SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x
Filedby a party other than the Registrant ¨
Check the appropriate box:
| ¨ | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material Pursuant to § 240.14a-12 |
Stoneridge, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| x | No fee required. |
| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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STONERIDGE, INC.
9400 East Market Street
Warren, Ohio 44484
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
We will hold the 2011our 2012 Annual Meeting of Shareholders of Stoneridge, Inc. on Monday, May 9, 2011,7, 2012, at 11:00 a.m. Eastern Time, at the Sheraton Cleveland Airport Marriott Hotel, 5300 Riverside Drive,4277 West 150thStreet, Cleveland, Ohio 44135.
The purpose of the Annual Meeting is to consider and vote on the following matters:
| 1. | Election of seven directors, each for a term of one year; |
| 2. | Ratification of the appointment of Ernst & Young LLP; |
| 3. | An advisory vote on executive compensation; |
| Any other matters properly brought before the meeting. |
Only shareholders of record at the close of business on April 1, 2011,5, 2012, are entitled to notice of and to vote at the meeting or any adjournment thereof. Shareholders are urged to complete, sign and date the enclosed proxy and return it in the enclosed envelope or to vote by telephone or Internet.
| By order of the Board of Directors, | |
  | |
| ROBERT M. LOESCH, | |
| Secretary | |
Dated: April 12, 2011
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 9, 2011:
This Proxy Statement and the Company’s 20102011 Annual Report to Shareholders are also available atwww.edocumentview.com/sri.
YOUR VOTE IS IMPORTANT.
PLEASE SUBMIT YOUR PROXY BY COMPLETING AND MAILING THE ENCLOSED PROXY CARD
OR PROVIDE YOUR VOTE BY TELEPHONE OR INTERNET.
STONERIDGE, INC.
PROXY STATEMENT
The Board of Directors (the “Board”) of Stoneridge, Inc. (the “Company”) is sending you this Proxy Statement to ask for your vote as a Stoneridge shareholder on certain matters to be voted on at theour Annual Meeting of Shareholders to be held on Monday, May 9, 2011,7, 2012, at 11:00 a.m. Eastern Time, at the Sheraton Cleveland Airport Hotel, 5300 Riverside Drive,Marriott, 4277 West 150th Street, Cleveland, Ohio 44135. This Proxy Statement and the accompanying notice and proxy will be mailed to you on or about April 12, 2011.
Annual Report; Internet Availability
A copy of the Company’sour Annual Report to Shareholders for the fiscal year ended December 31, 2010,2011, is enclosed with this proxy statement.Proxy Statement. Additionally, this Proxy Statement and our Annual Report to Shareholders for the fiscal year ended December 31, 20102011 are available atwww.edocumentview.com/sri.
Solicitation of Proxies
The Board of Directors (“Board”) is making this solicitation of proxies and the Companywe will pay the cost of the solicitation. The Company hasWe have retained Georgeson Inc., at an estimated cost of $8,000, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals. In addition to the solicitation of proxies by mail by Georgeson Inc., the Company’sour employees may solicit proxies by telephone, facsimile or electronic mail.
Proxies; Revocation of Proxies
The common shares represented by your proxy will be voted in accordance with the instructions as indicated on your proxy. In the absence of any such instructions, they will be voted to (a) elect the director nominees set forth under “Election of Directors”; (b) ratify the appointment of Ernst & Young LLP as the Company’sour independent registered public accounting firm for 2011;2012; and (c) approve the compensation paid to the Company’sour Named Executive Officers; (d) approve “every three years” regarding the frequency of a shareholder vote on the compensation of the Named Executive Officers; and (e) approve the Amended Annual Incentive Plan.Officers. Your presence at the Annual Meeting of Shareholders, without more, will not revoke your proxy. However, you may revoke your proxy at any time before it has been exercised by signing and delivering a later-dated proxy or by giving notice to the Company in writing at the Company’sour address indicated on the attached Notice of Annual Meeting of Shareholders or in the open meeting. If you hold your Company common shares in “street name”, in order to change or revoke your voting instructions you must follow the specific voting directions provided to you by your bank, broker or other holder of record.
Voting Eligibility
Only shareholders of record at the close of business on the record date, April 1, 2011,5, 2012, are entitled to receive notice of the Annual Meeting of Shareholders and to vote the common shares held on the record date at the meeting. On the record date, the Company’sour outstanding voting securities consisted of 25,598,61728,013,683 common shares, without par value, each of which is entitled to one vote on each matter properly brought before the meeting.
Voting Procedures
If you are a record holder:
| · | You may vote by mail: complete and sign your proxy card and mail it in the enclosed, prepaid and addressed envelope. |
| · | You may vote by telephone: call toll-free 1-800-652-VOTE (8683) on a touch-tone phone and follow the instructions. You will need your proxy card available if you vote by telephone. |
| · | You may vote by Internet: accesswww.envisionreports.com/sriand follow the instructions. You will need your proxy card available if you vote by Internet. |
| · | You may vote in person at the meeting, however, you are encouraged to vote by |
If you are a “street name” holder:
| · | You must vote your common shares through the procedures established by your bank, broker, or other holder of record. Your bank, broker, or other holder of record has enclosed or otherwise provided a voting instruction card for you to use in directing the bank, broker, or other holder of record how to vote your common shares. |
| · | You may vote at the meeting however, to do so, you will first need to ask your bank, broker or other holder of record to furnish you with a legal proxy. You will need to bring the legal proxy with you to the meeting and hand it in with a signed ballot that you can request at the meeting. You will not be able to vote your common shares at the meeting without a legal proxy and signed ballot. |
| 2 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of the Company’sour common shares as of March 4, 2011,2, 2012, by: (a) the Company’sour directors and nominees for election as directors; (b) each other person who is known by the Companyus to own beneficially more than 5% of the Company’sour outstanding common shares; (c) the executive officers named in the Summary Compensation Table; and (d) the Company’sour executive officers and directors as a group.
| Number of | ||||||||
| Shares | Percent | |||||||
| Beneficially | of | |||||||
| Name of Beneficial Owner | Owned (1) | Class | ||||||
Wellington Management Company LLP (2) | 2,266,670 | 8.9 | % | |||||
BlackRock, Inc. (3) | 1,444,926 | 5.6 | ||||||
Dimensional Fund Advisors LP (4) | 1,321,647 | 5.2 | ||||||
FMR LLC (5) | 1,305,637 | 5.1 | ||||||
John C. Corey (6) | 833,188 | 3.3 | ||||||
Jeffrey P. Draime (7) | 421,694 | 1.6 | ||||||
George E. Strickler (8) | 259,551 | 1.0 | ||||||
Thomas A. Beaver (9) | 191,134 | * | ||||||
Mark J. Tervalon (10) | 170,399 | * | ||||||
William M. Lasky (11) | 81,180 | * | ||||||
Michael D. Sloan (12) | 72,798 | * | ||||||
Paul J. Schlather (13) | 51,317 | * | ||||||
Douglas C. Jacobs (14) | 43,700 | * | ||||||
Kim Korth (15) | 21,540 | * | ||||||
Ira C. Kaplan (16) | 15,892 | * | ||||||
| All Executive Officers and Directors as a Group (11 persons) | 2,162,393 | 8.5 | % | |||||
| Name of Beneficial Owner | Number of Shares Beneficially Owned (1) | Percent Of Class | ||||||
| Wellington Management Company LLP(2) | 2,551,015 | 9.1 | % | |||||
| Covalent Partners LLC(3) | 2,254,543 | 8.0 | ||||||
| The Goldman Sachs Group, Inc. (4) | 1,972,223 | 7.0 | ||||||
| BlackRock, Inc.(5) | 1,523,064 | 5.4 | ||||||
| John C. Corey(6) | 1,021,588 | 3.6 | ||||||
| Jeffrey P. Draime(7) | 385,094 | 1.4 | ||||||
| George E. Strickler(8) | 317,651 | 1.1 | ||||||
| Thomas A. Beaver(9) | 233,034 | * | ||||||
| Mark J. Tervalon(10) | 218,299 | * | ||||||
| Michael D. Sloan(11) | 102,798 | * | ||||||
| William M. Lasky(12) | 92,460 | * | ||||||
| Paul J. Schlather(13) | 71,457 | * | ||||||
| Douglas C. Jacobs(14) | 49,340 | * | ||||||
| Ira C. Kaplan(15) | 21,532 | * | ||||||
| Kim Korth(16) | 11,480 | * | ||||||
| All Executive Officers and Directors as a Group (13 persons) | 2,564,233 | 9.1 | % | |||||
* Less than 1%.
| (1) | Unless otherwise indicated, the beneficial owner has sole voting and investment power over such common shares. |
| (2) | According to a Schedule 13G filed with the Securities and Exchange Commission (“SEC”) by Wellington Management Company, LLP, in its capacity as investment advisor, it may be deemed to beneficially own the common shares which are held of record by clients of Wellington Management Company, LLP. The address of Wellington Management Company LLP is 280 Congress Street, Boston, Massachusetts 02210. |
| (3) | According to a Schedule 13G filed with the SEC by Covalent Partners LLC, Covalent Partners LLC serves as investment advisor to Covalent Capital Partners Master Fund L.P. which directly holds the common shares for the benefit of its investors. Covalent Capital Partners GP, LLC is the general partner of Covalent Capital Partners Master Fund L.P. Mr. Robert L. Hockett is the majority member of each Covalent Capital Partners GP, LLC and Covalent Partners LLC and therefore a majority indirect owner of Covalent Capital Partners Master Fund, L.P. By virtue of these relationships, Covalent Capital Partners GP, LCC and Mr. Hockett may be deemed to beneficially own the Common shares held by Covalent Capital Partners Master Fund L.P. The address of Covalent Partners LLC is 930 Winter Street, Suite 2800, Waltham, Massachusetts 02451. |
| (4) | According to a Schedule 13G filed with the SEC by The Goldman Sachs Group, Inc., the filing reflects the securities beneficially owned by certain operating units (collectively the “Goldman Sachs Reporting Units”) of Goldman Sachs Group, Inc. and its subsidiaries and affiliates. The Goldman Sachs Reporting Units disclaims beneficial ownership of the securities beneficially owned by (i) any client accounts with respect to which the Goldman Sachs Reporting Units or their employees have voting or investment discretion or both, or with respect to which there are limits on their voting or investment authority or both and (ii) certain investment entities of which Goldman Sachs Reporting Units act as the general partner, managing general partner or other manager, to the extent interests in such entities are held by persons other than the Goldman Sachs Reporting Units. The address of The Goldman Sachs Group, Inc. is 200 West Street, New York, New York 10282. |
| (5) | According to a Schedule 13G filed with the SEC by BlackRock, Inc. The address of BlackRock, Inc. is 40 East 52nd Street, New York, New York 10022. |
| (6) | Represents 10,000 common shares that Mr. Corey has the right to acquire upon the exercise of share options, |
| (7) | Represents |
| (8) | Represents |
| (9) | Represents 20,000 common shares that Mr. Beaver has the right to acquire upon the exercise of share options, |
| (10) | Represents 4,000 common shares that Mr. Tervalon has the right to acquire upon the exercise of share options, |
| (11) | Represents 90,720 restricted common shares, which are subject to forfeiture, and 12,078 common shares owned by Mr. Sloan directly. |
| (12) | Represents 10,000 common shares that Mr. Lasky has the right to acquire upon the exercise of share options, |
| (13) | Represents |
| (14) | Represents |
| (15) | Represents |
| (16) | Represents |
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PROPOSAL ONE: ELECTION OF DIRECTORS
In accordance with the Company’s Amended and Restated Code of Regulations, the number of directors has been fixed at seven. At the Annual Meeting of Shareholders, youshareholders will elect seven directors to hold office until the Company’sour next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board proposes that the nominees identified below be elected to the Board. John C. Corey, the Company’s President and Chief Executive Officer, has an employment agreement with the Company, which provides that, during the term of the agreement, Mr. Corey shall be entitled to be nominated for election to the Board. At theour Annual Meeting of Shareholders, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the seven nominees hereinafter named.
