Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE PITTSTON COMPANY
..................................................................
(Name of Registrant as Specified In Its Charter)
..................................................................
(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:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(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):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] 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:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
[PITTSTON LOGO] The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, VA 23226-8100
MICHAEL T. DAN
Chairman,
President and Chief Executive Officer
March 29, 2002
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders of
The Pittston Company to be held at The Grand Hyatt New York Hotel, Park Avenue
at Grand Central Station, New York, New York, on Friday, May 3, 2002, at 1:00
p.m., local time.
You will be asked to: (i) elect one director for a term of one year, one
director for a term of two years and three directors for a term of three years;
and (ii) approve independent public accountants for 2002.
It is important that you vote, and you are urged to complete, sign, date and
return the enclosed proxy in the envelope provided.
We appreciate your prompt response and cooperation.
Sincerely,
/s/ Michael Dan
[PITTSTON LOGO]
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 2002
-------------------
Notice Is Hereby Given that the annual meeting of shareholders of THE
PITTSTON COMPANY will be held on May 3, 2002, at 1:00 p.m., local time, at The
Grand Hyatt New York Hotel, Park Avenue at Grand Central Station, New York, New
York, for the following purposes:
1. To elect one director for a term expiring in 2003, one director for a
term expiring in 2004 and three directors for a term expiring in 2005.
2. To approve the selection of KPMG LLP as independent public accountants to
audit the accounts of the Company and its subsidiaries for the year 2002.
3. To transact such other business as may properly come before the meeting
or any adjournment.
The close of business on March 11, 2002, has been fixed as the record date
for determining the shareholders entitled to notice of and to vote at the
meeting.
If you do not expect to attend the annual meeting in person, please
complete, date and sign the enclosed proxy and return it in the enclosed
envelope, which requires no additional postage if mailed in the United States.
Prompt response is helpful and your cooperation will be appreciated.
Austin F. Reed
Secretary
March 29, 2002
The Annual Report to Shareholders, including financial statements, is being
mailed to shareholders, together with these proxy materials, commencing on or
about March 29, 2002.
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. A RETURN ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
THE PITTSTON COMPANY
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of The Pittston Company (the 'Company') of proxies from
holders of Pittston Common Stock (as defined below), to be voted at the annual
meeting of shareholders to be held on May 3, 2002, at 1:00 p.m., local time, at
The Grand Hyatt New York Hotel, Park Avenue at Grand Central Station, New York,
New York (and at any adjournment thereof), for the purposes set forth in the
accompanying notice of such meeting.
On January 14, 2000, the Company completed an exchange (the 'Exchange') of
its Pittston BAX Group Common Stock ('BAX Stock'), par value $1.00 per share and
Pittston Minerals Group Common Stock ('Minerals Stock'), par value $1.00 per
share, into Pittston Brink's Group Common Stock ('Brink's Stock'), at exchange
ratios of .4848 share of Brink's Stock for each share of BAX Stock and .0817
share of Brink's Stock for each share of Minerals Stock. The remaining class,
Brink's Stock (hereinafter referred to as 'Pittston Common Stock'), now
constitutes the Company's only class of common stock and continues to trade on
the New York Stock Exchange under the symbol 'PZB.'
The close of business on March 11, 2002, has been fixed as the record date
for determining the shareholders entitled to notice of and to vote at the annual
meeting, and only shareholders of record at the close of business on that date
will be entitled to vote at the meeting and any adjournment thereof. On
March 11, 2002, the Company had outstanding 54,267,677 shares of Pittston Common
Stock, the holders thereof being entitled to one vote per share on all matters
that the Board of Directors knows will be presented for consideration at the
annual meeting.
This Proxy Statement and the accompanying form of proxy and Annual Report to
Shareholders are being mailed to shareholders commencing on or about
March 29, 2002. The address of the principal executive office of the Company is
1801 Bayberry Court, P. O. Box 18100, Richmond, VA 23226-8100.
The election of directors and the selection of independent public
accountants are the only matters that the Board of Directors knows will be
presented for consideration at the annual meeting. As to any other business that
may properly come before the annual meeting, it is intended that proxies in the
enclosed form will be voted in respect thereof in accordance with the judgment
of the person voting the proxies.
The Company's bylaws provide that the chairman of the annual meeting will
determine the order of business at the annual meeting and the voting and other
procedures to be observed. The chairman is authorized to declare whether any
business is properly brought before the annual meeting, and business not
properly brought before the annual meeting will not be transacted.
The shares of Pittston Common Stock represented by proxies solicited by the
Board of Directors will be voted in accordance with the recommendations of the
Board of Directors unless otherwise specified in the proxy, and where the person
solicited specifies a choice with respect to any matter to be acted upon, the
shares of Pittston Common Stock will be voted in accordance with the
specification so made.
The enclosed proxy is revocable at any time prior to its being voted by
filing an instrument of revocation or a duly executed proxy bearing a later
date. A proxy may also be revoked by attendance at the annual meeting and voting
in person. Attendance at the annual meeting will not by itself constitute a
revocation.
Votes cast by shareholders will be treated as confidential in accordance
with a policy approved by the Board of Directors. Shareholder votes at the
annual meeting will be tabulated by the Company's transfer agent, EquiServe
Trust Company, N.A.
CORPORATE GOVERNANCE
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, exercising
their good faith business judgment of the best interests of the Company. Members
of the Board are kept informed of the Company's business by various reports sent
to them regularly, as well as by operating and financial reports made at Board
and Committee meetings by the President and Chief Executive Officer and other
officers and members of management. During 2001, the Board met seven times.
The Audit and Ethics Committee (the 'Audit Committee') recommends to the
Board the selection by the shareholders at their annual meeting of a firm of
independent public accountants, confers with the Company's independent public
accountants to review the plan and scope of their proposed audit as well as
their findings and recommendations upon the completion of the audit, and meets
with the independent public accountants and with appropriate Company financial
personnel and internal auditors regarding the Company's internal controls,
practices and procedures. The Audit Committee also oversees the Company's legal
and business ethics compliance programs. During 2001, the Board examined the
composition of the Audit Committee and found the members to meet the
independence requirements of the New York Stock Exchange. The Audit Committee
currently consists of Mr. Gross, as Chairman, Mrs. Alewine and Messrs.
Breslawsky, Craig, Grinstein and Sloane, none of whom is an officer or employee
of the Company or any of its subsidiaries. The Audit Committee met five times
during 2001.
The Compensation and Benefits Committee (the 'Compensation Committee') is
responsible for establishing and reviewing policies governing salaries,
incentive compensation and the terms and conditions of employment of senior
executives and other key employees of the Company, in addition to oversight of
the Company's stock option plans for employees and similar plans which may be
maintained from time to time by the Company. The Compensation Committee
currently consists of Mr. Ackerman, as Chairman, and Messrs. Barker, Grinstein
and Sloane, none of whom is an officer or employee of the Company or any of its
subsidiaries. The Compensation Committee met four times during 2001.
The Corporate Governance and Nominating Committee (the 'Corporate Governance
Committee'), recommends to the Board nominees for election as directors and as
senior executive officers of the Company, as well as reviewing the performance
of incumbent directors in determining whether to recommend them to the Board for
renomination. The Corporate Governance Committee currently consists of Mr.
