SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Fuel-Tech N.V.
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FUEL-TECH N.V.
Castorweg 22-24, Curacao, Netherlands Antilles
------------------------------------
Notice of Annual General Meeting of Shareholders
To be Held June 5, 2002
--------------May 28, 2003
--------------------
To the Shareholders of Fuel-Tech N.V.:
The Annual General Meeting (the "Meeting") of Shareholders of Fuel-Tech
N.V., a Netherlands Antilles limited liability company (the "Company"("Fuel Tech"), will be
held Wednesday, June 5, 2002,May 28, 2003, at the registered office of the Company,Fuel Tech, Castorweg
22-24, Curacao, Netherlands Antilles, at 10:00 a.m. local time, to consider
and act uponvote on the following matters, each of which is explained more fully in
the following Proxy Statement. A proxy card for your use in voting on these matters
is also
enclosed.
1. To approve the Annual Report of Management to Shareholders on the
business and administration of the CompanyFuel Tech for the calendar year ended
December 31, 20012002 (the "Annual Report");
2. To approve the Financial Statements for said calendar year, being the
Consolidated Balance Sheet, Consolidated Statement of Operations,
Consolidated Statement of Shareholders' Equity and Consolidated
Statement of Cash Flows with Notes and Auditors'Auditors Report together with
the Unconsolidated Balance Sheet and the Statement of Operations of Fuel
Tech (Note 11 to the Company (Schedule I)Financial Statements);
3. To elect Eight (8)seven (7) Managing Directors and to approve their
compensation;
4. To approveratify the reappointment of Ernst & Young LLP as theFuel Tech's
independent auditors for the year 20022003 and to authorize the Managing
Directors to approve their compensation; and
5. To transact any other business that may properly come before the
meeting or at any adjournment thereof.
Only common shareholders of record at the close of business on June 4,
2002May 27, 2003
are entitled to vote at the Meeting. The presence in person or by proxy of
stockholdersshareholders entitled to cast one-third of the total number of votes which may
be cast shall constitute a quorum for the transaction of business at the
Meeting.
The Annual Report is enclosed with this Notice of Meeting and Proxy
Statement.
FUEL-TECH N.V.
Charles W. Grinnell
Secretary
April 29, 2002March 15, 2003
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON IT IS REQUESTED THAT
YOU PROMPTLY FILL OUT, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD.
AN INFORMATION MEETING WILL BE HELDFOR INTERNET OR TELEPHONE VOTING, PLEASE REFER TO THE INSTRUCTIONS ON JUNE 14, 2002 FROM 9:30 A.M. TO 11:00
A.M. AT THE
LONDON SHERATON HOTEL, PICCADILLY, W1J 7BX, LONDON, U.K.PROXY CARD OR THE VOTING INSTRUCTION FORM.
FUEL-TECH N.V.
Proxy StatementPROXY STATEMENT
The enclosed proxy is solicited by the Board of Managing Directors (the
"Board") of Fuel-Tech N.V., a Netherlands Antilles limited liability company
(the "Company"("Fuel Tech"), in connection with the Annual Meeting of Shareholders of the
CompanyFuel
Tech (the "Meeting") to be held at the registered offices of the Company,Fuel Tech,
Castorweg 22-24, Curacao, Netherlands Antilles, Wednesday, June 5, 2002,May 28, 2003, at
10:00 a.m. local time, and at any adjournments thereof.
The record date with respect to mailing this solicitation is April 12,
2002.March 31, 2003.
Under Netherlands Antilles law, however, all holders of CompanyFuel Tech common stock
as of the close of business on June 4, 2002May 27, 2003 are nevertheless entitled to vote at the
Meeting. As of the record date the CompanyMarch 3, 2003, Fuel Tech had 19,290,53419,680,432 shares of common stock
outstanding according to the records of the Company's Transfer
Agent.Mellon Investor Services LLC, Fuel
Tech's transfer agent (the "Transfer Agent"). Each share is entitled to one
vote. Under the rules of The Nasdaq Stock Market, Inc., a quorum of one third
of the votes entitled to be cast is required for action on matters taken up at
the Meeting.
Each shareholder is entitled to appoint a representative at the Meeting
other than those named in the form of proxy. A shareholder desiring to appoint
some other person who need not be a shareholder may do so by completing
another proper form of proxy for use at the Meeting. All completed forms of
proxy should be mailed promptly in the enclosed return envelope for delivery
on or before 5:00 p.m. (local time) June 4, 2002time at New York, N.Y.) May 27, 2003 to the
Transfer Agent.
A shareholder giving a proxy may revoke such proxy by an instrument in
writing signed by the shareholder, by his attorney-in-fact authorized in
writing, or, if the shareholder is a corporation, under its corporate seal or
by a duly authorized officer or attorney, and deposited with the Transfer
Agent or with the Chairman of the Meeting at the time of the Meeting.
If a proxy is signed and not revoked by the shareholder, the shares it
represents will be voted at the Meeting in accordance with the instructions of
the shareholder. Abstentions and broker non-votes are counted as present in
determining whether a quorum is present, but are not counted in the
calculation of the vote. If the proxy is signed and returned without
specifying choices, the shares will be voted in favor of each item on the
agenda in accordance with the recommendations of the Board. Members of the
Board and executive officers of the
CompanyFuel Tech may solicit shareholders' proxies by
mail, telephone or facsimile. The
Company shallFuel Tech will bear the cost of proxy
solicitation, if any.
ANNUAL REPORT
The Company'sFuel Tech's Annual Report to Shareholders (the "Report"), contains the
report of Management on the business and administration of the CompanyFuel Tech for the
calendar year ended December 31, 20012002 and financial statements reflecting the
financial position and results of operations of the CompanyFuel Tech for 20012002 (the
"Financial Statements"), together with the Company'sFuel Tech's Balance Sheet and Statement
of Operations. The Financial Statements are set forth in the Report in
consolidated form and, as required by Netherlands Antilles law, in
unconsolidated form. See Schedule INote 11 to this Proxy Statementthe Financial Statements for the
Unconsolidatedunconsolidated Financial Statement.Statements. The Report and this Proxy Statement were
distributed together commencing in the week of April 29, 2002.21, 2003. The Report is
available for inspection at the office of Fuel Tech at the Companyaddress written on
the Notice of Meeting and will be available for inspection at the Meeting.
A resolution will be presented at the Meeting for the adoption of the Annual
Report and the approval of the Financial Statements. The CompanyFuel Tech understands
that under Netherlands Antilles law, approval of the Report and the Financial
Statements at the Meeting will have the effect of discharging the Managing
Directors from legal liability for their activities as directors for the year
ended December 31, 2001.2002.
The affirmative vote of a majority of the shares voting is required for the
approval of this proposal. The Board recommends a vote FOR this proposal.
