PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – DATED APRIL 6, 2020
No.__)No. 1)☒Preliminary Proxy Statement☐Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))☐Definitive Proxy Statement☐Definitive Additional Materials☐Soliciting Material Under Rule 14a-12☒No fee required☐Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.1.Title of each class of securities to which transaction applies: _____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):4.Proposed maximum aggregate value of transaction: _____5.Total fee paid:☐Fee paid previously with preliminary materials.☐Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.Amount Previously Paid: _____ Form Schedule or Registration Statement No.: _____ Filing Party: _____ Date Filed: _____ PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – DATED APRIL 6, 2020
MESSAGE FROM THE BOARD OF DIRECTORS
Dear Fellow Shareholders –
You are cordially invited to attend the 2020Notice of 2021 Annual Meeting of Shareholders (the “Annual Meeting”) of Synalloy Corporation, a Delaware corporation (the “Company”), which is scheduled to be held at _____________ on ________, 2020 at [9:00 a.m.] ET, and any adjournments or postponements. Shareholders of the Company at the close of business on ________, 2020 are entitled to notice of, and to vote at, the Annual Meeting. Details of the business to be conducted at the Annual Meeting are given in the accompanying Notice of
Your votehas determined that the 2021 Annual Meeting will be especially important atheld in a virtual meeting format only, via the Annual Meeting. As you may know, Privet Fund LP, UPG Enterprises LLC and certain of their respective affiliates (collectively, the “Dissident Group”) have notified the Company that they intend to nominate five candidates to the Board for election as directors at the Annual Meeting. Once elected, the Dissident Group’s nominees would constitute a majority of the Board. The Board doesNOT endorse the election of any of the Dissident Group’s nominees and strongly urges youNOT to sign or return any proxy card sent to you by the Dissident Group. If you have previously submitted a white proxy card sent to you by the Dissident Group, you can revoke that proxy and have your shares voted for our Board’s nominees and on the other mattersInternet, with no physical in-person meeting.
We are confident that our slate of Board nominees has the right mix of professional achievement, skills, experiences and reputations that qualify eachas follows:
After reading the Notice of Annual Meeting of Shareholders and the proxy statement, please mark your votes on the accompanyingBLUE Proxy Card or voting instruction form, sign it and promptly return it in the accompanying postage-paid envelope. You may also vote by Internet or telephone as instructed in the proxy statement or on theBLUE Proxy Card or voting instruction form. Please vote by whichever method is most convenient for you to ensure that your shares are representedother business properly presented at the Annual Meeting.
You may receive proxy solicitation materials from the Dissident Group, including proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to the Dissident Group or the nominees contained in any proxy solicitation materials filed or disseminated by, or on behalf
It is very important that your shares be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote over the Internet, as well as by telephone, or by mailing theBLUE Proxy Card or voting instruction form. Returning the proxy or voting by Internet or telephone does not deprive you of your right to attend the Annual Meeting and vote your shares in person.
Your vote and participation, no matter how many or how few shares you own, are very important to us. Your cooperation is greatly appreciated.
Richmond, Virginia
________, 2020
The attached Notice of Annual Meeting of Shareholders and proxy statement are first being made available to shareholders beginning ________, 2020. If you have any questions concerning the business to be conducted at the Annual Meeting, would like additional copies of this Proxy Statement or require assistance in authorizing a proxy or voting your shares of common stock, please contact the Company’s proxy solicitor at the contact listed below:
509 Madison Avenue Suite 1206
New York, New York 10022
Shareholders Call Toll Free: (800) 662-5200Banks and Brokers Call Collect: (203) 658-9400
Email: SYNL@investor.morrowsodali.com
PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – DATED APRIL 6, 2020
SYNALLOY CORPORATION
4510 COX ROAD, SUITE 201
RICHMOND, VA 23060
NOTICE OF ANNUAL MEETING
________, 2020
TO THE SHAREHOLDERS OF SYNALLOY CORPORATION
Notice is hereby given that the Annual Meeting of Shareholders (the “Annual Meeting”) of Synalloy Corporation, a Delaware corporation (the “Company”), will be held at ____________ on ________,2020 at [9:00 a.m.] ET.
The following important matters will be presented for your consideration.
Shareholders may also consider such other business as may properly be brought before the meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the accompanying Proxy Statement accompanyingStatement.
Onlymaterials will be made available to shareholders electronically on or around April 1, 2021 or mailed on or around the same date to those shareholders who have previously requested printed materials.
A complete list of shareholders entitled to vote at the Annual Meeting will be available at the Annual Meeting and for ten days prior to the Annual Meeting during ordinary business hours, at the Company’s headquarters, 4510 Cox Road, Suite 201, Richmond, Virginia 23060. The transfer books of the Company will not be closed.
All shareholders are cordially invited to attend the Annual Meeting. Whether or not you expect to attend, we encourage you to submit your proxy as soon as possible using one of three convenient methods by (i) accessing the Internet site described in theBLUE Proxy Card or voting instruction form providedpossible. Your vote is very important to you, (ii) calling the toll-free number in theBLUE Proxy Card or voting instruction form provided to you, or (iii) completing, signing, datingus, and returning the enclosedBLUE Proxy Card promptly in the accompanying envelope, which requires no postage if mailed in the United States, or voting instruction form provided to you. You are urged to complete and submit the enclosedBLUE Proxy Card, even if your shares were sold after such date.
If your broker, bank, trustee or other similar organization is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive a voting instruction form from the holder of record. You must provide voting instructions by filling out the voting instruction form in order forwe want your shares to be voted. We recommend that you instruct your broker or other nominee to vote your shares on the enclosedBLUE Proxy Card. The proxy is revocable and will not affect your right to vote in person if you attend the Annual Meeting.
Your vote will be especially importantrepresented at the Annual Meeting. Privet Fund LP, UPG Enterprises LLC and certain of their respective affiliates (collectively, the “Dissident Group”) have notified the Company that they intend to nominate five candidates to the Board for election as directors at the Annual Meeting. You may receive proxy solicitation materials from the Dissident Group, including proxy statements and proxy cards. The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to the Dissident Group or the nominees contained in any proxy solicitation materials filed or disseminated by, or on behalf of, the Dissident Group or any other statements that the Dissident Group or its representatives have made or may otherwise make. Signing, dating and returning any proxy card that the Dissident Group, or any of its affiliates may send to you, even with instructions to vote “withhold” with respect to the Dissident Group’s nominees, will cancel any proxy you may have previously submitted to have your shares voted for the Board’s nominees on aBLUE proxy card, as only your latest proxy card or voting instruction form will be counted. Again, if you have previously submitted a white proxy card sent to you by or on behalf of the Dissident Group, you can revoke that proxy and vote for your Board’s nominees and on the other matters to be voted on at the Annual Meeting by using the enclosedBLUE Proxy Card or voting by Internet or telephone by following the instructions specified on theBLUE Proxy Card or by voting your shares in person at the Annual Meeting. If you are a participant in the Synalloy Corporation 401(k) Plan/Employee Stock Ownership Plan (the “401(k)/ESOP Plan”) and you own shares of our Common Stock through the 401(k)/ESOP Plan, you should follow the instructions provided by the 401(k)/ESOP Plan trustee with respect to having the shares allocated to you in the 401(k)/ESOP Plan voted at the Annual Meeting.
The Board, including all of its independent directors, strongly and unanimously recommends that you vote on theBLUE Proxy Card or voting instruction form “FOR” the election of Messrs. Craig C. Bram, Anthony A. Callander, Henry L. Guy, Jeffrey Kaczka, James W. Terry, Jr., and Murray H. Wright and Mses. Susan S. Gayner and Amy J. Michtich.
The nomineesmeeting.
Regardless of the number of shares of common stock of the Company that you own, your vote will be important. Thank you for your continued support, interest and investment in Synalloy Corporation.
Richmond, Virginia
________, 2020
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON ________, 2020.
The accompanying Proxy Statement, the accompanyingBLUE Proxy Card, and the Company’s Summary Annual Report to Shareholders (including its Annual Report on Form 10-K for the fiscal year ended December 31, 2019) are available free of charge at www.proxyvote.com. Information on this website, other than this Proxy Statement, is not a part of this Proxy Statement.
Please sign, date and promptly return the enclosedBLUE Proxy Card in the envelope provided, or grant a proxy and give voting instructions by Internet or telephone, so that you may be represented at the Annual Meeting. Instructions are on yourBLUE Proxy Card or on the voting instruction form provided by your broker.
Brokers cannot vote on any of the proposals without your instructions.
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The accompanying Proxy Statement provides a detailed description of the business to be conducted at the Annual Meeting. We urge you to read the accompanying Proxy Statement, including the appendices, carefully and in their entirety.
If you have any questions concerning the business to be conducted at the Annual Meeting, would like additional copies of this Proxy Statement or require assistance in authorizing a proxy or voting your shares of Common Stock, please contact the Company’s proxy solicitor at the contact listed below:
509 Madison Avenue Suite 1206
New York, New York 10022
Shareholders Call Toll Free: (800) 662-5200Banks and Brokers Call Collect: (203) 658-9400
Email: SYNL@investor.morrowsodali.com
The
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIAL FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON ________, 2020
The Company’s 2019 Annual Report to Shareholders, 2019 Annual Report on Form 10-K and 2020 Proxy Statement are available via the Interneton our website at http://investor.synalloy.com.
2020
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SYNALLOY CORPORATION
4510 COX ROAD, SUITE 201
RICHMOND, VA 23060
PROXY STATEMENT
________,
This Proxy Statement and the accompanyingBLUE Proxy Card, along with the 2019 Annual Report to Shareholders, (includingincluding our Annual Report on2020 Form 10-K, for the fiscal year ended December 31, 2019) is being made available to shareholders together with these proxy materials on or about ________, 2020 in connection with the solicitation by the Board of Directors (the “Board”) of Synalloy Corporation, a Delaware corporation (the “Company”) of proxies to be voted at the Annual Meeting of Shareholder (the “Annual Meeting”), which will be held on ________, 2020 at [9:00 a.m.] ET, at ___________, and at any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of Annual Meeting. Any shareholder giving such a proxy may revoke it at any time before it is exercised by written notice to the Corporate Secretary of the Company at the above-stated address, by giving a later dated proxy or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not in itself have the effect of revoking the proxy.
As used in this Proxy Statement, the terms “the Company”, “we”, “us”, and “our” refer to Synalloy Corporation.
You are being asked to vote on the election of the 8 nominees listed below. Additional information about each Director nominee’s background and experience can be found beginning on page 21.
April 1, 2021.
THE BOARD URGES YOUNOT TO SIGN, RETURN OR VOTE ANY PROXY CARD SENT TO YOU BY PRIVET FUND LP, UPG ENTERPRISES LLC AND ANY OF THEIR RESPECTIVE AFFILIATES (COLLECTIVELY, THE “DISSIDENT GROUP”), EVEN AS A PROTEST VOTE, AS ONLY YOUR LATEST DATED PROXY CARD WILL BE COUNTED.
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Questions and Answers About the Proxy Materials, Annual Meeting and Voting
When and where will the Annual Meeting be held?
Why am I receiving this Proxy Statement?
Theon Wednesday, May 19, 2021. We encourage you to access the meeting prior to the start time.
Is my vote important?
Your vote will be particularly important at the Annual Meeting. As you may know, the Company has received a notice from the Dissident Group regarding its intent to nominate a slate comprised of five candidates to the Board for election as directors, (each, a “Dissident Group Nominee” and collectively, the “Dissident Group Nominees”), in opposition to the eight nominees recommended by the Board. If elected, the Dissident Group Nominees would constitute a majority of the Board.
The Board recommends a vote “FOR” the election of each of the director nominees named in this proxy statement on the enclosedBLUE Proxy Card, and strongly urges youNOT to sign or return any proxy card(s) or voting instruction form(s) that you may receive from the Dissident Group. Please be advised that we are not responsible for the accuracy of any information provided by or relating to the Dissident Group or any Dissident Group Nominee contained in any proxy solicitation materials filed or disseminated by, or on behalf of, the Dissident Group or any other statements that the Dissident Group or its representatives have made or may otherwise make.
To vote “FOR” any of the Board’s nominees, you must complete, sign, date and return the enclosedBLUE Proxy Card or follow the instructions provided in theBLUE Proxy Card for submitting a proxy over the Internet or by telephone or vote in person at the Annual Meeting.
If you have previously signed any proxy card sent to you by the Dissident Group in respect of the Annual Meeting, you can revoke it by completing, signing, dating and returning the enclosedBLUE Proxy Card or by following the instructions provided in theBLUE Proxy Card for submitting a proxy to vote your shares over the Internet or by telephone or voting in person at the Annual Meeting. Completing, signing, dating and returning any proxy card that the Dissident Group may send to you, even with instructions to vote “withhold” with respect to the Dissident Group Nominees, will cancel any proxy you may have previously submitted to have your shares voted for the Board’s nominees as only your latest proxy card or voting instruction form will be counted. Beneficial owners whose shares are held in “street name” should follow the voting instructions provided by their bank, broker, trustee or other nominee to ensure that their shares are represented and voted at the Annual Meeting, or to revoke prior voting instructions. The Board urges you to complete, sign, date and return only the enclosedBLUE Proxy Card.
Who is soliciting my proxy?
The Board, on behalf of the Company, is soliciting your proxy to vote your shares of Common Stock on all matters scheduled to come before the 2021 Annual Meeting of Shareholders, whether or not you attend the virtual meeting. By completing signing, dating and returning theBLUE Proxy Card proxy card or voting instruction form,card, or by transmitting your proxy and voting instructions overvia the Internet, or by telephone, you are authorizing the proxy holders to vote your shares of Common Stock at theour Annual Meeting as you have instructed. Proxies
Additionally, the Company has retained Morrow Sodali LLC (“Morrow Sodali”), a proxy solicitation firm, which may solicit proxies on the Board’s behalf. You may also be solicited through press releases, investor presentations or other communications issued by us, postings on our corporate website or other websites or otherwise. Unless expressly indicated otherwise, information contained on our corporate website is not part of this proxy statement. In addition, none of the information on the other websites, if any, listed in this proxy statement is part of this proxy statement. Such website addresses are intended to be inactive textual references only.
Will there be a proxy contest at the Annual Meeting?
The Dissident Group has nominated a slate of five individuals for election as directors to the Board at the Annual Meeting.The Dissident Group Nominees haveNOT been endorsed by the Board. You may receive proxy solicitation materials from the Dissident Group, including proxy statements and white proxy cards.The Board recommends that you disregard them. We are not responsible for the accuracy of any information provided by or relating to the Dissident Group or any Dissident Group Nominee contained in any proxy solicitation materials filed or disseminated by, or on behalf of, the Dissident Group or any other statements that the Dissident Group or its representatives have made or may otherwise make.
Our Board is pleased to nominate for election as directors the following eight persons — Craig C. Bram, Anthony A. Callander, Henry L. Guy, Jeffrey Kaczka, James W. Terry, Jr., and Murray H. Wright and Mses. Susan S. Gayner and Amy J. Michtich — named in this Proxy Statement and on the enclosedBLUE Proxy Card. We believe our eight nominees have the breadth of relevant and diverse experiences, integrity and commitment necessary to continue to grow the Company for the benefit of all of the Company’s shareholders.
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voting? How does the Board recommend that I cast my vote?
Why is the Board making such recommendations?
We describe each proposal and the Board’s reason for its recommendation with respect to each proposal on pages 21, 45, 47 and elsewhere director nominees listed in this Proxy Statement.
