PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – DATED APRIL 6, 2020
United States
Securities and Exchange Commission
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of the Securities Exchange Act of 1934 (Amendment
No. 1)No.__)
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PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – DATED APRIL 6, 2020
SYNALLOY CORPORATION
4510 COX ROAD, SUITE 201
RICHMOND, VA 23060
1400 16th Street, Suite 270
Oak Brook, Illinois 60523
MESSAGE FROM THE BOARD OF DIRECTORS
April 27, 2022
Dear Fellow
Shareholders –Stockholder:
You are cordially invited to virtually attend the 2020our Annual Meeting of Shareholders (theStockholders (including any adjournments or postponements thereof, the “Annual Meeting”) of Synalloy Corporation, a Delaware corporation (the “Company”),on June 6, 2022, which is scheduled towill be held at _____________ on ________, 2020 at [9:00 a.m.] ET, and any adjournments or postponements. Shareholders ofin a virtual meeting format only via live audio webcast. Included with this letter are the Company at the close of business on ________, 2020 are entitled to notice of and to vote at, the Annual Meeting. Detailsannual meeting of stockholders, a proxy statement detailing the business to be conducted at the Annual Meeting, and a proxy card. You may also find electronic copies of these documents online at www.proxyvote.com.
Regardless of whether you plan to attend our virtual Annual Meeting, it is important that your voice be heard. We encourage you to vote in advance of the meeting by telephone, by Internet or by signing, dating and returning your proxy card by mail. You may also vote by attending the virtual annual meeting at www.virtualshareholdermeeting.com/SYNL2022 and voting online. Full instructions are givencontained in the accompanying proxy statement and in the enclosed proxy card.
Sincerely,
SYNALLOY CORPORATION
1400 16th Street, Suite 270
Oak Brook, Illinois 60523
Notice of 2022 Annual Meeting of Shareholders and Proxy Statement.
The Proxy Statement was first made available to our shareholders on or about ________, 2020. You should also have received aBLUE Proxy Card or voting instruction form and postage-paid return envelope, which are being solicited on behalf2022 Annual Meeting of our BoardShareholders (2022 Annual Meeting) of Directors (the “Board”).Your voteSynalloy Corporation (Company) will be especially importanta virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/SYNL2022 on Monday, June 6, 2022, at 9:00 a.m. Eastern Time. To access this website and enter the Annual Meeting. Asmeeting, 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 andmust have your shares voted for our Board’s nominees and on the other matterscontrol number available.
Matters to be voted on at the
2022 Annual Meeting
by completing, signing, dating and returning the enclosedBLUE Proxy Card or by following the instructions provided on theBLUE Proxy Card to submit a proxy over the Internet or by telephone or by attending the Annual Meeting and voting your shares in person.We are confident that our slate of Board nominees has the right mix of professional achievement, skills, experiences and reputations that qualify eachas follows:
1.Election of the Company’sfive director nominees to serve asnamed in this Proxy Statement.
2.Approval, on a shareholder representative overseeing the managementnon-binding advisory basis, of the Company. We are committed to engaging with our shareholders and continuing to respond to shareholder concerns about the Company, and we believe we are in the best position to oversee the executioncompensation of our long-term strategic plan to grow and realize shareholder value. The Board unanimously recommends that you vote “FOR”named executive officers (say-on-pay).
3.Approval of the election2022 Omnibus Equity Incentive Plan
4.Ratification 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.After reading the Noticeappointment of Annual MeetingBDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.
5.Consideration 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
All of the
Dissident Group or any other statements that the Dissident Group or its representatives have made or may otherwise make. The Board, including all of its independent directors, strongly urges youNOT to sign or return any proxy card sent to you by or on behalf of the Dissident Group. 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 otherabove 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.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.
| By Order of the Board of Directors, |
| |
|  |
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) 662-5200
Banks 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.
| 1. | To elect eight nominees to the Company’s Board of Directors (the “Board”), each to hold office until the 2021 Annual Meeting of Shareholders or until his or her respective successor is elected and qualified (Proposal 1); |
| 2. | To approve, on a non-binding advisory basis, of the compensation of our named executive officers (say-on-pay) (Proposal 2); and |
| 3. | To ratify the appointment of KPMG, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020 (Proposal 3). |
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.
We are providing our proxy materials to our shareholders electronically again this
year unless they previously requested to receive hard copies. Therefore, most of our shareholders will only receive a Notice of
Internet Availability of Proxy Materials (Notice) containing instructions on how to access the proxy materials electronically and to vote. Electronic delivery allows the Company to provide you with the information you need for the 2022 Annual
Meeting. The Board unanimously recommendsMeeting while reducing costs. Shareholders can request a
vote “FOR” eachpaper copy of the
eight nominees for director named inproxy materials by following the
accompanying Proxy Statement and a vote “FOR” each of Proposal 2 and 3instructions included on the
enclosedBLUENotice. Proxy
Card.Onlymaterials will be made available to shareholders electronically on or around April 27, 2022 or mailed on or around the same date to those shareholders who have previously requested printed materials.
Record Date: You can attend the meeting online at www.virtualshareholdermeeting.com/SYNL2022 and vote if you were a shareholder of record at the close of business on ________, 2020 areApril 14, 2022.
Proxy Voting: Each share of Synalloy common stock is entitled to notice of and toone vote aton each matter properly brought before the Annual Meeting and any adjournment or postponement thereof. The Annual Meeting may be adjourned or postponed from time to time. At any adjourned or postponed meeting, action with respect to matters specified in this notice may be taken without further notice to shareholders, unless requiredmeeting. Please vote by law or the Company’s Bylaws, as amended (the “Bylaws”).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.
Dated April 27, 2022
By order of the Board for election as directors of the Company are listed in the accompanyingDirectors
Doug Tackett, Corporate Secretary
Synalloy Corporation’s Notice of Annual Meeting, 2022 Proxy Statement,
andBLUE Proxy Card.IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING, REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND. ACCORDINGLY, AFTER READING THE ACCOMPANYING PROXY STATEMENT, PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED BLUE PROXY CARD AND PROMPTLY SUBMIT YOUR PROXY BY INTERNET, TELEPHONE OR MAIL AS DESCRIBED ON THE BLUE PROXY CARD. PLEASE NOTE THAT EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE RECOMMEND THAT YOU VOTE USING THE ENCLOSED BLUE PROXY CARD PRIOR TO THE ANNUAL MEETING TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED. EVEN IF YOU VOTE YOUR SHARES PRIOR TO THE ANNUAL MEETING, IF YOU ARE A RECORD HOLDER OF SHARES, OR A BENEFICIAL OWNER WHO OBTAINS A “LEGAL” PROXY FROM YOUR BROKER, BANK, TRUSTEE OR OTHER NOMINEE, YOU STILL MAY ATTEND THE ANNUAL MEETING AND VOTE YOUR SHARES IN PERSON. IF YOU ARE AN 401(K)/ESOP PLAN PARTICIPANT AND WANT TO REVOKE ANY PRIOR VOTING INSTRUCTIONS YOU PROVIDED TO THE 401(K)/ESOP PLAN TRUSTEE IN RESPECT OF THE ANNUAL MEETING, YOU MUST CONTACT THE 401(K)/ESOP PLAN TRUSTEE.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.
| By order of the Board of Directors |
| |
| |
| Sally M. Cunningham |
| Secretary |
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’s2021 Summary Annual Report to Shareholders (including itsand
2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2019) are available free of chargeon our website at www.proxyvote.com. Information on this website, other than thisinvestors.synalloy.com/proxy.
SYNALLOY CORPORATION
2022 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.
********************
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) 662-5200
Banks and Brokers Call Collect: (203) 658-9400
Email: SYNL@investor.morrowsodali.com
The 2020 Annual Report on Form 10-K is furnished herewith.
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 Internet at http://investor.synalloy.com.
SYNALLOY CORPORATION
2020 Proxy Statement
Table of Contents
PRELIMINARY
SYNALLOY CORPORATION
PROXY STATEMENT
SUBJECT TO COMPLETION – DATED APRIL 6, 2020SYNALLOY CORPORATION
4510 COX ROAD, SUITE 201
RICHMOND, VA 23060
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
________, 2020
This Proxy Statement and the accompanyingBLUE Proxy Card, along with the 2019
June 6, 2022
The 2021 Annual Report to Shareholders,
(includingincluding our
Annual Report on2021 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.
Our Director Nominees
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 27, 2022.
QUESTIONS AND ANSWERS ABOUT THE
BOARD UNANIMOUSLY RECOMMENDSPROXY MATERIALS, ANNUAL MEETING AND 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.
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.
Name | | Position | | Age | | | Board
Tenure | | Committee
Memberships |
Craig C. Bram | | President and Chief Executive Officer of the Company | | | 61 | | | 16 years | | |
Anthony A. Callander | | Principal at Business Value Consultancy; Former Partner at Ernst & Young, LLP | | | 73 | | | 8 years | | Audit (Chair)
CG |
Susan S. Gayner | | President and CEO of ParkLand Ventures, Inc.; Independent Director of Constellation Software Inc. | | | 59 | | | 4 years | | Comp
CG (Chair) |
Henry L. Guy | | President and CEO of Modern Holdings Incorporated; Former Managing Director of Anima Regni Partners | | | 51 | | | 8 years | | Audit
Comp (Chair) |
Jeffrey Kaczka | | Former Chief Financial Officer at MSC Industrial Direct, Genworth Financial Inc., Owens & Minor, Inc., Allied Worldwide, Inc. and I-Net, Inc. | | | 60 | | | 1 year | | Audit
CG |
Amy J. Michtich | | Vice President/General Manager, North American Operations of The Scotts Miracle Gro Company; Former Chief Supply Chain Officer of Molson Coors Canada; Former Operations Manager at Miller Brewing Company | | | 51 | | | 6 years | | Comp
CG |
James W. Terry, Jr. | | Director of Strategic Investments at Hollingsworth Funds, Inc.; Former President of Carolina First Bank | | | 72 | | | 8 years | | Audit
Comp |
Murray H. Wright
(Chairman of the Board) | | Former Senior Counsel at DurretteCrump PLC; Former Partner at VanDeventer Black LLP | | | 74 | | | 19 years | | |
| Comp | Compensation & Long-Term Incentive |
Corporate Governance Highlights
Director Independence | ●
●
| 7 of 8 director nominees are independent
3 fully independent Board committees: Audit, Compensation & Long-Term Incentive,
Corporate Governance
|
Board Accountability | ●
●
| Declassified Board – all directors are elected annually
Majority vote standard for charter and bylaw amendment
|
Board Leadership | ●
●
●
| Separate CEO and Chairman roles
Annual assessment and determination of Board leadership structure
Independent Chairman has strong role and significant governance duties, including chair of
Executive Sessions of independent directors
|
Board Evaluation and Effectiveness | ●
●
| Annual Board and committee self-assessments
Annual independent director evaluation of Chairman and CEO
|
Board Refreshment & Diversity | ●
●
●
●
| Balance of new and experienced directors, with 2 directors added in the last 5 years
Retirement Policy in place
2 directors are women
Robust Board self-evaluation process drives refreshment
|
Director Engagement | ●
●
| Shareholder ability to contact directors
All of our directors attended our 2019 Annual Meeting of Shareholders, at which management and the directors responded to each shareholder question
|
Director Access | ●
●
●
| Significant interaction with senior business leaders through regular business reviews
Directors have access to senior management and other employees
Directors have ability to hire outside experts and consultants and to conduct independent
investigations
|
DIRECTOR SKILLS AND EXPERIENCES
| Murray H. Wright
| | Craig C. Bram | | Anthony A. Callander | | Susan S. Gayner | | Henry L. Guy | | Jeffrey Kaczka
| | Amy J. Michtich
| | James W. Terry, Jr.
|
Public Company Leadership and Strategy | | | X | | | | X | | X | | X | | X | | |
Financial Management / Reporting / Audit | | | X | | X | | | | X | | X | | | | X |
Finance / Banking | X | | | | X | | | | | | X | | | | X |
Capital Markets / M&A | X | | X | | X | | X | | X | | X | | X | | X |
Manufacturing / Supply Chain / Logistics | | | X | | X | | X | | | | X | | X | | |
Operations / Technical Experience (Metals / Chemicals) | | | X | | | | X | | | | X | | | | |
Corporate Governance and Other Public Company Directorship | X | | | | | | X | | X | | | | | | |
Risk Management | X | | X | | X | | X | | X | | X | | X | | X |
Capital Allocation | X | | X | | X | | | | X | | X | | X | | X |
Legal & Regulatory | X | | | | | | | | | | | | X | | X |
Public Company Leadership and Strategy
Directors with significant public company leadership experience, including current and former chief executive officers, provide the Company with special insights. These directors possess a hands-on knowledge of how large organizations operate, including the importance of corporate strategy and risk management, and how these factors impact the Company’s operations and controls.
|
Financial Management / Reporting / Audit
Directors with an understanding of financial and accounting reporting processes, particularly in large public company organizations, provide an important oversight role. These directors ensure effective oversight of the Company’s financial measures and processes, which is critical to the Company’s legal compliance and overall success.
|
Finance / Banking
Directors with an understanding of finance and banking, especially with respect to trends in debt and equity markets, provide an important role. These directors provide the Company with the expertise to make sound business judgments and engage in transactions that are supported by the Company’s finances.
|
Capital Markets / M&A
Directors with capital markets and M&A experience provide the Company with valuable insights into potential strategic transactions, as well as important skills in deal analysis and negotiation. Such directors help to evaluate worthwhile opportunities and advise the rest of the Board as to its role and obligations when contemplating potential mergers, acquisitions, or other similar transactions.
|
Manufacturing / Supply Chain / Logistics
Directors with manufacturing, supply chain, and logistics experience play an important role, by providing the Company with strategic guidance in areas critically important to its business and allowing the Company to be more competitive and efficient.
|
Operations / Technical Expertise (Metals / Chemicals)
Directors with operations and technical expertise in metals and chemicals provide the Company with special insights. These directors possess knowledge of how to best allocate resources and support production of the Company’s products.
|
Corporate Governance and Other Public Company Directorship
Directors with corporate governance and other public company directorship experience provide an important oversight role. These directors carry out the responsibilities relating to strong Board and management accountability, and the development and maintenance of the corporate governance policies and related matters required by the federal securities laws.
|
Risk Management
Directors with risk management expertise help the Company to identify and anticipate risks so that the Company can take only those risks that are consistent with its business objectives, and keep all other risks controlled.
|
Capital Allocation
Directors with experience in capital allocation prove instrumental in helping the Board collaborate with management to shape and execute a strategy with respect to the distribution and investment of the Company’s financial resources. Specifically, such directors will provide guidance in prioritizing among the many options available to a company looking to allocate excess capital, including whether to make a distribution to shareholders, engage in acquisitions or other strategic transactions, or invest in organic growth. As such, these directors aid the Company in making key decisions about the profits and long-term health of the Company.
|
Legal & Regulatory
Directors with legal knowledge and experience are able to advise the Board in its oversight role and in appropriate communications with shareholders. As a public company, the Company is subject to myriad regulatory and other legal requirements and elevated scrutiny from federal and state sources, which legally experienced directors can help the Board to navigate. This helps to ensure that the Company remains legally compliant at all times as it executes its business strategy, and this experience is especially helpful during current times of increased uncertainty and volatility in global markets and politics.
|
Questions and Answers About the Proxy Materials, Annual Meeting and Voting
When and where will the Annual Meeting be held?
The Annual Meeting of Shareholders of Synalloy Corporation (the "Company") will be held as a virtual meeting and webcast live over the Internet. Please go to www.virtualshareholdermeeting.com/SYNL2022 for instructions on _____________, 2020,how to attend and participate in the Annual Meeting.Any shareholder may attend and listen live to the webcast of the Annual Meeting.Shareholders as of the record date may vote and submit questions while attending the Annual Meeting via the Internet by following the instructions listed on your proxy card. The webcast starts at [9:9:00 a.m.] ET at _________________.Why am I receiving this Proxy Statement?
Theon Monday, June 6, 2022. We encourage you to access the meeting prior to the start time.
Who is soliciting my proxy?
Our Board is soliciting your proxy to vote
at the Annual Meeting because you owned shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”), at the close of business on the Record Date, and therefore, are entitled to vote at the Annual Meeting on the following proposals: | ● | Proposal 1: To elect eight nominees named in this Proxy Statement to serve on the Board, each until the next annual meeting of shareholders and until his or her respective successor is duly elected and qualified; |
| ● | Proposal 2: To approve, by a non-binding advisory vote, the compensation paid to the Company’s named executive officers; and |
| ● | Proposal 3: To ratify the appointment of KPMG, LLP (“KPMG”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. |
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 2022 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
On what matters will
I be
solicited on behalf of the Board by the Company’s directors, director nominees, and certain executive officers of the Company. Such persons are listed in Appendix A to this Proxy Statement.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.
voting? How does the Board recommend that I cast my vote?
