UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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[ ] | Definitive Additional Materials |
[ ] | Soliciting Material Under § 240.14a-12 |
Perma-Pipe International Holdings, Inc.
(name of registrant as specified in its charter)
(name of person(s) filing proxy statement, if other than registrant)
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May 8, 2019
Dear Fellow Stockholders:
At last year’s annual meeting, our Board of Directors reaffirmed our intent to increase engagement with you, our stockholders. Following the annual meeting, our Chairman of the Board, Chairman of the Compensation Committee, and Chief Executive Officer reached out to all stockholders holding 200,000 or more shares of our common stock to ask for their thoughts on our executive compensation and corporate governance practices. Additionally, in March 2019 we reached out again to these stockholders to share with them many of the changes we had made and also to solicit their thoughts and opinions on how we are doing in responding to their expectations. These stockholders represented more than 50% of the shareholdings in our Company. Specifically, our Board was interested in receiving stockholders’ feedback on any recommended improvements to our executive compensation and corporate governance practices so that we could consider their suggestions into our ongoing review of these two areas.
Based on the feedback received, our Board has decided to adopt some of the recommendations, including:
● | Adopt a plan to allow our stockholder rights plan to expire on September 15, 2019 without being extended or renewed; | ||
● | Add a 360-degree review element to our annual Board and Committee evaluations; | ||
● | Adopt a claw back policy on executive compensation awards; | ||
● | Diversify the makeup of our Board; as evidenced by the recent appointment of Cynthia A. Boiter to our Board; | ||
● | Strengthen our insider trading, anti-hedging and anti-pledging policies; | ||
● | Engage an executive compensation consultant to complete a comprehensive peer benchmarking study of our executive compensation program; | ||
● | Adopt a Board retirement policy requiring non-employee directors to retire from the Board, and not stand for re-election, on the date of the annual stockholder meeting following their 72nd birthday. This policy is in the interest of keeping and refreshing the skills, experience and perspective of our Board at a competitive and responsive level and to serve in the best interest of our stockholders; and | ||
● | Include in this proxy statement a director’s skill matrix which highlights our Board’s core competencies. We recognize our stockholders’ interest in understanding how our directors are qualified, both on an individual level and as a group, to oversee the Company’s business risks and long-term strategy. |
In addition, our Board has adopted the following annual plan to incorporate year-round proactive stockholder engagement:
November – January
● | Review governance best practices, regulatory developments, Board skill matrix and our Company's governance policies and practices; | ||
● | Assess stockholder feedback on our governance and executive compensation policies and practices; and | ||
● | Identify and act upon areas of enhancement. |
February – April
● | Reach out to all our major stockholders explaining the significant recent enhancements to our corporate governance practices and compensation policies; | ||
● | Reach out to our largest stockholders to solicit their further input on topics they would like us to address at the annual meeting; and | ||
● | Review and discuss feedback from our stockholders and consider modifications to our governance policies and executive compensation plans where appropriate. |
May – July
● | Highlight and demonstrate to all stockholders in our annual proxy statement any changes implemented to our governance policies and executive compensation practices in response to stockholder feedback received; and | ||
● | Immediately following the annual meeting, evaluate the results of our stockholder vote on our director elections and our executive compensation practices, to address any additional concerns our stockholders have expressed. We believe this will demonstrate our responsiveness to our stockholders. |
August- October
● | Complete a Committee and individual director self-assessment, along with continued consideration of feedback from stockholders throughout the year. |
We have long believed that good corporate governance and interaction with our stockholders is paramount in ensuring that we are managed for the long-term benefit of our stockholders. We regularly review our Board’s structure, policies, charters and practices and compare them to those suggested by various authorities in corporate governance and to the practices of other public companies. Our charters for each of our Board’s Audit, Compensation, and Nominating and Corporate Governance Committees, our code of conduct, along with certain other corporate governance documents, are available on our website, www.permapipe.com.
We hope that you view these changes, as we do, as positive steps in stockholder outreach and engagement. Of course, stockholders and other interested parties are always free to write or call our Board as provided below:
Write: Corporate Secretary
Perma-Pipe International Holdings, Inc.
6410 W. Howard Street
Niles, IL 60714
Call: Investor Relations
(847) 929-1200
Email: investor@permapipe.com
We would like to invite all stockholders to communicate through the above contact information, any specific topics they would like the Board and executive management team to address at our forthcoming Annual Meeting.
Thank you for your investment in Perma-Pipe International Holdings, Inc. and continued support of our Board and Company.
Very truly yours,
David S. Barrie David J. Mansfield
Chairman of the Board Chief Executive Officer
6410 W. Howard Street
Niles, Illinois 60714
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
Thursday
June10:00 a.m. Central Time
Online at
www.virtualshareholdermeeting.com/Perma-Pipe International Holdings, Inc. ("Company", "
1. | to elect |
2. | to approve, on an advisory basis, the compensation of the Company's named executive officers; |
3. | to determine, on an advisory basis, the frequency of the advisory vote on the compensation of the Company's named executive officers; |
4. | to ratify the appointment of Grant Thornton LLP as the Company's independent accountant for the fiscal year ending January 31, |
2020; and | |
5. | |
to transact such other business as may be properly presented at the meeting. |
The Board recommends that you vote
"FOR" the election of the director nominees, "FOR" the approval, on an advisory basis, of the compensation of the Company’s named executive officers, for the submission of the advisoryStockholders of record at the close of business on May 8, 2017April 22, 2019 are entitled to attendnotice of and to vote atprior to the date of the meeting.
We have elected to use the notice and access rules adopted by the Securities and Exchange Commission ("SEC") to provide our stockholders access to our proxy materials and 2018 Annual Report to Stockholders by notifying them of the availability of our proxy materials and 2018 Annual Report to Stockholders via the Internet. The notice and access model gives the Company a fast, efficient and lower-cost way to furnish stockholders with their proxy materials and reduces our impact on the environment. As a result, on May 12, 2017,8, 2019, we mailed to our stockholders an "Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on June 22, 2017"20, 2019" ("Notice") with instructions on how to access theour proxy materials and the 2018 Annual Report to Stockholders via the Internet and how to vote online. On the date of mailing of the Notice, all stockholders will be able tomay access theour proxy materials on a website referred to, and at the URL address included in, the Notice and in theour proxy statement. TheseOur proxy materials will beare available free of charge.
Stockholders of record as of May 8, 2017April 22, 2019 will be able to participate in theour virtual annual meeting by visiting
Our Proxy Statement and the Company's
By orderOrder of the Board of Directors,
D. Bryan Norwood
Secretary
May 12, 2017
Perma-Pipe International Holdings, Inc.
PROXY STATEMENT
For the 2019 Annual Meeting of Stockholders
June 20, 2019
INTRODUCTION
This proxy statement is being furnished to our stockholders by the Board of Directors (the “Board”) of Perma-Pipe International Holdings, Inc., in connection with the solicitation of proxies by our Board for use at our 2019 annual meeting of stockholders to be held virtually by live webcast at www.virtualshareholdermeeting.com/PPIH2019 on Thursday June 20, 2019 at 10:00 a.m., Central Time, and all adjournments or postponements thereof (the “Annual Meeting”) for the purposes set forth in the attached Notice of 2019 Annual Meeting of Stockholders.
A proxy, in the enclosed form, which is properly executed, duly returned to the Company and not revoked, will be voted in accordance with the instructions contained therein. The shares represented by executed but unmarked proxies will be voted as follows:
FOR the election of five directors to hold office until the Company’s 2020 Annual Meeting of Stockholders and until their successors are otherwise duly elected or qualified;
FOR the approval, on an advisory basis, of Perma-Pipe International Holdings, Inc.the compensation of the Company's named executive officers;
For the submission of the advisory vote on the compensation of the Company's named executive officers to the Company's stockholders every ONE year;
• | FOR the ratification of our selection of Grant Thornton, LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2020; and | |
• | On transacting any other business which may properly come before the Annual Meeting or any adjournment or postponement thereof. |
This Proxy Statementproxy statement and the accompanying form of proxy are first being sent or made available by the Company to stockholders of the Company on
References in this proxy statement to "the Company," "we," "our" and "us," are references to Perma-Pipe International Holdings, Inc. Our fiscal year ends January 31. Years described as 2018 and 2017 are our fiscal years ended January 31, 2019 and 2018, respectively.
It is important that your shares are represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please sign and date the enclosed proxy card and return it to us. If you own your shares through a broker, bank or other nominee, please return your voting instruction form to your broker, bank or nominee, or use the electronic voting means described below to vote your shares.
VOTING AND OTHER INFORMATION
Who may vote? You may vote up to the day of the Annual Meeting if you were the holder of record of our common stock ("Common Stock") at the close of business on April 22, 2019. You are entitled to one vote on each proposal presented at the Annual Meeting for each share you owned on that date. If you held Common Stock on that date in "street name" through a bank, broker, or other nominee, you must obtain a legal proxy, executed in your favor, from the institution that held your Common Stock as of the close of business on April 22, 2019, to be entitled to vote those shares of Common Stock. As of the close of business on April 22, 2019, there were 7,883,522 shares of Common Stock outstanding.
Why did I receive a Notice Regarding the Availability of Proxy Materials instead of printed copies of these materials in the mail? In accordance with rules promulgated by the SEC, the Company has elected to furnish its proxy materials to stockholders electronically via the Internet at www.proxyvote.com. On May 8, 2019, the Company began mailing to stockholders a notice containing general information about the Annual Meeting, the address of the website on which this proxy statement and the Company's 2018 Annual Report, excluding exhibits, are available for review, printing and downloading, and instructions on how to submit proxy votes. If you received that notice, you will not receive a printed copy of our proxy materials unless you request them by following the instructions for requesting such materials contained in the notice.
What am I voting on? You are voting on:
1. | the election of five directors to hold office until our 2020 annual meeting of the stockholders and until their successors are otherwise duly elected or qualified; |
2. | the approval, on an advisory basis, of the compensation of the Company's named executive officers; |
3. | the determination, on an advisory basis, of the frequency of the advisory vote on the compensation of the Company's named executive officers; |
4. | the ratification of the appointment of Grant Thornton LLP as the Company's independent accountant for our fiscal year ending January 31, 2020; and | |
5. | such other business as may be properly presented at the Annual Meeting. |
In case any nominee named herein for election as a director is unable to serve when the election occurs, proxies in the accompanying form may be voted for a substitute as determined by our Board. The Company expects all nominees to be able to serve as a director if elected and knows of no matters to be brought before the Annual Meeting other than those referred to in the accompanying Notice of 2019 Annual Meeting and this proxy statement. If, however, any other matters come before the Annual Meeting, proxies in the accompanying form will be voted thereon in accordance with the judgment of the designated proxies.
What vote is required to approve the various proposals?
Proposal 1.A plurality of the votes of the shares present in person or represented by proxy at the Annual Meeting will be required to elect our directors. This means that the individuals receiving the largest number of votes will be elected as directors, up to the maximum number of directors to be elected at the Annual Meeting. Any shares that are not voted on this matter at the Annual Meeting, whether by abstention, broker nonvote or otherwise, will have no effect on the election of directors at the Annual Meeting.
Proposal 2. The compensation of the Company's named executive officers will be approved, on an advisory basis, if the votes cast in favor of the proposal exceed those cast against the proposal. Abstentions and broker non-votes will not affect the voting results for this proposal.
Proposal 3. The frequency of the advisory vote on the compensation of our named executive officers receiving the greatest number of votes cast in favor of such frequency, whether every year, every two years or every three years, will be the frequency of the advisory vote on the compensation of the Company’s named executive officers that stockholders are deemed to have approved. Abstentions and broker non-votes do not constitute a vote for any particular frequency.
Proposal 4. The appointment of Grant Thornton LLP as our independent accountant for our fiscal year ending January 31, 2020 will be ratified if the votes cast in favor of the proposal exceed those cast against the proposal. Abstentions will not affect the voting results for this proposal.
Why a virtual meeting? We are excited to continue to utilize the latest technology to provide expanded access, improved communication and cost savings for our stockholders. Hosting a virtual meeting again this year will enable increased stockholder attendance and participation, since our stockholders can participate from any location around the world. You will be able to attend the Annual Meeting online and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/PPIH2019; however, you will not be able to vote electronically at our Annual Meeting. Therefore, you must submit your proxy or otherwise vote your shares prior to our Annual Meeting in order for your vote to be properly cast.
