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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to 240.14a-12
Perma-Fix Environmental Services, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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Persons who are to respond to the collection of information contained in this
form are not required to respond unless the form displays a SEC 1913(05-05)
currently valid OMB control number.
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.: Def 14A
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3) Filing Party: Perma-Fix Environmental Services, Inc.
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4) Date Filed: July 2, 2007
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PERMA-FIX ENVIRONMENTAL SERVICES, INC.
8302 Dunwoody Place, Suite 250
Atlanta, Georgia 30350
NOTICE OF ANNUAL MEETING
To Be Held August 2, 2007
To the Stockholders of Perma-Fix Environmental Services, Inc.:
Notice is hereby given that the 2007 Annual Meeting of Stockholders (the
"Meeting") of Perma-Fix Environmental Services, Inc. (the "Company") will be
held at the Crowne Plaza Hotel, Atlanta-Airport, 1325 Virginia Avenue, Atlanta,
Georgia 30344, on Thursday, August 2, 2007, at 1:00 p.m. (EDST), for the
following purposes:
1. To elect eight directors to serve until the next Annual Meeting of
Stockholders or until their respective successors are duly elected
and qualified;
2. To ratify the appointment of BDO Seidman, LLP as the independent
registered public accounting firm of the Company for the 2007 fiscal
year; and
3. To transact such other business as may properly come before the
meeting and at any adjournments thereof.
Only stockholders of record at the close of business on June 1, 2007, will be
entitled to notice of, and to vote at, the Meeting or at any postponement or
adjournment thereof. A complete list of the stockholders entitled to vote at the
meeting will be open to the examination of any stockholder for any purposes
relevant to the meeting during ordinary business hours for 10 days prior to the
meeting at the offices of the Company. The list will also be available at the
meeting.
The Company's Annual Report for 2006 is enclosed for your convenience.
By the order of the Board of Directors
/s/ Steven Baughman
Steven Baughman
Secretary
Atlanta, Georgia
July 2, 2007
It is important that your shares be represented at the meeting. Please complete,
date, sign and return the accompanying Proxy or vote on the internet at
www.continentalstock.com, whether or not you plan to attend the meeting in
person. The enclosed return envelope requires no additional postage if mailed in
the United States. If a stockholder decides to attend the meeting, he or she
may, if so desired, revoke the Proxy and vote in person.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
8302 Dunwoody Place, Suite 250
Atlanta, Georgia 30350
PROXY STATEMENT
FOR THE
2007 ANNUAL MEETING OF STOCKHOLDERS
Solicitation
This Proxy Statement is furnished to the holders of the common stock, par value
$.001 (the "Common Stock"), of Perma-Fix Environmental Services, Inc. (the
"Company", "we", "our", or "us") in connection with the solicitation on behalf
of the Board of Directors of the Company (the "Board of Directors" or the
"Board") of proxies to be used in voting at the 2007 Annual Meeting of
Stockholders to be held at the Crowne Plaza Hotel, Atlanta-Airport, 1325
Virginia Avenue, Atlanta, Georgia, on Thursday, August 2, 2007, at 1:00 p.m.
(EDST), and any adjournments thereof (the "Meeting"). The Notice of Annual
Meeting of Stockholders, this Proxy Statement and the accompanying Proxy Card
were first mailed to stockholders on or about June 22, 2007.
The Company will pay the cost of preparing, printing, assembling and mailing
this Proxy Statement and the Proxy Card. In addition to solicitation by use of
the mail, certain of the Company's officers and employees may, without receiving
additional compensation therefore, solicit the return of proxies by telephone,
telegram or personal interview. The Company will reimburse brokerage houses and
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
in forwarding soliciting materials to their principals, the beneficial owners of
Common Stock.
Method of Voting Shares
Via Internet. You have the option of voting your shares electronically through
the Internet, eliminating the need to return the proxy card. Your electronic
vote authorizes the named proxies to vote your shares in the same manner as if
you marked, signed, dated and returned the proxy card. Votes submitted
electronically over the Internet or by telephone must be received by 7:00 p.m.,
EDST, on August 1, 2007. To vote your proxy by internet, have your proxy card
available when you access the website at www.continentalstock.com and follow the
prompts to vote your shares.
Via Written Ballot. You may also vote your shares by submitting the accompanying
proxy card. Complete, date, sign and return the card. The enclosed return
envelope requires no additional postage if mailed in the United States.
Whether or not you plan to attend the Annual Meeting of Stockholders, please
submit your vote either by internet or by written proxy card.
Revocation of Proxy
Any stockholder who executes a proxy may revoke it at any time before it is
voted by delivering to the Company's Secretary either an instrument revoking the
proxy or a duly executed proxy bearing a later date. Any stockholder present at
the Meeting who expresses a desire to vote his shares in person may also revoke
a proxy.
Record Date and Voting Shares
Only the holders of Common Stock of record at the close of business on June 1,
2007 (the "Record Date"), will have the right to receive notice of, and be
entitled to vote at, the Meeting. At the close of business on the Record Date,
52,165,113 shares of Common Stock were issued and outstanding. Each stockholder
of record, as of the Record Date, is entitled to one vote for each share of
Common Stock that the stockholder owned as of the Record Date on each matter to
be voted upon at the Meeting. A majority of all of the outstanding shares of
Common Stock entitled to notice of, and to vote at, the Meeting, represented in
person or by proxy, will constitute a quorum for the holding of the Meeting. The
failure of a quorum to be represented at the Meeting will necessitate
adjournment and will subject the Company to additional expense.
Pursuant to the General Corporation Law of the State of Delaware, only votes
cast "FOR" a matter constitute affirmative votes, except proxies in which the
stockholder fails to make a specification as to whether the stockholder votes
"FOR," "AGAINST," "ABSTAIN" or "WITHHOLD" as to a particular matter shall be
considered as a vote "FOR" that matter. Votes in which the stockholder specifies
"WITHHOLD" or "ABSTAIN" are counted for quorum purposes. Because abstentions
represent shares entitled to vote, an abstention (a) will have no effect on
election of directors and (b) will have the effect of a vote against the
ratification of the appointment of independent registered public accounting
firm. A broker non-vote is counted toward the shares needed for a quorum, but
because
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a broker non-vote is not considered to be eligible to vote, a broker non-vote
will be deemed not to have voted on the election of directors or the
ratification of the appointment of the Company independent registered public
accounting firm. An inspector of election appointed by the Board of Directors
will tabulate votes.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that each
member of the Board of Directors shall hold office until the next annual meeting
of stockholders and their successors have been elected and qualified or until
their earlier resignation or removal. Successors to those Directors whose terms
have expired are required to be elected by stockholder vote. The existing Board
of Directors fills vacancies for an unexpired term and any additional positions
created by the Board of Directors' action.
On June 13, 2007, the Company completed the acquisition of Nuvotec USA, Inc.
("Nuvotec"), and its wholly owned subsidiary, Pacific EcoSolutions, Inc.
("PEcoS"). In negotiating the terms of the acquisition, the Company agreed to
increase the number of its directors from seven to eight and take reasonable
action to nominate and recommend Robert L. Ferguson for election as a member of
the Company's Board, if the acquisition was completed and such nomination would
not breach any fiduciary duties or legal requirements of the Board. Prior to the
completion of the acquisition, Mr. Ferguson was the Chairman and Chief Executive
Officer of Nuvotec and PEcoS. The Board of Directors has determined that
nominating Mr. Ferguson for election as a member of the Company's Board of
Directors does not breach the Board's fiduciary duties or legal requirements.
The Board's Corporate Governance and Nominating Committee ("Nominating
Committee") has considered Mr. Ferguson's qualifications for services as a
member of the Board and has nominated Mr. Ferguson for election at the Meeting.
The Company's Bylaws provide that the number of the Company's directors (the
"Directors") shall be at least three, and that the number of Directors may be
increased or decreased by action of the Board. As a result of the Nuvotec
acquisition, the Board of Directors currently has determined that the number of
Directors shall be increased from seven to eight.
The eight Directors named below have been recommended by the Corporate
Governance and Nominating Committee ("Nominating Committee") to the Board of
Directors for election at the Meeting to serve until the next annual meeting of
the stockholders and until their respective successors are elected and
qualified. All nominees are incumbent Directors, except for Mr. Ferguson. Shares
represented by the enclosed proxy will be voted "FOR" the election as Directors
of the eight nominees named below, unless authority is withheld. Except as
described below, if any nominee named below becomes unavailable for election,
the proxies in the form solicited will be voted for a person who is recommended
by the Nominating Committee and who the Board of Directors proposes to replace
such nominee. However, if Mr. Ferguson becomes unavailable for election, the
Board intends to decrease the number of directors to seven, rather than filling
the resulting vacancy. Approval of each nominee for election to the Board of
Directors will require the affirmative vote of a plurality of the votes cast by
the holders of the Company's Common Stock, in person or by proxy.
Nominees for Directors
The following sets forth information concerning the eight nominees for election
as Directors:
Dr. Louis F. Centofanti Dr. Centofanti has served as Chairman of the Board since he joined the Company in
Chairman of the Board February 1991. Dr. Centofanti also served as President and Chief Executive Officer of
and Director since 1991, the Company from February 1991 until September 1995 and again in March 1996 was
Age: 63 elected to serve as President and Chief Executive Officer of the Company. From 1985
until joining the Company, Dr. Centofanti served as Senior Vice President of USPCI,
Inc., a large hazardous waste management company, where he was responsible for
managing the treatment, reclamation and technical groups within USPCI. In 1981 he
founded PPM, Inc., a hazardous waste management company specializing in the treatment
of PCB contaminated oils, which was subsequently sold to USPCI. From 1978 to 1981, Dr.
Centofanti served as Regional Administrator of the U.S. Department of Energy for the
southeastern region of the United States. Dr. Centofanti has a Ph.D. and a M.S. in
Chemistry from the University of Michigan, and a B.S. in Chemistry from Youngstown
State University.
Jon Colin Mr. Colin has served as a Director since December 1996. Mr. Colin is currently Chief
Director since 1996, Executive Officer of LifeStar Response Corporation, a position he has held since April
Age: 51 2002. Mr. Colin served as Chief Operating Officer of LifeStar Response Corporation
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from October 2000 to April 2002, and a consultant for LifeStar Response Corporation
from September 1997 to October 2000. From 1990 to 1996, Mr. Colin served as President
and Chief Executive Officer for Environmental Services of America, Inc., a publicly
traded environmental services company. Mr. Colin is also a Director at LifeStar
Response Corporation and Bamnet Inc. Mr. Colin has a B.S. in Accounting from the
University of Maryland.
Jack Lahav Jack Lahav has served as a Director since September 2001. Mr. Lahav is a private
Director since 2001, investor, specializing in launching and growing businesses. Mr. Lahav devotes much
Age: 58 of his time to charitable activities, serving as president, as well as, board member
of several charities. Previously, Mr. Lahav founded Remarkable Products Inc. and
served as its president from 1980 to 1993. Mr. Lahav was also co-founder of Lamar
Signal Processing, Inc.; president of Advanced Technologies, Inc., a robotics company
and director of Vocaltech Communications, Inc. Mr. Lahav served as Chairman of Quigo
Technologies from 2001 to 2004 and is currently serving as Chairman of Phoenix Audio
Technologies and Doclix Inc.
