budget Reconciliation Act Implications for Executive
Compensation. Effective January 1, 1994, under
Section 162(m) of the Code, a public company generally will
not be entitled to a deduction for non-performance-based
compensation paid to certain executive officers to the extent
such compensation exceeds $1.0 million. Special rules apply
for performance-based compensation, including the
approval of the performance goals by the shareholders of the
Company.
All compensation paid to the Companys employees in 2004
will be fully deductible. With respect to compensation to be
paid to executives in 2005 and future years, in certain
instances that compensation may exceed $1.0 million.
However, in order to maintain flexibility in compensating
executive officers in a manner designed to promote varying
corporate goals, the Committee has not adopted a policy that all
compensation must be deductible.
|
|
|
COMPENSATION COMMITTEE |
|
|
George Deukmejian (Chair) |
|
Christine D. Iger |
12
REPORT OF AUDIT COMMITTEE
The information in this Audit Committee Report shall not be
deemed to be soliciting material, or to be
filed with the Securities and Exchange Commission or
to be subject to Regulation 14A or 14C as promulgated by
the Securities and Exchange Commission, or to the liabilities of
Section 18 of the Securities and Exchange Act of 1934.
The Audit Committee reviews the Companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process, including the system of
internal controls.
In this context, the Committee has met and held discussions with
management and the independent registered public accounting firm
regarding the fair and complete presentation of the
Companys results. The Committee has discussed significant
accounting policies applied by the Company in its consolidated
financial statements, as well as alternative treatments.
Management represented to the Committee that the Companys
consolidated financial statements were prepared in accordance
with U.S. generally accepted accounting principles, and the
Committee has reviewed and discussed the consolidated financial
statements with management and the independent registered public
accounting firm. The Committee discussed with the independent
registered public accounting firm matters required to be
discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees).
In addition, the Committee has discussed with the independent
registered public accounting firm the firms independence
from the Company and its management, including the matters in
the written disclosures required by the Independence Standards
Board Standard No. 1 (Independence Discussions With Audit
Committees). The Committee noted that in 2004, there were no
non-audit service fees paid to the Companys independent
registered public accounting firm. The Committee has concluded
that the independent registered public accounting firm is
independent from the Company and its management.
The Committee discussed with the Companys independent
registered public accounting firm the overall scope and plans
for its audit.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors, and the
Board has approved, that the audited consolidated financial
statements be included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2004, for
filing with the Securities and Exchange Commission. The
Committee has selected and the Board of Directors has ratified,
subject to shareholder ratification, the selection of the
Companys independent registered public accounting firm.
|
|
|
AUDIT COMMITTEE |
|
|
George Deukmejian |
|
Christine D. Iger |
|
Edward R. Muller (Chair) |
13
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on our common stock, based on its market
price, with the cumulative total return of companies on the
Nasdaq Industrial Index, the Wilshire 5000 Index and a weighted
average peer group index, assuming reinvestment of dividends,
for the period beginning December 31, 1999, through our
fiscal year ended December 31, 2004. We constructed our own
peer group index which includes the following companies listed
in alphabetical order: Michael Baker Corporation, Tetra Tech,
Inc., TRC Companies, Inc., and URS Corporation. This graph
assumes that the value of the investment in our common stock and
each of the comparison groups was $100 on December 31, 1999.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2004
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1999 |
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2000 |
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|
2001 |
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
The Keith Companies, Inc.
|
|
|
$ |
100 |
|
|
|
$ |
183 |
|
|
|
$ |
233 |
|
|
|
$ |
299 |
|
|
|
$ |
311 |
|
|
|
$ |
397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NASDAQ INDUSTRIALS
|
|
|
$ |
100 |
|
|
|
$ |
66 |
|
|
|
$ |
62 |
|
|
|
$ |
46 |
|
|
|
$ |
72 |
|
|
|
$ |
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WILSHIRE 5000
|
|
|
$ |
100 |
|
|
|
$ |
89 |
|
|
|
$ |
80 |
|
|
|
$ |
63 |
|
|
|
$ |
83 |
|
|
|
$ |
93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer Group
|
|
|
$ |
100 |
|
|
|
$ |
159 |
|
|
|
$ |
179 |
|
|
|
$ |
99 |
|
|
|
$ |
180 |
|
|
|
$ |
168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as disclosed in this Proxy Statement, neither the
nominees for election as directors of the Company, the directors
or executive officers of the Company, nor any shareholder owning
more than five percent of the issued shares of the Company, nor
any of their respective associates or affiliates, had any
material interest, direct or indirect, in any material
transaction to which the Company was a party during fiscal 2004,
or which is presently proposed.