What is householding? The rules of the SEC permit companies to provide a single copy of an annual report, proxy statement or notice of internet availability of proxy materials to households in which more than one stockholder resides. As a result, any stockholders who share an address and who have been previously notified that their broker, bank or other intermediary will be householding their proxy materials, will receive only one copy of our proxy statement and 2018 Annual Report to Stockholders and notice of internet availability of proxy materials, unless they have affirmatively objected to the householding notice.
Stockholders sharing an address who received only one set of these materials may request a separate copy, which will be promptly sent at no cost, by contacting our Corporate Secretary orally or in writing at the address below. Stockholders sharing an address who received multiple copies of these materials may request householding by contacting the Corporate Secretary as follows:
Perma-Pipe International Holdings, Inc.
6410 W. Howard Street
Niles, Illinois 60714
(847) 929-1000
For future annual meetings, a stockholder may request separate annual reports, proxy statements, or notices of internet availability of proxy materials, as applicable, or may request the householding of such materials, by contacting the Company's Transfer Agent at the following address:
Broadridge Corporate Issuer Solutions, Inc.
P.O. Box 1342
Brentwood, NY 11717
(877) 830-4936 or (720) 378-5591
What is the quorum requirement for holding the Annual Meeting?The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the outstanding shares of our Common Stock will constitute a quorum. Abstentions and broker non-votes will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum.
Can I revoke my proxy?Yes, a stockholder of record may revoke his or her proxy at any time prior to the voting thereof by giving written notice of such revocation to the Company in care of the Corporate Secretary at Perma-Pipe International Holdings, Inc., 6410 W. Howard Street, Niles, Illinois 60714 or, by executing and duly and timely delivering a subsequent proxy to the same address shown immediately above. For Common Stock you hold beneficially in "street name," you may change your vote by submitting new voting instructions to your broker, bank or other nominee or, if you have obtained a legal proxy from your broker, bank or other nominee giving you the right to vote your Common Stock, by executing and properly delivering a timely subsequent proxy to the address set forth in such proxy. If you are a stockholder of record as of the record date for the Annual Meeting, you may vote whether or not a proxy has been previously given, but your presence (without further action) at the Annual meeting will not constitute revocation of a previously submitted proxy.
How can I access the proxy materials on the internet? You can access this proxy statement and our 2018 Annual Report from the Company's website atwww.permapipe.com. No information contained on the Company's website is part of or incorporated into this proxy statement.
How may I obtain a paper copy of the proxy materials? Additional copies of our 2018 Annual Report to Stockholders, excluding exhibits, and this proxy statement may be obtained, without charge, from the Company by calling 847-966-1000, or by writing to the Company's Corporate Secretary at the address above.
In addition to the use of the mail, proxies may be solicited by directors, officers, or employees of the Company in person, by electronic mail, by telephone or by other means. The cost of the proxy solicitations will be paid by the Company.
What is the effect of a "broker non-vote" on the proposals to be voted on at the 2017Annual Stockholders' Meeting? CommonStock held by a broker, bank or other nominee that does not have authority, either express or discretionary, to vote on a particular matter at the Annual Meeting is a broker non-vote. A broker non-vote is counted as present for purposes of determining the presence of a quorum andat the Annual Meeting, but will otherwise be counted as a "no" vote on any routine proposal. All proposals, other than the ratification of the appointment of our independent accountants, are non-routine matters and are not matters on which a broker may vote without your instructions. Therefore, if your stockCommon Stock is not registered in your name and you do not provide instructions to the record holderyour broker, bank or other nominee with respect to any proposal other than the ratification of the appointment of independent accountants, a broker non-vote as to your stockCommon Stock will result. The ratification of the appointment of the independent accountant is a routine item. As a result, brokers who do not receive instructions from you as to how to vote on that matter generally may vote on that matter atin their discretion.
How do I vote?
Most stockholders have a choice of voting prior to theThe Internet and telephone voting procedures are designed to authenticate stockholders' identitiesyour identity and to confirm that theiryour instructions have been properly recorded.
What if I do not specify a choice for a
matter when returning a signed proxy? If your proxy form is signed and returned,All stockholders are cordially invited to attend theour virtual meeting.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Outstanding Shares | |
Dimensional Fund Advisors LP | 566,126 | (1) | 7.4% |
Building One | |||
6300 Bee Cave Road | |||
Austin, Texas, 78746 | |||
David Unger | 521,830 | (2) | 6.9% |
6410 W. Howard Street | |||
Niles, IL 60714 | |||
Bradley E. Mautner | 507,692 | (3) | 6.7% |
6410 W. Howard Street | |||
Niles, IL 60714 | |||
Strategic Value Partners | 446,327 | (4) | 5.9% |
Carl W. Dinger III | |||
PO Box 897 | |||
Berthoud, CO 80513 | |||
Edward W. Wedbush | 393,925 | (5) | 5.2% |
P.O. Box 30014 | |||
Los Angeles, CA 90030-0014 |
Name of Beneficial Owner | Shares | Stock options exercisable within 60 days | Total | Percent of Outstanding Stock | |
Bradley E. Mautner (2) | 477,692 | (1) | 30,000 | 507,692 | 6.7% |
Karl J. Schmidt | 100,774 | 13,750 | 114,524 | 1.5% | |
David J. Mansfield | 12,578 | — | 12,578 | 0.2% | |
Wayne M. Bosch | 29,509 | 1,500 | 31,009 | 0.4% | |
Mark A. Zorko (2) | 7,983 | 20,000 | 27,983 | * | |
David S. Barrie (2) | 1,920 | 10,000 | 11,920 | * | |
Jerome T. Walker (2) | — | — | — | — | |
David B. Brown (2) | — | — | — | — | |
All directors and executive officers as a group (8 persons) | 630,456 | 8.3% |
PROPOSAL 1 - ELECTION OF DIRECTORS
Five individuals have been nominated by the Nominating and Corporate Governance Committeeour Board for election tore-election for a one-year term atthrough the annual meeting.2020 Annual Meeting, and until their successors are duly elected and qualified. All of the nominees, except Mr. Mansfield, wereother than Cynthia A. Boiter, have been previously elected as directors by theour stockholders, and all of the nominees are currently serving as directors of the Company.
Mark A. Zorko resigned from his position on the Board as of February 1, 2019. We would like to formally extend our gratitude to Mr. Zorko for his many years of service to our Company, our Board and our stockholders. We extend our sincere appreciation for his valued service, guidance, advice and dedication to our Company and wish Mr. Zorko the best in his future endeavors.
On January 9, 2019, the Board appointed Cynthia A. Boiter to serve as a director, effective January 21, 2019, to fill the vacant director position created by the resignation of Mr. Zorko. Mrs. Boiter is standing for election at the Annual Meeting.
The following are the Board’s director nominees:
Name | ||
Offices and Positions, if any, held with the Company; Age | First Became a Director of the Company | |
David S. Barrie | Director and Chairman of the | 2012 |
Director; Age | ||
David B. Brown | Director; Age 56 | 2015 |
David J. Mansfield | Director, President and Chief Executive Officer; Age | 2017 |
Jerome T. Walker | Director; Age | 2014 |
The director nominees’ biographical sketches, including their business experience during at least the past five years, the namedirectorships of other public corporations and principal business of the organization in which such occupations and employment were carriedtheir qualifications to serve on other directorships held during at least the past five years, the person's particular areas of expertise or other relevant qualifications and the specific experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a Director for the Company.
David S. Barrie has been a director of the Company since 2012, and Chairman of the Board since September 2015. Mr. Barrie has been Principal of Barrie International, LLC since 2009, providing strategic and operational consulting, principally in the area of merger and acquisitions, to senior management of companies in the U.S. and abroad including NYSE listed companies and international advisory firms, andfirms. He has also been a Senior Executive Advisory Board member of Brown, Gibbons, Lang & Company, a middle market investment banking firm since 2009. He is a sitting director and Chairman of the Board of Advanced Battery Concepts, LLC, a private for-profit company developing leading edge lead acid battery technologies, andtechnologies. He has also served as a director for several non-profit institutions, including the Cleveland Museum of Natural History. He has served as an instructor for the Cornell Law School transactional law competition and has presented programs on best merger and acquisition practices to corporate executives, as well as reviewed, from time to time, certain specific acquisition candidates for business clients, from time to time. Heclients. Mr. Barrie is a member of and a Board Leadership Fellow of the National Association of Corporate Directors ("NACD"). He earned his Bachelor of Arts with honors in Political Science and Economics from Kenyon College and his Juris Doctor, Law, from Cornell University Law. Mr. Barrie's extensive experience in general management, strategic planning, mergers and acquisitions and international business provide valuable perspectives and insights to the Perma-Pipe International Holdings, Inc. Board.
David B. Brown has been a director of the Company since 2015. He has been the Chief Financial Officer ("CFO")for the Weir Flow Control division since March 2019. Previously he was the CFO for Tellabs Access, LLC, a global telecommunications supplier owned by Marlin Equity Partners, sincefrom October 2015.2015 to March 2019. He provided consulting services to private clients from June 2013 to September 2015 including serving as the Interim CFO at MV Transportation, Inc., a $1.0 billion private provider of paratransit services and passenger transportation contracting firm. From January 2012 to May 2013, Mr. Brown served as Senior Vice President and Chief Accounting Officer at MoneyGram International, Inc. (MGI), a $1.4 billion provider of global money transfer and payment services. From November 2010 to February 2016, Mr. Brown was a Board Member, Audit Committee Chair and Compensation Committee member for Cubic Energy, Inc. (n/k/a Hilltop Energy, LLC), an independent energy company engaged in the development and production of, and exploration for, crude oil and natural gas and natural gas liquids. From February 2011 to January 2012, Mr. Brown served as CFO of General Electric - Dresser (formerly Dresser, Inc.), a $2 billion energy infrastructure company that manufactures highly engineered flow control products, measurement and distribution systems, and natural gas compression and power engines. Mr. Brown received his Bachelor of Arts degree in Accounting from the University of Texas at Austin and is a Certified Public Accountant in the State of Texas. Mr. Brown spent the first 10 years of his career with Pricewaterhouse
David J. Mansfield has been the Company's President and Chief Executive Officer ("CEO") since November 2016 and a Directordirector of the Company since January 30, 2017. From 2015 to 2016, Mr. Mansfield served as CFO of Compressor Engineering Corp. & CECO Pipeline Services Co., which provide products and services to the gas transmission, midstream, gas processing, and petrochemical industries. In this position, he had overall responsibility for the group’s financial affairs, including the development and execution of turnaround plans and the successful negotiation of a corporate refinancing. From 2009 to 2014, Mr. Mansfield served as CFO and as Acting CEO of Pipestream, Inc. a venture capital-owned technology development company providing a suite of products to the oil and gas pipeline industry. In this position, he was a member of the executive team with overall responsibility for directing the financial, accounting and administrative affairs of the company, including IT, HR, insurance, internal control, management and financial reporting, treasury, tax compliance, investment evaluation, strategic planning, budgeting and forecasting. He also had overall responsibility for commercial, marketing and business development activities. As Acting CEO his responsibilities included establishing corporate strategies and directing the activities of the company toward the successful technical development and commercialization of its products and services and for the development of a sustainable and profitable business. From 1992 to 2009, Mr. Mansfield was employed with Bredero Shaw, the world’s largest provider of protective coatings for the oil and gas pipeline industry, most recently as Vice President Strategic Planning. During his tenure with Bredero Shaw, Mr. Mansfield served in numerous roles including Vice President Controller and Commercial General Manager, Europe, Africa & Former Soviet Union, andUnion. He played a key role in strategy development and merger and acquisition activities as the company grew from annual revenues of $100 million to over $900 million. Mr. Mansfield brings to the boardBoard extensive general management, business development and merger and acquisition experience in businesses similar to the Company's.
