Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The Pittston Company
..................................................................
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..................................................................
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[PITTSTON LOGO] The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, VA 23226-8100
MICHAEL T. DAN
Chairman,
President and Chief Executive Officer
March 27, 2003
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders of
The Pittston Company to be held at the Hotel Inter-Continental The Barclay New
York, 111 East 48th Street, New York, New York, on Friday, May 2, 2003, at 1:00
p.m., local time.
You will be asked to: (i) elect four directors for a term of three years and
one director for a term of one year; (ii) approve independent public accountants
for 2003; and (iii) approve the Company's proposal to amend the Company's
restated articles of incorporation to change the Company's name to 'The Brink's
Company.'
It is important that you vote, and we urge you to complete, sign, date and
return the enclosed proxy in the envelope provided.
We appreciate your prompt response and cooperation.
Sincerely,
MICHAEL T. DAN
[PITTSTON LOGO]
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 2, 2003
-------------------
Notice Is Hereby Given that the annual meeting of shareholders of THE
PITTSTON COMPANY will be held on May 2, 2003, at 1:00 p.m., local time, at the
Hotel Inter-Continental The Barclay New York, 111 East 48th Street, New York,
New York, for the following purposes:
1. To elect four directors for a term expiring in 2006 and one director for
a term expiring in 2004.
2. To approve the selection of KPMG LLP as independent public accountants to
audit the accounts of the Company and its subsidiaries for the year 2003.
3. To approve the Company's proposal to amend the Company's restated
articles of incorporation to change the Company's name to 'The Brink's Company.'
4. To transact such other business as may properly come before the meeting
or any adjournment.
The close of business on March 10, 2003, has been fixed as the record date
for determining the shareholders entitled to notice of and to vote at the
meeting.
Whether or not you expect to attend the annual meeting in person, please
complete, date and sign the enclosed proxy and return it in the enclosed
envelope, which requires no additional postage if mailed in the United States.
Prompt response is helpful and your cooperation will be appreciated.
Austin F. Reed
Secretary
March 27, 2003
The Annual Report to Shareholders, including financial statements, is being
mailed to shareholders, together with these proxy materials, commencing on or
about March 27, 2003.
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. A RETURN ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
THE PITTSTON COMPANY
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of The Pittston Company (the 'Company') of proxies from
holders of Pittston Common Stock (as defined below), to be voted at the annual
meeting of shareholders to be held on May 2, 2003, at 1:00 p.m., local time, at
the Hotel Inter-Continental The Barclay New York, 111 East 48th Street, New
York, New York (and at any adjournment thereof), for the purposes set forth in
the accompanying notice of such meeting.
On January 14, 2000, the Company completed an exchange (the 'Exchange') of
its Pittston BAX Group Common Stock ('BAX Stock'), par value $1.00 per share and
Pittston Minerals Group Common Stock ('Minerals Stock'), par value $1.00 per
share, into Pittston Brink's Group Common Stock ('Brink's Stock'), at exchange
ratios of .4848 share of Brink's Stock for each share of BAX Stock and .0817
share of Brink's Stock for each share of Minerals Stock. The remaining class,
Brink's Stock (hereinafter referred to as 'Pittston Common Stock'), now
constitutes the Company's only class of common stock and continues to trade on
the New York Stock Exchange under the symbol 'PZB.'
The close of business on March 10, 2003, has been fixed as the record date
for determining the shareholders entitled to notice of and to vote at the annual
meeting, and only shareholders of record at the close of business on that date
will be entitled to vote at the meeting and any adjournment thereof. On
March 10, 2003, the Company had outstanding 54,253,423 shares of Pittston Common
Stock, the holders thereof being entitled to one vote per share on all matters
that the Board of Directors knows will be presented for consideration at the
annual meeting.
This Proxy Statement and the accompanying form of proxy and Annual Report to
Shareholders are being mailed to shareholders commencing on or about March 27,
2003. The mailing address of the principal executive office of the Company is
1801 Bayberry Court, P. O. Box 18100, Richmond, VA 23226-8100.
The election of directors, the selection of independent public accountants
and the approval of the amendment of the Company's restated articles of
incorporation to change the Company's name to 'The Brink's Company' are the only
matters that the Board of Directors knows will be presented for consideration at
the annual meeting. As to any other business that may properly come before the
annual meeting, it is intended that proxies in the enclosed form will be voted
in respect thereof in accordance with the judgment of the person voting the
proxies.
The Company's bylaws provide that the chairman of the annual meeting will
determine the order of business at the annual meeting and the voting and other
procedures to be observed. The chairman is authorized to declare whether any
business is properly brought before the annual meeting, and business not
properly brought before the annual meeting will not be transacted.
The shares of Pittston Common Stock represented by proxies solicited by the
Board of Directors will be voted in accordance with the recommendations of the
Board of Directors unless otherwise specified in the proxy, and where the person
solicited specifies a choice with respect to any matter to be acted upon, the
shares of Pittston Common Stock will be voted in accordance with the
specification so made.
The enclosed proxy is revocable at any time prior to its being voted by
filing an instrument of revocation or a duly executed proxy bearing a later
date. A proxy may also be revoked by attendance at the annual meeting and voting
in person. Attendance at the annual meeting will not by itself constitute a
revocation.
Votes cast by shareholders will be treated as confidential in accordance
with a policy approved by the Board of Directors. Shareholder votes at the
annual meeting will be tabulated by the Company's transfer agent, EquiServe
Trust Company, N.A.
CORPORATE GOVERNANCE
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, exercising
their good faith business judgment of the best interests of the Company. Members
of the Board are kept informed of the Company's business by various reports sent
to them regularly, as well as by operating and financial reports made at Board
and Committee meetings by the President and Chief Executive Officer and other
officers and members of management. During 2002, the Board met nine times.
The Audit and Ethics Committee (the 'Audit Committee') recommends to the
Board the selection by the shareholders at their annual meeting of a firm of
independent public accountants, confers with the Company's independent public
accountants to review the plan and scope of their proposed audit as well as
their findings and recommendations upon the completion of the audit, and meets
with the independent public accountants and with appropriate Company financial
personnel and internal auditors regarding the Company's internal controls,
practices and procedures. The Audit Committee also oversees the Company's legal
and business ethics compliance programs. During 2002, the Board examined the
composition of the Audit Committee and found the members to meet the
independence requirements of the New York Stock Exchange. The Audit Committee
currently consists of Mr. Sloane, as Chairman, and Messrs. Barker, Craig (whose
term as a director expires in May), Grimes and Gross, none of whom is an officer
or employee of the Company or any of its subsidiaries. The Audit Committee met
seven times during 2002.
The Compensation and Benefits Committee (the 'Compensation Committee') is
responsible for establishing and reviewing policies governing salaries,
incentive compensation and the terms and conditions of employment of senior
executives and other key employees of the Company, in addition to oversight of
the Company's stock option plans for employees and similar plans which may be
maintained from time to time by the Company. The Compensation Committee
currently consists of Mr. Barker, as Chairman, and Messrs. Ackerman, Broadhead
and Grinstein, none of whom is an officer or employee of the Company or any of
its subsidiaries. The Compensation Committee met four times during 2002.
The Corporate Governance and Nominating Committee (the 'Corporate Governance
Committee'), recommends to the Board nominees for election as directors and as
senior executive officers of the Company, as well as reviewing the performance
of incumbent directors in determining whether to recommend them to the Board for
renomination. The Corporate Governance Committee currently consists of Mr.
Gross, as Chairman, Mrs. Alewine and Messrs. Grinstein and Turner, none of whom
is an officer or employee of the Company or any of its subsidiaries. The
Corporate Governance Committee met five times during 2002. For information
concerning procedures to be followed for submitting names of nominees for
consideration by the Corporate Governance Committee, see 'Other
Information -- Shareholder Proposals.'
The Finance Committee recommends to the Board dividend and other actions and
policies regarding the financial affairs of the Company, including those
relating to matters that may affect the financial strength of the Company. The
Finance Committee currently consists of Mr. Ackerman, as Chairman, and Messrs.
Breslawsky, Craig, Grimes and Turner, none of whom is an officer or employee of
the Company or any of its subsidiaries. The Finance Committee met five times
during 2002.