Broadhead, as Chairman, Mrs. Alewine and Messrs. Ackerman, Barker, Craig and
Gross, none of whom is an officer or employee of the Company or any of its
subsidiaries. The Corporate Governance Committee met four times during 2001. For
information concerning procedures to be followed for submitting names of
nominees for consideration by the Corporate Governance Committee, see 'Other
Information -- Shareholder Proposals.'
The Finance Committee recommends to the Board dividend and other actions and
policies regarding the financial affairs of the Company, including those
relating to matters that may affect the financial strength of the Company. The
Finance Committee currently consists of Mr. Barker, as Chairman, Mrs. Alewine
and Messrs. Ackerman, Breslawsky and Broadhead, none of whom is an officer or
employee of the Company or any of its subsidiaries. The Finance Committee met
four times during 2001.
The Pension Committee is responsible for the oversight of the Company's
Pension-Retirement Plan and Savings-Investment Plan and any similar plans which
may be maintained from time to time by the Company. The Pension Committee also
has general oversight responsibility for pension plans maintained by foreign and
other subsidiaries of the Company. The Pension Committee has authority to adopt
amendments to the Company's Pension-Retirement Plan, Pension Equalization Plan
and Savings-Investment Plan. In carrying out these responsibilities, the Pension
Committee coordinates with the appropriate financial, legal and administrative
personnel of the Company, including the Company's Administrative Committee, as
well as outside experts retained in connection with the administration of those
plans. The Pension Committee currently consists of Mr. Craig, as Chairman, and
Messrs. Breslawsky, Broadhead, Grinstein, Gross and Sloane, none of whom is an
officer or employee of the Company or any of its subsidiaries. The Pension
Committee met four times during 2001.
2
The Executive Committee of the Board may exercise substantially all the
authority of the Board during the intervals between the meetings of the Board.
The Executive Committee currently consists of Mr. Dan, as Chairman, and all
other directors, except that a quorum of the Executive Committee consists of
one-third of the number of members of the Executive Committee, three of whom
must not be employees of the Company or any of its subsidiaries. The Executive
Committee held no meetings in 2001.
During 2001, all incumbent directors attended at least 75% of the total
number of meetings of the Board of Directors and of the committees of the Board
on which they served, and the average attendance at all meetings was
approximately 97%.
COMPENSATION OF DIRECTORS
Each non-employee director is paid an annual retainer fee of $28,500, an
attendance fee of $1,200 per day for each meeting of the Board and of each
committee of the Board, and a fee of $1,200 per day for rendering any special
services to the Company at the request of the Chairman of the Board. Each
Committee chairman receives an additional annual fee of $3,300. A director may
elect to defer receipt of his or her fees to future years and to receive
interest thereon, compounded quarterly, at the prime commercial lending rate of
JPMorgan Chase and Co., as of the end of the previous calendar quarter.
Under the terms of the Company's Directors' Stock Accumulation Plan (the
'Directors' Stock Accumulation Plan'), each non-employee director receives as of
June 1 of each year, an allocation of Units representing shares of Pittston
Common Stock (the 'Units') equal to (a) 50% of the annual retainer in effect on
such June 1 if he or she has accrued less than eight years of service or (b) 25%
of such annual retainer if he or she has accrued eight or more years of service,
divided by the stock price for such date. In addition, under the Directors'
Stock Accumulation Plan, additional Units are credited to participants' accounts
in respect of cash dividends paid on the Pittston Common Stock based upon the
Directors' Stock Accumulation Plan's formula for accrual. Upon a participant's
termination of service, the distribution of shares of Pittston Common Stock
equal to the number of Units allocated to such director's account will be made
in a single lump sum distribution unless the participant elects at least 12
months before his or her termination to receive equal annual installments (not
more than 10) commencing on the first day of the month next following his or her
termination of service. The following table sets forth information concerning
the number of Units credited during 2001 to each participant standing for
election or continuing as a director:
2001 UNITS
CREDITED
--------
Roger G. Ackerman........................................... 313.04
Betty C. Alewine............................................ 597.09
James R. Barker............................................. 317.39
Marc C. Breslawsky.......................................... 599.99
James L. Broadhead.......................................... 315.73
William F. Craig............................................ 319.18
Gerald Grinstein............................................ 599.99
Ronald M. Gross............................................. 613.84
Carl S. Sloane.............................................. 601.60
All Non-Employee Nominees and Continuing Directors as a
Group (9 persons)......................................... 4,277.85
Under the Non-Employee Directors' Stock Option Plan (the 'Non-Employee
Directors' Stock Option Plan'), automatic annual grants of options are made for
2,517 shares of Pittston Common Stock at 100% of fair market value on the date
of grant to each non-employee director on each July 1 so long as the
Non-Employee Directors' Stock Option Plan remains in effect. Each option granted
annually will become exercisable six months from the date of grant. Each option
granted under the Non-Employee Directors' Stock Option Plan constitutes a
nonqualified stock option under the Internal Revenue Code of 1986, as amended
(the 'Code'), and terminates no later than ten years from the date of grant. The
Non-Employee Directors' Stock Option Plan expires May 11, 2008. The options are
3
nontransferable otherwise than by will or the laws of descent and distribution
except that options may be transferable to immediate family members (or trusts
therefor) of an optionee.
Under the Directors' Charitable Award Program, the Company will contribute
$1,100,000 on behalf of each participating director after such director's death.
Of that amount, $100,000 will be donated to one or more tax-exempt organizations
designated by the Company, and $1,000,000 will be donated in accordance with the
director's recommendations to eligible educational institutions and charitable
organizations. Each of the Company's directors currently participates in the
Directors' Charitable Award Program. The Company is the owner and beneficiary of
life insurance policies insuring the lives of the participating directors.
Premiums paid in 2001 in respect of such policies totaled in aggregate
approximately $532,000.
ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
of the Chief Executive Officer and the other four highest paid executive
officers of the Company:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- ---------------------------
SECURITES UNDERLYING
OPTIONS
NAME AND OTHER ANNUAL --------------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY(a) BONUS(b) COMPENSATION(c) BRINK'S BAX MINERALS COMPENSATION(d)
------------------ ---- --------- -------- --------------- ------- --- -------- ---------------
M. T. Dan 2001 $832,692 $318,750 $ -- 170,000 $12,776
Chairman, President 2000 699,038 262,500 -- 200,000 11,596
and Chief Executive 1999 650,000 500,000 -- 100,000 83,000 30,000 6,945
Officer
R. T. Ritter 2001 322,692 150,000 -- 40,000 11,654
Vice President and 2000 303,000 125,000 -- 30,000 10,863
Chief Financial 1999 280,833 150,000 20,725 20,000 20,000 7,500 5,919
Officer
A. F. Reed 2001 298,523 110,000 -- 30,000 10,581
Vice President, 2000 284,500 100,000 -- 25,000 10,729
General Counsel 1999 273,300 120,000 -- 15,000 20,000 7,500 5,902
and Secretary
F. T. Lennon 2001 297,523 110,000 -- 30,000 11,756
Vice President -- 2000 283,231 100,000 -- 25,000 10,724
Human Resources 1999 270,833 125,000 8,797 15,000 20,000 7,500 5,880
and Administration
J. B. Hartough 2001 233,031 80,000 -- 20,000 10,401
Vice President -- 2000 229,800 70,000 -- 12,500 10,280
Corporate Finance 1999 222,800 75,000 -- 10,000 5,000 2,000 5,545
and Treasurer
---------
(a) Salaries before compensation reduction payments under the Savings-Investment
Plan and the Deferral of Salary and Supplemental Savings Plan portions of
the Company's Key Employees' Deferred Compensation Program.