The director nominees are identified below. If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board expects that proxies will be voted for the election of a substitute nominee designated by the Board. The following information is furnished with respect to each person nominated for election as a director.
The Board of Directors recommends that you vote FOR the following nominees.
Nominees to Serve for a One-Year Term Expiring in 2012
| John C. Corey | Mr. Corey, |
Since 2004 Mr. Corey has served as a director and Chairman of the Board of Haynes International, Inc., a producer of metal alloys. Mr. Corey serves on the board of the Motor and Equipment Manufacturers Association, an organization that represents motor vehicle parts suppliers, and was a past Chairman of the Board of Directors for the Original Equipment Suppliers Association, an organization dedicated to supporting and promoting automotive suppliers.
In addition to his professional experience described above, the Company believes that Mr. Corey should serve as a director because he has successfully guided companies through restructuring initiatives and executed performance and strategy development initiatives throughout his career. Through his leadership and industry experience, from both an operational and financial perspective, he provides valuable insight to the Board and strengthens the Board’s collective qualifications, skills and experience.
| Jeffrey P. Draime | Mr. Draime, |
Mr. Draime has served in various roles with the Company over an 18 year period including operations, sales, quality control, product costing, and marketing. The Company believes that Mr. Draime should serve as a director because he provides an historical as well as an internal perspective of our business to the Board and strengthens the Board’s collective qualifications, skills and experience. Mr. Draime’s father, D.M. Draime, was the founder of Stoneridge.
| Douglas C. Jacobs | Mr. Jacobs, |
Mr. Jacobs has served as a director of Standard Pacific Corporation, a national residential home builder in southern California, since 1998 and serves as Chairman of the Audit Committee and a member of the Nominating and Corporate Governance Committee. Mr. Jacobs is a member of the boards of SureFire, Inc., a manufacturer of high-performance flashlights, weapon-mounted lights and other tactical equipment, and M/G Transport Services, LLC, a barge line and inland waterways carrier.
Mr. Jacobs qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Jacobs should serve as a director because he provides valuable business experience and judgment to the Board which strengthens the Board’s collective qualifications, skills and experience.
| Ira C. Kaplan | Mr. Kaplan, |
Mr. Kaplan has counseled clients in governance and business matters in his role at the law firm. In addition to his legal and management experience described above, the Company believes that Mr. Kaplan should serve as a director because he brings thoughtful analysis, sound judgment and insight to best practices to the Board, in addition to his professional experiences, which strengthens the Board’s collective qualifications, skills and experience.
| Kim Korth | Ms. Korth, | |
Ms. Korth is a member of the boards of Shape Corporation, a manufacturer of automotive bumper and impact energy management systems, Burke E. Porter Machinery Company, a manufacturer of automotive test systems, Unwired Technology LLC, a manufacturer of wireless headphones, and the Original Equipment Suppliers Association, an organization dedicated to supporting and promoting automotive suppliers.
Ms. Korth has several decades of experience in corporate governance issues, organizational design, and development of strategies for growth and improved financial performance for automotive suppliers. In addition to the knowledge and experience described above, the Company believes that Ms. Korth should serve as a director because she provides insight to industry trends and expectations to the Board which strengthens the Board’s collective qualifications, skills and experience.
| William M. Lasky | Mr. Lasky, |
Mr. Lasky was appointed director of Affinia Group, Inc., a designer, manufacturer and distributor of industrial grade replacement parts and services for automotive and heavy-duty vehicles, in January 2011.
In addition to his professional experience described above, the Company believes that Mr. Lasky should serve as a director because he provides in-depth industry knowledge, business acumen and leadership to the Board which strengthens the Board’s collective qualifications, skills and experience.
| Paul J. Schlather | Mr. Schlather, | |
Mr. Schlather qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Schlather should serve as a director because he provides financial analysis and business acumen to the Board which strengthens the Board’s collective qualifications, skills and experience.
PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
The Audit Committee of the Board currently anticipates appointing Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the year ending December 31, 2011.2012. For 2010,2011, Ernst & Young was engaged by us to audit our annual financial statements and to perform audit-related and tax services. Representatives of Ernst & Young are expected to be present at the Annual Meeting of Shareholders, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.
The Board seeks an indication from shareholders of their approval or disapproval of the Audit Committee’s anticipated appointment of Ernst & Young as the Company’sour independent registered public accounting firm for the 20112012 fiscal year. The submission of this matter for approval by shareholders is not legally required, however, the Board believes that the submission is an opportunity for the shareholders to provide feedback to the Board on an important issue of corporate governance. If the shareholders do not approve the appointment of Ernst & Young, the appointment of the Company’sour independent registered public accounting firm will be re-evaluated by the Audit Committee but will not require the Audit Committee to appoint a different accounting firm. If the shareholders do approve the appointment of Ernst & Young, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and its shareholders. Approval of the proposal to ratify the selection of Ernst & Young as our independent registered public accounting firm requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to be voted on the proposal at theour Annual Meeting of Shareholders. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on the proposal and will not have a positive or negative effect on the outcome of this proposal, however, there should be no broker non-votes on this proposal because brokers should have the discretion to vote uninstructed common shares on this proposal.
The Board of Directors recommends that you vote FOR Proposal Two.
Service Fees Paid to the Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees billed by and paid to Ernst & Young by fee category for the fiscal years ended December 31, 20102011 and 2009.2010. The Audit Committee has considered the scope and fee arrangements for all services provided by Ernst & Young, taking into account whether the provision of non-audit-related services is compatible with maintaining Ernst & Young’s independence.
| 2010 | 2009 | |||||||
| Audit Fees | $ | 1,606,726 | $ | 1,551,937 | ||||
| Tax Fees | 284,033 | 501,029 | ||||||
| All Other Fees | 11,760 | 10,167 | ||||||
| Total Fees | $ | 1,902,519 | $ | 2,063,133 | ||||
| 2011 | 2010 | |||||||
| Audit Fees | $ | 1,735,620 | $ | 1,606,726 | ||||
| Tax Fees | 580,600 | 284,033 | ||||||
| All Other Fees | - | 11,760 | ||||||
| Total Fees | $ | 2,316,220 | $ | 1,902,519 | ||||
Audit Fees.
Audit fees include fees associated with the annual audit ofTax Fees.
Tax fees primarily relate to tax compliance and both domestic and international tax planning.All Other Fees.
All other fees relate to regulatory reviews.Pre-Approval Policy
The Audit Committee’s policy is to approve in advance all audit and permitted non-audit services to be performed for the Company by its independent registered public accounting firm. Pre-approval is generally provided for up to one year, is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee also pre-approves particular services on a case-by-case basis. In accordance with this policy, the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee. The Chairman may pre-approve services and then inform the Audit Committee at the next scheduled meeting.
All services provided by Ernst & Young during fiscal year 2010,2011, as noted in the previous table, were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described previously.
Audit Committee Report
In accordance with its written charter, the Audit Committee assists the Board in fulfilling its responsibility relating to corporate accounting, our reporting practices, of the Company, and the quality and integrity of the financial reports and other financial information provided by the Companyus to any governmental body or to the public. Management is responsible for the financial statements and the reporting process, including the system of internal controls. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of the audited financial statements with generally accepted accounting principles. The Audit Committee is comprised of four directors, each of whom is “independent” for audit committee purposes under the current listing standards of the New York Stock Exchange (“NYSE”).
In discharging its oversight responsibility as to the audit process, the Audit Committee reviewed and discussed theour audited financial statements of the Company for the year ended December 31, 2010,2011, with the Company’s management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The Audit Committee also discussed with the Company’sour independent registered public accounting firm, Ernst & Young, the matters required to be discussed by Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee has received the written disclosures and letter from Ernst & Young required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communication with the Audit Committee concerning independence. The Audit Committee discussed Ernst & Young’s independence with Ernst & Young. The Audit Committee also considered whether the provision of non-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence. Management has the responsibility for the preparation of the Company’sour financial statements and Ernst & Young has the responsibility for the examination of those statements.
The Audit Committee discussed with the Company’sour internal auditor and Ernst & Young the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditor and Ernst & Young, with and without management present, to discuss the results of their examinations, their evaluations of the Company’sour internal controls, and the overall quality of the Company’s financial reporting.
Based on the above-referenced review and discussions with management, the internal auditor and Ernst & Young, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 2010,2011, for filing with the SEC.
| The Audit Committee | |
| Douglas C. Jacobs, Chairman | |
| Ira C. Kaplan | |
| William M. Lasky | |
| Paul J. Schlather |
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PROPOSAL THREE: SAY ON PAY
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enables our shareholders to vote to approve, on an advisory (non-binding) basis, the compensation of our Named Executive Officers (“NEOs”) as disclosed in this Proxy Statement. PursuantAt our 2011 Annual Meeting of Shareholders, our shareholders, in addition to Section 14Athe advisory vote on the compensation of our NEOs, also voted on how frequently we should hold such an advisory vote and voted in favor of an annual advisory vote. In accordance with the Securities Exchange Act, we are including in these proxy materials a2011 frequency vote, the Board of Directors has determined to implement an advisory non-binding shareholder vote on the compensation of our executive compensation.NEOs on an annual basis until the next required shareholder vote on how frequently shareholders will vote on a non-binding resolution to approve the compensation of our NEOs. As described below in the “Compensation Discussion and Analysis” section of this Proxy Statement, beginning on page 19,15, our executive compensation program is designed to attract and retain high quality executives and to align the interest of management with the interest of shareholders by rewarding both short- and long-term performance and is based on a pay-for-performance philosophy.
Base compensation is aligned to be competitive in the industry in which we operate. Incentive compensation (cash and equity) generally represents 65-75% of each executive officer’s target compensation opportunity, with long-term incentives representing the majority of compensation. Targets for incentive compensation are based on clear financial goals and increasing shareholder value. The Compensation Committee retains the services of an independent consultant to advise on competitive compensation and compensation practices.