Jerome T. Walker has been a Directordirector of the Company since 1995.2014. He is CEO of Caribbean Distributed Energy, LLC ("CDE"), a company he co-founded in early 2017. CDE is a global provider of modular, packaged energy solutions. He was employed by the CompanyPresident and its predecessors in various executive and administrative capacities since 1978 and was the CEO from February 1, 2013 to November 8, 2016. He served as President from December 2004 to November 2016 and was Chief Operating Officer from December 2004 to January 2013. His experience includes work in both manufacturing and mechanical contracting. In those areas, he has experience in project management, sales management, mergers and acquisitions, strategy and business development planning and execution. He has served onmember of the Board of both private companies and a not-for-profit organization. He is a memberManagers of the NACD. He earned a Master of Business Administration degree and a Bachelor of Science in mechanical engineering from Washington University in Saint Louis. Mr. Mautner's long history with the Company and his experience in management, strategic and business planning give him valuable insight into the Company's operations and strategies.
Cynthia A. Boiter was appointed to our Board on January 21, 2019. Mrs. Boiter is Chief Financial Officer, Chemicals Division of Milliken & Company, a leading, privately-held, technology-based company with businesses in the performance material, floor covering and chemical markets. Mrs. Boiter joined Milliken in 2012 as the Director of Marketing, Strategy and Business Development for the Chemicals Division. Her scope of experience covers both public and private sectors in a variety of industries. In 2013, she became the Chief Financial Officer for the Chemicals Division. Prior to joining Milliken, Mrs. Boiter held various finance and business leadership positions at Eaton Corporation and MeadWestvaco. She has a B.S. in Accounting from Indiana University and a Masters of Business Administration from Emory University. Mrs. Boiter brings extensive experience in strategy and planning, mergers and acquisition and CFO level experience in international companies, all of which qualifies her as one of our directors
Director Selection and Board Refreshment
It is a Principal with Brentwood Advisory, LLC, a consulting firm providingtop priority of our Board and C-level expertiseour Nominating and Corporate Governance Committee that our directors have the skills, background and values to client firms since 2013.effectively represent the long-term interest of our stockholders. Throughout the year, our Board reviews a matrix of the cumulative qualifications, skills and experience that we believe our Board needs to have and discusses whether there are any gaps that need to be filled that will improve our Board’s performance. We assess potential new director candidates in light of the matrix and whether they possess the qualifications, skills and experience needed by our Board. When we identify potential new director candidates, we review extensive background information compiled by our professional search firm, evaluate their references, consider their prior board experience and conduct in-person interviews. Considering and valuing diversity is consistent with the goal of creating a Board that best serves the needs of the Company and the interests of its stockholders.
We also believe that new perspectives and ideas are essential for an innovative and strategic Board. The average tenure of our directors is approximately 3.6 years. Since 2014, we have added four new directors to our Board, including Mrs. Cynthia A. Boiter added in 2019. In January 2016, he founded Brentwood 401k, LLCaddition, the Committee routinely reviews the Board’s committee assignments with a goal of rotating membership on committees every three to provide 401(k) plan advisory servicesfive years. The committee assignments were most recently rotated in May 2017. Our Board will continue to middle market firms. Since January 2017, Mr. Zorko has been onreview and refresh the skills, qualifications and experiences necessary for our Board to serve the long-term interests of our stockholders.
Our corporate governance principles require our Nominating and chairs the AuditCorporate Governance Committee for Westell Technologies, Inc. (WSTL). He was the interim CFO at Landauer Inc. ("LDR") from June 2014 until April 2015. LDRto recommend director nominees such that our Board is the global leader in radiation sciencecomprised of a substantial majority of independent directors and services. He served as the CFOpossesses a variety of Steel Excel, Inc. ("SXCL") until May 2013. He also served as the Presidentexperience and CEO of SXCL's subsidiary Well Services Ltd. ("WSL") in 2012 and CFO of DGT Holdings Corp. ("DGTC") from 2006 through 2012. SXCL, WSL and DGTC are all affiliated with Steel Partners Holding, L.P., a publicly traded diversified global holding company. SXCL is publicly traded and primarily engaged in the oilfield service business. DGTC is publicly traded and engagedbackground, including those who have substantial experience in the business community, those who have substantial experience outside the business community (such as public, academic or scientific experience), and those who will represent our stakeholders as a whole rather than special interest groups or individual constituencies.
Each candidate should have sufficient time available to devote to our affairs and be free of x-ray imagingany conflict of interest that would violate any applicable law or regulation or interfere with the proper performance of his or her responsibilities including being able to represent the best long-term interests of all of our stockholders. Each candidate also should possess substantial and power conversion. Mr. Zorko issignificant experience that would be of particular importance to us in the performance of his or her duties as a director. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the foregoing criteria, based on whether or not the candidate was recommended by a stockholder.
The Board believes that the director nominees are highly-qualified and bring a collective balance of relevant knowledge and skills to the boardroom and an effective mix of diversity and leadership and professional experiences. The Skills Matrix table set forth below highlights each director nominee’s skills, knowledge and experience that uniquely qualify such director to serve on the Audit Committee for Opportunity Int'l, a microfinance bank,Board. A particular director nominee may possess additional skills, knowledge and was onexperience even though they are not indicated below. All director nominees satisfy the Finance Committeecriteria set forth in our corporate governance principles and possess the characteristics that are essential for the Alexian Brothers Health System. Mr. Zorko earned a Master of Business Administration degree from the University of Minnesotaproper and a Bachelor of Science degree in accounting from The Ohio State University. He is a Certified Public Accountant and a membereffective functioning of the NACD. In addition to his expertise as a CFO, Mr. Zorko has extensive experience with international operations, mergers and acquisitions, information technology and financing, which has enabled him to develop a deep operational understandingBoard.
Board of our global businesses. Mr. Zorko is a NACD Leadership Fellow.Directors Skills Matrix
Board Skills Deemed Important | ||||||||
Directors - as individuals | D. Barrie | J. Walker | C. Boiter | D. Brown | D. Mansfield | Board Skills Collective Assessment | ||
Energy Industry | ✔ | ✔ | ✔ | ✔ | ||||
Senior Executive Experience | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
Operations | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
Strategy & Planning | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
Corporate Governance | ✔ | ✔ | ✔ | ✔ | ||||
International Experience | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
Mergers and Acquisitions | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
Capital Market Experience | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
Accounting and Finance | ✔ | ✔ | ✔ | ✔ | ✔ | |||
Legal & Regulatory | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
IT Management | ✔ | ✔ | ✔ | ✔ | ||||
IR/PR | ✔ | ✔ | ✔ | ✔ | ||||
HR, Talent Acquisition & Development | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
Risk Assessment & Management | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ |
✔ High Integrity | ✔ Commitment to the Long-Term Interests of our Stockholders | ||
✔ Leadership Experience | ✔ Strong Business Judgement | ||
✔ Commitment to Ethics | ✔ Commitment to Safety and Diversity in the Workplace | ||
✔ Proven Record of Success | ✔ Diversity of Thought |
Vote Required
The affirmative vote of a plurality of the shares of stockour Common Stock present or represented by proxy at the annual meetingAnnual Meeting is required to elect the sixour five director nominees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "
PROPOSAL 2 - APPROVAL, ON AN ADVISORY BASIS, OF THE ADVISORY RESOLUTION ONCOMPENSATION OF OUR NAMED EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended ("Exchange Act"), we are asking theour stockholders to approve the following advisory resolution ofat the 2017 Annual Meeting of Stockholders regarding the compensation of our NEOs.
"RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid toof the Company's named executive officers, as disclosed in the Company's Proxy Statement foras disclosed in the 2017 Annual Meeting of Stockholders pursuant toExecutive Compensation Discussion and Analysis section and the compensation disclosure rules of the Securities and Exchange Commission, including theaccompanying compensation tables and the narrative discussion.narratives contained in this proxy statement."
We are asking our stockholders to indicate their support for the compensation of our NEOs as described in this proxy statement. This proposal, commonly known as a "say-on-pay" proposal, gives you as a stockholder the opportunity to express your views on our fiscal year 20162018 compensation for our NEOs. This vote is not intended to address any specific item of compensation; rather, theyour vote relates to the overall compensation of our NEOs as described in this proxy statement in accordance with the compensation disclosure rules of the SEC.
Stockholder Engagement and Outreach
At the Company's 2018 annual meeting of stockholders, our Board of Directors reaffirmed our intent to increase engagement with you, our stockholders. Following the 2018 annual meeting, our Chairman of the Board, Chairman of the Compensation Committee, and Chief Executive Officer reached out to 11 stockholders holding 200,000 or more shares of our Common Stock to ask for their thoughts on our executive compensation and corporate governance practices. Additionally, in March 2019 we reached out again to these stockholders to share with them many of the changes we had made and also to solicit their thoughts and opinions on how we are doing in responding to their expectations. These stockholders represented more than 50% of the shareholdings in our Company. Specifically, our Board was interested in receiving stockholders’ feedback on any recommended improvements to our executive compensation and corporate governance practices so that we could consider their suggestions into our ongoing review of these two areas.
WTW compared the design and compensation levels of our current executive compensation program to a market benchmarking reference group of general industry companies which have revenue amounts similar to the Company. WTW also compared our executive compensation program to a smaller group of public industrial manufacturing peer group comparatives as a check on the general industry group survey data. Based on its comparative market benchmarking analysis, WTW concluded that the Company's aggregate executive pay is positioned between the 25th and 50th percentile when measured against the general industry survey data and below the 50th percentile when measured against the peer group. The survey also concluded that the CEO’s pay mix (base, cash bonus and long-term incentive) is generally consistent with market practices but the other executives have a lower weighting on long-term incentives than the benchmark. As a result of these findings, consideration of future executive compensation will include moving the executives, as a group, closer to the survey 50th percentile and increasing the weighting on long-term incentives.
Our executive compensation goals and guiding principles emphasize pay-for-performance. We base several elements of our compensation upon delivering high levels of performance relative to performance measures that the Compensation Committee has approved. For example, (i) the annual Financial Short-Term Incentive Plan (STIP) requires that we achieve financial performance before recipients are entitled to this compensation; and (ii) the Long-Term Incentive Plan (LTIP) equity component of our compensation program provides greater financial benefits when our stock price is increasing. Our goals and guiding principles are as follows:
✔ | Create and reinforce pay-for-performance. Reward exceptional performance with increased compensation, while delivering reduced or no incentive pay when we do not achieve performance expectations. | ||
✔ | Encourage both the desired results and the right behaviors. Strike a balance to reward the delivery of near-term results that drive long-term performance, while incorporating risk-mitigating features to ensure the compensation program does not encourage excessive or inappropriate risk-taking. | ||
✔ | Align the interests of management with the interests of stockholders. Deliver a significant portion of executive compensation in equity-based awards, with required minimum stock ownership guidelines designed to appropriately focus our management on long-term, sustainable growth and increasing share price. | ||
✔ | Ensure our performance goals and measures align with our strategy and operating plan. Set performance goals that are challenging yet achievable during the applicable performance period and align with our long-term strategic objectives. | ||
✔ | Target compensation approaching the 50th percentile. Establish target compensation with reference to our compensation peer group for target performance to help us remain competitive among our peers and in our industry in attracting and retaining top executive talent. |
Prior to voting, stockholders may wish to review our discussion of executive compensation as presentedincluding elements that make up our total compensation more fully in the section entitled "Executive Compensation" on page 24,Compensation Discussion and Analysis", as well as the discussion regarding the Compensation Committee on page 19.
Although this is an advisory vote that will not be binding on theour Compensation Committee or the Board, theour Compensation Committee and the Board will carefully review the results of theour stockholder vote. Thevote on this say-on-pay proposal. Our Compensation Committee will consider stockholders' concerns and take them into account in future determinations concerning executive compensation. The current frequency of this advisory vote is every year, thus the next such vote shall occur at the Company’s
Vote Required
The affirmative vote of a majoritycompensation of the sharesCompany's named executive officers will be approved, on an advisory basis, if the votes cast in favor of stock present or represented by proxy at the annual meeting is required to approveproposal exceed those cast against the advisory resolution on executive compensation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "
PROPOSAL 3 - ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY RESOLUTIONVOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE COMPENSATION.
In accordance with the requirements of Section 14A of the Exchange Act, we are providing our stockholders with a vote on how frequently we will submit the advisory vote on the compensation of our named executive officers to our stockholders. Accordingly, we are asking our stockholders whether the advisory vote on the compensation of our named executive officers should occur every year, every two years or every three years.