ELECTION OF DIRECTORS
The Board proposes the election of eightseven Managing Directors. The term of
office of each director is until the next Annual General Meeting or until a
successor shall have been duly elected. Douglas G. Bailey, Ralph E. Bailey,
Miguel Espinosa, Charles W. Grinnell, John R. Selby,Samer S. Khanachet, Thomas S. Shaw, and
Tarma Trust Management N.V., who are each incumbent directors, and Messrs. Espinosa and Khanachet, who
are proposed to be elected for the first time, are the
nominees for election as Managing Directors of the Company.Fuel Tech. Mr. John R. Selby,
currently a Managing Director, is not standing for reelection. Each of the
nominees has consented to act, if elected. Should one or more of these
nominees become unavailable to accept nomination or election, votes will be
cast for a substitute nominee, if any, designated by the Board. If no
substitute nominee is designated prior to the election, the individuals named
as proxies on the enclosed proxy card will exercise their judgment in voting
the shares that they represent. A motion will be proposed at the Meeting for
the election of the foregoing eightseven directors and to approve their
compensation as described below under the caption "Directors'"Director's Compensation." Mr. John A. de Havilland, Mr. Jeremy D. Peter-Hoblyn and Mr.
James M. Valentine, formerly Managing Directors of the Company, resigned
effective March 1, 2002 and are not standing for reelection. Prior to his
resignation, Mr. de Havilland had been Chairman of the Audit Committee.
The affirmative vote of a majority of the shares voting is required for the
election of directors and the approval of their compensation. The CompanyFuel Tech
recommends a vote FOR each of the nominees and their compensation.
The following table sets forth certain information with respect to each
person nominated and recommended to be elected as a Managing Director of the
Company.
Name Age Director Since
- ---- --- --------------
Ralph E. Bailey 78Fuel
Tech.
Name Age Director Since
- ---- --- --------------
Douglas G. Bailey ...................................... 53 1998
Ralph E. Bailey ........................................ 79 1998
Miguel Espinosa ........................................ 62 2002
Charles W. Grinnell .................................... 65 1989
Samer S. Khanachet ..................................... 52 2002
Thomas R. Shaw ......................................... 56 2001
Tarma Trust Management N.V. ............................ -- 1998
Douglas G. Bailey 52 1998
Miguel Espinosa 61 --
Charles W. Grinnell 64 1989
Samer S. Khanachet 51 --
John R. Selby 72 1998
Thomas R. Shaw 55 2001
Tarma Trust Management N.V. - 1998
Shareholders' Agreement
The CompanyFuel Tech is party to a Shareholders' Agreement of April 30, 1998, amended
March 1, 2002 (the "Agreement") with certain Investors who acquired 4,750,000
shares and warrantsoptions to purchase 3,000,000 shares of Company common stock.
During the term of the Agreement the Investors have the right to nominate
three persons as Managing Directors of the Company,Fuel Tech one of whom shall be an
independent director. The Investors are Douglas G. Bailey, Ralph E. Bailey,
Nolan R. Schwartz and other persons who are or were associated with American
Bailey Corporation, a privately owned company of which Mr. Ralph E. Bailey is
Chairman and Mr. Douglas G. Bailey, his son, is President and Chief Executive
Officer. Of the persons identified above as the nominees of the Board for
appointment as Managing Directors at the Meeting, Messrs. Douglas G. Bailey and Ralph
E. Bailey and John R. Selby are nominees of the Investors Mr. Selby being
independent.and the other nominees are nominees of
the Board as a whole. The term of the Agreement is until April 30, 2008,
unless before April 30, 2002 the Investors as a group own less than 2,375,000 of the Company's
common shares, or, before April 30, 2008 the Investors own less than 475,000 shares of
CompanyFuel Tech common stock.
Directors and Executive Officers of the CompanyFuel Tech and Fuel Tech, Inc.
Vincent M. Albanese, 53,54, has been Senior Vice President -- Air Pollution
Control, Sales and Marketing of Fuel Tech, Inc. since May, 2000, and, from
April, 1998 and Seniorto May, 2000 was a Vice President since May 1, 2000.President. He was Vice President Sales and
Marketing of Nalco Fuel Tech, a joint venture between Fuel Tech, Inc. and
Nalco Chemical Company ("Nalco"), prior to joining Fuel Tech, Inc., and had
served Nalco Fuel Tech since 1990. Prior to his service with Nalco Fuel Tech,
Mr. Albanese was a market development specialist with Nalco, his employer
since 1975.
2
Steven C. Argabright, 59,60, has been a director and the President and Chief
Operating Officer of Fuel Tech, Inc. since April, 1998. He was President and
Chief Executive Officer of Nalco Fuel Tech from 1996 to April,
2
1998 and Vice President of Nalco Fuel Tech from 1990 to 1996. Prior to the
formation of Nalco Fuel Tech, Mr. Argabright was a Regional Sales Manager of
Nalco, his employer since 1973.
Douglas G. Bailey has been a director of Fuel Tech and of Fuel Tech, Inc.
since April, 1998 and Deputy Chairman and Chief Strategic Officer of Fuel Tech
and of Fuel Tech, Inc. since 2002. Mr. Bailey, who is the son of Ralph E.
Bailey, has been the President and Chief Executive Officer of American Bailey
Corporation ("ABC"), a privately owned business acquisition and development
company, since 1984. Mr. Bailey is Chairman of Golden Casting Corporation, an
affiliate of ABC and a foundry company.
Ralph E. Bailey has been a director and Chairman of the Board and Chief
Executive Officer of the CompanyFuel Tech and Chairman and a director and Chairman of Fuel Tech, Inc.
since April, 1998. He has been a director and Chairman of American Bailey
Corporation ("ABC"), a privately owned business acquisition and development
company,ABC since 1984.
Mr. Bailey is the former Chairman and Chief Executive Officer of Conoco, Inc.,
an energy company, and a former Vice Chairman of E.I. du Pont de Nemours &
Co., a chemical company.
Douglas G. BaileyStephen P. Brady, 46, has been a director of the Company andSenior Vice President -- Fuel Chem of Fuel
Tech, Inc. since April, 1998. Mr. Bailey, who is the son of Ralph E. Bailey, has been
the PresidentJanuary, 2002, and, Chief Executive Officer of ABC since 1984. Mr. Bailey is
Chairman and Chief Executive Officer of Golden Casting Corporation, an affiliate
of ABC and a foundry company.
Stephen P. Brady, 45, has been Vice President - Fuel Chemicals Sales &
Marketing of Fuel Tech, Inc. sincefrom February, 1998 and Seniorto January, 2002 was
a Vice President
since January 1, 2002.President. Prior to joining Fuel Tech, Inc., Mr. Brady was a Regional
Sales Manager of Nalco, his employer since 1980.
Miguel Espinosa has been President and Chief Executive Officer of The
Riverview Group, LLC, a financial consulting company, since 2001. He retired
in 2001 as Treasurer of Conoco, Inc., his employer since 1965. In addition to
corporate finance, Mr. Espinosa's responsibilities at Conoco involved
international operations, mergers and acquisitions and joint ventures.
Mr. Espinosa has a Masters in Business Administration degree from the
University of Texas.
Charles W. Grinnell has been Vice President, General Counsel and Corporate
Secretary of the CompanyFuel Tech since 1988 and a director of the CompanyFuel Tech and Fuel Tech,
Inc. since September, 1989. Mr. Grinnell is a director of Clean Diesel
Technologies, Inc., a specialty chemical and energy technology company, and
has also been engaged in the private practice of corporate law in Stamford,
Connecticut since 1992.