The Board recommends that shareholders vote for the following resolution:
“RESOLVED that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”
Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee. The Board and the Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote when considering future executive compensation arrangements.
The affirmative vote of a majority of the shares of Company common shares present or represented by proxy and voting at the annual meeting will constitute approval of this non-binding resolution. If you own common shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your common shares so that your vote can be counted on this proposal. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on this proposal and will not have a positive or negative effect on the outcome of this proposal.
The Board of Directors recommends that you vote FOR Proposal Three.
| 10 |
CORPORATE GOVERNANCE
Corporate Governance Documents and Committee Charters
The Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and the charters of the Board of Directors’ Audit, Compensation, and Nominating and Corporate Governance committees are posted on our website atwww.stoneridge.com. Written copies of these documents will beare available without charge to any shareholder upon request. Requests should be directed to Investor Relations at the Company’sour address listed on the Notice of Annual Meeting of Shareholders.
Corporate Ethics Hotline
We established a corporate ethics hotline as part of the Company’sour Whistleblower Policy and Procedures to allow persons to lodge complaints about accounting, auditing and internal control matters, and to allow an employee to lodge a concern, confidentially and anonymously, about any accounting and auditing matter. Information about lodging such complaints or making such concerns known is contained in the Company’sour Whistleblower Policy and Procedures, which is posted on our website atwww.stoneridge.com.
Director Independence
The NYSE rules require listed companies to have a Board of Directors comprised of at least a majority of independent directors. Under the NYSE rules, a director qualifies as “independent” upon the affirmative determination by the Board of Directors that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board has not adopted categorical standards of independence. The Board has determined that the following directors and nominees for election of director are independent:
| Jeffrey P. Draime | Kim Korth |
| Douglas C. Jacobs | William M. Lasky |
| Ira C. Kaplan | Paul J. Schlather |
The Board of Directors’ Role in Risk Oversight
It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has oversight responsibility of the processes established to report and monitor systems for material risks applicable to the Company.us. The Audit Committee regularly reviews enterprise-wide risk management, which includes treasury risks (commodity pricing, foreign exchange rates, and credit and debt exposures), financial and accounting risks, legal and compliance risks, and other risk management functions. The Compensation Committee considers risks related to the attraction and retention of talent and related to the design of compensation programs and arrangements. The full Board considers strategic risks and opportunities and regularly receives reports from management on risk and from the committees regarding risk oversight in their areas of responsibility.
Compensation Policies and Risk
Our policies and overall compensation practices for all employees do not create risks that are reasonably likely to have a material adverse affect on the Company. Generally speaking, theThe compensation policies are generally consistent for all of our business units of the Company.
In addition, incentives are not designed, and do not create, risks that are reasonably likely to have a material adverse affecteffect on the Company as all incentives reward growth and profitability. The Company’sOur various incentive programs are based on our consistent growth and continued profitability, of the Company, relying, for example, on the total return on investment, operating profit and total shareholder return. As such, they do not encourage employees to take risks in order to receive incentive compensation, nor are they reasonably likely to have a material adverse effect on the Company.
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The Board of Directors
In 2010,2011, the Board held 19 meetings and took action by unanimous written consent on two occasions.seven meetings. In 2010,2011, each Board member attended at least 75% of the meetings of the Board and of the committees on which he or she serves. The Company’sOur policy is that directors are to attend the Annual Meeting of Shareholders. All of our current directors except Ms. Korth attended the 20102011 Annual Meeting of Shareholders. Mr. Lasky has been appointed as the lead independent director by the independent directors to preside at the executive sessions of the independent directors. It is the Board’s practice to have the independent directors meet regularly in executive session. All directors, except Mr. Corey, the Company’s President and Chief Executive Officer (“CEO”), are independent.
Leadership of the Board
The Board does not have a formal policy regarding the separation of the roles of CEO and Chairman of the Board as the Board believes it is in theour best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. At this time, the Board has determined that having an independent director serve as Chairman is in the best interest of the Company’sour shareholders. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits the Company’sour President and CEO to devote more time to focus on the strategic direction and management of the Company’sour day-to-day operations.
Committees of the Board
The Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities. These committees are the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. Each member of the Audit, Compensation, and Nominating and Corporate Governance Committees is independent as defined under the listing standards of the NYSE. The table below shows the composition of the Board’s committees:
Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | |||
| Douglas C. | * | Jeffrey P. Draime | Jeffrey P. Draime | ||
| Ira C. Kaplan | Douglas C. Jacobs | Ira C. Kaplan | |||
| William M. Lasky | Kim | * | Kim Korth | ||
| Paul J. Schlather | William M. Lasky | William M. | * |
* Committee Chairperson
Audit Committee
.This committee held eightnine meetings during 2010.2011. Information regarding the functions performed by the Audit Committee is set forth in the “Audit Committee Report,” included in this Proxy Statement. The Board has determined that each Audit Committee member is financially literate under the current listing standards of the NYSE. The Board also determined that Mr. Jacobs and Mr. Schlather each qualify as an “audit committee financial expert” as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002. In addition, under the Sarbanes-Oxley Act of 2002 and the NYSE rules mandated by the SEC, members of the audit committee must have no affiliation with the issuer, other than their Board seat, and receive no compensation in any capacity other than as a director or committee member. Each member of the Audit Committee meets this additional independence standard applicable to audit committee members of NYSE listed companies.
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Compensation Committee.
This committee held fivefour meetings during 2010.2011. The Compensation Committee is responsible for establishing and reviewing our compensation philosophy and programs with respect to our executive officers; approving executive officer compensation and benefits; recommending to the Board the approval, amendment and termination of incentive compensation and equity-based plans; and certain other compensation matters, including director compensation. Recommendations regarding compensation of other officers are made to the Compensation Committee by our CEO. The Compensation Committee can exercise its discretion in modifying any amount presented by our CEO. The Compensation Committee regularly reviews tally sheets that detail the total compensation obligations to each of our executive officers. During 2010,2011, the Compensation Committee retained Total Rewards Strategies LLC to provide compensation related consulting services. Specifically, the compensation consultants provided relevant market data, current trends in executive and director compensation and advice on program design. In accordance with its charter, the Compensation Committee may delegate power and authority as it deems appropriate for any purpose to a subcommittee of not fewer than two members.
Nominating and Corporate Governance Committee
.This committee held two meetings in 2010.2011. The purpose of the Nominating and Corporate Governance Committee is to evaluate the qualifications of director nominees, to recommend candidates for election as directors, to make recommendations concerning the size and composition of the Board, to develop and implement the Company’sour corporate governance policies and to assess the effectiveness of the Board.
Nominations and Nomination Process
It is the policy of the Nominating and Corporate Governance Committee to consider individuals recommended by shareholders for membership on the Board. If a shareholder desires to recommend an individual for membership on the Board, then that shareholder must provide a written notice (the “Recommendation Notice”) to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484, on or before January 15 for consideration by the committee for that year’s election of directors at the Annual Meeting of Shareholders.
In order for a recommendation to be considered by the Nominating and Corporate Governance Committee, the Recommendation Notice must contain, at a minimum, the following:
| · | the name and address, as they appear on the Company’s books, and telephone number of the shareholder making the recommendation, including information on the number of common shares owned and date(s) acquired, and if such person is not a shareholder of record or if such common shares are owned by an entity, reasonable evidence of such person’s ownership of such shares or such person’s authority to act on behalf of such entity; |
| · | the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience, and qualifications of that individual; |
| · | a written acknowledgment by the individual being recommended that he or she has consented to the recommendation and consents to the Company undertaking an investigation into that individual’s background, experience, and qualifications in the event that the Nominating and Corporate Governance Committee desires to do so; |
| · | any information not already provided about the person’s background, experience and qualifications necessary for |
| · | the disclosure of any relationship of the individual being recommended with |
| · | the disclosure of any relation of the individual being recommended with the shareholder, whether direct or indirect, and, if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at |
The Nominating and Corporate Governance Committee determines, and periodically reviews with the Board, the desired skills and characteristics for directors as well as the composition of the Board as a whole. This assessment considers the directors’ qualifications and independence, as well as diversity, age, skill, and experience in the context of the needs of the Board. At a minimum, directors should share theour values of the Company and should possess the following characteristics: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; and the time available to devote to Board activities and the willingness to do so. The Nominating and Corporate Governance Committee does not have a formal policy specifically focusing on the consideration of diversity; however, diversity is one of the many factors that the Nominating and Corporate Governance Committee considers when identifying candidates and making its recommendations to the Board. In addition to the foregoing considerations, generally with respect to nominees recommended by shareholders, the Nominating and Corporate Governance Committee will evaluate such recommended nominees considering the additional information regarding them contained in the Recommendation Notices. When seeking candidates for the Board, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management and third-party search firms. Ultimately, the Nominating and Corporate Governance Committee will recommend to the Board prospective nominees who the Nominating and Corporate Governance Committee believes will be effective, in conjunction with the other members of the Board, in collectively serving the long-term interests of the Company’sour shareholders.
The Nominating and Corporate Governance CommitteeCommittee recommended to the Board each of the nominees identified in "Election of Directors" starting on page 5.
Compensation Committee Interlocks and Insider Participation
None of the members of the Board’s Compensation Committee have served as one of our officers at any time or as an employee during 2010.2011. Additionally, no Compensation Committee interlocks existed during 2010.
Communications with the Board of Directors
The Board believes that it is important for interested parties to have a processthe ability to send communications to the Board. Accordingly, persons who wish to communicate with the Board may do so by sending a letter to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board or certain specified individual directors (such as the lead independent director or non-management directors as a group). The Secretary will make copies of all such letters and circulate them to the appropriate director or directors. The directors are not spokespeople for the Company and responses or replies to any communication should not be expected.
Transactions with Related Persons
There were no reportable transactions involving related persons in 2010.
Review and Approval of Transactions with Related Persons
The Board has adopted a written statement of policy with respect to related party transactions. Under the policy, a related party transaction is a transaction required to be disclosed pursuant to Item 404 of Regulation S-K or any other similar transaction involving the Company or the Company’s subsidiaries and any Company employee, officer, director, 5% shareholder or an immediate family member of any of the foregoing if the dollar amount of the transaction or series of transactions exceeds $25,000. A related party transaction will not be prohibited merely because it is required to be disclosed or because it involves related parties. Pursuant to the policy, such transactions are presented to the Nominating and Corporate Governance Committee for evaluation and approval by the committee, or if the committee elects, by the full Board. If the transaction is determined to involve a related party, the Nominating and Corporate Governance Committee will either approve or disapprove the proposed transaction. Under the policy, in order to be approved, the proposed transaction must be on terms that are fair to the Company and are comparable to market rates, where applicable.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
Our Company’s compensation programs for executive officers are designed to attract, retain, motivate, and reward talented executives who will advance our strategic, operational and financial objectives and thereby enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:
| · | attract and retain talented executive officers by providing a compensation package that is competitive with that offered by similarly situated companies; |
| · | create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals; and |
| · | align total compensation with the objectives and strategies of our business and shareholders. |
We have a commitment to formulate the components of our compensation program under a pay-for-performance ideology. To this end, a substantial portion of our executive officers’ annual and long-term compensation is tied to quantifiable measures of the Company’s financial performance and therefore may not be earned if targeted performance is not achieved.