Our Board recommends that stockholders vote for the submission of the advisory vote on the compensation of our named executive officers to our stockholders every year (an annual vote), because we believe that an annual vote promotes best governance practices and facilitates our Compensation Committee’s and our management’s consideration of the views of our stockholders in structuring our compensation programs for our named executive officers. We believe that an annual vote provides our Compensation Committee and our management with more direct input on, and reactions to, our current compensation practices, and better allows our Compensation Committee and our senior management to measure how they have responded to the prior year’s vote.
For the reasons discussed above, our Board recommends that stockholders vote for holding an advisory vote on the compensation of our named executive officers at our annual meeting of stockholders every year. In voting on this Proposal 3, stockholders should be aware that they are not voting “for” or “against” the Board’s recommendation. Rather, stockholders will be voting to determine, on an advisory basis, the frequency of the advisory vote on the compensation of our named executive officers, which may be every year, two years or three years, or stockholders may abstain entirely from voting on the proposal.
Vote Required
The frequency of the advisory vote on the compensation of our named executive officers receiving the greatest number of votes cast in favor of such frequency, whether every year, every two years or every three years, will be the frequency of the advisory vote on the compensation of our named executive officers that stockholders are deemed to have approved. Abstentions and broker non-votes do not constitute a vote for any particular frequency.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS BE SUBMITTED TO STOCKHOLDERS EVERY “ONE” YEAR.
PROPOSAL 34 - RATIFICATION OF APPOINTMENT OF COMPANY'S INDEPENDENT ACCOUNTANT
The Audit Committee has appointed
Grant Thornton LLPWhile theour Audit Committee is responsible for the appointment, discharge, compensation and oversight of the
Vote Required
The affirmative vote of a majority of the shares of stock present or represented by proxy at the annual meeting is required to ratify the appointment of Grant Thornton LLP as the Company'sour independent accountant for theour fiscal year ending
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "
Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Term | ||
Stock options not entitled to dividends or dividend equivalent rights(1) | 524,200 | $11.55 | 4.5 years | |
Stock options entitled to dividends or dividend equivalent rights | - | - | - | |
Unvested time-based restricted stock/units | 234,274 | N/A | N/A | |
Vested deferred stock units outstanding | 60,495 | N/A | N/A | |
Common stock outstanding | 7,616,214 | N/A | N/A |
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS
Corporate Governance Highlights
Our Board is committed to excellence in our corporate governance. We know that our long-standing tradition of principled, ethical governance benefits you, our stockholders, as well as our customers, employees and communities, and we have developed and will continue to maintain a governance profile that aligns with industry leading standards and expectations. We believe that this high standard will continue to have a direct and substantial impact on our business. The following table presents a brief summary of the recent focus of our governance reviews, based on both Board self-assessment and external feedback, followed by more in-depth discussion in this proxy statement.
Overview | Focus Areas | Recent Actions | ||
Corporate Governance | Board Retirement Policy | Board adopted a retirement policy requiring non-employee directors to retire from the Board, and not stand for reelection, on the date of the annual stockholder meeting following their 72nd birthday. | ||
Stockholder Right to Call Special Meetings | The Board revised the Bylaws to permit stockholders holding 10% of our outstanding common stock to call a special meeting without limitation. | |||
Poison Pill Elimination | Poison Pill to expire on September 15, 2019 and will not be extended or renewed. | |||
Board Refreshment and Gender Diversity | Average tenure of directors - 3.6 years Four new directors in last five years Reduced Board size from eight directors to five directors in last four years Cynthia A. Boiter appointed to the Board on January 21, 2019. | |||
Director Qualifications and Experience | Added matrix highlighting the skills of individual directors and the Board as a whole to this proxy statement. | |||
Stockholder Outreach | Conducted frequent and expansive stockholder outreach in 2018 and 2019. Our Chairman, CEO, and other independent Board members spoke to our large stockholders who collectively own more than 50% of our outstanding shares on a variety of topics including say on pay, executive compensation, company strategy, growth and governance issues. | |||
Compensation Committee Communication & Responsiveness | Review of the Executive Compensation Program | In 2019 the Compensation Committee engaged executive compensation consultant Willis Towers Watson to evaluate its compensation practices through peer and market industry practices. Future compensation reviews to incorporate survey feedback and recommendations. | ||
Long-Term Equity-Based Incentive Plan | Reviewed and reaffirmed the use of our long-term equity-based incentive awards, which by their nature tie compensation directly and objectively to our stock price, help ensure that our executives’ interests are aligned with those of our stockholders. Agreed to drive towards an increased percent of senior executive compensation to long-term equity during future compensation allocations. | |||
Equity Vesting Acceleration upon a Change in Control | All future restricted stock award terms to contain "double-trigger" vesting of equity awards in connection with a change in control. | |||
Clawback Policy | The Board adopted formal guidelines and policies relating to clawbacks for incentive compensation paid to Board members and executive officers. | |||
Stock Ownership Guidelines | The Board approved stock ownership guidelines as follows: ● CEO - 3X Annual Base Salary ● Executive officers including NEO 1.5X Annual Base Salary ● Independent Directors - 3X Annual Base Cash Retainer Director and executive officer ownership table included in this proxy statement. | |||
Disclosure of Stockholding Periods | Executive officers are required to hold shares until ownership guidelines are met. | |||
Anti-Hedging/Pledging Policy | Adopted formal guidelines and policies relating to hedging and pledging which are found in our Insider Trading Policy |
Director Independence
Our Board currently consists of six directors. These individuals have beenfive directors, all of whom are nominated by the Nominating and Corporate Governance Committee for re-election or election to a one-year termour Board at the annual meeting. All of the nominees, except Mr. Mansfield, were previously elected by the stockholders and all are currently serving as directors of the Company.Annual Meeting. The Board has determined that four of the
Director Compensation
In early 2018, our Compensation Committee engaged Willis Towers Watson as its independent compensation consultant to advise the Committee and the Board consistedon our non-employee directors compensation program. As a result of three additional directors who were not nominated for re-election atits engagement, WTW compared the 2016 annual meetingdesign and compensation levels of stockholders, David Unger, Dennis Kesslerour current non-employee director compensation program to a market benchmarking reference group of approximately 100 publicly-traded companies from various industries and Michael J. Gade. Mr. Kesslerwhich have revenue of less than $300 million. In 2019 the Compensation Committee once again reviewed the WTW benchmarked data, confirmed the Company's competitiveness and Mr. Gade were independent directors, but Mr. Ungerwas satisfied with its Director current compensation. As a result, no change in director compensation will be made following the Annual Meeting.
The following table sets forth our non-employee director compensation program:
Annual cash retainers |
| ||
Non-Employee Director | $ | 45,000 | |
Independent Chairman of the Board | 40,000 | ||
Chairman of Audit Committee | 10,000 | ||
Members of the Audit Committee | 6,000 | ||
Chairman of the Compensation Committee | 7,500 | ||
Members of the Compensation Committee | 6,000 | ||
Chairman of the Nominating and Corporate Governance Committee | 5,000 | ||
Members of the Nominating and Corporate Governance Committee | 5,000 | ||
Annual equity grant (1) | |||
Non-Employee Director | $ | 50,000 | |
Independent Chairman of the Board | 60,000 |
(1) | Independent non-employee directors receive an annual grant under our 2017 Omnibus Stock Incentive Plan ("2017 Plan") of deferred Common Stock in the dollar amount noted above. The number of deferred Common Stock granted are calculated by dividing the dollar value of the grant by the fair market value of the Common Stock on the date of grant. Such deferred Common Stock vests immediately and is issuable upon the director’s departure from our Board. |
The Chairman of the Board sits as a former employeede facto, non-paid participant of each of the Company, did not meetBoard Committees.
The Board and Committee retainers are intended to fully compensate the definition of "independent" under the Nasdaq Stock Market rules. As part of its assessment of director independence, the Board considered the fact that David S. Barrie is a memberdirectors for their time engaged in activities on behalf of the Senior Executive Advisory Board of Brown, Gibbons, Lang & Company ("BGL"), which has been engaged by the Company to conductCompany. In certain, advisory work, including advising the Companyrare circumstances, such as in connection with the Company’s recent sale of its filter operations. Although in his position with BGL Mr. Barrie is available as an advisor to BGL in their industrials practice, Mr. Barrie has undertaken no activities for BGL in the past three years and has never received any compensation from BGL. Based on these facts, the Board concluded that Mr. Barrie’s position with BGL did not affect his status as an independent director.
The following table shows the total compensation earned by theour non-employee directors (other than Mr. Mautner and Mr. Mansfield, who received no compensation as a director during 2016) for the fiscal year ending
Directors' 2018 Compensation (2)
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) |
David S. Barrie | $101,275 | $40,000 | $141,275 |
David B. Brown | 77,494 | 40,000 | 117,494 |
Michael J. Gade* | 30,878 | — | 30,878 |
Dennis Kessler* | 29,496 | — | 29,496 |
David Unger* | 20,025 | — | 20,025 |
Jerome T. Walker | 77,206 | 40,000 | 117,206 |
Mark A. Zorko | 79,647 | 40,000 | 119,647 |
Name | Fees Earned or Paid in Cash | Stock Awards (1) | Total | |||||
David S. Barrie | $ | 85,000 | $ | 60,000 | $ | 145,000 | ||
Cynthia A. Boiter | 1,894 | — | 1,894 | |||||
David B. Brown | 70,263 | 50,000 | 120,263 | |||||
Jerome T. Walker | 67,763 | 50,000 | 117,763 | |||||
Mark A. Zorko | 66,317 | 50,000 | 116,317 |
(1) | Deferred Common Stock awards are awarded under our 2017 Plan and are issuable to the director as shares of Common Stock on the date the director ceases to be a director. Based on a closing sale price of $9.79 on the award grant date, each such deferred Common Stock award represents 6,129 shares and 5,107 shares of our common stock |
The following table summarizes the aggregate amount |
Name | Deferred Stock (1) | Total Options | Exercisable Options | Unexercisable Options |
David S. Barrie | 17,143 | 10,000 | 10,000 | — |
David B. Brown | 11,896 | — | — | — |
Dennis Kessler* | — | 12,000 | 12,000 | — |
David Unger* | — | 40,000 | 40,000 | — |
Jerome T. Walker | 14,313 | — | — | — |
Mark A. Zorko | 17,143 | 20,000 | 20,000 | — |
Name | Number of Deferred Stock (1) | Number of Stock Options (2) |
David S. Barrie | 28,272 | 10,000 |
David B. Brown | 22,003 | — |
Jerome T. Walker | 24,420 | — |
Mark A. Zorko | 27,250 | 7,500 |
(1) | Deferred Common Stock awards are issued as Common Stock upon departure from our Board. |
(2) | All options are vested and fully exercisable. Mr. Barrie’s options have an exercise price of $5.55 per share; Mr. Zorko’s options have a weighted average exercise price of $6.89 per share. |
Guidelines for Director and Officer Equity Ownership
The Compensation Committee and the Board believe there is stockholder value in our directors and executive officers owning a significant amount of our stock in order to further link their economic interests to those of our stockholders. To underscore this value, we require our directors and officers to own a number of shares of our common stock having a total value equal to the resultfollowing multiples of dividing $40,000 bytheir respective base salaries or base cash retainers, as applicable:
Group | Stock Ownership Requirement |
President and CEO | 3.0 X Annual Base Salary |
Executive Officers | 1.5 X Annual Base Salary |
Independent Directors | 3.0 X Annual Base Cash Retainer |
Equity Position
Directors and Officers | Total Position in Shares | Guideline Multiple | Achieved | Excess/(Short) (1) | |
David J. Mansfield | 120,886 | 3.0 | Yes | $ | 17,543 |
D. Bryan Norwood (2) | - | 1.5 | No | (375,000) | |
Wayne M. Bosch | 39,806 | 1.5 | Yes | 1,936 | |
David S. Barrie | 30,192 | 3.0 | Yes | 5,040 | |
Cynthia A. Boiter (3) | - | 3.0 | No | (135,000) | |
David B. Brown | 22,003 | 3.0 | Yes | 35,057 | |
Jerome T. Walker | 24,420 | 3.0 | Yes | 65,051 |
(1) Equity ownership was calculated using the fair market valueclosing price of the Company’s common stock on Februarythe date of grant.