Samer S. Khanachet has been President of United Gulf Management, Inc.
("United"UGM"), an investment management company, since 19961991 where his
responsibilities are focused on United States
venture capital andinclude private equity activities. From 1990 to 1996, Mr. Khanachet
was a General Manager ofand real estate investments for UGM's
parent company, Kuwait Projects Company (Holding), the parent company and clients. Mr. Khanachet
has a Masters in Business Administration degree from Harvard University.
Scott M. Schecter, 46, has been Vice President, Chief Financial Officer and
Treasurer of United.Fuel Tech since January 1994 and has been a director of Fuel
Tech, Inc. since April, 1998. Mr. Schecter was also Chief Financial Officer of
Clean Diesel Technologies, Inc. from 1995 through November, 1999.
Nolan R. Schwartz, 51,52, has been a director of Fuel Tech, Inc. since April,
1998. He is a Principal of American Bailey Corporation, his employer since
1988. Mr. Schwartz is a director of Golden Casting Corporation.
John R. Selby has been a director of the Company since December, 1998
and a director of Fuel Tech, Inc. since November, 1998. Mr. Selby was a director
and the President and Chief Executive Officer of SPS Technologies, Inc., a
diversified manufacturing company, from 1971, and Chairman from 1987, until his
retirement in 1993 and was a director of General Signal Corporation from 1987 to
1998.
Thomas S. Shaw, Jr. has been Executive Vice President of Pepco Holdings,
Inc. ("PHI") since August 1, 2002 when PHI acquired Conectiv, an electric
power generating and distribution company. Mr. Shaw remains as President and
Chief Operating Officer of Conectiv an electric power generating and distribution company,has been since September, 2000 and
previously had been employed by its predecessor Delmarva Power &and Light
Company ("Delmarva") for over 25 years where he had been President of its
subsidiary Delmarva Capital Investments, Inc. from 1991 until 1995 and was
Executive Vice President of Delmarva and Conectiv from 1997 until September,
2000.
Scott M. Schecter, 45, has been Vice President, Chief Financial Officer
and Treasurer of the Company since January, 1994 and has been a director of FTI
since April, 1998. Mr. Schecter was also Chief Financial Officer of Clean Diesel
Technologies, Inc. from 1995 through November, 1999. From June, 1990 through
January, 1994, Mr. Schecter was Senior Vice President and Chief Financial
Officer of American Vision Centers, Inc., a consumer products company.
Tarma Trust Management, N.V., ("Tarma"), a director of the CompanyFuel Tech since
April, 1998, is a Netherlands Antilles limited liability company in Curacao
specializing in company management and representation. Tarma's position as
Managing Director enables the CompanyFuel Tech to act in the Netherlands Antilles without
the presence of the other directors.
There are no family relationships between any of the directors or executive
officers, except as stated above.
3
Board Committees of the CompanyAudit Committee and Fuel Tech, Inc.Compensation Committee
The Board has an Audit Committee of which the members are Mr. Selby,Shaw
(Chairman), Mr. Shaw, Chairman,Espinosa, Mr. Khanachet, Mr. Selby and Mr. R.E.R. E. Bailey (ex
officio). If Messrs.Mr. Shaw, Mr. Espinosa and Mr. Khanachet are
elected at the Meeting, the Board intends to appoint them to the
Audit Committee. Messrs, Selby and Shaw are, and Messrs. Espinosa and Khanachet
will be,3
independent directors. There are no other committees of the Board of Directors of the Company.Fuel-Tech
N.V. Compensation matters are determined by the Compensation Committee of Fuel
Tech, Inc. of which the members are Messrs.Mr. Selby Chairman, S. C. Arbabright(Chairman), Mr. Argabright (ex
officio), D. G. Bailey, R. E. Bailey and N. R. Schwartz. Following the Meeting
and consequent on Mr. Selby's retirement from the Board, Mr. Espinosa and
Mr. Shaw will be nominated for appointment as Chairmen, respectively, of the
Audit Committee and Compensation Committee. Ex officio members of Company or Fuel Tech, Inc. committeesthe
Committees are participating but non-voting members. Fuel Tech, Inc. is a wholly-owned
subsidiary of the Company.and do not attend executive sessions.
Audit Committee
The Audit Committee is responsible for review of audits, financial reporting
and compliance, and accounting and internal controls policy,policy. For audit
services, the Audit Committee is responsible for the engagement and
recommendations to the Board regarding the engagementcompensation of independent auditors, oversight of their activities and
evaluation of their independence. The Audit Committee has instituted
procedures for receiving reports of improper recordkeeping, accounting or
disclosure. The Board has also constituted the Audit Committee as a Qualified
Legal Compliance Committee in accordance with Securities and Exchange
Commission regulations.
Financial Experts
In the opinion of the Board, each of the members of the Audit Committee has
both business experience and an understanding of generally accepted accounting
principles and financial statements enabling them to effectively discharge
their responsibilities as members of that Committee. Moreover, the Board has
determined that Mr. Espinosa and Mr. Khanachet are Financial Experts within
the meaning of Securities and Exchange Commission regulations. In making this
determination the Board considered the Financial Experts' academic training
and experience. Mr. Espinosa has experience as Treasurer of an energy company
and Mr. Khanachet has experience as the President of an investment management
company.
Compensation Committee
The Compensation Committee is responsible for setting and administering the
policies and programs that govern both annual compensation and stock ownership
programs and recommends stock option awards to the Board of the
Company.Fuel Tech.
Meetings
During the year ended December 31, 2001,2002, there were four meetings of the
Board of Directors of the Company, one meetingFuel Tech, four meetings of its Audit Committee and four
meetings of the Compensation Committee of Fuel Tech, Inc. Each director of
the
CompanyFuel Tech attended at least 75% of Board and committee meetings of which he
was a member during the period of his directorship. Tarma Trust Management
N.V., which represents and acts for the CompanyFuel Tech in the Netherlands Antilles,
does not normally attend Company Board meetings outside of the Antilles and
did not attend any meetings in 20012002 except for the 20012002 Annual General Meeting
of Shareholders.
Indemnification
Under the Fuel Tech Articles of Incorporation of the Company,Association, indemnification is afforded
the Company'sFuel Tech's directors and executive officers to the fullest extent permitted
by the laws of the Netherlands Antilles. Such indemnification also includes
payment of any costs which an indemnitee incurs because of claims against the
indemnitee. The CompanyFuel Tech is, however, not obligated to provide indemnity and
costs where it is adjudicated that the indemnitee did not act in good faith in
the reasonable belief that the indemnitee's actions were in the best interests
of the Company,Fuel Tech, or, in the case of a settlement of a claim, such determination
is made by the Board of Directors of the Company.
The CompanyFuel Tech.
Fuel Tech carries insurance providing indemnification, under certain
circumstances, to all of its and its subsidiaries' directors and officers for
claims against them by reason of, among other things, any act or failure to
act in their capacities as directors or officers. The current annual premium
for this policy is $67,500.$144,500. No sums have been paid for such indemnification
to any past or present director or officer by the CompanyFuel Tech or under any insurance
policy.