At the Annual Meeting, you will be asked to: (1) elect the five director nominees listed in this Proxy Statement; (2) approve, on a non-binding advisory basis, the compensation of our named executive officers; (3) approve the 2022 Omnibus Equity Incentive Plan; and (4) ratify the appointment of our independent registered public accounting firm.
Our Board unanimously recommends that you vote by proxy usingvote:
FOR all five of theBLUE Proxy Card with respect to the proposals as follows: | ● | “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 to serve on the Board, each until the next annual meeting of shareholders and until his or her successor is duly elected and qualified; |
| ● | “FOR”the non-binding, advisory resolution approving the compensation of the Company’s named executive officers for 2020; and |
| ● | “FOR” the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2020. |
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;
FOR the Annual Meeting?The Board has set ________, 2020approval, on a non-binding advisory basis, of the compensation of our named executive officers (say-on-pay);
FOR the approval of the 2022 Omnibus Equity Incentive Plan; and
FOR the ratification of the appointment of BDO USA, LLP as the Record Dateour independent registered public accounting firm for the Annual Meeting. fiscal year ending December 31, 2022.
How many votes may I cast?
You are entitled to notice and to vote if you were a shareholder, as of the close of business on ________, 2020. You are entitled tomay cast one vote on each proposal for eachevery share of our Common Stock that you heldowned on April 14, 2022, the Record Date,record date, except shareholdersyou have the right to cumulate your votes in regard tofor the election of directors. YourFor more information, see "What is cumulative voting?" below.
What is cumulative voting?
You have the right to cumulate your votes either (i) by giving to one candidate as many votes as equal the number of shares mayowned by you multiplied by the number of directors to be voted atelected, or (ii) by distributing your votes on the Annual Meeting only if you are present in person or yoursame principle among any number of candidates.
How many shares are represented by a valid proxy. Ateligible to be voted?
On April 14, 2022, the
close of business onrecord date, the
Record Date, there were [●]Company had 10,223,498 shares of
our Common Stock
issued, outstanding and eligible to be voted at the Annual
Meeting.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 861,605 shares held in the name of that organization may nottreasury).
How many shares must be
voted and will not be considered entitledpresent to
vote on any matters to be considered athold the Annual
Meeting, and as such, will not be considered present at the Annual Meeting. If you own your shares in “street name,” please instruct your bank, broker, trustee or other nominee how to vote your shares using theBLUE voting instruction form provided by your bank, broker, trustee or other nominee so that your vote can be counted. TheBLUE voting instruction form provided by your bank, broker, trustee or other nominee may also include information about how to submit your voting instructions over the Internet or by telephone, if such options are available.Meeting?
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 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
proposals, your shares may still be counted as present at the
Annual Meeting
if: | ● | you attend the Annual Meeting ;for purposes of determining whether a quorum exists since your bank, broker or other holder of record has discretionary authority to vote on Proposal 4. In addition, shares held by shareholders of record who are present at the Annual Meeting in person or |
| ● | your shares are represented by a properly authorized and submitted proxy (submitted over the Internet, by telephone or by mail). |
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.
If a proxy covering your shares. In the absence of a quorum is present at the Annual Meeting, mayProposal 1 - Election of Directors, directors will be adjourned, from time to time,elected by votea majority of the holdersshares present and eligible to vote at the Annual Meeting. Abstentions and broker non-votes will have the effect of votes against the election of directors. As described in greater detail in the "Proposal 1 - Election of Directors" section of this Proxy Statement, our Board of Directors has adopted a director resignation policy that applies to the election of directors. Under this policy, any nominee who does not receive an affirmative vote of a majority of the votes cast is required to tender his or her resignation to the Board of Directors. Consequently, the number of abstentions and broker non-votes with respect to a nominee will have no effect on whether our director resignation policy will apply to that individual.
Approval for Proposal 2 - Advisory Vote on the Compensation of Our Named Executive Officers, Proposal 3 – Approval of 2022 Omnibus Equity Incentive Plan, Proposal 4 - Ratification of the Appointment of Our Independent Registered Public Accounting Firm, and all other matters which may be considered and acted upon by the holders of Common Stock at the Annual Meeting will be approved if a majority of the shares represented at such meeting (but no other business shall be transacted at such meeting), without any notice if the timepresent and place thereof are announcedeligible to vote at the meeting are voted in favor of the proposals. Abstentions and broker non-votes will have the effect of votes against these proposals.
If a quorum is not present or represented at which the adjournmentmeeting, the chairman of the Annual Meeting has the power to adjourn the meeting. If the meeting is taken unlessto be reconvened within 30 days, no notice of the adjournmentreconvened meeting will be given other than an announcement at the adjourned meeting. If the meeting is to be adjourned for more than thirty30 days or unless after the adjournmentmore, or if a new record date is fixed for the adjourned meeting, in which event a notice of the adjournedreconvened meeting will be given to each shareholderas provided in the Bylaws.
Who pays for soliciting proxies?
We pay all expenses incurred in connection with the solicitation of
record entitled to vote at the adjourned meeting.Who can attend the Annual Meeting?
Admission to the Annual Meeting is limited to shareholders and their duly appointed proxy holders as 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.
We will be unable to admit anyone who does not present identification or refuses to comply with our rules of conductproxies for the Annual Meeting. For security reasons, youIn addition to solicitations by mail, our directors, officers, and your bagsemployees, without additional remuneration, may solicit proxies personally or by telephone, other electronic means or mail and we reserve the right to retain outside agencies for the purpose of soliciting proxies. Banks, brokers or other holders of record will be subjectrequested to search prior to your admittanceforward proxy soliciting material to the Annual Meeting. These rules provide, among other things, that no cameras, recording equipment, electronic devices, large bags or packagesbeneficial owners, and as required by law, we will be permitted at the Annual Meeting. You are encouraged to submit aBLUE proxy card to have your shares voted regardless of whether or not you plan to attend the Annual Meeting.
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.
How do I
vote my shares?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?
Shareholders of record” or in an account with a broker, bank, trust or other nominee (i.e., in “street name”). If your shares are registered in your name, you mayRecord
Shareholders of record can vote your shares in person (virtually) at the Annual Meeting or by proxy. Shareholders of record may also vote their proxy whetherby mail, by telephone or not you attendby Internet following the Annual Meeting. instructions on the proxy card.
Beneficial Shareholders
If your shares are held in the name of a broker, bank, trustbroker or other nominee, you will receive instructions from the nominee that you must follow in order for your shares to be voted.YourWithout your direction, your broker is not permitted to vote your shares on anythe election of directors, the non-binding advisory vote on the compensation of our named executive officers, or the Approval of 2022 Omnibus Equity Incentive Plan. Your broker has discretionary authority to vote your shares on ratification of the proposalsappointment of BDO USA, LLP. Therefore, if your shares are held in the name of a broker, to be sure your shares are voted, please instruct your broker as to how you wish it to vote. If your shares are not registered in your own name and you wish to vote your shares in person (virtually) at the Annual Meeting, without receivingyou should contact your voting instructions.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.
Participants in the Synalloy Corporation 401(k)/ESOP Plan
If you are a participant in the Synalloy Corporation 401(k)
Plan/Employee Stock Ownership Plan
(the “401(k)/ESOP Plan”)(401(k) Plan) and you own shares of our Common Stock through the 401(k)
/ESOP Plan, the
BLUE Proxy Card proxy card sent to you will also serve as your voting instruction
formcard to the 401(k)
/ESOP Plan trustee, who
actually votes the shares of our Common Stock that you own through the 401(k)
/ESOP Plan. Plan on your behalf. If you do not provide voting instructions for these shares to the trustee by
11:595:00 p.m. ET,
________, 2020June 2, 2022 (the
“Plan Cut-Off Date”)plan cut-off date), as directed by the terms of the 401(k)
/ESOP Plan, the Company, in its capacity as the 401(k)
/ESOP Plan administrator, will instruct the trustee to vote
thoseyour 401(k)
/ESOP Plan shares
“FOR”"FOR" all the director nominees named in this Proxy Statement and
“FOR”"FOR" all other proposals.
Voting Methods
If you are a shareholder as of the close of business on the Record Date, you
You can vote your
sharesproxy by any of the methods below:
VOTE BY INTERNET -
www.proxyvoting.com/SYNL (for shareholder of record);www.proxyvote.com (for beneficial owners of shares held in street name)Use the Internet to transmit your voting instructions and for electronic delivery of
information. Haveinformation until 11:59 p.m. ET the day before the meeting date, or by 5:00 p.m. ET on June 2, 2022, for 401(k) Plan participants. Please have your
BLUE Proxy Card or voting instruction form proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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.instructions until 11:59 p.m. ET the day before the meeting date or until 5:00 p.m. ET on June 2, 2022, for 401(k) Plan participants. Have your
BLUE Proxy Card or voting instruction form proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
If you are a shareholder of record, please
Mark, sign and date yourBLUE Proxy Card proxy card and return it in the postage-paid envelope we have provided or return it to Michael A. Verrechia,Vote Processing, c/o Morrow Sodali, 509 Madison Avenue Suite 1206, New York, New York 10022. IfBroadridge, 51 Mercedes Way, Edgewood, NY 11717.
Only the latest dated proxy received from you,
are a beneficial owner whose shares are held in street name, please return a properly signed and dated voting instruction formwhether submitted by
following the instructions specified in the form.
VOTE IN PERSON
Shares held in your name as the shareholder of record mayInternet, mail or telephone, will be voted in person at the Annual Meeting. Shares held beneficially in street name may be voted in person only ifIf 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, needplease do not returnmail your proxy card. You may also vote in person (virtually) at the Annual Meeting.
Why did I receive a notice in the mail regarding the Internet availability of proxy cardmaterials instead of a full set of proxy materials?
The rules of the Securities and Exchange Commission allow us to provide our proxy materials to our stockholders over the Internet if they have not requested that printed materials be provided to them on an ongoing basis. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials to our stockholders who have not previously requested that printed materials be provided to them on an ongoing basis. Instructions on how to access our proxy materials over the Internet or
to request a printed copy by mail may be found in the
voting instruction form forwarded by your broker, bank, trust or other holderNotice of
record by mail.Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.
If you have previously elected to receive printed materials and would like to reduce the costs incurred by theour Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
What happens if I do not vote for a proposal? What is a broker non-vote?
If you properly execute and return a proxy or voting instruction card, your shares will be voted as you specify. If you are a participantshareholder of record and you return an executed proxy card but make no specifications on your proxy card, your shares will be voted in accordance with the 401(k)/ESOP Plan, although you may attendrecommendations of our Board, as provided above. If any other matters properly come before the Annual Meeting, youthe persons named as proxies by the Board of Directors will not be ablevote upon such matters according to cast a vote at the Annual Meeting with respect to any sharestheir judgment.
If you hold through the 401(k)/ESOP Plan.
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.
A broker “non-vote” occurs when a nominee holding shares for shareholders)a beneficial owner does not vote on a particular proposal because the nominee has not received instructions from the beneficial owner and either (i) does not have discretionary voting power for that particular proposal, or(203) 658-9400 (call collect for banks (ii) chooses not to vote the shares. Brokers do not have discretionary voting power to vote on Proposals 1, 2, and brokers).3.
Can I revoke or change my vote after I deliver my proxy?
As a shareholder as of the Record Date, if you submit a proxy, you may
Yes. You can revoke your proxy at any time before it is voted
at the Annual Meeting by
(i) providing notice in writing
of revocation that is dated later than the date of your proxy to
the attention of our Corporate Secretary at
4510 Cox Road,1400 16th Street, Suite
201, Richmond, VA 23060; (ii)270, Oak Brook, Illinois 60523; by
submittingdelivering a valid proxy bearing a later date
over the Internet, by telephone or by mail to the Company’s office at
4510 Cox Road,1400 16th Street, Suite
201, Richmond, VA 23060,270, Oak Brook, Illinois 60523, prior to the
Annual Meeting;meeting; or
(iii) by attending the
Annual Meetingvirtual meeting and voting in person. Attendance at the Annual Meeting will not in itself constitute revocation of a proxy.
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
I share an address with another shareholder, and
returning the enclosedBLUE Proxy Card in the accompanying postage-paid envelope or by voting over the Internet or by telephone by following the instructions on yourBLUE Proxy Card. Submitting any proxy card sent to you by the Dissident Group will revoke votes you have previously made via the Company’sBLUE Proxy Card.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?
Some banks, brokers and other
than theBLUE Proxy Card.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, 1400 16th Street, Suite 270, Oak Brook, Illinois 60523. 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.
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 JUNE 6, 2022
The Company's 2021 Annual Report to
you by the Dissident Group.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 the2021 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:
| ● | “FOR” the election of the eight Board nominees listed on theBLUE Proxy Card (i.e., 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), each to serve on the Board until the next annual meeting of shareholders and until his or her respective successor is duly elected and qualified; |
| ● | “FOR”the approval of the non-binding, advisory resolution approving the compensation of the Company’s named executive officers; and |
| ● | “FOR” the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2020. |
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 this2022 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) 662-5200
Banks 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.
http://investor.synalloy.com.
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
The
Company’s 2019Company's 2021 Annual Report to Shareholders, including the Annual Report on Form 10-K for the fiscal year ended December 31,
20192021, as filed with the
SEC,Securities and Exchange Commission ("SEC"), accompanies this Proxy Statement. Copies of exhibits to the
20192021 Annual Report on Form 10-K will be provided upon written request to the Corporate Secretary, Synalloy Corporation,
4510 Cox Road,1400 16th Street, Suite
201, Richmond, VA 23060, at a charge270, Oak Brook, Illinois 60523, free of
$0.10 per page.charge. Copies of the
20192021 Annual Report on Form 10-K and exhibits may also be downloaded at no cost from the
SEC’sSEC's website at http://www.sec.gov. The
20192021 Annual Report on Form 10-K does not form any part of the material for soliciting proxies.
Beneficial Owners of More Than Five Percent
BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT (5%)
of the Company’s Common StockOF THE COMPANY’S COMMON STOCK
The table below provides certain information regarding persons known by the Company to be the beneficial owners of more than five percent (5%) of the Company’s Common Stock as of
March 17, 2020.December 31, 2021. This information has been obtained from
Forms 4, Schedules 13D,
and 13G, and related amendments, filed with the SEC, and has not been independently verified by the Company.