(2) Mr. Norwood joined the Company on October 1, 2017, which units will vest2018
(3) Mrs. Boiter was appointed to the Board on January 21, 2019
An executive officer’s or non-employee director’s ownership can take the earlierform of June 1, 2017direct ownership or Mr. Mautner’s death, provided Mr. Mautner is a director on such date. Noindirect ownership of our Common Stock through family trusts, deferred company stock will be issued pursuantunit programs, or in any other manner commonly acceptable to this award until Mr. Mautner ceases to be a director. For details, refer to Exhibit 10.1 filed with the Company's Current Report on Form 8-K on February 3, 2017.
Name (a) | Option Awards | |
Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | |
Michael J. Gade* | 17,500 | $20,348 |
Name (a) | Deferred Stock Awards | |
Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | |
David S. Barrie | 1,920 | $13,613 |
Michael J. Gade* | 11,518 | 81,893 |
Dennis Kessler* | 11,518 | 81,893 |
David Unger* | 6,271 | 44,587 |
Mark A. Zorko | 959 | 6,799 |
The Board’s Role in the Oversight of Compensation Risk
To help mitigate compensation risk, and align executives’ interests with those of our stockholders, we have adopted a director on June 28, 2016.
Insider Trading Policy – Hedging and Pledging
Our Named Executive Officers and Board of Director's MeetingsDirectors are prohibited from hedging or pledging any Company securities that they hold directly. In addition, our Named Executive Officers and Committees
Clawback Policy
The Board has adopted a policy which provides for the recoupment of certain executive compensation in the event either (1) the Company is required to prepare an accounting restatement of its financial statements due to the Company's material noncompliance with any financial reporting requirement under the U.S. securities laws or (2) an executive violates the Company's code of conduct or breaches a fiduciary duty or is grossly negligent or engages in illegal or improper conduct causing financial or reputational harm to the Company. The Board will determine, in its sole discretion, the method for recouping incentive compensation under the policy which may include, without limitation: (a) requiring reimbursement of cash incentive compensation previously paid; (b) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; (c) offsetting the recouped amount from any compensation otherwise owed by the Company to the executive; (d) cancelling outstanding vested or unvested equity or cash awards; and/or (e) taking any other remedial and recovery action permitted by law, as determined by the Board.
Other Risk Mitigators
We pay incentive compensation only after our audited financial results are complete and the Compensation Committee has certified our performance results and the associated incentive awards.
Board and Committee Meetings
The Board has three standing committees: the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee. The IndependentOur independent Chairman of the Board serves as a de facto non-paid member of all three committees. During 2016,2018, the following number of meetings were held:
Number of Meetings | ||
Board of Directors | 4 | |
Audit Committee | 5 | |
Nominating and Corporate Governance Committee | 4 | |
Compensation Committee | 4 |
In addition to regular meetings, the Board and each committee also meets in executive sessions.
Audit Committee
The Audit Committee consists of David B. Brown (Chairman), Cynthia A. Boiter and Jerome T. Walker, and Mark A. Zorko.Walker. The Board has determined that all members of the Audit Committee are "independent" as that term is defined in the Nasdaq Stock Market rules. The Board has also determined that two of the members of the Audit Committee, Mr. Brown and Mr. Zorko,Mrs. Boiter, qualify as "audit committee financial experts" as defined in Item 407(d)under SEC regulations.
The principal duties of Regulation S-K.the Audit Committee include:
Selecting the Company’s independent registered public accounting firm;
Evaluating the independent registered public accounting firm’s independence;
Monitoring the scope, approach and results of the annual audits and quarterly reviews of the Company's financial statements and discussing the results of those audits and reviews with management and the independent registered public accounting firm;
Overseeing the effectiveness of the Company’s internal audit function and overall risk management processes; and
Discussing with management and the independent registered public accounting firm the nature and effectiveness of the Company’s internal control systems.
The Board last updated its Audit Committee Charter in 2017, which is available at www.permapipe.comunder: Investors - Corporate Governance.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance
Committee is comprised ofThe Nominating and Corporate Governance Committee also meets in executive sessions.
The Nominating and Corporate Governance
Committee identifies the attributes of the Board's incumbent members believed to contribute to the work of the Board and its committees, including leadership, accomplishments, experience, skills, diversity, integrity and commitment to Board duties. When a position on the Board becomes vacant, or if the number of the members of the Board is being increased, the Nominating and Corporate GovernanceCommitteeRecommendations for potential director nominees may come from many sources, including members of the Board, executive officers, stockholders, self-recommendations, members of the communities the Company serves, or search firms. All persons recommended to the Board or the Nominating and Corporate Governance
Committee for a vacant or new Board positionIn 2018, the Nominating and Corporate Governance Committee retained a search firm to assist it in identifying and assessing potential director candidates meeting the criteria established by the Committee, interviewing and screening such candidates, and acting as an intermediary with such candidates. When identifying Cynthia A. Boiter as a nominee for the director position, the Committee considered her experience as a senior executive, as well as her experience in operations, international business, and accounting and finance and her business judgement, diversity and independence of thought.
Any stockholder wishing to make a recommendation for a person to be considered by the Nominating and Corporate Governance
Committee pursuant to the process described above as a potential nominee to the Board should refer to "Stockholder Proposals and Nominations forThe Board updated its Nominating and Corporate Governance Committee Charter in 2018, which is available at
Compensation Committee
The Compensation Committee consists of Jerome T. Walker (Chairman), Cynthia A. Boiter and David B. Brown, and Mark A. Zorko.Brown. The Board has determined that all members of the Compensation
The Compensation Committee shall:
Assists the Board in overseeing the Company's compensation, including equity plans and benefits strategies.strategies;
Determines the appropriate compensation for theour President/CEO, who is considered the Tier I Executive Officer, and recommendrecommends its approval to the Board.our Board;
Consults with our CEO on the compensation of the Company's Corporate Executive Officers (other than the President/CEO) and Divisional Presidents, who together are considered Tier II Executive Officers, and recommend approval to the Board.other executive officers;
Reviews the Company's list of hi-potentialshigh-potential key employees and itstheir critical positions, along with their retention and succession plans.plans;
Reviews our independent and Chairmannon-employee director compensation and recommendrecommends its approval to the Board.our Board;
Oversees and responsibilities set forth in the Charter.
Reviews and approve withapproves the Executive Officers the Compensation Discussion and Analysis to be included in the Company’sour proxy statement or(or Annual Report on Form 10-K if required.required); and
Performs any other activities consistent with theits Charter, the Company's bylaws, applicable law and as the Board deems necessary or appropriate.
In making decisions concerning executive compensation, the compensation committee typically considers, but is not required to accept, the recommendations of Mr. Mansfield, in consultation with the Compensation Committee, sets the executive compensation for the named executive officers other than forexcept that Mr. Mansfield himself.
The Compensation Committee has delegated to the Company's SeniorChief Human Resources Executive Officer the authority to control, operate, manage and administer all executive compensation, equity basedequity-based compensation plans and benefit plans, but not to do any of the following: grant waivers of plan terms, conditions, restrictions and limitations,or limitations; accelerate vesting or exercise of an award,award; establish new kinds of awards,awards; establish or modify performance goals, or certify the attainment of performance goals.
The Board has adopted alast updated its Compensation Committee Charter in 2018, which is availableavailable at www.permapipe.com under: Investors - Corporate Governance.
Board and Company Leadership
The Board believes it should remain freeretain the discretion to structure the leadership of theour Board and the Company in the manner that best serves the Company's and its stockholders' interests at a given time, and accordingly, has no fixed policy with respect to combining or separating the offices of Chairman and CEO. During 2009, theThe Board has determined that, if the Chairman is not an independent director, a Lead Independent Director should be selected by the independent directors and should serve as the chair of the Nominating and Corporate Governance Committee. David S. Barrie has served as our independent Chairman of the Board since September 2015 and is an independent director, thus2015. As a result, the Company does not have a Lead Independent Director at this time. The Board believes that theits current leadership structure is effective and appropriate,appropriate; allows for a separation of oversight between management and non-management,the Board; provides an experienced Chairman with whom the CEO can discuss issues facing the Company,Company; and givesempowers a significant voice to non-management directors.
Board's Oversight of Enterprise Risk
Our Board is responsible for overseeing the major enterprise risks facing theour Company and reviewing management's proposals for their mitigation.the mitigation of such risks. It reviews and discusses significant financial and nonfinancial risk exposures and the steps management has taken to monitor, control and report such exposures. In performing its oversight responsibilities, theour Board periodically discusses with management the Company's policies with respect to enterprise risk assessment and risk management, including risks inherent in proposals for which the Board's approval is sought. TheOur Audit Committee and Compensation Committee report to the Board regularly on matters relating to the specific areas of risk the committees oversee.each committee oversees. Throughout the year, the Board and certain of its committees receive regular reports from management regarding any major risks and exposures facing the Company and the steps management has taken to monitor and control such risks and exposures. In addition, throughout the year, the Board and theits relevant committees dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail. Furthermore, management routinely assesses significant risks inherent to the Company's business.
Board and Stockholder Meeting Attendance
The Company expects Board members to attend all meetings of the Board, of Board committees ofon which they are a member, and the annual meeting of the Company's stockholders. During 2016,2018, all directors then serving in office attended at least 75% ofall of the aggregate number of meetingsmeetings of the Board and all Board committees on which such director served. All directors then serving in office attended the Company's 2018 annual meeting held on June 28, 2016. David J. Mansfield attended all meetings since his appointment on January 30, 2017.
Code of Conduct
The Company has adopted a Code of Conduct, which is applicable to all employees of the Company and to the Company's Board. The Code of Conduct is publicly available on the Company's website at
www.permapipe.comunder: Investors - Corporate Governance.Stockholder Communication with theour Board of Directors
Stockholders may communicate with theour Board by submitting their communications in writing, addressed to the Board as a whole or, at the election of the stockholder, to one or more specific directors, in care of the Corporate Secretary of the Company, to: Corporate Secretary, Perma-Pipe International Holdings, Inc., 6410 W. Howard Street, Niles, Illinois 60714. TheOur Corporate Secretary will submit all such matters to the Board or specific director(s),directors, as applicable. Stockholders also will have the opportunity to communicate with Board members at the annual meeting.
Our Audit Committee of the Board has established procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters. Stockholders who wish to submit a complaint under these procedures should submit the complaint in writing to: EthicsChief Compliance Officer, Perma-Pipe International Holdings, Inc., 6410 W. Howard Street, Niles, Illinois 60714.
REPORT OF THE AUDIT COMMITTEE
To Our Stockholders:
The Audit Committee of Perma-Pipe International Holdings, Inc.,the Board, which met ninefive times during the last fiscal year, consists of three independent directors. The members of the Audit Committee meet the independence requirements, and two of the current members, Mr. Brown and Mrs. Boiter, and the prior member Mr. Zorko (who resigned his position from the Board effective February 1, 2019 and was replaced by Mrs. Boiter), meet the financial literacy requirements, of Nasdaq and the NASDAQ and additional, heightened independence criteria applicable to members of the Audit Committee under SEC and NASDAQNasdaq rules. The Audit Committee has adopted, and annually reviews, a charter outlining the practices it follows. The charter conforms to the SEC's implementing regulations and to the NASDAQ listing standards. A copy of the Committee's charter is available at
Management is responsible for the Company’s internal controls and the financial reporting process by which it prepares the Company’s financial statements. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s annual financial statements of Perma-Pipe International Holdings, Inc. and expressing an opinion on those statements. The Audit Committee monitors the Company’s financial reporting processes, including its internal control systems. The principal duties of the Audit Committee include:
During fiscal year 2016,2018, at each of its regularly scheduled meetings, the Audit Committee met with the senior members of the Company’s financial management team. Additionally, the Audit Committee hadheld four separate private executive sessions, on a quarterly basis,at each of its regularly scheduled meetings, with the Company’s independent registered public accounting firm, Vonya Global (a firm engaged by management to provide internal audit and separatelycompliance support) and with the Company’s CEO and CFO, at which candid discussions regarding financial management, legal, accounting, auditing and internal control issues took place. The Audit Committee’s agenda is established by the Audit Committee’s Chairman and the Company’s CFO.