See Change in Control Agreements for a summary of
change in control agreements with certain of our executive
officers.
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of March 9, 2005, unless
otherwise indicated, certain information relating to the
ownership of our common stock by (i) each person known by
the Company to be the beneficial owner of more than five percent
of the outstanding shares of our common stock
(7,934,833 shares), (ii) each of the Companys
directors, (iii) each of the Named Executive Officers, and
(iv) all of the Companys executive officers and
directors as a group. Except as may be indicated in the
footnotes to the table and subject to applicable community
property laws, each such person has the sole voting and
investment power with respect to the shares owned. The address
of each person listed is in care of the Company,
19 Technology Drive, Irvine, California 92618, unless
otherwise set forth below such persons name.
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of | |
|
|
|
|
Common Stock | |
|
|
Name and Address |
|
Beneficially Owned(1) | |
|
Percent(1) | |
|
|
| |
|
| |
Named Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
Aram H. Keith
|
|
|
1,366,217 |
(2) |
|
|
17.2 |
% |
Gary C. Campanaro
|
|
|
98,008 |
(3) |
|
|
1.2 |
% |
Eric C. Nielsen
|
|
|
97,793 |
(4) |
|
|
1.2 |
% |
Thomas E. Braun
|
|
|
55,650 |
(5) |
|
|
** |
|
George Deukmejian
|
|
|
12,307 |
(6) |
|
|
** |
|
Christine D. Iger
|
|
|
9,407 |
(7) |
|
|
** |
|
Edward R. Muller
|
|
|
3,000 |
(8) |
|
|
** |
|
Jerald H. Evans(9)
|
|
|
-0- |
|
|
|
** |
|
|
5% Holders:
|
|
|
|
|
|
|
|
|
Royce & Associates, LLC
|
|
|
|
|
|
|
|
|
|
1414 Avenue of the Americas, New York, NY 10019
|
|
|
1,101,400 |
|
|
|
13.9 |
% |
Wedbush, Inc. and related parties
|
|
|
|
|
|
|
|
|
|
1000 Wilshire Blvd., Los Angles, CA 90017
|
|
|
606,315 |
(10) |
|
|
7.6 |
% |
Third Avenue Management LLC
|
|
|
|
|
|
|
|
|
|
622 Third Avenue, New York, NY 10017
|
|
|
597,583 |
|
|
|
7.5 |
% |
Babson Capital Management LLC
|
|
|
|
|
|
|
|
|
|
One Memorial Drive, Cambridge, MA 02142
|
|
|
592,840 |
|
|
|
7.5 |
% |
Wells Fargo & Company
|
|
|
569,040 |
|
|
|
7.2 |
% |
|
420 Montgomery Street, San Francisco, CA 94104
|
|
|
|
|
|
|
|
|
Snow Capital Management, L.P.