The percentages shown were calculated based on 9,058,039 issued and outstanding shares of Common Stock. To the knowledge of the Company, there are no material proceedings to which any holder of 5% or more of our currently outstanding common stock, or any affiliate of such security holder that is adverse to the Company (or any of its subsidiaries) or has a material interest adverse to the Company (or any of its subsidiaries). 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 | % |
| | | | | | | | | | | | | | | | | 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 | 1,846,643 | | (1) | 18.1% | UPG Enterprises, LLC
1400 16th Street #250
Oak Brook, IL 60523 | 783,998 | | (2) | 7.7% | 180 Degree Capital Corp
7 N. Willow Street, Suite 4B
Montclair, NJ 07042 | 573,327 | | (3) | 5.6% | (1) Based on the Schedule 13D/A filed with the SEC on December 23, 2021, Privet Fund LP has shared voting power with shared dispositive power with respect to 1,846,643 shares referenced above. | (2) Based on the Schedule 13D/A filed with the SEC on July 2, 2020, UPG Enterprises, LLC has sole voting power with sole dispositive power with respect to 723,401 shares referenced above. | (3) Based on the Schedule 13G filed with the SEC on February 14, 2022, 180 Degree Capital Corp. (“180”), an investment advisor registered with the SEC under the Investment Act of 1940, has shared voting power with shared dispositive power with respect to 573,327 shares referenced above. According to such filing, 180 disclaims beneficial ownership of 200,021 of these shares that are beneficially owned by a separately managed account (“SMA”). 180 has shared dispositive and voting power over these shares through its position as Investment Manager of the SMA. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (1)
| Based on the Schedule 13D/A filed with the SEC on March 18, 2020, Privet Fund LP has shared voting power and shared dispositive power with respect to 1,535,507 shares referenced above. |
| (2) | Based on the Schedule 13G/A filed with the SEC on January 29, 2020, Royce & Associates, LP, an investment advisor registered with the SEC under the Investment Advisors Act of 1940, has sole voting power and sole dispositive power with respect to 1,009,153 of the shares referenced above. |
| (3) | Based on the Schedule 13D/A filed with the SEC on March 18, 2020, UPG Enterprises LLC has sole voting power and sole dispositive power with respect to 723,401 of the shares referenced above. |
| (4) | Based on the Schedule 13G/A filed with the SEC on February 6, 2020, Blackrock, Inc., an investment advisor registered with the SEC under the Investment Advisors Act of 1940, has sole voting power with respect to 560,585 of the shares referenced above and sole dispositive power with respect to 572,937 of the shares referenced above. |
| (5) | Based on the Schedule 13G/A filed with the SEC on February 12, 2020, Dimensional Fund Advisors, LP, an investment advisor registered with the SEC under the Investment Advisors Act of 1940, has sole voting power with respect to 462,212 of the shares referenced above and sole dispositive power with respect to 480,273 of the shares referenced above. |
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, 2020April 14, 2022, 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 | % |
| (1) | Includes indirect ownership of 17,818 shares held in an IRA; 32,763 shares held by his spouse; 3,145 shares allocated under the Company’s 401(k)/ESOP Plan; and 2,030 shares which are subject to currently exercisable options. |
| (2) | Includes indirect ownership of 40,000 shares held in an IRA; 5,810 shares held by his spouse; and 89,583 shares held in a revocable trust. |
| (3) | Includes 552 shares held in custodial accounts for minor children; and 7,000 shares held in a revocable trust. |
| (4) | Includes indirect ownership of 1,896 shares held in an IRA; 7,076 shares held under the Company’s 401(k)/ESOP; and 17,490 shares which are subject to currently exercisable options. |
| (5) | Includes 20,000 shares held in an IRA; and 1,150 shares held in a revocable trust. |
| (6) | Includes 13,174 shares held in an IRA |
| (7) | Includes 12,071 shares allocated under the Company’s 401(k)/ESOP Plan; and 8,326 shares which are subject to currently exercisable options. The beneficial owners have a right to acquire such shares within 60 days ofMarch 17,2020. |
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 | 68,430 | | (1) | * |
| J. Greg Gibson | 71,557 | | (2) | * |
| John P. Schauerman | 74,548 | | | * |
| Aldo J. Mazzaferro | 1,200 | | | * |
| Aaron M. Tam | 23,792 | | | * |
| Timothy J. Lynch | 16,319 | | | * |
| Sally M. Cunningham | 31,623 | | (3) | * |
| Benjamin Rosenzweig | 51,773 | | | * |
| Christopher G. Hutter | 989,574 | | (4) | 9.68% |
| All Directors, Nominees and Executive Officers as a group (7 persons) | 1,241,234 | | (5) | 11.99% |
| *Less than 1% |
(1) Includes 606 shares held in custodial accounts for minor children; and 7,889 shares held in a revocable trust. |
(2) Includes 7,076 shares allocated under the Company’s 401(k)/ESOP Plan; 1,896 shares held in an IRA; and 17,490 shares which are subject to currently exercisable options. |
(3) Includes 5,736 shares held in an IRA; and 12,000 shares which are subject to currently exercisable options. |
(4) Includes 783,998 shares held by UPG Enterprises, LLC, of which Mr. Hutter has shared voting power and shared dispositive power. |
(5) Includes 7,076 shares allocated under the Company’s 401(k)/ESOP Plan; and 29,490 shares which are subject to currently exercisable options. The beneficial owners have a right to acquire such shares within 60 days of April 14, 2022. |
Proposal
PROPOSAL 1 -
Election of DirectorsELECTION OF DIRECTORS
The Certificate of Incorporation
of the Company provides that the Board
of Directors shall consist of not less than three nor more than 15 individuals. Upon recommendation of the Corporate Governance Committee
and discussion by the current Board of Directors, the Board
of Directors has fixed the number of directors constituting the full Board at
eightfive members and recommends that the
eightfive nominees listed in the table
whichthat follows be elected as directors to serve for a term of one year until the next Annual Meeting or until
his or her respective successor istheir successors are elected and qualified to serve. Each of the
Company’s nominees has consented to
serving as a director nominee and beingbe named in this Proxy Statement and to
servingserve as a director if elected.
If cumulative voting is not requested, the proxy agents named in the
accompanyingBLUEBoard of Directors’ form of proxy that accompanies this Proxy
CardStatement will vote the proxies received by them
“FOR”"FOR" the election of the
eightfive persons named as directors. If cumulative voting is requested, the proxy agents named in the
accompanyingBLUEBoard of Directors’ form of proxy that accompanies this Proxy
CardStatement intend to vote the proxies received by them cumulatively for some or all of the nominees in such manner as may be determined at the time by such proxy agents.
If, at the time of the Annual Meeting
of Shareholders, or any
adjournment or postponementadjournment(s) thereof, one or more of the
Company’s director nominees is
unablenot available to serve
or for good cause will not serve,by reason of any unforeseen contingency, the proxy agents intend to vote for such substitute nominee(s) as the Board
of Directors recommends, or the Board
of Directors will reduce the number of directors.
Directors will be elected by a pluralitymajority of the shares present and eligible to vote at the Annual Meeting. Abstentions and broker non-votes will have the effect of votes against the election of directors.
Director Resignation Policy: Our Bylaws provide that any nominee for director who duly holds office as a director under the Bylaws and does not receive an affirmative vote of a majority of the votes cast. “Plurality” means that, amongcast shall promptly tender his or her resignation to the Board’s nomineesBoard of Directors after such election. The Board of Directors will evaluate the relevant facts and circumstances and then determine whether to accept or reject the Dissident Group Nominees, the eight nomineestendered resignation. Any director who receive the largest number of “FOR” votes of the shares entitledtenders a resignation pursuant to be votedthis policy shall not participate in the election for directorsBoard of Directors’ decision. The Board of Directors will be elected. Votes that are withheld or shares that are not voted will have no effect on the outcome of the election of directors.promptly disclose publicly its decision and decision-making process regarding a tendered resignation.
THE BOARD
OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR”"FOR" THE ELECTION OF THE
EIGHTFIVE NOMINEES LISTED IN THE FOLLOWING TABLE AS DIRECTORS OF THE COMPANY.
The following table sets forth the names of nominees for director, their ages, the years in which they were first elected
or appointed directors,
ifas applicable, and a brief description of their principal occupations and business experience during the last five years. There are no family relationships among any of the directors
director nominees and executive officers.
There are no agreements or arrangements between any director or director nominee, and any person or entity other than the Company relating to compensation or other payment in connection with the director or director nominee’s candidacy or service.
| | | | | |
| Name, Age, Principal Occupation, Other Directorships and Other Information | | Director
Since
|
Craig C. Bram, age 61
Mr. Bram became President and Chief Executive Officer (“CEO”) of the Company in January 2011 and has served as a director of the Company since 2004, except for a period between September 2010 and January 2011. As the chief architect of the Company’s acquisition strategy, Mr. Bram has been directly involved in every transaction that has occurred since 2012, including the negotiation of the purchase price, associated terms and integration into the overall business. During his tenure, the Company has completed six acquisitions and three divestitures, while growing revenue three-fold and posting record profits in 2018. For the first time in the Company’s history, Synalloy was added to the Russell 2000 Index in June 2018.
Starting in 1995, Mr. Bram founded or co-founded multiple private companies covering a broad array of services. He founded and was a Managing Director with McCammon Group, a mediation and consulting company, from 1995 through 2011. He served as the President and Chief Executive Officer of Bizport, Ltd., a document management company, from January 2002 to December 2010. He served as a director of TrialNet, Inc. (now Acuity Management Solutions), an electronic billing company, from 1997 to 2013. He continues to provide investment advisory services through his company, Horizon Capital Management, where he was the founder and President since 1995.
Prior to 1995, Mr. Bram served as the General Manager for a national litigation firm, overseeing all business operations and the acquisition of new practices. Mr. Bram started his business career in manufacturing, holding various logistics and supply chain, sales and marketing, and corporate planning and development with Reynolds Metals Company (now Alcoa Corporation NYSE: AA) and Richfood, Inc (now United Natural Foods, Inc NYSE: UNFI). Mr. Bram received his B.B.A. in marketing from James Madison University, graduating summa cum laude. He also received his M.B.A. from Virginia Commonwealth University, with a concentration in finance.
Mr. Bram has over 30 years of experience in business management, financial operations, logistics, management consulting, business start-ups and strategic planning for a variety of companies.
| | 2004 |
Anthony A. Callander, age 73
Mr. Callander has served as a director since .2012. Mr. Callander has served as a Principal at Business Value Consultancy since January 2019. He was appointed Upstate Managing Director by The Hobbs Group, a certified public accounting firm in Columbia, South Carolina, in January 2012. In 2008, he retired from Ernst & Young, LLP after 36 years in their Columbia, South Carolina, Greenville, South Carolina and Atlanta, Georgia offices. He served as a Partner in the firm’s audit and assurance practice and in various other roles including Office Managing Partner of the Columbia and Greenville offices and leading the Southeast manufacturing industry group. He has also been an active entrepreneur with direct business interest in several Zaxby’s franchise restaurants in Arkansas, from 2008 to 2016. Mr. Callander received a B.S. and Masters in Accountancy from the Darla Moore School of Business at the University of South Carolina. He is a Certified Public Accountant and a Certified Management Accountant.
Mr. Callander spent his career in the audit and assurance practice with significant experience in auditing, mergers and acquisitions, initial public offerings and other financings, reorganizations, business process improvement and business strategy development. From 1998 to 2003, while with Ernst & Young, Mr. Callander served as the audit partner on the Company’s independent audits, giving him in-depth experience and knowledge about the Company. Mr. Callander, a Certified Public Accountant, also meets the criteria of a financial expert.
| | 2012 |
Susan S. Gayner, age 59
Ms. Gayner joined our Board in May 2016. She currently serves as President and CEO of ParkLand Ventures, Inc. (“ParkLand”), an owner-operator of multi-family housing communities in nine states. She served as Chief Operating Officer of ParkLand from October 2010 to May 2014, and as Vice President from May 2009 to October 2010. Ms. Gayner is a chemical engineer and holds a MAI designation (currently inactive). Prior to ParkLand, she served as an independent MAI and held various manufacturing and quality assurance roles with the DuPont Company, between 1989 and 1992, and Hercules, Inc., between 1983 and 1989. Since September 2019, she has served as a Director of Constellation Software Inc. (OTCMKTS: CNSWF). She received a B.A. degree in chemistry and an M.E. degree in chemical engineering, both from the University of Virginia.
Ms. Gayner offers valuable experience in the chemical business. She has 10 years’ experience working for two large chemical companies in the area of quality assurance and as a research and development engineer. In her current role as CEO and President of Parkland, she has valuable experience in executive management and operations.
| | 2016 |
Name, Age, Principal Occupation, Other Directorships and Other Information | | Director
Since
|
Henry L. Guy, age 51 54 Mr. Guy joined our Board in August 2011. He is the President & CEO of Modern Holdings Incorporated, (“Modern Holdings”), a diversified holding company with investments primarilylocated in Summit, NJ.He has served the insurance, transportation, network servicesboard of directors of Metro International S.A. (MTRO), Scribona AB (CATB), Pergo AB (PERG), Miltope Corporation (MILT) and media industries. HeEvermore Global Advisors (EVGBX). Mr. Guy joined Modern Holdings in 2002 and has ledmanaged investments in over 30 Modern Holdings subsidiaries. Previously, Mr. Guy was a managing director of Anima Regni Partners, a single family office with offices in the United States, Luxembourg and Sweden. Prior to joining Modern Holdings & Anima Regni Partners, Mr. Guy was the Chief Operating Officer of XSource Corporation, a holding company focused on private investments in the United States and Scandinavia. He began his professional career as an officer in the United States Navy where he served in a variety of operational roles in the United States and Southwest Asia.Mr. Guy’s public board experience includes serving on the boards of Metro International S.A. (MTRO); Pergo AB (PERG); Miltope Corporation (MILT); and Scribona AB (CATB). He currently serves on the boards of Evermore Global Advisors (EVGBX), Lors Photography, Inc., Specialty Claims Management & MHI Investments AB. He has served on the Board of Visitors of Vanderbilt University’s Owen Graduate School of Management since 2010. Mr. Guy’s corporate governance experience also includes serving on the nominating committee for the board of directors of Investment AB Kinnevik. He holds a B.S. degree in economicsgraduated from the United States Naval Academy with a Bachelor of Science degree in Economics and anearned his M.B.A. with a concentration in Operations and Strategy from Vanderbilt University.
Mr. Guy’s primary career focus has been as an owner/operator of private investments. Mr. Guy has a unique combination of operating skills and M&A experience that has been invaluable to the Company’s growth by acquisition strategy. His role on the Executive Committee provides the President and CEO with a continuous source of advice and counsel as the Company pursues its strategic initiatives.
| | 2011 |
Jeffrey Kaczka
Christopher G. Hutter, age 6042 Mr. KaczkaHutter became interim President & Chief Executive Officer (CEO) of Synalloy on November 9, 2020 (the interim designation was elected toremoved on March 18, 2022).. He also currently serves as Co-Founder and Manager of UPG Enterprises, LLC (f/k/a Union Partners, LLC), an operator of a diverse set of industrial companies focused on metals, manufacturing, distribution and logistics, since its founding in August 2014. At UPG Enterprises, Mr. Hutter oversees operations and growth initiatives at the Boardholding company and portfolio company level, and has extensive experience in May 2019. Prior to his retirementlarge scale acquisitions, transaction structuring and business operations and integration across a broad spectrum of industries. Mr. Hutter graduated cum laude from University of Illinois with a Bachelor of Science degree in 2015, Mr. Kaczka served as Executive Vice PresidentFinance and Chief Financial Officer for MSC Industrial Direct (NYSE: MSM) from April 2011 to July 2015. Prior to joining MSC Industrial Direct, he held chief financial officer positions at Genworth Financial, Inc. (NYSE: GNW), Owens & Minor, Inc. (NYSE: OMI), Allied Worldwide, Inc. and I-Net, Inc. Mr. Kaczka began his career at General Electric (NYSE: GE) (“GE”) in 1981, where he spent 14 years, moving through its Financial Management Program, Corporate Audit Staff and financial positions in several GE operations. Mr. Kaczka earned his B.A. in EconomicsM.B.A.in Finance from RutgersLewis University.Mr. Kaczka has more than 25 years of experience in financial management of both public and large private companies. His background as chief financial officer for multiple publicly traded companies brings significant experience in finance, financial and banking transactions, mergers and acquisitions, and audit matters. Mr. Kaczka also meets the criteria of a financial expert.
| | 20192020 |
Amy J. Michtich
Benjamin Rosenzweig, age 51Ms. Michtich joined our Board37
Mr. Rosenzweig currently serves as a Partner at Privet Fund Management LLC, an investment firm focused on event-driven, value-oriented investments in April 2014. She has servedsmall capitalization companies. Mr. Rosenzweig currently serves as the Vice President – General Manager, North American Operationsa director of The Scotts Miracle Gro Company since July 2019. From September 2015 to July 2019, she was the Chief Supply Chain Officereach of Molson Coors Canada, where she oversaw end-to-end operational excellence for Canada’s largestBed Bath and North America’s oldest brewer of quality beers and ciders. From June 2009 to September 2015, she was the Brewery Vice President and Plant Manager of the MillerCoors-Shenandoah Brewery. From November 2007 to May 2009, she served as the Operations Manager at Miller Brewing Company. Prior to 2007, Ms. Michtich held executive and operations leadership positions across various consumer package goods companies including Pepsi Bottling Group, Clorox and Unilever.Ms. Michtich served on the Board of Directors of Brewers Distributor Ltd.Beyond (NASDAQ: BBBY), an omnichannel retailer (since March 2022), Potbelly Corporation (NASDAQ: PBPB), a private joint venture company, between January 2016restaurant chain (since April 2018), PFSweb, Inc. (NASDAQ: PFSW), a global commerce service provider (since May 2013), and September 2018. Further, she served on the BoardHardinge Inc. (formerly NASDAQ: HDNG), a global designer, manufacturer and distributor of Advisors to James Madison University’s Collegemachine tools (since October 2015). Mr. Rosenzweig graduated
magna cum laude from Emory University with a Bachelor of Business between the years of 2013Administration degree in Finance and 2017. She earned a B.S. degree from Purdue University’s School of Technology locatedsecond major in West Lafayette, IN.Ms. Michtich has served in senior level leadership positions with several large union and non-union manufacturing businesses. She has significant experience in the areas of manufacturing operations, engineering, distribution and global logistics, human resources, environmental compliance and safety.
Economics. | | 20142020 |
| | | | | |
| Name, Age, Principal Occupation, Other Directorships and Other Information | | Director
Since
|
James W. Terry, Jr.