Joe R. Reeder A Director since April 2003, Mr. Reeder since April 1999 has been Shareholder in
Director since April 2003, Charge of the Mid-Atlantic Region for Greenberg Traurig LLP, one of the nation's
Age: 59 largest law firms, with 29 offices and over 1700 attorneys, worldwide. His clientele
has included sovereign nations, international corporations, and law firms throughout
the U.S. As the 14th Undersecretary of the U.S. Army (1993-97), Mr.
Reeder also served for three years as Chairman of the Panama Canal Commission's Board
of Directors, overseeing a multibillion-dollar infrastructure program. He sits on
the Board of Governors of the National Defense Industry Association (NDIA), the Armed
Services YMCA, the USO, and many other corporate and charitable organizations, and
is a frequent television commentator on legal and national security issues. A
graduate of West Point who served in the 82d Airborne Division following Ranger
School, Mr. Reeder also has a J.D. from the University of Texas and an L.L.M. from
Georgetown University.
Dr. Charles E. Young Dr. Charles E. Young has served as a Director since July 2003. Dr. Young was president of
Director since July 2003, the University of Florida, a position he held from November 1999 to January 2004. Dr.
Age: 75 Young also served as chancellor of the University of California at Los Angeles (UCLA)
for 29 years until his retirement in 1997. Dr. Young was formerly the chairman of the
Association of American Universities and served on numerous commissions including the
American Council on Education, the National Association of State Universities and
Land-Grant Colleges, and the Business-Higher Education Forum. Dr. Young serves on the
board of directors of I-MARK, Inc., a software and professional services company and
AAFL Enterprises, a sports development Company. He previously served on the board of
directors of Intel Corp., Nicholas-Applegate Growth Equity Fund, Inc., Fiberspace,
Inc., and Student Advantage, Inc. Dr. Young has a Ph.D. and M.A. in political science
from UCLA and a B.A. from the University of California at Riverside.
Mark A. Zwecker Mark Zwecker has served as a Director since the Company's inception in January 1991.
Director since 1991, Mr. Zwecker has recently assumed the position of Director of Finance for
Age: 56 Communications Security and Compliance Technologies, Inc., a software company
developing security products for the mobile workforce and serves as an advisor to
Plum Combustion, Inc., an engineering and manufacturing company developing high
performance combustion technology. Mr. Zwecker served as president of ACI
Technology, LLC, from 1997 until 2006, and was vice president of finance and
administration for American Combustion, Inc., from 1986 until 1998. In 1983, Mr.
Zwecker participated as a founder with Dr. Centofanti in the start up of PPM, Inc.
He remained with PPM, Inc. until its acquisition in 1985 by USPCI. Mr. Zwecker has a
B.S. in Industrial and Systems Engineering from the Georgia Institute of Technology
and an M.B.A. from Harvard University.
Larry M.Shelton Mr. Shelton has served as a Director since July 2006, as a result of Mr. Alfred
Director since July 2006, Warrington's retirement from the Board. Mr. Shelton is currently Chief Financial
Age: 53 Officer of S K Hart Management, LC, an investment holding company. He has held this
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position since 1999. Mr. Shelton was Chief Financial Officer of Envirocare of Utah,
Inc., a waste management company from 1995 until 1999. Mr. Shelton serves on the
Board of Directors of Subsurface Technologies, Inc., and Pony Express Land
Development Inc. Mr. Shelton has a B.A. in accounting from the University of Oklahoma
Robert L. Ferguson Mr. Ferguson was nominated to serve as a Director in June 2007 in connection with the
Nominated June 2007 closing of the acquisition by the Company of Nuvotec and PEcoS. Mr.
Age: 74 Ferguson currently serves as Chairman of the Board of Directors of Vivid Learning
System, a publicly traded company. Mr. Ferguson served as CEO and Chairman of
the Board of Directors of Nuvotec USA, Inc. and PEcoS from December 1998 until its
acquisition by Perma-fix in June 2007. Mr. Ferguson has over 45 years of management
and technical experience in the government and private sectors. He served as
Chairman of the Board of Technical Resources International, Inc. from 1995 to 1998
and as Corporate VP for Science Applications International Corporation following the
acquisition of R.L. Ferguson and Associates. He served as the Chairman of the Board
for UNC Nuclear Industries, Inc. from 1983 to 1985 and served as CEO for Washington
Public Power Supply System from 1980 to 1983. His government experience from 1961 to
1980 includes various roles for the Atomic Energy Commission, the Energy Research and
Development Administration, and the U.S. Department of Energy, including his last
assignment as Deputy Assistant Secretary of Nuclear Reactor Programs. Mr. Ferguson
served on the Board of British Nuclear Fuels Inc. and was a founder of Columbia Trust
Bank and served as a Director prior to its acquisition by American West Bank. Mr.
Ferguson received his B.S. in Physics from Gonzaga University and attended the US
Army Ordnance Guided Missile School, the Oak Ridge School of Reactor Technology, and
the Federal Executive Institute.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION
OF THE EIGHT NOMINEES AS THE COMPANY'S DIRECTORS.
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Board Independence
The Board of Directors has determined that each of Messrs. Zwecker, Colin,
Lahav, Shelton, Reeder, and Young is an "independent director" within the
meaning of the applicable Nasdaq Stock Market, Inc. ("NASDAQ") rules and Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act.
Dr. Centofanti is not considered to be an "independent director" because of his
employment as a senior executive of the Company. The Board of Directors also
does not consider Mr. Ferguson to be "independent" because (a) he served as the
Chief Executive Officer and Chairman of Nuvotec (k/n/a Perma-Fix Northwest,
Inc.), our newly acquired subsidiary, (b) as a former shareholder of Nuvotec who
is "accredited" under the rules of Regulation D under the Act, the Company paid
Mr. Ferguson a total of $224,560 cash and will issue to him 192,783 shares of
our Common Stock, (c) he is entitled to receive certain contingent consideration
under the terms of the acquisition, and (d) Mr. Ferguson has guaranteed $4.0
million of bank debt and a $1.75 million line of credit assumed by us in the
acquisition. The foregoing consideration includes the amounts and shares paid
and payable to entities controlled by Mr. Ferguson. See "Certain Relationships
and Related Transaction ? Nuvotec and PEcoS" for a discussion of certain
transactions with Mr. Ferguson.
Meetings and Committees of the Board of Directors
During 2006, the Board of Directors held seven meetings. No Director attended
fewer than 75% of the aggregate number of meetings held by the Board of
Directors and the committees on which he served during 2006, except Mr. Jack
Lahav and Mr. Joe Reeder, who were only able to attend 53% of the Board meetings
and committee meetings on which they serve. Although the Company does not
currently have a policy with respect to the attendance of its directors at
annual meetings, the Company encourages each of its Directors to attend whenever
possible. During 2006, all Board of Directors attended our Annual Meetings of
Shareholders held on July 27, 2006, except for Mr. Chuck Young and Mr. Joe
Reeder. The Board of Directors has an Audit Committee, Compensation and Stock
Option Committee and a Corporate Governance and Nominating Committee.
Audit Committee:
The Audit Committee assists the Board of Directors in monitoring the integrity
of the financial statements of the Company, the independent auditor's
qualifications and independence, the performance of the Company's internal audit
function and independent auditor, and the Company's compliance with legal and
regulatory requirements. In carrying out these purposes, the Audit Committee,
among other things:
o appoints, evaluates, and approves the compensation of, the Company's
independent auditor;
o pre-approves all auditing services and permitted non-audit services;
o annually considers the qualifications and independence of the
independent auditors;
o reviews recommendations of independent auditors concerning the
Company's accounting principles, internal controls and accounting
procedures and practices;
o reviews and approves the scope of the annual audit;
o reviews and discusses with the independent auditors the audited
financial statements; and
o performs such other duties as set forth in the Audit Committee
Charter.
The Audit Committee acts under an Audit Committee Charter that was adopted by
the Board of Directors on February 27, 2003, which replaced its previous
charter. A copy of the Audit Committee Charter is available on the website at
www.perma-fix.com. The Audit Committee has established 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 of concerns by employees of the Company
regarding accounting or auditing matters.
The Audit Committee members during 2006 were Mark Zwecker (Chairperson), Jon
Colin and Larry Shelton. The Board of Directors has determined that each of the
three members of the Audit Committee is an "audit committee financial expert" as
defined by Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Audit Committee meets at least quarterly
and at such additional times as necessary or advisable and held six meetings in
2006.
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Compensation and Stock Option Committee:
The Compensation and Stock Option Committee reviews and recommends to the Board
of Directors the compensation and benefits of all of the Company's officers and
reviews general policy matters relating to compensation and benefits of the
Company's employees. The Committee also administers the Company's stock option
plans. The members of the Compensation and Stock Option Committee during 2006
were Jack Lahav (Chairperson), Jon Colin, Joe Reeder, and Dr. Charles Young. The
Compensation and Stock Option Committee held four meetings in 2006.
Corporate Governance and Nominating Committee:
The Corporate Governance and Nominating Committee recommends to the Board of
Directors candidates to fill vacancies on the Board, as well as, the nominees
for election as the Company's directors by the stockholders at each annual
meeting of stockholders. Members of the Nominating Committee during 2006 were
Dr. Charles Young (Chairperson), Jack Lahav, Joe Reeder, and Larry Shelton. The
Corporate Governance and Nominating Committee meets at least quarterly and as
such times as necessary or advisable and held four meetings in 2006. The
Corporate Governance and Nominating Committee adopted a Corporate Governance and
Nominating Committee Charter, which is available on our website at
www.perma-fix.com. All members of the Corporate Governance and Nominating
Committee are "independent" as that term is defined by the current NASDAQ
listing standards.
The Corporate Governance and Nominating Committee does not have a formal policy
with regard to the consideration of any director candidate recommended by
security holders, because our Board of Directors believes that our by-laws and
the procedures noted below provide sufficient guidance for the consideration of
such persons so recommended. Although there is no formal procedure for
stockholders to recommend nominees for the Board of Directors, the Nominating
Committee will consider such recommendations if received in writing, together
with all of the information described below as to the person so recommended, 120
days in advance of the annual meeting of stockholders. The Committee will
consider appropriate factors such as experience with other organizations,
skills, diversity, integrity, judgment and independence. Recommendations should
be made in compliance with the Company's by-laws and be addressed to the
Nominating Committee at the Company's address and provide all information
relating to such person that the stockholder desires to nominate that is
required to be disclosed in solicitation of proxies for the election of such
nominee, including the nominee's written consent to serve as a director if so
elected. If the chairman of the Meeting determines that a person is not
nominated in accordance with the nomination procedure, such nomination will be
disregarded.
Code of Ethics
We have adopted a Code of Ethics that applies to all our executive officers. Our
Code of Ethics is available on our website at www.perma-fix.com. If any
amendments are made to the Code of Ethics or any grants of waivers are made to
any provision of the Code of Ethics to any of our executive officers, we will
promptly disclose the amendment or waiver and nature of such amendment of waiver
on our website.