Who is entitled to vote at Statement;
The Board has set ________, 2020approval, on a non-binding advisory basis, of the compensation of our named executive officers (say-on-pay);
What is the difference between a shareholder of “record” and a “street name” owner?
If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. The Company sent the proxy materials directly to you. TheBLUE Proxy Card accompanying this Proxy Statement will provide information regarding how to vote your shares.
If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. You are considered to be the beneficial owner of those shares and your shares are said to be held in “street name,” and the proxy materials are being forwarded to you by that organization. Street name owners generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares. If you do not provide that organization specific direction on how to vote, yourMeeting (excluding 1,097,955 shares held in the name of that organization may nottreasury).
What constitutes a quorum?
Except where otherwise provided by applicableUnder Delaware law and our Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”) or the Bylaws, as amended (the “Bylaws”), the presence in person (virtually) or by proxy of the holders of a majority of the issued and outstanding shares of stock of the Companyour Common Stock entitled to vote constitutesis necessary to constitute a quorum for the transaction of business, which is required to hold and conduct business at the Annual Meeting. The inspector of election will determine whether a quorum is present. At the closeIf you are a beneficial owner (as defined below) of business on the Record Date, [●] shares of our Common Stock were outstanding and entitledyou do not instruct your bank, broker, or other holder of record how to vote atyour shares (so-called "broker non-votes") on any of the Annual Meeting. Shares are
If you are a record holder and you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the Annual Meeting for the purpose of determining a quorum. If your shares are held in “street name,” your shares are counted as present for purposes of determining whether a quorum if you provideexists, whether or not such holder abstains from voting instructions to your broker, bank, trustee or other nominee and such broker, bank, trustee or other nominee submitshis shares on any of the proposals.
Who can attend
Admissionmeeting is to the Annual Meeting is limited to shareholders and their duly appointed proxy holders asbe adjourned for 30 days or more, notice of the close of business on the Record Date with proof of ownership of Common Stock, as well as valid government-issued photo identification, such as a valid driver’s license or passport. If your shares are held in “street name” and you plan to attend the Annual Meeting, you must present proof of your ownership of Common Stock, such as a bank or brokerage account statement, as well as valid government-issued photo identification to be admitted to the Annual Meeting. Any holder of a proxy from a shareholder must present the proxy card, properly executed, and a copy of proof of ownership as well as valid government-issued photo identification.
Wereconvened meeting will be unable to admit anyone who does notgiven as provided in the Bylaws. At any reconvened meeting at which a quorum is present identification or refuses to complyrepresented, any business may be transacted that might have been transacted at the meeting as originally noticed.
Your vote is very important. Please submit your BLUE Proxy Card even if you plan to attend the Annual Meeting.
reimburse them for their related out-of-pocket expenses.
The process for voting your shares depends on how your Common Stock is held. Generally, you may hold Common Stock in your name as a “shareholdervote?
broker or agent to obtain a proxy card from your broker and bring it to the Annual Meeting in order to vote. You may vote your shares by Internet, by mail or by telephone as further described below.
If you are a shareholder as of the close of business on the Record Date, you
VOTE BY PHONE -- 1-800-213- 6370 (for shareholder of record); 1-800-690-6903 (for beneficial owners of shares held in street name)
Use any touch-tone telephone to transmit your voting instructions. Have yourBLUE Proxy Card or voting instruction form in hand when you call and then follow the instructions.
VOTE BY MAIL
If you are a shareholder of record, please sign and date yourBLUE Proxy Card and return it in the postage-paid envelope we have provided or return it to Michael A. Verrechia, c/o Morrow Sodali, 509 Madison Avenue Suite 1206, New York, New York 10022. If you are a beneficial owner whose shares are held in street name, please return a properly signed and dated voting instruction form by following the instructions specified in the form.
VOTE IN PERSON
Shares held in your name as the shareholder of record may be voted in person at the Annual Meeting. Shares held beneficially in street name may be voted in person only if you obtain a legal proxy from the broker, bank, trust or other nominee that holds your shares as of the Record Date, indicating that you were a beneficial owner of shares as of the close of business on such date and the number of shares that you beneficially owned at that time.
Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions by Internet, telephone, or mail so that your vote will be counted if you later decide not to attend the Annual Meeting. The Internet and telephone voting facilities will close at 11:59 p.m. ET for shareholders of record and for shares held beneficially in street name on ________, 2020 or, for 401(k)/ESOP Plan participants, at 11:59 p.m. ET on the Plan Cut-Off Date. Shareholders who submit a proxy by Internet or telephone need not return a proxy card or the voting instruction form forwarded by your broker, bank, trust or other holder of record by mail.
If you have any questions or require assistance in submitting a proxy for your shares please call Morrow Sodali at (800) 662-5200 (toll freethrough a bank, broker or other nominee, and you return a broker voting instruction card but do not indicate how you want your broker to vote, your broker has discretionary authority to vote on Proposal 4, but a broker non-vote will occur as to Proposals 1, 2, and 3.
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As a shareholder as of the Record Date, if you submit a proxy, you may
Shareholders whosewho hold their shares are held in street name with a broker bank, trust or other nominee may change or revoke their proxy instructions by following the instructions of their broker or other nominee or submitting new voting instructions to the broker or other nominee. Such shareholders may also vote in person at the Annual Meeting if they obtain a legal proxy from their broker, bank, trust or other nominee which holds their shares in street name.
If you have previously submitted a white proxy card sent to you by the Dissident Group, you may change your vote by completing
Has the Companywe received notice fromonly one or more shareholders that they are intending to nominate director candidates or bring proposals at the Meeting?
Yes. Based on recently available public filings, the Dissident Group has indicated beneficial ownership of an aggregate 2,258,908 shares of our Common Stock (representing approximately 24.94% of outstanding Common Stock), and the Dissident Group has delivered notice to the Company of its intention to nominate five candidates to the Board for election as directors in opposition to the eight nominees recommended by the Board.
The Board strongly urges youNOT to sign or return any proxy cards or voting instruction forms that you may receive from the Dissident Group, including to vote “withhold” with respect to the Dissident Group Nominees. If you wish to vote pursuant to the recommendationpaper copy of the Board, you should disregard any proxy card that you receivematerials. How may I obtain an additional copy of the proxy materials?
What does it mean if I receive more than one notice from the Company or BLUE Proxy Card?
Because the Dissident Group has submitted the Dissident Group Nominees to the Board in opposition to the slate proposed by the Board, we may conduct multiple mailings prior to the Annual Meeting to ensure shareholders haveholders of record are "householding" our latest proxy information and materials to vote. In that event, we will send you a newBLUE Proxy Card or voting instruction form with each mailing, regardless of whether you have previously voted. You may also receive more than one set of proxy materials, including multipleBLUE Proxy Cards, if you hold shares that are registered in more than one account—please vote theBLUE Proxy Card for every account you own. The latest dated proxy you submit will be counted, andIF YOU WISH TO VOTE AS RECOMMENDED BY THE BOARD, THEN YOU SHOULD ONLY SUBMIT BLUE PROXY CARDS AND DISREGARD ANY PROXY CARD SENT TO YOU BY THE DISSIDENT GROUP.
What should I do if I receive a proxy card from the Dissident Group?
The Dissident Group has nominated a slate of five individuals for election as directors to the Board in opposition to the eight nominees proposed by the Board. We expect that you may receive proxy solicitation materials from the Dissident Group, including opposition proxy statements and annual reports for their customers. This means that only one copy of our proxy cards.The Board strongly urgesmaterials may have been sent to multiple shareholders in your household. If youNOT prefer to signreceive separate copies of a proxy statement or return any proxy cardsannual report, either now or voting instruction forms that you may receive fromin the Dissident Group, including to vote “withhold” with respectfuture, please call us at 804-822-3260, or send your request in writing to the Dissident Group Nominees. Wefollowing address: Corporate Secretary of Synalloy Corporation, 4510 Cox Road, Suite 201, Richmond, VA 23060. If you are not responsiblestill receiving multiple reports and proxy statements for the accuracy of any information provided by or relatingshareholders who share an address and would prefer to the Dissident Group or the Dissident Group Nominees contained in any proxy solicitation materials filed or disseminated by, or on behalfreceive a single copy of the Dissident Group or any other statements thatannual report and proxy statement in the Dissident Group or its representatives have made or may otherwise make. If you have already voted using the white proxy card provided by the Dissident Group, you have every right to change your vote by completing and returning the enclosedBLUE Proxy Card or by voting over the Internet or by telephone by following the instructions provided on the enclosedBLUE Proxy Card or voting instruction form or by voting in personfuture, please contact us at the Annual Meeting. Only the latest proxy you submit will be counted. If you vote “withhold” on the Dissident Group Nominees using the white proxy card sent to you by the Dissident Group, your vote will not be counted as a vote for any of the director nominees recommended by the Board, but will result in the revocation of any previous vote you may have cast on theBLUE Proxy Card.If you wish to vote pursuant to the recommendation of the Board, you should disregard any proxy card that you receive other than the BLUE Proxy Card. If you have any questionsabove address or need assistance voting, please call Morrow Sodali at (800) 662-5200 (toll free for shareholders) or (203) 658-9400 (call collect for banks and brokers).telephone number. If you are a 401(k)/ESOP Plan participant and want to revoke any prior voting instructionsbeneficial holder, you provided to the 401(k)/ESOP Plan trustee in respect of the Annual Meeting, you mustshould contact the 401(k)/ESOP Plan trustee.
Is cumulative voting permitted for the election of directors?
You have the right to cumulate your votes by distributing a number of votes, determined by multiplying the number of directors to be elected at the Annual Meeting (i.e., eight) by the number of your shares as of the close of business on the Record Date, to one individual nominee or among two or more nominees. Unless contrary instructions are provided on the enclosedBLUE Proxy Card or voting instruction form, the persons named as proxies may cast all of their votes “For” or “Withhold” with respect to the nominees or may allocate the votes among the nominees in accordance with their discretion.
However, you willNOTbe permitted to distribute your votes between the candidates recommended by our Board listed on theBLUE Proxy Card and the Dissident Group’s nominees on the white proxy card sent to you by the Dissident Group. This is because any vote with respect to any of the Dissident Group’s nominees on its white proxy card will revoke any previous proxy submitted by you, including any previous proxyFOR the Company’s nominees. THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERSDO NOT RETURN ANY WHITE PROXY CARD SENT TO YOU BY THE DISSIDENT GROUP, EVEN AS A PROTEST VOTE AGAINST ANY OF ITS GROUP MEMBERS OR NOMINEES.Your Board strongly and unanimously urges you toDISCARD all white proxy cardsbank, broker or other materials sentholder of record.
How will my shares be voted?
Shareholders, as of the close of business on the Record Date are entitled to one vote for each share of Common Stock held on each matter to be voted upon at the Meeting, except shareholders have the right to cumulate votes in regard to the election of directors. All shares entitled to vote and represented by properly submitted proxies received before the polls are closed at the2020 Annual Meeting, and not revoked or superseded, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxies. Where a choice has been specified on theBLUE Proxy Card with respect to the proposals, the shares represented by theBLUE Proxy Card will be voted as you specify. If you return a validly executedBLUE Proxy Card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted: “FOR” the election of the eight Board nominees set forth on theBLUE Proxy Card (Proposal 1); “FOR” the non-binding, advisory resolution approving the compensation of the Company’s named executive officers (Proposal 2); and “FOR” the ratification of the appointment of KPMG as our independent registered public accounting firm for the fiscal year ended December 31, 2020 (Proposal 3).
What happens if I do not specify how I want my shares voted? What is discretionary voting? What is a broker non-vote?
As a shareholder as of the close of business on the Record Date, if you properly complete, sign, date and return aBLUE Proxy Card or voting instruction form, your shares of Common Stock will be voted as you specify. However, if you are a shareholder of record and you return an executedBLUEProxy Card or submit your proxy by telephone or Internet and do not specify how you want your shares voted, the persons named as proxies will vote your shares:
A “broker non-vote” occurs when a broker holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the broker does not have discretionary authority to vote the shares. If you own your shares beneficially in street name through a broker and do not provide voting instructions to your broker, your shares will be considered to be broker non-votes and will not be counted for establishing the presence of a quorum and will not be voted on any proposal on which your broker does not have discretionary authority to vote.
To the extent that the Dissident Group provides a proxy card to shareholders in street name, none of the proposals at the Annual Meeting are considered a discretionary matter. As a result, if you own your shares beneficially in street name through a broker, then we encourage you to provide voting instructions to the broker that holds your shares by carefully following the instructions provided in their notice to you.
What is the effect of abstentions and broker non-votes on voting?
Abstentions will be counted as present at the Meeting for the purpose of determining a quorum. Because each director nominee will require more “FOR” votes than the director nominees who receive the least number of votes in order to be elected, “withhold” votes have no effect on the outcome of Proposal 1. To approve the advisory votes on the compensation of the Company’s named executive officers and to ratify the appointment of KPMG as the Company’s independent registered public accounting firm for 2020, if a quorum is present, the affirmative vote of a majority of the voting power represented at the Annual Meeting is required for approval. As a result, abstention votes will have the same effect as a vote “AGAINST” such matters.
A broker non-vote occurs when the broker is unable to vote on a proposal because the proposal is not routine and the shareholder who owns the shares in “street name” has not provided any voting instructions to the broker on that matter. Even though the Company’s Common Stock is listed on the Nasdaq Global Market, the rules of the New York Stock Exchange (“NYSE”) apply to brokers that are NYSE members voting on matters being submitted to shareholders at the Annual Meeting. Under the rules of the NYSE, if a proposal is routine, a broker holding shares for an owner in street name may vote on the proposal without voting instructions. Because we are facing a contested election, the NYSE rules governing brokers’ discretionary authority do not permit brokers to exercise discretionary voting power regarding any of the proposals to be voted on at the Annual Meeting. As a result, brokers are not entitled to vote on any of the proposals at the Annual Meeting without receiving voting instructions from the beneficial owners, and thus the underlying shares will not be counted for establishing the presence of a quorum, and will have no effect on the outcome of Proposals 1, 2 or 3. If you do not provide voting instructions to your broker holding shares of Common Stock for you, your shares will not be voted with respect to any proposal. We therefore encourage you to provide voting instructions on aBLUE Proxy Card or the voting instruction form provided by the broker that holds your shares, in each case by carefully following the instructions provided.
Could other matters be decided at the Annual Meeting?
We do not expect any other items of business will be presented for consideration at the Annual Meeting other than those described in this proxy statement. However, by completing, signing, dating and returning aBLUE Proxy Card or submitting your proxy or voting instructions over the Internet or by telephone, you will give to the persons named as proxies discretionary voting authority with respect to any matter that may properly come before the Annual Meeting, and of which we did not have notice at least by February 17, 2020, which is 45 days before the date on which we first made available the proxy materials for our 2019 Annual Meeting of Shareholders, and such persons named as proxies intend to vote on any such other matter in accordance with their best judgment.
Who will count the votes?
All votes will be tabulated as required by Delaware law, the state of our incorporation, by the independent inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. Shares held by persons attending the Annual Meeting but not voting and shares represented by proxies that reflect abstentions as to one or more proposals will be counted as present for purposes of determining a quorum. Broker non-votes will not be counted as present for purposes of determining a quorum.
When will the voting results be announced?
The final voting results will be reported in a Current Report on Form 8-K, which will be filed with the Securities10-K and Exchange Commission (“SEC”) within four business days after the Annual Meeting. If our final voting results are not available within four business days after the Annual Meeting, we will file a Current Report on Form 8-K reporting the preliminary voting results and subsequently file the final voting results in an amendment to the Current Report on Form 8-K within four business days after the final voting results are known to us.