In addition, as of January 1, 2002, the participant's account was credited
with additional Common Stock Units in respect of cash dividends paid on
Pittston Common Stock during 2001 based upon the formula for accrual in the
Deferred Compensation Program. The following table sets forth the amount of
2001 salary deferred under the Deferred Compensation Program by each of the
executive officers named above and the number of Common Stock Units credited
to his account (including matching contributions and cash dividends) in
respect of salary paid in 2001:
2001 COMPENSATION COMMON STOCK
DEFERRED UNITS
-------- -----
Mr. Dan $166,769 7,969.32
Mr. Ritter 96,854 4,628.48
Mr. Reed 59,705 2,853.18
Mr. Lennon 74,381 3,554.47
Mr. Hartough 46,606 2,227.22
(footnotes continued on next page)
4
(footnotes continued from previous page)
Under the Deferred Compensation Program, distributions with respect to the
Common Stock Units are to be made in shares of Pittston Common Stock on the
basis of one share for each Common Stock Unit (with cash paid for fractional
Common Stock Units), but the aggregate value of the shares so distributed
attributable to the deferral of salary pursuant to the Deferral of Salary
portion of the Program (including related dividends, but not matching
contributions) may not be less than the aggregate amount of the salary
deferred pursuant to the Deferral of Salary portion of the Program and the
related dividends in respect of which such Common Stock Units were initially
credited. Such distributions will be made upon termination of employment or
earlier upon election made more than one year prior to distribution.
(b) Annual incentive payments under the Company's Key Employees Incentive Plan.
Under the Company's Key Employees' Deferred Compensation Program,
participants are permitted to defer up to 100% of their cash incentive
payment for 2001 and receive a Company-matching contribution with respect to
the amount so deferred but not in excess of 10% of the cash incentive
payment, which amounts were, as of January 1, 2002, converted into Common
Stock Units in accordance with the formula for conversion in the Deferred
Compensation Program. In addition, dividend credits of Common Stock Units
were made to the participant's account in respect of cash dividends paid on
Pittston Common Stock during 2001. The following table sets forth the
aggregate amount of incentive compensation for 2001 deferred under the
Deferred Compensation Program, including Company-matching contributions, by
each of the executive officers named above and the number of Common Stock
Units credited to his account (including in respect of cash dividends) as of
January 1, 2002:
BONUS COMMON STOCK
DEFERRED UNITS
-------- -----
Mr. Dan $127,500 5,998.22
Mr. Ritter 45,000 2,075.52
Mr. Reed 22,000 1,032.54
Mr. Lennon 66,000 3,079.65
Mr. Hartough 16,000 764.35
Under the Deferred Compensation Program, distributions with respect to the
Common Stock Units are to be made in shares of Pittston Common Stock on the
basis of one share for each Common Stock Unit (with cash paid for fractional
Common Stock Units), but the aggregate value of the shares so distributed
attributable to the deferral of cash incentive payments (including related
dividends, but not matching contributions) may not be less than the
aggregate amount of the cash incentive payment deferred and the related
dividends in respect of which such Common Stock Units were initially
credited. Such distributions will be made upon termination of employment
or earlier upon election made more than one year prior to distribution.
(c) Amounts shown reflect tax gross-up payments made to compensate the executive
officer for incremental federal and state income tax liability resulting
from relocation payments made in the years shown.
(d) The Company made matching contributions under the Savings-Investment Plan in
2001 in the amount of $8,500 for each of Messrs. Dan, Ritter, Reed, Lennon
and Hartough.
In 2001, the Company paid life insurance premiums under the Executive Salary
Continuation Plan in the amount of $4,276 for Mr. Dan; $3,154 for Mr.
Ritter; $2,081 for Mr. Reed; $3,256 for Mr. Lennon; and $1,901 for Mr.
Hartough. The Executive Salary Continuation Plan provides a death benefit
equal to three times a covered employee's annual salary payable in ten equal
annual installments to the employee's spouse or other designated
beneficiary.
5
STOCK OPTIONS
The following table sets forth information concerning nonqualified stock
options granted under the Company's 1988 Stock Option Plan on July 12, 2001, to
the Chief Executive Officer and the other officers named in the Summary
Compensation Table. Such options will (i) become exercisable as to one-third of
the total number of shares covered by such option on each of the first, second
and third anniversary of the date of grant; (ii) have purchase prices per share
equal to 100% of the fair market value of the Pittston Common Stock on the date
of grant, rounded up to the next higher cent; and (iii) expire on July 12, 2007.
No Stock Appreciation Rights were granted in 2001 to the named executive
officers.
OPTION GRANTS IN 2001
INDIVIDUAL GRANTS
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED 2001 PER SHARE DATE VALUE(a)
---- ------- ---- --------- ---- --------
M. T. Dan................................ 170,000 14.59% $21.60 7/12/07 $1,483,683
R. T. Ritter............................. 40,000 3.43% $21.60 7/12/07 349,102
A. F. Reed............................... 30,000 2.58% $21.60 7/12/07 261,827
F. T. Lennon............................. 30,000 2.58% $21.60 7/12/07 261,827
J. B. Hartough........................... 20,000 1.72% $21.60 7/12/07 174,551
---------
(a) Based on the Black-Scholes option-pricing model and the following
assumptions: (i) projected annual dividend yield of 0.48% for Pittston
Common Stock; (ii) expected volatility of 38.12%; (iii) a risk-free rate of
return of 4.81%; and (iv) all options are exercised on the expiration date.
All values vest at 33% per annum until fully vested. The actual value an
executive officer may receive depends on market prices and there can be no
assurance that the amounts reflected in the Grant Date Present Value column
will actually be realized. No gain to an executive officer is possible
without an appreciation in stock value, which will benefit all shareholders
commensurately.
The following table sets forth information concerning the exercise of
options during 2001 and unexercised options held at the end of such year.
AGGREGATED OPTION EXERCISES IN 2001
AND YEAR-END OPTION VALUES
STOCK OPTIONS
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2001 DECEMBER 31, 2001
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
M. T. Dan.............. 64,485 $253,996.61 328,215 346,533 $559,187 $1,035,684
R. T. Ritter........... 46,046 70,102 $ 98,036 $ 192,868
A. F. Reed............. 11,281 $ 43,327.81 80,704 55,102 $ 84,058 $ 160,396
F. T. Lennon........... 19,651 $ 88,995.55 89,870 55,102 $ 93,248 $ 160,396
J. B. Hartough......... 16,275 $ 60,675.27 72,182 32,528 $ 47,706 $ 80,690
PENSION-RETIREMENT PLAN
The Company maintains a noncontributory Pension-Retirement Plan (the
'Pension Plan') covering, generally, full-time employees of the Company and
participating subsidiaries who are not covered by a collective bargaining
agreement. Accrued benefits under the Pension Plan are vested upon employees'
completion of five years of Vesting Service (as defined in the Pension Plan).
The Code limits the amount of pensions which may be paid under federal income
tax qualified plans. The Board of Directors adopted a Pension Equalization Plan
(the 'Equalization Plan') under which the Company will make additional payments
so that the total amount received by each such person affected by the Code
limitations is the same as would have otherwise been received under the Pension
Plan. The
6
Company has reserved the right to terminate or amend the Pension Plan and the
Equalization Plan at any time.