John P. Schauerman, age 7265 Mr. TerrySchauerman has served on the Board since August 2011. Mr. Terry bringsbeen a wealth of experience in the banking industry where he spent more than 38 years. Since March 2018, he serves as Director of Strategic Assets & Investments for Hollingsworth Funds, Inc., a charitable foundationPrimoris Services Corporation (“Primoris”) (NASDAQ: PRIM) since November 15, 2016. He previously served in Greenville, South Carolina. In this role, Mr. Terry manages and provides investment insight for an endowment fund of over $200 million. From October 2009 to February 2018, he was the President of Hollingsworth Funds, Inc. In his aforementioned banking career, he served as the president of Carolina First Bank from 1991 to 2008 growing the bank to become an 87-branch network with the franchise becoming the largest regional bank headquartered in South Carolina, with assets over $6 billion. Prior to 1991, Mr. Terry was employed by First Union Bank for 21 years where he held various positionsnumerous executive roles at Primoris, including Executive Vice President with oversight for U.S. corporate lending, treasury management and asset based financing. He received his B. S. degree from the University of North Carolina.We believeCorporate Development, Chief Financial Officer. Mr. Terry’s banking experience is valuable in helping the Company evaluate financing options as well as acquisitions.
| | 2011 |
Murray H. Wright, age 74
Mr. Wright was elected Chairman of the Board in April 2014 and hasSchauerman previously served on the Board of Directors since April 2001.of MYR Group (NASDAQ: MYRG); Harmony Merger Corp. (NASDAQ: HRMNU): Allegro Merger Corp (NASDAQ: ALGR); and Wedbush Securities, Inc. Mr. Schauerman is a member of the Dean’s Executive Board of the UCLA School of Engineering. Mr. Schauerman holds an M.B.A. in Finance from Columbia University, New York, and a B.S. in Electrical Engineering from the University of California, Los Angeles.
| 2020 |
Aldo J. Mazzaferro, age 68 Mr. Mazzaferro serves as the Managing Partner and Director of Research at Mazzaferro Research, LLC, a steel industry research boutique firm, which he founded in October 2017. Prior to his retirement in 2014, he was Senior Counsel at the Richmond, Virginia law firm of DurretteCrump, PLC. From 2011 until January 2013, he was a Partner at the VanDeventer Black LLP law firm in Richmond, Virginia, wherethis, he served as the Senior Counsel from 2009 to 2011. From 1999 to 2012, he wasSteel & Metals Research Analyst and a founder and managing director of AvitasManaging Director during his tenure at Macquarie Capital LLC, a closely held(USA) Inc., an investment banking firm. In 1986, he founded the law firm of Wright, Robinson, Osthimer & Tatum in Richmond, Virginia. He served as chief executive officer of the law firmcompany, from 1986 until 2006.2011 to September 2017. Mr. Wright has servedMazzaferro is on the board of Bizport, Ltd.,directors of Arctic Canadian Diamond Company, Ltd, a document managementprivately-held Canadian mining company from 1987 until February 2020. He received his B.A. degree from Vanderbilt University and his J.D. from Vanderbilt University School of Law.Mr. Wright’s career as a trial lawyer, founder and chief executive of a law firm and his business and financial experience as managing director of a closely-held investment banking firm are considered to be valuable attributesthat supplies premium rough diamond assortments to the Board.
global markets, where he chairs the audit committee. Mr. Mazzaferro is a CFA charterholder. He earned his BA in English from Holy Cross College and an MBA in Finance from Northeastern University | | 20012022 |
The Corporate Governance Committee believes the combined business and professional experience of the Company’s directors, and their various areas of expertise make them a useful resource to management and qualify them for service on the Board.
Messrs. Wright and Bram have served on the Board for a significant period of time. During their tenures, these directors have gained considerable institutional knowledge about the Company and its operations, which has made them effective board members who are also able to integrate new directors into the Board and educate them about the Company’s business and long-term corporate strategy. Because the Company’s operations are complex, continuity of service and development of institutional knowledge help make the Board more efficient and more effective at developing long-range plans than it would be if there were frequent turnover in Board membership. When a Board member decides not to run for re-election, the Corporate Governance Committee seeks replacement directors who it believes will make significant contributions to the Board for a variety of reasons, including among others, business
legal, and financial experience and
expertise, operations and supply chain expertise, business and government contacts, relationship skills, knowledge of the Company and diversity.
The Corporate Governance Committee believes the current Board members are highly qualified to serve and each member has unique qualifications and business expertise that benefit the Company.
•Mr. Guy’s primary career focus has been in the area of private investments. His expertise and experience in this area are valuable tools as the Company focuses on growing through acquisitions.
•Mr. Hutter is a demonstrated business builder and organizational leader with operational know how and management capabilities across industrial segments, particularly steel and metals. His diverse experience covers areas that include corporate strategy, operations management, mergers and acquisitions, logistics and warehousing and supply chain optimization.
•Mr. Rosenzweig has corporate governance expertise based on service on numerous public and private company boards of directors, including multiple manufacturing companies. He has a background leading and working on mergers and acquisitions, restructurings and refinancing situations, and strategic board-level reviews.
•Mr. Schauerman has operational, financial, corporate development and strategic planning expertise gained from executive roles and directorships at construction and infrastructure companies. He has corporate governance experience as a result of service on several private and public company boards of directors across business-to-business sectors.
•Mr. Mazzaferro’s extensive experience in the steel and metals research and investment banking industries will provide valuable insight into the steels and metals industries as well as current capital markets and trends.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors currently has five members: Henry L. Guy, Christopher G. Hutter, Benjamin Rosenzweig, John P. Schauerman, and Aldo J. Mazzaferro.
The Board of Directors has determined that for 2021 each of the following directors arewere independent as such term is defined by the applicable rules of the Nasdaq Stock Market LLC (the “Nasdaq Rules”): Anthony A. Callander, Susan S. Gayner, Henry L. Guy, Jeffrey Kaczka, Amy J. Michtich, James W. Terry, Jr.Benjamin Rosenzweig and Murray H. Wright.John P. Schauerman. The Board has also determined that each of the current members of the Audit Committee, the Compensation & Long-Term Incentive Committee and the Corporate Governance Committee during 2021 were independent within the meaning of the Nasdaq Rules.Effective as of March 18, 2022, Aldo Mazzaferro was appointed to the Board and Mr. Rosenzweig was appointed as the Executive Chairman of the Board.Following his appointment as Executive Chairman, it is anticipated that Mr. Rosenzweig will no longer be independent within the meaning of the Nasdaq Rules and each person who servedthat for 2022 Mr. Mazzaferro will replace Mr. Rosenzweig as an independent director on such committees at any time during 2019 was independent under the Nasdaq Rules and applicable ruleseach of the SEC, as discussed in greater detail below.committees on which Mr. Rosenzweig serves.
Board and Board Committee Meetings and Attendance at Shareholder Meetings
During fiscal year 2019,2021, the Board of Directors met seveneight times.All members of the Board attended 75% or more of the aggregate of the total number of meetings of the Board and of the committees of the Board on which they served. The Company encourages, but does not require, its directors to attend annual meetings of shareholders. AllTo the best of our knowledge, all directors attended the 20192021 Annual Meeting, of Shareholders.which was held virtually.
The Board has established an Audit Committee, a Compensation & Long-Term Incentive Committee, and a Corporate Governance Committee, each of which is comprised entirely of directors who meet the applicable independence
requirementrequirements of the
NasdaqNASDAQ Rules. The committees keep the Board informed of their actions and
provide assistance toassist the Board in fulfilling its oversight responsibility to shareholders. The table below provides
current membership information
as of December 31, 2021, as well as the meeting information for the last fiscal year.
| 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 |
| Henry L. Guy | X | X(1) | X |
| Christopher G. Hutter | | | |
| Benjamin Rosenzweig | X(2) | X(2) | X(1)(2) |
| John P. Schauerman | X(1) | X | X |
| Total Meetings Held in 2021 | 6 | 5 | 3 |
(1) Committee Chair |
(2) Effective as of March 18, 2022, Aldo Mazzaferro was appointed to the Board and Mr. Rosenzweig was appointed as the Executive Chairman of the Board. Following his appointment as Executive Chairman, it is anticipated that Mr. Rosenzweig will no longer be independent within the meaning of the Nasdaq Rules and that for 2022 Mr. Mazzaferro will replace Mr. Rosenzweig as an independent director on each of the committees on which Mr. Rosenzweig serves. |
The
Company has an Audit Committee
is established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934
(as amended, the “Exchange Act”).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.
Benjamin Rosenzweig, Henry L. Guy and John P. Schauerman served on the Audit Committee as of December 31, 2021. The Board
has determined thatdesignated Mr.
Callander and Mr. Kaczka meet the definition ofSchauerman as the Audit Committee Financial Expert, as defined by the SEC
in Item 407 of Regulation S-K. During fiscal year 2019, the Audit Committee met 8 times.Compensation & Long-Term Incentive Committee
All members of the Compensation & Long-Term Incentive Committee are independent
directors as defined in the
NasdaqNASDAQ Rules, and
qualify as non-employee directors withinnone of them is a present or past employee or officer of the
meaning of Rule 16b-3 under the Securities Act.Company or its subsidiaries. This
committeeCommittee acts pursuant to a written charter which is available on the Company’s website at www.synalloy.com. The
committee (i)Committee reviews and approves salaries, bonuses, incentive compensation and benefits for
the Company’s executive officers,
of the Company, (ii)and administers and makes recommendations with respect to the Company’s cash incentive and equity plans, including the granting of shares and options thereunder, and
(iii) reviews the committee’s charter.
The committeeCommittee sets the compensation for the CEO and evaluates performance and it considers recommendations from the Company’s CEO in setting compensation for other senior executive officers. The Vice President, Corporate Administration supports the committee in its duties, and the committee may receive advice from any compensation advisor related to the Company’s compensation programs after the committee has considered certain factors specified in Rule 10C-1(b)(4) of the Exchange Act and Nasdaq Rule 5605(d)(3)(D). The committee has the authority under its charter to retain and terminateengage and approve fees for compensation consultants and other advisors as it deems appropriate to assist it in the fulfillment of its duties. Since 2016, the committeeCommittee has retained Pearl Meyer (“PM”) as the Compensation & Long-Term Incentive Committee’s outsideits independent compensation consulting firm for such duties.firm. The committeeCommittee has reviewed and confirmed the independence of PM as the committee’s compensation consultant.Pearl Meyer. Neither PMPearl Meyer nor any of its affiliates provide any services to the Company except for the services related solely to the executive officer and director compensation. The
Henry L. Guy, John P. Schauerman and Benjamin Rosenzweig served on the Compensation & Long-Term Incentive Committee
met 5 times during fiscal year 2019.as of December 31, 2021.
Corporate Governance Committee
All members of the Corporate Governance Committee are independent as defined in the NasdaqNASDAQ Rules. This committeeCommittee acts pursuant to a written charter which is available on the Company’s website at www.synalloy.com. This committeeCommittee is responsible for (i) reviewing and recommending changes in the size and composition of the Board (ii)of Directors and evaluating and recommending candidates for election to the Company’s Board, and (iii) reviewing, approving and overseeing any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K) and any other potential conflict of interest situations on an ongoing basis. This committeeBoard. The Committee also reviews and oversees corporate governance issues and makes recommendations to the Board related to the adoption of policies pursuant to rules of the SEC, NasdaqNASDAQ and other governing authorities, and as required by the Sarbanes-Oxley Act of 2002. The
Henry L. Guy, John P. Schauerman and Benjamin Rosenzweig served on the Corporate Governance Committee
met 3 times during
fiscal year 2019.Compensation Committee Interlocks and Insider Participation
Susan S. Gayner, Henry L. Guy, Amy J. Michtich and James W. Terry, Jr. served on 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.
2021.
Related Party Transactions
The Company requires that each executive officer, director and director nominee complete an annual questionnaire and report all transactions with the Company in which such persons (or their immediate family members) had or will have a direct or indirect material interest (except for salaries, directors’ fees and dividends on our stock). Management reviews responses to the questionnaires and, if any such transactions are disclosed, they are reviewed by the
Board.Board of Directors. The Company does not, however, have a formal written policy setting out these procedures.
There were no such transactions during the fiscal year ended December 31, 2019.26
See “Related Party Transactions” below.The Board
of Directors has adopted a retirement policy with respect to the
Company’sCompany's directors. Under the policy, directors who attain the age of 75 prior to an annual meeting of the
Company’sCompany's shareholders are not eligible to be nominated for re-election to the
Company’sCompany's Board
of Directors at the annual meeting.
Board Leadership Structure
and Board’s Role in Risk OversightThe
Board’s roleBoard of Directors’ roles and responsibilities are set forth in the Bylaws and
the Board’sBoard Charter
and Corporate Governance Guidelines (the “Board Charter”) which provide for a Chairman elected by the
majority vote of all Board
members present at the first Board meeting after an annual meeting.from among its members. The business and affairs of the Company are managed under the direction of the
Board.Board of Directors, and that management control is subject to the authority of the Board of Directors to appoint and remove any of our officers at any time. Our Board does not have a specific policy as to whether the role of Chairman and CEO should be held by separate persons, but rather
makes an assessment ofassesses the appropriate form of leadership structure on a case-by-case basis. The Board believes that this issue
can beplays a part
ofin the succession planning process and recognizes that there are various circumstances that weigh in favor of or against both combination and separation of these offices. Since 2002, the roles of Chairman and CEO have been held by separate persons. The Board believes it is appropriate, and in our Company’s best interests, for the two roles to
continue to be separated at this time.
The Board does not currently have a lead independent director.
Board’s Role in Risk Oversight
Our Board is actively involved in the oversight of risks that could affect our Company. The Board receives regular reports from members of senior management on areas of material risk to us, including strategic, operational, financial, information technology (including cyber risk), legal and regulatory risks. These reports are reviewed by the full Board, or, where responsibility for a particular area of risk oversight is delegated to a committee of the Board, that committee reviews the report and then reports to the full Board. In addition, the Audit Committee’s charter requires the committee to inquire of management and the
registered public accountantsindependent auditor about significant risks or exposures and assess the steps management has taken to manage such risks, and further requires the committee to discuss with the
registered public accountantsindependent auditor the Company’s policies and procedures to assess, monitor, and manage business risk, and legal and ethical compliance programs.
Director Qualifications and Nomination Process
The Corporate Governance Committee
follows thehas adopted Corporate Governance Guidelines
which are contained as Attachment A to the Board of Director’s Charter. The Corporate Governance Guidelinesthat set forth factors in recommending and evaluating candidates, including personal characteristics, core competencies, commitment and independence. It also takes into consideration such factors as it deems appropriate based on the Company’s current needs. These factors may include diversity, age, skills such as understanding of appropriate technologies and general finance, decision-making ability, inter-personal skills, experience with businesses and other organizations of comparable size, and the interrelationship between the candidate’s experience and business background, and other Board members’ experience and business background. Although the Corporate Governance Committee does not have a specific policy with regard to the consideration of diversity in identifying director nominees, the committee considers racial and gender diversity, as well as diversity in business and educational experience, as part of the total mix of information
it takes into account in identifyingapplied to identify nominees. Additionally, candidates for director
shouldmust possess the highest personal and professional ethics and
they should be committed to the long-term interests of the shareholders of the Company.
The Corporate Governance Committee does not have any specific process for identifying director candidates. Such candidates are routinely identified through personal and business relationships and contacts of the directors and executive officers. The Board Charter does require that any director nominee, whether a new nominee or a previous director, must be less than 75 years of age on the date of the Annual Meeting of Shareholders and Board of Director nominee vote.
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,1400 16th Street, Suite 201, Richmond, VA 23060 for270, Oak Brook, Illinois 60523 or 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.
Nominations for election as directors may also be made by shareholders from the floor at
an annual meetingthe Annual Meeting of
shareholdersShareholders provided such nominations
arewere received by the Company not less than
3060 nor more than
6090 days
prior tobefore the
anniversary of the preceding year's annual meeting
of shareholders, contain the information set forth above, and otherwise are made in accordance with the procedures set forth in the Company’s Bylaws.
Shareholder Communications with Directors
Any shareholder who wishes to send communications to the Board
of Directors should mail them addressed to the intended recipient by name or position in care of: Corporate Secretary, Synalloy Corporation,
4510 Cox Road,1400 16th Street, Suite
201, Richmond, VA 23060.270, Oak Brook, Illinois 60523. Upon receipt of any such communications, the Corporate Secretary will determine the identity of the intended recipient and whether the communication is an appropriate shareholder communication. The Corporate Secretary will send all appropriate shareholder communications to the intended recipient. An “appropriate shareholder communication” is a communication from a person claiming to be a shareholder in the communication the subject of which relates solely to the sender’s interest as a shareholder and not to any other personal or business interest.