What vote is required with respect to the proposals?
Election of Directors. Pursuant to our Bylaws, if a quorum is present at the Annual Meeting, with respect to Proposal 1 – “Election of Directors”, directors will be elected by a plurality of the votes cast by shares present in person or by proxy and entitled to vote at the Annual Meeting. “Plurality” means that, among the Board’s nominees and the Dissident Group Nominees, the eight nominees who receive the largest number of “FOR” votes of the shares entitled to be voted in the election for directors will be elected, whether or not they received a majority of votes cast. You may vote “FOR” all Board nominees, “WITHHOLD” your vote as to all Board nominees, or “FOR ALL” Board nominees except the specific nominee from whom you “WITHHOLD” your vote. There is no “against” option.Shares voting “withhold” are counted for purposes of determining a quorum. However, if you withhold authority to vote with respect to the election of any or all of the nominees, your shares will not be voted with respect to those nominees indicated. Therefore, “withhold” votes will not affect the outcome of the election of directors. Brokers do not have discretionary authority to vote on the election of directors. Broker non-votes and “withhold votes” will have no effect on the outcome of Proposal 1.
Non-binding Resolution to Approve Compensation for Named Executive Officers. The approval of a non-binding, advisory resolution approving the compensation of the Company’s named executive officers requires the affirmative vote by the holders of a majority of the voting power represented at the Annual Meeting when a quorum is present. You may vote “FOR,” “AGAINST” or “ABSTAIN.” If you “ABSTAIN” from voting on Proposal 2, the abstention will have the same effect as an “AGAINST” vote. While the vote on Proposal 2 is advisory, and will not be binding on the Company or the Board, the Board will review the results of the voting on this proposal and take it into consideration when making future decisions regarding executive compensation as we have done in this and previous years. Broker non-votes will have no effect on the outcome of Proposal 2.
Ratification of Auditors. The ratification of the appointment of KPMG requires the affirmative vote by the holders of a majority of the voting power represented at the Annual Meeting when a quorum is present. You may vote “FOR,” “AGAINST” or “ABSTAIN.” If you “ABSTAIN” from voting on Proposal 3, the abstention will have the same effect as an “AGAINST” vote. Broker non-votes will have no effect on the outcome of Proposal 3.
Who will pay for the solicitation of proxies?
The Company will bear the entire cost of solicitation of proxies, including preparation, assembly and mailing of this2021 Proxy Statement theBLUE Proxy Card,are available via the Notice of Annual Meeting and any additional information furnished to shareholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding shares of our Common Stock in their names that are beneficially owned by others to forward to those beneficial owners. We may reimburse persons representing beneficial owners for their costs of forwarding the solicitation materials to the beneficial owners. Original solicitation of proxies may be supplemented by telephone, facsimile, electronic mail or personal solicitation by our directors, officers or staff members. Other than the persons described in this Proxy Statement, no general class of employee of the Company will be employed to solicit shareholders in connection with this proxy solicitation. However, in the course of their regular duties, employees may be asked to perform clerical or ministerial tasks in furtherance of this solicitation. No additional compensation will be paid to our directors, officers or staff members for such services. We have retained Morrow Sodali to act as a proxy solicitor in conjunction with the Annual Meeting. We have agreed to pay Morrow Sodali $[●], plus reasonable out-of-pocket expenses for proxy solicitation services. Morrow Sodali expects that approximately [●] of its employees will assist in the solicitation.
Our aggregate expenses, including legal fees for attorneys, accountants, public relations and other advisors, printing, advertising, postage, transportation, litigation and other costs incidental to the solicitation, but excluding (i) costs normally expended for a solicitation for an election of directors in the absence of a proxy contest and (ii) costs represented by salaries and wages of Company employees and officers, are expected to be approximately $[●], of which $[●] has been incurred as of the date of this Proxy Statement.
Appendix A sets forth information relating to our directors, director nominees, as well as certain of our officers who are considered “participants” in our solicitation under the rules of the SEC by reason of their position as directors and director nominees of the Company or because they may be soliciting proxies on our behalf.
Do I have appraisal or dissenters’ rights?
None of the applicable Delaware law, the Certificate of Incorporation nor our Bylaws provide for appraisal or other similar rights for dissenting shareholders in connection with any of the proposals set forth in this Proxy Statement. Accordingly, you will have no right to dissent and obtain payment for your shares in connection with such proposals.
Whom should I call if I have questions about the Annual Meeting?
Morrow Sodali is assisting us with our effort to solicit proxies. If you have any questions concerning the business to be conductedInternet at the Annual Meeting, would like additional copies of this Proxy Statement or require assistance in authorizing a proxy or voting your shares of Common Stock, please contact Morrow Sodali:
509 Madison Avenue Suite 1206
New York, NY 10022
Shareholders Call Toll Free: (800) 662-5200Banks and Brokers Call Collect: (203) 658-9400
Email: SYNL@investor.morrowsodali.com
THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH
OF THE BOARD’S NOMINEES ON PROPOSAL 1, “FOR” PROPOSAL 2 AND “FOR” PROPOSAL 3, USING THE ENCLOSED BLUE PROXY CARD OR VOTING INSTRUCTION FORM.
THE BOARD URGES YOU NOT TO SIGN, RETURN OR VOTE ANY PROXY CARD OR VOTING INSTRUCTION FORM SENT TO YOU BY THE DISSIDENT GROUP EVEN AS A PROTEST VOTE,
AS ONLY YOUR LATEST DATED PROXY CARD WILL BE COUNTED.
Background to the Solicitation
Throughout 2016, Craig C. Bram, the Company’s President, CEO and director, held phone calls with representatives of Privet to discuss the Company, its operating performance and management’s strategy.
On September 19, 2016, Privet Fund LP and certain of its affiliates (collectively, “Privet”) filed a Schedule 13D with the SEC disclosing its ownership of approximately 7.5% of the Company’s then outstanding Common Stock.
On March 17, 2017, Mr. Bram met with Ryan Levenson, the managing member of Privet Fund Management LLC (an affiliate of Privet Fund LP), at the Company’s headquarters in Richmond, Virginia, to discuss the Company, its operating performance and management’s strategy.
On March 20, 2017, Privet filed Amendment No. 1 to its Schedule 13D with the SEC disclosing its ownership of approximately 8.9% of the Company’s then outstanding Common Stock.
On April 3, 2017, Privet filed Amendment No. 2 to its Schedule 13D with the SEC disclosing its ownership of approximately 10.9% of the Company’s then outstanding Common Stock.
On September 7, 2017, Dennis Loughran, the Company’s Chief Financial Officer (“CFO”), sent an email to Privet representative Mr. Levenson, informing him of the Company’s participation in an upcoming investor conference and offering a call with Mr. Levenson to discuss the materials that would be presented by the Company at the investor conference.
On September 29, 2017, Privet filed Amendment No. 3 to its Schedule 13D with the SEC disclosing its ownership of approximately 12.2% of the Company’s then outstanding Common Stock.
On August 10, 2018, the Company issued a press release announcing an “at-the-market” program whereby it would sell, from time to time, shares of Common Stock up to an aggregate amount of $10 million.
Later on August 10, 2018, Mr. Bram and Mr. Levenson met telephonically to discuss the Company’s “at-the-market” offering of equity securities announced earlier that day. Mr. Levenson told Mr. Bram about his belief that the Company should explore a different capital raising mechanism that he hoped would be more effective.
On August 11, 2018, Mr. Levenson and Mr. Bram exchanged emails discussing the conversation that took place the previous day. Mr. Bram elaborated on the Company’s decision to pursue the “at-the-market” offering.
On October 9, 2018, representatives of Privet, including Mr. Levenson, and representatives of another investor, met with Mr. Bram in Atlanta, Georgia, to discuss the Company’s strategy, operations and capital allocation priorities, as well as Privet’s strategic objectives. During the conversation, Mr. Levenson spoke positively of the Company’s M&A deals, integration of new businesses and capital allocation.
On October 31, 2018, Privet and the Company entered into a mutual non-disclosure agreement (the “NDA”) to facilitate an open dialogue about the financial performance and future prospects of the Company. The NDA did not include any standstill provisions.
On November 14, 2018, Messrs. Bram and Loughran, Murray H. Wright, the Chairman of the Board, and Henry L. Guy, a member of the Board, met with representatives of Privet, including Mr. Levenson, and representatives of another investor, in Richmond, Virginia to further discuss the Company and its strategic priorities. Mr. Levenson again reiterated his approval of the Company’s M&A deals, integration of new businesses and capital allocation. Further, Mr. Levenson commented at this meeting that he regarded the financial results reported in the Company’s Quarterly Report on Form 10-Q issued on November 6, 2018 to be the best of any publicly traded company that Privet had ever owned and that he was surprised the Company’s stock price was not trading at a price in excess of $30.00 per share.
On November 16, 2018, the Company issued a press release announcing a dividend payment of $0.25 per share, which represented a 92% increase over the prior year’s dividend. In the press release, the Company also announced that it had terminated its “at-the-market” program due to market conditions and the Company’s belief that its stock was undervalued at the time.
On December 27, 2018, Privet filed Amendment No. 4 to its Schedule 13D with the SEC disclosing its ownership of approximately 14.0% of the Company’s then outstanding Common Stock.
On March 21, 2019, Mr. Bram spoke by phone with Privet representatives, including Mr. Levenson and Benjamin Rosenzweig, a partner at Privet Fund Management LLC, to discuss the Company’s recent operating results, capital structure decisions and the details of recently announced 2019 guidance.
On April 18, 2019, Messrs. Bram, Wright and Guy met with Mr. Levenson and Mr. Rosenzweig at the Company’s headquarters in Richmond, Virginia. At this meeting, Messrs. Levenson and Rosenzweig informed Messrs. Bram, Wright and Guy of Privet’s interest in potentially exploring an acquisition of the Company at a potential purchase price of $19.00 per share. Messrs. Bram, Wright and Guy informed Messrs. Levenson and Rosenzweig that they would discuss Privet’s interest with the other members of the Board.
On April 23, 2019, Privet sent a letter to the Board proposing to acquire all of the Company’s outstanding Common Stock not already owned by Privet for $20.00 per share (the “April 23 Proposal”). The proposal did not identify a source of financing for the transaction and was subject to, among other things, the negotiation and execution of a mutually satisfactory definitive acquisition agreement, regulatory approvals and satisfactory completion of due diligence.
Also on April 23, 2019, Privet filed Amendment No. 5 to its Schedule 13D with the SEC disclosing the April 23 Proposal as well as beneficial ownership of approximately 14.5% of the Company’s then outstanding Common Stock.
On April 26, 2019, Mr. Bram sent a letter to Privet indicating that upon thorough review and careful consideration consistent with its fiduciary duties, including consulting with its independent financial and legal advisors, the Board concluded that the April 23 Proposal undervalued the financial performance of the Company and unanimously rejected that proposal. The letter also indicated the Board’s willingness to consider any and all good faith offers to acquire the Company.
On May 17, 2019, Mr. Bram had a telephonic conversation with Mr. Levenson to discuss a status update on Privet’s position. During the call, Mr. Bram suggested two potential paths going forward: 1) Privet could negotiate with the Executive Committee of the Board to determine an acceptable price, or 2) Privet could tender for the outstanding shares at $20 per share and let the shareholders decide on the offer.
On May 23, 2019, Privet sent a letter to the Board reiterating its $20.00 per share acquisition proposal (the “May 23 Proposal”). The proposal again did not identify a source of financing for the proposed transaction. Also on May 23, 2019, Privet filed Amendment No. 6 to its Schedule 13D with the SEC disclosing the May 23 Proposal.
On May 29, 2019, Mr. Bram responded to the May 23 Proposal by letter to Privet, reiterating the Board’s rejection of Privet’s $20.00 offer. Mr. Bram again noted the Board’s willingness to negotiate an acceptable price with Privet. Mr. Bram also noted that the Company would be open to respond to certain of Privet’s information requests.
On June 6, 2019, Privet requested from Mr. Bram a list of diligence items to evaluate in reconsidering its offer.
On June 7, 2019, Mr. Bram responded to Privet’s diligence request list by stating that the Company would be prepared to respond to certain items on the list over the following weeks.
On June 19, 2019, the Company issued a press release to announce updated full year 2019 guidance and also announced the Executive Committee of its Board of Directors, acting on behalf of the Board, had been in contact with representatives from Privet since Mr. Bram’s response to the May 23 Proposal on May 29, 2019
On June 20, 2019, the Company provided Privet and its advisors with access to an electronic data room containing a number of the diligence items requested by Privet in the diligence request list.
On July 1, 2019, the Company held a phone meeting with representatives of Privet, including Mr. Levenson, Mr. Rosenzweig and Christos Asimakopoulos, a vice president at Privet Fund Management LLC, as well as Privet’s financial advisors, to discuss the Company’s financial information.
During July 2019, representatives of the Company provided Privet and its financial advisor with select non-public financials and other information requested by Privet.
On August 2, 2019, Mr. Bram sent an email to Messrs. Levenson and Rosenzweig, stating that the Board would consider an updated offer from Privet to acquire the Company, if such offer would be made by the close of business on August 19, 2019. The email also asked for information about Privet’s contacts for financing sources that would be used to complete the transaction.
On August 19, 2019, Privet sent a letter to the Board decreasing its previous offer by 7.5% from $20.00 to $18.50 per share (the “August 19 Proposal”), indicating that it had decreased its offer based on the Company’s recent performance. The August 19 Proposal again did not include a financing source and instead attached a letter from a representative of Robert Baird & Co. Incorporated, stating such representative’s opinion that Privet would be able to secure debt financing of approximately 3.5-4.0 times of the Company’s LTM Adjusted EBITDA. In the Company’s view, the underlying calculation did not reflect all of the Company’s outstanding debt.
On August 20, 2019, Privet filed Amendment No. 7 to its Schedule 13D with the SEC disclosing the August 19 Proposal as well as beneficial ownership of approximately 13.6% of the Company’s then outstanding Common Stock.
On August 23, 2019, the Company responded to the August 19 Proposal by letter to Privet, stating that after careful consideration and review, the Board had decided to reject that proposal. The letter also stated the Board’s belief that notwithstanding the uneven financial results generated by the Company’s cyclical businesses, it would create greater value for shareholders to strategically grow the Company’s existing segments and pursue accretive acquisitions and expansion into complementary product lines. Pursuant to the terms of the NDA, the Company also announced the termination thereof.
On September 5, 2019, Messrs. Bram, Wright and Guy had a phone conversation with Messrs. Levenson and Rosenzweig regarding the Company’s ongoing strategy and value creation plan.
Over the course of September 2019, representatives of the Company and Privet had discussions regarding entering into a new non-disclosure agreement regarding certain of the Company’s activities in connection with prospective investments. Despite the Company’s good faith negotiations with Privet, the parties were unable to reach agreement and no non-disclosure agreement was entered into at the time.
On October 4, 2019, Mr. Bram sent an email to Messrs. Levenson and Rosenzweig containing materials relating to the Company’s current analysis and discussions regarding a contemplated future merger with Universal Stainless and Alloy Products, Inc. (“USAP”), a portfolio holding of Privet.
On October 7, 2019, representatives of the Company and Privet had a telephonic meeting to discuss the potential USAP transaction.
Throughout October 2019, Mr. Bram had multiple conversations with Messrs. Levenson and Rosenzweig regarding the potential USAP transaction. Mr. Levenson expressed his support for the USAP transaction and indicated his plan to take actions to gauge interest among certain institutional investors.