Effective December 1, 1997, the Equalization Plan was amended to permit
participants to receive the actuarial equivalent of their benefit under such
plan in a lump sum. By September 30, 2002, or if earlier, upon a Change in
Control (as defined in the Equalization Plan), the Company is required to
contribute amounts in cash to a trust established between the Company and The
Chase Manhattan Bank. Such amounts are designed to be sufficient to provide the
benefits to which (a) participants under the Equalization Plan and (b) retirees
covered under certain employment contracts, are entitled pursuant to the terms
of the Equalization Plan and such employment contracts. The assets of the trust
will be subject to the claims of the Company's general creditors in the event of
the Company's insolvency.
The table below illustrates the estimated annual benefits payable upon
retirement at age 65 under the Pension Plan and Equalization Plan to officers
and other eligible employees in various classifications as to Average Salary and
years of Benefit Accrual Service (as defined in the Pension Plan).
PENSION PLAN TABLE
ESTIMATED ANNUAL PENSION
AVERAGE ANNUAL SALARY PAYABLE BASED ON BENEFIT ACCRUAL SERVICE OF:
DURING 36 MONTHS ----------------------------------------------------
OF HIGHEST PAY 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
--------------------- -------- -------- -------- -------- --------
$ 200,000 $ 42,000 $ 63,000 $ 84,000 $105,000 $115,000
300,000 63,000 94,500 126,000 157,500 172,500
500,000 105,000 157,500 210,000 262,500 287,500
700,000 147,000 220,500 294,000 367,500 402,500
900,000 189,000 283,500 378,000 472,500 517,500
1,000,000 210,000 315,000 420,000 525,000 575,000
1,200,000 252,000 378,000 504,000 630,000 690,000
1,300,000 273,000 409,500 546,000 682,500 747,500
Such amounts are based on the assumption that the employee will be in the
Company's employ until normal retirement date (age 65), that the Pension Plan
and Equalization Plan will continue in effect without change and that payments
will be made on a straight life annuity basis. The Pension Plan and Equalization
Plan give effect to the full amount of earnings shown under the salary and bonus
columns of the Summary Compensation Table. At December 31, 2001, the executive
officers named in such Table had been credited under the Pension Plan with the
following years of Benefit Accrual Service: Mr. Dan, 20 years; Mr. Lennon, 25
years; Mr. Hartough, 15 years; Mr. Reed, 15 years; and Mr. Ritter, 4 years. The
table does not reflect reductions on account of the Social Security taxable wage
base.
EMPLOYMENT AGREEMENTS
As of May 4, 1998, the Company entered into an employment agreement with
Mr. Dan which, as amended as of March 8, 2002, provides him with, among other
things, a minimum annual salary of $884,000 for a period ending March 31, 2007,
in exchange for his services as President and Chief Executive Officer of the
Company. The agreement also provides certain benefits and obligations in the
event of a termination of his services during the contract term, including a
lump-sum cash payment equal to (i) his annual salary, as in effect immediately
prior to such termination, multiplied by three plus (ii) the bonus, if any, paid
to him in respect of the immediately preceding fiscal year multiplied by three,
plus (iii) a sum reflecting the economic equivalent of certain employee benefit
programs.
CHANGE IN CONTROL ARRANGEMENTS
In 1997 and 1998, the Company entered into change in control agreements with
Messrs. Hartough, Lennon, Reed and Ritter. Pursuant to these agreements, in the
event Messrs. Hartough, Lennon, Reed or Ritter are terminated by the Company
without cause (as defined in their respective agreements) or quit for good
reason (as defined in their respective agreements) within three years following
a Change in Control (as defined in their respective agreements), the terminated
executive will be entitled, in addition to other benefits, to a lump-sum cash
payment equal to (i) his accrued pay (including a
7
prorated portion of his annual bonus based on the number of days worked in the
year of his termination) plus (ii) three times the sum of his annual base salary
and annual bonus.
SEVERANCE AGREEMENTS
In 1997 and 1998, the Company entered into severance agreements with Messrs.
Hartough, Lennon, Reed and Ritter which provide that if the executive is
terminated by the Company other than for cause (as defined in such agreements)
or he quits for good reason (as defined in such agreements), the terminated
executive shall be entitled to receive (i) his accrued pay (including a prorated
portion of his annual bonus based on the number of days worked in the year of
his termination), (ii) two times the sum of his annual salary and annual bonus
and (iii) previously deferred compensation and related matching contributions
(whether or not vested). If such termination occurs after a 'Disposition Date',
the multiplier in clause (ii) in the preceding sentence shall be three. A
Disposition Date is generally the earliest of (i) the sale, lease or other
transfer to an entity unaffiliated with the Company of greater than fifty
percent (50%) of the assets or shares of Brink's, Incorporated; Brink's Home
Security, Inc.; Pittston Coal Company; BAX Global Inc. or Pittston Mineral
Ventures Company, (ii) the date of the first public announcement of such
disposition, or (iii) a Change in Control (as defined in such agreements).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the 'SEC') and the New York Stock Exchange reports of
ownership and changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such reports
furnished to the Company or written representations that no other reports were
required, the Company believes that, during 2001, all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
REPORT OF COMPENSATION AND BENEFITS COMMITTEE
The Compensation Committee is responsible for establishing and reviewing
policies governing salaries, incentive compensation, and the terms and
conditions of employment of senior executive officers and other key employees of
the Company. The policies of the Compensation Committee applicable to the
compensation of executive officers are described below.
The Compensation Committee has established an overall compensation program
to attract, retain and motivate executive officers and to enhance their
incentive to perform at the highest level and contribute significantly to the
Company's success. Recognizing the desirability of tying the compensation of
executive officers to performance and of aligning their interests closely to the
long-term interests of the Company and its shareholders, the Compensation
Committee has determined that a significant part of the compensation of
executive officers will be paid in the form of incentive payments under the Key
Employees Incentive Plan ('KEIP') and the Management Performance Improvement
Plan ('MPIP'), as well as stock option grants.
The Compensation Committee has from time to time engaged recognized
consultants in the executive compensation field to review and confirm the
appropriateness of the Company's salary, annual bonus and long-term incentive
programs for executive officers. Cash compensation is paid to executive
officers, including the Chief Executive Officer (the 'CEO'), in the form of
salaries targeted at or near the 50th percentile, and annual incentive payments
under the KEIP. In collaboration with these consultants, the Compensation
Committee has developed a policy to make available to executive officers annual
incentive payments based on individual and Company performance which, when
coupled with salary, provide executive officers the opportunity to earn annual
cash compensation above the 50th percentile for comparable positions in
companies of similar size across all industries from which the Company seeks to
attract executive officers.
8
The Compensation Committee periodically reviews the salaries of executive
officers in light of competitive standards and the Compensation Committee's
evaluation of their individual performance and makes such adjustments as are
appropriate. Each year the Compensation Committee sets target cash incentive
awards for executive officers under the KEIP. Such target incentives are
indicative of the incentive payment that an executive officer might expect to
receive for such year based generally on a strong performance by the individual
executive officer in achieving established individual objectives, by his or her
operating or staff unit, and the overall performance of the Company. For
purposes of determining actual awards under such guidelines, individual
performance is given a weight factor of 50%, and unit and Company performance
are each given weight factors of 25%.