The Pension Committee is responsible for the oversight of the Company's
Pension-Retirement Plan and Savings-Investment Plan and any similar plans which
may be maintained from time to time by the Company. The Pension Committee also
has general oversight responsibility for pension plans maintained by foreign and
other subsidiaries of the Company. The Pension Committee has authority to adopt
amendments to the Company's Pension-Retirement Plan, Pension Equalization Plan
and Savings-Investment Plan. In carrying out these responsibilities, the Pension
Committee coordinates with the appropriate financial, legal and administrative
personnel of the Company, including the Company's Administrative Committee, as
well as outside experts retained in connection with the administration of those
plans. The Pension Committee currently consists of Mr. Broadhead, as Chairman,
Mrs. Alewine and Messrs. Breslawsky and Sloane, none of whom is an officer or
employee of the Company or any of its subsidiaries. The Pension Committee met
four times during 2002.
2
The Executive Committee of the Board may exercise substantially all the
authority of the Board during the intervals between the meetings of the Board.
The Executive Committee currently consists of Mr. Dan, as Chairman, and all
other directors, except that a quorum of the Executive Committee consists of
one-third of the number of members of the Executive Committee, three of whom
must not be employees of the Company or any of its subsidiaries. The Executive
Committee held no meetings in 2002.
During 2002, all incumbent directors attended at least 75% of the total
number of meetings of the Board of Directors and of the committees of the Board
on which they served, and the average attendance at all meetings was
approximately 97%.
COMPENSATION OF DIRECTORS
Each non-employee director is paid an annual retainer fee of $32,500, an
attendance fee of $1,750 per day for each meeting of the Board and of each
committee of the Board, and a fee of $1,750 per day for rendering any special
services to the Company at the request of the Chairman of the Board. Each
Committee chairman receives an additional annual fee of $3,300. The annual
retainer fees and attendance fees were increased in 2002 by 14.04% over the fees
paid in 2001. A director may elect to defer receipt of his or her fees to future
years and to receive interest thereon, compounded quarterly, at the prime
commercial lending rate of J.P.Morgan Chase and Co., as of the end of the
previous calendar quarter.
Under the terms of the Company's Directors' Stock Accumulation Plan, each
non-employee director receives as of June 1 of each year, an allocation of Units
representing shares of Pittston Common Stock (the 'Units') equal to (a) 50% of
the annual retainer in effect on such June 1 if he or she has accrued less than
eight years of service or (b) 25% of such annual retainer if he or she has
accrued eight or more years of service, divided by the stock price for such
date. In addition, under the Directors' Stock Accumulation Plan, additional
Units are credited to participants' accounts in respect of cash dividends paid
on the Pittston Common Stock based upon the Directors' Stock Accumulation Plan's
formula for accrual. Upon a participant's termination of service, the
distribution of shares of Pittston Common Stock equal to the number of Units
allocated to such director's account will be made in a single lump sum
distribution unless the participant elects at least 12 months before his or her
termination to receive equal annual installments (not more than 10) commencing
on the first day of the month next following his or her termination of service.
On September 3, 2002, each participant's account was credited with a
supplemental allocation of 14.04% of their existing account balance to increase
the Units in each account with a corresponding percentage increase in the annual
retainer fee for each director.
The following table sets forth information concerning the number of Units
credited during 2002 to each participant standing for election or continuing as
a director:
2002 UNITS
CREDITED
--------
Roger G. Ackerman........................................... 854.74
Betty C. Alewine............................................ 829.11
James R. Barker............................................. 989.11
Marc C. Breslawsky.......................................... 914.85
James L. Broadhead.......................................... 938.44
Michael L. Grimes........................................... 0
Gerald Grinstein............................................ 914.85
Ronald M. Gross............................................. 1,338.59
Carl S. Sloane.............................................. 964.11
Ronald L. Turner............................................ 0
All Non-Employee Nominees and Continuing Directors as a
Group (10 persons)........................................ 7,743.80
Under the Non-Employee Directors' Stock Option Plan (the 'Non-Employee
Directors' Stock Option Plan'), automatic annual grants of options are made for
2,517 shares of Pittston Common Stock at 100% of fair market value on the date
of grant to each non-employee director on each July 1 so long
3
as the Non-Employee Directors' Stock Option Plan remains in effect. Each option
granted annually will become exercisable six months from the date of grant. Each
option granted under the Non-Employee Directors' Stock Option Plan constitutes a
nonqualified stock option under the Internal Revenue Code of 1986, as amended
(the 'Code'), and terminates no later than ten years from the date of grant. The
Non-Employee Directors' Stock Option Plan expires May 11, 2008. The options are
nontransferable otherwise than by will or the laws of descent and distribution
except that options may be transferable to immediate family members (or trusts
therefor) of an optionee.
Under the Directors' Charitable Award Program, the Company will contribute
$1,100,000 on behalf of each participating director after such director's death.
Of that amount, $100,000 will be donated to one or more tax-exempt organizations
designated by the Company, and $1,000,000 will be donated in accordance with the
director's recommendations to eligible educational institutions and charitable
organizations. Each of the Company's directors currently participates in the
Directors' Charitable Award Program. The Company is the owner and beneficiary of
life insurance policies insuring the lives of the participating directors.
Premiums paid in 2002 in respect of such policies totaled in aggregate
approximately $378,000.
ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
of the Chief Executive Officer and the other four highest paid executive
officers of the Company:
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------------- ---------------------
NAME AND SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(a) BONUS(b) OPTIONS COMPENSATION(c)
------------------ ---- --------- -------- ------- ---------------
M. T. Dan 2002 $880,077 $663,000 172,000 $18,624
Chairman, President 2001 832,692 318,750 170,000 12,776
and Chief Executive Officer 2000 699,038 262,500 200,000 11,596
R. T. Ritter 2002 $346,154 $200,000 40,000 $14,791
Vice President and 2001 322,692 150,000 40,000 11,654
Chief Financial Officer 2000 303,000 125,000 30,000 10,863
F. T. Lennon 2002 $310,900 $150,000 30,000 $14,944
Vice President -- 2001 297,523 110,000 30,000 11,756
Human Resources 2000 283,231 100,000 25,000 10,724
and Administration
A.F. Reed 2002 $311,169 $140,000 30,000 $12,926
Vice President, 2001 298,523 110,000 30,000 10,581
General Counsel 2000 284,500 100,000 25,000 10,729
and Secretary
J. B. Hartough 2002 $236,800 $163,000 20,000 $19,013
Vice President -- 2001 233,031 80,000 20,000 10,401
Corporate Finance 2000 229,800 70,000 12,500 10,280
and Treasurer
(a) Salaries before compensation reduction payments under the Savings-Investment
Plan and the Deferral of Salary and Supplemental Savings Plan portions of
the Company's Key Employees' Deferred Compensation Program.
In addition, as of January 1, 2003, the participant's account was credited
with additional Common Stock Units in respect of cash dividends paid on
Pittston Common Stock during 2002 based upon the formula for accrual in the
Deferred Compensation Program. The following table sets forth the amount of
2002 salary deferred under the Deferred Compensation Program by each of the
executive officers named above and the number of Common Stock Units credited
to his account (including matching contributions and cash dividends) in
respect of salary paid in 2002:
2002 COMPENSATION COMMON STOCK
DEFERRED UNITS
-------- -----
Mr. Dan $176,015.38 7,698.58
Mr. Ritter 103,846.12 4,541.99
Mr. Lennon 93,269.94 4,079.43
Mr. Reed 62,233.86 2,721.98
Mr. Hartough 47,360.04 2,071.46
(footnotes continued on next page)
4
(footnotes continued from previous page)
Under the Deferred Compensation Program, distributions with respect to the
Common Stock Units are to be made in shares of Pittston Common Stock on the
basis of one share for each Common Stock Unit (with cash paid for fractional
Common Stock Units), but the aggregate value of the shares so distributed
attributable to the deferral of salary pursuant to the Deferral of Salary
portion of the Program (including related dividends, but not matching
contributions) may not be less than the aggregate amount of the salary
deferred pursuant to the Deferral of Salary portion of the Program and the
related dividends in respect of which such Common Stock Units were initially
credited. Such distributions will be made upon termination of employment or
earlier upon election made more than one year prior to distribution.