On October 14, 2019, the Company delivered a public letter to the Chief Executive Officer of USAP, in which Mr. Bram proposed an all-stock combination between USAP and the Company.
On November 6, 2019, the Company received a letter from the Chief Executive Officer of USAP, indicating that the Board of Directors of USAP unanimously concluded that abusiness combination with the Company was not in the best interests ofUSAPand its shareholders.
On November 15, 2019, representatives of the Company, including Mr. Bram and Mr. Loughran, and representatives of Privet, including Mr. Levenson and Mr. Rosenzweig, had a phone conversation to discuss the Company’s operating results for the third quarter of 2019. During the call, Mr. Levenson expressed his desire to designate two individuals to the Board.
On November 21, 2019, Mr. Bram sent an email to Messrs. Levenson and Rosenzweig stating that the Board would be agreeable to adding one person, designated by Privet, to the 2020 slate of directors to be voted on by shareholders at the Annual Meeting (the “November 21 Proposal”). As a condition to this proposal, the Company asked Privet to execute a standstill agreement for a three-year period, during which time Privet would vote its shares in accordance the Board’s recommendations and would be restricted from increasing its ownership share in the Company above 15% of the Company’s outstanding shares of Common Stock. The proposal contained additional customary terms regarding Privet’s actions during the term of the proposed agreement.
On December 3, 2019, Mr. Bram had a phone conversation with Mr. Levenson during which Mr. Levenson offered to purchase the Company’s Chemicals segment in exchange for the Company stock owned by Privet and cash. Mr. Levenson did not respond to the Company’s November 21 Proposal during the conversation.
On December 6, 2019, Mr. Bram sent an email to Messrs. Levenson and Rosenzweig stating that the Board had discussed Privet’s verbal proposal to explore a purchase of the Chemicals segment. Mr. Bram noted that upon careful consideration, the Board unanimously concluded that it was not the right time to consider a sale of the Chemicals segment given the business cycle and that the sale of the Chemicals segment would have a significant tax consequence for the Company’s shareholders.
On January 23, 2020, UPG Enterprises LLC and certain of its affiliates (collectively, “UPG Enterprises”) began purchasing shares of Common Stock.
On March 3, 2020, Privet entered into a group agreement (the “Privet-UPG Agreement”) with UPG for the purposes of engaging in discussions with the Company regarding its suggestions for ways to enhance shareholder value.
On March 5, 2020, Privet filed Amendment No. 8 to its Schedule 13D with the SEC disclosing beneficial ownership of approximately 17.0% of the Company’s then outstanding Common Stock (and an aggregate of approximately 25.0% of the Company’s then outstanding Common Stock when including shares held by UPG), and disclosing that it had entered into the Privet-UPG Agreement.
Also on March 5, 2020, UPG filed a Schedule 13D with the SEC disclosing beneficial ownership of approximately 8.0% of the Company’s then outstanding Common Stock (and an aggregate of approximately 25.0% of the Company’s then outstanding Common Stock when including shares held by Privet), and disclosing that it had entered into the Privet-UPG Agreement.
On March 16, 2020, Privet, UPG and their nominees (the “Dissident Group Nominees”) entered into a Joint Filing and Solicitation Agreement (the “Joint Filing and Solicitation Agreement”), which superseded the Privet-UPG Agreement, pursuant to which the parties agreed, among other things, to (i) form a group with respect to the securities of the Company, (ii) solicit proxies for the election of the Dissident Group Nominees at the Annual Meeting and (iii) split expenses incurred in connection with the group’s activities between Privet and UPG based on each of Privet’s and UPG’s pro rata ownership percentage of shares of Common Stock, as adjusted each month.
Later on March 16, 2020, Privet Fund delivered a letter (the “Privet Nomination Letter”) to the Company, nominating the Dissident Group Nominees for election to the Board at the Annual Meeting.
On March 18, 2020, Privet and UPG issued a press release announcing the nomination of the Privet Nominees for election to the Board at the Annual Meeting. Also on March 18, 2020, Privet filed Amendment No. 9 to its Schedule 13D with the SEC disclosing the delivery of the Privet Nomination Letter and the issuance of the press release. On the same date, UPG filed Amendment No. 1 to its Schedule 13D with the SEC disclosing the same.
On March 20, 2020, the Dissident Group filed a preliminary proxy statement with the SEC.
On March 23, 2020, Mr. Bram and Mr. Rosenzweig had a phone call in which they agreed that a protracted proxy contest would not be in either party’s best interest. Mr. Rosenzweig stated that settlement would have to include re-constitution of the Board and replacement of the Chief Executive Officer.
On March 29, 2020, the Company’s counsel delivered an updated settlement proposal (the “March 29 Proposal”) by email to the Dissident Group’s counsel, offering the Dissident Group the right to designate two out of eight directors on the Board, with two incumbent directors resigning, and agreeing to form a strategic review committee for the purpose of reviewing the Company’s strategy and capital allocation. In exchange, the Dissident Group would agree to vote its shares in accordance with the Board’s recommendations and agree to a customary standstill until the nomination window opens for the Company’s 2022 annual meeting of shareholders.
On April 1, 2020, the Company filed a preliminary proxy statement with the SEC.
Also on April 1, 2020, the Company announced the adoption of a limited duration shareholder rights plan, under which rights to acquire shares of Common Stock would be issued to shareholders of record on April 10, 2020. The Company adopted the rights plan in light of the recent extreme market volatility caused by the COVID-19 pandemic and other macroeconomic conditions as well as the fact that the Company’s share price did not reflect intrinsic long-term value. The rights plan will expire on March 31, 2021, or later if the Board approves an extension prior to expiration and the extension is submitted to shareholders for ratification at the Company’s 2021 annual meeting of shareholders.
On April 2, 2020, the Company issued a press release announcing the first quarter shipments and bookings for the Metals Segment (excluding Palmer of Texas) and first quarter shipments for the Specialty Chemicals Segment, each compared with last year’s levels. The press release also announced the suspension of manufacturing operations at the Company’s Palmer of Texas business, citing the unprecedented impact of the COVID-19 pandemic on the oil and gas industry.
Later on that day, the Company issued another press release announcing its commitment to engage a leading independent financial advisor to conduct a comprehensive review of strategic alternatives once there is stabilization from the current market volatility and macroeconomic disruption related to the global health pandemic caused by COVID-19. The same press release also announced the recent making of the March 29 Proposal to the Dissident Group.
Also on April 2, 2020, the Dissident Group filed an amendment to its preliminary proxy statement with the SEC.
On April 3, 2020, the Dissident Group issued a press release commenting on the Company’s April 2 press release relating to the strategic alternatives review and the March 29 Proposal.
On April 6, 2020, the Company issued a press release advising shareholders to take no action in response to the Dissident Group and any proxy material it may provide.
Later on April 6, 2020, the Company filed an amendment to its preliminary proxy statement with the SEC.
OUR BOARD STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD OR VOTING INSTRUCTION FORM THAT YOU MAY RECEIVE FROM THE DISSIDENT GROUP, EVEN TO VOTE “WITHHOLD” WITH RESPECT TO THE DISSIDENT GROUP’S NOMINEES, AS DOING SO WILL CANCEL ANY PROXY YOU MAY HAVE PREVIOUSLY SUBMITTED TO HAVE YOUR SHARES VOTED FOR THE BOARD’S PROPOSED SLATE ON ABLUE PROXY CARD SINCE ONLY YOUR LATEST PROXY CARD OR VOTING INSTRUCTION FORM WILL BE COUNTED.
ANNUAL REPORT ON FORM 10-K
OF THE COMPANY’S COMMON STOCK
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Total | ||||||
Privet Fund LP 79 West Paces Ferry Road, Suite 200B Atlanta, GA 30305 | 1,535,507 | (1) | 16.95 | % | ||||
Royce & Associates, LP 745 Fifth Avenue New York, NY 10151 | 1,009,153 | (2),(3) | 11.14 | % | ||||
UPG Enterprises LLC 1400 16th Street, #250 Oak Brook, IL 60523 | 723,401 | (2) | 7.99 | % | ||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 572,937 | (2),(4) | 6.33 | % | ||||
Dimensional Fund Advisors, LP Building One 6300 Bee Cave Road Austin, TX 78746 | 480,273 | (2),(5) | 5.30 | % |
6 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the ownership of the Company’s Common Stock as of March 17, 202022, 2021 by each current director and nominee for director, and each current executive officer of the Company for whom compensation information is disclosed under the heading “ExecutiveExecutive Compensation”, and for the directors, nominees for director and executive officers of the Company as a group. The percentages shown were calculated based on 9,058,039 issued and outstanding shares of Common Stock. Except as otherwise noted, the address of each person named below is the address of the Company.
Name of Beneficial Owner | Common Stock Beneficially Owned | Percent of Total | ||||||
Craig C. Bram | 308,747 | (1) | 3.41 | % | ||||
Murray H. Wright | 137,008 | (2) | 1.51 | % | ||||
Dennis M. Loughran | 63,428 | * | ||||||
Henry L. Guy | 49,251 | (3) | * | |||||
J. Greg Gibson | 40,635 | (4) | * | |||||
James W. Terry, Jr. | 35,113 | (5) | * | |||||
Susan S. Gayner | 30,630 | * | ||||||
Anthony A. Callander | 20,520 | * | ||||||
Amy J. Michtich | 20,058 | * | ||||||
Jeffrey Kaczka | 18,081 | (6) | * | |||||
All Directors, Nominees and Executive Officers as a group (14 persons) | 777,971 | (7) | 8.59 | % |
Delinquent Section 16(a) Reports
Section 16(a) under the Exchange Act requires the Company’s officers and Directors and holders of more than ten percent of the Company’s outstanding shares of Common Stock to file reports of ownership and changes in ownership with the SEC and to furnish the Company with copies of these reports. Based solely upon a review of such reports, or on written representations from certain reporting persons, the Company believes that during 2019 all required events of its directors, officers and 10% shareholders required to be so reported, were timely filed.
Name of Beneficial Owner | Common Stock Beneficially Owned | Percent of Total | |||||||||
Henry L. Guy | 56,500 | (1) | * | ||||||||
J. Greg Gibson | 49,122 | (2) | * | ||||||||
John P. Schauerman | 42,978 | * | |||||||||
Susan S. Gayner | 34,382 | * | |||||||||
Jeffrey Kaczka | 26,084 | (3) | * | ||||||||
Amy J. Michtich | 23,810 | * | |||||||||
Sally M. Cunningham | 19,623 | (4) | * | ||||||||
Benjamin Rosenzweig | 12,757 | * | |||||||||
Christopher G. Hutter | 728,569 | (5) | 7.92% | ||||||||
All Directors, Nominees and Executive Officers as a group (9 persons) | 993,825 | (6) | 10.80% | ||||||||
*Less than 1% | |||||||||||
(1) Includes 548 shares held in custodial accounts for minor children; and 5,400 shares held in a revocable trust. | |||||||||||
(2) Includes 7,066 shares allocated under the Company’s 401(k)/ESOP Plan; and 6,092 shares which are subject to currently exercisable options. | |||||||||||
(3) Includes 16,974 shares held in an IRA | |||||||||||
(4) Includes 5,736 shares held in an IRA; and 4,000 shares which are subject to currently exercisable options | |||||||||||
(5) Includes 723,401 shares held by UPG Enterprises, LLC, of which Mr. Hutter has shared voting power and shared dispositive power. | |||||||||||
(6) Includes 8,915 shares allocated under the Company’s 401(k)/ESOP Plan; and 15,398 shares which are subject to currently exercisable options. The beneficial owners have a right to acquire such shares within 60 days of March 22, 2021. |
ELECTION OF DIRECTORS
Name, Age, Principal Occupation, Other Directorships and Other Information | Director
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Henry L. Guy, age 51 Mr. Guy
| 2011 | ||||
Christopher G. Hutter, age 41 Mr. | 2020 | ||||
Benjamin Rosenzweig, age 35 Mr. Rosenzweig currently serves as a Partner at Privet Fund Management LLC, an investment firm focused on event-driven, value-oriented investments in small capitalization companies. Mr. Rosenzweig currently serves as a director of each of Potbelly Corporation (NASDAQ: PBPB), a restaurant chain (since April 2018), PFSweb, Inc. (NASDAQ: PFSW), a global commerce service provider (since May 2013), and Hardinge Inc. (formerly NASDAQ: HDNG), a global designer, manufacturer and distributor of machine tools (since October 2015). Mr. Rosenzweig graduated magna cum laude from Emory University with a Bachelor of Business Administration degree in Finance and a second major in Economics. | 2020 | ||||
John P. Schauerman, age 64 Mr. Schauerman has been |
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Rules.
Meeting.
Name | Audit Committee | Compensation & Long-Term Incentive Committee | Corporate Governance Committee | |||
Anthony A. Callander | X* | X | ||||
Susan S. Gayner | X | X* | ||||
Henry L. Guy | X | X* | ||||
Jeffrey Kaczka | X | X | ||||
Amy J. Michtich | X | X | ||||
James W. Terry, Jr. | X | X | ||||
Total Meetings in 2019 | 8 | 5 | 3 | |||
* Committee Chair |
Name | Audit Committee | Compensation & Long-Term Incentive Committee | Corporate Governance Committee(1) | ||||||||
Susan S. Gayner | X | X* | |||||||||
Henry L. Guy | X | ||||||||||
Christopher G. Hutter | X | ||||||||||
Jeffrey Kaczka | X* | X | |||||||||
Amy J. Michtich | X* | X | |||||||||
Benjamin Rosenzweig | X | ||||||||||
John P. Schauerman | X | ||||||||||
Total | 3 | 3 | 3 | ||||||||
* Committee Chair | |||||||||||
(1) Mr. Hutter was appointed as Interim President and CEO on November 9, 2020. At that time, Mr. Hutter's service to the Governance Committee ended and Mr. Kaczka was appointed to the Governance Committee. |
The Audit Committeeand acts pursuant to a written charter adopted by the Board of Directors, which is available on the Company’s website at www.synalloy.com. Each member of the Audit Committee is independent as defined in the NasdaqNASDAQ Rules and meets the independence requirements of Rule 10A-3 under the Securities Exchange Act.Act of 1934. The Audit Committee (i) selects and appoints the independent registered public accounting firm, (ii)auditor, pre-approves the fees onpaid to the independent registered public accounting firm, (iii)auditor, reviews and discusses with management and the independent auditorsauditor prior to filing with the SEC the audited financial statements included in the Company’s Annual Report on Form 10-K and the unaudited financial statements included in the Form 10-Q for each quarter, (iv) meets independently with the independent auditors, (v)auditor, reviews the Audit Committee’s charter, on an annual basis, and (vi) has oversight of the Company’s Code of Conduct and Internal Audit.
25
2020.
Compensation2020. Mr. Hutter’s service on this Committee Interlocks and Insider Participation
Susan S. Gayner, Henry L. Guy, Amy J. Michtich and James W. Terry, Jr. servedended upon his appointment as Interim CEO on November 9, 2020. At that time, Mr. Kaczka was appointed to the Compensation & Long-Term Incentive Committee during 2019. All members of the Compensation & Long-Term Incentive Committee are independent directors and none of them is a present or past employee or officer of the Company or its subsidiaries.
Governance Committee.