For 2001, the CEO had a target cash incentive award under the KEIP of 100%
of salary. Based on the KEIP guidelines, the CEO's actual award could have
ranged from 0 to 200% of salary, depending on his performance rating and that of
the Company as determined by the Compensation Committee and approved by the
Board. The Compensation Committee recommended and the Board approved an annual
incentive payment of $318,750 or 38.3% of salary for the CEO and annual
incentive payments for the other executive officers for 2001 after considering
the following quantitative and qualitative measures of the Company's performance
in 2001: (i) revenues, earnings and cash flow on a consolidated basis;
(ii) revenues, operating earnings and cash flow of each business unit;
(iii) the employee safety performance of each unit; and (iv) changes in
shareholder value as measured by the market capitalization of the Company. The
Compensation Committee also took into account as additional factors and
criteria: pricing and market conditions affecting each business unit; the effect
of the economy on such businesses; comparative performance of the Company's
competitors; productivity and cost containment measures successfully carried
out; progress of management development and employee relations efforts; the
quality of strategic planning, and communications with external constituencies.
The Compensation Committee's evaluation of the CEO's and the other executive
officers' performance was based not only on the measures of the Company's
performance and the other factors and criteria described above but also on the
Compensation Committee's good faith business judgment of their performance as it
related both as to results in 2001 and the long-term positioning of the Company.
The Compensation Committee did not attach specific weights to the foregoing
factors.
In 2001, the Compensation Committee made stock option grants to the
executive officers of the Company totaling 290,000 shares of Pittston Common
Stock, including a grant to the CEO of 170,000 shares of Pittston Common Stock.
The Compensation Committee's intent in making these grants is to further align
the interests of management and shareholders. Because the 2001 stock options
were granted with exercise prices equal to 100% of market value on the date of
grant, executive officers will benefit from such stock option grants only to the
extent the stock price of the Pittston Common Stock appreciates above the
exercise price. In addition, since such options generally 'vest' only after
periods ranging from one to three years from the date of grant, they enhance the
ability of the Company to retain executive officers while encouraging such
officers to take a longer-term view in their decisions impacting the Company.
Stock options, therefore, tie the compensation of executive officers directly to
the long-term performance of the Company.
As a further means to align the interest of management and shareholders,
effective January 1, 2000, the Board adopted, and the Company's shareholders
approved in May 2000, the MPIP. Participants in the MPIP, including all of the
executive officers, have a substantial portion of their compensation tied to the
achievement of goals established over three-year periods by the Board.
The Compensation Committee believes that reasonable severance and
post-takeover employment arrangements are often an essential aspect of the terms
of employment of executive officers. The Compensation Committee also recognizes
the importance to the Company of retaining its executive officers during and
after the disruption typically provoked by a takeover offer (whether or not
ultimately successful). The Company is party to a 'change in control' employment
agreement and a severance agreement or employment agreement with each of its
executive officers, and the Compensation Committee is firmly of the view that
the Company and its shareholders have benefited from the protection which such
agreements afford its executive officers. The Compensation Committee
9
believes that these employment agreements provide reasonable compensation
arrangements and give the Company a high degree of management stability during a
period of economic change.
Internal Revenue Code Section 162(m) disallows a tax deduction for any
publicly held corporation for paid remuneration exceeding $1 million in any
taxable year for chief executive officers and certain other executive officers,
except for performance-based remuneration. In the past, the Company's
shareholders have approved amendments to the Company's 1988 Stock Option Plan.
The MPIP was approved by the Company's shareholders in 2000. The Compensation
Committee will continue to evaluate the impact of the Section 162(m) limitations
on an ongoing basis in light of applicable regulations and future events with an
objective of achieving deductibility to the extent deemed appropriate.
Roger G. Ackerman, Chairman
James R. Barker
Gerald Grinstein
Carl S. Sloane
REPORT OF AUDIT AND ETHICS COMMITTEE
In compliance with the requirements of the New York Stock Exchange, the
Audit and Ethics Committee of The Pittston Company adopted an Audit and Ethics
Committee charter (the 'Charter'), which was approved by the Board of Directors
on May 5, 2000. A copy of the Charter was provided as Exhibit A to the 2001
Proxy Statement, and outlines the functions and responsibilities of the Audit
and Ethics Committee. In connection with those responsibilities, the Audit and
Ethics Committee has:
Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2001 with management and KPMG LLP ('KPMG'), the
Company's independent auditors;
Discussed with KPMG the matters required to be discussed by Statement
on Auditing Standards No. 61 regarding required communication by
external auditors with audit committees; and
Received written disclosures and a letter from KPMG regarding KPMG's
independence as required by Independence Standards Board Standard
No. 1 and has discussed with KPMG their independence.
The Audit and Ethics Committee also considered, as it determined
appropriate, tax matters and other areas of financial reporting and the audit
process over which the Committee has oversight.
Based on the Audit and Ethics Committee's review and discussions described
above, the Audit and Ethics Committee recommended to the Board of Directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2001 for filing with the
Securities and Exchange Commission.
Ronald M. Gross, Chairman
Betty C. Alewine
Marc C. Breslawsky
William F. Craig
Gerald Grinstein
Carl S. Sloane
10
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total returns
for the Pittston Brink's Group Common Stock ('Pittston Common Stock')
outstanding since December 31, 1996, through December 31, 2001, a composite
index of peer companies (the 'Custom Composite Index') selected by the Company,
the S&P MidCap 400 Index and the S&P MidCap 400 (Commercial and Consumer
Services) Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG PITTSTON COMMON STOCK,
THE CUSTOM COMPOSITE INDEX, THE S&P MIDCAP 400 AND THE
S&P MIDCAP 400 (COMMERCIAL AND CONSUMER SERVICES) INDEX(1)
(YEAR ENDING DECEMBER 31)
[GRAPH]
-----------------------------------------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 1/14/00 12/31/00 12/31/01
-----------------------------------------------------------------------------------------------------------------
Pittston Common Stock $100 $150 $119 $ 82 $ 82 $ 75 $ 84
-----------------------------------------------------------------------------------------------------------------
Custom Composite Index $100 $146 $178 $165 $181 $162 $209
-----------------------------------------------------------------------------------------------------------------
S&P MidCap 400 Index $100 $132 $158 $181 $182 $212 $211
-----------------------------------------------------------------------------------------------------------------
S&P MidCap 400 Index (Commercial &
Consumer Services) $100 $130 $174 $124 $122 $165 $167
-----------------------------------------------------------------------------------------------------------------
---------
(1) As a result of the Exchange, the Company now has one class of common stock
instead of three separate classes of common stock, each of which was
intended to track the performance of certain of the Company's business
units. For the line designated as 'Pittston Common Stock' the graph depicts
the cumulative return on $100 invested in Pittston Common Stock. For the
Custom Composite Index, the S&P MidCap 400 Index and the S&P MidCap 400
Index (Commercial & Consumer Services), cumulative returns are measured on
an annual basis for the periods from December 31, 1996 through December 31,
2001, with the value of each index set to $100 on December 31, 1996. Total
return assumes reinvestment of dividends. The returns of the component
companies included in the Custom Composite Index and the S&P MidCap 400
Index (Commercial & Consumer Services) are weighted according to such
company's market capitalization at the beginning of each period. Companies
in the Custom Composite Index are as follows: Airborne Freight Corp., Air
Express International Corporation (through 1/14/00), Arch Coal Inc., Burns
International Services Corp. (through 6/30/00), Circle International Group
Inc. (through 9/30/00), Expeditors International Inc., Federal Express
Corporation, Protection One Inc., Wackenhut Corporation (Class A), and
Westmoreland Coal Co. As of December 31, 2001, companies on the S&P MidCap
400 Index (Commercial & Consumer Services) were as follows: Apollo Group
Inc., ChoicePoint, Inc., DeVry Inc., Dun & Bradstreet, Education Management,
NCO Group, The Pittston Company, Rollins, Inc., Sotheby's Holdings, Sylvan
Learning Systems, United Rentals and Viad Corporation. The Company chose the
S&P MidCap 400 Index and the S&P MidCap 400 Index (Commercial & Consumer
Services) because the Company is included in each of these indices which
measure the performance of the mid-size company segment of the United States
market.