We established the various components of our 20102011 compensation payments and awards to meet our objectives as follows:
| Objective Addressed | ||||||||||
Type of Compensation | Competitive Compensation | Performance Objective | Retention | |||||||
| Base salary | ||||||||||
| Annual incentive plan awards | ||||||||||
| P | P | P | ||||||||
| Benefits and perquisites | P | |||||||||
Mix of Compensation
Our executive compensation is based heavily on our pay-for-performance philosophy, which emphasizes executive performance measures that correlate closely with the achievement of both shorter-term performance objectives and longer-term shareholder value. To this end, aA substantial portion of our executive officers’ annual and long-term compensation is at-risk. The portion of compensation at-risk increases with the executive officer’s position level. This provides more upside potential and downside risk for more senior positions because these roles have greater influence on theour performance of the Company as a whole.
Total Target Compensation
Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the annual and long-term incentive compensation payout levels based upon the applicable performance achievement and, for long-term awards, the price of our common shares. The following charts show the weighting of each element of total target compensation for the CEO and the other Named Executive Officers (“NEOs”), excluding the one-time retention awards paid in 2010.NEOs. These charts illustrate our pay-for-performance philosophy, as annual and long-term incentive compensation comprises the majority of total target compensation.
Determination of Compensation
Based on the foregoing objectives, we have structured the Company’sour executive officers’ compensation to provide adequate competitive compensation to attract and retain executive officers, to motivate them to achieve our strategic goals and to reward the executive officers for achieving such goals. The Compensation Committee (the “Committee”) hashistorically retained the services of an independent compensation consultant to assist the Committee to fulfill various aspects of its charter. During 2010,Committee. For 2011, the Committee retained Total Rewards Strategies LLC to assist the Committee with the following: keeping it appraised about relevant trends and technical developments during its meetings; providing consulting advice regarding long-term incentive and change in control arrangements; providing peer group analysis; and providing market data for the CEO position and other executive officers. Additionally, recommendations and evaluations from the CEO are considered by the Committee when setting the compensation of the other executive officers. The annual evaluation of the CEO by the Board is considered by the Committee when establishing the compensation of the CEO.
Our executive officers receive two forms of annual cash compensation – base salary and annual incentive awards – which together constitute an executive officer’s total annual cash compensation; however, in 2010, our NEO’s also received one-time cash payments in connection with retention awards made in 2009.compensation. Please note that “total annual cash compensation,” as discussed in this Compensation Discussion and Analysis, differs from the “Total Compensation” column of the Summary Compensation Table on page 26,22, which includes long-term incentive, perquisites and other forms of compensation valued on a basis consistent with financial statement reporting requirements. The levels of base salary and annual incentive awards for our executive officers are established annually under a program intended to maintain parity with the competitive market for executive officers in comparable positions. Typically, our executive compensation levels are designed to be generally aligned with the 50th - 75th percentile of competitive market levels for each position.
A large percentage of total compensation is allocated to incentives based on the philosophy mentioned above.incentive-based. There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviews competitive market pay information provided by our compensation consultant and considers the Company’s historical compensation practices in determining the appropriate level and mix of incentive compensation for each executive position.
Compensation Benchmarking and Comparator Group
The comparator group is comprised of some of our direct competitors and a broader group of companies in the electronic and motor vehicle parts manufacturing industries that the Committee believes is representative of the labor market from which we recruit executive talent. Factors used to select the comparator group of companies include industry segment, revenue, profitability, number of employees and market capitalization. The Committee reviews and approves the comparator group annually.
The companies in the comparator group used to determine 2010in 2011 executive compensation decisions were:
| Accuride | ||||
| Gentex | Shiloh Industries | |||
| Graco | Standard Motor Products | |||
| Methode Electronics | Superior Industries International | |||
| AVX | Modine Manufacturing | Sypris Solutions | ||
| Commercial Vehicle Group | Nu Horizons Electronics | Thomas & Betts | ||
| CTS | Titan International | |||
| Esterline Technologies |
In 2009,2010, the median sales revenue for the comparator group was $579$787 million while our revenue was $475$635 million.
Total Reward Strategies LLC provides the Committee with the 50th and 75th percentiles of the comparator group for base salary, cash bonus, long-term incentives and total overall compensation. The Committee uses the 50th percentile as a primary reference point when determining compensation targets for each element of pay and adjusts each element of pay to reflect competitive market conditions. The objective of the executive compensation program is to provide overall compensation between the 50th and 75thpercentiles of pay practices of the comparator group of companies. Actual target pay for an individual may be more or less than the 50th percentile based on the Committee’s evaluation of the individual’s performance and potential. Consistent with the Committee’s philosophy of pay-for-performance, incentive payments can exceed target levels only if overall Company financial targets are exceeded and will fall below target levels if overall financial goals are not achieved.
Consideration of Shareholder Advisory Vote on Executive Compensation
At our 2011 Annual Meeting of Shareholders, our shareholders overwhelmingly approved our first compensation advisory resolution with more than 94% of the votes cast approving the 2010 executive compensation described in our 2011 Proxy Statement. Our shareholders also voted to hold an advisory vote every year. As a result, our Board has committed to an annual “say on pay” vote (see Proposal Three). The Committee did not consider the favorable shareholder advisory vote when structuring compensation for 2011 as the vote had not occurred when compensation for 2011 was approved; however, the Committee has continued our policies, processes and approach to executive compensation on substantially the same basis as those in place in 2010 and for which our shareholders registered their approval. The Committee did consider the advisory vote in deciding subsequently not to materially alter our compensation policies and programs.
Elements of Compensation
The principal elements of compensation of our executive officers for 20102011 were the following:
| · | Base salary; |
| · | Annual cash incentive awards; |
| · | Long-term equity-based incentive awards; and |
| · | Benefits and |
Although all executive officers are eligible to participate in the same compensation and benefit programs, only Mr. Corey has compensation that is governed by an employment agreement. The terms of Mr. Corey’s employment agreement are described under “Employment Agreements.”
Base Salaries
We use base salary as the foundation of our compensation program for our executive officers. The annual cash incentive compensation awards and long-term incentive awards are based on a percentage of base compensation. The base salary is set at competitive market levels to attract and retain our executive officers. Base salary levels for our executive officers are set on the basis of the executive’s responsibilities, the current general industry and competitive market data, as discussed above. In each case, due consideration is given to personal factors, such as the individual’s experience, competencies, performance and contributions, and to external factors, such as salaries paid to similarly situated executive officers by like-sized companies. The Committee considers the evaluation and recommendation of the CEO in determining the base salary of the other executive officers. The Committee generally approves all executive officer base salaries for the next calendar year at its December meeting which become effective January 1.1 of the following year. Executive officers base salaries remain fixed throughout the year unless a promotion or other change in responsibilities occurs. For 2010, to continue to manage costs in an uncertain economic environment, the Company delayed salary increases for employees for three months. The NEOs’ salary increases were delayed in line with this policy and became effective on April 1. The “Salary” column of the Summary Compensation Table lists the NEO’s base salary for 2010.
Annual Incentive Awards
Our executive officers participate in theour Annual Incentive Plan (“AIP”) which provides for annual cash payments based on the achievement of specific financial goals. We believe that a substantial portion of each executive’s overall compensation should be tied to quantifiable measures of financial performance. In January 2010,February 2011, the Committee approved the Company’s 20102011 AIP targets and metrics. The AIP targets are expressed as a percentage of the executive officer’s base salary. Per our competitive compensation review, it was determined that ourthe existing percentages fellAIP targets for Mr. Corey and Mr. Strickler were slightly below competitive market targets; therefore, their AIP targets were increased to 85% and 60%, respectively, for 2011. The AIP targets for the other NEOs were within competitive market targets;ranges, therefore, no changes to the AIP percentagestargets were implemented in 2011 for 2010.
For 2011, the structure of our AIP is comprised ofincluded both consolidated financial performance metrics for all participants.and, where appropriate, divisionally focused metrics to incentivize specific performance. The financial performance elements, weighting, target metrics, and achievement for our NEOs are summarized as follows:
| Weight | Target Metric | Achievement | ||||||||||
| Operating profit | 35 | % | $ | 13.4 million | 200 | % | ||||||
| Return on invested capital | 20 | % | 4.02 | % | 200 | % | ||||||
| Free cash flow | 20 | % | $ | (26.3) million | 200 | % | ||||||
| Sales growth | 25 | % | $ | 150.0 million | 200 | % | ||||||
| Weight | Target Metric | Achievement | ||||||||||
| For our CEO & CFO: | ||||||||||||
| Consolidated Metrics: | ||||||||||||
| Operating profit | 40 | % | $ | 40.6 million | 0 | % | ||||||
| Return on invested capital | 30 | % | 12.05 | % | 0 | % | ||||||
| Free cash flow | 30 | % | $ | 10.9 million | 0 | % | ||||||
| For our Other NEO’s: | ||||||||||||
| Consolidated Metrics: | ||||||||||||
| Operating profit | 30 | % | $ | 40.6 million | 0 | % | ||||||
| Return on invested capital | 20 | % | 12.05 | % | 0 | % | ||||||
| Free cash flow | 20 | % | $ | 10.9 million | 0 | % | ||||||
| Division Specific Metrics: | ||||||||||||
| Mr. Beaver: | ||||||||||||
| Sales Growth | 30 | % | $ | 150.0 million | 200 | % | ||||||
| Mr. Sloan & Mr. Tervalon: | ||||||||||||
| Lean Initiative Metrics | 30 | % | Various | 0 | % | |||||||
The consolidated financial performance target metrics were based on the Company’s 2010our 2011 business plan and were intended to be aggressive but achievable based on industry conditions known at the time they were established. Under the 20102011 AIP, the minimum level for achievement for each metricthe consolidated financial metrics was based on 80% of target while the maximum level was based on 130% of target. The divisional target metrics were based on plans or initiatives as developed during our 2011 budget process and established metrics were designed to be challenging but achievable. The following table provides the 20102011 AIP target as a percent of base salary, as a dollar amount and the dollar achievement for theour NEOs:
Target (Percent of Base Salary) | Target | Achieved | ||||||||||
| John C. Corey | 80 | % | $ | 528,000 | $ | 1,056,000 | ||||||
| George E. Strickler | 55 | % | 189,200 | 378,400 | ||||||||
| Mark J. Tervalon | 45 | % | 135,315 | 270,630 | ||||||||
| Thomas A. Beaver | 45 | % | 126,585 | 253,170 | ||||||||
| Michael D. Sloan | 45 | % | 101,250 | 202,500 | ||||||||
| Target (Percent of Base Salary) | Target | Achieved | ||||||||||
| John C. Corey | 85 | % | $ | 595,000 | $ | - | ||||||
| George E. Strickler | 60 | % | 214,620 | - | ||||||||
| Mark J. Tervalon | 45 | % | 135,315 | - | ||||||||
| Thomas A. Beaver | 45 | % | 129,150 | 77,490 | ||||||||
| Michael D. Sloan | 45 | % | 105,300 | - | ||||||||
For each performance metric, specific levels of achievement for minimum, target, and maximum were set as described above. At target, 100% payout is achieved for each element of the plan; at maximum, 200% payout is achieved; and at minimum, 50% payout is achieved. Below the minimum target, no incentive compensation is earned. The AIP prorates incentive compensation earned between the minimum and maximum levels. The payment of compensation under the 20102011 plan was subject to our overall performance and is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
Long-Term Incentive Awards
Under theour Long-Term Incentive Plan (“LTIP”), all executive officers may be granted share options, restricted shares and other equity-based awards. Under theour Long-Term Cash Incentive Plan (“LTCIP”), all executive officers may be granted awards payable in cash. We believe that long-term incentive awards are a valuable motivation and retention tool and provide a long-term performance incentive to management. The long-term award is calculated based on the fair value of the shares, shares equivalent or cash at the time of grant as a percentage of base salary. In 2011, all long-term awards were granted from the LTIP.