(b) Under the Company's Key Employees' Deferred Compensation Program,
participants are permitted to defer up to 100% of the cash incentive payment
for 2002 made to them pursuant to the Key Employees Incentive Plan and
receive a Company-matching contribution with respect to the amount so
deferred but not in excess of 10% of the cash incentive payment, which
amounts were, as of January 1, 2003, converted into Common Stock Units in
accordance with the formula for conversion in the Deferred Compensation
Program. In addition, dividend credits of Common Stock Units were made to
the participant's account in respect of cash dividends paid on Pittston
Common Stock during 2002. The following table sets forth the aggregate
amount of incentive compensation for 2002 deferred under the Deferred
Compensation Program, including Company-matching contributions, by each of
the executive officers named above and the number of Common Stock Units
credited to his account (including in respect of cash dividends) as of
January 1, 2003:
BONUS COMMON STOCK
DEFERRED UNITS
-------- -----
Mr. Dan $331,500 17,595.54
Mr. Ritter 60,000 3,184.71
Mr. Lennon 90,000 4,777.07
Mr. Reed 28,000 1,486.20
Mr. Hartough 17,600 934.18
Under the Deferred Compensation Program, distributions with respect to the
Common Stock Units are to be made in shares of Pittston Common Stock on the
basis of one share for each Common Stock Unit (with cash paid for fractional
Common Stock Units), but the aggregate value of the shares so distributed
attributable to the deferral of cash incentive payments (including related
dividends, but not matching contributions) may not be less than the aggregate
amount of the cash incentive payment deferred and the related dividends in
respect of which such Common Stock Units were initially credited. Such
distributions will be made upon termination of employment or earlier upon
election made more than one year prior to distribution.
(c) The Company made matching contributions under the Savings-Investment Plan in
2002 in the amount of $10,000 for each of Messrs. Dan, Ritter, Reed, Lennon
and Hartough.
In 2002, the Company paid life insurance premiums under the Executive Salary
Continuation Plan in the amount of $5,456 for Mr. Dan; $4,041 for Mr.
Ritter; $4,231 for Mr. Lennon; $1,876 for Mr. Reed; and $2,013 for Mr.
Hartough. The Executive Salary Continuation Plan provides a death benefit
equal to three times a covered employee's annual salary payable in ten equal
annual installments to the employee's spouse or other designated
beneficiary.
5
STOCK OPTIONS
The following table sets forth information concerning nonqualified stock
options granted under the Company's 1988 Stock Option Plan on July 11, 2002, to
the Chief Executive Officer and the other officers named in the Summary
Compensation Table. Such options will (i) become exercisable as to one-third of
the total number of shares covered by such option on each of the first, second
and third anniversary of the date of grant; (ii) have purchase prices per share
equal to 100% of the fair market value of the Pittston Common Stock on the date
of grant, rounded up to the next higher cent; and (iii) expire on July 11, 2008.
No Stock Appreciation Rights were granted in 2002 to the named executive
officers.
OPTION GRANTS IN 2002
INDIVIDUAL GRANTS
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO PRICE GRANT DATE
OPTIONS EMPLOYEES IN PER EXPIRATION PRESENT
NAME GRANTED 2002 SHARE GRANT VALUE(a)
- ---- ------- ---- ----- ----- --------
M. T. Dan.................................... 172,000 18.61% $21.48 7/11/08 $1,413,116
R. T. Ritter................................. 40,000 4.33% $21.48 7/11/08 328,632
F. T. Lennon................................. 30,000 3.25% $21.48 7/11/08 246,474
A. F. Reed................................... 30,000 3.25% $21.48 7/11/08 246,474
J. B. Hartough............................... 20,000 2.16% $21.48 7/11/08 164,316
- ---------
(a) Based on the Black-Scholes option-pricing model and the following
assumptions: (i) projected annual dividend yield of 0.52% for Pittston
Common Stock; (ii) expected volatility of 36.69%; (iii) a risk-free rate of
return of 4.23%; and (iv) all options are exercised on the expiration date.
All values vest at 33% per annum until fully vested, and were also
discounted by 3% per year to reflect the risk of forfeiture before vesting.
The actual value an executive officer may receive depends on market prices
and there can be no assurance that the amounts reflected in the Grant Date
Present Value column will actually be realized. No gain to an executive
officer is possible without a commensurate appreciation in stock value.
The following table sets forth information concerning the exercise of
options during 2002 and unexercised options held at the end of such year.
AGGREGATED OPTION EXERCISES IN 2002
AND YEAR-END OPTION VALUES
STOCK OPTIONS
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2002 DECEMBER 31, 2002
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
M. T. Dan............. 0 $ -- 464,749 351,999 $482,000 $241,000
R. T. Ritter.......... 0 -- 79,482 76,666 $ 96,400 $ 48,200
F. T. Lennon.......... 0 -- 97,367 58,333 $ 80,335 $ 40,165
A. F. Reed............ 0 -- 88,201 58,333 $ 80,335 $ 40,165
J. B. Hartough........ 0 -- 67,939 37,499 $ 40,170 $ 20,080
PENSION-RETIREMENT PLAN
The Company maintains a noncontributory Pension-Retirement Plan (the
'Pension Plan') covering, generally, full-time employees of the Company and
participating subsidiaries who are not covered by a collective bargaining
agreement. Accrued benefits under the Pension Plan are vested upon employees'
completion of five years of Vesting Service (as defined in the Pension Plan).
The Code limits the amount of pensions which may be paid under federal income
tax qualified plans. The Board of Directors adopted a Pension Equalization Plan
(the 'Equalization Plan') under which the Company will make additional payments
so that the total amount received by each such person affected by the
6
Code limitations is the same as would have otherwise been received under the
Pension Plan. The Company has reserved the right to terminate or amend the
Pension Plan and the Equalization Plan at any time.
Effective December 1, 1997, the Equalization Plan was amended to permit
participants to receive the actuarial equivalent of their benefit under such
plan in a lump sum. By September 30, 2003, or if earlier, upon a Change in
Control (as defined in the Equalization Plan), the Company is required to
contribute amounts in cash to a trust established between the Company and The
Chase Manhattan Bank. Such amounts are designed to be sufficient to provide the
benefits to which (a) participants under the Equalization Plan and (b) retirees
covered under certain employment contracts, are entitled pursuant to the terms
of the Equalization Plan and such employment contracts. The assets of the trust
will be subject to the claims of the Company's general creditors in the event of
the Company's insolvency.
The table below illustrates the estimated annual benefits payable upon
retirement at age 65 under the Pension Plan and Equalization Plan to officers
and other eligible employees in various classifications as to Average Salary and
years of Benefit Accrual Service (as defined in the Pension Plan).
PENSION PLAN TABLE
ESTIMATED ANNUAL PENSION
AVERAGE ANNUAL SALARY PAYABLE BASED ON BENEFIT ACCRUAL SERVICE OF:
DURING 36 MONTHS ----------------------------------------------------
OF HIGHEST PAY 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
-------------- -------- -------- -------- -------- --------
$ 300,000 $ 63,000 $ 94,500 $126,000 $157,500 $172,500
500,000 105,000 157,500 210,000 262,500 287,500
700,000 147,000 220,500 294,000 367,500 402,500
900,000 189,000 283,500 378,000 472,500 517,500
1,100,000 231,000 346,500 462,000 577,500 632,500
1,300,000 273,000 409,500 546,000 682,500 747,500
1,500,000 315,000 472,500 630,000 787,500 862,500
1,700,000 357,000 535,500 714,000 892,500 977,500
Such amounts are based on the assumption that the employee will be in the
Company's employ until normal retirement date (age 65), that the Pension Plan
and Equalization Plan will continue in effect without change and that payments
will be made on a straight life annuity basis. The Pension Plan and Equalization
Plan give effect to the full amount of earnings shown under the salary and bonus
columns of the Summary Compensation Table. At December 31, 2002, the executive
officers named in such Table had been credited under the Pension Plan with the
following years of Benefit Accrual Service: Mr. Dan, 21 years; Mr. Lennon, 26
years; Mr. Hartough, 16 years; Mr. Reed, 16 years; and Mr. Ritter, 5 years. The
table does not reflect reductions on account of the applicable Social Security
taxable wage base.
EMPLOYMENT AGREEMENTS
As of May 4, 1998, the Company entered into an employment agreement with
Mr. Dan which, as amended as of March 8, 2002, provides him with, among other
things, a minimum annual salary of $884,000 for a period ending March 31, 2007,
in exchange for his services as President and Chief Executive Officer of the
Company. The agreement also provides certain benefits and obligations in the
event of a termination of his services during the contract term, including a
lump-sum cash payment equal to (i) his annual salary, as in effect immediately
prior to such termination, multiplied by three plus (ii) the bonus, if any, paid
to him in respect of the immediately preceding fiscal year multiplied by three,
plus (iii) a sum reflecting the economic equivalent of certain employee benefit
programs.