In the case of communications addressed to the Board
of Directors, the Corporate Secretary will send appropriate shareholder communications to the
Executive Chairman of the Board. In the case of communications addressed to the independent
or outside directors, the Corporate Secretary will send appropriate shareholder communications to the Chairman of the Audit Committee. In the case of communications addressed to committees of the Board, the Corporate Secretary will send appropriate shareholder communications to the Chairman of such committee.
DIRECTOR COMPENSATION
Compensation of Non-Employee Directors
For the 2019-20202021-2022 term year, non-employee directors were paid a total annual retainer of $102,000 in the form of cash and restricted stock. Directors must elect to receive a minimum of $30,000 of the retainer fee in restricted stock and may elect to receive up to 100% of the retainer 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 2019 Annual Meeting of Shareholders or the date prior to the appointment to the Board. Non-employee directors elected by the shareholders for the 2019-2020 term year received an aggregate of 15,909 shares of restricted stock in lieu of such cash retainer amount as follows: Anthony A. Callander - 1,570; Susan S. Gayner - 5,338; Henry L. Guy - 1,570; Jeffery Kaczka - 2,617; Amy J. Michtich - 1,570; James W. Terry, Jr. - 1,674; and Murray H. Wright - 1,570. The annual retainer is inclusive of all director fees and directors did not receive meeting fees or chair fees in addition to the retainer. Directors were reimbursed for travel and other expenses related to attendance at meetings. Directors who are employees did not receive extra compensation for service on the Board or any committee of the Board.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 2021 Annual Meeting of Shareholders or, if later, the date prior to the director’s appointment to the Board. The annual retainer is inclusive of all director fees; directors did not receive meeting fees or chair fees in addition to the retainer, except that Mr. Rosenzweig received certain additional equity grants described in the table below relating to extraordinary services performed in his capacity as director. Directors were reimbursed for travel and other expenses related to attendance at meetings. There will be no changes to non-employee director annual retainers for the 2022-2023 term year.
The shares granted to the non-employee directors are not registered under the Securities Act of 1933 and are subject to forfeiture in whole or in part upon the occurrence of certain events.
The following table sets forth information about compensation paid by the Company to non-employee directors during calendar year 20192021.
| | | | | | | | | | | |
| Name | Fees Paid in Cash (1) | Stock Awards (2) | Total |
| (a) | (b) | (c) | (d) |
| Henry L. Guy | $39,000 | $50,000 | $89,000 |
| Benjamin Rosenzweig | $0 | $298,400(3) | $298,400 |
| John P. Schauerman | $51,000 | $62,000 | $113,000 |
(1) Represents fees paid in cash during 2021. |
(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 for 2021 service. For 2021, the directors received restricted shares in lieu of cash retainer as follows: Henry L. Guy - 5,146; Benjamin Rosenzweig - 10,499; and John P. Schauerman - 6,381. No director has been granted any stock options by the Company. |
(3) Effective as of March 18, 2022, Mr. Rosenzweig was appointed as the Executive Chairman of the Board. During 2021, Mr. Rosenzweig performed certain extraordinary services that went well beyond the typical duties of a director. In recognition of such services, the Company made the following equity awards to Mr. Rosenzweig: (a) On May 25, 2021, the Company made an award of 10,000 restricted stock units (RSUs) that vested 12 months after the grant date as long as Mr. Rosenzweig continued to serve on the Board at such time; and (b) on May 25, 2021, the Company made an award of 10,000 performance stock units (PSUs) to Mr. Rosenzweig that would vest at such time as the Company achieved a 30-day trailing volume weighted average price per share of stock of $14.50 (the Company achieved such target as of December 31, 2021). |
SECURITIES OWNERSHIP
The Board of Directors has established stock ownership levels for the senior management team and includes a portion from both the 2018-2019Board of Directors. Directors and 2019-2020 term years. Non-employeeexecutive officers have five years to achieve the targeted ownership levels. Stock ownership levels for executive officers and directors were paid $102,000are based on dollars invested or cost basis, not market value. All directors and named executive officers are currently in compliance (or in the 2018-2019 board termcase of Mr. Mazzaferro is still within the five-year period to achieve the targeted ownership level).
Stock ownership requirements are as follows:
•Board of Directors - three times retainer
•CEO - four times base salary
•CFO and the 2019-2020 board term.| 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 | |
| (1) | Represents fees paid in cash during 2019. |
| (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 May 16, 2019 for 2019 service. For 2019, the directors received restricted shares in lieu of cash retainer as follows: Anthony A. Callander - 1,570; Susan S. Gayner - 5,338; Henry L. Guy - 1,570; Jeffrey Kaczka - 2,617; Amy J. Michtich - 1,570; James W. Terry, Jr. - 1,674; and Murray H. Wright - 1,570. No director has been granted any stock options by the Company. |
| (3) | Mr. Kaczka was elected to the Board on May 16, 2019 and did not serve for the full 2019 calendar year. |
Segment Presidents - $250,000
Our Board has formally adopted a Code of Conduct that applies to all of our employees, officers and directors. We intend to satisfy the disclosure requirement regarding any amendment to, or waiver of, a provision of the Code of Conduct for the Company’s CEO,
CFO, Chief
AccountingFinancial Officer
(“CAO”)(CFO), Controller, or persons performing similar functions, by posting such information on the Company’s website.
There were no amendments to, or waivers of, any provision of the Code of Conduct for the Company’s CEO, CFO,
CAO, Controller, or any persons performing similar functions during fiscal year
2019.2021. A copy of our Code of Conduct is available on our website at www.synalloy.com.
Our Board adopted an anti-hedging and anti-pledging policy within its Insider Trading Policy whereby the Company’sSynalloy’s directors officers and any of their respective designeesofficers are prohibited from engaging in any speculative or hedging transactions in Company securities. Hedging transactions such as puts, calls, collars, swaps, forward sale contracts, and similar arrangements or instruments designed to hedge or offset decreases in the market value of Company securities and pledge Company securities as collateral for a loan are prohibited without the written permission of the Board.Board of Directors. Additionally, directors and officers are prohibited from pledging Synalloy securities as collateral for a loan.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors and executive officers and beneficial owners of more than 10% of our outstanding common stock (collectively, “Insiders”) to file reports with the SEC disclosing direct and indirect ownership of our common stock and changes in such ownership. The rules of the SEC require Insiders to provide us with copies of all Section 16(a) reports filed with the SEC. Based solely upon a review of copies of Section 16(a) reports received by us, and written representations that no additional reports were required to be filed with the SEC, we believe that our Insiders have timely filed all Section 16(a) reports during the 2021 fiscal year, except that the following Form 4 filings were made late:
| | | | | | | | | | | |
| Form | Name of Insider | Event Date | Filing Date |
| 4 | Guy Henry L | 12/1/21 | 12/16/21 |
| 4 | Guy Henry L | 11/22/21 | 12/08/21 |
| 3 | Tam Aaron M | 8/30/21 | 9/17/21 |
| 4 | Tam Aaron M | 8/30/21 | 9/17/21 |
| 4 | Rosenzweig Benjamin L | 5/25/21 | 6/14/21 |
| 4 | Hutter Christopher Gerald | 6/4/21 | 6/10/21 |
| 4 | Rosenzweig Benjamin L | 5/24/21 | 5/27/21 |
| 4 | Schauerman John P | 5/24/21 | 5/27/21 |
| 4 | Guy Henry L | 5/24/21 | 5/27/21 |
| 4 | Gibson James G | 5/14/21 | 5/26/21 |
| 4 | Schauerman John P | 5/18/21 | 5/21/21 |
| 4 | Cunningham Sarah M | 2/19/21 | 2/26/21 |
| 4 | Gibson James G | 2/19/21 | 2/26/21 |
| 4 | Padden Michael | 2/19/21 | 2/26/21 |
| 4 | Hutter Christopher Gerald | 11/10/20 | 2/19/21 |
| 4 | Gibson James G | 2/7/21 | 2/19/21 |
| 4 | Baroff Steven | 2/9/21 | 2/19/21 |
| 4 | Cunningham Sarah M | 2/7/21 | 2/19/21 |
| 4 | Roberson Maria Haughton | 2/7/21 | 2/19/21 |
| 4 | Padden Michael | 2/7/21 | 2/19/21 |
The following table provides information about our current executive officerofficers other than Mr. Craig Bram,Christopher G. Hutter, the Company’s President and CEO. Information about Mr. BramHutter is set forth above under “ElectionElection of Directors.”Directors. | | |
| Name, Age, Principal Position and Five-Year Business Experience |
Dennis
Aaron M. LoughranTam, age 53 Mr. Tam joined the Company in August 2021 as Chief Financial Officer. Prior to Synalloy, Mr. Tam was Chief Financial Officer of Northstar Aerospace, a leading independent manufacturer of components and assemblies to the global aerospace industry, where he served since 2013. Mr. Tam has served in multiple CFO roles encompassing a broad range of industries as well as spending more than a decade as a consultant, interim senior executive or restructuring advisor to a variety of businesses. Mr. Tam holds a Ph.D and M.A. in corporate finance, industrial organization and econometrics from Northwestern University and an A.B. in economics from the University of Michigan. |
Timothy J. Lynch, age 50 Mr. Lynch joined the Company in April 2021 as Executive Vice President, Synalloy Metals. Prior to Synalloy, Mr. Lynch held senior leadership positions at the Americas division of Outokumpu, a global leader in the stainless-steel market. Prior to Outokumpu, Mr. Lynch served as vice president of operations, optimization, procurement and special projects at TMS International, an industry leader in outsourced mill services for global steelmakers and general manager for United States Steel Corporation. Mr. Lynch holds a Bachelor of Business Administration with an emphasis in marketing from Duquesne University. He also served as a board member of the Specialty Steel Industry of North America organization and is a graduate of the U.S. Steel Corporation management academy program. |
John R. Zuppo III, age 46 Mr. Zuppo joined the Company in October 2021 upon the Company’s completion of the acquisition of DanChem Technologies, Inc. (“DanChem”) and was appointed Executive Vice President, Synalloy Chemicals in November 2021. Prior to Synalloy, Mr. Zuppo was the Chief Executive Officer of DanChem and spent nearly a decade in various leadership roles at Emerald Performance Materials, a leading producer of advanced specialty chemicals. Mr. Zuppo holds a Master of Business Administration with an emphasis in organizational behavior from the Weatherhead School of Management at Case Western Reserve University. In addition, he holds a Bachelor of Science in chemical engineering from the University of Akron. |
G. Douglas Tackett, Jr., age 6250 Mr. LoughranTackett joined the Company in July 2021 as Chief Legal Officer. Prior to Synalloy, Mr. Tackett served as the Chief Legal Officer of Support.com where he oversaw all legal, governance and compliance functions. Prior to Support.com, Mr. Tackett spent over seven years as the global chief legal and compliance officer and secretary for Startek, where he led a global team of legal and compliance professionals. Mr. Tackett holds a Juris Doctor from the University of Memphis and a Bachelor of Arts from the University of Tennessee. |
Set forth below is information regarding certain persons who were executive officers during a portion of 2021, which resulted in such persons being included below in “Summary Compensation Table”:
| | |
| Name, Age, Principal Position and Five-Year Business Experience |
Sally M. Cunningham, age 47 Ms. Cunningham joined the Company in October 2015 as Vice President of Corporate Administration. In July 2020, she was named Senior Vice President (“SVP”) & CFO.and Chief Financial Officer. Prior to joining the Company, heSynalloy, Ms. Cunningham was the chief financial officer of Citadel Plastics Holdings, Inc., a privately-owned company headquartered in Chicago, IL, until its merger with A. Schulman, Inc. in June 2015. From 2006 to 2014, he served as the chief financial officer for Rogers Corporation (NYSE: ROG), headquartered in Rogers, CT. Previous experience includes 19 years with Reynolds Metals Company in various financial and operations roles and six years as Vice President, Finance and Supply Chain with Alcoa Consumer Products. Mr. LoughranOperations at ICF International (NYSE: ICFI). Ms. Cunningham has a broad background in international business management, financial reporting, planning and analysis, profit improvement,operations, administration, mergers and acquisitions supply chain optimization, tax, treasury managementacross a number of industries. She received her B.B.A. in Accounting from the College of William and investor relations. Mr. Loughran attendedMary and her M.B.A from the University of Richmond, where he received a B.S. degree in business administration (magna cum laude) with a major in accounting. He also received his M.B.A. from Virginia Commonwealth University, with a concentration in finance. HeRichmond. Ms. Cunningham is a Certified Public Accountant.Accountant in the Commonwealth of Virginia. Ms. Cunningham separated employment on August 27, 2021. |
J. Greg Gibson, , age 4648
In April 2015, Mr. Gibson was named President of Synalloy Chemicals, with business unit responsibility for both Manufacturers Chemicals, LLC and CRI Tolling, LLC. He served as Executive Vice President, Sales and Administration for Manufacturers Chemicals, a wholly-owned subsidiary of the Company from July 2011 to April 2015. Mr. Gibson joined the Company in 2005 as a sales representative providing expertise in building client relationships, growing product market share, sales profitability and developing and executing sales strategies. Prior to joining the Company, he began his sales career in the pharmaceutical industry. Mr. Gibson graduated with a B.S.Bachelor of Science degree from the University of Tennessee at Chattanooga and areceived his M.B.A. from the University of North Alabama. Mr. Gibson separated employment in May 2021. |
Compensation
Discussion and
AnalysisThisLong-Term Incentive Committee Report
As a “smaller reporting company”, the Company has elected to follow the scaled disclosure requirements for smaller reporting companies with respect to the disclosures required by Item 402 of Regulation S-K. Under such scaled disclosure, the Company is not required to provide a Compensation, Discussion and Analysis, (“CD&A”) describes ourCompensation Committee Report and certain other tabular and narrative disclosures relating to executive compensation.
Compensation Discussion and Analysis
As a “smaller reporting company”, the Company has elected to follow the scaled disclosure requirements for smaller reporting companies with respect to the disclosures required by Item 402 of Regulation S-K. Under such scaled disclosure, the Company is not required to provide a Compensation, Discussion and Analysis, Compensation Committee Report and certain other tabular and narrative disclosures relating to executive compensation.
Compensation of Executive Officers
2021 Summary Compensation Table
The following table sets forth certain information concerning the compensation
programearned in 2021 and
policies and explains how2020 by each of the
Board’s Compensation & Long-Term Incentive Committee (the “Committee”) established goals, reviewed performance measures, and decided compensation for our namedindividuals who served as Chief Executive Officer, the next two most highly compensated executive officers,
(“NEOs”) in and for fiscal year 2019. Our NEOs are listed inother than the
table below:NEO | | Title |
Craig C. Bram | | President and Chief Executive Officer |
Dennis M. Loughran | | Senior Vice President & Chief Financial Officer |
J. Greg Gibson | | President, Synalloy Chemicals |
Executive Summary
Overview of Our Business and Results
The Company had a very challenging year in 2019. Coming off a record-breaking year in 2018, we set our 2019 forecasts assuming a continuation of the 2018 market volume and pricing. Instead, both market volume and pricingOfficer, who were constrained in 2019serving as we saw tighter inventory controls from customers and significant price compression in the marketplace. These constraints were predominantly in the Metals Segment, which is also our largest segment. While the Company’s performance was solid as compared to prior years,executive officers at the end of year financial results were well below targets2021 and expectations. The 2019 Incentive Plan paid out below target accordingly.
In 2019,two additional individuals for whom disclosure would have been the Company reported net sales of $305.2 million, up $24.3 million from 2018next two most highly compensated executive officers but less than our original 2019 forecast of $340 million. Adjusted EBITDA was $13.4 million in 2019, which is considerably lower than the $34.1 million reported in 2018 and our original forecast of $34.4 million for 2019.
The Company’s business has two divisions: the Metals Segment and the Chemicals Segment.
Synalloy Metals
The Metals Segment operates as four reporting units, including American Stainless Tubing (“ASTI”), Bristol Metals, LLC (“BRISMET”), Palmer of Texas Tanks, Inc. (“Palmer”) and Specialty Pipe & Tube, Inc. (“Specialty”). ASTI manufactures high-end ornamental stainless steel tubing. BRISMET manufactures stainless steel and other alloy pipe and tube. Palmer manufactures liquid storage solutions and separation equipment, and Specialty is a master distributor of seamless carbon pipe and tube. The Metals Segment’s markets include the oil and gas, chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and waste water treatment, liquid natural gas, brewery, food processing, petroleum, pharmaceutical and other industries.
In 2019, the Metals Segment reported net sales of $251.1 million, up $28.8 million from 2018 and Adjusted EBITDA was $15.3 million, down from $35.4 million in 2018. Synalloy Metals revenue was positively impacted by the acquisition of ASTI on January 1, 2019. However, the Adjusted EBITDA was negatively impacted by market-wide price compression, tighter customer inventory controls, decline in metal surcharges which increased inventory losses and the lost profits associated with equipment failure of a key production line.