The percentages are typically representative of the competitive market data obtained during the annual compensation review process described above. For 2010,2011, the Committee determinedreaffirmed that in order to remain competitive in the overall compensation packages, the long-term incentive awards should approximate the 75th percentile of market. The expected awards are subject to adjustment based on differences in the scope of the executive officer’s responsibilities, performance and ability.
We view long-term equity-based incentives as an important tool for retaining executive talent. For 2010,2011, we granted to our executive officers time-based restricted common shares under the LTIP equal to the equivalent of 50%60% of the fair value calculation discussed above. If the executive officer remains an employee at the end of the three year vesting period, the time-based restricted common shares will vest and no longer be subject to forfeiture on that date. The grant date fair value of the time-based restricted common shares is included in the “Stock Awards” column of the Summary Compensation Table. The time-based restricted common shares awarded in 20102011 are included in the “All Other Stock Awards” column of the Grants of Plan-Based Awards table.
We also viewsview long-term performance-based incentives as key to linking our executive officers’ overall compensation to shareholder return. For 2010,2011, we granted performance-based restricted common share awards under the LTIP to our executive officers targeting approximately 25%20% of the long-term incentive fair value calculation discussed above. The awards are subject to forfeiture based on our total shareholder return (“TSR”) over a three year period, when compared to TSR for a Peer Group of companies over the same period. If the Company’sour TSR is equal to the 50th percentile of the Peer Group TSR performance, the target number of common shares will vest and no longer be subject to forfeiture. If the Company’sour TSR is less than the 25th percentile (minimum) of the Peer Group TSR performance, all common shares will be forfeited and if the Company’sour TSR is equal to the 75th percentile (maximum) or greater of the Peer Group TSR performance, all common shares will vest and no longer be subject to forfeiture. Provided the executive officer remains employed, and depending on TSR performance, the number of common shares no longer subject to forfeiture prorates between the 25th and 75th percentile. The 20102011 Peer Group is comprised of the following companies:
| AVX | Graco | |
| Commercial Vehicle Group | Methode Electronics | |
| CTS | Modine Manufacturing | |
| Esterline Technologies | Nu Horizons Electronics | Thomas & Betts |
| Gentex | Shiloh Industries | Titan International |
In 2011 we also granted performance-based restricted common share awards under the LTCIPLTIP to our executive officers targeting approximately 25%20% of the long-term incentive fair value calculation discussed above. The awards are payable in cash equivalent to the number of shares earned at the fair market value of our common shares on the date of vesting (“Phantom Shares”). The awards are subject to forfeiture based on our actual annual earnings per share (“EPS”) performance over a three year period, when compared to minimum, target and maximum annual EPS amounts over the same period. For the 20102011 grants, the annual performance period target EPS was or will beis set using the Companyour Board approved annual budget.budget at the first regular meeting of each year in the performance period. Minimum EPS was or will beis established at 50% of target and maximum EPS was or will beis established at 150% of target for each annual performance period. The annual EPS target for the 20102011 performance period was established at a target of $(0.25).$0.78. The metrics are intended to be aggressive but achievable based on industry conditions known at the time they are set. Provided the executive officer remains employed, and depending on annual EPS performance, the number of Phantom Sharescommon shares no longer subject to forfeiture prorates between minimum and maximum amounts. Actual EPS performance below the minimum level results in no earned shares for the annual performance period. The amount of cash paid out at the end of the service and performance period will equal the number of Phantom Shares earned times the current fair value of the Company common shares at the date of vesting. For the 20102011 annual performance period, achievement was at the maximum level. The performance–based phantomrestricted common shares awarded in 20102011 are included in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the Grants of Plan-Based Awards table.
The Committee’s practice has been to approve the long-term incentive awards under the LTIP and LTCIP at the first regular meeting of the calendar year. Awards in 20102011 were granted at the March 2010February 2011 meeting, the first regularly scheduled meeting. As a general practice, awards under the LTIP and LTCIPlong-term incentive plans are approved once a year unless a situation arises whereby a compensation package is approved for a newly hired or promoted executive officer and equity-based compensation is a component.
Perquisites
We provide executive officers with perquisites the Companywe and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Companyus to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites provided to executive officers.
Perquisites that are provided to executive officers are different by individual and could include an auto allowance, fully paid premiums for healthcare coverage, and country club dues. The incremental costs of the perquisites listed above for the NEOs are included in the “All Other Compensation” column of the Summary Compensation Table.
Employment Agreements
In early 2006, the Companywe entered into a negotiated employment agreement with Mr. Corey that provided for a minimum base salary of $525,000, participation in the annual incentive plan at a minimum target of 70% of base salary; a monthly car allowance; reimbursement of country club dues and a one-time initiation fee; reimbursement of Mr. Corey’s premium on his life insurance policy; participation in the Company’s customary benefit plans and reimbursement of out-of-pocket healthcare expenses not to exceed $5,000 per covered family member on an annual basis. In addition, if Mr. Corey is terminated by the Company without cause, the Company will be obligated to provide as severance the same compensation and benefits described below under “Potential Change in Control and Other Post-Employment Payments.”
The Company has not entered into employment agreements with any other NEO.
Severance Plan
We adopted the Officers’ and Key Employees’ Severance Plan (the “Severance Plan”) in October 2009. The NEOs covered under the Severance Plan include Messrs.Mr. Strickler, Mr. Tervalon, Mr. Beaver and Mr. Sloan. If a covered executive is terminated by the Companyus without cause, the Companywe will be obligated under the Severance Plan to pay the executive’s salary for 12 months (18 months in the case of the Chief Financial Officer, Mr. Strickler) and continue health and welfare benefits coverage over the same period of time. Mr. Corey’s severance protection is provided in his employment agreement as described below under “Potential Change in Control and Other Post-Employment Payments.”
Termination and Change in Control Payments
We have entered into change in control agreements with our NEOs and certain other senior management employees. These agreements are designed to promote stability and continuity of senior management, both of which are in the best interest of Stoneridge and our shareholders. Our termination and change in control provisions for the NEOs are summarized below under “Potential Change in Control and Other Post-Employment Payments.”
Elimination of Tax Gross-Up
In 2011 the Compensation
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation in excess of $1.0 million that is paid to a company’s CEO and the other NEOs. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met.
The Committee believes that it is generally in the Company’sour best interest to attempt to structure performance-based compensation, including performance share award grants and annual incentive awards, to NEOs whose compensation may be subject to Section 162(m) in a manner that satisfies the statute’s requirements. Currently, all annualperformance-based compensation is designed to be deductible under Section 162(m); however, in the future, the Committee may determine that it is appropriate to pay compensation which is not deductible.
Accounting Treatment of Compensation
As one of many factors, the Committee considers the financial impact in determining the amount of and allocation of the different pay elements, including FASB ASC Topic 718 implications of the long-term incentives.
Compensation Committee Report
We have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on that review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
| The Compensation Committee | |
| Kim Korth, Chairwoman | |
| Jeffrey P. Draime | |
| Douglas C. Jacobs | |
| William M. Lasky |
Summary Compensation Table
The following table provides information regarding the compensation of our Chief Executive Officer, our Chief Financial Officer, and our three most highly compensated executive officers for 2010.