11
PROPOSALS OF THE BOARD
The following proposals are expected to be presented to the meeting. Holders
of Pittston Common Stock will have one vote per share.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS: in order to be elected, nominees
for director must receive a plurality of the votes cast by those present in
person or represented by proxy at the meeting and entitled to vote thereon.
Abstentions and shares held by a broker in 'street name' ('Broker Shares') that
are not voted in the election of directors will not be included in determining
the number of votes cast.
PROPOSAL NO. 2 -- APPROVAL OF THE SELECTION OF INDEPENDENT PUBLIC
ACCOUNTANTS: must receive more votes cast in favor of such proposal by holders
of the shares present in person or represented by proxy at the meeting and
entitled to vote thereon than votes cast in opposition to such proposal by such
holders. Abstentions and Broker Shares that are not voted on Proposal No. 2 will
not be counted in determining the number of votes cast.
12
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
In accordance with the Company's charter and bylaws, the Board of Directors
is divided into three classes, with the term of office of one of the three
classes of directors expiring each year and with each class being elected for a
three-year term. Messrs. Craig and Grinstein have been nominated for a one-year
and two-year term, respectively, in accordance with the company's corporate
governance policy regarding the retirement age of directors. Messrs. Dan and
Gross, whose current terms do not expire until 2004, have been nominated to
serve until 2005 in accordance with the Company's charter and bylaw provisions
that each of the classes be as evenly divided as possible.
The nominees for election as directors are: Mr. William F. Craig for a
one-year term expiring in 2003; Mr. Gerald Grinstein for a two-year term
expiring in 2004; and Messrs. Marc C. Breslawsky, Michael T. Dan and Ronald M.
Gross for a three-year term expiring in 2005.
The Board of Directors has no reason to believe that any of the nominees are
not available or will not serve if elected. If any of them should become
unavailable to serve as a director, full discretion is reserved to the persons
named as proxies to vote for such other persons as may be properly nominated.
Set forth below is information concerning the age, principal occupation and
employment during the past five years, other directorships and positions with
the Company of each nominee and director, and the year in which he or she first
became a director of the Company.
NOMINEE FOR ELECTION AS DIRECTOR FOR
A ONE-YEAR TERM EXPIRING IN 2003
[PHOTO] WILLIAM F. CRAIG, 70, is a private investor. He served as
(1), (3), (4), (6) Chairman of New Dartmouth Bank until 1994. Mr. Craig has
been a director of the Company since 1974.
NOMINEE FOR ELECTION AS DIRECTOR FOR
A TWO-YEAR TERM EXPIRING IN 2004
[PHOTO] GERALD GRINSTEIN, 69, is non-executive Chairman of Agilent
(1), (2), (4), (6) Technologies, a diversified technology company, and has held
that position since 1999. Since 1995, he has also served as
a principal in Madrona Investment Group LLC, a private
investment company. Mr. Grinstein served as Chairman and
Chief Executive Officer of Burlington Northern Inc., until
his retirement in 1995. From 1997-1999, Mr. Grinstein served
as non-executive Chairman of Delta Air Lines, Inc. He is a
director of Agilent Technologies, Delta Air Lines, Inc.,
PACCAR Inc. and Vans, Inc. Mr. Grinstein has been a director
of the Company since 1998.
13
NOMINEES FOR ELECTION AS DIRECTORS FOR
A THREE-YEAR TERM EXPIRING IN 2005
[PHOTO] MARC C. BRESLAWSKY, 59, is Chairman and Chief Executive
(1), (4), (5), (6) Officer of Imagistics International Inc., a company engaged
in direct sales, service and marketing of enterprise office
imaging and document solutions, and has held that position
since 2001. Prior thereto, he was President and Chief
Operating Officer of Pitney Bowes Inc., a position he held
from 1996 to 2001, and Vice Chairman from 1994 to 1996.
Mr. Breslawsky is a director of Imagistics International
Inc., the United Illuminating Company, C.R. Bard, Inc. and
Cytyc Corporation. He has been a director of the Company
since 1999.
[PHOTO] MICHAEL T. DAN, 51, is Chairman of the Board, President and
(4) Chief Executive Officer of the Company. Prior to his
election as President and Chief Executive Officer in
February 1998, Mr. Dan served as President and Chief
Executive Officer of Brink's Holding Company, Inc. beginning
in 1995 and President and Chief Executive Officer of
Brink's, Incorporated beginning in 1993. Mr. Dan has been a
director of the Company since 1998.
[PHOTO] RONALD M. GROSS, 68, is Chairman Emeritus of Rayonier Inc., a
(1), (3), (4), (6) global supplier of specialty pulps, timber and wood
products, after retiring as Chairman and Chief Executive
Officer at the end of 1998. Mr. Gross was President and
Chief Operating Officer from 1978, when he joined Rayonier,
until 1981; President and Chief Executive Officer from 1981
to 1984; Chairman, President and Chief Executive Officer
from 1984 to 1996; and Chairman and Chief Executive Officer
from 1996 to 1998. He is a director of Rayonier Inc. and
Corn Products International Inc. Mr. Gross has been a
director of the Company since 1995.
CONTINUING DIRECTORS
[PHOTO] ROGER G. ACKERMAN, 63, is the retired Chairman and Chief
(2), (3), (4), (5) Executive Officer of Corning Incorporated, a company engaged
in specialty glass, ceramics and communications. He retired
as Chairman in June 2001. From 1996 through 2000, Mr.
Ackerman served as Chief Executive Officer, prior to which
he served as President and Chief Operating Officer from 1992
to 1996. He is a director of Corning Incorporated and
Massachusetts Mutual Life Insurance Company. Mr. Ackerman
has been a director of the Company since 1991. His current
term as a director of the Company expires in 2003.
14
[PHOTO] BETTY C. ALEWINE, 53, is the retired President and Chief
(1), (3), (4), (5) Executive Officer of COMSAT Corporation, a provider of
global satellite services and digital networking services
and technology. Mrs. Alewine served as President and Chief
Executive Officer of COMSAT from 1996 until August 2000,
when the company was acquired by Lockheed Martin
Corporation. She served as President of COMSAT's largest
operating unit from 1994 to 1996. She is a director of New
York Life Insurance Company, Rockwell Automation
Corporation, the Cancer Research Foundation of America and
the National Symphony Orchestra. Mrs. Alewine has been a
director of the Company since 2000. Her current term as a
director of the Company expires in 2003.