SynalloyChemicals
The Chemicals Segment operates as one reporting unit which includes Manufacturers Chemicals, LLC (“MC”) and CRI Tolling, LLC (“CRI Tolling”). The Chemicals Segment produces specialty chemicals for the chemical, paper, metals, mining, agricultural, fiber, paint, textile, automotive, petroleum, cosmetics, mattress, furniture, janitorial and other industries.
Synalloy Chemicals profits decreased slightly in 2019fact that the individual was not serving as compared to 2018. Actual 2019 financial performance was less than our original 2019 forecast and the 2019 Incentive Plan paid out below target for the segment. Synalloy Chemicals’ saw an increase in pounds shipped of 7% over the original forecast. However, the new business came primarily from non-reactor products and products where the customers provided their own raw materials. As a result, sales fell short of forecast by 8% and adjusted EBITDA was off 22%. In 2019, the Chemicals Segment recorded Adjusted EBITDA was $4.5 million, approximately 22% less than our original forecast.
Summary of 2019 Key Compensation Decisions
2019 Incentive Plan
At our 2019 Annual Meeting of Shareholders, 89.3% of the shares votedexecutive officer at the meeting were in favorend of 2021 (collectively referred to as the “named executive officers” or “NEOs”):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | Year | Salary | Bonus | Stock Awards
(1) | Option Awards (1) | Non-Equity Incentive Plan Compensation | All Other Compensation
(2) | Total |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (i) | (j) |
| Christopher G. Hutter | 2021 | $35,568 | $— | $— | $— | $350,000 | $— | $385,568 |
| President and Chief Executive Officer | 2020 | $4,970 | $— | $791,000 | $— | $— | $— | $795,970 |
| | | | | | | | |
| Sally M. Cunningham | 2021 | $233,846 | $— | $— | $— | $— | $365,633 | $599,479 |
| Former SVP & Chief Financial Officer | 2020 | $266,750 | $35,000 | $142,500 | $229,239 | $78,000 | $8,345 | $759,834 |
| | | | | | | | |
| Aaron M. Tam | 2021 | $98,077 | $— | $125,266 | $— | $150,000 | $— | $373,343 |
| Chief Financial Officer | | | | | | | | |
| | | | | | | | |
| Timothy J. Lynch | 2021 | $227,692 | $— | $91,599 | $— | $225,000 | $2,933 | $547,224 |
| EVP, Synalloy Metals | | | | | | | | |
| | | | | | | | |
| J. Greg Gibson | 2021 | $129,231 | $— | $— | $— | $— | $227,054 | $356,285 |
| Former President, Synalloy Chemicals | 2020 | $262,500 | $20,000 | $159,600 | $155,940 | $100,203 | $19,071 | $717,314 |
(1) Represents the grant date fair value, computed in accordance with FASB ASC Topic 718. See Note 10 to our consolidated financial statements for the twelve months ended December 31, 2021 for information on the assumptions used in accounting for equity awards. |
(2) 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. Ms. Cunningham’s amount also includes severance associated with her dismissal effective August 27, 2021. Mr. Lynch’s amount includes COBRA insurance benefits. Mr. Gibson’s amount also includes severance associated with his dismissal effective May 14, 2021, and a monthly car allowance. |
Outstanding Equity Awards at Fiscal Year End 2021
The following table sets forth information about stock options and restricted stock awards outstanding at the end of 2021 for each 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: | ● | Base Salary - There were no changes to any NEO’s base salary in 2019. |
| ● | Short-Term Cash Incentive - There were no changes to the short-term cash incentive under the 2019 Incentive Plan. |
| ● | Long-Term Equity Incentive - There were no changes to the long-term equity incentive under the 2019 Incentive Plan. |
Compensation Philosophy, Objectives and Process
Compensation Philosophy and Objectives
The Board and management believe that the performance and contributions of our executive officers are critical to our overall success. To attract, retain and motivate the executives to accomplish our business strategy, the Committee establishes executive compensation policies and oversees the Company’s executive compensation practices.
The Company’s goal is to attract and retain highly motivated and talented executives and to ensure 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. |
| | |
Attracting and retaining highly motivated and talented executives | | 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. |
| | |
Aligning the interests of executives with the interests of shareholders | | A portion of each executive’s pay is equity-based compensation, to align the executives’ interests with those of our shareholders. |
The Company and the Committee believe that the most effective executive compensation program is one that is designed to reward the achievement of specific annual and long-term goals and functional operational initiatives of the Company as well as align the interest of executives with the interest of shareholders, ultimately improving shareholder value. Our pay for performance emphasis attracts executives who are willing to risk a larger share of their compensation on their own performance and the performance of the Company for the benefit of the longer-term shareholder value.
Compensation Process
The Committee looks for opportunities to improve upon the executive compensation program and in 2016 the Company retained PM as the Committee’s outside independent compensation consulting firm. PM is a nationally recognized executive compensation consultant and the Committee has retained it to provide information concerning compensation paid by competitors and members of our peer group. In 2016, PM assisted the Committee in designing the Incentive Plan that was used for NEOs in 2017, 2018 and 2019.
In reviewing the base salary of our NEOs in 2019, the Committee worked with PM to review aggregated information from our peer group and, for the executives below chief executive officer level, received input and guidance from the CEO on the performance of these officers. The Committee additionally reviews the performance of the CEO and considers this information in making compensation decisions.
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 is used by the Company 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 theNEOs. No 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’ pay with the Company’s performance by putting more emphasis on at-risk components of cash compensation.
Risk Considerations
The Committee has assessed the risks arising from the Company’s compensation policies and practices for all employees to determine whether such policies or practices are reasonably likely to have a material adverse effect on the Company. Based on its assessment, the Committee has determined that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
2019 Performance and Compensation
Our compensation program is relatively simple and straightforward, and consists of three main components: base salary, short-term cash incentives and long-term stock-based incentives. Below is information on the main components of and on certain decisions made regarding 2019 NEO compensation.
Base Salary
Base salary is a tool to provide executives with a reasonable level of fixed income relative to the responsibility of the positions they hold. Base salaries are reviewed annually by the Committee and the CEO and adjustments are considered at that time. Base salaries are adjusted from time to time to reflect changes in responsibility level, comparison of data obtained from peer groups, data from our compensation consultant and other external market comparative data. In addition, the Company considers the attributes of each individual executive, including but not limited to his/her longevity with the Company, his/her educational background and experience, the particular responsibilities of his/her position, the compensation of others with similar background, credentials and responsibilities, and his/her past level of performance.
For 2019, the Committee reviewed peer group data and, along with the CEO’s recommendation for the other NEOs, determined that it was in the best interests of the Company and our shareholders to defer any increase of each NEO’s base salary until a later date to be determined by the Committee.
Base salary for each NEOstock awards were outstanding as of December 31, 2019 and December 31, 2018 are listed in the table below:
| 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 awards to be issued under the 2015 Stock Award Plan (the “2015 Stock Plan”), which was approved by shareholders at the 2015 Annual Meeting.
2021. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | — | — | — | — | 16,500 | $271,095 | — | — |
| Sally M. Cunningham | 12,000 | — | $12.995 | 2/5/2030 | — | $— | — | $— |
| 10,000 | — | $7.330 | 6/30/2030 | | | | |
| Aaron M. Tam | — | — | — | — | 9,170 | $150,663 | 9,170 | $150,663 |
| Timothy J. Lynch | — | — | — | — | 7,614 | $125,098 | — | $— |
| J. Greg Gibson | 3,398 | — | $14.760 | 2/20/2024 | — | $— | — | $— |
| 2,092 | — | $16.010 | 2/10/2025 | | | | |
| 12,000 | — | $12.995 | 2/5/2030 | | | | |
(1) Includes stock options granted on February 5, 2020, and June 30, 2020. |
(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. For Mr. Tam this includes inducement awards granted on August 30, 2021, which vest after 36 months. For Mr. Lynch this includes inducement awards granted on April 12, 2021, which vest in 36 months.
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(3) For Mr. Tam, this includes volume weighted average performance shares that vest when the 30-day weighted average of the Company stock reaches $17.00. |
(4) Based on the December 31, 2021, closing stock price of $16.43 per share. |
Also, the Committee approved the calculation 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” as Adjusted EBITDA before incentives and excluding inventory gains and losses, metal price change gains and losses, inventory cost adjustments, aged inventory adjustments, and manufacturing variances.
Short-Term Cash Incentive
The short-term cash incentive in the 2019 Incentive Plan was calculated as a percentage of an executive’s base salary, depending on the executive’s position with the Company and what specified strategic goals were achieved. The two factors included in the short-term cash incentive were:
| ● | 70% of short-term cash incentive: Target Performance Metric with an established Threshold Performance Metric and Maximum Performance Metric for the payment of cash incentives. The Threshold Performance Metric is set at 75% of Target. The Maximum Performance Metric is set at 125% of Target. |
| ● | 30% of short-term cash incentive: Successful delivery of specified strategic goals that drive stronger efficiencies across the Company, for Messrs. Bram and Loughran and across the segment for Mr. Gibson. |
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. The table below provides the total short-term cash incentive for each NEO at the threshold, target and maximum levels.
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 | % |
For the short-term cash incentive compensation component of the 2019 Incentive Plan, the following table sets forth the Performance Metric component for each executive. Actual payout is based on a calculation using results for the year and may vary between Threshold and Maximum values. The table below details the 2019 Performance Metric threshold, target, maximum and actual results.
| | | 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 | |
| (1) | 2019 Performance Metric component is for the Chemicals Segment. |
For 2019, the Performance Metric achieved was below the Threshold level for the Company. The Performance Metric achievement for the Chemicals Segment in 2019 was between Threshold and Target performance level.
For the short-term cash incentive compensation component of the 2019 Incentive Plan, the following table sets forth the strategic goal component for each executive. Actual payout is based on a calculation using results for the year and may vary between Threshold and Maximum values. The table below details the 2019 strategic goals threshold, target, maximum and actual results.
| | 2019 Strategic Goals Component |
| | Threshold | | Target | | Maximum | | 2019 Actual |
President & CEO(1) | | 3 out of 5 | | 4 out of 5 | | 5 out of 5 | | 4.9 out of 5 |
SVP & CFO(2) | | 4 out of 7 | | 5 out of 7 | | 7 out of 7 | | 6.9 out of 7 |
President, Synalloy Chemicals(3) | | 3 out of 5 | | 4 out of 5 | | 5 out of 5 | | 4.0 out of 5 |
| (1) | The 2019 strategic goals for the President & CEO related to financial, growth, and personnel initiatives. |
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| (2) | The 2019 strategic goals for the SVP & CFO related to financial, process and personnel initiatives. |
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| (3) | The 2019 strategic goals for the President, Synalloy Chemicals related to facility safety, sales and marketing, growth and facility specific initiatives. |
For 2019, all NEOs met or exceeded the “Target” level of performance for the strategic goals component. The strategic goals component of the short-term cash incentive are operational and strategic goals specific to each named executive officer’s area of responsibility, in each case designed to drive overall Company financial and operational performance.
Total short-term cash incentives were earned for fiscal year 2019 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 Long-Term Equity Incentive
Our goal in awarding long-term equity incentive compensation is to emphasize to our executives the importance of increasing shareholder value by tying a portion of executive compensation to growth in the Company’s stock price. To help align the interests of our executives with the interest of our shareholders, one hundred percent (100%) of long-term incentive compensation for NEOs is in the form of equity instruments. In recent years, the Company has granted restricted stock awards that vest over either three or five years, with half of such awards subject to achievement of a performance goal.
The long-term stock-based incentives are delivered in the form of restricted stock awards. Stock-based compensation is established at a percentage of each executive’s base salary at the time of grant. In order to attract and retain executive talent, 50% of the long-term incentive is a time-vesting retention award. In order to closely tie total compensation to long-term shareholder value, the other 50% of the long-term incentive compensation for the NEOs is earned based on achievement of a three-year cumulative Performance Metric.
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 and will be earned, if at all, for performance during the three-year period ending December 31, 2021.
Total long-term equity incentives awarded for fiscal year 2019 were as follows:
| 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 | |
| (1) | Time-vesting restricted stock award vests at 33% per year over a three-year period. |
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| (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, 2021. |
Vesting of the 2017 Performance Long-Term Equity Incentive Award
The 2017 performance-vesting award was awarded for the three-year period ending December 31, 2019. The following table shows the threshold, target and maximum three-year cumulative Performance Metric when the award was made in 2017 as well as the actual performance for the three-year period ending December 31, 2019.
| | | 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 | |
| (1) | Three-year cumulative Performance Metric is for the Chemicals Segment. |
For the 2017 performance-vesting stock award, the three-year cumulative Performance Metric achieved was above the “Target” level for the Company. The three-year cumulative Performance Metric achieved for the Chemicals Segment in 2019 was at “Threshold” level. As such, the following table shows the amounts earned by the NEOs for the 2017 performance-vesting stock award.
| 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 | |
| (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 2017 Performance-Vesting Award, the NEOs received the following number of restricted shares: Mr. Bram 15,048; Mr. Loughran 7,495; and Mr. Gibson 2,268. |
Stock-Ownership Levels
The Board has established stock ownership levels for the senior management team and the Board. 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 NEOs are in compliance.
Stock ownership requirements are as follows:
| ● | Board - three times retainer; |
| ● | CEO - four times base salary; |
| ● | CFO and Segment Presidents - $250,000; and |
| ● | Corporate Secretary - $200,000. |
Employment Agreements
Following approval by the Committee, the Company has entered into employment agreements with its NEOs. the named executive officers.The Employment Agreement section herein reflects Employment Agreements asfollowing information summarizes the terms of December 31, 2019.Anthese employment agreements.
Ms. Cunningham and Mr. Gibson: The terms of the Company’s employment agreements with Ms. Cunningham and Mr. Gibson were the same, with the exception of base salary amount. Each agreement with Mr. Bram was originally entered into on March 1, 20192019. Ms. Cunningham’s agreement was amended and restated on February 5, 2021, in connection with her promotion to Senior Vice President and CFO to reflect her new title and base salary. Each agreement had a one-year term that was automatically extended for a two-year term. Onan additional year on each two-yearone-year anniversary of the employment agreement, the term is automatically extended for two additional years,effective date unless the Company or Mr. Bram providesthe executive provided written notice that it or he doesthe executive did 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 provideprovided that the executive willwould be entitled to severance payments in the case of death or disability, or a termination without cause (outside of, or in connection with or following a change in control)control in the form of (1) salary continuation, (2) average cash bonus, (3) health insurance and (4) restricted stock and options vesting. The base salary may be paid in installments or in a lump sum, at the election of the Company. In order to receive the severance, the executive or his beneficiary or estate, mustwas required to execute a release satisfactory to the Company. Please seeEach of Ms. Cunningham and Mr. Gibson received the table below for more informationseverance payments contemplated by their respective employment agreements in connection with the termination of their employment during 2021, with the Company electing in each case to make the base salary payments in installments during 2021. Each 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 above described severance payments.
With respectdate the executive’s employment is terminated for a period of one year after termination. In addition, each agreement stipulates that the executive may not be employed for a period of one year after his or her termination of employment with any business that was identified as a potential acquisition target during the executive’s tenure with the Company.
Mr. Hutter: The Company entered into an employment agreement with Mr. Hutter on October 26, 2020, with an employment term commencing on November 9, 2020. At his request, Mr. Hutter elected to be compensated primarily in the form of long-term incentive compensation. Pursuant to his agreement, Mr. Hutter received a changetime-vesting award of fifty thousand (50,000) restricted stock units, with two-thirds of the award vesting on October 26, 2021, and the remaining one-third vesting on April 26, 2022. These restricted stock units were granted in control,stock. Additionally, he received an award of ninety thousand (90,000) 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. Mr. Hutter’s employment agreement provides for a base salary of $35,568. He is eligible for bonus compensation at the discretion of the Board of Directors.
For purposes of the employment agreements,
provide for a
severance payment only if,“change 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 occurcontrol” means an event that occurs when “(i)(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”),.