Compensation of Directors
Directors who are employees receive no additional compensation for serving on
the board of directors or its committees. In 2006, we provided the following
annual compensation to directors who are not employees: (1) Each of our
non-employee directors reelected was awarded options to purchase 12,000 shares
of our Common Stock and our newly elected director was awarded options to
purchase 30,000 shares of our Common Stock. The grant date fair value of each
option award received by our non-employee directors was $1.742 per share, based
on the date of grant, pursuant to Statement of Financial Accounting Standard
123R (SFAS 123R); (2) The number of shares of Common Stock awarded under the
2003 Outside Director Plan for director fees earned is based on 75% of the
closing market price of our Common Stock as reported on NASDAQ as determined on
the business day immediately preceding the date the quarterly director fees is
due. The stock award is granted in lieu of cash compensation and is fully vested
upon grant. The table below summarizes the director compensation expenses
recognized by the Company for the director option and stock (resulting from fees
earned) awards. The terms of the 2003 Outside Directors Plan are further
described below under "2003 Outside Directors Plan".
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Director Compensation Table
Change in
Pension
Value and
Non-Equity Non-Qualified
Incentive Deferred
Fees Earned Plan Compen- All Other
or Paid Stock Option Compen- sation Compen-
Name In Cash Awards Awards sation Earnings sation Total
--------------------------- -------- ------ ------ ------ -------- -------- ------
($) ($)(2) ($)(3) ($) ($) ($) ($)
Mark Zwecker 10,332 25,583 20,904 -- -- -- 56,819
Alfred C. Warrington,IV (1) -- 34,402 -- -- -- -- 34,402
Jon Colin -- 24,001 20,904 -- -- -- 44,905
Jack Lahav -- 24,001 20,904 -- -- -- 44,905
Joe R. Reeder -- 24,001 20,904 -- -- -- 44,905
Charles E. Young 1,575 21,902 20,904 -- -- -- 44,381
Larry M. Shelton (1) 2,705 6,700 52,260 -- -- -- 61,665
(1) Mr. Alfred Warrington resigned as a member of the Board, effective July
27, 2006. Mr. Larry Shelton was subsequently elected as Board of Director
on July 27, 2006
(2) The number of shares of Common Stock comprising stock awards granted under
the 2003 Outside Directors Plan is calculated based on 75% of the closing
market value of the Common Stock as reported on the NASDAQ on the business
day immediately preceding the date that the quarterly fee is due.
(3) Option granted under the Company's 2003 Outside Director Plan resulting
from reelection of Board of Directors on July 27, 2006. Options are for a
10 year period with exercise price of $2.15 per share and are fully vested
in six months from grant date. Option Award is calculated based on the
fair value of the option per share ($1.742) on the date of grant pursuant
to Statement of Financial Accounting Standard 123R ("SFAS 123R"). In 2006,
the option expense recognized for financial statement purposes totaled
$133,000. The remaining $24,000 option expense was recognized in January
2007, upon vesting of the stock option, pursuant to SFAS 123R.
2003 Outside Directors Plan
In 2006, we paid our outside directors fees of $1,500 for each month of service.
We compensate our Audit Committee Chairman an additional $2,250 for each month
of service as Chairman, as a result of the additional responsibilities placed on
that position. Other than the additional fees for the Chairman of the Audit
Committee, the outside directors do not receive additional compensation for
committee participation or special assignment. As a member of the Board of
Directors, each Director elects to receive either 65% or 100% of the director's
fee in shares of our Common Stock based on 75% of the fair market value of the
Common Stock determined on the business day immediately preceding the date that
the quarterly fee is due. In 2006, the fees earned by our outside directors
totaled $175,000. The balance of each director's fee, if any, is payable in
cash. The aggregate amount of accrued directors' fees at December 31, 2006, to
be paid during 2007 to the six outside directors (Colin, Lahav, Reeder, Shelton,
Young and Zwecker) was $64,000. Reimbursements of expenses for attending
meetings of the Board are paid in cash at the time of the applicable Board
meeting. Although Dr. Centofanti is not compensated for his services provided as
a director, Dr. Centofanti is compensated for his services rendered as an
officer of the Company. See "EXECUTIVE COMPENSATION -- Summary Compensation
Table."
We believe that it is important for our directors to have a personal interest in
our success and growth and for their interests to be aligned with those of our
stockholders. Therefore, under our 2003 Outside Directors Stock Plan ("2003
Directors Plan"), each outside director is granted a 10 year option to purchase
up to 30,000 shares of Common Stock on the date such director is initially
elected to the Board of Directors, and receives on each reelection date an
option to purchase up to another 12,000 shares of Common Stock, with the
exercise price being the fair market value of the Common Stock on the date that
the option is granted. No option granted under the 2003 Directors Plan is
exercisable until after the expiration of six months from the date the option is
granted and no option shall be exercisable after the expiration of ten years
from the date the option is granted. Options to purchase 324,000 shares of
Common Stock were granted and are outstanding under the 2003 Directors Plan.
7
As of the date of this report, we have issued 299,485 shares of our Common Stock
in payment of director fees under the 2003 Directors Plan, covering the period
October 1, 2002, through December 31, 2006.
In the event of a change of control (as defined in our option plans) of the
Company, each outstanding option and award granted under the plans shall
immediately become exercisable in full notwithstanding the vesting or exercise
provisions contained in the stock option agreement.
Communications with the Board
The Company's Board of Directors believes that it is important for the Company
to have a process that enables stockholders to send communications to the Board.
Accordingly, stockholders who wish to communicate with the Board of Directors or
a particular director may do so by sending a letter to the Secretary of the
Corporation, at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350. The
mailing envelope must clearly indicate that the enclosed letter is a
"Stockholder-Board Communication" or "Stockholder-Director Communication." All
such letters must identify the author as a stockholder and clearly state whether
the intended recipients are all members of the Board of Directors or only
certain specified individual directors. The Secretary of the Corporation will
make copies of all such letters and circulate them to the appropriate director
or directors.
Compensation Committee Interlocks and Insider Participation
During 2006, the Compensation and Stock Option Committee for our Board of
Directors was composed of Jack Lahav, Jon Colin, Joe Reeder, and Dr. Charles E.
Young. None of the members of the Compensation and Stock Option Committee has
been an officer or employee of the Company or has had any relationship with the
Company requiring disclosure under the SEC regulations.
Family Relationships
There are no family relationships between any of the Company's existing
Directors, executive officers, or persons nominated or chosen to become a
Director or executive officer. Dr. Centofanti is the only Director who is the
Company's employee.
Certain Relationships and Related Transactions
The Company's Audit Committee acts under its Audit Committee Charter and reviews
all related party transactions involving our directors and executives.
Lawrence Properties
During February 2006, our Board of Directors approved and Perma-Fix
Environmental Services, Inc. entered into a lease agreement, whereby we will
lease property from, Lawrence Properties LLC, a company jointly owned by the
president of Schreiber, Yonley and Associates, Robert Schreiber, Jr. and his
spouse. Mr. Schreiber is a member of our executive management team. The lease is
for a term of five years and will begin on June 1, 2006. We will pay monthly
rent expense of $10,000, which we believe is lower than costs charged by
unrelated third party landlords. Additional rent would be assessed for any
increases over the initial lease commencement year, to property taxes or
assessments and property and casualty insurance premiums.
Mill Creek Environmental Services, Inc.
We utilize the remediation and analytical services of Mill Creek Environmental
Services, Inc., which is owned principally by the son and daughter-in-law of our
CEO, Dr. Louis Centofanti. Mill Creek has provided assistance in developing
remediation plans, completing a permit renewal and modification application, and
groundwater investigations at one of our remediation sites. The majority of
these services we are unable to perform ourselves. Our purchases from or
services provided to us by Mill Creek during 2006, 2005 and 2004 totaled $1,700,
$230,000, and $118,000 respectively. We believe that the rates we receive are
competitive and comparable to rates we would receive from unaffiliated third
party vendors.
Capital Bank-GRAWE Gruppe
As of June 1, 2007, Capital Bank represents to us that it owns of record, as
agent for certain accredited investors, 4,863,151 shares of Common Stock,
representing 9.32% of our issued and outstanding Common Stock. During 2006,
Capital Bank exercised the right to acquire 2,548,084 shares of our Common
Stock, as agent for its investors. The aggregate proceeds paid to the Company
was $4,459,147, or $1.75 per share.
Capital Bank has advised us that it is a banking institution regulated by the
banking regulations of Austria, which holds shares of our Common Stock on behalf
of numerous investors. Capital Bank asserts that it is precluded by
8
Austrian law from disclosing the identities of its investors, unless so approved
by each such investor. Certain of its investors gave Capital Bank permission to
disclose their identities in order to be included as Selling Stockholders in our
Form S-3 Registration Statement, effective November 22, 2002. Capital Bank has
represented that all of its investors are accredited investors under Rule 501 of
Regulation D promulgated under the Act. In addition, Capital Bank has advised us
that none of its investors beneficially own more than 4.9% of our Common Stock.
Capital Bank has further informed us that its clients (and not Capital Bank)
maintain full voting and dispositive power over such shares. Consequently,
Capital Bank has advised us that it believes it is not the beneficial owner, as
such term is defined in Rule 13d-3, of the shares of our Common Stock registered
in the name of Capital Bank because it has neither voting nor investment power,
as such terms are defined in Rule 13d-3, over such shares. Capital Bank has
informed us that it does not believe that it is required to file, and has not
filed, any reports under Forms 3, 4, or 5 as required by Section 16(a) of the
Exchange Act or to file either Schedule 13D or Schedule 13G in connection with
the shares of our Common Stock registered in the name of Capital Bank.
If the representations or information provided by Capital Bank are incorrect or
if Capital Bank was historically acting on behalf of its investors as a group,
rather than on behalf of each investor independent of other investors, Capital
Bank and/or the investor group could have become a beneficial owner (as that
term is defined under Rule 13d-3 as promulgated under the Exchange Act of more
than 10% of our Common Stock.
Because Capital Bank (a) has advised us that it holds the Common Stock as a
nominee only and that it does not exercise voting or investment power over the
Common Stock held in its name and that no one investor of Capital Bank for which
it holds our Common Stock holds more than 4.9% of our issued and outstanding
Common Stock and (b) has not nominated, and has not sought to nominate, and does
not intend to nominate in the future, any person to serve as a member of our
Board of Directors, we do not believe that Capital Bank is our affiliate.
Nuvotec and PEcoS
On June 13, 2007, the Company acquired Nuvotec and its wholly owned subsidiary,
PEcoS, by merger pursuant to the terms of a Merger Agreement, between the
Company, the Company's wholly owned subsidiary, PESI Transitory, Inc., Nuvotec,
and PEcoS. The acquisition resulted in PESI transitory being merger into Nuvotec
(whose name was changed to Perma-Fix Northwest, Inc.), Perma-Fix Northwest
becoming a wholly owned subsidiary of the Company, and PEcoS remaining a
wholly-owned subsidiary of PESI Northwest.
Prior to the merger, Robert L. Ferguson was a significant shareholder of Nuvotec
and the Chairman and Chief Executive Officer of Nuvotec and PEcoS. As
consideration for the merger, (a) the Company paid to Mr. Ferguson and entities
controlled by him, as accredited stockholders in Nuvotec, a total of $224,560
cash at the closing and will issue to him and the entities controlled by him a
total of 192,783 shares of Company common stock, and (b) Mr. Ferguson is
entitled to receive (i) approximately $500,000, payable in four annual
installments beginning June 2008, and (ii) if Perma-Fix Northwest and PEcoS
attain certain financial thresholds, an earn-out of up to $936,760, payable over
a four year period, beginning June 2008. These payments represent Mr. Ferguson's
proportionate share of the consideration paid or payable to the former Nuvotec
stockholders that qualified as accredited investors under Rule 501 of Regulation
D promulgated under the Act.
