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DEFINITIVE PROXY STATEMENT
SCHEDULE 14A
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ x ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Name of Registrant as Specified in Its Charter:
Comfort Systems USA, Inc.
Name of Person(s) Filing Proxy Statement:
Sheet Metal Workers' International Association
Payment of Filing Fee (check the appropriate box)
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
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FINAL PROXY STATEMENT
INDEPENDENT SHAREHOLDER SOLICITATION for
Annual Shareholders Meeting
Comfort Systems USA
May 23, 2002 11am
Doubletree Hotel
2001 Post Oak Blvd.
Houston TX
For release to Shareholders 4/26/02
Sheet Metal Workers' International Association
1750 New York Avenue NW
Washington, D.C. 20006
Tel. (800) 457-7694
Fax: (202) 662-0891
To Fellow Comfort Systems USA shareholders:
I. PLEASE VOTE FOR OUR PROPOSAL REQUESTING THE BOARD NOT
REPRICE OR REPLACE UNDERWATER STOCK OPTIONS WITHOUT FIRST
GETTING SHAREHOLDER APPROVAL:
We own stock in the Company and also have interests in the
Company going beyond stock ownership as a labor
organization.
Stock options are supposed to link executive compensation to
a company's stock performance: if the company's stock goes
up, then the options can be exercised at a price below the
new market price, benefiting company executives because they
presumably helped get the stock price up. If the stock
drops, options end up "underwater" (their exercise price is
above market price, so the executives would not profit from
exercising them).
However, stock options get delinked from stock performance
if the Board of Directors reprices options downwards after
executives fail to improve a company's stock price.
Another way for a board to accomplish basically the same
thing as repricing is to react to old options ending up
underwater by issuing new options at a lower price.
Last year's proxy statement reveals that the Company did
exactly this: "In late 2000, an aggregate of 300,000 options
were granted to five individuals excluding Mr. Murdy with
existing options because the previous options granted to
these individuals were at exercise prices significantly
higher than year end 2000 market value."
While the Board did inform shareholders in its Proxy
Statement of 4/24/2000 that it was requesting shareholder
approval of the 2000 Incentive Plan in part because existing
options were underwater (and such plan was approved), we
believe shareholders should have the right to separately
approve any award give solely on the basis that existing
options are underwater. The Board's proxy state of
4/15/2002 announce that its Compensation Committee recently
adopted a policy of not repricing options; however, no
restriction on replacing underwater options is mentioned.
The Committee admits it did indeed "consider" repricing
underwater options in 2000, a comment we believe further
supports shareholders expressing their views through their
proxy vote.
We intend to present a proposal at the shareholders meeting
asking the Board to adopt a policy of not repricing options
or granting new ones because old ones go underwater, unless
shareholders approve such grant. The full text of our
proposal is in Section VI below.
We believe that repricing of options (or granting new
options just because old options end up underwater) is
unfair to shareholders. A deal is a deal (or should be).
In our view repricing or replacing underwater options not
only reduces executives' incentive to work hard for
shareholders, but also in our view tends to mislead
shareholders about the true value of an executive's
compensation.
Top executives often justify high-level compensation by
claiming that much of it depends on stock price. That
justification in our opinion carries little weight if after
the stock dives, the executive's options just get repriced
or replaced by new cheaper options. In our experience,
employee morale depends largely on seeing that everyone -
executive or not - is in the same boat.
Similar proposals have been made of other companies by the
New York City and State pension funds and other
institutional investors. The proposal at Sprint received 46
percent of the votes cast at the 2001 annual meeting. Some
companies have voluntarily adopted a policy similar to the
one we propose, such as Earthgrains and Lone Star
Steakhouse.
While many shareholders oppose repricing on principle, some
investors prefer to support shareholder proposals only when
management is underperforming. If you're one of those,
please consider the Company's stock closing price on the day
of the last four annual meetings:
$21.125 in 1998.
$16.3125 in 1999.
$6.75 in 2000.
$4.24 in 2001.
This three-year period witnessed an 80% decline in
shareholder value.
II. PROXY VOTING:
PLEASE USE THE ENCLOSED PROXY CARD TO VOTE FOR THE PROPOSAL.
IF YOU SUPPORT IT, DO NOT SEND BACK A CARD TO MANAGEMENT
(UNLESS THAT CARD GIVES YOU A CHANCE TO VOTE YES FOR THIS
PROPOSAL). IT IS A RULE OF PROXY VOTING THAT ANY PROXY CARD
IS CANCELLED OUT BY SUBMITTING A LATER-DATED PROXY CARD.
We intend to solicit at least a majority of the voting power
of the outstanding stock. Our proposal is a nonbinding
recommendation to the Board. The company may seek to declare
the proposal out of order at the meeting on the grounds that
we submitted it too early under the bylaws. We submitted in
October and last year's proxy statement said "In accordance
with the Company's Bylaws, a proposal submitted for
consideration at the 2001 Annual Meeting of Stockholders
will be considered untimely if it has not been received by
the Company at its principal executive offices by the close
of business on the 60th day prior to the first anniversary
of the Meeting." What last year's proxy statement did not
reveal is that the bylaws require the proposal to be sent
within a window period of 60 to 90 days before the
anniversary of the last meeting. If the company elects to
rely on this bylaw provision, we will none the less vote
your shares as instructed on matters other than our
proposal, and will still present the company with our vote
tally on our proposal so that your voice is still heard.
However, the company is not obligated or bound to act on
this nonbinding proposal.