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||
| John C. Corey | 2010 | $ | 655,000 | $ | 1,296,116 | $ | 1,056,000 | $ | 707,557 | $ | 3,714,673 | |||||||||||
| President & Chief | 2009 | 615,439 | 304,372 | 204,800 | 71,799 | 1,196,410 | ||||||||||||||||
| Executive Officer | 2008 | 640,000 | 1,310,709 | 480,768 | 85,679 | 2,517,156 | ||||||||||||||||
| George E. Strickler | 2010 | 340,688 | 432,500 | 378,400 | 353,335 | 1,504,923 | ||||||||||||||||
| Executive Vice President, | 2009 | 324,430 | 87,907 | 72,765 | 27,290 | 512,392 | ||||||||||||||||
| Chief Financial Officer & Treasurer | 2008 | 330,750 | 379,104 | 194,359 | 35,325 | 939,538 | ||||||||||||||||
| Mark J. Tervalon | 2010 | 298,525 | 289,948 | 270,630 | 153,199 | 1,012,302 | ||||||||||||||||
| Vice President & President | 2009 | 283,987 | 53,091 | 52,560 | 21,995 | 411,633 | ||||||||||||||||
| of the Stoneridge Electronics Division | 2008 | 292,000 | 228,324 | 157,943 | 22,368 | 700,635 | ||||||||||||||||
| Thomas A. Beaver | 2010 | 279,600 | 238,740 | 253,170 | 154,508 | 926,018 | ||||||||||||||||
| Vice President of Global | 2009 | 269,221 | 42,244 | 49,410 | 20,985 | 381,860 | ||||||||||||||||
| Sales & Systems Engineering | 2008 | 274,500 | 182,013 | 151,565 | 30,902 | 638,980 | ||||||||||||||||
| Michael D. Sloan | 2010 | 219,790 | 166,080 | 202,500 | 105,312 | 693,682 | ||||||||||||||||
| Vice President & President | 2009 | 203,500 | 22,769 | 36,630 | 3,291 | 266,190 | ||||||||||||||||
| of the Stoneridge Control Devices Division | 2008 | 202,972 | 51,101 | 61,813 | 11,558 | 327,444 | ||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||
| John C. Corey | 2011 | $ | 700,000 | $ | 2,088,904 | $ | - | $ | 74,949 | $ | 2,863,853 | |||||||||||||
| President & Chief | 2010 | 655,000 | 1,296,116 | 1,056,000 | 707,557 | 3,714,673 | ||||||||||||||||||
| Executive Officer | 2009 | 615,439 | 304,372 | 204,800 | 71,799 | 1,196,410 | ||||||||||||||||||
| George E. Strickler | 2011 | 357,500 | 774,916 | - | 31,801 | 1,164,217 | ||||||||||||||||||
| Executive Vice President, | 2010 | 340,688 | 432,500 | 378,400 | 353,335 | 1,504,923 | ||||||||||||||||||
| Chief Financial Officer & Treasurer | 2009 | 324,430 | 87,907 | 72,765 | 27,290 | 512,392 | ||||||||||||||||||
| Thomas A. Beaver | 2011 | 287,000 | 343,764 | 77,490 | 25,314 | 733,568 | ||||||||||||||||||
| Vice President of Global | 2010 | 279,600 | 238,740 | 253,170 | 154,508 | 926,018 | ||||||||||||||||||
| Sales & Systems Engineering | 2009 | 269,221 | 42,244 | 49,410 | 20,985 | 381,860 | ||||||||||||||||||
| Mark J. Tervalon | 2011 | 300,700 | 402,725 | - | 21,570 | 724,995 | ||||||||||||||||||
| Vice President & President | 2010 | 298,525 | 289,948 | 270,630 | 153,199 | 1,012,302 | ||||||||||||||||||
| of the Stoneridge Electronics Division | 2009 | 283,987 | 53,091 | 52,560 | 21,995 | 411,633 | ||||||||||||||||||
| Michael D. Sloan | 2011 | 234,000 | 277,959 | - | 10,219 | 522,178 | ||||||||||||||||||
| Vice President & President | 2010 | 219,790 | 166,080 | 202,500 | 105,312 | 693,682 | ||||||||||||||||||
| of the Stoneridge Control Devices Division | 2009 | 203,500 | 22,769 | 36,630 | 3,291 | 266,190 | ||||||||||||||||||
| (1) | The amounts included in the “Stock Awards” column represent the grant date fair value of common share awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, |
Time Based | Target Performance Based | Maximum Performance Based | ||||||||||
| Mr. Corey | $ | 628,968 | $ | 681,741 | $ | 1,022,612 | ||||||
| Mr. Strickler | 182,013 | 197,091 | 295,637 | |||||||||
| Mr. Tervalon | 109,854 | 118,470 | 177,705 | |||||||||
| Mr. Beaver | 87,237 | 94,776 | 142,164 | |||||||||
| Mr. Sloan | 47,388 | 50,619 | 75,929 | |||||||||
| (2) | The amount shown for each NEO in the “Non-Equity Incentive Plan Compensation” column is attributable to an annual incentive award earned under the AIP in the fiscal year listed. |
| (3) | The amounts shown for |
Auto Allowance | Life Insurance | Gross-Up on Life Insurance | Healthcare Costs | Gross-Up on Healthcare Costs | Group Term Life Insurance | Club Dues | Retention Award | Health Insurance Premium | Total | |||||||||||||||||||||||||||||||
| Mr. Corey | $ | 14,400 | $ | 14,056 | $ | 9,900 | $ | 7,917 | $ | 5,576 | $ | 7,524 | $ | 5,174 | $ | 640,000 | $ | 3,010 | $ | 707,557 | ||||||||||||||||||||
| Mr. Strickler | 9,000 | - | - | - | - | 4,847 | 5,000 | 330,750 | 3,738 | 353,335 | ||||||||||||||||||||||||||||||
| Mr. Tervalon | - | - | - | - | - | 240 | 1,374 | 146,000 | 5,585 | 153,199 | ||||||||||||||||||||||||||||||
| Mr. Beaver | 14,400 | - | - | - | - | 1,032 | - | 137,250 | 1,826 | 154,508 | ||||||||||||||||||||||||||||||
| Mr. Sloan | - | - | - | - | - | 552 | - | 101,750 | 3,010 | 105,312 | ||||||||||||||||||||||||||||||
| Auto Allowance | 401(k) Match | Group Term Life Insurance | Club Dues | Health Insurance Premium | Life Insurance | Gross-Up on Life Insurance | Healthcare Costs | Gross-Up on Healthcare Costs | Total | |||||||||||||||||||||||||||||||
| Mr. Corey | $ | 14,400 | $ | 7,350 | $ | 7,524 | $ | 5,602 | $ | 1,837 | $ | 14,056 | $ | 9,900 | $ | 8,379 | $ | 5,901 | $ | 74,949 | ||||||||||||||||||||
| Mr. Strickler | 9,000 | 7,350 | 5,267 | 5,000 | 5,185 | - | - | - | - | 31,801 | ||||||||||||||||||||||||||||||
| Mr. Beaver | 14,400 | 7,350 | 1,032 | - | 2,532 | - | - | - | - | 25,314 | ||||||||||||||||||||||||||||||
| Mr. Tervalon | - | 7,350 | 994 | 6,971 | 6,255 | - | - | - | - | 21,570 | ||||||||||||||||||||||||||||||
| Mr. Sloan | - | 7,350 | 1,032 | - | 1,837 | - | - | - | - | 10,219 | ||||||||||||||||||||||||||||||
Grants of Plan-Based Awards for 2010
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of | Grant Date Fair Value of Stock and Option | |||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Stock or Units(#)(3) | Awards | |||||||||||||||||||||||||
| John C. Corey | 2/14/2011 | $ | 297,500 | $ | 595,000 | $ | 1,190,000 | 24,800 | 49,600 | 74,400 | 74,400 | $ | 2,088,904 | |||||||||||||||||||||
| George E. Strickler | 2/14/2011 | 107,310 | 214,620 | 429,240 | 9,200 | 18,400 | 27,600 | 27,600 | 774,916 | |||||||||||||||||||||||||
| Thomas A. Beaver | 2/14/2011 | 64,575 | 129,150 | 258,300 | 4,100 | 8,200 | 12,300 | 12,200 | 343,764 | |||||||||||||||||||||||||
| Mark J. Tervalon | 2/14/2011 | 67,658 | 135,315 | 270,630 | 4,800 | 9,600 | 14,400 | 14,300 | 402,725 | |||||||||||||||||||||||||
| Michael D. Sloan | 2/14/2011 | 52,650 | 105,300 | 210,600 | 3,300 | 6,600 | 9,900 | 9,900 | 277,959 | |||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of | Grant Date Fair Value of | |||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Shares of Stock or Units (#)(3) | Stock and Option Awards ($)(4) | |||||||||||||||||||||||||
| John C. Corey | $ | 264,000 | $ | 528,000 | $ | 1,056,000 | ||||||||||||||||||||||||||||
| 2/14/2010 | 32,850 | 65,700 | 98,550 | 121,600 | $ | 1,296,116 | ||||||||||||||||||||||||||||
| 27,950 | 55,900 | 83,850 | 386,828 | |||||||||||||||||||||||||||||||
| George E. Strickler | 94,600 | 189,200 | 378,400 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 10,950 | 21,900 | 32,850 | 40,600 | 432,500 | |||||||||||||||||||||||||||||
| 9,350 | 18,700 | 28,050 | 129,404 | |||||||||||||||||||||||||||||||
| Mark J. Tervalon | 67,658 | 135,315 | 270,630 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 7,350 | 14,700 | 22,050 | 27,200 | 289,948 | |||||||||||||||||||||||||||||
| 6,250 | 12,500 | 18,750 | 86,500 | |||||||||||||||||||||||||||||||
| Thomas A. Beaver | 63,293 | 126,585 | 253,170 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 6,050 | 12,100 | 18,150 | 22,400 | 238,740 | |||||||||||||||||||||||||||||
| 5,150 | 10,300 | 15,450 | 71,276 | |||||||||||||||||||||||||||||||
| Michael D. Sloan | 50,625 | 101,250 | 202,500 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 4,200 | 8,400 | 12,600 | 15,600 | 166,080 | |||||||||||||||||||||||||||||
| 3,600 | 7,200 | 10,800 | 49,824 | |||||||||||||||||||||||||||||||
| (1) | The amounts shown reflect awards granted under |
| (2) | The amounts shown reflect grants |
| (3) | The amounts shown reflect grants of time-based restricted common shares |
| (4) | The amounts included in “Fair Value of Awards” column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, |
| 23 |
Outstanding Equity Awards at Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||
| John C. Corey | 10,000 | $ | 15.725 | 5/10/2014 | 170,040 | (2) | $ | 1,433,437 | 98,550 | (5) | $ | 830,777 | ||||||||||||||||
| 121,600 | (3) | 1,025,088 | 83,850 | (6) | 706,856 | |||||||||||||||||||||||
| 74,400 | (4) | 627,192 | 74,400 | (7) | 627,192 | |||||||||||||||||||||||
| George E. Strickler | - | - | - | 49,110 | (2) | 413,997 | 32,850 | (5) | 276,926 | |||||||||||||||||||
| 40,600 | (3) | 342,258 | 28,050 | (6) | 236,462 | |||||||||||||||||||||||
| 27,600 | (4) | 232,668 | 27,600 | (7) | 232,668 | |||||||||||||||||||||||
| Thomas A. Beaver | 20,000 | 10.385 | 2/4/2013 | 23,600 | (2) | 198,948 | 18,150 | (5) | 153,005 | |||||||||||||||||||
| 22,400 | (3) | 188,832 | 15,450 | (6) | 130,244 | |||||||||||||||||||||||
| 12,200 | (4) | 102,846 | 12,300 | (7) | 103,690 | |||||||||||||||||||||||
| Mark J. Tervalon | 4,000 | 10.385 | 2/4/2013 | 29,660 | (2) | 250,034 | 22,050 | (5) | 185,882 | |||||||||||||||||||
| 27,200 | (3) | 229,296 | 18,750 | (6) | 158,063 | |||||||||||||||||||||||
| 14,300 | (4) | 120,549 | 14,400 | (7) | 121,392 | |||||||||||||||||||||||
| Michael D. Sloan | - | - | - | 12,720 | (2) | 107,230 | 12,600 | (5) | 106,218 | |||||||||||||||||||
| 15,600 | (3) | 131,508 | 10,800 | (6) | 91,044 | |||||||||||||||||||||||
| 9,900 | (4) | 83,457 | 9,900 | (7) | 83,458 | |||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||
| John C. Corey | 10,000 | $ | 15.725 | 5/10/2014 | 58,400 | (2) | $ | 922,136 | 94,950 | (5) | $ | 1,499,261 | ||||||||||||||||
| 170,040 | (3) | 2,684,932 | 98,550 | (6) | 1,556,105 | |||||||||||||||||||||||
| 121,600 | (4) | 1,920,064 | 83,850 | (7) | 1,323,992 | |||||||||||||||||||||||
| George E. Strickler | - | - | - | 16,900 | (2) | 266,851 | 27,450 | (5) | 433,436 | |||||||||||||||||||
| 49,110 | (3) | 775,447 | 32,850 | (6) | 518,702 | |||||||||||||||||||||||
| 40,600 | (4) | 641,074 | 28,050 | (7) | 442,910 | |||||||||||||||||||||||
| Mark J. Tervalon | 4,000 | 10.385 | 2/4/2013 | 10,200 | (2) | 161,058 | 16,500 | (5) | 260,535 | |||||||||||||||||||
| 29,660 | (3) | 468,331 | 22,050 | (6) | 348,170 | |||||||||||||||||||||||
| 27,200 | (4) | 429,488 | 18,750 | (7) | 296,063 | |||||||||||||||||||||||
| Thomas A. Beaver | 20,000 | 10.385 | 2/4/2013 | 8,100 | (2) | 127,899 | 13,200 | (5) | 208,428 | |||||||||||||||||||
| 23,600 | (3) | 372,644 | 18,150 | (6) | 286,589 | |||||||||||||||||||||||
| 22,400 | (4) | 353,696 | 15,450 | (7) | 243,956 | |||||||||||||||||||||||
| Michael D. Sloan | - | - | - | 4,400 | (2) | 69,476 | 7,050 | (5) | 111,320 | |||||||||||||||||||
| 12,720 | (3) | 200,849 | 12,600 | (6) | 198,954 | |||||||||||||||||||||||
| 15,600 | (4) | 246,324 | 10,800 | (7) | 170,532 | |||||||||||||||||||||||
| (1) | Based on the closing price of |
| (2) | These time-based restricted common shares vested on March |
| These time-based restricted common shares vest on February 14, 2013. |
| These |
| These performance-based restricted common shares are scheduled to vest on February 14, 2013 subject to achievement of specified financial performance metrics. |