In connection with the merger, Mr. Ferguson and another former officer, director
and stockholder of Nuvotec guaranteed $4.0 million owing by Perma-Fix Northwest
to KeyBank National Association. He and the other former Nuvotec principal also
guaranteed Perma-Fix Northwest's $1.75 million letter of credit with KeyBank.
Mr. Ferguson, along with the other former directors and executive officers of
Nuvotec and PEcoS, has released Perma-Fix Northwest, PEcoS, and Perma-Fix
Transitory from all claims arising against them arising prior to the closing of
the merger, including any claims for indemnification under the charter and
bylaws of Nuvotec and PEcoS. Mr. Ferguson is also subject to a one-year
non-compete agreement with PEcoS. The releases and the non-compete agreement
were conditions to the closing of the merger.
In connection with the merger, the Company agreed to increase the number of its
directors from seven to eight and to take reasonable action to nominate and
recommend Mr. Ferguson for election as a member of the Company's board of
directors. Accordingly, Mr. Ferguson has been nominated by our Corporate
Governance and Nominating Committee for election to the Board at the Meeting.
9
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act and the regulations promulgated thereunder
require our executive officers and directors and beneficial owners of more than
10% of our Common Stock to file reports of ownership and changes of ownership of
our Common Stock with the Securities and Exchange Commission, and to furnish us
with copies of all such reports. Based solely on a review of the copies of such
reports furnished to us and written information provided to us, we believe that
during 2006 none of our executive officers and directors failed to timely file
reports under Section 16(a), except Robert Schreiber, Jr. inadvertently failed
to timely file a Form 4 to report one transaction.
Capital Bank-GRAWE Gruppe AG ("Capital Bank") has advised us that it is a
banking institution regulated by the banking regulations of Austria, which holds
shares of our Common Stock as agent on behalf of numerous investors. Capital
Bank has represented that all of its investors are accredited investors under
Rule 501 of Regulation D promulgated under the Act. In addition, Capital Bank
has advised us that none of its investors, individually or as a group,
beneficially own more than 4.9% of our Common Stock. Capital Bank has further
informed us that its clients (and not Capital Bank) maintain full voting and
dispositive power over such shares. Consequently, Capital Bank has advised us
that it believes it is not the beneficial owner, as such term is defined in Rule
13d-3 of the Exchange Act, of the shares of our Common Stock registered in the
name of Capital Bank because it has neither voting nor investment power, as such
terms are defined in Rule 13d-3, over such shares. Capital Bank has informed us
that it does not believe that it is required (a) to file, and has not filed,
reports under Section 16(a) of the Exchange Act or (b) to file either Schedule
13D or Schedule 13G in connection with the shares of our Common Stock registered
in the name of Capital Bank.
If the representations, or information provided, by Capital Bank are incorrect
or Capital Bank was historically acting on behalf of its investors as a group,
rather than on behalf of each investor independent of other investors, then
Capital Bank and/or the investor group would have become a beneficial owner of
more than 10% of our Common Stock on February 9, 1996, as a result of the
acquisition of 1,100 shares of our Preferred Stock that were convertible into a
maximum of 1,282,798 shares of our Common Stock. If either Capital Bank or a
group of Capital Bank's investors became a beneficial owner of more than 10% of
our Common Stock on February 9, 1996, or at any time thereafter, and thereby
required to file reports under Section 16(a) of the Exchange Act, then Capital
Bank has failed to file a Form 3 or any Forms 4 or 5 for period from February 9,
1996, until the present.
Audit Committee Report
The Audit Committee is responsible for providing independent objective oversight
of the Company's accounting functions and internal controls. In accordance with
rules adopted by the Commission, the Audit Committee of the Company states that:
o The Audit Committee has reviewed and discussed with management the
Company's audited financial statements for the fiscal year ended December
31, 2006.
o The Audit Committee has discussed with BDO Seidman, LLP, the Company's
independent registered public accounting firm, the matters required to be
discussed by Statement on Auditing Standards No. 61 ("Communications with
Audit Committees"), as modified or supplemented.
o The Audit Committee has received the written disclosures and the letter
from BDO Seidman, LLP, required by Independence Standards Board Standard
No. 1 ("Independence Discussions with Audit Committees"), as modified or
supplemented, and has discussed with BDO Seidman, LLP, the independent
registered public accounting firm`s independence.
In connection with the Audit Committee's discussion with BDO Seidman, LLP, as
described above, the Audit Committee discussed and considered (a) that
approximately 8% and 7% of the total hours spent on audit services for the
Company for the year ended December 31, 2006, were spent by Cross, Fernandez &
Riley, LLP ("CFR") and McLeod and Company, respectively, members of the BDO
Seidman, LLP alliance network of firms, and (b) the nature and scope of the
non-audit services performed by CFR, and determined that the audit and non-audit
services provided by BDO Seidman, LLP, CFR, and McLeod and Company were
compatible with maintaining the independence of BDO Seidman, LLP.
Based upon the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the Company's audited financial
statements be included in the Company's Annual Report on Form
10
10-K for the fiscal year ended December 31, 2006, for filing with the Securities
and Exchange Commission. The Audit Committee also appointed BDO Seidman, LLP as
the Company's independent registered public accounting firm for 2007.
This report is submitted on behalf of the members of the Audit Committee:
Mark Zwecker (Chairperson)
Jon Colin
Larry Shelton
The Report of the Audit Committee shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor
shall it be incorporated by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference
and shall not otherwise be deemed filed under such Acts.
EXECUTIVE OFFICERS
The following table sets forth, as of the date hereof, information concerning
our executive officers:
NAME AGE POSITION
---- --- --------
Dr. Louis F. Centofanti 63 Chairman of the Board, President and Chief Executive Officer
Mr. Steven Baughman 48 Chief Financial Officer, Vice President, and Secretary
Mr. Larry McNamara 57 Chief Operating Officer
Mr. Robert Schreiber, Jr. 56 President of SYA, Schreiber, Yonley & Associates, a subsidiary of the
Company, and Principal Engineer
Dr. Louis F. Centofanti
See "Election of Directors" for further information on Dr. Centofanti.
Mr. Steven Baughman
Mr. Baughman has served as Vice President and Chief Financial Officer since May
15, 2006. Mr. Baughman was previously employed by Waste Management, Inc. from
1994 to 2005, serving in various capacities, including: Vice President Finance,
Control and Analysis from 2001 to 2005, and Vice President, International
Controller from 1999 to 2001. Mr. Baughman has BS degrees in Accounting and
Finance from Miami University (Ohio), and is a Certified Public Accountant.
Mr. Larry McNamara
Mr. McNamara has served as Chief Operating Officer since October 2005. From
October 2000 to October 2005, he served as President of the Nuclear Waste
Management Services segment. From December 1998 to October 2000, he served as
Vice President of the Company's Nuclear Waste Management Services Segment.
Between 1997 and 1998, he served as Mixed Waste Program Manager for Waste
Control Specialists (WCS) developing plans for the WCS mixed waste processing
facilities, identifying markets and directing proposal activities. Between 1995
and 1996, Mr. McNamara was the single point of contact for the DOD to all state
and federal regulators for issues related to disposal of Low Level Radioactive
Waste and served on various National Committees and advisory groups. Mr.
McNamara served, from 1992 to 1995, as Chief of the Department of Defense Low
Level Radioactive Waste office. Between 1986 and 1992, he served as the Chief of
Planning for the Department of Army overseeing project management and program
policy for the Army program. Mr. McNamara has a B.S. from the University of
Iowa.
Mr. Robert Schreiber, Jr.
Mr. Schreiber has served as President of SYA since the Company acquired the
environmental engineering firm in 1992. Mr. Schreiber co-founded the predecessor
of SYA, Lafser & Schreiber in 1985, and served in several executive roles in the
firm until our acquisition of SYA. From 1978 to 1985, Mr. Schreiber served as
Director of Air programs and all environmental programs for the Missouri
Department of Natural Resources. Mr. Schreiber provides technical expertise in
wide range of areas including the cement industry, environmental regulations and
air pollution control. Mr. Schreiber has a B.S. in Chemical Engineering from the
University of Missouri - Columbia.
Resignation of Chief Financial Officer
On March 23, 2006, Mr. Richard T. Kelecy tendered his resignation as Chief
Financial Officer, Vice President, and Secretary of the Board of Directors of
the Company. Mr. Kelecy's resignation from his positions and as an
11
executive officer became effective as of April 5, 2006. Mr. Kelecy continued as
a part time employee, to assist the Company in its transition, until September
2006.
Resignation of Interim Chief Financial Officer
Mr. David Hansen, was appointed by the Company's Board of Directors to serve as
Interim Chief Financial Officer from May 4 to May 15 upon resignation of Mr.
Richard T. Kelecy. Mr. Hansen had been with the Company since October 1995, and
served in various capacities within the company, including Vice President
Corporate Controller/Treasurer. Mr. Hansen resigned from the Company effective
June 2, 2006 and remained as a part time employee through August 2006.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Company's long-term success depends on our ability to efficiently operate
our facilities, evaluate strategic acquisitions within the Nuclear and
Industrial segments of our Company, and to continue to research and develop
innovative technologies in the treatment of nuclear waste, mixed waste and
industrial waste. To achieve these goals, it is important that we be able to
attract, motivate, and retain highly talented individuals who are committed to
the Company's values and goals.
The Compensation and Stock Option Committee (for purposes of this analysis, the
"Committee") of the Board has responsibility for establishing, implementing and
continually monitoring adherence with the Company's compensation philosophy. The
Committee does not have a charter. The Committee ensures that the total
compensation paid to the named executive officers is fair, reasonable and
competitive. Generally, the types of compensation and benefits provided to
members of the named executive officers are similar to those provided to other
executive officers at similar sized companies and industries.
Compensation Philosophy and Objectives
The Committee bases its executive compensation program on the objectives of the
Company. The Committee believes that the most effective executive compensation
program is one that is designed to reward the achievement of specific annual,
long-term and strategic goals by the Company, and which aligns executives'
interests with those of the stockholders by rewarding performance above
established goals, with the ultimate objective of improving stockholder value.
The Committee evaluates both executive performance and compensation to ensure
that the Company maintains its ability to attract superior employees in key
positions and to remain competitive relative to the compensation paid to
similarly situated executives of our peer companies. The Committee believes
executive compensation packages provided by the Company to its executives,
including the named executive officers, should include both cash and
equity-based compensation that provide rewards for performance as measured
against established goals. The Committee bases it executive compensation program
on the following criteria:
o Compensation should be based on the level of job responsibility,
executive performance, and company performance. Executive officers'
pay should be more closely linked to company performance than that
of other employees because the executive officers have a greater
ability to affect results of the Company.
o Compensation should be competitive with compensation offered by
other companies that compete with us for talented individuals.
o Compensation should reward performance.
o Compensation should motivate executives to achieve the Company's
strategic and operational goals.
Role of Executive Officers in Compensation Decisions
The Committee approves all compensation decisions for the named executive
officers and approves recommendations regarding equity awards to all officers of
the Company. Decisions regarding the non-equity compensation of other officers
are made by the Chief Executive Officer.
The Chief Executive Officer annually reviews the performance of each of the
named executive officers (other than the Chief Executive Officer whose
performance is reviewed by the Committee). Based on such reviews, the Chief
Executive Officer presents a recommendation to the Committee, which may include
salary adjustments, bonus and equity based awards, and annual awards. The
Committee exercises its discretion in accepting or modifying all such
recommendations.