4
APPROVALRATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, on the recommendation of the Audit Committee has reappointed the firm of Ernst & Young LLP, Certified
Public Accountants ("Ernst & Young"), to be the Company'sFuel Tech's auditors for the year
20022003 and submits that reappointment to the shareholders for approval.ratification.
Ernst & Young has served in this capacity since 1990 and is knowledgeable
about the Company'sFuel Tech's operations and accounting practices and is well-qualified to
act in the capacity of independent accountants. In making the appointment, the
Board reviewsAudit Committee reviewed Ernst & Young's performance in prior years along with
its reputation for integrity and overall competence in accounting and
auditing. Representatives of Ernst & Young arewill not
expected to be present in Curacao at
the Meeting or in London at the Information
Meeting.
Audit Fees
For 2001,2002, Ernst & Young billed $101,200$101,900 for fees for professional services
rendered for the audit of the Company's 2001Fuel Tech's 2002 financial statements and reviews of
the Company'sFuel Tech's financial statements included in the quarterly reports on
Securities and Exchange Commission Form 10-Q filed in 2001.2002.
Financial Information Systems Design and Implementation Fees
For 2001,2002, Ernst & Young did not render any professional services for the CompanyFuel
Tech in connection with financial information systems design and
implementation.
All Other Fees
For 2001,2002, Ernst & Young performed no non-audit services for the Company.Fuel Tech.
The affirmative vote of a majority of the shares voting is required for the
approval of this proposal. The Board recommends a vote FOR this proposal.
Report of the Audit Committee
Management is responsible for the Company'sFuel Tech's internal controls and its
financial reporting. The independent auditors are responsible for performing
an audit of the Company'sFuel Tech's financial statements in accordance with auditing
standards generally accepted in the United States and for expressing an
opinion on those financial statements based on their audit. The Audit
Committee reviews these processes on behalf of the Board of Managing Directors.processes. In such context, the Committee has reviewed
and discussed the audited financial statements contained in the 20012002 Annual
Report on Form 10-K with the Company'sFuel Tech's management and its independent auditors.
The Committee has discussed with the independent auditors the matters
required to be discussed by the Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended.
The Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as amended, and has
discussed with the independent auditors their independence. The Committee has
also considered whether the provision of the services described above under
the captions "Financial Information Systems Design and Implementation" and
"All Other Fees" is compatible with maintaining the independence of the
independent auditors.
In 2001 the Committee did not recommend any revisions to its Charter
previously published as Schedule II to its April 23, 2001 proxy statement.
Based on the review and discussions referred to above, the Committee
recommended to the Board of Managing Directors that the audited financial
statements be included in the Company'sFuel Tech's Annual Report on Form 10-K for the year
ended December 31, 20012002 filed with the Securities and Exchange Commission.
On March 4, 2003 the Board adopted an amended Audit Committee Charter which
is set out as Schedule I to this Proxy Statement.
By the Audit Committee:
J. A. de Havilland,T.S. Shaw, Chairman,
J. R.J.R. Selby, M. Espinosa and R. E. Bailey (ex officio).S.S. Khanachet.
5
PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of March 31, 20013, 2003 by (i) each person known to the
CompanyFuel
Tech to own beneficially more than five percent of the outstanding Common
Stock; (ii) each director andor nominee to be a director of the Company;Fuel Tech; (iii) the Named Executive
Officers; and (iv) all directors and executive officers as a group.
Name and Address(1) No. of Shares(2) Percentage(3)
- ------------------- ---------------- -------------
Beneficial Owner
Morgens Waterfall Vintiadis & Co., Inc. .... 1,000,000 5.08%
RIT Capital Partners plc ................... 1,028,882 5.23%
Management
Vincent M. Albanese (4)(5) ................. 142,500 *
Steven C. Argabright (5) ................... 275,250 1.4%
Douglas G. Bailey (5) ...................... 1,883,382 9.57%
Ralph E. Bailey (5)(6) ..................... 4,710,000 23.93%
Stephen P. Brady (5) ....................... 130,000 *
Miguel Espinosa ............................ 11,500 *
Charles W. Grinnell (5) .................... 74,839 *
Samer S. Khanachet ......................... 10,000 *
John R. Selby (5)(6) ....................... 45,000 *
Scott M. Schecter (4)(5) ................... 199,077 1.01%
Nolan R. Schwartz .......................... 375,000 1.91%
Thomas S. Shaw ............................. 20,000 *
Tarma Trust Management N.V. ................ -- *
All Directors and Officers as a Group (13
persons)(3)(4)(5)(6)...................... 7,876,548 40.00%
- ------------------- ------------- ----------
Beneficial Owner
RIT Capital Partners plc 1,028,882 4.7%
Management
Vincent M. Albanese(4) 113,750 *
Steven C. Argabright 202,750 *
Douglas G. Bailey (5) 1,952,500 8.9%
Ralph E. Bailey (5)(6) 4,690,000 21.3%
Stephen P. Brady 97,500 *
Charles W. Grinnell (5) 58,589 *
Nolan R. Schwartz(5) 365,000 1.7%
John R. Selby (5)(6) 35,000 *
Scott M. Schecter (5) 191,500 *
Thomas S. Shaw 10,000 *
Tarma Trust Management N.V. - *
All Directors and Officers
as a Group (13 persons)(3)(4)
(5)(6) 7,717,589 35%
- --------------------------
* Less than one percent (1.0%)
(1) The address of RIT Capital Partners plc is 27 St. James Place, London,
England SW1A 1NR.1NR and of Morgens Waterfall Vintiadis & Co., Inc. is 10
East 50th Street, New York, NY 10022. The address of each of the above
management beneficial owners is c/o Fuel Tech, Inc., Suite 703, 300
Atlantic Street, Stamford, Connecticut 06901, except Tarma Trust
Management N.V. which is Castorweg 22-24, Curacao, Netherlands Antilles.
(2) Except for 4,000 of the shares indicated for Mr. Argabright which are
owned by his spouse, the owners of all shares are believed by the CompanyFuel Tech
to have sole ownership and investment control of such shares.
(3) The percentages in each case are of the outstanding common at March 3,
2003 and all warrants or options exercisable within 60 days.
(4) Does not include 2,000 shares owned by Mr. Albanese's spouse and 3,000
shares owned by Mr. Schecter's children as to which he disclaimsthey disclaim
beneficial ownership.
(5) Includes shares subject to options and warrants exercisable presently and
within 60 days for Mr. Albanese, 108,750138,750 shares; Mr. Argabright, 193,750256,250
shares; Mr. D. G. Bailey, 1,877,5001,797,500 shares; Mr. R.E.R. E. Bailey, 60,000
shares; Mr. Brady, 120,000 shares; Mr. Espinosa, 10,000 shares;
Mr. Khanachet, 10,000 shares; Mr. Grinnell, 48,750 shares; Mr. Schwartz,
350,000 shares; Mr. Schecter, 165,000 shares; Mr. Selby 40,000 shares;
Mr. Brady, 87,500 shares; Mr. Grinnell, 32,500 shares; Mr. Schwartz, 340,000 shares
Mr. Schecter, 157,500 shares; Mr. Shaw, 10,000 shares; Mr. Selby 30,00020,000 shares; and, for all directors and officers as a group,
2,877,5003,036,250 shares.