| These phantom shares are scheduled to vest on February 14, 2013 subject to achievement of specified financial performance metrics. |
| (7) | These performance-based restricted common shares are scheduled to vest on February 14, 2014 subject to achievement of specified financial performance metrics. |
Option Exercises and Stock Vested for 2010
| Stock Awards(1) | ||||||||
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
| John C. Corey | 58,400 | $ | 892,644 | |||||
| George E. Strickler | 16,900 | 258,317 | ||||||
| Thomas A. Beaver | 8,100 | 123,809 | ||||||
| Mark J. Tervalon | 10,200 | 155,907 | ||||||
| Michael D. Sloan | 4,400 | 67,254 | ||||||
| Stock Awards | ||||||||
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
| John C. Corey | 52,400 | $ | 420,510 | |||||
| George E. Strickler | 16,500 | 134,850 | ||||||
| Mark J. Tervalon | 9,500 | 76,238 | ||||||
| Thomas A. Beaver | 7,750 | 62,194 | ||||||
| Michael D. Sloan | 5,000 | 40,125 | ||||||
| Name | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||
| John C. Corey | $ | 22,115 | $ | 535,678 | $ | - | ||||||
| George E. Strickler | - | - | - | |||||||||
| Mark J. Tervalon | 473 | 11,469 | - | |||||||||
| Thomas A. Beaver | - | - | - | |||||||||
| Michael D. Sloan | - | - | - | |||||||||
| (1) | The number of shares includes time-based restricted shares from the 2008 restricted share grant that vested and were no longer subject to forfeiture on March 2, 2011. The value realized on vesting was based on the average of the high and low market value as recorded on the date of vesting, March 2, 2011. |
Potential Change in Control and Other Post-Employment Payments
In July 2007,December 2011, we entered into ana 2011 Amended and Restated Change in Control Agreement (the “CIC Agreement”) with each NEO and certain other senior management employees. Our change in control agreements were designed to provide for continuity of management in the event of change in control of the Company. We think it is important for our executives to be able to react neutrally to a potential change in control and not be influenced by personal financial concerns. We believe our arrangements are consistent with market practice. For our NEOs, we set the level of benefits, at two times base salary and average incentive award (described in detail below)as described below, to remain competitive with our select peer group. Finally, allAll payments under the CIC Agreement are conditioned on a non-compete, non-solicitation and non-disparagement agreement. The CIC Agreements replaced and superseded change in control agreements we previously entered into with these employees. The Committee determined that amending and restating prior agreements was necessary to comply with recently adopted final regulation under Section 409A of the Code, to add a non-competition clause for our protection, to address ambiguity in the prior agreements and to add a conditional gross up of any excise tax imposed under Section 280G of the Internal Revenue Code. In December 2008, we amended the CIC Agreement to comply with the requirements of Revenue Ruling 2008-13, which requires that all payments to an executive be based on actual results for performance-based payments.
We believe that the CIC Agreements should compensate executives displaced by a change in control and not serve as an incentive to increase personal wealth. Therefore, our CIC Agreements are “double trigger” arrangements. In order for the executives to receive the payments and benefits set forth in the agreement, both of the following must occur:
| · | a change in control of the Company; and |
| · | a triggering event: |
| · | the Company separates NEO from service, other than in the case of a termination for cause, within two years of the change in control; or |
| · | NEO separates from service for good reason (defined as material reduction in NEO’s title, responsibilities, power or authority, or assignment of duties that are materially inconsistent to previous duties, or material reduction in NEO’s compensation and benefits, or require NEO to work from any location more than 100 miles from previous location) within two years of the change in control. |
If the events listed above occur and the executive delivers a release to the Company, the Companywe will be obligated to provide the following to the executive:
| · | three times the greater of the CEO or CFO’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control; |
| · | three times the greater of the CEO or CFO’s maximum annual incentive compensation he would have been entitled to at the time of a triggering event or at the occurrence of a change in control, in each case based upon the assumption that personal and company targets or performance goals were achieved in that year at the maximum level; |
| · | an amount equal to the pro rata amount of annual incentive compensation the CEO or CFO would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and |
| · | continued life and health insurance benefits for twenty-four months following termination. |
If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to our other NEOs:
| · | two times the greater of the NEO’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control; |
| · | two times the greater of the NEO’s average annual incentive award over the last three completed fiscal years or the last five completed fiscal years; |
| · | an amount equal to the pro rata amount of annual incentive compensation the NEO would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and |
| · | continued life and health insurance benefits for twenty-four months following |
Upon a change in control as defined in theour LTIP, the restricted common shares included on the “Outstanding Equity Awards at Year-End” table that are not performance-based vest and are no longer subject to forfeiture; the performance-based restricted common shares included on the “Outstanding Equity Awards at Year End” table vest and are no longer subject to forfeiture based on target achievement levels.
In October 2009, the Companywe adopted the Officers’ and Key Employees’ Severance Plan (the “Severance Plan”). The named executive officers covered under the Severance Plan include Messrs.Mr. Strickler, Mr. Tervalon, Mr. Beaver and Mr. Sloan. If we terminate a covered executive is terminated by the Company without cause, the Companywe will be obligated under the Severance Plan to pay the executive’s salary for 12 months (18 months in the case of the Chief Financial Officer, Mr. Strickler) and continue health and welfare benefits coverage over the same period of time. Mr. Corey’s severance protection is provided in his employment agreement as described above.
No severance is payable if the NEO’s employment is terminated for “cause,” if they resign, or upon death.
Value of Payment Presuming Hypothetical December 31, 20102011 Termination Date
Upon resignation, no payments are due to any NEO in the table below. Assuming the events described in the table below occurred on December 31, 2010,2011, each NEO would be eligible for the following payments and benefits:
| Termination Without Cause | Non- Termination Change in Control | Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause | Disability | Death | ||||||||||||||||
| John C. Corey | ||||||||||||||||||||
| Base Salary | $ | 1,400,000 | $ | - | $ | 2,100,000 | $ | 175,000 | $ | - | ||||||||||
| Annual Incentive Award | - | - | 3,570,000 | - | - | |||||||||||||||
| Long-term Incentive Award | 740,093 | 783,628 | 783,628 | 740,093 | 740,093 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 2,177,410 | 3,085,717 | 3,085,717 | 2,257,048 | 2,257,048 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 823,607 | 1,443,216 | 1,443,216 | 762,634 | 762,634 | |||||||||||||||
| Health & Welfare Benefits | 61,075 | - | 61,075 | - | - | |||||||||||||||
| Total | $ | 5,202,185 | $ | 5,312,561 | $ | 11,043,636 | $ | 3,934,775 | $ | 3,759,775 | ||||||||||
| George E. Strickler | ||||||||||||||||||||
| Base Salary | $ | 536,250 | $ | - | $ | 1,072,500 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 1,287,720 | - | - | |||||||||||||||
| Long-term Incentive Award | 213,733 | 226,306 | 226,306 | 213,733 | 213,733 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 672,765 | 988,923 | 988,923 | 695,770 | 695,770 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 281,769 | 497,370 | 497,370 | 259,152 | 259,152 | |||||||||||||||
| Health & Welfare Benefits | 21,517 | - | 28,689 | - | - | |||||||||||||||
| Total | $ | 1,726,034 | $ | 1,712,599 | $ | 4,101,508 | $ | 1,168,655 | $ | 1,168,655 | ||||||||||
| Thomas A. Beaver | ||||||||||||||||||||
| Base Salary | $ | 287,000 | $ | - | $ | 574,000 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 279,995 | - | - | |||||||||||||||
| Long-term Incentive Award | 102,690 | 108,731 | 108,731 | 102,690 | 102,690 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 335,902 | 490,626 | 490,626 | 346,965 | 346,965 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 148,246 | 257,958 | 257,958 | 138,182 | 138,182 | |||||||||||||||
| Health & Welfare Benefits | 7,451 | - | 14,901 | - | - | |||||||||||||||
| Total | $ | 881,289 | $ | 857,315 | $ | 1,726,211 | $ | 587,837 | $ | 587,837 | ||||||||||
| Mark J. Tervalon | ||||||||||||||||||||
| Base Salary | $ | 300,700 | $ | - | $ | 601,400 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 245,816 | - | - | |||||||||||||||
| Long-term Incentive Award | 129,114 | 136,709 | 136,709 | 129,114 | 129,114 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 414,604 | 599,879 | 599,879 | 428,504 | 428,504 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 178,712 | 310,224 | 310,224 | 166,914 | 166,914 | |||||||||||||||
| Health & Welfare Benefits | 14,121 | - | 28,242 | - | - | |||||||||||||||
| Total | $ | 1,037,251 | $ | 1,046,812 | $ | 1,922,270 | $ | 724,532 | $ | 724,532 | ||||||||||
| Michael D. Sloan | ||||||||||||||||||||
| Base Salary | $ | 234,000 | $ | - | $ | 468,000 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 159,420 | - | - | |||||||||||||||
| Long-term Incentive Award | 55,374 | 58,631 | 58,631 | 55,374 | 55,374 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 207,800 | 322,195 | 322,195 | 213,764 | 213,764 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 106,521 | 187,146 | 187,146 | 98,420 | 98,420 | |||||||||||||||
| Health & Welfare Benefits | 15,435 | - | 30,870 | - | - | |||||||||||||||
| Total | $ | 619,130 | $ | 567,972 | $ | 1,226,262 | $ | 367,558 | $ | 367,558 | ||||||||||
| 27 |
Termination Without Cause | Non-Termination Change in Control | Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause | Disability | Death | ||||||||||||||||
| John C. Corey | ||||||||||||||||||||
| Base Salary | $ | 1,320,000 | $ | - | $ | 1,320,000 | $ | 165,000 | $ | - | ||||||||||
| Annual Incentive Award | 1,161,045 | - | 1,161,045 | - | - | |||||||||||||||
| Long-term Incentive Award | 478,884 | 783,628 | 783,628 | 478,884 | 478,884 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 3,071,692 | 5,527,132 | 5,527,132 | 1,482,155 | 1,482,155 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 560,011 | 2,919,571 | 2,919,571 | 1,503,998 | 1,503,998 | |||||||||||||||
| Health & Welfare Benefits | 55,937 | - | 55,937 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 1,626,114 | - | - | |||||||||||||||