12
The Committee's Processes
The Compensation Committee has established certain processes designed to achieve
the Company's executive compensation objectives. These processes include the
following:
o Company Performance Assessment. The Committee assesses the Company's
performance in order to establish compensation ranges and, as
described below, to assist the Committee in establishing specific
performance measures that determine incentive compensation under the
Company's Executive Management Incentive Plan. For this purpose, the
Company considers numerous measures of performance of both the
Company and industries with which the Company competes.
o Individual Performance Assessment. Because the Committee believes
that an individual's performance should effect an individual's
compensation, the Committee evaluates each named executive officer's
performance. With respect to the named executive officers, other
than the Chief Executive Officer, the Committee considers the
recommendations of the Chief Executive Officer. With respect to all
named executive officers, the Committee exercises its judgment based
on its interactions with the executive officer, such officer's
contribution to the Company's performance and other leadership
achievements.
o Peer Group Assessment. The Committee benchmarks the Company's
compensation program with a group of companies against which the
Committee believes the Company competes for talented individuals
(the "Peer Group"). The composition of the Peer Group is
periodically reviewed and updated by the Committee. The companies
currently comprising the Peer Group are Clean Harbors, Inc. and
American Ecology Corporation. The Committee considers the company's
executive compensation programs as a whole and the compensation of
individual officers if job responsibilities are meaningfully
similar. The Committee sets compensation for executive officers at
levels paid to similarly situated executives of the companies
comprising the Peer Group. This Committee considers individual
factors such as experience level of the individual and market
conditions. The Committee believes that the Peer Group comparison
helps insure that the Company's executive compensation program is
competitive with other companies in the industry.
2006 Executive Compensation Components
For the fiscal year ended December 31, 2006, the principal components of
compensation for executive officers were:
o base salary;
o performance-based incentive compensation;
o long term incentive compensation;
o retirement and other benefits; and
o perquisites and other personal benefits.
Base Salary
The Company provides the named executive officers, other officers, and other
employees with base salary to compensate them for services rendered during the
fiscal year. Base salary ranges for executive officers are determined for each
executive based on his or her position and responsibility by using market data.
During its review of base salaries for executives, the Committee primarily
considers:
o market data;
o internal review of the executive's compensation, both individually
and relative to other officers; and
o individual performance of the executive.
Salary levels are typically considered annually as part of the Company's
performance review process as well as upon a promotion or other change in job
responsibility. Merit based increases to salaries of members of the executive
are based on the Committee's assessment of the individual's performance.
Performance-Based Incentive Compensation
The Committee has the latitude to design cash and equity-based incentive
compensation programs to promote high performance and achievement of the
Company's goals by Directors and the named executives, encourage the growth
13
of stockholder value and allow employees to participate in the long-term growth
and profitability of the Company. The Committee may grant stock options and/or
performance bonuses. In granting these awards, the Committee may establish any
conditions or restrictions it deems appropriate. In addition, the Chief
Executive Officer has discretionary authority to grant stock options to certain
high-performing executives.
All awards of shares of the Company's stock options under the aforementioned
programs are made at or above the market price at the time of the award. Newly
hired or promoted executives, other than executive officers, receive their award
of stock options following their hire or promotion. Grants of stock options to
newly hired executive officers who are eligible to receive them are made at the
next regularly scheduled Committee meeting following their hire date.
Executive Management Incentive Plan
In 2005, the Board of Directors adopted the Executive Management Incentive Plan
(the "MIP"), which became effective January 1, 2006, for the Company's Chief
Executive Officer, Chief Financial Officer, and Chief Operating Officer. The MIP
is an annual cash incentive program under the management incentive plans. The
MIP provides guidelines for the calculation of annual cash incentive based
compensation, subject to Committee oversight and modification. The Committee
considers whether an MIP should be established for the next succeeding year and,
if so, approves the group of employees eligible to participate in the MIP for
that year. The MIP includes various incentive levels based on the participant's
responsibilities and impact on Company operations, with target award
opportunities that are established as a percentage of base salary. These targets
range from 26% of base salary to 50% of base salary for the Company's named
executive officers.
For fiscal 2006, 70% of a named executive officer's MIP award was based upon
achievement of corporate financial objectives relating to revenue and net income
targets, with each component accounting for 15% and 55%, respectively, of the
total corporate financial objective portion of the MIP award. The remaining 30%
of an executive's MIP award was based upon health & safety incidents and permit
& license compliance targets. Each year, the Committee sets target and maximum
levels for each component of the corporate financial objective portion of the
MIP. Payments of awards under the MIP are contingent upon the achievement of
such objectives for the current year. Executive officers participating in the
MIP receive:
o no payment for the corporate financial objective portion of the MIP
award, unless the Company achieves the target performance level (as
computed for the total corporate financial objective portion);
o a payment of at least 100% but less than 175% of the target award
opportunity for the corporate financial objective portion of the MIP
award if the Company achieves or exceeds the target performance
level but does not attain the maximum performance level; and
o a payment of 175% of the target award opportunity for the corporate
financial objective portion of the MIP award if the Company achieves
or exceeds the maximum performance level.
Upon completion of each fiscal year, the Committee assesses the performance of
the Company for each corporate financial objective of the MIP comparing the
actual fiscal year results to the pre-determined target and maximum levels for
each objective and an overall percentage amount for the corporate financial
objectives is calculated.
Generally, the Committee sets the target level for earnings using the Company's
annually approved budget for the upcoming fiscal year. Minimum target objectives
are set between 80% - 100% of the Company's budget. Maximum earnings objectives
are set at 161% or higher of the company's budget. In making the annual
determination of the target and maximum levels, the Committee may consider the
specific circumstances facing the Company during the coming year. The Committee
generally sets the target and maximum levels such that the relative difficulty
of achieving the target level is consistent from year to year.
Each of the executive officers for the fiscal year ended December 31, 2005,
received the following payments in February 2006 under the MIP for fiscal 2005
performance.
14
2005 MIP
Name Bouns Award
------------------------ -----------
Dr. Louis F. Centofanti $ --
Steven T. Baughman $ --
Larry McNamara $35,550
Robert Schreiber, Jr $ 2,200
Awards made to Executive officers under the MIP for performance in 2006 are
reflected in the "Non-Equity Incentive Plan Compensation" column of the Summary
Compensation Table in this section.
Long-Term Incentive Compensation
Employee Stock Option Plan
The 2004 Stock Option Plan (the "Option Plan") encourages participants to focus
on long-term Company performance and provides an opportunity for executive
officers and certain designated key employees to increase their stake in the
Company. Stock options succeed by delivering value to the executive only when
the value of the Company's stock increases. The Option Plan authorizes the grant
of non-qualified stock options and incentive stock options for the purchase of
Common Stock.
The Option Plan assists the Company to:
o enhance the link between the creation of stockholder value and
long-term executive incentive compensation;
o provide an opportunity for increased equity ownership by executives;
and
o maintain competitive levels of total compensation.
Stock option award levels are determined based on market data, vary among
participants based on their positions within the Company and are granted at the
Committee's regularly scheduled March meeting. Newly hired or promoted executive
officers who are eligible to receive options are awarded such options at the
next regularly scheduled Committee meeting following their hire or promotion
date.
Options are awarded with an exercise price equal to the closing price of the
Company's Common Stock on the date of the grant as reported on the NASDAQ. In
certain limited circumstances, the Committee may grant options to an executive
at an exercise price in excess of the closing price of the Company's Common
Stock on the grant date. The Committee will not grant options with an exercise
price that is less than the closing price of the Company's Common Stock on the
grant date, nor has it granted options which are priced on a date other than the
grant date.
The stock options granted prior to 2006 generally have a ten year term with
annual vesting of 20% over a five year period. In anticipation of the adoption
of SFAS 123R, which the Company adopted effective January 1, 2006, on July 28,
2005, the Committee approved the acceleration of all outstanding and unvested
options as of the approval date. The options granted in 2006 by the Committee
are for a six year term with vesting period of three years at 33.3% increment
per year. Vesting and exercise rights cease upon termination of employment
except in the case of death or retirement (subject to a six month limitation),
or disability (subject to a one year limitation). Prior to the exercise of an
option, the holder has no rights as a stockholder with respect to the shares
subject to such option.
Retirement and Other Benefits
401(k) Plan
We adopted the Perma-Fix Environmental Services, Inc. 401(k) Plan (the "401(k)
Plan") in 1992, which is intended to comply with Section 401 of the Internal
Revenue Code and the provisions of the Employee Retirement Income Security Act
of 1974. All full-time employees who have attained the age of 18 are eligible to
participate in the 401(k) Plan. Participating employees may make annual pretax
contributions to their accounts up to 100% of their compensation, up to a
maximum amount as limited by law. We, at our discretion, may make matching
contributions based on the employee's elective contributions. Company
contributions vest over a period of five years. We currently match 25% of our
employees' contributions. We contributed $378,000 in matching funds during 2006.
15
Perquisites and Other Personal Benefits
The Company provides executive officers with perquisites and other personal
benefits that the Company and the Committee believe are reasonable and
consistent with its overall compensation program to better enable the Company to
attract and retain superior employees for key positions. The Committee
periodically reviews the levels of perquisites and other personal benefits
provided to executive officers. The executive officers are provided an auto
allowance.
Employment Agreement and Change-in Control Arrangements
On March 1, 2007, the Board of Directors approved for the Company to enter into
employment agreements with its named executives, subject to finalization of
certain of its material terms, including, but not limited to, the formula for
paying year-end incentive bonuses. As of the date of this Proxy Statement, the
terms of the employment agreements have not been finalized, and none of our
named executives has entered into any employment agreement with the Company.
It is anticipated that such proposed employment agreements, if completed, would
be effective for three years, unless earlier terminated by the Company with or
without cause or by the executive officer for "good reason" or any other reason.
If the executive officer's employment is terminated due to death, disability or
for cause, it is anticipated that the Company would pay to the executive officer
or to his estate a lump sum equal to the sum of any unpaid base salary through
the date of termination, any earned or unpaid incentive bonus, and any benefits
due to the executive officer under any employee benefit plan, excluding any
severance program or policy (the "Accrued Amounts").
If the executive officer terminates his employment for good reason, it is
anticipated that the employment agreements will provide that the Company would
be required to pay the executive officer a sum equal to the total Accrued
Amounts and one year of full base salary. If the executive terminates his
employment for a reason other than for good reason, it is anticipated that the
Company would pay to the executive the amount equal to the Accrued Amounts. The
employment agreements would provide, when finalized, that if there is a Change
in Control (to be defined in the agreements), that all outstanding stock options
to purchase common stock held by the executive officer will immediately become
exercisable in full.
Compensation Committee Report
The Committee of the Company has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with
management and, based on such review and discussions, the Committee recommended
to the Board that the Compensation Discussion and Analysis be included in this
Proxy Statement.
THE COMPENSATION AND STOCK OPTION COMMITTEE
Jack Lahav, Chairman
Jon Colin
Dr. Charles E. Young
Joe Reeder
16
Summary Compensation Table
The following table summarizes the total compensation paid or earned by each of
the executive officers for the fiscal years ending December 31, 2004, 2005 and
2006. Currently, the Company does not have any employment agreements with any of
the executive officers. When setting total compensation for each of the
executive officers, the Committee reviews, among other things, the executive's
current compensation, including equity and non-equity based compensation.