Mr. Tam: The Company has not entered into an employment agreement with Mr. Tam, but did provide an offer letter to Mr. Tam stating that in each case, unless, following such Business Combination, allthe event that either Mr. Hutter or substantially allMr. Rosenzweig is no longer a member of the individualsBoard and entities who were the beneficial ownersMr. Tam’semployment is terminated within one (1) year of outstanding voting securitiesMr. Hutter or Mr. Rosenzweig’s departure, Mr. Tam shall receive six (6) months of the Company immediately prior to such Business Combination beneficially own, directlyseverance pay at a rate of his then current base salary. The base salary may be paid in installments or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in a lump sum, at the election of directors, as the case mayCompany. In order to receive the severance, Mr. Tam will be of the entity resulting from such Business Combination (including, without limitation, an entity which, asrequired to execute 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 respectrelease satisfactory 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, LoughranHutter and GibsonTam upon termination for the reasons described below, or to their beneficiaries in the event of death.As noted above, each of Ms. Cunningham and Mr. Gibson have already received the severance payments contemplated by their respective employment agreements in connection with the termination of their employment during 2021 and therefore they are not listed in the table below.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 | |
| (1) | Upon death or disability, all NEOs 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. Mr. Loughran was the only NEO eligible for retirement as of December 31, 2019.Death or Disability | Retirement | Termination Without Cause (3) | Change in Control (1) |
| Christopher G. Hutter | (3)Restricted Stock (5) | Upon termination without cause, Mr. Bram will receive 1.5X of current base salary, 1.0X of the average of the two most recent cash bonuses, 24 months of COBRA premiums and immediate vesting of all restricted stock and options as severance. All other NEOs 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.— | — | — | $390,000 |
| Aaron M. Tam | (4)Restricted Stock | — | — | — | $150,000 |
(1)Upon a triggering event under the “double-trigger” change in control, Mr. BramHutter will receive 2.5X of current base salary, 2.5X of the average of the two most recent cash and stock bonuses, 24 months of COBRA premiums andan immediate vesting of all restricted stock and options as severance. Upon a triggering event under the “double-trigger” change in control, all other NEOs will receive 2.0X of current base salary, 2.0X of the average of the two most recent cash and stock bonuses, 24 months of COBRA premiums and immediate vesting of all restricted stock and options as severance.severance |
| (5) | (2) Restricted Stock is calculated based on the December 31, 20192021, closing stock price of $12.91$16.43 per share. |
Compensation
RELATED PARTY TRANSACTIONS
The Company from time-to-time engages in transactions with related parties. The Company’s Board of
Executive Officers2019 Summary Compensation Table
The following table sets forth summary compensation information for our NEOs forDirectors reviews any related party relationships and approves any significant modifications to any existing related party transactions, as well as any new significant related party transactions.
Expense Reimbursement
During 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 | |
| (1) | Stock Awards - The amounts in this column represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718six months ended June 30, 2020, Privet Fund Management, LLC (“Privet”) and UPG Enterprises, LLC (“UPG”), with an ownership interest of approximately 25% of stock awards made during the year. See Note 7 to the Company’s consolidated financial statements for the year ended December 31, 2019, which are included in the Company’s 2019 Annual Report on Form 10-K, for additional disclosure of all assumptions made with respect to the valuation of stock awards. |
| (2) | Non-Equity Incentive Compensation - The amounts reported in Non-Equity Incentive Plan Compensation were paid under the Incentive Plan for the respective year, as more fully described in the CD&A. Amounts reported in this column were earned in the indicated year. |
| (3) | 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. In addition, Mr. Gibson received a monthly car allowance. |
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 isCompany’s outstanding common shares, filed a reasonable estimate calculated in a manner consistentproxy statement with the SEC rules based on our payrollSecurities 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 varietyExchange Commission seeking an election 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 comparablefive of its nominees 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.
GrantsSynalloy Board 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 | |
| (1) | These awards were made pursuant to our 2019 Incentive Plan and were earned upon the achievement of certain performance goals established by the Committee for the fiscal year ended December 31, 2019. 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 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 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.
| (2) | These amounts represent grants of performance-vesting restricted stock made pursuant to our 2019 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 Mr. Gibson. |
| (3) | These amounts represent grants of time based restricted shares made under the 2019 Incentive Plan. For a discussion of the material terms of these awards, see our CD&A section. |
| (4)
| Full grant date fair value of equity awards computed in accordance with FASB ASC Topic 718. |
Outstanding Equity Awards at Fiscal Year End 2019
The following table sets forth information about stock options and restricted stock awards outstandingDirectors 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 | | | | | | | | | | | | | | | | | |
| (1) | Includes stock options granted on February 20, 2014 and February 10, 2015, all of which vest in 20% increments annually, beginning one year after date of grant. |
| (2) | Includes restricted stock awards granted on February 16, 2016 which vest in 20% increments annually, beginning one year after date of grant and restricted stock awards granted on May 5, 2017, February 8, 2017, February 7, 2018 and February 6, 2019 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 2017, 2018 and 2019, 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,Company’s 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, 2019 closing stock price of $12.91 per share. |
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 | |
| (1) | Based on the market value of the shares on the exercise or vesting date. |
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 afterAt the date granted at the rate of 20% annuallyAnnual Meeting held 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 allJune 30, 2020, Synalloy shareholders voted to elect three of the assets or Common Stockfive nominees designated by Privet and UPG to serve on Synalloy’s Board of Directors. In May 2021, the Company (or a subsidiary or divisionagreed to reimburse Privet and UPG for up to 90% 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 additionits documented out-of-pocket fees and expenses (including legal expenses) incurred related 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 sinceproxy contest through the date of the awards, except as2020 Annual Meeting. During the resultthird quarter of 2021, the Company paid $0.6 million related to the reimbursement to Privet and UPG.
Sales to Related Parties
The Company’s President and Chief Executive Officer has ownership interests in other entities with which the Company may, from time-to-time, conduct business. During the year ended December 31, 2021, the Company recorded revenue of $31,073 from the sale of product to certain of these entities. During the year ended December 31, 2021, the Company received $40,000 in cash and recognized a loss on disposal of property, plant and equipment of $13,000 from the sale of property, plant and equipment to certain of these entities. The Company had no such transactions for the year ended December 31, 2020.
Lease Agreement
On August 30, 2021, the Company entered into a thirty-eight month operating lease agreement for office space with an employee’s retirement (minimum ageentity affiliated with the Company’s President and Chief Executive Officer. Pursuant to the terms of 62), death or permanent disability, upon which event any portion of a stock award that has not vested withthe lease agreement, the Company will become 100% vested. Otherwise, any portionpay a base rent in the first year of the agreement of $5,364 monthly with an annual increase in October each year of 2.5% through the term of the agreement. During the year ended December 31, 2021, the Company recognized $0.2 million of right-of-use assets in exchange for new operating lease liabilities and incurred $23,220 in rent expense associated with this lease agreement.
Shared Services Agreement
In September 2021, the Company entered into a
stock awardshared services agreement (the “Shared Services Agreement”) with UPG, an entity that has
not vested prior to the terminationan ownership interest of
an employee’s employment with the Company for any other reason shall be automatically cancelled. Vestingapproximately 8% of the
total number of unvestedCompany’s outstanding common 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 Companyand an entity 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)Company’s President and Chief Executive Officer has an ownership interest. Pursuant to the
sale of more than 50% in value of the assets ofagreement, UPG provides 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.with certain corporate functions, including human resources and information technology services. 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 ofShared Services Agreement has an employee’s retirement (minimum age of 62), death or permanent disability, in which case any portion of a stock award that has not vestedindefinite term, 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, employee contributions cannot be invested in the Company’s Common Stock.
Prior to January 1, 2016, all Company contributions were invested in Company stock. Effective January 1, 2016, Company contributions are invested in accordance with employee elections for individual contributions, and the ESOP portion of the 401(k)/ESOP Plan is frozen. For each plan year, the Company contributes on behalf of each eligible participant a discretionary matching contribution equal to a percentage determined annually by the Board.
For 2019 and 2018, the maximum matching contribution was 4%. The matching contribution is allocated within 15 days of each pay period. In addition 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 except in the event of death, disability, termination of employment 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 retirement in the form of cash or shares of the Company’s Common Stock or both. If employment terminates for reasons other than retirement, disability or death (e.g. resignation or termination by the Company), any discretionary portion of a participant’s account balance will vest as follows: less than three years’ service- 0% vested; three or more years- 100% vested.
Unvested amounts are forfeited and allocated to participants eligible to participate for a plan year. The 401(k)/ESOP Plan permits rollovers from qualified plans at the discretion of the Company. The 401(k)/ESOP Plan is permitted to borrow money to purchase shares of the Company’s Common Stock. All shares of the Company’s Common Stock acquired by the 401(k)/ESOP Plan with the proceeds of a loan are maintained in a suspense account and are withdrawn and shares are allocated to participant’s accounts as the loan is paid. As a participant in the 401(k)/ESOP Plan, any employee may direct the trustee to vote shares allocated to his or her account in accordance with the employee’s wishes.
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 comprised of the corporate officers 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 Board of the Companyparty having the right to amendterminate any or all services with 30 days’ prior written notice. Charges allocated to the 401(k)/ESOP PlanCompany are based on the Company’s actual use of specific services detailed in any mannerthe Shared Services Agreement at a rate of $145 per hour. The Company will also pay or terminatereimburse UPG for all out-of-pocket fees and expenses incurred by UPG in connection with the 401(k)/ESOP Plan at any time. The 401(k)/ESOP Plan may be amended to preserve the qualificationrendering of the 401(k)/ESOP Planservices under the applicable provisionsShared Services Agreement including, (i) reasonable fees and disbursements of any independent professionals and organizations, including independent accountants, outside legal counsel or consultants and (ii) travel expenses or similar expenses not associated with UPG’s ordinary operations. During the Internal Revenue Codeyear ended December 31, 2021, the Company incurred $2,320 of 1986, as amended from timeexpense related to time. For 2019, the Company’s total matching contribution was $833,698.
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 consideration of the 2019 shareholder vote, the Compensation & Long-Term Incentive Committee recommended to our Board that the “Compensation Discussion and Analysis” be included in our 2019 Annual Report on Form 10-K and in this Proxy Statement.
| The Compensation & Long-Term Incentive Committee |
| |
| Henry L. Guy, Chair |
| Susan S. Gayner |
| Amy J. Michtich |
| James W. Terry, Jr. |
Shared Service Agreement.
Proposal
PROPOSAL 2 - Advisory Vote on the Compensation of ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Our
Named Executive OfficersThe 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”) 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” proposal. While theThe Company's current policy provides for an annual 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 proposalexecutive compensation. It 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 disclosuresother related materials 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.
Because your vote is advisory, it is non-binding on our Board; however, our Board will take into account the outcome of the vote on the say-on-pay proposal when considering future compensation arrangements. We invite shareholders who wish to communicate with our Board on executive compensation or any other matters to contact us as provided under
“Corporate"Corporate Governance - Shareholder Communications with Directors.
”"
Accordingly, in compliance with the Dodd-Frank Act, we ask you to approve the following resolution:
“
"RESOLVED, that the shareholders of Synalloy Corporation
hereby approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed pursuant to the compensation disclosure rules of the SEC,
and Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and
narrative discussionthe related materials regarding the Company's executive compensation in the Company’s
20202021 Proxy Statement.
”"
A majority of the
voting power representedshares present and eligible to vote at the Annual Meeting
of Shareholders must vote
“FOR”“FOR” Proposal 2 to approve the advisory vote on the compensation of our named executive officers. The enclosed
BLUE Proxy Card form of proxy provides a means for you to vote
“FOR,“For,”
“AGAINST”“Against” or to
“ABSTAIN”“Abstain” on this proposal. Each properly executed proxy received in time for the Annual Meeting will be voted as specified therein. Abstentions
and broker non-votes will have the
same effect
as a voteof votes against this proposal.
Broker non-votes will have no effect on the outcome of the vote on this proposal.Board Recommendation
THE
OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR”"FOR" THE APPROVAL OF THE ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
PROPOSAL 3 - PROPOSAL TO APPROVE THE 2022 OMNIBUS EQUITY INCENTIVE PLAN (Vote Required)
A majority of the shares present and eligible to vote at the Annual Meeting of Shareholders must vote “FOR” Proposal 3 to approve 2022 Omnibus Equity Incentive Plan. The enclosed form of proxy provides a means for you to vote “For,” “Against” or to “Abstain” on this proposal. Each properly executed proxy received in time for the Annual Meeting will be voted as specified therein. Abstentions and broker non-votes will the effect of a vote against this proposal.
Introduction
On April 25, 2022, the Board of Directors approved, upon the recommendation of the Compensation Committee but subject to stockholder approval, adoption of the Synalloy Corporation 2022 Omnibus Equity Incentive Plan (the “Plan”) and directed that the Plan be submitted for approval by our stockholders at our 2022 Annual Meeting of Stockholders. The full text of the Plan is set forth in Exhibit A to this proxy statement. The following summary description is qualified in its entirety by reference to the full text of the Plan.
Background of the Proposal to Approve the Plan
In considering whether to propose adoption of the Plan, including the number of shares to be covered thereby, the Board of Directors considered many factors, including the following:
•Compensation Philosophy - The Board views equity awards as a key component of our compensation program and believes that use of equity awards helps align the interests of employees, directors, and other persons who provide substantial services to us and our subsidiaries with those of our stockholders and motivate such individuals to make sound business decisions focused on long-term stockholder value creation.
•Pool of Shares Available for Awards - The Plan contemplates a pool of shares available for awards equal to 750,000 shares of common stock, subject to the share recycling terms and conditions set forth in the Plan.In establishing such number, the Board evaluated, among other things, the value of our common stock, outstanding and potential plan awards in relation to our total shares issued and outstanding and the market capitalization of the Company, and historic and anticipated grant practices. Upon approval of the Plan by our stockholders, the Company will cease granting new awards under the 2015 Stock Awards Plan, pursuant to which there are currently 693,272 shares of stock that remain authorized for issuance. In establishing the number of shares available for grant under the Plan, the Board also thus took into account the termination of additional grants under the 2015 Stock Awards Plan, and that in effect the shares available thereunder would be transferred from such old plan to the Plan.
•Inclusion of Best Practices - The Plan incorporates certain current best practices in compensation governance such as:
◦No In-the-Money Option or Stock Appreciation Right Grants - The Plan prohibits the grant of options or stock appreciation rights with an exercise price less than the fair market value of our common stock on the date of grant;
◦No Repricing Without Stockholder Approval - Repricing of stock options and stock appreciation rights is prohibited under the Plan except (i) if stockholder approval is obtained or (ii) in connection with certain “corporate events” as defined in the Plan, including a stock dividend, extraordinary dividend, stock split or share combination or any recapitalization, merger, consolidation, exchange of shares, spin-off, liquidation or dissolution of the Company or other similar transaction;
◦Clawback Provision - Awards granted under the Plan will be subject to clawback on the terms of any clawback policy adopted by the Board of Directors or administrator of the Plan, including any clawback policy adopted in response to the SEC or stock exchange rules.Any such policy may subject awards and shares or amounts paid or realized with respect to awards to reduction, cancellation, forfeiture or recoupment if certain specified events or wrongful conduct occur; and
◦Forfeiture and Recoupment of Awards – Awards granted under the Plan will be subject to generally applicable policies as to forfeiture and recoupment as may be adopted from time to time by the Board or administrator of the Plan.Participants must forfeit and disgorge to the Company any awards granted or vested and any gains earned or accrued due to the exercise of options or stock appreciation rights or the sale of any common stock to the extent required by applicable law or as required by applicable stock exchange rules.
•Expected Duration - The Board of Directors expects that if the Plan is approved by our stockholders, the shares available for future awards will be sufficient for currently anticipated needs for approximately three years. Expectations regarding future share usage under the Plan are based on a number of assumptions such as future growth in the population of eligible participants, the rate of future compensation increases, the rate at which shares are returned to the Plan reserve upon theirexpiration, forfeiture or cash settlement, and the future performance of our stock price. While the Board of Directors believes that the assumptions it used are reasonable, future share usage will differ from current expectations to the extent that actual events differ from the assumptions utilized.
Purpose of the Plan
The purpose of the Plan is to attract, retain, motivate and reward our qualified employees, directors, and consultants whose present and potential contributions to us and our subsidiaries are of importance, by providing the opportunity to acquire and maintain awards.We believe that the Plan will encourage long-term service, recognize individual contributions and reward achievement of Company goals, and will promote the creation of long-term value for stockholders by closely aligning the interests of Plan participants with those of stockholders.
Administration
The Plan will be administered by the Board or any committee of the Board so designated to administer the Plan (the “Administrator”).The Administrator has authority to determine (among other things) to whom awards will be granted, the value of shares under the Plan, the type, form, and number of awards, and vesting, acceleration, restrictions, limitations, form of payment and terms and conditions applicable to awards.The Administrator may also suspend or accelerate award vesting or waive award restrictions.
The Administrator is authorized to prescribe, amend and rescind rules and regulations relating to the Plan, to interpret and reconcile inconsistencies or omissions relating to the Plan and award terms, and to make all decisions and determinations under the Plan. The Administrator may authorize any person to execute documents in relation to the Plan on its behalf and may delegate its authorities and powers to officers and directors subject to certain conditions and application of applicable Delaware Law.