[PHOTO] JAMES R. BARKER, 66, is Chairman of The Interlake Steamship
Co., vessel owners and operators of self unloaders. He is
(2), (3), (4), (5) also Vice Chairman of Mormac Marine Group, Inc., vessel
owners of oil product carriers, and Moran Towing Corp., tug
and barge owners and operators. He is a director of Verizon
Communications. Mr. Barker has been a director of the
Company since 1993. His current term as director expires in
2004.
[PHOTO] JAMES L. BROADHEAD, 66, is the retired Chairman and Chief
(3), (4), (5), (6) Executive Officer of FPL Group, Inc., a public utility
holding company. He served as Chief Executive Officer and
Chairman of FPL Group, Inc. from 1989 and 1990,
respectively, until his retirement in December 2001. He is a
director of Delta Air Lines, Inc. and New York Life
Insurance Company. Mr. Broadhead has been a director of the
Company since 1983. His current term as a director of the
company expires in 2004.
[PHOTO] CARL S. SLOANE, 65, is a private consultant and the Ernest L.
(1), (2), (4), (6) Arbuckle Professor of Business Administration, Emeritus at
Harvard University, Graduate School of Business
Administration. From 1991 to 2000, he served as the Ernest
L. Arbuckle Professor of Business Administration at Harvard
University, Graduate School of Business Administration. He
is a director of Rayonier Inc., Ionics, Inc. and Sapient
Corporation. Mr. Sloane has been a director of the Company
since 1998. His current term as a director of the Company
expires in 2003.
---------
(1) Audit and Ethics Committee
(2) Compensation and Benefits Committee
(3) Corporate Governance and Nominating Committee
(4) Executive Committee
(5) Finance Committee
(6) Pension Committee
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR ALL NOMINEES FOR ELECTION AS DIRECTORS.
15
STOCK OWNERSHIP
Based in part on information furnished by each nominee, director and
executive officer named in the Summary Compensation Table, the number of shares
of Pittston Common Stock beneficially owned by them at January 31, 2002, was as
follows:
NAME OF INDIVIDUAL NUMBER OF SHARES
OR IDENTITY OF GROUP BENEFICIALLY OWNED(a) PERCENT OF CLASS
-------------------- -------------------- ----------------
R. G. Ackerman................................... 20,625(b) *
B. C. Alewine.................................... 6,550(b) *
J. R. Barker..................................... 30,995(b) *
M. C. Breslawsky................................. 21,003(b) *
J. L. Broadhead.................................. 19,219(b) *
W. F. Craig...................................... 31,287(b) *
M. T. Dan........................................ 465,926(c) *
G. Grinstein..................................... 21,003(b) *
R. M. Gross...................................... 28,382(b) *
J. B. Hartough................................... 114,342(c) *
F. T. Lennon..................................... 148,774(c) *
A. F. Reed....................................... 115,749(c)(d) *
R. T. Ritter..................................... 80,257(c) *
C. S. Sloane..................................... 22,135(b) *
14 nominees, directors and executive officers as
a group........................................ 1,126,247 2.1%
---------
* Except as otherwise noted, the named individuals have sole voting and
investment power with respect to such shares of Pittston Common Stock. None
of such individuals beneficially owns more than approximately 1% of the
outstanding Pittston Common Stock. None of such individuals owns any of the
Company's $31.25 Series C Cumulative Convertible Preferred Stock or the
depositary shares relating thereto.
(a) Includes shares of Pittston Common Stock which could be acquired within 60
days after January 31, 2002, upon the exercise of options granted pursuant
to the Company's stock option plans, as follows:
Mrs. Alewine............................................ 5,034
Mr. Barker.............................................. 24,905
Mr. Dan................................................. 344,882
Mr. Gross............................................... 22,624
Mr. Hartough............................................ 72,182
Mr. Lennon.............................................. 89,870
Mr. Reed................................................ 80,704
Mr. Ritter.............................................. 46,046
Each of Messrs. Ackerman, Broadhead and Craig........... 13,488
Each of Messrs. Breslawsky, Grinstein and Sloane........ 18,879
All nominees, directors and executive officers as a
group (14 persons)..................................... 783,348
(b) Includes Common Stock Units representing shares of Pittston Common Stock,
rounded to the nearest whole Common Stock Unit, credited to each Director's
account under the Company's Directors' Stock Accumulation Plan on or prior
to January 31, 2002, as follows:
Mr. Ackerman............................................ 3,879
Mrs. Alewine............................................ 1,516
Mr. Barker.............................................. 4,832
Mr. Broadhead........................................... 4,473
Mr. Craig............................................... 5,222
Mr. Gross............................................... 5,129
Mr. Sloane.............................................. 2,473
Each of Messrs. Breslawsky and Grinstein................ 2,124
(footnotes continued on next page)
16
(footnotes continued from previous page)
(c) Includes Common Stock Units representing shares of Pittston Common Stock,
rounded to the nearest whole Common Stock Unit, credited to respective
accounts under the Company's Key Employees' Deferred Compensation Program
on or prior to January 31, 2002, as follows:
Mr. Dan................................................. 95,882
Mr. Hartough............................................ 24,211
Mr. Lennon.............................................. 40,160
Mr. Reed................................................ 26,742
Mr. Ritter.............................................. 26,775
Non-employee directors do not participate in the Company's Key Employees'
Deferred Compensation Program.
(d) Includes 102 shares of Pittston Common Stock held jointly by Mr. Reed with
his son, 222 shares of Pittston Common Stock held jointly by Mr. Reed with
his daughter, and 4,441 shares of Pittston Common Stock held jointly by Mr.
Reed with his wife.
The following table sets forth the only persons known to the Company to be
deemed beneficial owners of more than five percent of the outstanding Pittston
Common Stock at December 31, 2001:
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
David J. Greene and Company, LLC
599 Lexington Avenue
New York, NY 10022........................................ 4,758,159(a) 8.77%
JP Morgan Chase Bank, as Directed Trustee
under The Pittston Company Employee Benefits Trust
4 New York Plaza, 2nd Floor
New York, NY 10004........................................ 3,103,072(b) 5.71%
Sterling Capital Management LLC
Sterling MGT, Inc.
Eduardo A. Brea
Alexander W. McAlister
David M. Ralston
Brian R. Walton
Mark Whalen
301 S. College Street, Suite 3200
Charlotte, NC 28202....................................... 3,327,479(c) 6.1%
---------
(a) According to a report on Schedule 13G, dated February 15, 2002, filed with
the SEC by David J. Greene and Company, LLC, an investment adviser
registered under the Investment Advisers Act of 1940, David J. Greene and
Company, LLC, had sole voting power over 271,850 shares of Pittston Common
Stock, shared voting power over 2,286,376 shares of Pittston Common Stock,
sole dispositive power over 271,850 shares of Pittston Common Stock and
shared dispositive power over 4,486,309 shares of Pittston Common Stock.