Management updates the Audit Committee is updated periodically on management’sits process to assess the adequacy of the Company’s system of internal control over financial reporting,reporting; the framework used to make the assessmentassessment; and management’s conclusions on the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee, senior members of management, Vonya Global a firm engaged by management to provide internal audit and compliance support, and the Company’s independent registered public accounting firm reviewed the Company’s policies and procedures with respect to risk assessment and risk management.
Each year, the Audit Committee evaluates the performance of the Company’s independent registered public accounting firm, including the senior audit engagement team, and determines whether to reengage the current independent registered public accounting firm or consider other audit firms. As a threshold matter, the Committee satisfies itself that the most recent Public Company Accounting Oversight Board ("PCAOB") inspection report pertaining to the current firm does not contain any information that would render inappropriate its continued service as the Company’s independent public accountants, including consideration of the public portion of the report and discussion in general terms of the types of matters covered in the non-public portion of the report. The Audit Committee also considers the quality and efficiency of the previous services rendered by the current auditors and the auditors’ technical expertise and knowledge of the Company’s global operations and industry. Based on this evaluation, the Audit Committee decided to reengagere-engage Grant Thornton LLP as the Company’s independent registered public accounting firm for fiscal year 2017. It reviewed with senior members of the Company’s financial management team and Grant Thornton the overall audit scope and plans, the results of internal and external audit examinations, evaluations by management and Grant Thornton of the Company’s internal controls over financial reporting and the quality of the Company’s financial reporting.2019 Although the Audit Committee has the sole authority to appoint the Company’s independent registered public accounting firm, the Audit Committee will continuecontinued its long-standing practice of recommending that the Board ask the Company’s stockholders, at theirthe Annual Meeting, to ratify theits appointment of the Company’s independent registered public accounting firm.
With respect to the Company’s audited financial statements for fiscal year 2016:
The Audit Committee has reviewed and discussed the audited financial statements with management;
The Audit Committee has met with Grant Thornton the Company’s independent registered public accounting firm,LLP and discussed the matters required by Statement on Auditing Standards No. 61, as amended, as adopted by PCAOB in Rule 3200T;the applicable requirements of the Public Company Accounting Oversight Board ("PCAOB") and the SEC; and
The Audit Committee has received the written disclosures and the letter from Grant Thornton LLP required by the applicable requirements of PCAOB regarding the independent accountant'saccountant’s communications with the audit committeeAudit Committee concerning independence, and has discussed with Grant Thornton theirLLP its independence.
In reliance upon the Audit Committee’s reviews and discussions with both management and Grant Thornton LLP referred to above, management’s representations and the report of Grant Thornton LLP on the Company’s fiscal 2018 audited financial statements, the Audit Committee recommended to the Board that the Company’s audited financial statements for the fiscal year ended January 31, 20172019 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 20172019 for filing with the SEC.
This Audit Committee Report is not to be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, (
David B. Brown, Chairman
Cynthia A. Boiter
Jerome T. Walker
Members of the Audit Committee
AUDIT FEES
The Audit Committee appointed Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ended January 31, 2017.2019. The Company’s stockholders ratified the engagement of Grant Thornton LLP at the 2018 Annual Meeting of Stockholders on June 28, 2016.
The Sarbanes-Oxley Act of 2002 prohibits an independent public accountant from providing certain non-audit services for an audit client. The Company engages various other professional service providers for these non-audit services as required. Other professional advisory and consulting service providers are engaged where the required technical expertise is specialized and cannot be economically provided by employee staffing. Such services include internal audit and tax services.
The aggregate amounts included in the Company’s financial statements for fiscal year
2016 | 2015 | |||
Audit Fees | $550,451 | $671,437 | ||
Audit-Related Fees | 0 | 0 | ||
Tax Fees | 0 | 0 | ||
All Other Fees | 4,900 | 4,900 | ||
Total | $555,351 | $676,337 |
2018 | 2017 | |||||||
Audit Fees | $ | 533,856 | $ | 701,548 | ||||
Audit-Related Fees | 20,000 | — | ||||||
All Other Fees | 4,900 | 4,900 | ||||||
Total | $ | 558,756 | $ | 706,448 |
Audit Fees
Audit-related fees billedinclude fees for all services related to providing consent for the Company’s Registration Statement on Form S-8 filed in 2016 or 2015.
Representatives of Grant Thornton LLP are expected to be present atattend the virtual stockholder meetingAnnual Meeting and will be available to respond to appropriate questions and may make a statement if they so desire.
The Audit Committee, at each of its regularly scheduled meetings, and on an interim basis as required, reviews all engagements of Grant Thornton LLP for audit and all other services. Prior to the Audit Committee’s consideration for approval, management provides the Audit Committee with a description of the reason for, and nature of, the services to be provided along with an estimate of the time required and approximate cost. Following such review, each proposed service is approved, modified or denied, as appropriate. AThe Audit Committee maintains a record of all such approvals is maintained in theits files of the Audit Committee for future reference. AllThe Audit Committee approved all services provided by Grant Thornton LLP during the past two years were approved by the Audit Committee prior to their undertaking.
The Audit Committee has adopted a policy for approving all permitted audit, audit-related, tax and non-audit services to be provided by Grant Thornton LLP in advance of the commencement of such services, except for those considered to be
de minimis by law for non-audit services. Information regarding services performed by the independent registered public accounting firm under this de minimis exception is presented to the Audit Committee for information purposes at each of its meetings. There is no blanket pre-approval provision within this policy.EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
General
The purpose of this Executive Compensation Discussion and Analysis is to provide information about the compensation of the following current and former executive officers, who are the Company’s NEOs for fiscal 2018: David J. Mansfield, the Company’s President and Chief Executive Officer, Wayne M. Bosch, the Company’s Vice President and Chief Human Resources Officer, and Karl J. Schmidt, the Company’s former Vice President and Chief Financial Officer. Mr. Schmidt retired from the Company on October 31, 2018. D. Bryan Norwood, the Company’s current Vice President and Chief Financial, is not considered an NEO for fiscal 2018 under the Exchange Act because he received less than $100,000 in total compensation during fiscal 2018 since he joined the Company on October 1, 2018.
Purpose of Executive Compensation Program
Our long-term success depends on our ability to attract, motivate, focus and retain highly talented individuals who are committed to the Company's vision, values and strategy. To that end, our executive compensation program is designed to link our executives’ pay to their individual performance, to our annual and long-term performance, and to successful execution of our business strategies. We also use our executive compensation program to encourage high-performing executives to remain with us over the course of their careers.
We believe the compensation packages for our Named Executive Officers are market competitive and reflect their extensive management experience, continued high performance, and exceptional service. We also believe our compensation strategies have been effective in attracting executive talent and promoting performance and retention.
Principles of Our Executive Compensation Program
We believe the level of compensation received by our executives should be closely tied to our corporate financial and stock price performance. This principle is apparent in the design of our executive compensation program and in the specific compensation packages we provide. In addition to aligning our executives’ pay with performance, we follow several other principles when designing and implementing our executive compensation program.
✔ Market and Peer Positioning
We believe the target, on average, for our executives’ total direct compensation opportunity (consisting of base salary, target annual bonus, and target long-term incentive value) should be approaching the 50th percentile of an independent market benchmark.
✔ Short-Term and Long-Term Balance
We strive for a balance between annual short-term and long-term elements of compensation consistent with an independent market benchmark. We believe in setting short and long-term goals that are challenging but attainable at their targeted levels without the need for our executives to take inappropriate risks, take actions that would violate our Code of Conduct, or make material changes to our long-term business strategy or our methods of management or operation.
✔ Pay at Risk
We believe that the more senior an executive’s position, the more of the executive's short and long-term compensation should be "at risk," which means it will vary based on the Company's consolidated financial and stock price performance.
✔ Alignment with Stockholders Interests
We believe that equity-based compensation and stock ownership should be a substantial part of our executive compensation program in order to link executives’ compensation with our stockholders’ returns. The greater the level of responsibility of the officer, the more their compensation should be stock-based and the higher their stock ownership requirement should be, which practice is consistent with market practices.
✔ Retention of Executives
✔ Simple and Transparent
We believe that our executive compensation program should be transparent to our investors and employees as well as simple and easy to understand.
Summary Compensation
The following table shows the total compensation earned by the Company's CEO, former CEO and the two most highly paid executive officers other than the CEONEOs for the fiscal years ended January 31, 20172019 and 20162018 for services rendered in all capacities to the Company and its subsidiaries.
TABLE 1 Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (1) (2) | Nonqualified Deferred Compensation Earnings ($) (3) | All Other Compensation ($) (4) | Total ($) | |||||
David J. Mansfield * | 2016 | $70,615 | $34,000 | $100,000 | n/a | $1,636 | $206,251 | |||||
President and Chief Executive Officer | ||||||||||||
Bradley E. Mautner | 2016 | 407,268 | — | 702,403 | — | 693,142 | 1,802,813 | |||||
Former President and Chief Executive Officer | 2015 | 413,179 | — | 175,597 | (44,866) | 44,977 | 588,887 | |||||
Karl J. Schmidt | 2016 | 314,860 | — | 421,442 | n/a | 9,755 | 746,057 | |||||
Vice President and Chief Financial Officer | 2015 | 323,850 | 49,418 | 154,775 | n/a | 10,555 | 538,598 | |||||
Wayne M. Bosch | 2016 | 215,430 | — | 113,601 | n/a | 8,269 | 337,300 | |||||
Vice President and Chief Human Resources Officer | 2015 | 221,450 | 12,575 | 40,972 | n/a | 8,514 | 283,511 |
Name and Principal Position | Fiscal Year | Salary | Bonus (2) | Restricted Stock Awards (3) | All Other Compensation (4) | Total | |||||||||||
David J. Mansfield | 2018 | $ | 356,506 | — | $ | 522,747 | $ | 10,433 | $ | 889,686 | |||||||
President and Chief Executive Officer | 2017 | 340,000 | — | 510,000 | 10,254 | 860,254 | |||||||||||
Karl J. Schmidt(1) | 2018 | 262,393 | — | 261,442 | 193,634 | 717,469 | |||||||||||
Former Vice President and Chief Financial Officer | 2017 | 335,343 | — | 263,400 | 10,730 | 609,473 | |||||||||||
Wayne M. Bosch | 2018 | 244,715 | — | 75,540 | 9,753 | 330,008 | |||||||||||
Vice President and Chief Human Resources Officer | 2017 | 226,662 | — | 71,000 | 9,102 | 306,764 |
(1) | Mr. Schmidt retired from the Company on October 31, 2018. |
(2) | The NEOs did not receive any cash bonuses in fiscal 2017 (for performance related to fiscal 2016) or, fiscal 2018 (for performance related to fiscal 2017), as the |
(3) | |
Represents the equity amount awarded in the fiscal year that will vest 1/3 per year over a three-year vesting period. Also represents the dollar amounts for the years shown of the aggregate grant date fair value of stock and unit awards granted in those years in accordance with SEC rules. These amounts reflect the Company's accounting expense and do not correspond to the actual value that may be realized by the NEOs. |
(4) | |
Details of the amounts |
TABLE 2 Name | Year | Severance | Club Dues and Fees | Net amount of Personal Use of Company Provided Automobile | 401(k) Contribution | Life Insurance Premiums | Total All Other Compensation | |||||||||
David J. Mansfield | 2016 | $— | $— | $— | $1,556 | $80 | $1,636 | |||||||||
Bradley E. Mautner | 2016 | 653,275 | 30,112 | — | 9,275 | 480 | 693,142 | |||||||||
2015 | — | 32,240 | 228 | 9,275 | 3,234 | 44,977 | ||||||||||
Karl J. Schmidt | 2016 | — | — | — | 9,275 | 480 | 9,755 | |||||||||
2015 | — | — | — | 9,275 | 1,280 | 10,555 | ||||||||||
Wayne M. Bosch | 2016 | — | — | — | 7,789 | 480 | 8,269 | |||||||||
2015 | — | — | — | 7,680 | 834 | 8,514 |
Name | Fiscal Year | Severance | 401(k) | Life Insurance Premiums | Total All Other Compensation | |||||||||
David J. Mansfield | 2018 | $ | — | $ | 9,659 | $ | 774 | $ | 10,433 | |||||
2017 | — | 9,450 | 804 | 10,254 | ||||||||||
Karl J. Schmidt | 2018 | 183,570 | 8,305 | 1,758 | 193,633 | |||||||||
2017 | — | 9,450 | 1,280 | 10,730 | ||||||||||
Wayne M. Bosch | 2018 | — | 8,565 | 1,188 | 9,753 | |||||||||
2017 | — | 7,868 | 1,234 | 9,102 |
Grants of Stock-Based Compensation Awards
The following table provides information about stock-based compensation awards granted to theour NEOs in
TABLE 3 Name | Grant Date | Restricted Stock Award (1) | Grant Date Fair Value of Awards (2) |
David J. Mansfield | 11/8/2016 | 12,578 | $100,000 |
Bradley E. Mautner | 3/22/2016 | 36,331 | 263,403 |
Bradley E. Mautner | 6/14/2016 | 59,890 | 439,000 |
Karl J. Schmidt | 3/22/2016 | 21,799 | 158,042 |
Karl J. Schmidt | 6/14/2016 | 35,934 | 263,400 |
Wayne M. Bosch | 3/22/2016 | 5,876 | 42,601 |
Wayne M. Bosch | 6/14/2016 | 9,686 | 71,000 |
Name | Grant Date | Restricted Stock Award in Shares (1) | Grant Date Fair Value of Awards (2) | ||||
David J. Mansfield | 6/14/2018 | 53,396 | $ | 522,747 | |||
Karl J. Schmidt (3) | 6/14/2018 | 26,705 | 261,442 | ||||
Wayne M. Bosch | 6/14/2018 | 7,716 | 75,540 |
(1) | |
The restricted stock vests ratably over three years. |
(2) | |
The amounts shown in the Grant Date Fair Value of Awards column represent the fair value of the awards on the date of grant, as computed in accordance with Topic 718, excluding the effect of estimated forfeitures. | |
(3) | Restricted shares awarded to Mr. Schmidt were forfeited on |
Executive Compensation Elements
In addition to their base salary, each NEO is annually assigned a target annual cash bonus amount under the Company’s short-term incentive plan. In addition, each NEO receives an annual long-term incentive stock grant under the 2017 Plan, which the Compensation Committee determines based on the Committee’s evaluation of the total compensation reported in the Summary Compensation Table above is paidtheir performance and, with respect to the NEOs other than the CEO, pursuant to the termsrecommendation of their compensation plans maintainedthe CEO and, to the extent applicable, generally consistent with each executive's employment agreement. Annually, corporate performance targets (based on EBIT and personal goals), are assigned various weights under the Company’s short-term incentive plan, such that achievement of the 100% level within each goal would have resulted in full payment of the specified targeted bonus for each NEO described below under "Executive Employment Agreements." Performance below the minimum threshold of the financial target may result in a zero payment, and performance above the maximum target may result in a higher bonus of up to 200%.