26
The Corporate Governance Committee will consider as potential nominees persons informally recommended by shareholders if the following requirements are met. If a shareholder wishes to informally recommend a director candidate to the Corporate Governance Committee for consideration as a Board’sBoard of Directors’ nominee, the shareholder must submit in writing to the Corporate Governance Committee the recommended candidate’s name, a brief resume setting forth the recommended candidate’s business and educational background and qualifications for service, the number of the Company’s shares beneficially owned by the person, and a notarized consent signed by the recommended candidate stating the recommended candidate’s willingness to be nominated and to serve. Additionally, the recommending shareholder must provide his or her name and address and the number of the Company’s shares beneficially owned by such person. This information must be delivered to the Corporate Secretary of the Company at the Company’s corporate headquarters at 4510 Cox Road, Suite 201, Richmond, VA 23060 for transmission to the Corporate Governance Committee, and must be received not less than 90 days nor more than 120 days prior to an annual meetingthe Annual Meeting of shareholders. The committee may request further information if it determines a potential candidate may be an appropriate nominee. Director candidates recommended by shareholders that comply with these requirements will receive the same consideration from the committee that other candidates receive.
DIRECTOR COMPENSATION
There will be no changes to non-employee director annual retainers for the 2020-2021 term year. Non-employee directors will be paid a total annual retainer of $102,000 in the form of cash and restricted stock. Directors must elect a minimum of $30,000 of the retainer fee to be paid in restricted stock and may elect up to 100% of the retainer to be paid in restricted stock.
The number of restricted shares issued was determined by the average of the high and low Common Stock price on the day prior to the 2020 Annual Meeting of Shareholders or, if later, the date prior to the director’s appointment to the Board. Non-employee directors elected by the shareholders for the 2020-2021 term year received an aggregate of 50,652
shares of restricted stock in lieu of such cash retainer amount as follows: Susan S. Gayner – 3,752; Henry L. Guy – 6,253; Christopher G. Hutter – 5,168; Jeffery Kaczka – 5,003; Amy J. Michtich – 3,752; Benjamin Rosenzweig – 12,757; and John P. Schauerman – 6,378. Mr. Hutter’s Board compensation was for his Board service for the period prior to November 9, 2020, when he was appointed Interim CEO.Name | Fees Paid in Cash (1) | Stock Awards (2) | Total | Non Retainer Compensation(3) | |||||||||||||
(a) | (b) | (c) | (d) | ||||||||||||||
Anthony A. Callander | $36,000 | $11,178 | $47,178 | $30,000 | |||||||||||||
Susan S. Gayner | $36,000 | $66,000 | $102,000 | ||||||||||||||
Henry L. Guy | $62,000 | $40,000 | $102,000 | ||||||||||||||
Christopher G. Hutter(4) | $41,318 | $41,318 | |||||||||||||||
Jeffrey Kaczka | $62,000 | $40,000 | $102,000 | ||||||||||||||
Amy J. Michtich | $72,000 | $30,000 | $102,000 | ||||||||||||||
Benjamin Rosenzweig | $51,000 | $51,000 | |||||||||||||||
John P. Schauerman | $25,500 | $25,500 | $51,000 | ||||||||||||||
James W. Terry, Jr. | $35,000 | $11,923 | $46,923 | $30,000 | |||||||||||||
Murray H. Wright | $36,000 | $11,178 | $47,178 | $30,000 | |||||||||||||
(1) Represents fees paid in cash during 2020. | |||||||||||||||||
(2) Represents the grant date fair value, computed in accordance with FASB ASC Topic 718 as disclosed in the Stock Awards footnote to the Summary Compensation Table, of restricted shares granted to the directors on July 6, 2020 for 2020 service. For 2020, the directors received restricted shares in lieu of cash retainer as follows: Susan S. Gayner 3,752; Henry L. Guy - 6,253; Christopher G. Hutter - 5,168; Jeffrey Kaczka - 5,003; Amy J. Michtich - 3,752; Benjamin Rosenzweig - 12,757; and John P. Schauerman - 6,378. No director has been granted any stock options by the Company. | |||||||||||||||||
(3) Upon retirement from the Board of Directors, Mr. Callander, Mr. Terry and Mr. Wright were each awarded $30,000 in non-retainer compensation related to their efforts during the 2020 Proxy Contest. | |||||||||||||||||
(4) Mr. Hutter received Director Compensation from July 6, 2020 through November 9, 2020. On November 10, 2020 Mr Hutter assumed the role of Company Interim President & CEO and no longer received non-employee director compensation. |
Name | Fees Paid in Cash(1) | Stock Awards(2) | Total | |||||||||
(a) | (b) | (c) | (h) | |||||||||
Anthony A. Callander | $ | 72,000 | $ | 30,000 | $ | 102,000 | ||||||
Susan S. Gayner | — | $ | 102,000 | $ | 102,000 | |||||||
Henry L. Guy | $ | 72,000 | $ | 30,000 | $ | 102,000 | ||||||
Jeffrey Kaczka(3) | $ | 26,000 | $ | 50,000 | $ | 76,000 | ||||||
Amy J. Michtich | $ | 72,000 | $ | 30,000 | $ | 102,000 | ||||||
James W. Terry, Jr. | $ | 70,000 | $ | 32,000 | $ | 102,000 | ||||||
Murray H. Wright | $ | 72,000 | $ | 30,000 | $ | 102,000 |
Board of Directors. Directors and executive officers have five years to achieve the targeted ownership levels. Stock ownership levels for NEOs and directors are based on dollars invested or cost basis, not market value. All named executive officers (NEOs) are currently in compliance.
Name, Age, Principal Position and Five-Year Business Experience | ||
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47 |
ThisLong-Term Incentive Committee Report
Executive Summary
range of 90%. At the 2020, Annual Meeting, the program was approved by a 58% vote. The Compensation Committee considered this decline in shareholder endorsement of our executive compensation program when making future compensation decisions including the compensation arrangement with Mr. Hutter, who was named Interim President & CEO on November 9, 2020. Shareholders will continue to have an opportunity annually to cast an advisory vote to approve our executive compensation program.
The Company had
In 2019, the Company reported net sales of $305.2 million, up $24.3 million from 2018 but less than our original 2019 forecast of $340 million. Adjusted EBITDA was $13.4$9.2 million compared to $13.5 million in 2019, which is considerably lower than2019. Adjusted EBITDA as a percentage of net sales was 3.6% compared to 4.4% in the $34.1 million reported in 2018 and our original forecast of $34.4 million for 2019.
prior year.
macro-economic conditions resulting from COVID-19.
Synalloy Chemicals profits decreased slightly
Summary of 2019 Key Compensation Decisions
2019 Incentive Plan
At our 2019 Annual Meeting of Shareholders, 89.3% ofdriven by operational efficiencies, cost containment measures and elevated margins related to hand sanitizer production during the shares voted at the meeting were in favor of our 2018 NEO compensation program. As a result of this strong level of support, we committed to using the same Incentive Plan in 2019 (the “2019 Incentive Plan”) that was utilized in 2018 noting the following:
31
Compensation Philosophy, Objectives and Process
The Board and management
The Company’s goal is to attract and retain highly motivated and talented executives and to ensureprovide a strong link between executive pay, Company performance, and shareholder value.
Compensation Objective | How Objective is Achieved | |||||
Pay for performance | The majority of the annual short-term cash and long-term equity components of the compensation program have Performance Metric target ranges for each business segment and the Company as a whole. Executives are rewarded with higher incentive pay when above target ranges are met, while lower incentives are paid when target ranges are not achieved. | |||||
Attract, develop, and retain an experienced management team, develop, retain and motivate an experienced and highly qualified executive team | ||||||
The overall compensation program is designed to be competitive with positions at peer group companies to attract highly qualified candidates.Restricted stock awards have multi-year time vesting elements with forfeiture of unvested grants if an executive leaves the Company prior to vesting for any reason other than retirement, disability or death. | ||||||
We place a substantial portion at risk through performance goals that, if achieved, are expected to enhance shareholder value. |
The Committee looksis responsible for opportunities to improve upon thereviewing and approving NEO compensation and our overall executive compensation program andprogram. To assist the Committee in 2016this process, the CompanyCommittee has retained PM as the Committee’s outside independent compensation consulting firm. PM isPearl Meyer, a nationally recognized executive compensation consultant, andto advise the Committee has retained iton executive compensation and director compensation matters. The Committee’s consultant attends meetings as requested by the Committee, either in person or virtually, to provide information concerningdiscuss NEO compensation, paidthe appropriate relationship between pay and performance, and emerging trends.
In reviewing the base salary of our NEOs in 2019, the Committee worked with PM to review aggregatedNEOs.
In 2019, the Committee identified 17 companies for its peer group, all manufacturing businesses, with many in either the Basic Materials- Metals/Mining or Materials-Specialty Chemicals industry classification. Others are manufacturers of machinery or component parts. The peer group is focused on micro-cap companies with similar revenues and market capitalization to the Company’s performance. Additionally, the Committee compares the Company’s one-year and three-year average annual EBITDA to that of the peer group.
For 2019, our peer group consists of the following companies: American Vanguard, Ampco-Pittsburgh, CSW Industrials, Core Molding Company, Eastern Company, Houston Wire and Cable, Hawkins, Haynes International, Hurco, Insteel, KPMG Chemical, Landec Corp., Lawson Products Inc., L.B. Foster Company, Northwest Pipe Co., Perma Pipe, UFP Technologies, and Universal Stainless & Alloy Products.
The peer group information isalso used by the CompanyCommittee to benchmark the compensation for our CEO and CFO. The Committee sets base salary for our CEO near the median base salary for the peer group. The Committee sets the base salaries of the other NEOs to be market competitive as compared to the salaries of executives at similarly situated companies. However, the Committee believes that targeted total cash compensation, including short-term incentive pay, should provide the CEO and all other NEOs with the potential to earn in excess of the median total cash compensation of the peer group.
The Committee believes this methodology is appropriate because it directly aligns the CEO and other NEOs’NEOs' pay with the Company’sCompany's performance by putting more emphasis on at-risk components of cash compensation.
American Vanguard Corporation | Insteel Industries, Inc. | ||||
Ampco-Pittsburgh Corporation | Landec Corporation | ||||
CSW Industrials, Inc. | Lawson Products, Inc. | ||||
Core Molding Technologies, Inc. | L.B. Foster Company | ||||
The Eastern Company | Northwest Pipe Company | ||||
Hawkins, Inc. | Perma-Pipe International Holdings, Inc. | ||||
Haynes International, Inc. | UFP Technologies, Inc. | ||||
Houston Wire & Cable Co. | Universal Stainless & Alloy Products, Inc. | ||||
Hurco Companies, Inc. |
2019 Performance and
Elements
Base Salary
Base salary is a toolretain talent. We seek to provide our executives with a reasonable level of fixed income relative to the responsibility of the positions they hold. Base salaries are reviewed annually by the Compensation Committee and the CEO, and adjustments are considered at that time.
For
Base salary for each NEO asfiscal year.
NEO | Title | Base Salary at 12/31/2019 | Base Salary at 12/31/2018 | % Increase | ||||||||||
Craig C. Bram | President & CEO | $ | 495,000 | $ | 495,000 | — | % | |||||||
Dennis M. Loughran | SVP & CFO | $ | 322,500 | $ | 322,500 | — | % | |||||||
J. Greg Gibson | President, Synalloy Chemicals | $ | 272,000 | $ | 272,000 | — | % |
2019 Incentive Plan
With assistance from our compensation consultant, the Committee established the 2016 Incentive Plan and essentially carried the same plan forward each year including the 2019 Incentive Plan. As with the prior incentive plans, the 2019 Incentive Plan consisted of two components: short-term cash incentive compensation and long-term equity incentive compensation in the form of restricted stock awardswas tied to be issued under the 2015 Stock Award Plan (the “2015 Stock Plan”), which was approved by shareholders at the 2015 Annual Meeting.
Also, the Committee approved the calculationachievement of the same performance metric that has been utilized since the 2016 Incentive Plan and is used to calculate certain components of both the short-term cash and long-term equity incentives. Consistent with prior years incentive plans, the 2019 Incentive Plan defined the “Performance Metric” asTargeted Adjusted EBITDA before incentives and excluding(excluding inventory gains and losses, metal price change gains and losses, inventory cost adjustments, and aged inventory adjustments,inventory). This performance metric was originally established with Pearl Meyer’s assistance in 2016 and manufacturing variances.
Short-Term Cash Incentive
has been consistently used since then. A Threshold Adjusted EBITDA was set at 75% of the target, and a Maximum Adjusted EBIDTA was set at 125% of the target.
While the Performance Metric carried the heaviest weighting (70%) for the short-term cash component, the Committee used qualitative measures related to strategic goals to increase executive focus beyond the annual Performance Metric to include those measures management and the Board believe will lead to sustained results on a longer-term basis. plan.
Total Short-Term Cash Incentive (as a percentage of base salary) | ||||||||||||
Threshold | Target | Maximum | ||||||||||
President & CEO | 50.0 | % | 85.0 | % | 120.0 | % | ||||||
SVP & CFO | 45.0 | % | 65.0 | % | 85.0 | % | ||||||
President, Synalloy Chemicals | 40.0 | % | 57.0 | % | 75.0 | % |
Total Short-Term Cash Incentive (as a percentage of base salary) | |||||||||||
Threshold | Target | Maximum | |||||||||
President & CEO | 50.0% | 85.0% | 120.0% | ||||||||
SVP & CFO | 45.0% | 65.0% | 85.0% | ||||||||
President, Synalloy Chemicals | 40.0% | 57.0% | 75.0% |
2019 Performance Metric Component | ||||||||||||||||
(dollars in millions) | Threshold | Target | Maximum | 2019 Actual | ||||||||||||
President & CEO | $ | 25.50 | $ | 34.00 | $ | 42.50 | $ | 21.41 | ||||||||
SVP & CFO | $ | 25.50 | $ | 34.00 | $ | 42.50 | $ | 21.41 | ||||||||
President, Synalloy Chemicals(1) | $ | 4.35 | $ | 5.80 | $ | 7.25 | $ | 5.05 |
For 2019,2020, the Performance Metric achieved was below the Threshold level for the Company. The Performance Metric achievement for the Chemicals Segment in 2019Company and was between the Threshold and Target performance level.
Forlevel for the Chemicals segment. The table below details the 2020 Targeted Adjusted EBIDTA threshold, target, maximum, and the final results. Messrs. Bram and Loughran did not receive a payout under the 2020 short-term cash incentive compensation component ofplan because they were not employed for the 2019 Incentive Plan, theentire calendar year.