|
|
|
|
|
|
|
|
|
|
2100 Corporate Drive, Suite 300, Pittsburg, PA 15237
|
|
|
546,907 |
|
|
|
6.9 |
% |
Current directors and executive officers as a group
(9 persons)
|
|
|
1,669,034 |
(11) |
|
|
21.0 |
% |
|
|
|
|
** |
Less than one percent. |
|
|
|
|
(1) |
Under Rule 13d-3, certain shares may be deemed to be
beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned
by a person if the person has the right to acquire the shares
(for example, upon exercise of an option) within 60 days of
the date as of which the information is provided. In computing
the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) by
reason of these acquisition rights. As a result, the percentage
of outstanding shares of any person as shown in this table does
not necessarily reflect the persons actual ownership or
voting power with respect to the number of shares of common
stock actually outstanding at March 9, 2005. The percentage
ownership is based on 7,934,833 shares of common stock
outstanding as of March 9, 2005. |
|
|
(2) |
Includes (a) 1,300,217 shares of common stock held in
the Aram H. Keith and Margie R. Keith Trust, for which
Mr. and Mrs. Keith serve as co-trustee and
(b) 66,000 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or prior to May 8, 2005. |
15
|
|
|
|
(3) |
Includes (a) 7,359 shares of common stock held jointly
by Mr. Campanaro and his wife and
(b) 73,982 shares of common stock reserved for
issuance upon exercise of stock options, which are or will
become exercisable on or prior to May 8, 2005. |
|
|
(4) |
Includes 76,893 shares of common stock reserved for
issuance upon exercise of stock options, which are or will
become exercisable on or prior to May 8, 2005. |
|
|
(5) |
Includes 26,240 shares of common stock reserved for
issuance upon exercise of stock options, which are or will
become exercisable on or prior to May 8, 2005. |
|
|
(6) |
Includes (a) 2,400 shares of common stock held jointly
by Mr. Deukmejian and his wife and
(b) 8,407 shares of common stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or prior to May 8, 2005. |
|
|
(7) |
Includes 8,407 shares of common stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or prior to May 8, 2005. |
|
|
(8) |
Includes (a) 2,000 shares of common stock held by a
family trust established for the benefit of
Mr. Mullers family in which Mr. Muller and his
wife share voting and investment powers and
(b) 1,000 shares of common stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or prior to May 8, 2005. |
|
|
(9) |
Mr. Evans retired as President Emeritus of Energy/
Industrial Services effective January 31, 2005. |
|
|
(10) |
Edward W. Wedbush is the Chairman of Wedbush, Inc. (formerly
E*Capital Corporation) and owns a majority of the outstanding
shares of Wedbush, Inc. Mr. Wedbush is the President of
Wedbush Morgan Securities and owns a majority of the shares of
common stock of Wedbush Morgan Securities. Wedbush, Inc. has
sole ownership of 369,011 shares of our common stock,
Mr. Wedbush has sole ownership of 167,934 shares of
our common stock and Wedbush Morgan Securities has sole
ownership of 50,000 shares of our common stock. Wedbush,
Inc., Mr. Wedbush, and Wedbush Morgan Securities have sole
power to vote and dispose of 369,011 shares,
167,934 shares, and 50,000 shares, respectively. Each
of Wedbush, Inc., Mr. Wedbush and Wedbush Morgan Securities
has shared power to vote with respect to 586,945 shares and
shared power to dispose of 606,315 shares. Mr. Wedbush
may be deemed the beneficial owner of our shares that are owned
by Wedbush, Inc. However, Mr. Wedbush disclaims beneficial
ownership of the shares of common stock owned by Wedbush, Inc. |
|
(11) |
Includes 273,599 shares of common stock reserved for
issuance upon exercise of stock options, which are or will
become exercisable on or prior to May 8, 2005. |
The information as to shares beneficially owned has been
individually furnished by the respective directors, Named
Executive Officers, and other shareholders of the Company, or
taken from documents filed with the SEC.
CODE OF CONDUCT
The Company has adopted a Code of Conduct which is designed to
set the standards of business conduct and ethics and help
directors and employees resolve ethical issues. The Code of
Conduct applies to all directors and employees, including the
Chief Executive Officer and Chief Financial Officer and other
persons performing similar functions. The Code of Conduct covers
topics including, but not limited to, conflicts of interest,
confidentiality of information, fair dealing with customers,
suppliers, and competitors, and compliance with applicable laws,
rules, and regulations. The purpose of the Code of Conduct is to
ensure to the greatest possible extent that our business is
conducted in a consistently legal and ethical manner. A copy of
the Code of Conduct is posted on our website at
www.keithco.com.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the 2006
Annual Meeting of Shareholders for inclusion in the
Companys Proxy Statement and Proxy form relating to that
Annual Meeting must submit the proposal to the Company at its
principal executive offices by December 11, 2005. In
addition, in the event a
16
shareholder proposal is not received by the Company by
February 23, 2006, the Proxy to be solicited by the Board
of Directors for the 2006 Annual Meeting will confer
discretionary authority on the holders of the Proxy to vote the
shares if the proposal ultimately is presented at the 2006
Annual Meeting without any discussion of the proposal in the
Proxy Statement for that meeting.