Based on the fair value of equity awards granted to executive officers in 2006
and the base salary of the executive officers, "Salary" accounted for
approximately 53.3% of the total compensation of the executive officers while
non-equity incentive, option award, and other compensation accounted for
approximately 46.7% of the total compensation of the executive officers.
Change in
Pension
Value and
Non-
Non-Equity Qualified
Incentive Deferred
Plan Compen- All other Total
Stock Option Compen sation Compen- Compen-
Name Year Salary Bonus Awards Awards -sation Earning sation sation
----------------------------------------------------------------------------------------------------------------------------------
($) ($) ($) ($)(5) ($) ($) ($)(6) ($)
Dr. Louis Centofanti 2006 232,269 -- -- 86,800 143,324 (4) -- 13,601 475,990
Chairman of the Board, 2005 218,808 -- -- -- -- -- 12,500 231,308
President and Chief 2004 190,000 45,801 -- -- -- -- 11,695 247,496
Executive Officer --
Steven Baughman (1) 2006 123,077 -- -- 87,700 63,709 (4) -- 9,000 283,482
Vice President and Chief 2005 -- -- -- -- -- -- -- --
Financial Officer 2004 -- -- -- -- -- -- -- --
Larry McNamara 2006 193,558 -- -- 217,000 122,500 (4) -- 12,750 545,804
Chief Operating Officer 2005 189,761 -- -- -- 35,550 -- 12,500 237,811
2004 173,000 93,913 -- -- -- -- 11,569 278,482
Robert Schreiber, Jr. 2006 158,292 -- -- 21,700 5,915 -- 14,502 200,409
President of SYA 2005 195,749 -- -- -- 2,200 -- 14,002 211,951
2004 135,394 38,800 -- -- -- -- 13,457 187,651
Richard T. Kelecy (2) 2006 123,813 -- -- -- -- -- 3,409 127,222
Vice President and Chief 2005 180,762 -- -- -- -- -- 12,500 193,262
Financial Officer 2004 175,000 35,400 -- -- -- -- 12,250 222,650
David Hansen (3) 2006 92,094 -- -- 4,340 -- -- 1,678 98,112
Chief Financial Officer 2005 135,000 8,000 -- -- -- -- 2,850 145,850
2004 135,000 10,000 -- -- -- -- 2,132 147,132
(1) Appointed as Vice President and Chief Financial Officer in May 2006.
(2) Resigned as Chief Financial Officer, Vice President, and Secretary of the
Board of Director effective April 5, 2006. Mr. Kelecy continued as a part
time employee until September 8, 2006.
(3) Named as Interim Chief Financial Officer from May 4 to May 15 by Board of
Director. Mr. Hansen resigned from the Company effective June 2, 2006 and
remained as a part time employee through August 31, 2006.
17
(4) Represents 2006 performance compensation earned in 2006 under the
Company's MIP. The amount includes $55,530, $37,693, and $47,463 earned by
Dr. Centofanti, Mr. Baughman, and Mr. McNamara, respectively, in 4th
quarter of 2006, which was paid on March 15, 2007. The MIP is described
under the heading "Executive Management Incentive Plan" in the
Compensation Discussion and Analysis.
(5) This amount reflects the expense to the Company for financial statement
reporting purposes for the fiscal year ended December 31, 2006, in
accordance with SFAS 123(R) of options granted under Stock Option Program
in 2006. There was no expense for options granted prior to 2006, which
were fully vested prior to 2006, and are not included in these amounts.
(6) Each named executive officer, with the exception of Mr. Hansen, interim
Chief Financial Officer, receives a monthly automobile allowance of $750
or a leased vehicle. Also included, where applicable, is our 401(k)
matching contribution.
The compensation plan under which the awards in the following table were made
are generally described in the "Compensation Discussion and Analysis" section,
and include the Company's MIP, which is a non-equity incentive plan, and the
Company's 2004 Stock Option Plan, which provides for grant of stock options to
our employees.
Grant of Plan-Based Awards Table
Estimated Future Estimated Future Payouts Under All other All other
Payouts Equity Stock Options
Under Non-Equity Incentive Incentive Awards: Awards:
Plan Awards Plan Awards Number of Number of
------------------------------- ------------------------------ Shared of Securities
Threshold Target Maxi- Threshold Target Maxi-mum Stock or Underlying
$ $ (1) mum $ $ $ Units(#) Options (#)
$ (1)
Name Grant Date
-------------------- ---------- ------- ---------- ---------- --------- -------- ------ -------- ----------
Dr. Louis Centofanti 3/2/2006 -- -- -- -- -- -- -- 100,000
N/A 117,000 204,748
Steven Baughman 5/15/2006 -- -- -- -- -- -- -- 100,000 (2)
N/A 52,000 91,012
Larry McNamara 3/2/2006 -- -- -- -- -- -- -- 250,000
N/A 100,000 175,000
Robert Schreiber, Jr. 3/2/2006 -- -- -- -- -- -- -- 25,000
Richard T. Kelecy -- -- -- -- -- -- -- -- --
David Hansen 3/2/2006 -- -- -- -- -- -- -- 5,000 (3)
Exercise or Grant
Base Date Fair
Price Value of
of Option Stock and
Awards ($/Sh) Option
Awards
Name
-------------------- -------------- -------
Dr. Louis Centofanti 1.86 .868
Steven Baughman 1.85 .877
Larry McNamara 1.86 .868
Robert Schreiber, Jr. 1.86 .868
Richard T. Kelecy -- --
David Hansen 1.86 .868
(1) The amounts shown in column titled "Target" reflects the minimum
payment level under the Company's Executive Management Incentive
Plan which is paid with the achievement of 80% to 100% of the target
amount. The amount shown in column titled "Maximum" reflects the
maximum payment level of 175% of the target amount. These amounts
are based on the individual's current salary and position.
(2) Upon his employment with the Company, Mr. Baughman received options
to purchase 100,000 shares of the Common Stock of the Company with a
grant price equal to $1.85, which was the closing price of the
Company's Common Stock on the NASDAQ Stock Exchange on the grant
date.
(3) Named as Interim Chief Financial Officer from May 4 to May 15 by
Board of Directors. Mr. Hansen resigned from the Company effective
June 2, 2006 and remained as a part-time employee through August 31,
2006. The options granted were forfeited by Mr. Hansen upon his
resignation.
During 2006, the named executive officers were granted the number of options
noted in the above Grant of Plan-Based Award Table under the Company's 2004
Stock Option Plan. The March 2 and May 15 grants are each for a term of six
years and vest over a three year period, at 33.3% increments per year, with
exercise price of $1.860 and $1.850, respectively. We calculated a fair value of
$0.868 and a fair value of $0.877, respectively, for each share under the grants
as of the date of grant, respectively, using the Black-Scholes option pricing
model.
18
Outstanding Equity Awards at Fiscal Year
The following table sets forth the fiscal year-end of unexercised options held
by the named executive officers.
Outstanding Equity Awards at December 31, 2006
Options Awards Stock Awards
-------------- ------------
Equity Incentive Equity
Plan Awards: Incentive Plan
Stock Awards Number of Number of Market Value Awards: Number
Number of Number of Securities Shares or of Shares or of Unearned
underlying underlying Underlying Units of Units of Shares, Units
Unexercised Unexercised Unexercised Option Stock That Stock That or Other Rights
Options Options Unearned Exercise Option Have Not Have Not That Have Not
(#) (#) (1) Options Price Expiration Vested Vested Vested
Name Exercisable Unexercisable (#) ($) Date (#) ($) (#)
-------------------- ----------- ------------- --------- -------- --------- --------- ----------- ------------
Dr. Louis Centofanti 100,000 -- -- 2.25 10/1/2007 -- -- --
100,000 -- -- 2.50 10/1/2007 -- -- --
100,000 -- -- 3.00 10/1/2007 -- -- --
75,000 -- -- 1.25 4/10/2010 -- -- --
100,000 -- -- 1.75 4/3/2011 -- -- --
100,000 -- -- 2.19 2/27/2013 -- -- --
-- 100,000 (2) -- 1.86 3/2/2012 -- -- --
Steven Baughman -- 100,000 (3) -- 1.85 5/15/2012 -- -- --
Larry McNamara 50,000 -- -- 1.25 4/10/2010 -- -- --
120,000 -- -- 1.75 4/3/2011 -- -- --
100,000 -- -- 2.19 2/27/2013 -- -- --
-- 250,000 (2) -- 1.86 3/2/2012 -- -- --
Robert Schreiber, Jr. 15,000 -- -- 1.25 10/14/2008 -- -- --
15,000 -- -- 1.25 4/10/2010 -- -- --
50,000 -- -- 1.75 4/3/2011 -- -- --
50,000 -- -- 2.19 2/27/2013 -- -- --
-- 25,000 (2) -- 1.86 3/2/2012 -- -- --
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
Name (#)
-------------------- -----------
Dr. Louis Centofanti --
--
--
--
--
--
--
Steven Baughman --
Larry McNamara --
--
--
--
Robert Schreiber, Jr. --
--
--
--
--
(1) In the event of a change in control (as defined in the Plan) of the
Company, each outstanding option and award shall immediately become
exercisable in full notwithstanding the vesting or exercise
provisions contained in the stock option agreement.
(2) Incentive stock option granted on March 2, 2006 under the Company's
2004 Stock Option Plan. The option is for a six year period and
vests over a three year period, at 33.3% increments per year.
(3) Incentive stock option granted on May 15, 2006 under the Company's
2004 Stock Option Plan. The option is for a six year period and
vests over a three year period, at 33.3% increments per year.
19
The following table sets forth the number of options exercised by the named
executive officers in 2006:
Option Exercises and Stock Vested Table
Option Awards Stock Awards
------------------------ ---------------------------- -------------------------
Number of Value Number of Value
Name Shares Realized On Shares Realized
Acquired on Exercise Acquired on On
Exercises ($) (3) Vesting Vesting
(#) (#) ($) (#)
------------------------ --------------- ------------ ------------ ------------
Dr. Louis F. Centofanti -- -- -- --
Steven Baughman -- -- -- --
Larry Mcnamara -- -- -- --
Robert Schreiber, Jr. 80,000 64,700 -- --
Richard T. Kelecy (1) 250,000 160,303 -- --
David Hansen (2) 40,000 27,575 -- --
(1) Resigned as Chief Financial Officer, Vice President, and Secretary of the
Board of Directors of the Company effective April 5, 2006. Mr. Kelecy
continued as a part time employee until September 8, 2006.
(2) Served as Interim Chief Financial Officer from May 4 to May 15, 2006. Mr.
Hansen resigned from the Company effective June 2, 2006 and remained as a
part time employee through August 31, 2006.
(3) Based on the difference between the closing price of our Common Stock
reported on the National Association of Securities Dealers Automated
Quotation (`NASDAQ") Capital Market on the exercise date and the exercise
price of the option.
Employee Stock Purchase Plan
Our 2003 Employee Stock Purchase Plan ("2003 Purchase Plan") was adopted to
provide our eligible employees an opportunity to become stockholders and
purchase our Common Stock through payroll deductions. The maximum number of
shares issuable under the 2003 Purchase Plan was 1,500,000. The 2003 Purchase
Plan authorized the purchase of shares two times per year, at an exercise price
per share of 85% of the market price of our Common Stock on the offering date of
the period or on the exercise date of the period, whichever is lower.