2020 Performance Metric Component | ||||||||||||||
(dollars in millions) | Threshold | Target | Maximum | 2020 Actual | ||||||||||
SVP & CFO | $21.49 | $28.66 | $35.82 | $15.18 | ||||||||||
President, Synalloy Chemicals (1) | $5.52 | $7.37 | $9.21 | $6.80 | ||||||||||
(1) 2020 Performance Metric component is for the Chemicals Segment. |
2020 Strategic Goals Component | ||||||||||||||||||||||
Threshold | Target | Maximum | ||||||||||||||||||||
3 out of 5 | 4 out of 5 | 5 out of 5 | 4.5 out of 5 | |||||||||||||||||||
President, Synalloy Chemicals (2) | 3 out of 5 | 4 out of 5 | 5 out of 5 | |||||||||||||||||||
The | ||
(2) The |
For 2019, all NEOs met or
the short-term cash incentive plan. Total short-term cash incentives were earned by Ms. Cunningham and Mr. Gibson for fiscal year 20192020 were as follows:
2019 Performance Metric Component | 2019 Strategic Goals Component | Total 2019 Short-Term Cash Incentive Payments | ||||||||||||||||||||||||
Name | Position | $ | % of Base Salary | $ | % of Base Salary | $ | % of Base Salary | |||||||||||||||||||
Craig C. Bram | President & CEO | — | — | % | $ | 176,700 | 35.7 | % | $ | 176,700 | 35.7 | % | ||||||||||||||
Dennis M. Loughran | SVP & CFO | — | — | % | $ | 81,238 | 25.2 | % | $ | 81,238 | 25.2 | % | ||||||||||||||
J. Greg Gibson | President, Synalloy Chemicals | $ | 77,580 | 28.5 | % | $ | 46,512 | 17.1 | % | $ | 124,092 | 45.6 | % |
2019
2020 Performance Metric Component | 2020 Strategic Goals Component | Total 2020 Short-Term Cash Incentive Payments | |||||||||||||||||||||
Name | Position | $ | % of Base Salary | $ | % of Base Salary | $ | % of Base Salary | ||||||||||||||||
Sally M. Cunningham | SVP & CFO | $0 | —% | $78,000 | 24.4% | $78,000 | 24.4% | ||||||||||||||||
J. Greg Gibson | President, Synalloy Chemicals | $100,203 | 35.8% | $0 | —% | $100,203 | 35.8% |
Plan
The long-term stock-based incentives are delivered in the formevent of death or disability. The restricted stock awards. is issued pursuant to the terms of the Company’s 2015 Stock Awards Plan.
For the long-term equity incentive component of the 2019 Incentive Plan, Mr. Bram was awarded restricted stock with a value at the time of grant equal to 42.5% of his base salary in the form of a time-vesting award, Mr. Loughran was awarded restricted stock with a value at the time of grant equal to 32.5% of his base salary in the form of time-vesting awards, and Mr. Gibson was awarded restricted stock with a value at the time of grant equal to 28.5% of his base salary in the form of an time-vesting award. These time-vesting stock awards vest 33% per year over a three-year period.
The NEOs are also eligible for performance-vesting restricted stock awards which, at maximum pay-out levels, would equal 63.75% of base salary for Mr. Bram, 48.75% of base salary for Mr. Loughran and 42.75% of base salary for Mr. Gibson. This performance-vesting restricted stock award is based on achievement of a three-year cumulative Adjusted EBITDA Performance Metric target and will be earned, if at all, for performance during the three-year period ending December 31, 2021.
2022.
Name | Position | 2019 Time-Vesting Stock Award(1) | 2019 Performance-Vesting Stock Award(2) | Total 2019 Long-Term Equity Awards | ||||||||||
Craig C. Bram | President & CEO | $ | 210,375 | $ | 210,375 | $ | 420,750 | |||||||
Dennis M. Loughran | SVP & CFO | $ | 104,813 | $ | 104,813 | $ | 209,625 | |||||||
J. Greg Gibson | President, Synalloy Chemicals | $ | 77,520 | $ | 77,520 | $ | 155,040 |
Name | Position | 2020 Time-Vesting Stock Award (1) | 2020 Performance-Vesting Stock Award (2) | Total 2020 Long-Term Equity Awards | ||||||||||
Craig C. Bram | President & CEO | $210,375 | $210,375 | $420,750 | ||||||||||
Dennis M. Loughran | SVP & CFO | $108,144 | $108,144 | $216,288 | ||||||||||
Sally M. Cunningham | VP, Corporate Administration | $71,250 | $71,250 | $142,500 | ||||||||||
J. Greg Gibson | President, Synalloy Chemicals | $79,800 | $79,800 | $159,600 | ||||||||||
(1) Time-vesting restricted stock award vests at 33% per year over a three-year period. | ||||||||||||||
(2) Performance-vesting restricted stock award is based on achievement of a three-year cumulative Performance Metric target and will be earned, if at all, for performance during the three-year period ending December 31, 2022. |
2017 Performance-Vesting Stock Award (cumulative three-year Performance Metric ending December 31, 2020) | ||||||||||||||||
(in millions) | Threshold | Target | Maximum | Actual | ||||||||||||
President & CEO | $ | 39.11 | $ | 57.55 | $ | 75.95 | $ | 71.88 | ||||||||
SVP & CFO | $ | 39.11 | $ | 57.55 | $ | 75.95 | $ | 71.88 | ||||||||
President, Synalloy Chemicals(1) | $ | 17.39 | $ | 25.59 | $ | 33.76 | $ | 17.46 |
2020.
2018 Performance-Vesting Stock Award (cumulative three-year Performance Metric ending December 31, 2020) | ||||||||||||||
(in millions) | Threshold | Target | Maximum | Actual | ||||||||||
SVP & CFO | $52.94 | $77.86 | $102.78 | $70.22 | ||||||||||
President, Synalloy Chemicals (1) | $16.79 | $24.69 | $32.59 | $18.15 | ||||||||||
(1) Three-year cumulative Performance Metric is for the Chemicals Segment. |
Name | Position | 2017 Performance-Vesting Award Earned(1) | ||||
Craig C. Bram | President & CEO | $ | 185,096 | |||
Dennis M. Loughran | SVP & CFO | $ | 92,200 | |||
J. Greg Gibson | President, Synalloy Chemicals | $ | 27,900 |
Name | Position | 2018 Performance-Vesting Award Earned (1) | ||||||
Sally M. Cunningham | SVP & CFO | $16,045 | ||||||
J. Greg Gibson | President, Synalloy Chemicals | $24,266 | ||||||
(1) The amounts in this column represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of equity awards made pursuant to this award. For the |
Stock-Ownership Levels
Stock ownership requirements are as follows:
Employment Agreements
Following approval by the Committee, the Company has entered into employment agreements with its NEOs. The Employment Agreement section herein reflects Employment Agreements as of December 31, 2019.
An employment agreement with Mr. Bram was entered into on March 1, 2019 for a two-year term. On each two-year anniversary of the employment agreement, the term is automatically extended for two additional years, unless the Company or Mr. Bram provides written notice that it or he does not wish to extend the agreement within 90 days of the end of the term.
Employment agreements with Mr. Loughran and Mr. Gibson were entered into on March 1, 2019, each for a one-year term. On each one-year anniversary of the employment agreement, the term is automatically extended for an additional year, unless the Company or the executive provides written notice that it or he does not wish to extend the agreement within 90 days of the end of the term.
The employment agreements for each of Messrs. Bram, Loughran and Gibson provide for a base salary, cash incentive and restricted stock incentive to be reviewed by the Committee on an annual basis. The employment agreements also provide that each executive is eligible to participate in any employee benefit plan and programs generally made available to employees.
The employment agreements provide that the executive will be entitled to severance paymentsincluded in the case
With respect to a change in control, the employment agreements provide for a severance payment only if, in connection with, or within two years after, a change in control, either (a) the Company terminates the executive’s employment (other than for cause, as defined in the agreement, and other than due to death or disability), or (b) the executive is not retained in substantially the same or better role and substantially the same or better compensation level as prior to the change in control. This approach is commonly referred to as “double-trigger” acceleration upon a change in control.
Each employment agreement defines a change in control to occur when “(i) any person (as defined in Section 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities, or (ii) there is a consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries). The election of any or all of the Dissident Group’s nominees would not trigger a change in control within the meaning of such term as it is used under these employment agreements.
The employment agreement contains a covenant not to engage, directly or indirectly, in competition with the Company with respect to the businesses in which it is engaged on the date the executive’s employment is terminated and for a period of one year after termination of the executive’s employment. In addition, each agreement stipulates that the executive may not be employed for a period of one year after his termination of employment with any business that was identified as a potential acquisition target during the executive’s tenure with the Company. Each NEO has also agreed not to disclose, at any time during his employment with the Company or thereafter, any of the Company’s confidential information.
The following table shows the potential payments to Messrs. Bram, Loughran and Gibson upon termination for the reasons described below, or to their beneficiaries in the event of death. The amounts shown assume that the employment of each executive was terminated effective December 31, 2019.
Potential Payments Upon Termination or Change-in-Control
Death or Disability(1) | Retirement(2) | Termination Without Cause(3) | Termination without Cause following a Change in Control(4) | |||||||||||||||
Craig C. Bram, | Base Salary | $ | 123,750 | — | $ | 742,500 | $ | 1,237,500 | ||||||||||
President & CEO | Cash Bonus | $ | 176,700 | — | $ | 372,356 | $ | 930,890 | ||||||||||
Stock Options | — | — | — | — | ||||||||||||||
Restricted Stock(5) | $ | 997,886 | — | $ | 997,886 | $ | 1,889,428 | |||||||||||
Healthcare | — | — | $ | 34,062 | $ | 34,062 | ||||||||||||
Dennis M. Loughran, | Base Salary | $ | 80,625 | — | $ | 241,875 | $ | 645,000 | ||||||||||
SVP & CFO | Cash Bonus | $ | 81,238 | — | $ | 86,422 | $ | 345,688 | ||||||||||
Stock Options | — | — | — | — | ||||||||||||||
Restricted Stock(5) | $ | 498,791 | $ | 498,791 | $ | 498,791 | $ | 847,241 | ||||||||||
Healthcare | — | — | $ | 21,138 | $ | 42,276 | ||||||||||||
J. Greg Gibson, | Base Salary | $ | 68,000 | — | $ | 204,000 | $ | 544,000 | ||||||||||
President, Synalloy | Cash Bonus | $ | 135,689 | — | $ | 64,945 | $ | 259,780 | ||||||||||
Chemicals | Stock Options | — | — | — | — | |||||||||||||
Restricted Stock(5) | $ | 340,630 | — | $ | 340,630 | $ | 612,670 | |||||||||||
Healthcare | — | — | $ | 21,138 | $ | 42,276 |
38
Compensation of Executive Officers
2019 Summary Compensation Table
The following table sets forth summary compensation information for our NEOs for the years indicated:
Name and Principal Position | Year | Salary | Stock Awards(1) | Non-Equity Incentive Plan Compensation(2) | All Other Compensation(3) | Total | ||||||||||||||||||
(a) | (b) | (c) | (e) | (g) | (i) | (j) | ||||||||||||||||||
Craig C. Bram | 2019 | $ | 495,000 | $ | 420,750 | $ | 176,700 | $ | 11,200 | $ | 1,103,650 | |||||||||||||
(President & CEO) | 2018 | $ | 495,000 | $ | 292,500 | $ | 568,012 | $ | 10,800 | $ | 1,366,312 | |||||||||||||
2017 | $ | 450,000 | $ | 255,997 | $ | 277,172 | $ | 10,800 | $ | 993,969 | ||||||||||||||
Dennis M. Loughran | 2019 | $ | 322,500 | $ | 209,625 | $ | 81,238 | $ | 11,200 | $ | 624,563 | |||||||||||||
(SVP & CFO) | 2018 | $ | 322,500 | $ | 138,825 | $ | 264,450 | $ | 10,800 | $ | 736,575 | |||||||||||||
2017 | $ | 308,500 | $ | 121,508 | $ | 192,355 | $ | 10,800 | $ | 633,163 | ||||||||||||||
J. Greg Gibson | 2019 | $ | 272,000 | $ | 155,040 | $ | 124,092 | $ | 19,900 | $ | 571,032 | |||||||||||||
(President, Synalloy Chemicals) | 2018 | $ | 272,000 | $ | 117,000 | $ | 135,689 | $ | 19,500 | $ | 544,189 | |||||||||||||
2017 | $ | 260,000 | $ | 87,764 | $ | 41,730 | $ | 19,500 | $ | 408,994 |
CEO Pay Ratio - For 2019, the annual total compensation for our median employee was $60,256; Mr. Bram’s 2019 annual total compensation was $1,103,650 and the ratio of these two amounts was 1:18.
SEC rules permit companies to identify the median paid employee once every three years as long as there has been no change in the company’s employee population or compensation arrangements that significantly impacts the pay ratio disclosure. As we have had no such material changes since 2017, we are using the same median employee identified for 2017, as described below.
The median employee was identified for 2017 utilizing total cash compensation consisting of earnings, bonuses and allowances and annualized for all employees as of December 31, 2017. This pay ratio is a reasonable estimate calculated in a manner consistent with the SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Grants of Plan-Based Awards
Name | Grant Date | 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 Stock or Units (#)(3) | Grant Date Fair Value of Stock and Option Awards(4) | |||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | |||||||||||||||||||||||||
Craig C. Bram | 2/8/19 | $ | 74,250 | $ | 420,750 | $ | 594,000 | |||||||||||||||||||||||||||
2/8/19 | $ | 105,188 | $ | 210,375 | $ | 315,563 | 13,396 | $ | 420,750 | |||||||||||||||||||||||||
Dennis M. Loughran | 2/8/19 | $ | 43,538 | $ | 209,625 | $ | 274,125 | |||||||||||||||||||||||||||
2/8/19 | $ | 52,406 | $ | 104,813 | $ | 157,219 | 6,669 | $ | 209,625 | |||||||||||||||||||||||||
J. Greg Gibson | 2/8/19 | $ | 32,640 | $ | 155,040 | $ | 204,000 | |||||||||||||||||||||||||||
2/8/19 | $ | 38,760 | $ | 77,520 | $ | 116,280 | 4,932 | $ | 155,040 |
Consequently, the target amounts in this column assume that Mr. Bram earned 85%, Mr. Loughran earned 65%, and Mr. Gibson earned 57% of the maximum potential awards that they could have earned using these annual incentive opportunities.
The threshold amounts assume that the NEOs earned the minimum cash incentive awards required to trigger any level of payout. If Company performance fell below performance goals required to earn the threshold amount, they would not have been entitled to any non-equity incentive plan awards.
Mr. Bram earned 35.7%, Mr. Loughran earned 25.2%, and Mr. Gibson earned 45.6% of these non-equity incentive plan awards based on our performance during 2019. These annual incentive amounts are also included under “Non-Equity Incentive Compensation” in the Summary Compensation Table.
|
40
Outstanding Equity Awards at Fiscal Year End 2019
The following table sets forth information about stock options and restricted stock awards outstanding at the end of 2019 for each of our NEOs. No other stock awards were outstanding at December 31, 2019.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#)/ Exercisable(1) | Number of Securities Underlying Unexercised Options (#)/ Unexercisable(1) | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(2) | Market Value of Shares or Units of Stock That Have Not Vested(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4) | ||||||||||||||||||||||||
(a) | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||
Craig C. Bram | 1,015 | 1,015 | $ | 16.010 | 2/10/2025 | 37,129 | $ | 479,335 | 20,083 | $ | 259,272 | |||||||||||||||||||||
Dennis M. Loughran | — | — | — | — | 18,904 | $ | 244,051 | 9,866 | $ | 127,370 | ||||||||||||||||||||||
J. Greg Gibson | 1,673 | 419 | $ | 16.010 | 2/10/2025 | 14,493 | $ | 187,105 | 4,865 | $ | 62,807 | |||||||||||||||||||||
3,398 | — | $ | 14.760 | 2/20/2024 |
41
2019 Option Exercises and Stock Vested
The following table sets forth information about restricted stock awards that vested in 2019.