SEC rules and regulations provide that if the date of the
Companys 2006 Annual Meeting is advanced or delayed more
than 30 days from the date of the 2005 Annual Meeting,
shareholder proposals intended to be included in the proxy
materials for the 2006 Annual Meeting must be received by the
Company within a reasonable time before the Company begins to
print and mail the proxy materials for the 2006 Annual Meeting.
Upon determination by the Company that the date of the 2006
Annual Meeting will be advanced or delayed by more than
30 days from the date of the 2005 Annual Meeting, the
Company will disclose that change in the earliest possible
Quarterly Report on Form 10-Q.
|
|
|
ON BEHALF OF THE BOARD OF DIRECTORS |
|
|
|
|
|
Gary C. Campanaro, Secretary |
Irvine, California
April 8, 2005
17
APPENDIX A
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
OF
THE KEITH COMPANIES, INC.
The Audit Committee (the Committee) of the
Board of Directors (the Board) of The Keith
Companies, Inc. (the Company) has been
established to: (a) assist the Board in its oversight
responsibilities regarding (1) the integrity of the
Companys financial statements, (2) the Companys
compliance with legal and regulatory requirements, and
(3) the outside auditor s qualifications and
independence; (b) prepare the audit committee report
required by the United States Securities and Exchange Commission
(the SEC) for inclusion in the
Companys annual proxy statement; (c) provide
oversight of the Companys financial reporting system,
(d) determine the appointment, compensation, retention and
oversight of the work of the outside auditor; (e) approve
audit and non-audit services to be performed by the outside
auditor; (f) establish procedures for the receipt,
retention and treatment of complaints regarding accounting
controls and auditing matters, including procedures for
confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing
matters; and (g) perform such other functions as the Board
may from time to time assign to the Committee. In performing its
duties, the Committee shall seek to maintain an effective
working relationship with the Board, the outside auditor and
management of the Company.
The Committee shall be composed of at least three members
(including a Chairperson), all of whom shall (i) be
independent directors, as such term is defined in
Rule 4200(a)(15) of the Marketplace Rules of the NASDAQ
National Stock Market, (ii) meet the independence criteria
of Rule 10A-3(b)(i) of the Rules and Regulations of the
Securities and Exchange Commission, (iii) not have
participated in the preparation of the financial statements of
the Company or any current subsidiary of the Company at any time
during the past three years; and (iv) be able to read and
understand fundamental financial statements, including a
companys balance sheet, income statement, and cash flow
statement. The members of the Committee and the Chairperson
shall be selected annually by the Board and serve at the
pleasure of the Board. A Committee member (including the
Chairperson) may be removed at any time, with or without cause,
by the Board. The Board may designate one or more directors who
meet the foregoing requirements as alternate members of the
Committee, who may replace any absent or disqualified member or
members at any meetings of the Committee. No person may be made
a member of the Committee if his or her service on the Committee
would violate any restriction on service imposed by any rule or
regulation of the SEC or the NASDAQ National Stock Market. At
least one member of the Committee shall have past employment
experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience
or background which results in the individuals financial
sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with
financial oversight responsibilities. The Committee shall have
the power (including any necessary funding) to engage such
financial and accounting experts, including independent public
accountants other than the Companys outside auditor, and
legal counsel as it deems reasonably necessary to assist it in
carrying out its responsibilities.