CHANGE IN CONTROL ARRANGEMENTS
In 1997 and 1998, the Company entered into change in control agreements with
Messrs. Hartough, Lennon, Reed and Ritter. Pursuant to these agreements, in the
event Messrs. Hartough, Lennon, Reed or Ritter are terminated by the Company
without Cause (as defined in their respective agreements) or quit for Good
Reason (as defined in their respective agreements) within three years following
a Change
7
in Control (as defined in their respective agreements), the terminated executive
will be entitled, in addition to other benefits, to a lump-sum cash payment
equal to (i) his accrued pay (including a prorated portion of his annual bonus
based on the number of days worked in the year of his termination) plus (ii)
three times the sum of his Annual Base Salary and Annual Bonus (as defined in
their respective agreements).
SEVERANCE AGREEMENTS
In 1997 and 1998, the Company entered into severance agreements with Messrs.
Hartough, Lennon, Reed and Ritter which provide that if the executive is
terminated by the Company other than for Cause (as defined in such agreements)
or he quits for Good Reason (as defined in such agreements), the terminated
executive shall be entitled to receive (i) his accrued pay (including a prorated
portion of his annual bonus based on the number of days worked in the year of
his termination), (ii) two times the sum of his annual base salary and Annual
Bonus (as defined in such agreements) and (iii) previously deferred compensation
and related matching contributions (whether or not vested). If such termination
occurs after a 'Disposition Date', the multiplier in clause (ii) in the
preceding sentence shall be three. A Disposition Date is generally the earliest
of (i) the sale, lease or other transfer to an entity unaffiliated with the
Company of greater than fifty percent (50%) of the assets or shares of Brink's,
Incorporated; Brink's Home Security, Inc.; Pittston Coal Company; BAX Global
Inc. or Pittston Mineral Ventures Company, (ii) the date of the first public
announcement of such disposition, or (iii) a Change in Control (as defined in
such agreements).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the 'SEC') and the New York Stock Exchange reports of
ownership and changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such reports
furnished to the Company or written representations that no other reports were
required, the Company believes that, during 2002, its officers, directors and
greater than 10% beneficial owners were in compliance with all applicable filing
requirements.
REPORT OF COMPENSATION AND BENEFITS COMMITTEE
The Compensation Committee is responsible for establishing and reviewing
policies governing salaries, incentive compensation, and the terms and
conditions of employment of senior executive officers and other key employees of
the Company. The policies of the Compensation Committee applicable to the
compensation of executive officers are described below.
The Compensation Committee has established an overall compensation program
to attract, retain and motivate executive officers and to enhance their
incentive to perform at the highest level and contribute significantly to the
Company's success. Recognizing the desirability of tying the compensation of
executive officers to performance and of aligning their interests closely to the
long-term interests of the Company and its shareholders, the Compensation
Committee has determined that a significant part of the compensation of
executive officers will be paid in the form of incentive payments under the Key
Employees Incentive Plan ('KEIP') and the Management Performance Improvement
Plan, as well as stock option grants.
The Compensation Committee has from time to time engaged recognized
consultants in the executive compensation field to review and confirm the
appropriateness of the Company's salary, annual bonus and long-term incentive
programs for executive officers. Cash compensation is paid to executive
officers, including the Chief Executive Officer (the 'CEO'), in the form of
salaries targeted at or near the 50th percentile, and annual incentive payments
under the KEIP. In collaboration with these consultants, the Compensation
Committee has developed a policy to make available to executive officers annual
incentive payments based on individual and Company performance which, when
coupled
8
with salary, provide executive officers the opportunity to earn annual cash
compensation above the 50th percentile for comparable positions in companies of
similar size across all industries from which the Company seeks to attract
executive officers.
The Compensation Committee periodically reviews the salaries of executive
officers in light of competitive standards and the Compensation Committee's
evaluation of their individual performance and makes such adjustments as are
appropriate. Each year the Compensation Committee sets target cash incentive
awards for executive officers under the KEIP. Such target incentives are
indicative of the incentive payment that an executive officer might expect to
receive for such year based generally on a strong performance by the individual
executive officer in achieving established individual objectives, by his or her
operating or staff unit, and the overall performance of the Company. For
purposes of determining actual awards under such guidelines, individual
performance is given a weight factor of 50%, and unit and Company performance
are each given weight factors of 25%.
For 2002, the CEO had a target cash incentive award under the KEIP of 100%
of salary. Based on the KEIP guidelines, the CEO's actual award could have
ranged from 0 to 200% of salary, depending on his performance rating and that of
the Company as determined by the Compensation Committee and approved by the
Board. The Compensation Committee recommended and the Board approved an annual
incentive payment of $663,000 or 75% of salary for the CEO and annual incentive
payments for the other executive officers for 2002 after considering the
following quantitative and qualitative measures of the Company's performance in
2002: (i) revenues, earnings and cash flow on a consolidated basis;
(ii) revenues, operating earnings and cash flow of each business unit;
(iii) the employee safety performance of each unit; and (iv) changes in
shareholder value as measured by the market capitalization of the Company. The
Compensation Committee also took into account as additional factors and
criteria: pricing and market conditions affecting each business unit; the effect
of the economy on such businesses; comparative performance of the Company's
competitors; productivity and cost containment measures successfully carried
out; progress of management development and employee relations efforts; the
quality of strategic planning, and communications with external constituencies.
The Compensation Committee's evaluation of the CEO's and the other executive
officers' performance was based not only on the measures of the Company's
performance and the other factors and criteria described above but also on the
Compensation Committee's good faith business judgment of their performance as it
related both as to results in 2002 and the long-term positioning of the Company.
The Compensation Committee did not attach specific weights to the foregoing
factors.
In 2002, the Compensation Committee made stock option grants to the
executive officers of the Company totaling 292,000 shares of Pittston Common
Stock, including a grant to the CEO of 172,000 shares of Pittston Common Stock.
The Compensation Committee's intent in making these grants is to further align
the interests of management and shareholders. Because the 2002 stock options
were granted with exercise prices equal to 100% of market value on the date of
grant, executive officers will benefit from such stock option grants only to the
extent the stock price of the Pittston Common Stock appreciates above the
exercise price. In addition, since such options generally 'vest' only after
periods ranging from one to three years from the date of grant, they enhance the
ability of the Company to retain executive officers while encouraging such
officers to take a longer-term view in their decisions impacting the Company.
Stock options, therefore, tie the compensation of executive officers directly to
the long-term performance of the Company.
As a further means to align the interest of management and shareholders,
effective January 1, 2000, the Board adopted, and the Company's shareholders
approved in May 2000, the Management Performance Improvement Plan. Participants
in the Management Performance Improvement Plan, including all of the executive
officers, have a substantial portion of their compensation tied to the
achievement of goals established over three-year periods by the Board.
The Compensation Committee believes that reasonable severance and
post-takeover employment arrangements are often an essential aspect of the terms
of employment of executive officers. The Compensation Committee also recognizes
the importance to the Company of retaining its executive officers during and
after the disruption typically provoked by a takeover offer (whether or not
ultimately successful). The Company is party to a 'change in control' employment
agreement and a
9
severance agreement or employment agreement with each of its executive officers,
and the Compensation Committee is firmly of the view that the Company and its
shareholders have benefited from the protection which such agreements afford its
executive officers. The Compensation Committee believes that these employment
agreements provide reasonable compensation arrangements and give the Company a
high degree of management stability during a period of change.
Internal Revenue Code Section 162(m) disallows a tax deduction for any
publicly held corporation for paid remuneration exceeding $1 million in any
taxable year for chief executive officers and certain other executive officers,
except for performance-based remuneration. In the past, the Company's
shareholders have approved amendments to the Company's 1988 Stock Option Plan.
The Management Performance Improvement Plan was approved by the Company's
shareholders in 2000. The Compensation Committee will continue to evaluate the
impact of the Section 162(m) limitations on an ongoing basis in light of
applicable regulations and future events with an objective of achieving
deductibility to the extent deemed appropriate.