The fiscal 2019 short-term incentive bonus goals for the NEOs are expected to be based 80% on the Company’s achievement of its operating plan financial results for 2019, and 20% on each NEO’s achievement of his personal goals and objectives, as approved by the Company as described below.
All NEOs are eligible for employee benefits available to the Company'sCompany’s other salaried employees in the U.S., including group medical insurance, dental insurance, group life insurance, Company-funded short-term disability benefits, group long-term disability insurance, a 401(k) retirement plan and awards under the 20132017 Plan.
We believe the ongoing health and wellness of our executives is critical for achieving our Company goals and creating stockholder value. As a result, in April 2019 the Board approved the addition of an Executive Wellness Program which will require each senior executive to complete a Company paid, annual health and wellness assessment.
Pay for Performance Philosophy
In fiscal 2018, our compensation plan was designed to hold our executive officers accountable for our business results and to reward them for consistently strong corporate performance and the creation of stockholder value. The key elements of our executive compensation program supported this objective.
Compensation Element | Form of Payment | Performance Metrics | Rationale | |||
Base salary | Cash | Individual Performance. | Market based to attract and retain skilled executives. Designed to recognize scope of responsibility, individual performance and experience. | |||
Short-Term Incentive | Cash | Consolidated EBIT Performance: Financial 80%; Personal Goals 20%. | Rewards on the achievement of challenging annual financial performance goals of the Company and personal goals tied to operational performance of each individual executive. | |||
Long-term Incentive | Equity - Restricted Stock Units | Three-year vesting schedule. | Provides an incentive for long term strategic planning and profitable growth correlated with stockholder value through share price appreciation over time. |
Because we believe the compensation of our most senior executives should be based on the Company's overall performance, each executive’s pay is tied to the same financial metrics and in aggregate, approximately half of each executive's pay is either short-term incentive-based or long-term stock price based and therefore at risk. In fiscal 2018, incentive based components (short-term and long-term incentive compensation) were 71% of the CEO’s target total direct compensation opportunity and 44% of the average target total direct compensation opportunity for the other executive officers.
Change of Control - Double Trigger
The Board has determined that all future restricted stock awards will include a "double-trigger," meaning that the unvested restricted stock would not vest upon a change in control of the Company, unless specific additional events occur, such as a material adverse change in responsibilities.
Executive Compensation Aligned with the Market
Throughout this Executive Compensation Discussion and Analysis, each reference to the ‘‘market’’ and to market positioning practices is intended to incorporate the approach outlined below. We review our executive compensation program on a regular basis and generally target approaching the 50th percentile of the market in positioning each individual element of compensation.
For fiscal 2018, our primary benchmarking reference was a consolidation and integration of market data from companies in the manufacturing industry in the WTW General Industry Executive Management Survey as well as a Custom Peer Group benchmark. We also considered data from our Custom Peer Group (defined below) regarding pay program design, dilution, and performance. We believe this approach provides an appropriate representation of the market, as applicable to our executives, and, by incorporating multiple sources, we lessen the impact of fluctuations in market data over time.
Our Custom Peer Group is made up of the 12 public companies shown below. All of these firms fall into at least one of these categories: (i) customers with a strong presence in one or more of our major markets; (ii) companies that are US based and have a large international presence; (iii) companies that are project based that have similar product profile or related products; (iv) companies with similar Global Industry Classification codes; and (iv) diversified companies that compete for investor capital within the market segment. The Custom Peer Group companies also are similar to the Company in size, demographics, locations and investor profile and compete with us for talent.
● | Ampco-Pittsburgh Corporation | ● | Hurco Companies, Inc. | |||
● | Core Molding Technologies, Inc. | ● | Manitex International, Inc. | |||
● | DMC Global Inc | ● | Preformed Line Products Company | |||
● | Energy Recovery, Inc. | ● | The L.S. Starrett Company | |||
● | Graham Corporation | ● | The Gorman-Rupp Company | |||
● | Haynes International, Inc. | ● | Thermon Group Holdings, Inc. |
How Performance Measures and Goals are Determined
The Compensation Committee regularly reviews all elements of our executive compensation program and makes changes it deems appropriate from time to time. Each participating executive officer will be assigned a potential target cash bonus amount underreview includes general comparisons against market and peer data and analysis prepared by WTW, including information on market and peer practices and decision support in the short termfollowing areas:
✔ Pay strategy and positioning on all elements of compensation;
✔ Annual Short-Term Incentive plan design, including performance measures, performance targets and plan leverage;
✔ Long-Term Incentive plan strategy, design and targets percentages;
✔ Stock ownership guidelines;
✔ Executive perquisites; and
✔ Executive benefits and protection policies, including severance practices for officers and change in control arrangements.
The Compensation Committee establishes performance measures and goals each year aligned to the Company's strategic plan that are designed to help achieve our business strategy and objectives. In setting the performance goals for annual short-term and long-term incentive plan. In addition, NEOs receive grants under the Company’s 2013 Plan or 2017 Plan if approved, which
Executive Employment Agreements
David J. Mansfield.
Karl J. Schmidt.
Mr. Schmidt was appointed Vice President and CFO in January 2013. On March 17, 2017, the Company and Mr. Schmidt entered into an employment agreement pursuant toD. Bryan Norwood. Mr. Norwood joined the Company on October 1, 2018, and was appointed Vice President and CFO in November 2018. On October 1, 2018, the Company and Mr. Norwood entered into an employment agreement pursuant to which he will participatereceive an annual base salary of $250,000 and is eligible for incentive compensation determined in accordance with normal Company practices. Mr. Norwood also receives an annual cash bonus opportunity, with a target incentive set at 50% of his base salary, and an annual long-term restricted stock award, with a target annual award of 33% of his base salary, vesting ratably over three years. Mr. Norwood participates in all standard Company benefits and is also entitled to a severance payment of up to one year’s base salary and short-term incentive compensation and continuation of benefits if his employment is terminated under certain conditions. The Employment Agreement has a one-year term and automatically renews for successive one-year terms. For details, refer to Exhibit 10.1 filed with the Company's Current Report on Form 8-K on March 20, 2017. In 2016 and 2015, Mr. Schmidt did not earn a bonus under the short-term incentive plan due to the Company not achieving applicable financial targets. In 2015, Mr. Schmidt received a $98,835 discretionary bonus from a discretionary bonus pool established by the Company in 2015 for grants to executive officers and employees in recognition of such persons' efforts. Mr. Schmidt's discretionary bonus is comprised of 50% cash ($49,418) and 50% restricted shares (a grant of 7,289 shares valued at $49,417 based on a value of $6.78 per share). In 2016 and 2015, Mr. Schmidt was granted restricted stock as approved by the Compensation Committee.
Wayne M. Bosch.
Mr. Bosch was appointed Vice President and Chief Human Resource Officer in December 2013. In addition to Mr.The following table sets forth the outstanding stock options held by our NEOs as of January 31, 2019 (Mr. Mansfield held no options on such date):
Outstanding Option Awards at January 31, 2019
Name | Number of Vested Stock Options | Number of Un-Vested Stock Options | Option Exercise Price | Option Expiration Date | ||||||
Wayne M. Bosch | 2,000 | — | $12.77 | 11/30/2023 |
Mr. Schmidt exercised 10,000 stock options in fiscal 2018 after his retirement.
The following table sets forth the outstanding restricted stock awarded to our NEOs as of January 31, 2019:
Outstanding Restricted Stock Awards at
January 31,Name | Equity incentive plan awards: Number of Shares of Stock That Have Not Vested | Vesting | Equity incentive plan awards: Market Value of Shares of Stock That Have Not Vested | ||||||
David J. Mansfield | 21,250 | 6/22/2019 | $ | 185,725 | |||||
21,250 | 6/22/2020 | 185,725 | |||||||
17,799 | 6/14/2019 | 155,563 | |||||||
17,799 | 6/14/2020 | 155,563 | |||||||
17,798 | 6/14/2021 | 155,563 | |||||||
Wayne M. Bosch | 3,229 | 6/14/2019 | 28,221 | ||||||
2,958 | 6/22/2019 | 25,853 | |||||||
2,959 | 6/22/2020 | 25,862 | |||||||
2,572 | 6/14/2019 | 22,479 | |||||||
2,572 | 6/14/2020 | 22,479 | |||||||
2,572 | 6/14/2021 | 22,479 |
Mr. Schmidt's unvested restricted shares were forfeited as of October 31, 2018.