The first purchase period commenced July 1, 2004. The following table details
the total employee stock purchase under the 2003 Purchase Plan.
Shares
Purchase Period Proceeds Purchased
-------------------------------------- ------------ -----------
July 1 - December 31, 2004 $ 47,000 31,287
January 1 - June 30, 2005 51,000 33,970
July 1 - December 31, 2005 44,000 31,123
------------ -----------
$ 142,000 96,380
============ ===========
On May 15, 2006, the Board of Directors of the Company terminated the 2003
Purchase Plan due to lack of employee participation and the cost of managing the
plan. Upon termination of the 2003 Purchase Plan, the balance, if any, then
standing to the credit of each participant in the participant stock purchase
stock purchase account was refunded to the participant.
20
Equity Compensation Plans
The following table sets forth information as of December 31, 2006, with respect
to our equity compensation plans.
Equity Compensation Plan
------------------------------------------------------------------------------
Number of securities
remaining available for
Weighted average future issuance under
Number of securities to exercise price of equity compensation
be issued upon exercise outstanding plans (excluding
of outstanding options options, warrants securities reflected in
Plan Category warrants and rights and rights column (a)
------------------------------------ ------------------------- -------------------- -----------------------------
(a) (b) (c)
Equity compensation plans
Approved by stockholders 2,816,750 $1.86 1,348,515
Equity compensation plans not
Approved by stockholders (1) 300,000 2.58 --
------------------------- -------------------- -----------------------------
Total 3,116,750 $1.93 1,348,515
(1) These shares are issuable pursuant to options granted to Dr. Centofanti
under his prior employment agreement. The options expire in October 2007.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners The table below sets forth
information as to the shares of voting securities beneficially owned as of June
1, 2007, by each person known by us to be the beneficial owners of more than 5%
of any class of our voting securities.
Amount and Percent
Title Nature of Of
Name of Beneficial Owner Of Class Ownership Class (1)
--------------------------------- ----------- ---------------- ---------
Rutabaga Capital Management (2) Common 5,298,709 10.16%
Heartland Advisors, Inc. (3) Common 4,375,245 8.39%
Sandler Capital Management (4) Common 2,857,094 5.48%
Pictet Asset Management, LTD (5) Common 4,876,460 9.35%
Jeffrey L Gendell, et al(6) Common 3,738,581 7.17%
(1) The number of shares and the percentage of outstanding Common Stock
"beneficially owned" by a person are based upon 52,165,113 shares of Common
Stock issued and outstanding on June 1, 2007, and the number of shares of Common
Stock which such person has the right to acquire beneficial ownership of within
60 days. Beneficial ownership by our stockholders has been determined in
accordance with the rules promulgated under Section 13(d) of the Exchange Act.
(2) This information is based on the Schedule 13F-HR, filed with the Securities
and Exchange Commission ("SEC"), on May 11, 2007, which provides that Rutabaga
Capital Management, an investment advisor, has sole voting and sole dispositive
power over all of these shares. The address of Rutabaga Capital Management is:
64 Broad Street, 3rd Floor, Boston, MA 02109.
(3) This information is based on the Schedule 13F-HR, filed with the Securities
and Exchange Commission ("SEC"), on May 15, 2007, which provides that Heartland
Advisors, Inc. an investment advisor, has sole voting power over 4,037,045
shares and no voting power over 338,200 shares, but sole dispositive power over
4,375,245 shares. The address of Heartland Advisors, Inc. is: 789 North Water
Street, Milwaukee, WI 53202.
(4) This information is based on the Schedule 13F-HR, filed with the Securities
and Exchange Commission ("SEC"), on May 15, 2007, which provides that Sandler
Capital Management, an investment advisor, has shared voting power and shared
dispositive power over all of these shares. The address of Sandler Capital
Management is: 711 Fifth Avenue, 15th Floor, New York, NY 10022.
21
(5) This information is based on the Schedule 13F-HR, filed with the Securities
and Exchange Commission ("SEC"), on May 11, 2007, which provides that Pictet
Asset Management, LTD, Inc. an investment advisor, has shared dispositive power
and no voting power over these shares. The address of Pictet Asset Management,
LTD is: Tower 42, level 37, 25 Old Broad Street, London, EC2N 1HQ, United
Kingdom.
(6) This information is based on the Schedule 13G, filed with the Securities and
Exchange Commission ("SEC"), on May 29, 2007, which provides that Jeffrey L
Gendell, as managing member of both Tontine Capital Management, L.L.C. and
Tontine Overseas Associates, L.L.C., two investment companies, has shared voting
and shared dispositive power over 3,002,825 shares held by Tontine Capital
Management, L.L.C. and 735,756 shares held by Tontine Overseas Associates,
L.L.C. The address of the business of the reporting person is 55 Railroad
Avenue, Greenwich, Connecticut 06830.
Capital Bank represented to us that:
o Capital Bank holds of record as a nominee for, and as an agent of,
certain accredited investors, 4,863,151 shares of our Common Stock.;
o All of the Capital Bank's investors are accredited investors;
o None of Capital Bank's investors beneficially own more than 4.9% of
our Common Stock and to its best knowledge, none of Capital Bank's
investors act together as a group or otherwise act in concert for
the purpose of voting on matters subject to the vote of our
stockholders or for purpose of dispositive or investment of such
stock;
o Capital Bank's investors maintain full voting and dispositive power
over the Common Stock beneficially owned by such investors; and
o Capital Bank has neither voting nor investment power over the shares
of Common Stock owned by Capital Bank, as agent for its investors.
o Capital Bank believes that it is not required to file reports under
Section 16(a) of the Exchange Act or to file either Schedule 13D or
Schedule 13G in connection with the shares of our Common Stock
registered in the name of Capital Bank.
o Capital Bank is not the beneficial owner, as such term is defined in
Rule 13d-3 of the Exchange Act, of the shares of Common Stock
registered in Capital Bank's name because (a) Capital Bank holds the
Common Stock as a nominee only and (b) Capital Bank has neither
voting nor investment power over such shares.
If Capital Bank's representations to us described above are incorrect or if
Capital Bank's investors are acting as a group, then Capital Bank or a group of
Capital Bank's investors could be a beneficial owner of more than 5% of our
voting securities. If Capital Bank is deemed the beneficial owner of such
shares, the following table sets forth information as to the shares of voting
securities that Capital Bank may be considered to beneficially own on June 1,
2007.
Amount and Percent
Title Nature of Of
Name of Record Owner Of Class Ownership Class (1)
------------------------------ ------------ ----------------- -----------
Capital Bank- GRAWE Gruppe (2) Common 4,863,151(2) 9.32%
(1) This calculation is based upon 52,165,113 shares of Common Stock issued and
outstanding on June 1, 2007 and the number of shares of Common Stock which
Capital Bank, as agent for certain accredited investors has the right to acquire
within 60 days.
(2) This amount is the number of shares that Capital Bank has represented to us
that it holds of record as nominee for, and as an agent of, certain of its
accredited investors. As of the date of this Proxy Statement, Capital Bank has
no warrants or options to acquire, as agent for certain investors, additional
shares of our Common Stocks. Although Capital Bank is the record holder of the
shares of Common Stock described in this note, Capital Bank has advised us that
it does not believe it is a beneficial owner of the Common Stock or that it is
required to file reports under Section 16(a) or Section 13(d) of the Exchange
Act. Because Capital Bank (a) has advised us that it holds the Common Stock as a
nominee only and that it does not exercise voting or investment power over the
Common Stock held in its name and that no one investor of Capital Bank for which
it holds our Common Stock holds more than 4.9% of our issued and outstanding
Common Stock and (b) has not nominated, and has not sought to nominate, and does
not intend to nominate in the future, any person to serve as a member of our
Board of Directors, we do not believe that Capital Bank is our affiliate.
Capital Bank's address is Burgring 16, A-8010 Graz, Austria.
22
Security Ownership of Management
The following table sets forth information as to the Common Stock beneficially
owned as of June 1, 2007, by each of our Directors and named executive officers
and by all of our directors and executive officers as a group. Beneficial
ownership has been determined in accordance with the rules promulgated under
Section 13(d) of the Exchange Act. A person is deemed to be a beneficial owner
of any voting securities for which that person has the right to acquire
beneficial ownership within 60 days.
Number of Shares
Of Common Stock Percentage of
Name of Beneficial Owner Beneficially Owned Common Stock (1)
-------------------------------------- ------------------- ----------------
Dr. Louis F. Centofanti (2)(3) 1,450,267 (3) 2.75%
Jon Colin (2)(4) 146,142 (4) *
Jack Lahav (2)(5) 704,250 (5) 1.35%
Joe Reeder (2)(6) 302,448 (6) *
Dr. Charles E. Young (2)(7) 88,685 (7) *
Mark A. Zwecker (2)(8) 319,619 (8) *
Larry M. Shelton (2)(9) 30,000 (9) *
Larry McNamara (2)(10) 353,333 (10) *
Robert Schreiber, Jr. (2)(11) 227,702 (11) *
Steven Baughman (2)(12) 333,342 (12) *
Directors and Executive Officers
as a Group (10 persons) 3,955,788 (13) 7.37%
Richard T. Kelecy (2)(14) 51,947 (14) *
Robert L. Ferguson (2)(15) 192,783 (15) *
*Indicates beneficial ownership of less than one percent (1%).
(1) See footnote (1) of the table under "Security Ownership of Certain
Beneficial Owners".
(2) The business address of such person, for the purposes hereof, is c/o
Perma-Fix Environmental Services, Inc., 8302 Dunwoody Place, Suite 250, Atlanta,
Georgia 30350.
(3) These shares include (i) 537,934 shares held of record by Dr. Centofanti;
(ii) options to purchase 308,333 shares which are immediately exercisable; (iii)
options to purchase 300,000 shares granted pursuant to Dr. Centofanti's prior
employment agreement, which are immediately exercisable; and (iv) 304,000 shares
held by Dr. Centofanti's wife. Dr. Centofanti has sole voting and investment
power of these shares, except for the shares held by Dr. Centofanti's wife, over
which Dr. Centofanti shares voting and investment power.
(4) Mr. Colin has sole voting and investment power over these shares which
include: (i) 68,142 shares held of record by Mr. Colin, and (ii) options to
purchase 78,000 shares of Common Stock, which are immediately exercisable.
(5) Mr. Lahav has sole voting and investment power over these shares which
include: (i) 636,250 shares of Common Stock held of record by Mr. Lahav; (ii)
options to purchase 68,000 shares, which are immediately exercisable.
(6) Mr. Reeder has sole voting and investment power over these shares which
include: (i) 239,448 shares of Common Stock held of record by Mr. Reeder, and
(ii) options to purchase 63,000 shares, which are immediately exercisable.
(7) Dr. Young has sole voting and investment power over these shares which
include: (i) 22,685 shares held of record by Dr. Young; and (ii) options to
purchase 66,000 shares, which are immediately exercisable.
(8) Mr. Zwecker has sole voting and investment power over these shares which
include: (i) 241,619 shares of Common Stock held of record by Mr. Zwecker; and
(ii) options to purchase 78,000 shares, which are immediately exercisable.
(9) Mr. Shelton has sole voting and investment power over these shares which
include: options to purchase 30,000 shares, which are immediately exercisable.
(10) Mr. McNamara has sole voting and investment power over these shares which
include: options to purchase 353,333 shares, which are immediately exercisable.