James R. Barker, Chairman
Roger G. Ackerman
James L. Broadhead
Gerald Grinstein
REPORT OF AUDIT AND ETHICS COMMITTEE
In compliance with the requirements of the New York Stock Exchange, the
Audit and Ethics Committee of The Pittston Company adopted a new Audit and
Ethics Committee charter (the 'Charter'), which was approved by the Committee on
March 13, 2003. A copy of the Charter is provided as Exhibit A to this Proxy
Statement, and outlines the functions and responsibilities of the Audit and
Ethics Committee. In connection with those responsibilities, the Audit and
Ethics Committee has:
Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2002 with management and KPMG LLP ('KPMG'), the
Company's independent auditors;
Discussed with KPMG the matters required to be discussed by Statement
on Auditing Standards No. 61 regarding required communication by
external auditors with audit committees; and
Received written disclosures and a letter from KPMG regarding KPMG's
independence as required by Independence Standards Board Standard
No. 1 and has discussed with KPMG their independence.
The Audit and Ethics Committee also considered, as it determined
appropriate, tax matters and other areas of financial reporting and the audit
process over which the Committee has oversight.
Based on the Audit and Ethics Committee's review and discussions described
above, the Audit and Ethics Committee recommended to the Board of Directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2002 for filing with the
Securities and Exchange Commission.
Carl S. Sloane, Chairman
James R. Barker
William F. Craig
Michael L. Grimes
Ronald M. Gross
10
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total returns
for the Pittston Brink's Group Common Stock ('Pittston Common Stock')
outstanding since December 31, 1997, through December 31, 2002, a composite
index of peer companies (the 'Custom Composite Index') selected by the Company
and the S&P MidCap 400 Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG PITTSTON COMMON STOCK,
THE CUSTOM COMPOSITE INDEX AND THE S&P MIDCAP 400(1)
(YEAR ENDING DECEMBER 31)
[PERFORMANCE GRAPH]
12/31/97 12/31/98 12/31/99 1/14/00 12/31/00 12/31/01 12/31/02
Pittston Common Stock $100 $ 79 $ 55 $ 55 $ 50 $ 56 $ 47
Custom Composite Index $100 $122 $113 $124 $111 $143 $151
S&P MidCap 400 Index $100 $119 $137 $138 $161 $160 $136
- ---------
(1) As a result of the Exchange, the Company now has one class
of common stock instead of three separate classes of common
stock, each of which was intended to track the performance
of certain of the Company's business units. For the line
designated as 'Pittston Common Stock' the graph depicts the
cumulative return on $100 invested in Pittston Common Stock.
For the Custom Composite Index and the S&P MidCap 400 Index,
cumulative returns are measured on an annual basis for the
periods from December 31, 1997 through December 31, 2002,
with the value of each index set to $100 on December 31,
1997. Total return assumes reinvestment of dividends. The
returns of the component companies included in the Custom
Composite Index are weighted according to such company's
market capitalization at the beginning of each period.
Companies in the Custom Composite Index are as follows:
Airborne, Inc., Air Express International Corporation
(through 1/14/00), Arch Coal Inc., Burns International
Services Corp. (through second quarter 2000), Circle
International Group Inc. (through 9/30/00), Expeditors
International Inc., FedEx Corp., Protection One Inc.,
Wackenhut Corporation (Class A) (through 3/31/02), and
Westmoreland Coal Co. The Company chose the S&P MidCap 400
Index because the Company is included in this index which
measures the performance of the mid-size company segment of
the United States market. The Company has not included
information for the S&P Midcap 400 (Consumer and Commercial
Services) Index as it has in prior years because the S&P no
longer publishes that index.
11
PROPOSALS OF THE BOARD
The following proposals are expected to be presented to the meeting. Holders
of Pittston Common Stock will have one vote per share.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS: in order to be elected, nominees
for director must receive a plurality of the votes cast by those present in
person or represented by proxy at the meeting and entitled to vote thereon.
Abstentions and shares held by a broker in 'street name' ('Broker Shares') that
are not voted in the election of directors will not be included in determining
the number of votes cast.
PROPOSAL NO. 2 -- APPROVAL OF THE SELECTION OF INDEPENDENT PUBLIC
ACCOUNTANTS: must receive more votes cast in favor of such proposal by holders
of the shares present in person or represented by proxy at the meeting and
entitled to vote thereon than votes cast in opposition to such proposal by such
holders. Abstentions and Broker Shares that are not voted on Proposal No. 2 will
not be counted in determining the number of votes cast.
PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT OF RESTATED ARTICLES OF
INCORPORATION must receive the vote of the holders of a majority of the
outstanding shares of Pittston Common Stock. Abstentions and Broker Shares that
are not voted on Proposal No. 3 will have the effect of votes against the
proposal.
12
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
In accordance with the Company's charter and bylaws, the Board of Directors
is divided into three classes, with the term of office of one of the three
classes of directors expiring each year and with each class being elected for a
three-year term. Mr. Grimes has been nominated to serve until 2004 in accordance
with the Company's charter and bylaw provisions that each of the classes be as
evenly divided as possible.
The nominees for election as directors are: Mr. Michael L. Grimes for a
one-year term expiring in 2004; and Mrs. Betty C. Alewine and Messrs. Roger G.
Ackerman, Carl S. Sloane and Ronald L. Turner for a three-year term expiring in
2006.
The Board of Directors has no reason to believe that any of the nominees are
not available or will not serve if elected. If any of them should become
unavailable to serve as a director, full discretion is reserved to the persons
named as proxies to vote for such other persons as may be properly nominated.
Set forth below is information concerning the age, principal occupation and
employment during the past five years, other directorships and positions with
the Company of each nominee and director, and the year in which he or she first
became a director of the Company.
NOMINEE FOR ELECTION AS DIRECTOR FOR
A ONE-YEAR TERM EXPIRING IN 2004
[Photo] MICHAEL L. GRIMES, 53, has been President and Chief Executive
Officer of Stewart & Stevenson Services, Inc. since joining
(1), (4), (5) the company in 1999. Stewart & Stevenson, founded in 1902,
is a leading manufacturer, distributor, and provider of
service for industrial, transportation and energy related
equipment. From 1996 to 1999, he served as president of
Cooper Cameron Corporation's Cooper Energy Services Division
and president of Cooper Cameron Power Generation. Prior to
joining Cooper Cameron, Mr. Grimes held numerous marketing,
sales and general management positions during a 23-year
career with the General Electric Company. Mr. Grimes was
elected a director of the Company in 2003.
NOMINEES FOR ELECTION AS DIRECTORS FOR
A THREE-YEAR TERM EXPIRING IN 2006
[Photo] ROGER G. ACKERMAN, 64, is the retired Chairman and Chief
Executive Officer of Corning Incorporated, a company engaged
(2), (4), (5) in specialty glass, ceramics and communications. He retired
as Chairman of the Board of Corning, Incorporated in June
2001. From 1996 through 2000, Mr. Ackerman served as Chief
Executive Officer of Corning, Incorporated, prior to which
he served as President and Chief Operating Officer from 1992
to 1996. He is a director of Massachusetts Mutual Life
Insurance Company. Mr. Ackerman has been a director of the
Company since 1991.
13
[Photo] BETTY C. ALEWINE, 54, is the retired President and Chief
Executive Officer of COMSAT Corporation, a provider of
(3), (4), (6) global satellite services and digital networking services
and technology. Mrs. Alewine served as President and Chief
Executive Officer of COMSAT from 1996 until August 2000,
when the company was acquired by Lockheed Martin
Corporation. She served as President of COMSAT's largest
operating unit from 1994 to 1996. She is a director of New
York Life Insurance Company and Rockwell Automation
Corporation. Mrs. Alewine has been a director of the Company
since 2000.
[Photo] CARL S. SLOANE, 66, is a private consultant and the Ernest L.
Arbuckle Professor of Business Administration, Emeritus at
(1), (4), (6) Harvard University, Graduate School of Business
Administration. From 1991 to 2000, he served as the Ernest
L. Arbuckle Professor of Business Administration at Harvard
University, Graduate School of Business Administration. He
is a director of Rayonier Inc. and MedSource Technologies,
Inc. Mr. Sloane has been a director of the Company since
1998.
[Photo] RONALD L. TURNER, 56, has been Chairman, President and Chief
Executive Officer of Ceridian Corporation since January
(3), (4), (5) 2000. Ceridian Corporation is an information services
company providing outsourcing services to the human
resources, transportation and retail markets, and operates
in the U.S., Canada and Europe. Mr. Turner served as Chief
Operating Officer of Ceridian from April 1998 to January
2000; Executive Vice President of Operations from March 1997
to April 1998; and has been a director of Ceridian since
July 1998. He is also a director of FLIR Systems, Inc. Mr.