The Committee shall meet as often and at such times and places
(or telephonically) as determined by the Committee. Any member
of the Committee may call a meeting. If practicable, a written
agenda shall be
A-1
prepared for each meeting and distributed to Committee members
prior to the meeting, together with any appropriate background
materials. After each meeting, detailed minutes will be prepared
recording the deliberations of the Committee. The Committee
shall periodically report to the Board on its activities.
While the Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Committee to
plan or conduct audits or to determine that the Companys
financial statements are complete and accurate and in accordance
with generally accepted accounting principles. This is the
responsibility of management and the outside auditor.
In carrying out its responsibilities, the Committee believes its
policies and procedures should remain flexible, in order to best
react to changing conditions and to ensure to the Board and
stockholders that the corporate accounting and reporting
practices of the Company are in accordance with all requirements.
The following is a summary of the responsibilities of the
Committee:
The Committee will review and reassess the adequacy of this
Charter at least annually and make recommendations to the Board,
as conditions dictate, to update this Charter.
|
|
B. |
Selection and Oversight of Outside Auditor |
The Committee will:
|
|
|
1. Appoint and make all determinations with respect to the
retention of the outside auditor; which firm is ultimately
accountable to the Committee and the Board, as representatives
of the shareholders. |
|
|
2. Review and evaluate the qualifications, performance and
independence of the outside auditor. To assist in this
undertaking, the Committee shall require the outside auditor to
submit a report (which report shall be reviewed by the
Committee) describing (a) the outside auditors
internal quality-control procedures, (b) any material
issues raised by the most recent internal quality-control
review, or peer review, of the accounting firm or by any inquiry
or investigations by governmental or professional authorities
(within the preceding five years) respecting one or more
independent audits carried out by the outside auditor, and any
steps taken to deal with any such issues, and (c) all
relationships the outside auditor has with the Company, its
executive officers and relevant third parties to determine the
outside auditors independence. The Committee shall also
consider whether the provision of any non-audit services is
compatible with the independence standards under the guidelines
of the SEC and of the Independence Standards Board. |
|
|
3. Approve the fees to be paid to the outside auditor for
audit services. |
|
|
4. Approve the retention of the outside auditor for any
material non-audit service and the fee for such service. |
|
|
5. Review with the outside auditor the experience and
qualifications of the senior members of the audit team,
including the knowledge and experience of the senior members of
the audit team with respect to the Companys industry. The
Committee shall ensure the regular rotation of the lead audit
partner and audit review partner as required by law and consider
whether there should be a periodic rotation of the
Companys outside auditor. |
|
|
6. Establish and periodically review Company policies on
hiring former employees of the outside auditor. |
|
|
7. Direct and supervise any special audit inquiries by the
independent auditor as the Board or the Committee may request. |
A-2
|
|
|
8. Review with the outside auditor any problems or
difficulties the auditor may have encountered and any
management or internal control letter
provided by the outside auditor and the Companys response
to that letter. Such review shall include: |
|
|
|
a. any difficulties encountered in the course of the audit
work, including any restrictions on the scope of activities or
access to required information and any disagreements with
management; |
|
|
b. any accounting adjustments that were proposed by the
outside auditor that were not agreed to by the Company; and |
|
|
c. communications between the outside auditor and its
national office regarding any issues on which it was consulted
by the audit team and matters of audit quality and consistency. |
|
|
|
9. Communicate with the outside auditor regarding
(a) alternative treatments of financial information within
the parameters of GAAP, (b) critical accounting policies
and practices to be used in preparing the audit report and
(c) such other matters as the SEC and the NASDAQ National
Sock Market may direct by rule or regulation. |
|
|
10. Periodically consult with the outside auditor out of
the presence of management about internal controls and the
completeness and accuracy of the Companys financial
statements and the adequacy of its accounting personnel. |
|
|
11. Oversee the relationship with the outside auditor by
discussing with the outside auditor the nature and rigor of the
audit process, receiving and reviewing audit reports and
ensuring that the outside auditor has full access to the
Committee (and the Board) to report on any and all appropriate
matters. |
|
|
12. Discuss with the outside auditor prior to the audit the
general planning and staffing of the audit. |
|
|
13. Obtain a representation from the outside auditor that
Section 10A of the Securities Exchange Act of 1934 has been
followed. |
The Committee will periodically evaluate the need for an
internal audit function at the Company and make recommendations
to the Board with respect thereto.