(6) Does not include for Mr. R. E. Bailey 15,12919,354 Units and for Mr. Selby
17,78422,417 Units accrued at MarchDecember 31, 2002 under the Directors'Directors Deferred
Compensation Plan.
6
EXECUTIVE COMPENSATION
The table below sets forth information concerning compensation for services
in all capacities awarded to, earned by or paid to Mr. Ralph E. Bailey,
Chairman and Chief Executive Officer, Mr. Vincent M. Albanese, Senior Vice
President of FTI,Fuel Tech, Inc., Steven C. Argabright, President and Chief
Operating Officer of FTI,Fuel Tech, Inc., Stephen P. Brady, Senior Vice President
of FTIFuel Tech, Inc. and Scott M. Schecter, Vice President, Treasurer and Chief
Financial Officer of the CompanyFuel Tech and FTIFuel Tech, Inc. during the fiscal years
ended December 31, 2002, 2001 2000 and 1999.2000.
Summary Compensation Table
Long-Term
Compensation
------------
Shares
Annual Long-Term
------ ---------
Compensation Shares
Underlying
--------------------------------------- Options
Other Granted All Other
Name and Principal Position Year Salary(1) Bonus(2) Compensation(3) (#)(4) Compensation(5)
- --------------------------------------------------------- ---- ---------- -------------------- -------- --------------- --------------------------- ---------------
Vincent M. Albanese ........................... 2002 166,999 19,260 -- 20,000 9,345
Senior Vice President 2001 159,799 10,000 -- 25,000 4,794
Senior Vice President 2000 151,299 -- -- 35,000 10,200
1999 140,852 35,553 -- 50,000 9,456
Steven C. Argabright .......................... 2002 220,000 40,922 -- 35,000 10,559
President and Chief 2001 205,917 20,000 -- 50,000 5,100
President and ChiefOperating Officer 2000 194,334 -- -- 75,000 10,200
Operating Officer 1999 178,230 72,475 -- 75,000 9,600
Stephen P. Brady .............................. 2002 168,800 19,188 -- 25,000 9,792
Senior Vice President 2001 156,371 15,000 180,000 40,000 5,100
Senior Vice President 2000 147,617 -- -- -- 10,200
1999 140,837 35,087 -- 50,000 9,285
Ralph E. Bailey 2001............................... 2002 -- -- -- 10,000 10,00019,933
Chairman and Chief 20002001 -- -- -- 10,000 10,000
Executive Officer 19992000 -- -- -- 10,000 14,60310,000
Scott M. Schecter ............................. 2002 219,237 25,284 -- 25,000 10,059
Vice President, Treasurer 2001 209,800 12,500 -- 25,000 5,100
Vice President, Treasurerand Chief Financial 2000 200,467 -- -- 50,000 10,200
and Chief Financial 1999 190,747 48,020 -- 50,000 9,60010,210
Officer
- ---------------
(1) Mr. Bailey is not an employee of the CompanyFuel Tech or of Fuel Tech, Inc.
(2) Bonus payments for 19992002 were for participating employees in the Fuel Tech
Management Incentive Program ("MIP"). No MIP bonuses were payable for
20002001 and 2001.2000. Special bonuses, however, were paid in 2002 to recognize
2001 achievements.
(3) The amount of $180,000 designated as "Other Compensation" for Mr. Brady
was payment to him in February 2001, the third anniversary of his
employment with the Company,Fuel Tech, as a "Stay Bonus" under his employment
agreement as reimbursement for loss of benefits under a previous
employer's defined benefit plan.
(4) With the exception of the options granted to Mr. Bailey which were Non-QualifiedNon-
Qualified Stock Options, the options granted were Incentive Stock
Options. The options do not include stock appreciation rights.
(5) The amounts designated "Other Compensation" for Mr. Bailey were
directors' fees which for 2002, 2001 2000 and 1999,2000, respectively, were
deferred under the Directors' Deferred Compensation Plan as 4,225, 3,432
4,927 and 6,7704,927 Units; and, for Messrs. Albanese, Argabright, Brady and
Schecter, Company profit sharing and matching contributions to the Fuel
Tech, Inc. 401(k) Plan. No profit sharing contributions were made for
2001.
7
Directors' Compensation
Effective from May 1, 2002, directors' cash compensation is
proposed to beFuel Tech provides an annual cash retainer of $15,000 forpayable quarterly in
arrears to each director and, in addition, $2,000 for each committee Chairman
of Fuel Tech or Fuel Tech, Inc. and, for each regular or special meeting of
the Board, a meeting fee of $1,200 and, for meetings of committees of both the
Company and of Fuel Tech, Inc., a meeting fee of $600. The Fuel Tech Board usually has
generally four regularly scheduled meetings per year. In 2001, the Company provided an annual
retainer of $10,000 payable quarterly in arrears and meeting fees of $1,000 for
days spent on Board or committee meetings in excess of five per year. In
addition, committee chairmen, were provided an annual retainer of $2,000.
Non-executive directors
are entitled under the Company's Directors'Fuel Tech's Directors Deferred Compensation Plan to defer
fees in either cash with interest or share equivalent "Units" until fixed
dates, including the date of retirement from the Board.
7
Board, when the deferred
amounts will be distributed in cash.
Directors employed by the CompanyFuel Tech or its subsidiaries receive compensation
other than directors' fees but receive no compensation for their service as
directors.
Except for the retainer for committee chairmen and the
non-executive options referred to below,Under Fuel Tech, Inc. directors are not
compensated for their service as directors.
Under the non-executive feature of the Company'sTech's 1993 Incentive Plan, each non-executive director of the CompanyFuel
Tech or of Fuel Tech, Inc. receives as of the first business day following the
annual meeting a non-qualified stock option award of 10,000 shares for a term
of 10 years vesting immediately. In 2001 such 10,000 share options were
granted to Messrs. D. G. and R. E. Bailey, Schwartz, Selby and Shaw at the
exercise price of $3.595 per share.
Compensation Committee Interlocks and Insider Participation
Mr. R. E. Bailey, who is not an employee of the CompanyFuel Tech or of Fuel Tech, Inc.,
is Chairman and Chief Executive Officer of the CompanyFuel Tech and is a member of the
Fuel Tech, Inc. Compensation Committee (the "Committee"). Mr. Argabright is
President and Chief Operating Officer of Fuel Tech, Inc. and, as an ex officio
member of the Compensation Committee, participates inattends meetings of the Committee but
does not vote on Committee actions.actions and is not present for discussions or
decisions on his own compensation. Mr. R. E. Bailey is Chairman and a
shareholder of ABC and Mr. D. G. Bailey is President, Chief OperatingExecutive Officer
and an employee and shareholder of ABC, in which relationships they enjoy a
direct material interest in the management services fees set forth below under
the caption "Management Services Agreement."