(b) According to a report on Schedule 13G, dated February 8, 2002, filed with
the SEC by JP Morgan Chase Bank, as Directed Trustee (the 'Trustee') under
The Pittston Company Employee Benefits Trust Agreement, as amended (the
'Trust Agreement'), has shared voting power and shared dispositive power
over the shares. The Company and The Chase Manhattan Bank entered into the
Trust Agreement and created The Pittston Company Employee Benefits Trust in
December 1992 to provide for the satisfaction of certain obligations of the
Company and its affiliates under various employee benefit plans of the
Company, particularly those providing for the acquisition by employees of
shares of Pittston Common Stock. The Trust Agreement was subsequently
amended in 1993, 1996, 1998, 1999 and 2001 to provide for additional shares
to be issued under the Trust. The Trust Agreement provides that shares held
by the Trustee shall be voted in the same proportion and manner as shares
of Pittston Common Stock held in accounts of participants in the Company's
Savings-Investment Plan (the 'SIP') and also provides for a similar
procedure in the case of a tender or exchange offer for shares of Pittston
Common Stock. Such participants direct the voting or tender of shares held
in their SIP accounts. In the report, the Trustee disclaimed beneficial
ownership.
(c) According to a report on Schedule 13G, dated February 6, 2002, filed with
the SEC by Sterling Capital Management LLC ('Sterling'), an investment
adviser registered under the Investment Advisers Act of 1940, on behalf of
itself, Sterling MGT, Inc., the Manager of Sterling ('Sterling
Management'), and Messrs. Brea, McAlister, Ralston, Walton and Whalen,
controlling shareholders of Sterling Management, Sterling had through such
entities sole voting power over no shares of Pittston Common Stock, shared
voting power over 3,327,479 shares of Pittston Common Stock, sole
dispositive power over no shares of Pittston Common Stock and shared
dispositive power over 3,327,479 shares of Pittston Common Stock.
17
PROPOSAL NO. 2 -- APPROVAL OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has, subject to shareholder approval, selected KPMG
as the Company's independent public accountants for the year 2002 and recommends
approval of such selection by the shareholders. KPMG served in this capacity for
the year 2001. One or more representatives of KPMG are expected to attend the
annual meeting and will have the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Pursuant to the Securities and Exchange Commission's rules regarding auditor
independence, the Company makes the following disclosures:
AUDIT FEES
The Company expects to be billed approximately $1,709,000 in the aggregate
by KPMG for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2001, and for the reviews of the Company's
financial statements included in the Company's Forms 10-Q for the same fiscal
year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company was billed $0 in the aggregate by KPMG for financial information
systems design and implementation services rendered during the fiscal year ended
December 31, 2001.
ALL OTHER FEES
The Company was billed approximately $2,365,000 in the aggregate by KPMG for
all other services rendered during the fiscal year ended December 31, 2001.
These fees covered audit related and non-audit related (tax and management
assurance) services. Audit related services consisted of international statutory
audits of the Company's subsidiaries, assistance in preparation of statutory
financial statements, audits of employee benefit plans and other miscellaneous
assurance related services, all of which totaled approximately $1,656,000 billed
to the Company. Tax related services consisted of international statutory tax
return services, executive tax services, tax planning and other miscellaneous
tax related services, all of which totaled approximately $632,000 billed to the
Company. Management assurance services consisted of assisting in the development
of an information technology audit program for the Company, all of which totaled
approximately $77,000 billed to the Company.
CONSIDERATION OF AUDITOR INDEPENDENCE
In connection with Securities and Exchange Commission rules regarding
auditor independence, the Audit and Ethics Committee has considered whether
financial information systems design and implementation services and other
non-audit services provided by KPMG to the Company are compatible with
maintaining KPMG's independence.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE APPROVAL OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
-------------------
OTHER INFORMATION
SHAREHOLDER PROPOSALS
To nominate a director at the annual meeting, a shareholder must satisfy
conditions specified in the Company's bylaws. A shareholder who wishes to
suggest potential nominees to the Board of Directors for consideration should
write to the Secretary of the Company, stating in detail the qualifications of
such nominees for consideration by the Corporate Governance Committee of the
Board. The Company's bylaws also prescribe the procedures a shareholder must
follow to bring other business
18
before annual meetings. For a shareholder to nominate a director or directors at
the 2003 annual meeting or bring other business (including any proposal intended
for inclusion in the Company's proxy materials) before the 2003 annual meeting,
notice must be given to the Secretary of the Company between September 30, 2002,
and November 29, 2002, inclusive. The notice must include a description of the
proposed business, the reason for it, the complete text of any resolution and
other specified matters.
Any shareholder desiring a copy of the Company's bylaws will be furnished
one without charge upon written request to the Secretary.
OTHER MATTERS
The cost of this solicitation of proxies will be borne by the Company. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, facsimile, electronic mail, telegram, in person or by other means.
Arrangements also will be made with brokerage firms and other custodians,
nominees and fiduciaries to forward proxy solicitation material to the
beneficial owners of Pittston Common Stock held of record by such persons and
the Company will reimburse such brokerage firms, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in connection
therewith. The Company has retained Georgeson Shareholder Communications Inc. to
perform various proxy advisory and solicitation services. The fee of Georgeson
Shareholder Communications Inc. in connection with the 2002 annual meeting is
currently estimated to be approximately $15,000, plus reimbursement of
out-of-pocket expenses.
AUSTIN F. REED
Secretary
March 29, 2002
19
Appendix I
THE PITTSTON COMPANY
Proxy/Voting Direction Card Solicited on Behalf of the Board of Directors
for Annual Meeting of Shareholders, May 3, 2002
The undersigned hereby appoints Michael T. Dan, Austin F. Reed and Robert T.
Ritter and each of them as proxy, with full power of substitution, to vote all
shares of common stock of the undersigned in The Pittston Company at the Annual
Meeting of Shareholders to be held on May 3, 2002, at 1:00 p.m., Eastern
Daylight Time, and at any adjournment thereof, on all matters coming before the
meeting. The proxies will vote: (1) as the undersigned specifies on the back of
this card; (2) as the Board of Directors recommends where the undersigned does
not specify a vote on a matter listed on the back of this card; and (3) as the
proxies decide on any other matter.
This Proxy/Voting Direction Card also will serve as a direction to the Funding
Agent of the Company's Savings-Investment Plan and the Recordkeeper of the
Company's 1994 Employee Stock Purchase Plan to vote all shares in The Pittston
Company credited to the account of the undersigned. The Funding Agent will vote:
(1) as the undersigned specifies on the back of this card; (2) proportionately
with the shares as to which directions by other Plan participants shall have
been received, to the extent that the undersigned has not timely directed the
manner in which such shares shall be voted; and (3) as the Funding Agent decides
on any other matter.
If registrations are not identical, you may receive more than one set of proxy
materials. Please complete and return all cards you receive. If you wish to vote
or direct a vote on all matters as the Board of Directors recommends, please
sign, date and return this card. If you wish to vote or direct a vote on items
individually, please also mark the appropriate boxes on the back of this card.
-------------- --------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
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--------------------------------------------------------------------------------
--- Please mark
X votes as in
--- this example.
The Board of Directors Recommends a vote "FOR ALL NOMINEES" in Item 1
and "FOR" Item 2.
FOR all WITHHELD for all
Nominees Nominees
1. Election of the following nominees: |_| |_|
Nominees: (01) William F. Craig,
(02) Gerald Grinstein, (03) Marc C. Breslawsky,
(04) Michael T. Dan and (05) Ronald M. Gross
|_| -------------------------------------------------
For all nominees, except for those nominees listed above
FOR AGAINST ABSTAIN
2. Approval of KPMG LLP |_| |_| |_|
as independent public accountants.
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature:_______________ Date:______ Signature:_______________ Date_______