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | ||||||
(a) | (b) | (c) | ||||||
Craig C. Bram | 44,586 | $ | 703,872 | |||||
Dennis M. Loughran | 19,316 | $ | 307,435 | |||||
J. Greg Gibson | 12,954 | $ | 206,841 |
Equity Plans
Stock Option Plan
The Company currently has one stock option plan, the 2011 Long-Term Incentive Stock Option Plan (the “2011 Option Plan”), approved at the 2011 Annual Meeting of Shareholders. Options may be exercised beginning one year after the date granted at the rate of 20% annually on a cumulative basis; however, in no event shall an option be exercisable more than ten years after the date of grant. In the event that (a) all or substantially all of the assets or Common Stock of the Company (or a subsidiary or division of the Company in which employee is employed) are sold to an entity not affiliated with the Company, (b) a merger or share exchange with an unaffiliated party occurs in which the Company is not the surviving entity, or (c) a similar sale or exchange transaction occurs, which in the Committee’s sole discretion justifies an exercise right, an option holder may exercise, in addition to the above, 100% of the options not otherwise exercisable because of the holding period requirement, subject to the limitation that in no event shall incentive stock options under this and all other option plans of the Company having an aggregate fair market value in excess of $100,000 at the dates of grant become exercisable by an optionee for the first time during a calendar year. The exercise price for options granted under the 2011 Option Plan is equal to 100% of the fair market value on the date the option is granted. The option grant price is determined by averaging the high and low sales prices for the Company’s Common Stock for the day prior to the option grant date as reported by the Nasdaq Global Market. If one of the events described in (a), (b) or (c) above had occurred as of December 31, 2019, all of the stock options shown in the “Number of Securities Underlying Unexercised Options/Unexercisable” column of the Outstanding Equity Awards at Fiscal Year End 2019 table would have vested immediately.
On February 10, 2015, the Board amended the 2011 Option Plan to allow former employees who cease to be employees of the Company as a result of normal retirement, early retirement or disability retirement, to exercise any outstanding options at any time after the date on which he or she ceased to be an employee, but not later than the end of the fixed term of the option and no earlier than one year from the date the option was granted. In the case of death, the option may be exercised by the holder’s estate, a person who acquired the right to exercise the option by bequest or inheritance, or his or her attorney-in-fact, as appropriate, at any time after the holder’s death, but not later than the end of the fixed term of the option. Otherwise, options can only be exercised by an employee who has been in the continuous employment of the Company since the date the option was granted. Options granted under the 2011 Option Plan to an employee shall not be transferable except by will or the laws of descent and distribution.
At March 17, 2020, there were a total of 170,436 shares underlying outstanding options and 46,936 shares underlying exercisable options under the 2011 Option Plan. There were 28,528 shares available for grant under the 2011 Option Plan as of March 17, 2020.
Stock Award Plans
The 2015 Stock Plan, approved by shareholders at the 2015 Annual Meeting of Shareholders and amended by the Board and the shareholders at the 2018 Annual Meeting of Shareholders, authorizes the issuance of up to 500,000 shares which can be awarded for a period of ten years from the effective date of the plan. On February 16, 2017, the Board amended the 2015 Stock Plan to enable the Compensation & Long-Term Incentive Committee to establish vesting schedules as it administers the plan, generally over three or five years. In order for the awards to vest, the employee must be in the continuous employment of the Company or a subsidiary since the date of the awards, except as the result of an employee’s retirement (minimum age of 62), death or permanent disability, upon which event any portion of a stock award that has not vested with the Company will become 100% vested. Otherwise, any portion of a stock award that has not vested prior to the termination of an employee’s employment with the Company for any other reason shall be automatically cancelled. Vesting of the total number of unvested shares will occur in the event that there is either (i) the acquisition of more than 50% of the outstanding voting securities of the Company or a subsidiary or division of the Company in which the employee is employed (calculated on a fully diluted basis) by any person during any consecutive 12-month period of time; or (ii) the sale of more than 50% in value of the assets of the Company over any consecutive 12-month period of time. At March 17, 2020, awards for 211,830 shares have been granted under the 2015 Stock Plan.
The 2005 Stock Awards Plan (“2005 Stock Plan), approved by shareholders at the 2005 Annual Meeting of Shareholders, and amended by the Board effective at its February 2008 and November 2014 meetings, authorized the issuance of up to 300,000 shares which could be awarded for a period of ten years from the effective date of the plan. The 2005 Stock Plan expired on February 3, 2015 at which time no further grants could be awarded. There are outstanding awards under the 2005 Stock Plan that will vest over the next year. Stock awards vest in 20% increments annually, beginning one year after the date of grant. In order for the awards to vest, the employee must be in the continuous employment of the Company or a subsidiary since the date of the awards, except as the result of an employee’s retirement (minimum age of 62), death or permanent disability, in which case any portion of a stock award that has not vested with the Company will become 100% vested. Otherwise, any portion of a stock award that has not vested prior to the termination of an employee’s employment with the Company for any other reason shall be automatically cancelled. Vesting of up to 100% of the total number of unvested shares will occur in the event that there is either (i) the acquisition of more than 50% of the outstanding voting securities of the Company or a subsidiary or division of the Company in which the employee is employed (calculated on a fully diluted basis) by any person during any consecutive 12-month period of time; or (ii) the sale of more than 50% in value of the assets of the Company over any consecutive 12-month period of time. The Company may also terminate any portion of an award that has not vested upon an employee’s failure to comply with all conditions of the award or the plan. If one of the events described in (i) or (ii) above had occurred as of December 31, 2019, 100% of the restricted shares shown in the “Number of Shares or Units of Stock That Have Not Vested” column of the Outstanding Equity Awards at Fiscal Year End 2019 table would have vested immediately.
Shares relating to awards that have not yet vested are reserved for issuance by the Company and an employee is not entitled to any voting or dividend rights with respect to any such shares. Share awards that have not vested are not transferable.
RetirementPlans
401(k)/ESOP Plan
The Company sponsors a 401(k) Plan/Employee Stock Ownership Plan. All employees (except those employees who are entitled to participate in union-sponsored plans) who are 21 years or older are automatically enrolled at a pre-determined percentage following 60 days of full-time employment with the Company or any subsidiary. Employees may choose to opt out or elect to change the default deferral rate. Employees are eligible to receive a matching contribution in the month following their one-year anniversary.
Employees are permitted to contribute up to 100% of earnings not to exceed a dollar amount set by the Internal Revenue Service through payroll deduction on a pre-tax basis or after-tax basis through a Roth 401(k). Employees are permitted to change the election daily and can revoke the election at any time. Employee contributions are 100% vested at all times. An employee can invest his contribution in any of the investment funds offered; however, employeeoffered. Prior to 2015, the 401(k) plan was designed as an Employee Stock Ownership Plan (the “ESOP”) and contributions cannotcould be invested in the Company’sCompany's Common Stock.
Prior toStock; the ESOP provisions of the 401(k) Plan were frozen effective January 1, 2016 alland Company stock is no longer an available investment option.
For 2019 and 2018, the maximum matching contribution was 4%. The matching contribution is allocatedagreement within 1590 days of each pay period. In additionthe end of the term. The employment agreements provide that the executive will be entitled to the matching contribution, the Company may make a discretionary contribution which shall be distributed to all eligible participants regardless of whether they contribute to the 401(k)/ESOP Plan. No discretionary contributions have been made to the 401(k)/ESOP Plan.
Distributions are not permitted before age 59 1/2 exceptseverance payments in the eventcase of death or disability, termination of employmentwithout cause or reason of proved financial hardship as defined according to Internal Revenue Service guidelines. The 401(k)/ESOP Plan provides for payment of the participant’s account balance upon death, disability or retirementfollowing a change in control in the form of (1) salary continuation, (2) average cash bonus, (3) health insurance and (4) restricted stock and options vesting.
Unvested amounts are forfeited and allocated to participants eligible to participateagreement provides for a plan year. The 401(k)/ESOP Plan permits rollovers from qualified plansbase salary of $35,568. He is eligible for bonus compensation at the discretion of the Company.Board of Directors.
All 401(k)/ESOP Plan assets are held by an independent trustee. The trustee invests all assets and makes payment of 401(k)/ESOP Plan benefits. The 401(k)/ESOP Plan is managed and administered by an independent administrator and a Pension Committee comprisedRule 13d-3 of the corporate officersExchange Act), directly or indirectly, of the Company. Expenses incurred for the administration of the 401(k)/ESOP Plan are paid by the Company. The 401(k)/ESOP Plan reserves to the Boardsecurities of the Company the right to amend the 401(k)/ESOP Plan in any manner or terminate the 401(k)/ESOP Plan at any time. The 401(k)/ESOP Plan may be amended to preserve the qualificationrepresenting more than fifty percent (50%) of the 401(k)/ESOP Plan under the applicable provisionscombined voting power of the Internal Revenue Code
COMPENSATION COMMITTEE REPORT
The Compensation & Long-Term Incentive Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Further, the Compensation & Long-Term Incentive Committee considered and took into account the 2019 shareholder vote on executive compensation. Based on such review, discussion and considerationa reorganization, merger or consolidation or sale or other disposition of all or substantially all of the 2019 shareholder vote,assets of the Compensation & Long-Term Incentive Committee recommendedCompany (a “Business Combination”).
Death or Disability (1) | Retirement (2) | Termination Without Cause (3) | Change in Control (4) | ||||||||||||||
Sally M. Cunningham, SVP & CFO | Base Salary | $80,000 | — | $240,000 | $320,000 | ||||||||||||
Cash Bonus | $78,000 | — | $83,725 | $167,450 | |||||||||||||
Stock Options | $4,701 | — | $4,701 | $4,701 | |||||||||||||
Restricted Stock (5) | $144,043 | — | $144,043 | $144,043 | |||||||||||||
Healthcare | — | — | $21,138 | $42,276 | |||||||||||||
J. Greg Gibson, President, Synalloy Chemicals | Base Salary | $70,000 | — | $210,000 | $280,000 | ||||||||||||
Cash Bonus | $100,203 | — | $112,148 | $224,295 | |||||||||||||
Stock Options | — | — | — | — | |||||||||||||
Restricted Stock (5) | $169,556 | — | $169,556 | $169,556 | |||||||||||||
Healthcare | — | — | $21,138 | $42,276 | |||||||||||||
Christopher G. Hutter | Restricted Stock (5) | — | — | — | $390,000 | ||||||||||||
(1) Upon death or disability, Ms. Cunningham and Mr. Gibson will receive base salary in the amount of three months or until the anniversary date of the agreement, whichever is greater, the cash incentive for that fiscal year prorated to the date of the executive's death or disability, and immediate vesting of all restricted stock and options. | |||||||||||||||||
(2) Upon eligible retirement, all restricted stock and options immediately vest. Neither executive was eligible for retirement as of December 31, 2020. | |||||||||||||||||
(3) Upon termination without cause, Ms. Cunningham and Mr. Gibson will receive 0.75X of current base salary, 0.5X of the average of the two most recent cash bonuses, 12 months of COBRA premiums and immediate vesting of all restricted stock and options as severance. | |||||||||||||||||
(4) Upon a triggering event under the "double-trigger" change in control, Ms. Cunningham and Mr. Gibson will receive 1.0X of current base salary, 1.0X of the average of the two most recent cash bonuses, 12 months of COBRA premiums and immediate vesting of all restricted stock and options as severance. | |||||||||||||||||
(5) Restricted Stock is calculated based on the December 31, 2020 closing stock price of $7.80 per share. |
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | ||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (i) | (j) | ||||||||||||||||||
Christopher G. Hutter | 2020 | $4,970 | — | $791,000 | — | — | — | $795,970 | ||||||||||||||||||
Interim President & CEO | ||||||||||||||||||||||||||
Sally M. Cunningham | 2020 | $266,750 | $35,000 | $142,500 | $229,239 | $78,000 | $8,345 | $759,834 | ||||||||||||||||||
SVP & CFO | ||||||||||||||||||||||||||
J. Greg Gibson | 2020 | $262,500 | $20,000 | $159,600 | $155,940 | $100,203 | $19,071 | $717,314 | ||||||||||||||||||
President, Synalloy Chemicals | 2019 | $272,000 | — | $155,040 | — | $124,092 | $19,900 | $571,032 | ||||||||||||||||||
2018 | $272,000 | — | $117,000 | — | $135,689 | $19,500 | $544,189 | |||||||||||||||||||
Craig C. Bram | 2020 | $481,771 | $329,250 | $420,750 | $324,875 | — | $1,027,015 | $2,583,661 | ||||||||||||||||||
President & CEO (former) | 2019 | $495,000 | — | $420,750 | — | $176,700 | $11,200 | $1,103,650 | ||||||||||||||||||
2018 | $495,000 | — | $292,500 | — | $568,012 | $10,800 | $1,366,312 | |||||||||||||||||||
Dennis M. Loughran | 2020 | $158,294 | $50,000 | $216,613 | $240,408 | — | $11,400 | $676,715 | ||||||||||||||||||
SVP & CFO (former) | 2019 | $322,500 | — | $209,625 | — | $81,238 | $11,200 | $624,563 | ||||||||||||||||||
2018 | $322,500 | — | $138,825 | — | $264,450 | $10,800 | $736,575 | |||||||||||||||||||
(1) Mr. Bram retired November 9, 2020. | ||||||||||||||||||||||||||
(2) Mr. Hutter was named Interim President and CEO on November 10, 2020. | ||||||||||||||||||||||||||
(3) Mr. Loughran resigned as SVP & CFO on June 30, 2020. Mr. Loughran's unvested Stock Awards and Stock Options were forfeited in connection with his termination of employment | ||||||||||||||||||||||||||
(4) Ms. Cunningham was appointed SVP & CFO effective July 1, 2020. Her 2020 compensation includes the entire calendar year. | ||||||||||||||||||||||||||
(5) Salary - On May 5, 2020, certain executives accepted a voluntary, temporary decrease in salary associated with the COVID-19 pandemic. Mr. Bram's temporary salary decrease was 25%. Mr. Loughran, Mr. Gibson and Ms. Cunningham's temporary decrease was 15% each. The executives resumed full base salary effective October 3, 2020. | ||||||||||||||||||||||||||
(6) Bonus - The Committee awarded Mssrs. Bram, Loughran and Gibson and Ms. Cunningham were awarded a retention bonus related to their efforts with the proxy contest. Additionally, Mr. Bram received cash in lieu of stock for a portion of his long-term incentive. See the CD&A for further discussion. | ||||||||||||||||||||||||||
(7) All Other Compensation - The amounts shown in this column represent the Company's contributions pursuant to the 401(k)/ESOP Plan for the named executives. Mr. Bram's amount also includes severance associated with his retirement effective November 9, 2020. Mr. Gibson's amount also includes a monthly car allowance. |
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | ||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | ||||||||||||||||||||||||
Christopher G. Hutter | |||||||||||||||||||||||||||||||||||
10/26/2020 | 50,000 (4) | $282,500 | |||||||||||||||||||||||||||||||||
10/26/2020 | 90,000 (5) | $62,000 | |||||||||||||||||||||||||||||||||
Craig C. Bram | |||||||||||||||||||||||||||||||||||
02/05/2020 | $94,669 | $420,750 | $525,938 | ||||||||||||||||||||||||||||||||
02/05/2020 | $105,188 | $210,375 | $315,563 | 16,188 | $420,750 | ||||||||||||||||||||||||||||||
02/05/2020 | 25,000 | $12.995 | $324,875 | ||||||||||||||||||||||||||||||||
Dennis M. Loughran | |||||||||||||||||||||||||||||||||||
02/05/2020 | $48,738 | $216,613 | $270,766 | ||||||||||||||||||||||||||||||||
02/05/2020 | $54,072 | $108,144 | $162,216 | 8,321 | $216,613 | ||||||||||||||||||||||||||||||
02/05/2020 | 18,500 | $12.995 | $240,408 | ||||||||||||||||||||||||||||||||
Sally M. Cunningham | |||||||||||||||||||||||||||||||||||
02/05/2020 | $32,063 | $142,500 | $178,125 | ||||||||||||||||||||||||||||||||
02/05/2020 | $68,000 | $136,000 | $204,000 | 5,482 | $142,500 | ||||||||||||||||||||||||||||||
02/05/2020 | 12,000 | $12.995 | $155,940 | ||||||||||||||||||||||||||||||||
06/30/2020 | 10,200 | $7.330 | $73,299 | ||||||||||||||||||||||||||||||||
J. Greg Gibson | |||||||||||||||||||||||||||||||||||
02/05/2020 | $35,910 | $159,600 | $199,500 | ||||||||||||||||||||||||||||||||
02/05/2020 | $39,900 | $79,800 | $119,700 | 6,140 | $159,600 | ||||||||||||||||||||||||||||||