23
(11) Mr. Schreiber has joint voting and investment power, with his spouse, over
89,369 shares of Common Stock beneficially held and sole voting and investment
power over options to purchase 138,333 shares, which are immediately
exercisable.
(12) Mr. Baughman has sole voting and investment power over these shares which
include: (i) 300,009 shares held of record by Mr. Baughman, and (ii) options to
purchase 33,333 shares, which are immediately exercisable.
(13) Shares do not reflect shares held of record by Mr. Kelecy as Mr. Kelecy
resigned as Chief Financial Officer, Vice President, and Secretary of the Board
of Director effective April 5, 2006. Mr. Kelecy continued as a part time
employee until September 8, 2006.
(14) Mr. Kelecy has sole voting and investment power over 51,947 shares of
Common Stock held of record by Mr. Kelecy. See footnote (13) regarding Mr.
Kelecy's resignation, effective April 5, 2006.
(15) Mr Ferguson beneficially owned no shares of Common Stock as of the record
date. Upon the closing of the Company's acquisition of Nuvotec USA, Inc. (k/n/a
Perma-Fix Northwest, Inc.) on June 13, 2007, Mr. Ferguson became entitled to
receive these shares as consideration for his interest in Nuvotec. These shares
include (a) 141,719 shares to be issued to Mr. Ferguson, (b) 27,046 shares to be
issued to Mr. Ferguson's individual retirement account, over which he possesses
voting and dispositive power, and (c) 24,018 shares to be issued to Ferguson
Financial Group LLC ("FFG LLC"), of which Mr. Ferguson is the manager with
voting and dispositive power over the securities held by FFG LLC.
PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has appointed BDO Seidman, LLP ("BDO") as independent
registered public accounting firm to audit the consolidated financial statements
of the Company for fiscal year 2007. BDO has been the Company's independent
auditor since December 18, 1996. It is expected that representatives of BDO will
be present at the annual meeting, will have an opportunity to make a statement
if they desire to do so, and will be available to answer appropriate questions.
The affirmative vote of the holders of a majority of the Common Stock present in
person or by proxy at the Meeting and entitled to vote is required for adoption
of this proposal.
Audit Fees
The aggregate fees and expenses billed by BDO Seidman, LLP ("BDO") for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal years ended December 31, 2006 and 2005, for the
reviews of the financial statements included in the Company's Quarterly Reports
on Form 10-Q for those fiscal years, and for review of documents filed with the
Securities and Exchange Commission for those fiscal years were approximately
$478,000 and $447,000, respectively. Audit fees for 2006 and 2005 include
approximately $195,000 and $201,000, respectively, in fees to provide internal
control audit services to the Company. Approximately 8% and 46% of the total
hours spent on audit services for the Company for the years ended December 31,
2006 and 2005, respectively, were spent by Cross, Fernandez and Riley, LLP
("CFR"), members of the BDO alliance network of firms. Such members are not full
time, permanent employees of BDO. In addition, approximately 7% of the total
hours spent on audit services for the Company for the year ended December 31,
2006, were spent by McLeod and Company, members of the BDO alliance of network
of firms. Such members are not full time, permanent employees of BDO.
Audit-Related Fees
BDO was not engaged to provide audit related services to the Company for the
fiscal years ended December 31, 2006 and 2005.
CFR audited the Company's 401(k) Plan during 2006 and 2005, and billed $11,000
and $8,000, respectively.
Tax Fees
BDO was not engaged to provide tax services to the Company for the fiscal years
ended December 31, 2006 and 2005.
24
The aggregate fees billed by CFR for tax compliance services for 2006 and 2005
were approximately $34,000 and $39,000, respectively. CFR was engaged to provide
consulting on corporate tax issues for the fiscal year ended December 31, 2006.
The aggregate fees billed by CFR for the period was approximately $4,300. CFR
was not engaged to provide any other tax services to the Company for the fiscal
year ended December 31, 2005.
All Other Fees
BDO was engaged to provide services related to our proposed acquisition of
Nuvotec USA, Inc. and its who1ly owned subsidiary, Pacific EcoSolutions, Inc.
("PEcoS") for the fiscal year ended December 31, 2006. The aggregate fees billed
by BDO for the period was $4,300. BDO was not engaged to provide any other
services to the Company for the fiscal year ended December 31, 2005.
The Audit Committee of the Company's Board of Directors has considered whether
BDO's provision of the services described above for the fiscal years ended
December 31, 2006 and 2005, is compatible with maintaining its independence. The
Audit Committee also considered services performed by CFR to determine that it
is compatible with maintaining independence.
Engagement of the Independent Auditor
The Audit Committee is responsible for approving all engagements with BDO and
any members of the BDO alliance network of firms to perform audit or non-audit
services for us, prior to engaging these firms to provide those services. All of
the services under the headings Audit Related Fees, Tax Fees, and All Other Fees
were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X of the Exchange Act. The Audit Committee's pre-approval
policy provides as follows:
o The Audit Committee will review and pre-approve on an annual basis
any known audit, audit-related, tax and all other services, along
with acceptable cost levels, to be performed by BDO and any members
of the BDO alliance network of firms. The Audit Committee may revise
the pre-approved services during the period based on subsequent
determinations. Pre-approved services typically include: statutory
audits, quarterly reviews, regulatory filing requirements,
consultation on new accounting and disclosure standards, employee
benefit plan audits, reviews and reporting on management's internal
controls and specified tax matters.
o Any proposed service that is not pre-approved on the annual basis
requires a specific pre-approval by the Audit Committee, including
cost level approval.
o The Audit Committee may delegate pre-approval authority to one or
more of the Audit Committee members. The delegated member must
report to the Audit Committee, at the next Audit Committee meeting,
any pre-approval decisions made.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE REAPPOINTMENT OF BDO AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
STOCKHOLDER PROPOSALS FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to present a proposal for consideration at the annual
meeting of stockholders to be held in 2008 must submit such proposal in
accordance with the rules promulgated by the Securities and Exchange Commission.
In order for a proposal to be considered for inclusion in the Company's proxy
materials relating to the 2008 Annual Meeting of Stockholders, the stockholder
must submit such proposal in writing to the Company so that it is received no
later than May 8, 2008. Any stockholder proposal submitted with respect to the
Company's 2008 Annual Meeting of Stockholders which proposal is received by the
Company after February 22, 2008, will be considered untimely for purposes of
Rule 14a-4 and 14a-5 under the Exchange Act and the Company may vote against
such proposal using its discretionary voting authority as authorized by proxy.
Such proposals should be addressed to the Secretary of the Corporation,
Perma-Fix Environmental Services, Inc., 8302 Dunwoody Place, Suite 250, Atlanta,
Georgia 30350.
OTHER MATTERS
Other Business
The Board of Directors has no knowledge of any business to be presented for
consideration at the Meeting other than as described above. Should any such
matters properly come before the Meeting or any adjournment thereof,
25
the persons named in the enclosed Proxy Card will have discretionary authority
to vote such proxy in accordance with their best judgment on such matters and
with respect to matters incident to the conduct of the Meeting.
Additional copies of the Annual Report and the Notice of Annual Meeting, Proxy
Statement and accompanying Proxy Card may be obtained from the Company.
In order to assure the presence of the necessary quorum at the Meeting, please
sign and mail the enclosed Proxy Card promptly in the envelope provided. No
postage is required if mailed within the United States. The signing of the Proxy
Card will not prevent your attending the Meeting and voting in person, should
you so desire.
Annual Report on Form 10-K
A copy of the Company's 2006 Annual Report accompanies this Proxy Statement.
Upon written request, the Company will send you, without charge, a copy of its
Annual Report on Form 10-K (without exhibits) for the fiscal year ended December
31, 2006, including the financial statements and schedules, which the Company
has filed with the Securities and Exchange Commission. Copies of the exhibits to
the Form 10-K are available, but a reasonable fee per page will be charged to
the requesting stockholder. Each written request must set forth a good faith
representation that, as of the record date, the person making the request was a
beneficial owner of the Company's Common Stock entitled to vote at the Meeting.
Stockholders should direct the written request to the Company's Chief Financial
Officer at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.
Order of the Board of Directors
Steven Baughman
Secretary
Atlanta, Georgia
July 2, 2007
[PermaFix LOGO]
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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PROXY
Perma-Fix Environmental Services, Inc.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
For Annual Meeting of Stockholders to be held August 2, 2007
The undersigned hereby appoints Dr. Louis F. Centofanti and Steven Baughman, and
each of them severally, the undersigned's proxies, with full power of
substitution, to attend the Annual Meeting of the Stockholders of Perma-Fix
Environmental Services, Inc. (the "Company") at the Crowne Plaza Hotel,
Atlanta-Airport, 1325 Virginia Avenue, Atlanta, Georgia 30344, at 1:00 p.m.
(EDST), on August 2, 2007, and at any adjournment of that meeting, and to vote
the undersigned's shares of Common Stock, as designated on the reverse side.
(Continued, and to be marked, dated and signed, on the other side)
VOTE BY INTERNET OR MAIL
QUICK EASY IMMEDIATE
[PermaFix LOGO]
Voting by Internet is quick, easy and immediate. As a Perma-Fix stockholder, you
have the option of voting your shares electronically through the Internet,
eliminating the need to return the proxy card. Your electronic vote authorizes
the named proxies to vote your shares in the same manner as if you marked,
signed, dated and returned the proxy card. Votes submitted electronically over
the Internet must be received by 7:00 p.m., Eastern Daylight Saving Time, on
August 1, 2007.
To Vote Your Proxy by Internet
www.continentalstock.com
Have your proxy card available when you access the above website. Follow the
prompts to vote your shares.
PLEASE DO NOT RETURN THE CARD BELOW IF YOU ARE VOTING ELECTRONICALLY.
To Vote Your Proxy by Mail
Mark, sign, and date your proxy card below, detach it, and return it in the
postage-paid envelope provided.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
--------------------------------------------------------------------------------
PROXY
Please mark your votes like this |X|
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE IN ITEMS 1
AND 2. IF THE UNDERSIGNED MAKES NO SPECIFICATIONS, THIS PROXY WILL BE VOTED
"FOR" ITEMS 1 AND 2 AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ANY
MATTER REFERRED TO IN ITEM 3.
1. ELECTION OF DIRECTORS
01 Dr. Louis F. Centofanti 05 Larry Shelton WITHHOLD
02 Jon Colin 06 Dr. Charles E. Young FOR AUTHORITY
03 Jack Lahav 07 Mark A. Zwecker |_| |_|
04 Joe R. Reeder 08 Robert L. Ferguson
(To withhold authority to vote for an individual nominee, strike through
the nominee's name above)
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FOR AGAINST ABSTAIN
2. RATIFICATION OF THE APPOINTMENT OF BDO |_| |_| |_|
SEIDMAN, LLP AS THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM OF THE COMPANY FOR
FISCAL YEAR 2007
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
COMPANY ID:
PROXY NUMBER:
ACCOUNT NUMBER:
Signature Signature Date
---------------------- ---------------------- ---------
Please sign exactly as your name appears below, date and return this Proxy Card
promptly, using the self-addressed, prepaid envelope enclosed for your
convenience. Please correct your address before returning this Proxy Card.
Persons signing in fiduciary capacity should indicate that fact and give their
full title. If a corporation, please sign in full corporate name by the
president or other authorized officer. If a partnership, please sign in the
partnership name by an authorized person. If joint tenants, both should sign.