|
|
D. |
Oversight and Review of Accounting Principles and
Practices and Internal Controls and Legal Compliance |
The Committee will:
|
|
|
1. In consultation with the outside auditor, review the
integrity of the Companys financial reporting processes,
both internal and external. |
|
|
2. Annually discuss with management and the outside auditor
significant financial reporting issues and judgments made in
connection with the preparation of the Companys financial
statements, including the factors which resulted in the
selection of the GAAP methods on the Companys financial
statements and a description of any transactions as to which
management obtained Statement on Auditing Standards No. 50
letters. |
|
|
3. Discuss with and make inquiries of management and the
outside auditor concerning the adequacy and effectiveness of the
internal financial, accounting and operating controls and
procedures of the Company and its subsidiaries, including but
not limited to procedures designed to prevent any fraud, illegal
acts or deficiencies in internal control, and ensure that the
outside auditor informs the Committee of any fraud, illegal acts
or deficiencies in internal control of which it becomes aware. |
|
|
4. Discuss with management and legal counsel the status of
any pending litigation, income taxation matters, regulatory
compliance policies and other legal and compliance matters
material to the operations of the Company. |
A-3
|
|
|
5. Review with management and the outside auditor the
effect of regulatory and accounting initiatives as well as
off-balance sheet structures on the Companys financial
statements. |
|
|
6. Meet at least annually with the chief financial officer,
the chief executive officer, and the outside auditor in separate
executive sessions. |
|
|
7. Review and approve all related party transactions in
accordance with the rules of the SEC and the NASDAQ National
Stock Market. |
|
|
8. Confirm with management and the outside auditor that the
Company and its subsidiaries are in conformity with applicable
legal requirements, including disclosures of insider and
affiliated party transactions; advise the Board with respect to
the Companys policies and procedures regarding compliance
with applicable laws and regulations. |
|
|
E. |
Oversight and Monitoring of the Companys Financial
Statements and Documents and Reports |
The Committee will:
|
|
|
1. Review and discuss with the outside auditor and with
senior management the results of the audit and any reports or
opinions to be rendered in connection therewith, including major
issues regarding accounting and auditing principles and
practices. |
|
|
2. Review quarterly and annual financial results with
management and the outside auditor, prior to any interim or
year-end filings, including the results of the outside
auditors reviews of the quarterly financial statements,
and consider whether the information is adequate and consistent
with the Committees knowledge about the Company and its
operations. |
|
|
3. Review and discuss with management all (i) press
releases reporting annual or quarterly financial results or
other material financial developments, and (ii) financial
guidance to analysts and other members of the financial
community, in each case prior to release to the public. |
|
|
4. Discuss with management any significant variances in the
annual financial statements between years and determine whether
the data are consistent with the managements discussion
and analysis section of the annual and quarterly reports. |
|
|
5. Review with management the managements discussion
and analysis section of annual and quarterly reports and confirm
that the outside auditor and legal counsel have completed their
review. |
|
|
6. Review with management and the outside auditor any
correspondence with regulators or government agencies and any
employee complaints or published reports that raise material
issues regarding the Companys financial statements or
accounting policies. |
|
|
7. Establish and periodically review procedures for
receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or
auditing matters, and confidential, anonymous submission by
employees of concerns regarding questionable accounting or
auditing matters. |
|
|
8. Implement policies designed to ensure that no officer,
director or any person acting under their direction fraudulently
influences, coerces, manipulates or misleads the outside auditor
for purposes of rendering the Companys financial
statements materially misleading. |
|
|
9. Periodically review the Committees policies with
respect to the participation of Committee members in educational
programs conducted by the Company or an outside consultant to
enhance their knowledge of accounting and financial matters. |
|
|
F. |
Audit Committee Reports |
The Committee will prepare annually the audit committee report
for inclusion in the Companys proxy statement relating to
its annual shareholders meeting. In that report, the Committee
will state whether it has: (i) reviewed and discussed the
audited financial statements with management;
(ii) discussed with the outside
A-4
auditor the matters required to be discussed by Statement on
Auditing Standards No. 61, as that statement may be
modified or supplemented from time to time; (iii) received
from the outside auditor the written disclosures and the letter
required by Independence Standard Board Standard No. 1, as
that standard may be modified or supplemented from time to time,
and has discussed with the outside auditor, the outside
auditors independence; and (iv) based on the review
and discussions referred to in clauses (i), (ii) and
(iii) above, recommended to the Board that the audited
financial statements be included in the Companys Annual
Report on Form 10-K for the last fiscal year for filing
with the Securities and Exchange Commission.