Name | Equity incentive plan awards: Number of Shares of Stock That Have Not Vested (#) | Vesting Date | Equity incentive plan awards: Market Value of Shares of Stock That Have Not Vested ($) | ||
David J. Mansfield | 12,578 | 11/8/2017 | $110,058 | ||
Bradley E. Mautner | 4,959 | 6/17/2017 | 43,391 | ||
21,287 | 6/16/2017 | 186,261 | |||
19,963 | 6/14/2017 | 174,676 | |||
19,963 | 6/14/2018 | 174,676 | |||
21,288 | 6/16/2018 | 186,270 | |||
19,964 | 6/14/2019 | 174,685 | |||
Karl J. Schmidt | 11,978 | 6/14/2017 | 104,808 | ||
12,772 | 6/16/2017 | 111,755 | |||
2,975 | 6/17/2017 | 26,031 | |||
7,288 | 5/13/2018 | 63,770 | |||
11,978 | 6/14/2018 | 104,808 | |||
12,773 | 6/16/2018 | 111,764 | |||
11,978 | 6/14/2019 | 104,808 | |||
Wayne M. Bosch | 3,228 | 6/14/2017 | 28,245 | ||
1,959 | 6/16/2017 | 17,141 | |||
755 | 6/17/2017 | 6,606 | |||
1,484 | 6/18/2017 | 12,985 | |||
1,854 | 5/13/2018 | 16,223 | |||
3,229 | 6/14/2018 | 28,254 | |||
1,958 | 6/16/2018 | 17,133 | |||
1,484 | 6/18/2017 | 12,985 | |||
3,229 | 6/14/2019 | 28,254 |
TABLE 4 Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Vesting Date | Option Expiration Date | |||
Bradley E. Mautner | 5,000 | 28.99 | 5/31/2017 | |||||
5,000 | 17.635 | 5/31/2018 | ||||||
5,000 | 6.885 | 5/31/2019 | ||||||
5,000 | 6.095 | 5/31/2020 | ||||||
5,000 | 7.69 | 5/31/2021 | ||||||
5,000 | 6.882 | 5/31/2022 | ||||||
Karl J. Schmidt | 5,000 | 6.07 | 12/31/2022 | |||||
3,750 | 7.81 | 4/30/2023 | ||||||
1,250 | 7.81 | 5/31/2017 | 4/30/2023 | |||||
3,750 | 11.42 | 8/31/2023 | ||||||
1,250 | 11.42 | 9/30/2017 | 8/31/2023 | |||||
Wayne M. Bosch | 1,500 | 12.77 | 11/30/2023 | |||||
500 | 12.77 | 12/2/2017 | 11/30/2023 |
The following table sets for the number and value of NEO restricted stock awards that vested in 2016.
Restricted Stock Vested 2016
TABLE 5 Name (a) | Restricted Stock Vested | |
Number of Shares Vested (#) (b) | Value Realized upon Vesting ($) (c) | |
Bradley E. Mautner | 45,980 | $356,356 |
Karl J. Schmidt | 31,420 | 240,981 |
Wayne M. Bosch | 7,059 | 54,774 |
Name | Number of Shares Vested | Value Realized upon Vesting | |
David J. Mansfield | 21,250 | $ | 200,813 |
Karl J. Schmidt | 43,014 | 414,477 | |
Wayne M. Bosch | 11,483 | 110,658 |
Tax Deductibility of Pay
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to each NEO. While the Compensation Committee considers the tax impact of Section 162(m) in determining compensation for each NEO, the Committee has determined that order to provide competitive pay and to reward NEOs for achieving various corporate goals, it may be appropriate to pay NEOs amounts in excess of $1,000,000 which will not be deductible by the Company and received total compensationunder Section 162(m).
Related Party Transactions
There were no related party transactions in 2016 of $230,397 and in 2015 of $203,206. David Mautner separated from the Company in 2016.
401(k) Plan
The domestic employees of the Company, including theour NEOs, are eligible to participate in the MFRI, Inc.Company's Employee Savings and Protection Plan ("401(k) Plan"), which is applicable to all employees except certain employees covered by collective bargaining agreement benefits. The 401(k) Plan allows employee pretax payroll contributions of upfrom 1% to 16% of total compensation. The Company matches 100% of the first 1% of the participant's contributions, and another 50% of each participant's contribution, up tothe next 5% of contributions, for a maximum total of 3.5% employer match.
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
Based on filings made under Section 13(d) and Section 13(g) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the following table sets forth the only persons known to the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock; the name and address of such owner; the number of shares of Common Stock beneficially owned; the nature of such ownership; and the percent ownership of our outstanding shares of Common Stock which is based upon 7,854,322 shares outstanding as of January 31, 2019.
Name and Address of | Amount and Nature of Beneficial Ownership |
| Percent of Outstanding Shares |
Cannell Capital LLC | 699,207 | (1) | 8.9% |
245 Meriwether Circle |
|
|
|
Alta, WY 83414 |
|
|
|
|
|
|
|
Wells Fargo & Company | 565,420 | (2) | 7.2% |
420 Montgomery Street |
|
|
|
San Francisco, CA 94163 |
|
|
|
|
|
|
|
Dimensional Fund Advisers LP | 561,284 | (3) | 7.1% |
6300 Bee Cave Road, Building # 1 |
|
|
|
Austin, TX 78746 |
|
|
|
|
|
|
|
David Unger | 511,830 | (4) | 6.5% |
P. O. Box 361 |
|
|
|
Morton Grove, IL 60053 |
|
|
|
|
|
|
|
Strategic Value Partners | 508,697 | (6) | 6.5% |
Carl W. Dinger III |
|
|
|
PO Box 897 |
|
|
|
Berthoud, CO 80513 |
|
|
|
|
|
|
|
Edward W. Wedbush | 393,925 | (7) | 5.0% |
P.O. Box 30014 |
|
|
|
Los Angeles, CA 90030-0014 |
|
|
|
(1) | According to a Schedule 13G filed February 14, 2019, as of December 31, 2018, Cannell Capital LLC has shared power to vote and dispose on 699,207 shares. |
(2) | According to a Schedule 13G filed January 22, 2019, as of December 31, 2018, Wells Fargo & Company has shared power to vote and dispose on 448,670 shares. |
(3) | According to a Schedule 13G/A filed February 8, 2019, Dimensional Fund Advisors LP, in its capacity as investment adviser, may be deemed the beneficial owner of 561,284 shares of Common Stock as of December 31, 2018, which are owned by investment advisory client(s) consisting of investment companies and certain other commingled funds, group trusts and separate accounts. Dimensional stated that it has sole voting and dispositive power on 553,623 shares. Dimensional disclaims beneficial ownership of such securities. |
(4) | As of January 31, 2019, includes 30,000 shares that are subject to stock options granted by the Company, at a weighted average price of $8.43. |
(5) | According to a Schedule 13D/A filed April 3, 2017, as of March 31, 2017, the Strategic Value Partners group has shared power to vote and shared power to dispose on 446,327 shares. The schedule was filed jointly by Carl W. Dinger III, Carl W. Dinger III’s children (Ashley, Caleigh and Shelby), Kenneth E. Stroup Jr., and Carousel World L.P., of which Carl W. Dinger III is the general partner. |
(6) | According to a Schedule 13G/A filed February 17, 2015, as of December 31, 2014, Wedbush, Inc. ("WI"), a control person, has sole ownership of 177,977 shares of Common Stock; Edward W. Wedbush ("EWW") has sole ownership of 160,794 shares; and Wedbush Securities, Inc. ("WS"), a broker-dealer, has sole ownership of 18,901 shares. WI has sole power to vote on 177,977 shares, shared power to vote on 210,157 shares, sole power to dispose on 177,977 shares, and shared power to dispose on 210,157 shares. EWW has sole power to vote on 160,794 shares, shared power to vote on 370,151 shares, sole power to dispose on 160,794 shares, and shared power to dispose on 393,925 shares. WS has sole power to vote on 18,901 shares, shared power to vote on 210,157 shares, sole power to dispose on 18,901 shares and shared power to dispose on 233,931 shares. EWW is the chairman of WI, is the president of WS, and owns approximately 50% of the outstanding shares of WI, which is the sole shareholder of WS, and, thus, EWW may be deemed the beneficial owner of the shares held by WI or WS (but disclaims ownership of such shares). |
SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the beneficial ownership of our Common Stock of each participant's salary.
Name of Beneficial Owner | Number of Shares | Stock options exercisable within 60 days | Deferred Shares | Total | Percent of Outstanding Stock |
David J. Mansfield (1) | 120,886 | — | — | 120,886 | 1.5% |
Karl J. Schmidt (2) | 72,607 | — | — | 72,607 | 0.9% |
Wayne M. Bosch (1)(3) | 39,806 | 2,000 | — | 41,806 | 0.5% |
David S. Barrie (3)(4) | 1,920 | 10,000 | 28,272 | 40,192 | 0.5% |
Jerome T. Walker (4) | — | — | 24,420 | 24,420 | * |
David B. Brown (4) | — | — | 22,003 | 22,003 | * |
Cynthia A. Boiter | — | — | — | — | — |
All directors and executive officers as a group (7 persons) | 235,219 | 12,000 | 74,695 | 321,914 | 3.4% |
* Less than 0.5%.
(1) | Messrs. Mansfield and Bosch hold unvested restricted shares with voting rights. As of January 31, 2019, Mr. Mansfield held 95,896 shares of restricted Common Stock, and Mr. Bosch held 16,862 shares of restricted common stock. | |
(2) | Represents information known by the Company as of October 31, 2019, the day Mr. Schmidt retired. | |
(3) | All options are vested and fully exercisable. Mr. Barrie's options have an exercise price of $5.55 per share and Mr. Bosch's options have an exercise price of $12.77 per share. | |
(4) | Since 2014, the only stock awards granted to directors have been deferred common stock awards that will not convert to common stock until the director’s departure from the Board. Refer to Director Compensation. |
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR 20182019 ANNUAL MEETING
Inclusion of Proposals in the Company's 2020 Proxy Statement and Proxy Card Under SEC Rules
In order to be eligible for inclusion in the proxy statement and proxy form relating to such meeting pursuant to the rules and regulations of the SEC, any proposal which a stockholder intends to present at the Company's 2020 annual meeting of stockholders in 2018 must be in writing, must be received by the Company at its principal executive offices in Niles, Illinois by January 12, 20181, 2020 and must satisfy the applicable rules and regulations of the SEC.
Advance Notice Requirements for Stockholder Submission of Nominations and Proposals
In addition, a stockholder recommendation for nomination of a candidate for election to theour Board or a proposal for consideration at the 2018 Company's 2020annual meeting of stockholders must be submitted in accordance with the advance notice procedures and other requirements in the Company's bylaws. These requirements are separate from and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy statement and form of proxy/voting instruction card pursuant to the SEC's rules.
Our bylaws require a stockholder who wants to nominate a director or submit a stockholder proposal to be a stockholder of record and comply with the advance notice provisions of our bylaws.
Our bylaws require that stockholder recommendations for nominees to the Board must include all information relating to such person that is required to be disclosed in a proxy statement, and a written consent signed by the nominee evidencing a willingness to serve as a director if elected.
Our bylaws require that stockholder proposals include all information relating to such business that would be required to be disclosed in a proxy statement or otherwise in connection with solicitations of proxies for election of directors. In order to be considered timely under the advance notice requirements of our bylaws, the proposal or recommendation for nomination must be received by the Board at least 90 days but no more than 120 days prior to the first anniversary of the previous year's annual meeting. For the
In addition, our bylaws require that the stockholder giving notice must also include with respect to such stockholder, each nominee proposed by such stockholder, and any person acting in concert, directly or indirectly, with such stockholder and any person controlling, controlled by or under common control with such stockholder or person acting in concert with such stockholder,stockholder; (i) the name and address of the stockholder,stockholder; (ii) the class or series and number of shares which are beneficially owned or held of record by the person,such person; (iii) the nominee holder for and number of, shares beneficially owned but not owned of record by such person,person; (iv) whether and the extent to which any hedging or other transaction or any other arrangement has been entered into or made, the intent or effect of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such person with respect to any share of stock of the Company,Company; (v) if known by the stockholder, making the proposal, the name and address of any other stockholder supporting the nominee or the proposal on the date of such stockholder's proposal,proposal; (vi) descriptionsa description of anyall arrangements or understandings between such persons pursuant to which nominations are to be made and any relationships between the nominating stockholder or any person acting in concert with such stockholder and each proposed nominee,nominee; (vii) whether such person intends to solicit proxies in connection with the nomination or proposal,proposal; (viii) a brief description of the matter (other than nomination of a director) and the reasons for consideration thereof at the meeting,meeting; and (ix) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the person named in the proposal or bring such matter before the meeting.
IMPORTANT
We urge you to PROMPTLY vote your shares by phone, via the internet, or by signing, dating and returning the enclosed Proxyproxy to the address provided.
BY ORDER OF THE BOARD OF DIRECTORS
D. Bryan Norwood
Secretary