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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:
[ X] Preliminary Proxy Statement
[ ] 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)
[X] $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.
REVISED PRELIMINARY PROXY STATEMENT
The enclosed form is not a proxy voting card, but only a
voluntary survey.
Released to Shareholders 11/__/01
Sheet Metal Workers International Association
1750 New York Avenue NW
Washington, D.C. 20006
Tel. (800) 457-7694
Fax: (202) 662-0891
NOTICE OF INTENDED PROXY CONTEST AT COMFORT SYSTEMS USA
To Fellow Comfort Systems USA shareholders:
I. WITHOUT SHAREHOLDER APPROVAL, SHOULD THIS COMPANY GRANT
ITS EXECUTIVES NEW STOCK OPTIONS JUST
BECAUSE THE STOCK'S MARKET PRICE DROPPED BELOW THE
EXERCISE PRICE OF PRIOR OPTIONS?
Our International owns stock in the Company and also has
interests in the Company going beyond stock ownership, as the
representative of several hundred Company employees.
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, benefitting 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 executive 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."
We intend to present a proposal at the next 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 action. . 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:
The enclosed form is not a proxy voting card, but only a
voluntary survey. We intend to solicit votes for the proposal in
a few months using our own proxy card and proxy statement. These
probably cannot be sent you until after you receive a proxy
statement and card from the Company. The Company's proxy card
may not include our proposal.
IF YOU SUPPORT OUR PROPOSAL, DO NOT SEND BACK A PROXY CARD TO
MANAGEMENT UNLESS IT INCLUDES OUR PROPOSAL. WAIT UNTIL YOU
RECEIVE OUR PROXY CARD.
We intend to solicit at least a majority of the voting power of
the outstanding stock. The Company's annual shareholders meeting
generally occurs the third week of May, generally at a hotel near
the company's headquarters , 777 Post Oak Blvd., Houston,
TX 77056. Our proposal is a non-binding recommendation to the
Board.
III. PROXY SOLICITATION:
This solicitation is conducted by Sheet Metal Workers'
International Association (SMWIA),which owns 1,400 shares of
Comfort Systems USA stock and represents about 500 Comfort
Systems employees for collective bargaining purposes. Several
hundred are represented by other unions: a total of approximately
2,795 are unionized, out of approximately 10,000 non-management
personnel. 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 vote each proxy
card it receives in accordance with the shareholder's
instructions. SMWIA will not seek any discretionary voting
authority for the shareholders meeting: rather, it will vote
stock solely as directed by the shareholder . SMWIA will
bear all solicitation costs (anticipated at $5000) and will not
seek reimbursement from the Company.
IV. MORE INFORMATION ON EXECUTIVE STOCK OPTIONS AND OTHER
COMPENSATION:
We incorporate by reference the information on executive
compensation contained at pp. 8-12 of the Company's prior proxy
statement. This is available at www.sec.gov or upon request from
SMWIA.
V. 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 upcoming proxy statement and proxy card. The
deadline for shareholders to submit proposals for inclusion in
management's proxy materials is December 1, 2001.
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 SURVEY TODAY.
For more information, contact Allen Smith at SMWIA at (800)
457-7694.
SURVEY OF SHAREHOLDERS OF COMFORT SYSTEMS USA
This is a voluntary survey, not a proxy card, and cannot be used
to vote on the shareholder proposal. Your identity will be kept
confidential unless you specifically authorize to the
contrary . The information from your response will be used
solely for communicating about shareholder voting issues.
YOUR VIEW OF OUR SHAREHOLDER PROPOSAL FOR SHAREHOLDER CONTROL
OVER STOCK OPTION REPRICING:
____ Strongly support
____ Likely to support
____ Likely to oppose because ______________________
____ Undecided
NEED MORE INFORMATION?
____ Please send me more information about the issues on
which shareholders will be voting.
___________________________________________ _______________
PRINT SHAREHOLDER NAME # SHARES(optional)
Mailing address: _________________________________________
E-mail address: _________________________________________
Telephone: _________________________________________
Fax: _________________________________________
Please return to SMWIA by November __, 2001 in the enclosed
envelope, or fax to (202)662-0891.