A-5
GLOSSARY
Independence Standards Board The
Independence Standards Board is the private sector
standard-setting body governing the independence of auditors
from their public company clients. The ISB was dissolved on
July 31, 2001. Many of the ISB standards and
interpretations continue to represent authoritative guidance for
auditors of public companies with respect to auditor
independence matters.
Independence Standard Board Standard
No. 1 requires the outside auditor to
disclose to the audit committee of the Company, in writing, all
relationships between the auditor and its related entities and
the Company and its related entities that in the auditors
professional judgment may reasonably be thought to bear on
independence and to confirm in the letter that, in its
professional judgment, it is independent of the company within
the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934.
Section 10A of the Securities Act of
1934 sets forth certain standards that govern the
procedures to be employed by registered public accounting firms
in the conduct of audits required by the Securities Act of 1934.
Statement of Auditing Standards No. 50
letters is a report prepared by an accounting
firm on the application of accounting principles to hypothetical
transactions.
Statement on Auditing Standards
No. 61 sets forth the requirements imposed
on registered public accounting firms and their communications
with audit committees of public clients.
A-6
q DETACH PROXY CARD HERE q
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1. ELECTION OF DIRECTORS
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o FOR all nominees listed
below (except as indicated
to the contrary below).
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o WITHHOLD AUTHORITY to vote for all
nominees listed below
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o EXCEPTIONS |
Director Nominees: Aram H. Keith, Gary C. Campanaro, George Deukmejian, Christine D. Iger, and Edward R. Muller
(INSTRUCTIONS: To withhold authority to vote for any individual nominee mark the Exceptions box and write that nominees name on the space below.)
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RATIFICATION OF APPOINTMENT OF KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2005. |
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o FOR
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o AGAINST
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o ABSTAIN |
If you wish to vote in accordance with the recommendations
of management, all you need to do is sign and return this card.
The proxies cannot vote your shares unless you sign and return the card.
Please sign exactly as name appears hereon. Joint owners should each sign.
Where applicable, indicate position or representative capacity.
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Dated:
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, 2005 |
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Signature |
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Signature |
Please Detach Here
q You Must Detach This Portion of the Proxy Card q
Before Returning it in the Enclosed Envelope
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
THE KEITH COMPANIES,
INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Aram H. Keith and Gary C. Campanaro, and each of them, with
full power of substitution, as the proxies of the undersigned, to vote all shares of Common Stock
of any class of The Keith Companies, Inc. (the Company) that the undersigned is entitled to vote
at the Annual Meeting of Shareholders of the Company to be held at 19 Technology Drive, Irvine,
California, on May 17, 2005 at 10:30 a.m. Pacific Standard Time, and at all adjournments thereof
(the Annual Meeting), upon the following matters, which are described in the Companys Proxy
Statement for the Annual Meeting.
The undersigned hereby revokes any other proxy to vote at the Annual Meeting, and hereby
ratifies and confirms all that said proxies, and each of them, may lawfully do by virtue hereof.
With respect to matters not known at the time of the solicitation hereof, said proxies are
authorized to vote in accordance with their best judgment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS NOMINATED BY THE
BOARD OF DIRECTORS AND FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP. THE PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE ELECTION
OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND FOR RATIFICATION OF THE APPOINTMENT OF KPMG
LLP.
PLEASE SIGN AND DATE ON REVERSE SIDE