Turner was elected a director of the Company in 2002.
CONTINUING DIRECTORS
[Photo] JAMES R. BARKER, 67, is Chairman of The Interlake Steamship
Co., vessel owners and operators of self unloaders, a
(1), (2), (4) position he has held since 1987. He is also Vice Chairman of
Mormac Marine Group, Inc, vessel owners of oil product
carriers, and Moran Towing Corporation, tug and barge owners
and operators. He is a director of Verizon Communications.
Mr. Barker has been a director of the Company since 1993.
His current term as a director of the Company expires in
2004.
14
[Photo] MARC C. BRESLAWSKY, 60, is Chairman and Chief Executive
Officer of Imagistics International Inc., a company engaged
(4), (5), (6) in direct sales, service and marketing of enterprise office
imaging and document solutions, and has held that position
since 2001. Prior thereto, he was President and Chief
Operating Officer of Pitney Bowes Inc., a position he held
from 1996 to 2001, and Vice Chairman from 1994 to 1996. Mr.
Breslawsky is a director of Imagistics International Inc.,
the United Illuminating Company, C.R. Bard, Inc. and Cytyc
Corporation. He has been a director of the Company since
1999. Mr. Breslawsky's current term as a director of the
Company expires in 2005.
[Photo] JAMES L. BROADHEAD, 67, is the retired Chairman and Chief
Executive Officer of FPL Group, Inc., a public utility
holding company. He served as Chief Executive Officer and
(2), (4), (6) Chairman of FPL Group, Inc. from 1989 and 1990,
respectively, until his retirement in December 2001. He is a
director of New York Life Insurance Company. Mr. Broadhead
has been a director of the Company since 1983. His current
term as a director of the Company expires in 2004.
[Photo] MICHAEL T. DAN, 52, is Chairman of the Board, President and
Chief Executive Officer of the Company. Prior to his
(4) election as President and Chief Executive Officer in
February 1998, Mr. Dan served as President and Chief
Executive Officer of Brink's Holding Company, Inc. beginning
in 1995 and President and Chief Executive Officer of
Brink's, Incorporated beginning in 1993. Mr. Dan has been a
director of the Company since 1998. His current term as a
director of the Company expires in 2005.
[Photo] GERALD GRINSTEIN, 70, is the retired non-executive Chairman of
Agilent Technologies, a diversified technology company, and
(2), (3), (4) held that position from August 1999 to November 2002. He
also serves as a principal in Madrona Investment Group LLC,
a private investment firm, and as strategic advisor for
Madrona Venture Fund, a Seattle-based venture fund. Mr.
Grinstein served as Chairman and Chief Executive Officer of
Burlington Northern Inc., until his retirement in 1995. From
1997-1999, Mr. Grinstein served as non-executive Chairman of
Delta Air Lines, Inc. He is a director of Delta Air Lines,
Inc., PACCAR Inc. and Vans, Inc. Mr. Grinstein has been a
director of the Company since 1998.
15
[Photo] RONALD M. GROSS, 69, is Chairman Emeritus of Rayonier Inc., a
global supplier of specialty pulps, timber and wood
(1), (3), (4) products, after retiring as Chairman and Chief Executive
Officer at the end of 1998. Mr. Gross was President and
Chief Operating Officer from 1978, when he joined Rayonier,
until 1981; President and Chief Executive Officer from 1981
to 1984; Chairman, President and Chief Executive Officer
from 1984 to 1996; and Chairman and Chief Executive Officer
from 1996 to 1998. He is a director of Rayonier Inc. and
Corn Products International, Inc. Mr. Gross has been a
director of the Company since 1995. His current term as a
director of the Company expires in 2005.
- ---------
(1) Audit and Ethics Committee
(2) Compensation and Benefits Committee
(3) Corporate Governance and Nominating Committee
(4) Executive Committee
(5) Finance Committee
(6) Pension Committee
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR ALL NOMINEES FOR ELECTION AS DIRECTORS.
16
STOCK OWNERSHIP
Based in part on information furnished by each nominee, director and
executive officer named in the Summary Compensation Table, the number of shares
of Pittston Common Stock beneficially owned by them at January 31, 2003, was as
follows:
NAME OF INDIVIDUAL NUMBER OF SHARES
OR IDENTITY OF GROUP BENEFICIALLY OWNED(a) PERCENT OF CLASS*
- -------------------- --------------------- -----------------
R. G. Ackerman.................................. 24,014(b)
B.C. Alewine.................................... 9,903(b)
J. R. Barker.................................... 34,523(b)
M. C. Breslawsky................................ 24,444(b)
J. L. Broadhead................................. 22,694(b)
M. T. Dan....................................... 634,610(c) 1.17%
M. L. Grimes.................................... 0(b)
G. Grinstein.................................... 24,444(b)
R. M. Gross..................................... 32,260(b)
J. B. Hartough.................................. 115,381(c)
F. T. Lennon.................................... 167,432(c)
A. F. Reed...................................... 128,970(c)(d)
R. T. Ritter.................................... 124,555(c)
C. S. Sloane.................................... 25,627(b)
R. L. Turner.................................... 0(b)
15 nominees, directors and executive officers as
a group....................................... 1,368,757 2.52%
- ---------
* Except as otherwise noted, the named individuals have sole voting and
investment power with respect to such shares of Pittston Common Stock. None
of such individuals beneficially owns more than approximately 1% of the
outstanding Pittston Common Stock, unless otherwise noted above.
(a) Includes shares of Pittston Common Stock which could be acquired within 60
days after January 31, 2003, upon the exercise of options granted pursuant
to the Company's stock option plans, as follows:
Mrs. Alewine............................................ 7,551
Mr. Barker.............................................. 27,422
Mr. Dan................................................. 481,415
Mr. Grimes.............................................. 0
Mr. Gross............................................... 25,141
Mr. Hartough............................................ 67,939
Mr. Lennon.............................................. 97,367
Mr. Reed................................................ 88,201
Mr. Ritter.............................................. 79,482
Mr. Turner.............................................. 0
Each of Messrs. Ackerman and Broadhead.................. 16,005
Each of Messrs. Breslawksy, Grinstein and Sloane........ 21,396
All nominees, directors and executive officers as a
group (15 persons)..................................... 970,716
(b) Includes Common Stock Units representing shares of Pittston Common Stock,
rounded to the nearest whole Common Stock Unit, credited to each Director's
account under the Company's Directors' Stock Accumulation Plan on or prior
to January 31, 2003, as follows:
Mr. Ackerman............................................ 4,751
Mrs. Alewine............................................ 2,352
Mr. Barker.............................................. 5,843
Mr. Broadhead........................................... 5,431
Mr. Grimes.............................................. 0
Mr. Gross............................................... 6,490
Mr. Sloane.............................................. 3,448
Mr. Turner.............................................. 0
Each of Messrs. Breslawsky and Grinstein................ 3,048
(footnotes continued on next page)
17
(footnotes continued from previous page)
(c) Includes Common Stock Units representing shares of Pittston Common Stock,
rounded to the nearest whole Common Stock Unit, credited to respective
accounts under the Company's Key Employees' Deferred Compensation Program
on or prior to January 31, 2003, as follows:
Mr. Dan................................................. 127,035
Mr. Hartough............................................ 28,065
Mr. Lennon.............................................. 50,339
Mr. Reed................................................ 32,213
Mr. Ritter.............................................. 35,991
Non-employee directors do not participate in the Company's Key Employees'
Deferred Compensation Program.
(d) Includes 102 shares of Pittston Common Stock held jointly by Mr. Reed with
his son, 222 shares of Pittston Common Stock held jointly by Mr. Reed with
his daughter, and 4,441 shares of Pittston Common Stock held jointly by Mr.
Reed with his wife.
The following table sets forth the only persons known to the Company to be
deemed beneficial owners of more than five percent of the outstanding Pittston
Common Stock at December 31, 2002:
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
David J. Greene and Company, LLC
599 Lexington Avenue
New York, NY 10022........................................ 3,242,879(a) 5.98%
Barclays Global Investors, NA
Barclays Global Fund Investors
Barclays Global Investors, Ltd.