| Total | $ | 6,647,569 | $ | 9,230,331 | $ | 13,393,427 | $ | 3,630,037 | $ | 3,465,037 | ||||||||||
| George E. Strickler | ||||||||||||||||||||
| Base Salary | $ | 516,000 | $ | - | $ | 688,000 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 430,349 | - | - | |||||||||||||||
| Long-term Incentive Award | 138,298 | 226,306 | 226,306 | 138,298 | 138,298 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 912,867 | 1,683,372 | 1,683,372 | 453,831 | 453,831 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 186,972 | 930,031 | 930,031 | 459,884 | 459,884 | |||||||||||||||
| Health & Welfare Benefits | 17,953 | - | 23,938 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 465,827 | - | - | |||||||||||||||
| Total | $ | 1,772,090 | $ | 2,839,709 | $ | 4,447,823 | $ | 1,052,013 | $ | 1,052,013 | ||||||||||
| Mark J. Tervalon | ||||||||||||||||||||
| Base Salary | $ | 300,700 | $ | - | $ | 601,400 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 320,755 | - | - | |||||||||||||||
| Long-term Incentive Award | 83,544 | 136,709 | 136,709 | 83,544 | 83,544 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 563,561 | 1,058,877 | 1,058,877 | 590,546 | 590,546 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 125,259 | 603,178 | 603,178 | 289,308 | 289,308 | |||||||||||||||
| Health & Welfare Benefits | 17,094 | - | 34,189 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 280,702 | - | - | |||||||||||||||
| Total | $ | 1,090,158 | $ | 1,798,764 | $ | 3,035,810 | $ | 963,398 | $ | 963,398 | ||||||||||
| Thomas A. Beaver | ||||||||||||||||||||
| Base Salary | $ | 281,300 | $ | - | $ | 562,600 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 302,763 | - | - | |||||||||||||||
| Long-term Incentive Award | 66,447 | 108,731 | 108,731 | 66,447 | 66,447 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 451,673 | 854,239 | 854,239 | 481,595 | 481,595 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 103,159 | 492,648 | 492,648 | 234,394 | 234,394 | |||||||||||||||
| Health & Welfare Benefits | 6,293 | - | 12,586 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | - | - | - | |||||||||||||||
| Total | $ | 908,872 | $ | 1,455,618 | $ | 2,333,567 | $ | 782,436 | $ | 782,436 | ||||||||||
| Michael D. Sloan | ||||||||||||||||||||
| Base Salary | $ | 225,000 | $ | - | $ | 450,000 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 200,629 | - | - | |||||||||||||||
| Long-term Incentive Award | 35,830 | 58,631 | 58,631 | 35,830 | 35,830 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 260,188 | 516,649 | 516,649 | 315,800 | 315,800 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 71,845 | 320,537 | 320,537 | 141,935 | 141,935 | |||||||||||||||
| Health & Welfare Benefits | 12,830 | - | 25,660 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 138,711 | - | - | |||||||||||||||
| Total | $ | 605,693 | $ | 895,817 | $ | 1,710,817 | $ | 493,565 | $ | 493,565 | ||||||||||
DIRECTORS’ COMPENSATION
Cash Compensation
In February 2011, the Board approved that each non-employee director of the Company receives areceive an annual retainer of $35,000 per year$70,000, for serving as aour director of the Company, $1,500 forand attending each meeting of the Board and $750 for participating in each telephonic meeting of the Board.Committee meetings. The non-executive Chairman receives twice the annual retainer and Board meeting fees thanof the other directors. Committee members receive $1,000 for attending such meetings and $500 for participating in telephonic meetings. The Audit Committee, chairman receives additional compensation of $10,000 per year and the Compensation Committee and Nominating and Corporate Governance Committee chairperson each receives additional compensation of $10,000, $7,500, and $5,000, respectively, per year. Beginning in 2009,Prior to February 2011, directors were paid an additional cash award granted to supplementreceived a retainer of $35,000 per year and meeting fees of $1,500 per in-person and $750 per telephonic meeting for Board meetings and $1,000 per in-person and $500 per telephonic meeting for Committee meetings. Also, the fair value of the annual grant of restricted common shares due to the depressed market value of our common shares and the number of shares available under the Directors’ Restricted Shares Plan at the date of grant. The final payment of this award occurred in 2010. Additionally in 2010, two members of a BoardCompensation Committee chairperson received additional compensation of $70,000 each in connection with their work on a special project. Directors who are also employees of the Company are not paid additional compensation for serving as a director. The Company reimburses$5,000. We reimburse out-of-pocket expenses incurred by all directors in connection with attending Board and committeeCommittee meetings.
Equity Compensation
Pursuant to the Directors’ Restricted Shares Plan,non-employee directors are eligible to receive awards of restricted common shares. In 2010,2011, Mr. Lasky, as Chairman of the Board, was granted 15,8807,600 restricted common shares and all other directors were granted 7,9403,800 restricted common shares. The restrictions for those common shares lapsed on February 14, 2011.
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
| Jeffrey P. Draime | $ | 66,625 | $ | 60,040 | $ | 126,665 | ||||||
| Douglas C. Jacobs | 78,125 | 60,040 | 138,165 | |||||||||
| Ira C. Kaplan | 67,125 | 60,040 | 127,165 | |||||||||
| Kim Korth | 73,813 | 60,040 | 133,853 | |||||||||
| William M. Lasky | 138,750 | 120,080 | 258,830 | |||||||||
| Paul J. Schlather | 67,125 | 60,040 | 127,165 | |||||||||
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | |||||||||
| Jeffrey P. Draime | $ | 69,361 | $ | 54,945 | $ | 124,306 | ||||||
| Douglas C. Jacobs | 83,361 | 54,945 | 138,306 | |||||||||
| Ira C. Kaplan | 67,233 | 54,945 | 122,178 | |||||||||
| Kim Korth | 143,611 | 54,945 | 198,556 | |||||||||
| William M. Lasky | 143,222 | 109,890 | 253,112 | |||||||||
| Paul J. Schlather | 136,483 | 54,945 | 191,428 | |||||||||
| (1) | The amounts included in the “Stock Awards” column represent fair value at grant date of restricted common share awards to directors, computed in accordance with FASB ASC Topic 718. For a discussion of the valuation assumptions, see Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, |
OTHER INFORMATION
Shareholder’s Proposals for 2012 Annual Meeting of Shareholders
Proposals of shareholders intended to be presented, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), at the Company’s 2012our 2013 Annual Meeting of Shareholders must be received by the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484, on or before December 14, 2011,13, 2012, for inclusion in the Company’sour proxy statement and form of proxy relating to the 20122013 Annual Meeting of Shareholders. In order for a shareholder’s proposal outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) of the Exchange Act, such proposal must be received by the Company at the address listed in the immediately preceding sentence not later than February 24, 2012.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’sour directors and executive officers, and owners of more than 10% of the Company’sour common shares, to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of the Company’sour common shares and other equity securities. Executive officers, directors and owners of more than 10% of the common shares are required by SEC regulations to furnish the Companyus with copies of all forms they file pursuant to Section 16(a).
To the Company’sour knowledge, based solely on the Company’sour review of the copies of such reports furnished to the Companyus and written representations that no other reports were required during the fiscal year ended December 31, 2010,2011, all Section 16(a) filing requirements applicable to the Company’sour executive officers, directors and more than 10% beneficial owners were complied with, except Mr. Corey, Mr. Strickler, Mr. Beaver, Mr. Tervalon and Mr. TervalonSloan each filed late one Form 4 related to one transaction.
Other Matters
If the enclosed proxy is executed and returned to us via mail, telephone or Internet, the persons named in it will vote the common shares represented by that proxy at the meeting. The form of proxy permits specification of a vote for the election of directors as set forth under “Election of Directors” above, the withholding of authority to vote in the election of directors, or the withholding of authority to vote for one or more specified nominees. When a choice has been specified in the proxy, the common shares represented will be voted in accordance with that specification. If no specification is made, those common shares will be voted at the meeting to elect directors as set forth under “Election of Directors” above, to elect three years with respect to the advisory vote on conducting future advisory votes on executive compensation, and FOR the proposals (i) to ratify the appointment of Ernst & Young as the Company’sour independent auditors for the year ending December 31, 2011;2012; and (ii) to approve of the advisory resolution on executive compensation; and (iii) to approve the Amended AIP.
Director nominees who receive the greatest number of affirmative votes will be elected directors and the choice selected by the most shareholders will be deemed the shareholders’ choice on the frequency of the Company’s executive compensation advisory vote.directors. Broker non-votes and abstaining votes will be counted as “present” for purposes of determining whether a quorum has been achieved at the meeting, but will not be counted in favor of or against any nominee. The voting standards for each of the other known matters to be considered at the meeting are set forth within the above proposals. All other matters to be considered at the meeting require for approval the favorable vote of a majority of the shares entitled to vote and represented at the meeting in person or by proxy.
The holders of shares of a majority of the common shares outstanding on the record date, present in person or by proxy, shall constitute a quorum for the transaction of business to be considered at the Annual Meeting of Shareholders.
If any other matter properly comes before the meeting, the persons named in the proxy will vote thereon in accordance with their judgment. The Company doesWe do not know of any other matter that may be presented for action at the meeting and the Company haswe have not received any timely notice that any of the Company’sour shareholders intend to present a proposal at the meeting.
| By order of the Board of Directors, | |
|  |
| ROBERT M. LOESCH, | |
| Dated: April 11, 2012 | Secretary |
| 01 | 02 | 03 | 04 | 05 | 06 | 07 | ||
| o | For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. | ¨ | ¨ | ¨ | ¨ | ¨ | ¨ | ¨ |
| For | Against | Abstain | For | Against | Abstain | ||||||||
| 2. | Ratification of Ernst & Young LLP: | ¨ | ¨ | ¨ | 3. | Advisory resolution on executive compensation: | ¨ | ¨ | ¨ | ||||
| 4. | Advisory vote on the frequency of the advisory vote on executive compensation: | 1 Yr o | 2 Yrs o | 3 Yrs o | Abstain o | 5. | Approval of Amended Annual Incentive Plan: | o | o | o | |||
| 6. | On such other business as may properly come before the meeting. |