You can revoke any proxy vote prior to the tally at the
shareholders meeting by signing and submitting a new proxy
card, by sending written notice of revocation to the proxy
holder, or by appearing at the meeting and voting in person.
The record date for eligibility to vote is April 9, 2002.
We seek no discretionary voting authority for the meeting.
Shares represented by the enclosed proxy card will be voted
in accordance with the choice made by the shareholder. If
you return the enclosed card but give us no instructions, we
will vote your stock FOR the proposal and not vote the card
in the directors election or on any other matter. The board
election and management's proposal to amend the non-employee
directors' stock plan are the only matters listed by
management as coming up for a vote at this meeting. If any
matters other than the above come before the meeting, which
we do not expect, the shares represented by our proxy card
will not be voted thereon. We incorporate by reference all
other information concerning the board of directors and
voting procedures contained in management's proxy statement
at pages 1-8.
III. INFORMATION ON PARTICIPANTS IN THIS SOLICITATION:
This solicitation is conducted by Sheet Metal Workers'
International Association (SMWIA), which owns 1,400 shares
of Comfort Systems USA stock. Prior to the Company's recent
sale of several subsidiaries, SMWIA represented about 500
Company employees for collective bargaining purposes.
Several hundred were represented by other unions. A total
of approximately 2,795 were unionized, out of approximately
10,000 nonmanagement personnel. Most of the unionized
subsidiaries were sold in 2002; we estimate there are three
remaining, employing about 63 unionized workers, including
about 7 SMWIA members. Based upon the Company's latest 10-K
filing with the SEC, we believe the Company now has about
6,000 employees. To SMWIA's knowledge, there are no
strikes, contract disputes, picketing, or boycotts going on
currently. We do not seek your support in labor matters.
SMWIA will bear all solicitation costs (anticipated at
$5000) and will not seek reimbursement from the Company.
SMWIA will solicit proxies by mail, phone, e-mail, fax and
in person using its regular staff, who shall not receive any
additional compensation, but SMWIA may also hire an outside
solicitor. SMWIA will reimburse banks, brokers, and other
custodians, nominees or fiduciaries for reasonable expenses
incurred in forwarding proxy material to beneficial owners.
IV. YOUR RIGHT TO MAKE SHAREHOLDER PROPOSALS:
If a shareholder has owned more than $2000 worth of stock
for more than a year and meets the other criteria of SEC
Rule 14a-8, then he or she has the legal right to have a
proposal appear in management's proxy statement and proxy
card. The deadline for shareholders to submit proposals for
inclusion in management's proxy materials for the year 2003
is December 16, 2002.
V. EXECUTIVE COMPENSATION/SECURITY OWNERSHIP OF MANAGEMENT
AND 5% OWNERS:
We incorporate by reference the information contained in
management's proxy statement at pages 8-10.
VI. TEXT OF OUR PROPOSAL:
RESOLVED that shareholders urge the Board of Directors to
adopt a policy that the Company shall not, without prior
approval of the holders of a majority of stock, reprice
stock options already granted to any executive officer or
director to a lower exercise price, nor terminate and
regrant any such option at a lower price, nor grant new
options to such persons on account of the market price
dropping below the exercise price of prior options. This
proposal shall not be construed as asking the Board to
breach any existing contract nor to amend any option plan
without shareholder approval.
PLEASE RETURN THE ENCLOSED PROXY CARD TODAY.
For more information, contact Allen Smith at SMWIA at (800)
457-7694.
VOTE FOR THE PROPOSAL TO REQUIRE SHAREHOLDER APPROVAL BEFORE
ANY STOCK OPTIONS GET REPRICED OR REISSUED DUE TO A DECLINE
IN STOCK PRICE (ITEM #3 ON THE ENCLOSED CARD)
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PROXY CARD
Solicited by SMWIA for Annual Shareholders Meeting of Comfort
Systems USA, May 23, 2002.
The undersigned hereby designates SMWIA Researcher Allen Smith,
with full power of substitution, as the proxy of the undersigned
for the sole purpose of voting all stock of the undersigned
in the manner marked below at the Comfort Systems annual
shareholders meeting for 2002. This proxy card grants no
discretionary voting authority: if matters come before the
meeting other than the items below, the stock of the undersigned
will not be voted on such matters.
1. ELECTION OF DIRECTORS:
For: [ ]
J. Gordon Beittenmiller
Robert D. Wagner
Steven S. Harter
[the above are nominees of the current Board]
To withhold authority for individual candidates, cross out
name(s)
Withhold Authority as to all above: [ ]
2. APPROVAL OF AMENDMENT TO 1997 NON-EMPLOYEE DIRECTOR STOCK
OPTION PLAN:
For [ ] Against [ ] Abstain [ ]
[we make no recommendation on this issue]
3. SHAREHOLDER PROPOSAL REQUESTING POLICY AGAINST REPRICING OR
REPLACING STOCK OPTIONS WITHOUT PRIOR SHAREHOLDER APPROVAL:
FOR THIS PROPOSAL: [ ] AGAINST THIS PROPOSAL: [ ] ABSTAIN:[ ]
[we recommend a vote for the proposal]
If no specification is made above, this card will be voted
for #3 and not voted on other matters.
Dated: _______________
SIGNATURE:___________________________________________________
PRINT SHAREHOLDER NAME:___________________________________
Optional information to help us keep you informed:
Telephone _______________________ Fax __________________________
E-mail address: _______________________________________
Mail to us in the enclosed envelope or fax to (202) 662-0891.
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