45 Fremont Street
San Franciso, CA 94105.................................... 3,005,586(b) 5.54%
- ---------
(a) According to a report on Schedule 13G dated February 7, 2003, filed with
the SEC by David J. Greene and Company, LLC, an investment adviser
registered under the Investment Advisers Act of 1940, David J. Greene and
Company, LLC, had sole voting power over 264,565 shares of Pittston Common
Stock, shared voting power over 1,651,431 shares of Pittston Common Stock,
sole dispositive power over 264,565 shares of Pittston Common Stock and
shared dispositive power over 2,978,314 shares of Pittston Common Stock.
(b) According to a report on Schedule 13G dated February 10, 2003, filed with
the SEC by Barclays Global Investors, NA, ('Barclays'), a bank as defined
in the Securities Exchange Act of 1934, on behalf of itself, Barclays
Global Fund Investors and Barclays Global Investors, Ltd., Barclays had
through such entities sole voting power over 3,005,586 shares of Pittston
Common Stock, shared voting power over no shares of Pittston Common Stock,
sole dispositive power over 3,005,586 shares of Pittston Common Stock and
shared dispositive power over no shares of Pittston Common Stock, all of
such shares being held in trust accounts for the economic benefit of the
beneficiaries of those accounts.
18
PROPOSAL NO. 2 -- APPROVAL OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has, subject to shareholder approval, selected KPMG
as the Company's independent public accountants for the year 2003 and recommends
approval of such selection by the shareholders. KPMG served in this capacity for
the year 2002. One or more representatives of KPMG are expected to attend the
annual meeting and will have the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Pursuant to the Securities and Exchange Commission's rules regarding auditor
independence, the Company makes the following disclosures:
AUDIT FEES
The Company expects to be billed approximately $2,173,000 in the aggregate
by KPMG for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2002, and the reviews of the Company's financial
statements included in the Company's Forms 10-Q for the same fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company was billed $0 in the aggregate by KPMG for financial information
systems design and implementation services rendered during the fiscal year ended
December 31, 2002.
ALL OTHER FEES
The Company was billed approximately $3,209,000 in the aggregate by KPMG for
all other services rendered during the fiscal year ended December 31, 2002.
These fees covered audit related and non-audit related (tax) services. Audit
related services consisted of international statutory audits of the Company's
subsidiaries, assistance in preparation of statutory financial statements,
audits of employee benefit plans coal property audits and other miscellaneous
assurance related services, all of which totaled approximately $1,983,000 billed
to the Company. Tax related services consisted of international statutory tax
return services, executive tax services, tax planning and other miscellaneous
tax related services, all of which totaled approximately $1,226,000 billed to
the Company.
CONSIDERATION OF AUDITOR INDEPENDENCE
In connection with Securities and Exchange Commission rules regarding
auditor independence, the Audit and Ethics Committee has considered whether
financial information systems design and implementation services and other
non-audit services provided by KPMG to the Company are compatible with
maintaining KPMG's independence.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE APPROVAL OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
-------------------
PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT OF
THE COMPANY'S RESTATED ARTICLES OF INCORPORATION
The purpose of the amendment to the Company's Restated Articles of
Incorporation is to change the Company name from 'The Pittston Company' to 'The
Brink's Company.' In all other respects, the terms and provisions of the
Company's Restated Articles of Incorporation will remain unaltered.
The Company believes that it is in the Company's best interest to amend
Article I of the Restated Articles of Incorporation to read as follows:
The name of the Corporation is THE BRINK'S COMPANY.
While The Pittston Company name has a long history, much of the recognition
arose from the Company's past participation in the coal industry. The Company
recently completed its departure from the coal business through a series of
dispositions of coal operations and reserves in order to focus on its core
services businesses.
19
The Company believes that changing its name to The Brink's Company, as part
of a distinctive new identity program, will clearly communicate the Company's
position as the world's largest secured transportation company, a leading
provider of residential monitored security services and a multi-modal
transportation and supply chain management company, and will provide a stronger
foundation for all of the Company's corporate communication efforts.
The name change will not affect the validity or transferability of currently
outstanding stock certificates, and shareholders will not be requested to
surrender for exchange any certificates presently held by them.
If the proposal is approved, the name change will become effective as of the
effective date set forth in the Articles of Amendment to the Restated Articles
of Incorporation that will be filed with the State Corporation Commission of the
Commonwealth of Virginia. If the proposal is approved by the shareholders, the
Company intends to make the appropriate filings promptly and to take all other
actions necessary to implement the name change.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE APPROVAL OF THE AMENDMENT OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION.
-------------------
OTHER INFORMATION
SHAREHOLDER PROPOSALS
To nominate a director at the annual meeting, a shareholder must satisfy
conditions specified in the Company's bylaws. A shareholder who wishes to
suggest potential nominees to the Board of Directors for consideration should
write to the Secretary of the Company, stating in detail the qualifications of
such nominees for consideration by the Corporate Governance Committee of the
Board. The Company's bylaws also prescribe the procedures a shareholder must
follow to bring other business before annual meetings. For a shareholder to
nominate a director or directors at the 2004 annual meeting or bring other
business (including any proposal intended for inclusion in the Company's proxy
materials) before the 2004 annual meeting, notice must be given to the Secretary
of the Company between September 29, 2003, and November 28, 2003, inclusive. The
notice must include a description of the proposed business, the reason for it,
the complete text of any resolution and other specified matters.
Any shareholder desiring a copy of the Company's bylaws will be furnished
one without charge upon written request to the Secretary.
OTHER MATTERS
The cost of this solicitation of proxies will be borne by the Company. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, facsimile, electronic mail, telegram, in person or by other means.
Arrangements also will be made with brokerage firms and other custodians,
nominees and fiduciaries to forward proxy solicitation material to the
beneficial owners of Pittston Common Stock held of record by such persons and
the Company will reimburse such brokerage firms, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in connection
therewith. The Company has retained Georgeson Shareholder Communications Inc. to
perform various proxy advisory and solicitation services. The fee of Georgeson
Shareholder Communications Inc. in connection with the 2003 annual meeting is
currently estimated to be approximately $15,000, plus reimbursement of
out-of-pocket expenses.
AUSTIN F. REED
Secretary
March 27, 2003
20
EXHIBIT A
[PITTSTON LOGO]
AUDIT AND ETHICS COMMITTEE CHARTER
I. PURPOSE
1.1 The primary purpose of the Audit and Ethics Committee (the 'Committee')
is to assist the Board of Directors (the 'Board') in fulfilling its
responsibility to oversee management's conduct of the Company's financial
reporting process, by the oversight of the integrity of regular financial
reports and other financial information provided by the Company to the
Securities and Exchange Commission or the public, the Company's systems of
internal accounting and financial controls, the qualifications, performance and
independence of the Company's independent auditors, the annual independent audit
of the Company's financial statements and the Company's legal compliance and
business ethics programs.
1.2 In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose. These parties are
ultimately accountable to the Board and the Committee.
1.3 The Committee shall, on an annual basis:
(a) Review the adequacy of this Charter;
(b) Evaluate the Committee's performance under this Charter; and
(c) Prepare a report as required by the rules of the Securities and
Exchange Commission for inclusion in the Company's annual proxy statement.
II. MEMBERSHIP
2.1 The Committee shall be comprised of not fewer than three members of the
Board, and the Committee's composition will meet the requirements of the Audit
Committee Policy of the New York Stock Exchange, where applicable, rules and
regulations of the Securities and Exchange Commission and the requirements of
Section 10A of the Securities and Exchange Act of 1934.
2.2 All of the members will be directors who, in the business judgment of
the Board of Directors:
(a) Have no relationship to the Company that interferes with the
exercise of their independence from management and the Company; and
(b) Are financially literate or who will become financially literate
within a reasonable period of time after appointment to the Committee.
2.3 At least one member of the Committee shall be a financial expert, as
such term is defined by the Securities and Exchange Commission, and shall have,
in the business judgment of the Board of Directors, accounting or related
financial management expertise.
2.4 The members of the Committee shall be appointed and may be replaced by
the Company's Board of Directors.
2.5 No member of the Committee may receive any payment from the Company
other than payment for Board or committee service.
III. KEY RESPONSIBILITIES
3.1 The Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditors are responsible for auditing those
financial statements. Additionally, the Committee recognizes that the Company's
financial management, as well as the outside auditors, have greater knowledge of
the day-to-day operations of the Company and more detailed information regarding
the Company than do Committee members. Consequently, in carrying out its
oversight responsibilities, the Committee is not providing any expert or special
assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work.