02/05/2020 | 12,000 | $12.995 | $155,940 | ||||||||||||||||||||||||||||||||
(1) These awards were made pursuant to our 2020 Incentive Plan and were earned upon the achievement of certain performance goals established by the Committee for the fiscal year ended December 31, 2020. For a discussion of these performance goals, see our CD&A section included in this proxy statement. The Committee targeted a payout equal to 85% of base salary for Mr. Bram, 65% of base salary for Mr. Loughran, and 57% of base salary for Ms. Cunningham and Mr. Gibson, which would be achieved if 100% of the Performance Metric goal and 80% of the strategic goals were met. Consequently, the target amounts in this column assume that Mr. Bram earned 85%, Mr. Loughran earned 65%, and Mr. Gibson and Ms. Cunningham earned 57% of the maximum potential awards that they could have earned using these annual incentive opportunities. The threshold amounts assume that the NEOs earned the minimum cash incentive awards required to trigger any level of payout. If Company performance fell below performance goals required to earn the threshold amount, they would not have been entitled to any non-equity incentive plan awards. Ms. Cunningham 55% of Target and Mr. Gibson earned 63% of Target of these non-equity incentive plan awards based on our performance during 2020. These annual incentive amounts are also included under “Non-Equity Incentive Compensation” in the Summary Compensation Table. | |||||||||||||||||||||||||||||||||||
(2) These amounts represent grants of performance-vesting restricted stock made pursuant to our 2020 Incentive Plan. These restricted shares will be earned over the performance cycle ending December 31, 2022. For a discussion of the other material terms of these awards, see our CD&A section. The Committee targeted payout of restricted shares equivalent to 42.5% of base salary for Mr. Bram, 32.5% of base salary for Mr. Loughran and 28.5% of base salary for Ms. Cunningham and Mr. Gibson. | |||||||||||||||||||||||||||||||||||
(3) These amounts represent grants of time based restricted shares made under the 2020 Incentive Plan. For a discussion of the material terms of these awards, see our CD&A section. | |||||||||||||||||||||||||||||||||||
(4) These awards are time-vesting, with two-thirds of the award vesting on October 26, 2021 and the remaining one-third vesting on April 26, 2022. | |||||||||||||||||||||||||||||||||||
(5) These performance stock units or “PSUs” that will vest provided the 30-day volume weighted average price (VWAP) of a share of Company stock equals a specified target level. Fifty thousand (50,000) PSUs will vest if the 30-day VWAP per share equals eight dollars ($8.00) or more on or before October 26, 2023 (Tranche I), and the remaining forty thousand (40,000) will vest if the VWAP per share equals eleven dollars ($11.00) or more on or before October 26, 2023 (Tranche II). The 50,000 Tranche I PSUs vested on January 29, 2021 and will be settled in stock following the 2021 Annual Meeting of Shareholders provided shareholders approve Proposal 3 to increase the number of shares of Company stock reserved for issuance under the 2015 Stock Awards Plan. |
Option Awards | Stock Awards | |||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#)/ Exercisable (1) | Number of Securities Underlying Unexercised Options (#)/ Unexercisable (1) | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (2) | Market Value of Shares or Units of Stock That Have Not Vested (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (4) | ||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||
Christopher G. Hutter | — | — | — | — | 140,000 | $1,092,000 | — | — | ||||||||||||||||||
Sally M. Cunningham | — | 12,000 | $12.995 | 2/5/2030 | 10,575 | $82,485 | 12,176 | $94,973 | ||||||||||||||||||
— | 10,000 | $7.330 | 6/30/2030 | |||||||||||||||||||||||
J. Greg Gibson | — | 12,000 | $12.995 | 2/5/2030 | 13,074 | $101,977 | 15,764 | $122,959 | ||||||||||||||||||
2,092 | — | $16.010 | 2/10/2025 | |||||||||||||||||||||||
3,398 | — | $14.760 | 2/20/2024 | |||||||||||||||||||||||
(1) Includes stock options granted on February 5, 2020 and June 30, 2020, all of which vest in 33% increments annually, beginning one year after date of grant. Additionally, includes stock options granted February 20, 2014 and February 10, 2015, all of which vest in 20% increments annually, beginning one year after date of grant. | ||||||||||||||||||||||||||
(2) For Mr. Hutter, this includes restricted stock awards granted on November 10, 2020 which vest 66% after 12 months and 33% after 18 months, as well as variable weight average performance shares that vest when the 30-day weighted average of the Company stock reaches $8.00 and $11.00. For Ms Cunningham and Mr. Gibson, this includes restricted stock awards granted on February 19, 2016 and vests in 20% increments annually, beginning one year after date of grant. It also includes grants on February 7, 2018, February 6, 2019 and February 5, 2020 which vest in 33.3% increments annually, beginning one year after date of grant. Stock awards are subject to the recipients continuing to be employed by the Company and other conditions described under "Equity Plans - Stock Awards Plan." | ||||||||||||||||||||||||||
(3) These represent the performance based restricted shares granted in 2018, 2019 and 2020 the earn out of which is based on achievement of a three-year Performance Metric target. Shares will be earned, if at all, for the period ending December 31, 2020, December 31, 2021 and December 31, 2022. In accordance with SEC rules, the number of shares included in this table is based on a threshold level of payout. | ||||||||||||||||||||||||||
(4) Based on the December 31, 2020 closing stock price of $7.80 per share. |
Option Awards | Stock Awards | ||||||||||||||||
Name | Number of shares acquired on exercise | Value realized on exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | |||||||||||||
(a) | (b) | (c) | (d) | (e) | |||||||||||||
Craig C. Bram | — | — | 53,317 | $434,236 | |||||||||||||
Dennis M. Loughran | — | — | 9,690 | $122,985 | |||||||||||||
Sally M. Cunningham | — | — | 4,726 | $60,181 | |||||||||||||
J. Greg Gibson | — | — | 7,559 | $95,863 | |||||||||||||
(1) Based on the market value of the shares on the exercise or vesting date. |
The Board is committed to a compensation philosophy and program that promotes our ability to attract, retain and motivate individuals who can achieve superior financial results. As part of that commitment, and in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”"Dodd-Frank Act") and Section 14A of the Securities Exchange Act of 1934, shareholders are being asked to approve, in an advisory non-binding resolution, the compensation of our NEOs as disclosed in this Proxy Statement. This proposal is our “say-on-pay”"say-on-pay" proposal. While the advisory vote is required by the Exchange Act, the frequency of the vote (every year, every two years, or every three years) is at the discretion of the Board. Rule 14a-21(b) under the Exchange Act requires the Board to ask shareholders at least every six years, to recommend the frequency of the” say-on pay” vote. At the 2018 Annual Meeting of Shareholders, shareholders recommended that future “say-on-pay” votes take place every year, and the Board has determined to submit the “say-on-pay” vote to shareholders on an annual basis. The next vote for the frequency of the “say-on-pay” votes will be at the 2024 Annual Meeting of Shareholders.
This proposalIt gives you the opportunity to let us know how you view the overall compensation of our NEOs, and the policies and practices described in this Proxy Statement. It is not intended to address any specific item of compensation. In considering how to vote on this proposal, we encourage you to review all the relevant information in this Proxy Statement- our CD&A (including its executive summary), the compensation tables, and the rest of the narrative disclosures regarding our executive compensation program. Your vote will not directly affect or otherwise limit any existing compensation or award arrangement of any of the NEOs.
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Board Recommendation
THE
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants, and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (1) (c) | |||||||||||||||||
Equity compensation plans approved by security holders | 179,531 | $ | 12.74 | — | ||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
Total | 179,531 | 12.74 | — |
Fee Category | Fiscal 2019 | % of Total | Fiscal 2018 | % of Total | ||||||||||||
Audit Fees | $ | 1,636,379 | 99.4 | % | $ | 1,099,790 | 95.3 | % | ||||||||
Audit Related Fees | $ | 9,200 | 0.6 | % | $ | 54,200 | 4.70 | % | ||||||||
Tax Fees | — | — | % | — | — | % | ||||||||||
All Other Fees | — | — | % | — | — | % | ||||||||||
Total Fees | $ | 1,645,579 | 100.0 | % | $ | 1,153,990 | 100.0 | % |
Fee Category | Fiscal 2020 | % of Total | Fiscal 2019 | % of Total | ||||||||||||||||
Audit Fees | $1,223,546 | 99.4% | $1,636,379 | 99.4% | ||||||||||||||||
Audit Related Fees | $7,000 | 0.6% | $9,200 | 0.6% | ||||||||||||||||
Tax Fees | — | —% | — | —% | ||||||||||||||||
All Other Fees(1) | — | —% | — | —% | ||||||||||||||||
Total Fees | $1,230,546 | 100.0% | $1,645,579 | 100.0% |
compliance.
2019.
KPMG LLP.
Auditor
AUDIT COMMITTEE REPORT
Proposal 3 - Ratificationsubsequent interim period through March 12, 2021, neither the Company nor anyone on the Company’s behalf consulted BDO regarding any of the Appointmentmatters referred to in Item 304(a)(2)(i) or (ii) of Our Independent Registered Public Accounting Firm
Regulation S-K.
2020.
THE
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (such as brokers and banks) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and cost savings for companies.
A number of banks, trustees and other holders of record who are our shareholders may be “householding” our proxy materials and annual reports for their customers. This means that only one copy of our proxy materials may have been sent to multiple shareholders sharing an address unless contrary instructions have been received from one or more of the affected shareholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If you prefer to receive separate copies of a proxy materials or annual report, either now or in the future, please call us at 804-822-3260, or send your request in writing to the following address: Corporate Secretary of Synalloy Corporation, 4510 Cox Road, Suite 201, Richmond, VA 23060. If you are still receiving multiple reports and proxy statements for shareholders who share an address and would prefer to receive a single copy of the annual report and proxy statement in the future, please contact us at the above address or telephone number. If you are a beneficial owner, you should contact your bank, broker or other holder of record.
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December 1, 2021. In order for a shareholder to bring any business or nominations before the 2021 Annual Meeting of Shareholders, that is not submitted for inclusion in the Company’s proxy statement for the 2021 Annual Meeting of Shareholders by the deadline identified above, certain conditions set forth in the Company’s Bylaws must be complied with, including but not limited to, the delivery of a written notice to the Corporate Secretary of the Company between________, 2021 and________, 2021 (notnot less than 30 nor more than 60 days in advance of the 20212022 Annual Meeting which is tentatively scheduled on________, 2021); provided, however, that in the event that less than 40 days’ notice or prior public disclosure of the date of the 2021 Annual Meeting of Shareholders is given or made available May 19, 2022. With respect to shareholders, notice by theany shareholder must beproposal not received by the Company not later than the close of business on the 10th day following the day on which such notice of the date of the 2021 Annual Meeting of Shareholders was mailed or a public disclosure including such date was made.
Each shareholder who desires to present a proposal to be voted on at the 2021 Annual Meeting of Shareholders may do so only in accordance with Section 9 of Article II of the Bylaws, which provides that such shareholder’s notice referenced above shall be timely and must include, for each matter the shareholder proposes to bring before the annual meeting, (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and shareholder, and (iv) any material interest of the shareholder in such business.
Each shareholder who desires to nominate a candidate for election to be voted at the 2021 Annual Meeting of Shareholders may do so only in accordance with Section 10 of Article II of the Bylaws, which provides that such shareholder’s notice referenced above shall be timely and shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of the Company which are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Rule 14a under the Securities Exchange Act of 1934; and (b) as to the shareholder giving the notice, (i) the name and record address of shareholder and (ii) the class and number of shares of the Company which are beneficially owned by the shareholder. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company. No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth therein.
In accordance with Rule 14a-4(c) under the Securities Act,February 18, 2022, the designated proxy agents will vote on the proposal in their discretion with respect to any shareholder proposal not received by the Company by________, 2021, which is 45 days before the date on which this Proxy Statement was first made available to the Company’s shareholders.
discretion.
As
Additional Information Regarding Participants in the Solicitation
Under applicable SEC rules and regulations, members of the Board, the Board’s nominees and certain officers of the Company are “participants” with respect to the Company’s solicitation of proxies in connection with the Meeting. The following sets forth certain information about such persons (the “Participants”).
Directors and Director Nominees
The names and present principal occupation of our directors and director nominees, each a Participant, are set forth below. The business address for the Company’s current directors and director nominees is c/o Synalloy Corporation, 4510 Cox Road, Suite 201, Richmond, Virginia 23060.
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Officers
The officers of the Company who are Participants are Dennis M. Loughran and J. Greg Gibson. The business address for each is c/o Synalloy Corporation, 4510 Cox Road, Suite 201, Richmond, Virginia 23060. Their present principal occupations are stated below. Mr. Bram is also an executive officer of the Company but is listed above as a Director and Director Nominee.
Information Regarding Ownership of the Company’s Securities by Participants
The number of the Company’s securities beneficially owned by the Participants as of March 17, 2020 is set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management” in this proxy statement.
Information Regarding Transactions in the Company’s Securities by Participants
The following table sets forth information regarding purchases and sales of the Company’s securities by the Participants within the past two years. No part of the purchase price or market value of these securities is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities.
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Miscellaneous Information Concerning Participants
Other than as set forth in this Appendix
Other than as set forth in this Appendix A or elsewhere in this Proxy Statement and based on the information provided by each Participant, neither the Company nor any of the Participants listed above or any of their associates have or will have (i) any arrangements or understandings with any person with respect to any future employment by the Company or its affiliates or with respect to any future transactions to which the Company or any of its affiliates will or may be a party or (ii) a direct or indirect material interest in any transaction or series of similar transactions since the beginning of our last fiscal year or any currently proposed transactions, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a party in which the amount involved exceeds $120,000.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like
the box marked by the arrow available and follow the instructions.
1-800-690-6903
VOTE IN PERSON
You may attend and vote at the Annual Meeting if you were a shareholder of record as of the Record Date, or if you were a beneficial owner of shares held in street name and you have obtained a legal proxy from the broker, bank, trust or other nominee that holds your shares as of ________, 2020, which is the record date for the Annual Meeting
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
The Board of Directors recommends you vote FOR the following: 1. Election of Directors |
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| To withhold authority to vote for any individual nominee(s), mark |
Nominees |
01) |
2. | For
| Against
| Abstain
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3.Approval of an increase in the number of shares of Company stock reserved for issuance under the Company's 2015 Stock Plan. | ☐ | Against ☐ | Abstain ☐ | |||||||||||
4.The ratification of the appointment of | For
| Against
| Abstain
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request cumulative voting. ☐
____________________________________________________ | _______________ | ____________________________________________________ | _______________ | |||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
________, 2020 [9:
AM
The Board of Directors doesNOT endorse the nominees put forth by Privet Fund LP, UPG Enterprises LLC and certain of their respective affiliates (collectively, the “Dissident Group”) and strongly urges you toDISCARD all proxy cards or other materials sent to you by the Dissident Group. 2021.
side.)