8
OPTION GRANTS IN THE LAST FISCAL YEAR (1)YEAR(1)
Potential
Number of % of Total Potential Realizable
Number of
Shares Options Value of Assumed
Annual
Underlying Granted to Exercise or Annual Rates of Stock
Price
Options Granted Employees in Base Price Price Appreciation for
OptionName Granted (#) 20012002 ($/Sh) Expiration Date Option Term
------------------- ---------------- -------------- ------------------- ---- ----------- ------------ -------------
Name----------- --------------- -------------------
5% 10%
---- -- ----------- --------
Vincent M. 25,000 6.74% $1.50Albanese ......... 20,000 5.64% $5.98 2/22/11 $23,588 $59,775
Albanese28/12 $ 75,200 $190,600
Steven C. 50,000 13.49% $1.50Argabright ........ 35,000 9.88% $5.98 2/22/11 $47,175 $119,550
Argabright28/12 $131,600 $333,550
Ralph E. Bailey ............. 10,000 2.69% $3.595 2/22/11 $22,612 $57,3042.82% $6.265 6/06/12 $ 39,400 $ 99,850
Stephen P. Brady 40,000 10.79% $1.50............ 25,000 7.06% $5.98 2/22/11 $37,740 $95,64028/12 $ 94,000 $238,250
Scott M. Schecter ........... 25,000 6.74% $1.507.06% $5.98 2/22/11 $23,588 $59,77528/12 $ 94,000 $238,250
- ---------------
(1) Except the options granted to Mr. Bailey which are immediately
exercisable, 50% of the above stock option awards are first exercisable
on the second anniversary of grant and 25% of the awards on each of the
third and fourth anniversaries of grant. 20012002 options were granted on
February 22, 2001. The
Company28, 2002. Fuel Tech has not historically and did not in 20012002
grant stock appreciation rights.
8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised
Acquired on Value Unexercised Options at Fiscal in-the-Money Options
atName Exercise Realized Year-End at Fiscal Year-End
------------- ------------- ------------------------------------- -------------------------------- ---- -------- -------- --------------------------- ---------------------------
Exercisable Unexercisable Exercisable Unexercisable
--------------------- --------------- -------------- ----------------
Name------------ ------------ ------------ -------------
Vincent M. Albanese ......................... -- -- 66,250 97,500 275,500 405,188
Albanese108,750 75,000 209,844 100,156
Steven C. Argabright ........................ -- -- 122,500 187,500 512,688 781,250
Argabright203,750 141,250 389,375 192,188
Ralph E. Bailey ............................. -- -- 40,00050,000 -- 146,05095,950 --
Stephen P. Brady ............................ -- -- 62,500 77,500 259,375 333,87587,500 87,500 167,188 86,563
Scott M. Schecter 10,000 $13,450 107,500........................... 20,000 $77,600 112,500 439,750 465,00087,500 275,625 115,625
9
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Compensation Policies
The Company'sFuel Tech's executive compensation policies are to pay competitive salaries
and annual incentive compensation, if earned, and to grant stock option awards
in appropriate amounts. Competitive salaries are based on Management's
knowledge of market conditions supplemented by salary surveys as well as the
position of each employee within the business and historical practice.
Incentive compensation, intended to encourage performance, may be in the form
of discretionary bonuses or participation by managers in the Fuel Tech, Inc.
Management Incentive Program ("MIP"). Company stock option awards are made to
provide a long-termlong term incentive to employees and to create a common interest
between the employees and its shareholders generally.
Compensation of Executive Officers - 2001-- 2002
The key components of the Company'sFuel Tech's executive compensation program during the
last fiscal year were base salary, incentive compensation and stock option
awards under the 1993 Plan. Incentive compensation was not awarded, but special bonuses were paid
to recognize 2001 achievements.Plan in the amounts shown above under the caption
"Executive Compensation." Base salaries are fixed by the Board in its
discretion based upon historical levels, performance, ranking within the
officer group, amounts being paid by comparable companies, and the Company'sFuel Tech's
financial position. Incentive compensation awards, when earned, are based upon
the
Company'sFuel Tech's achievement of a minimum level of performance under an annual
profit plan and the individual officer's allocated percentage of an amount
determined by the Board to be the MIP "pool," if minimum financial performance
is achieved. Incentive compensation payments, however, were not made for 2001, as the minimumSuch performance level for 2001 was not achieved.achieved in 2002. The stock options are
designed to provide additional incentives to executive officers to maximize
stockholder value. Through the use of vesting periods the option program
encourages executives to remain in the employ of the Company.Fuel Tech. In addition,
because the exercise prices of such options are set at the fair market value
of the stock on the date of grant of the option, executives can only benefit
from such options if the trading price of the Company'sFuel Tech's shares increases, thus
aligning their financial interests with those of the shareholders.
Compensation of Chief Executive Officer - 2001-- 2002
The Chairman and Chief Executive Officer, Ralph E. Bailey, is not an
employee of the CompanyFuel Tech or of Fuel Tech, Inc. and received directors' fees and
stock option awards for service in his capacity as a director only. See also
the text below under the caption "Management Services Agreement" concerning
payments by the CompanyFuel Tech to American Bailey Corporation.
In 2001,2002, Mr. Argabright, President and Chief Operating Officer of Fuel Tech,
Inc., was paid a competitive base salary. A significant portion of
Mr. Argabright's annual compensation was to be based on incentive compensation
with a maximum target percentage of 40%. The Company did not achieve its profit goals and
that of base salary. Under the 2002 MIP
formula, Mr. Argabright's incentive compensation for 2002 was not earned. A special bonus payment23.7% of
$15,000
was, however, paid to Mr. Argabright to recognize his 2001 achievements.December 31, 2002 base salary, or $40,922. Stock option awards to
Mr. Argabright in 20012002 were 50,000 shares.35,000 shares at the exercise price of $5.98 per
share.
9
This report has been prepared by the following members of the Compensation
Committee of Fuel Tech, Inc.
D. G. Bailey R. E. Bailey
N. R. Schwartz J. R. Selby
10
This compensation report and the following performance graph shall not be
deemed incorporated by reference into any filing by the CompanyFuel Tech under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent the CompanyFuel Tech specifically incorporates such report.
PERFORMANCE GRAPH
The following line graph compares (i) the Company'sFuel Tech's total return to
shareholders per share of Common Stock for the five years ended December 31,
20012002 to that of (ii) the Russell 2000 index, and (iii) the Standard & PoorsDow Jones Pollution
Control Index.
-------------------------------------------------------------------Fuel-Tech N.V.
Stock Performance Graph
12/31/97 - Cumulative % change from base year 12/31/96
-------------------------------------------------------------------
-------------------------------------------------------------------
FTEK02
[GRAPH]
------------------------------------------------------
Fuel-Tech N.V. Russell 2000 SPPOLU
-------------------------------------------------------------------
-------------------------------------------------------------------Dow Jones Pollution
Stock Price Index Control Index
------------------------------------------------------
12/31/94
12/31/95
12/31/9697 100 100 100
12/31/98 133 97 96 121 101
12/31/98 128 116 108103
12/31/99 140 139 48146 115 57
12/29/00 108 133 78113 111 80
12/31/01 388 135 87
-------------------------------------------------------------------
[LINE GRAPH]
11403 112 90
12/31/02 279 88 71
------------------------------------------------------
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Services Agreement
Pursuant to a Management Services Agreement of April 30, 1998, as amended,
between Fuel Tech, Inc. ("FTI") and American Bailey Corporation ("ABC"), ABC will
provide management services to FTIFuel Tech, Inc. and, if requested, the
Company.Fuel Tech.