3.2 The Committee shall have the authority, to the extent it deems necessary
or appropriate, to retain special legal, accounting or other consultants to
advise the Committee.
A-1
3.3 The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function:
(a) The Committee shall review with management and the outside auditors
the annual audited financial statements, including disclosures under
'Management's Discussion and Analysis of Financial Conditions and Results of
Operations,' review and consider with the outside auditors the matters
required to be discussed by Statement of Auditing Standards ('SAS') No. 61
and recommend to the Board whether the audited financial statements should
be included in the Company's Annual Report on Form 10-K.
(b) The Committee shall review with management and the outside auditors
the Company's interim financial results to be included in the Company's
quarterly reports and the matters required to be discussed by SAS Nos. 61
and 100, as applicable; this review will occur prior to the Company's filing
of the Form 10-Q.
(c) The Committee shall:
(i) review and discuss with management and the independent auditor
accounting policies and financial reporting issues and judgments that may
be viewed as critical;
(ii) review and discuss analyses prepared by management and/or the
independent auditor setting forth significant financial reporting issues
and judgments made in connection with the preparation of financial
statements, including analyses of the effects of alternative GAAP methods
on the financial statements;
(iii) consider any significant changes in the accounting and auditing
policies;
(iv) review and discuss any accounting and financial reporting
proposals that may have a significant impact on the financial reports;
and
(v) review and discuss major issues as to the adequacy of the
internal controls and any special audit steps adopted in light of
material control deficiencies.
(d) The Committee shall review and discuss with management and the
independent auditor:
(i) any material financial or non-financial arrangements of the
Company that do not appear on the financial statements; and
(ii) any transactions or courses of dealing with parties that are
significant in size or involve terms or other aspects that differ from
those that would likely be negotiated with independent parties and that
are relevant to an understanding of the Company's financial statements.
(e) The Committee shall review and discuss with management its policies
and practices regarding earnings press releases, as well as financial
information and earnings guidance given to analysts and ratings agencies,
giving attention to any use of 'pro forma' or 'adjusted' non-GAAP
information.
(f) The Committee shall discuss with management the Company's major
financial risk exposures and the steps management has taken to monitor and
control such exposures, including the Company's risk assessment and risk
management policies.
(g) The Committee shall discuss with management and the independent
auditor the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures on the Company's financial statements.
(h) The Committee shall meet periodically and separately with the
Company's management, the independent auditor and the internal auditors.
(i) The Committee shall review and discuss with the Company's
management, the independent auditor and the internal auditing department:
(a) the results of the audit and management letters and any reports of the
independent auditor with respect to any interim period; and (b) any
significant difficulties encountered during the course of audit work,
including: (i) management's response; (ii) any restrictions on the scope of
work or access to required information; and (iii) the nature and extent of
any significant changes in accounting principles or the application therein.
(j) The Committee shall:
(i) obtain and review a formal written report by the independent
auditor, at least annually, which report shall include descriptions of:
(A) the independent auditor's internal quality-control procedures;
(B) any material issues raised by the most recent internal quality
control review, or peer review, or by any inquiry or investigation by
governmental or professional
A-2
authorities in the preceding five years respecting one or more
independent audits carried out by the firm; (C) any steps taken to deal
with such issues; (D) all relationships between the independent auditor
and the Company; and (E) any other relationships that may adversely
affect the independence of the auditor;
(ii) assess the independence of the independent auditor, including
that of the independent auditor's lead partner, based on a review of the
written report and recommend to the Board that it take appropriate action
in response to the report to satisfy the independence requirements;
(iii) establish policies and procedures for the engagement of the
outside auditors to provide non-audit services; determine whether the
outside auditor's performance of any non-audit services is compatible
with the outside auditor's independence; and approve all significant
non-audit engagements with the independent auditor.
(iv) evaluate the qualifications, experience, performance and
independence of the senior members of the independent auditor team,
including that of the independent auditor's lead partner, taking into
consideration the opinions of management and the internal auditors;
present its conclusions with respect to such evaluations to the full
Board;
(v) set clear hiring policies for employees or former employees of
the independent auditors; and
(vi) assure the regular rotation of the lead audit partner as
required by law, and consider whether there should be regular rotation of
the independent auditing firm itself, in order to assure continuing
independence of the independent auditor.
(k) The Committee shall have the ultimate authority and responsibility
to select (or recommend annually for shareholder approval), evaluate and,
where appropriate, replace the outside auditor and shall approve all audit
engagement fees and terms.
3.4 The Committee shall:
(a) review the appointment, replacement, reassignment or dismissal of
the senior internal auditing executive; and
(b) oversee the internal audit department's responsibilities, budget and
staffing, and the planned scope of the internal audit.
3.5 The Committee shall obtain reports that the Company and its
subsidiary/foreign affiliated entities are in conformity with applicable legal
requirements and the Company's Business Code of Ethics.
3.6 The Committee shall review reports and disclosures of insider and
affiliated party transactions.
3.7 The Committee shall advise the Board with respect to the Company's
policies and procedures regarding compliance with applicable laws and
regulations and with the Company's Business Code of Ethics.
3.8 The Committee shall establish procedures for (a) the receipt, retention,
and treatment of complaints received by the Company regarding accounting,
internal accounting controls, or auditing matters; and (b) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
3.9 The Committee annually shall provide a report for inclusion in the
Company's proxy statement in accordance with applicable law and regulation.
3.10 The Committee shall provide from time-to-time affirmation,
confirmation, certification and information to the New York Stock Exchange as is
required by the rules of such organization with respect to the Committee, its
membership and its operation.
3.11 The Committee shall make regular reports to the Board, and shall review
with the Board any issues that arise with respect to the quality or integrity of
the Company's financial statements, the Company's compliance with legal or
regulatory requirements, the performance and independence of the Company's
independent auditors or the performance of the internal audit function.
3.12 The Committee shall review and reassess the adequacy of this Charter,
at least annually.
3.13 The Committee shall annually evaluate its own performance.
A-3
Appendix 1
THE PITTSTON COMPANY
Proxy/Voting Direction Card Solicited on Behalf of the Board of Directors
for Annual Meeting of Shareholders, May 2, 2003
The undersigned hereby appoints Michael T. Dan, Austin F. Reed and Robert T.
Ritter and each of them as proxy, with full power of substitution, to vote all
shares of common stock of the undersigned in The Pittston Company at the Annual
Meeting of Shareholders to be held on May 2, 2003, at 1:00 p.m., Eastern
Daylight Time, and at any adjournment thereof, on all matters coming before
the meeting. The proxies will vote: (1) as the undersigned specifies on the
back of this card; (2) as the Board of Directors recommends where the
undersigned does not specify a vote on a matter listed on the back of
this card; and (3) as the proxies decide on any other matter.
This Proxy/Voting Direction Card also will serve as a direction to the Funding
Agent of the Company's Savings-Investment Plan to vote all shares in The
Pittston Company credited to the account of the undersigned. The Funding Agent
will vote: (1) as the undersigned specifies on the back of this card;
(2) proportionately with the shares as to which directions by other Plan
participants shall have been received, to the extent that the undersigned has
not timely directed the manner in which such shares shall be voted; and
(3) as the Funding Agent decides on any other matter.
If registrations are not identical, you may receive more than one set of proxy
materials. Please complete and return all cards you receive. If you wish to
vote or direct a vote on all matters as the Board of Directors recommends,
please sign, date and return this card. If you wish to vote or direct a vote
on items individually, please also mark the appropriate boxes on the back of
this card.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
================================================================================
[X] Please mark
votes as in
this example.
The Board of Directors Recommends a vote "FOR" ALL NOMINEES in Item 1
and "FOR" Items 2 and 3.
FOR all WITHHELD for all
Nominees Nominees FOR AGAINST ABSTAIN
1. Election of the following nominees: [ ] [ ] 2. Approval of KPMG LLP [ ] [ ] [ ]
Nominees: (01) Michael L. Grimes, as independent public accountants.
(02) Betty C. Alewine, (03) Roger G. Ackerman,
(04) Carl S. Sloane and (05) Ronald L. Turner
FOR AGAINST ABSTAIN
[ ] ________________________________________ 3. Approval of amendment of the [ ] [ ] [ ]
For all nominees, except for those nominees listed above Company's Restated Articles
of Incorporation
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
Signature:_________________ Date:_____ Signature: __________________ Date _____