Such management services shall consist of management policy guidance and
assistance in the areas of management focus and strategic direction, world-wideworld-
wide marketing strategy and planning, internal accounting and administrative
procedures, management and organizational development, financial analysis,
budgeting and working capital management and market analysis, industry trend
analysis, and advice regarding power generation and internal combustion engine
markets. The fee payable to ABC by FTIFuel Tech, Inc. for these services is
$250,000$350,000 per year until expiration of the Agreement on April 30, 2002. ABC and disinterested
members of the Board are in discussion concerning an extension of this Agreement
and the terms and conditions of such extension.2004. Ralph
E. Bailey is Chairman and Douglas E.G. Bailey is President and Chief Operating
Officer of ABC and both are shareholders of ABC.
Clean Diesel Technologies, Inc. Management Services Agreement
Under an August 3, 1995 Management and Services Agreement with Clean Diesel
Technologies, Inc. ("CDT"), $73,000$69,120 was paid to the CompanyFuel Tech, Inc. by CDT in 20012002
for reimbursement on account of the costs to the CompanyFuel Tech, Inc. of
administrative, legal and management services. $68,000$66,780 of the 20012002
reimbursement was on account of legal services provided to CDT by Mr. Grinnell,
an employee of Fuel Tech, Inc. and Managing Director of the CompanyFuel Tech and a
Director and Officer of CDT. The CompanyFuel Tech has a 16.3%15.2% equity ownership interest
in CDT's issued and outstanding shares. Mr. Grinnell will recuse himself from
consideration of any transactions between Fuel Tech and Clean Diesel that may
be, or may appear to be, material to either Company.
Employment Agreements
Messrs. Albanese, Argabright, Brady and Schecter have employment agreements
with the CompanyFuel Tech, Inc. effective January 17, 1994 for Mr. Schecter, March 30,
1998 for Mr. Albanese, February 6, 1998 for Mr. Argabright and February 1,
1998 for Mr. Brady. These agreements are for indefinite terms, provide for
disclosure and assignment of inventions to the Company,Fuel Tech, Inc., protection of Company
proprietary data, covenants against certain competition against the Company and arbitration of
disputes. Under Mr. Schecter's agreement, he is required to provide two months
notice on resignation and, if his employment is terminated by the CompanyFuel Tech, Inc.
for reasons other than "just cause" (as defined in the agreement), the CompanyFuel Tech
must continue Mr. Schecter's then base salary and benefits until he finds
other comparable employment but not for a period in excess of one year.
1211
GENERAL
Section 16(a) Beneficial Ownership Reporting Compliance
The CompanyFuel Tech believes that all reports required to be filed under Section 16(a)
of the Securities and Exchange Act of 1934 for the year 20012002 were timely filed.filed
except that two reports for transactions on December 18 and 27, 2002 for
Mr. Albanese were filed January 3, 2003; one report for a transaction on
December 31, 2002 for Mr. D. G. Bailey was filed January 8, 2003; one report
for a transaction on February 22, 2002 for Mr. Schecter was filed March 11,
2002; and two reports for Mr. James M. Valentine, a former director of Fuel
Tech, for transactions throughout the months of January and March 2002, were
filed April 16, 2002.
Other Business
Management knows of no other matters that may properly be, or are likely to
be, brought before the meeting other than those described in this Proxy Statement.proxy
statement.
Shareholder Proposals
If other proper matters are introduced at the Meeting, the individuals named
as Proxies on the enclosed Proxy Card will vote in their discretion the shares
represented by the Proxy Card. In order to be presented for action at the
Meeting, such matters must, under the Articles of the Company,Fuel Tech, be sentin writing and
received by
registered airmail to the Board of Managing Directors in writing postmarked prior to
Midnight, June 4, 2002 toat the above address of the CompanyFuel Tech
in Curacao not later than May 16, 2003 in order to be presented for
consideration at the meeting.Meeting.
Proposals of shareholders intended for inclusion in the Proxy Statementproxy statement and
proxy card to be mailed to all shareholders entitled to vote at the Annual General
Meeting of shareholders to be held in the year 20032004 must be received in
writing addressed to the Board of Directors at the above address of the CompanyFuel Tech
or to the Secretary at Fuel Tech, Inc., 300 Atlantic Street, Stamford CT 06901
USA on or before December 30, 2002November 17, 2003 and, if not received by such date, may be
excluded from the proxy materials.
FUEL-TECH N.V.
Charles W. Grinnell
Secretary
April 29, 2002March 15, 2003
12
SCHEDULE I
Fuel-Tech N.V.
Audit Committee Charter
The Board of Managing Directors (the "Board") of Fuel-Tech N.V. (the
"Company") has established from among its members an Audit Committee (the
"Committee") with the composition, responsibilities, and duties described
below:
Composition
The Committee shall be comprised of not less than that number of independent
directors and financial experts who shall, in the opinion of the Board, meet
the requirements of applicable stock exchange rules and law and regulations
from time to time in effect. "Ex Officio" members of the Committee shall not
be included in the number of required independent directors or financial
experts and shall not vote. Appointment to the Committee shall not signify
that the appointee has a higher degree of liability than other directors.
Responsibility
The Committee's responsibility is to assist the Board in fulfilling its
fiduciary responsibilities as to accounting policies and reporting practices
of the Company. The Committee is authorized to retain persons having a special
competence as necessary to assist the Committee in fulfilling such
responsibility. Notwithstanding the terms of this Charter, it shall not be the
duty of the Committee to plan or conduct audits or to determine that the
Company's financial statements are complete and accurate and are in accordance
with generally accepted accounting principles, that being the responsibility
of Management and the Independent Accountant. The Independent Accountant shall
report directly to the Committee in connection with issuing an audit report or
related work. The designation of any member of the Committee as a "financial
expert" is not intended and shall not be construed as imposing a higher degree
of individual responsibility, obligation or liability on such member or that
the duties, obligations or liabilities of the other members of the Committee
are decreased because of such designation.
Attendance
At all meetings of the Committee two independent members shall constitute a
quorum. As necessary, the Chairman of the Committee may request members of
Management and representatives of the Independent Accountant to be present at
meetings. Ex Officio members shall not attend executive sessions of the
independent directors except by invitation.
Minutes
Minutes of the meetings of the Committee shall be prepared by the Corporate
Secretary, shall be sent to Committee members and to directors who are not
Committee members and, after approval by the Committee, shall be kept with the
minutes of the meetings of the Board.
Duties
1. For purposes of issuing an audit report or related work, the Committee
shall have sole authority to appoint the Independent Accountant; oversee and
evaluate the work of the Independent Accountant; approve the compensation of
the Independent Accountant; review and approve in advance all matters
concerning audit and non-audit services proposed to be performed by the
Independent Accountant; and review and approve any discharge of the
Independent Accountant.
2. Receive periodic written statements from the Independent Accountant
regarding its independence and delineating all relationships between it and
the Company, including fees for audit and non-audit services, and to discuss
such statements with the Independent Accountant, in accordance with applicable
statements of independence standards, law and regulations.
13
Schedule I3. Review with Management and the Independent Accountant the scope and
general extent of the Independent Accountant's proposed audit examinations
and, where applicable, annual independent evaluation of the Company's
disclosure controls and internal controls.
4. Upon completion of the annual audit, the Committee shall review with
Management and the Independent Accountant the Company's financial results for
the year; where applicable, the results of the Independent Accountant's
evaluation of the Company's disclosure controls and internal controls; and
discuss with the Independent Accountant the matters relating to the annual
audit required to be discussed by applicable statements on auditing standards,
law and regulations.
5. Discuss with the Independent Accountant matters relating to reviews by
the Independent Accountant of the Company's unaudited interim financial
statements and periodic reports.
6. Discuss with the Independent Accountant the quality of the Company's
financial accounting personnel and any relevant recommendations of the
Independent Accountant.
7. Review and approve all related party transactions and matters apparently
involving conflicts of interest regardless of amount.
8. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
or disclosure controls or auditing matters; and the confidential anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
9. The members of the Committee who are not "ex officio" members shall act
as a Qualified Legal Compliance Committee to receive reports of material
violations of the securities laws, breaches of fiduciary duty or similar
material violations from legal counsel representing the Company and practicing
before the Securities and Exchange Commission.
10. Review this Charter from time to time with a view toward recommending
revisions to the Board.
11. UNCONSOLIDATED FINANCIAL STATEMENTSPerform such other duties as may be required by law, the Company's
governing documents or the resolutions of the Board.
14
PROXY PROXY
Solicited by the Board of Managing Directors
FUEL-TECH N.V.
Annual Meeting of Shareholders - May 28, 2003
The undersigned hereby appoints Ralph E. Bailey, Charles W. Grinnell or
Tarma Trust Management N.V., acting singly, with full power of substitution,
proxies for the undersigned and authorizes them to represent and vote, as
designated on the reverse side, all of the shares of Common Stock of Fuel-Tech
N.V.(the "Company") which the undersigned may be entitled to vote at the Annual
General Meeting of Shareholders of the Company to be held at the office of the
Company, Castorweg 22-24, Curacao, Netherlands Antilles, at 10:00 a.m. on
Wednesday, May 28, 2003, and at any adjournments or postponements of the
meeting, for the approval of the agenda items set forth below and with
discretionary authority as to any other matters that may properly come before
the meeting, all in accordance with and as described in the Notice of Meeting
and accompanying Proxy Statement. The Board of Directors recommends a vote for
election as Managing Director of each of the nominees and of each other agenda
item, and, if no direction is given, this proxy will be voted for all nominees
and for such other items.
IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE
- --------------------------------------------------------------------------------
Address Change/Comments (Mark the corresponding box on the reverse side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
Mark Here for |_|
Address Change
or Comments SEE
REVERSE SIDE
To approve the Annual Report of Management of FOR AGAINST ABSTAIN
the Company for the year ended December 31, 2002. |_| |_| |_|
To approve the Financial Statements of the FOR AGAINST ABSTAIN
Company for the year ended December 31, 2002. |_| |_| |_|
3. To approve the election as Managing Directors of
01 Douglas G. Bailey,
02 Ralph E. Bailey, FOR
03 Miguel Espinosa, all nominees listed WITHHOLD AUTHORITY
04 Charles W. Grinnell, above (except as to vole for all
05 Samer S. Khanachet, marked to the contrary) nominees listed above
06 Thomas S. Shaw, and |_| |_|
07 Tarma Trust Management N.V.
and to fix their compensation.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the line provided below.)
- -------------------------------------------------------- FOR AGAINST ABSTAIN
4. To ratify the appointment of Ernst & Young LLP as the |_| |_| |_|
independent auditors for the year 2003 and to authorize
the Board of Managing Directors to fix their compensation.
Signature Signature Date
---------------------- ---------------------- ----------
Please sign exactly as name appears. If acting as attorney, executor, trustee or
in other representative capacity, insert name and title.
FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11 PM Eastern Time the day
prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
Balance Sheets (at December 31) 2001 2000
--------------- ---------------- ---------------------------------------------------------------------------------------------------
Internet Telephone Mail
http://www.eproxy.com/ftek 1-800-435-6710
Assets:
ReceivableUse the Internet to vote Use any touch-tone Mark, sign and other current assets $ 34,000 $ 226,000
Investmentsdate your
your proxy. Have your telephone to vote your proxy card and return it
proxy card in subsidiaries 13,319,000 14,539,000
--------------- ---------------
Total assets $ 13,353,000 $ 14,765,000
=============== ===============
Liabilitieshand when proxy. Have your proxy in the enclosed postage-paid
you access the web site. OR card in hand when you OR envelope.
You will be prompted to call. You will be prompted
enter your control number, to enter your control
located in the box below, number, located in the box
to create and shareholders' equity
Liabilities
Accounts payablesubmit an below, and accrued expenses 218,000 198,000
Shareholders' equity 13,135,000 14,567,000
--------------- ---------------
Total liabilities and shareholders' equity $ 13,353,000 $ 14,765,000
=============== ===============then follow the
electronic ballot. directions given.
- --------------------------------------------------------------------------------------------------
Statements of Operations (for the years ended December 31) 2001 2000 1999
--------------- --------------- ---------------
Loss from operations $ (952,000) $ (750,000) $ (524,000)
Interest and other income, net 129,000 -- --
(Loss) income from equity investment in subsidiary (810,000) 335,000 3,532,000
=============== =============== ===============
Net (loss) income $ (1,633,000) $ (415,000) $ 3,008,000
=============== =============== ===============
Statements of Cash Flow (for the years ended December 31) 2001 2000 1999
--------------- --------------- ---------------
Operating activities:
Net cash used in operating activities $ (521,000) $ (511,000) $ (551,000)
--------------- --------------- ---------------
Investing activities:
Investment in and loans to CDT (125,000) (350,000) --
Investment in Fuel Tech CS GmbH -- (116,000) --
--------------- --------------- ---------------
Net cash used in investing activities (125,000) (466,000) --
Financing activities:
Dividend from FTI 280,000 638,000 825,000
Exercise of stock options 406,000 339,000 212,000
Purchase of treasury stock/other (40,000) -- (46,000)
Purchase and retirement of nil coupon loan notes -- -- (444,000)
--------------- --------------- ---------------
Net cash provided by investing activities 646,000 977,000 547,000
Net decrease in cash and cash equivalents -- -- (4,000)
Cash and cash equivalents at beginning of period -- -- 4,000
--------------- --------------- ---------------
Cash and cash equivalents at end of period $ -- $ -- $ --
=============== =============== ===============
Basis of Presentation:
In the unconsolidated financial statements, the Company's investment in
subsidiaries is stated at cost plus equity in undistributed earnings of
subsidiaries since the date of acquisition. The Company's share of net income of
its unconsolidated subsidiaries is included in consolidated income using the
equity method. The unconsolidated financial statements should be read in
conjunction with the Company's consolidated financial statements.
14If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.