The Administrator has authority, with respect to non-U.S. jurisdictions, to determine which of our affiliates are covered by the Plan, to determine which individuals outside of the U.S. are eligible for the Plan, to modify the terms and conditions of awards to comply with foreign laws or listing requirements, to establish sub-plans and modify exercise procedures to the extent necessary or advisable (subject to certain limitations),and to take any action it deems advisable to comply with applicable governmental regulatory exemptions or approval or listing requirements of any foreign securities exchange.
Eligibility
Any individual classified as an employee by us or one of our subsidiaries and consultants and directors are eligible to participate in the Plan. Only employees are eligible to receive Incentive Stock Options (defined below).
Number of shares Available for Issuance
The aggregate number of shares which may be issued under the Plan is equal to 750,000. The shares issued under the Plan may be authorized but unissued or reacquired Company common stock, including shares purchased by the Company on the open market for purposes of the Plan.
Upon exercise, settlement or conversion of any award, the number of shares subject to the award (less the shares actually issued in connection with the exercise, settlement or conversion) will be again available for grant under the Plan. Additionally, shares associated with awards that are forfeited, canceled, expired or otherwise terminated and shares that are withheld to satisfy tax withholding obligations will be again available for grant under the Plan. Awards which the Administrator reasonably determine will be settled in cash will not reduce the maximum number of shares which may be issued under the Plan. Shares or awards that are issued in assumption of or in substitution for any outstanding awards will not count against the shares available for grant under the Plan.The Administrator may adopt reasonable counting procedures to ensure appropriate counting of shares and may make adjustments if the number of shares actually delivered differs from the number of shares previously counted in connection with an award.
Authority to Amend Awards and Shares; Corporate Events
In the event of a stock dividend, extraordinary dividend, stock split or share combination or any recapitalization, merger, consolidation, exchange of shares, spin-off, liquidation or dissolution of the Company or other similar transaction affecting the Company common stock, the Administrator is authorized to adjust the number of shares available for issuance under the Plan and the number, class and option price or base price of any outstanding awards (as applicable), make substitutions, revisions or other provisions and take such other actions as it determines to be equitable. In the event of certain “corporate events” as defined in the Plan, the Administrator has authority to change the number of shares or other securities covered by outstanding awards, the prices specified in such awards, the securities, cash or other property to be received upon award exercise, settlement or conversion of such awards, and any applicable performance goals.Unless approved in advance by a majority of shares entitled to vote generally in the election of our directors or as a result of a corporate event, the Administrator does not have authority to reduce the exercise price of any outstanding option or base price of any outstanding stock appreciation rights.
General Terms of Awards
Award Agreements. Each award will be evidenced by an agreement setting the terms, conditions, restrictions and/or limitations applicable to an award, in addition to and not inconsistent with those set forth in the Plan, as the Administrator may deem equitable and in the best interests of the Company and its subsidiaries.Awards may be granted either alone or in tandem, in the discretion of the Administrator.
Vesting and Term. Each agreement will set forth the period until the award is scheduled to expire. The Administrator may determine the vesting conditions of awards.
Transferability. Unless otherwise approved by the Administrator, no award will be liable for the debts, contracts or engagements of a Plan participant or his or her successors, nor will it be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means or by operation of law, judgment, levy, attachment, garnishment or any other legal or equitable proceedings; provided, however, that awards may be transferred by will or by the applicable laws of descent and distribution or, with the prior approval of the Company’s General Counsel or the Administrator, estate planning transfers. The Administrator may set forth additional restrictions on the transferability of shares issued upon exercise of options and stock appreciation rights as it deems appropriate.Each participant may designate a beneficiary to exercise any award or receive payment under any award payable on or after the participant’s death.
Termination of Service. Subject to certain exceptions, unvested awards granted under the Plan are forfeited upon a participant’s termination of employment or service for any reason, unless otherwise provided in the applicable award agreement.
Stockholder Rights.Unless otherwise provided, the holder of an award is not entitled to the rights or privileges of a stockholder with respect to such award unless and until the associated shares have been issued to such holder.
Section 409A.If the Administrator determines that any award may be subject to Section 409A of the Internal Revenue Code and related regulations under such section (“Section 409A”), the Administrator may adopt amendments to the Plan and applicable award agreement or other policies and procedures determined by the Administrator as necessary to exempt the award from Section 409A, comply with Section 409A, or comply with any correction procedures available under Section 409A.
Types of Awards
The types of awards that may be granted under the Plan include stock option awards, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance shares, performance units, deferred share units, cash awards, and dividend equivalents. The Administrator also has the discretion to grant other types of equity-based or equity-related awards, as long as they are evidenced by an award agreement. In addition to the general terms of all the awards, as described above, the basic characteristics of the awards that may be granted under the Plan are as follows:
Stock Option Awards. A stock option award is an option to purchase Company common stock.Stock option awards vest and become exercisable according to the terms of the agreement (unless sooner accelerated by the Administrator), but in no event will an option become exercisable after the expiration of 10 years from the grant date (5 years for certain Incentive Stock Options). Award agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to qualify such options as “incentive stock options” under Section 422 of the Code. Non-Qualified Stock Options are stock option awards that do not meet the requirements of Incentive Stock Options, as described below. The exercise price will be determined by the Administrator and may not be less than the fair market value of a share of common stock on the grant date. The exercise price is payable in full at the time of
exercise and may be paid in cash, cash equivalents, shares or other awards under the Plan or other Company plans, other property, or any other legal consideration the Administrator deems appropriate.
A participant may not receive an Incentive Stock Option under the Plan if, immediately after the grant of the award, the participant would own shares with more than 10% of the total combined voting power of all classes of stock of the Company or a parent or subsidiary corporation of the Company, subject to certain exceptions. If a Participant makes any disposition of shares issued pursuant to an Incentive Stock Option under circumstances that would constitute a disqualifying disposition, the Participant shall notify the Company of such disposition within the time provided to do so in the applicable award agreement.
Stock Appreciation Rights. A stock appreciation right is a right to receive payment in cash and/or shares equal to the product of (i) the excess, if any, of the fair market value of one share on the date of exercise over a specified price that will not be less than 100% of the fair market value of one share on the grant date, multiplied by (ii) a stated number of shares. Stock appreciation rights vest and become exercisable according to the terms of the award agreement (unless sooner accelerated by the Administrator), but in no event will stock appreciation rights be exercisable after the expiration of 10 years from the grant date.Stock appreciation rights granted in tandem with stock option awards become vested and exercisable on the same date or dates as such stock option awards and may only be exercised upon surrender of the right to exercise such stock option awards for an equivalent number of shares and only with respect to the shares for which the related stock option awards are then exercisable.The agreement may provide for a limitation upon the amount or percentage of total appreciation on which payment may be made upon exercise.
Restricted Stock Awards.Restricted stock awards are stock awards subject to restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Administrator may impose. These restrictions may lapse separately or in combination at such times, in such installments, as the Administrator determines. Restricted stock awards may be evidenced in such manner as the Administrator shall determine. The Administrator may allow or require a restricted stock award recipient to elect that any cash dividends paid on a share of restricted stock be automatically reinvested in additional shares of restricted stock, applied to the purchase of additional awards, or deferred without interest to the date of vesting of the restricted stock award. Unless otherwise determined by the Administrator, shares distributed in connection with a stock split or stock dividend and other property distributed as a dividend will be subject to restrictions and risk of forfeiture to the same extent as the restricted stock award.
Restricted Stock Units. Restricted stock unit awards are a right to receive shares, cash or a combination of cash and shares at the end of a specified period (which may or may not be coterminous with the vesting schedule of the underlying award). The Administrator will set the terms and conditions and specific dates of vesting for restricted stock units in its discretion. Unless otherwise provided in an award agreement, on the settlement date, the Company will transfer to the participant a number of shares equal to the number of restricted stock units or cash in an amount equal to the fair market value of the specified number of shares equal to the number of restricted stock units, or a combination thereof, as determined by the Administrator. The Administrator will specify the purchase price, if any, to be paid by the restricted stock unit award recipient for any shares that are issued.
Performance Shares and Performance Units. A Performance share is a contractual right to receive a share (or the cash equivalent of the share) upon achievement, in whole or in part, of certain performance goals set by the Administrator. Performance units are a U.S. Dollar denominated unit payable on the achievement, in whole or in part, of applicable performance goals set by the Administrator.The Administrator will specify the performance period for achievement of performance goals and may impose, as a vesting condition, completion of a minimum period of service. After the end of a performance cycle, the Administrator will determine the number of performance shares, other performance awards, and the number and value of performance units or the amount of any cash entitlement that has been earned or vested. The Administrator has the right, in its absolute discretion, to reduce or eliminate the amount otherwise payable to an award recipient based on individual performance or any other factors that the Administrator deems appropriate.
Deferred Share Units.Deferred share unit awards allow for the credit to a notational account of a hypothetical unit which represents the right to receive a share of Company stock or cash equal to the fair market value thereof on settlement of the account. No shares are issued at the time of grant. Unless otherwise provided by the Administrator, deferred share unit awards are fully vested and nonforfeitable when granted. Deferred share units are settled in cash or in shares or any combination of cash and shares on the date specified in the award agreement.
Cash Awards and Dividend Equivalents.The Administrator may grant awards denominated in cash on a free-standing basis or as an element of, a supplement to, or in lieu of any other awards under the plan in such amounts and subject to other terms as the Administrator in its discretion determines to be appropriate. The Administrator may grant dividend equivalents in tandem with other awards or as freestanding awards.Dividend equivalents may be subject to vesting conditions as determined by the Administrator.Dividend equivalents granted in connection with other awards do not vest until the connected awards vest and dividend equivalents are forfeited if the connected awards are forfeited.
Effect of a Change in Control
Unless otherwise provided in an award agreement or determined by the Administrator prior to the occurrence of a change in control (as defined in the Plan), upon a change in control, each outstanding award that is not yet fully exercisable or vested (and certain vested awards, as determined by the Administrator), will not be accelerated or cancelled if the Administrator determines that such awards will be honored or assumed or that new rights will be substituted for such awards (“Alternative Awards”) following the change in control.The Alternative Awards must give participants rights and entitlements substantially equivalent to or better than the rights and terms applicable to the original awards and provide for certain vesting with respect to service-based or performance-based vesting requirements if the participant’s employment is terminated without cause or for good reason within twelve months of the change in control.The Administrator may modify or impose certain new performance-based vesting requirements on performance-based awards to the extent that they no longer operate as intended in connection with a change in control.
If the shares provided under Alternative Awards are not publicly traded, (1) the acquisition, holding and disposition of such shares may be subject to terms and conditions established by the Administrator and (2) the Company or our acquirer in a change in control will be required to repurchase any Alternative Awards or underlying shares following termination of employment (other than for Cause or other circumstances resulting in forfeiture of the Alternative Awards) for cash or marketable securities equal to the fair market value of the shares underlying the Alternative Awards on the effective date of termination.
If the Administrator determines that no Alternative Awards will or should be provided in connection with a change in control, unless otherwise provided in the applicable award agreement: each unvested award (other than performance awards and freestanding dividend equivalents) will immediately become exercisable or vested; outstanding option and stock appreciation rights awards will be canceled in exchange for payment equal to the excess of the change in control price (as defined in the Plan) over the applicable option price or stock appreciation right base price; shares underlying restricted stock, restricted stock units, performance shares and performance units and other stock-based awards that are vested will be issued, unless the Administrator otherwise settles such awards in cash pursuant to the Plan; outstanding performance awards will be cancelled (unless otherwise determined by the Administrator or set forth in the applicable award agreement); and freestanding dividend equivalent awards will be cancelled without payment.
To the extent that any portion of the amount paid by an acquirer in connection with a change in control is other than cash or is paid other than at the time of the change in control, the award holders will receive the same value in respect of their awards as is received by our stockholders in respect of their common stock, and the Administrator will determine the extent to which such value will be paid in cash, securities or other property, or in a combination of cash and securities or other property.
Duration, Amendment and Termination
The Administrator may modify, suspend or terminate the Plan at any time except that approval of the majority of the shares entitled to vote at a duly constituted meeting of shareholders is required to increase the number of shares under the Plan (subject to certain exceptions), modify the class of persons eligible to participate in the Plan, modify the prohibition regarding repricing under the Plan, and materially modify the Plan in a manner that would require shareholder approval, under applicable law. No amendment, suspension or termination may adversely alter or impair any rights or obligations under an award without the consent of the award holder. Subject to stockholder approval, the Plan will be effective and continue in effect unless sooner terminated until the day immediately preceding the tenth anniversary of the effective date of the Plan.
Federal Tax Considerations
The following summary sets forth the tax events generally expected for United States citizens under current United States federal income tax laws in connection with awards under the Plan.
Incentive Stock Options. A recipient will realize no taxable income, and we will not be entitled to any related deduction, at the time an incentive stock option is granted under the Plan. If certain statutory employment and holding period conditions are satisfied before the recipient disposes of shares acquired pursuant to the exercise of such an option, then no taxable income will result upon the exercise of such option, and we will not be entitled to any deduction in connection with such exercise. Upon disposition of the shares after expiration of the statutory holding periods, any gain or loss realized by a recipient will be a long-term capital gain or loss. We will not be entitled to a deduction with respect to a disposition of the shares by a recipient after the expiration of the statutory holding periods.
Except in the event of death, if shares acquired by a recipient upon the exercise of an incentive stock option are disposed of by such recipient before the expiration of the statutory holding periods (a “disqualifying disposition”), such recipient will be considered to have realized as compensation, taxable as ordinary income in the year of disposition, an amount, not exceeding the gain realized on such disposition, equal to the difference between the exercise price and the fair market value of the shares on the date of exercise of
the option. We will be entitled to a deduction at the same time and in the same amount as the recipient is deemed to have realized ordinary income. Any gain realized on the disposition in excess of the amount treated as compensation or any loss realized on the disposition will constitute capital gain or loss, respectively. Such capital gain or loss will be long-term or short-term based upon how long the shares were held. If the recipient pays the option price with shares that were originally acquired pursuant to the exercise of an incentive stock option and the statutory holding periods for such shares have not been met, the recipient will be treated as having made a disqualifying disposition of such shares, and the tax consequence of such disqualifying disposition will be as described above.
The foregoing discussion applies only for regular tax purposes. For alternative minimum tax purposes, an incentive stock option will be generally treated as if it were a non-qualified stock option, the tax consequences of which are discussed below.
Non-Qualified Stock Options. A recipient will realize no taxable income, and we will not be entitled to any related deduction, at the time a non-qualified stock option is granted under the Plan. At the time of exercise of a non-qualified stock option, the recipient will realize ordinary income, and we will be entitled to a deduction, equal to the excess of the fair market value of the stock on the date of exercise over the option price. A recipient’s tax basis in the shares received upon exercise of a non-qualified stock option will be its fair market value on the date of exercise. Upon disposition of the shares, the difference between any amount realized by the recipient and the recipient’s tax basis in the shares disposed will be taxed as a capital gain or loss, long-term or short-term, based upon how long the shares are held.
Stock Appreciation Rights; Performance Shares and Performance Units. Generally: (a) the recipient will not realize income upon the grant of a stock appreciation right, performance shares or performance unit award; (b) the recipient will realize ordinary income, and we will be entitled to a corresponding deduction, in the year cash or shares of common stock are delivered to the recipient upon exercise of a stock appreciation right or in payment of the performance shares or performance unit award; and (c) the amount of such ordinary income, and our deduction will be the amount of cash received plus the fair market value of the shares of common stock received on the date of issuance. The federal income tax consequences of a disposition of unrestricted shares received by the recipient upon exercise of a stock appreciation right or in payment of a performance share or performance unit award are the same as described below with respect to a disposition of unrestricted shares.
Restricted Stock; Restricted Stock Units. For restricted stock, unless the recipient files an election to be taxed under Section 83(b) of the Code: (a) the recipient will not realize income upon the grant of restricted stock; (b) the recipient will realize ordinary income, and we will be entitled to a corresponding deduction, when the restrictions have been removed or expire; and (c) the amount of such ordinary income and deduction will be the fair market value of the restricted stock on the date the restrictions are removed or expire. If the recipient files an election to be taxed under Section 83(b) of the Code, the recipient will generally realize ordinary income, and we will be entitled to a corresponding deduction, equal to the fair market value of the restricted stock (determined without regard to any restrictions that may lapse) as of the date of grant and the later removal or expiration of the restrictions will have no tax consequences.
When the recipient disposes of restricted stock, the difference between the amount received upon such disposition and the amount the recipient realized as ordinary income (the recipient’s basis) will be treated as a capital gain or loss, long-term or short-term, based upon how long the shares have been held. A recipient’s holding period for restricted stock will begin when the restrictions are removed or expire or, if an election was made under Section 83(b) of the Code, the date of grant of the restricted stock.
Deferred Share Unit Awards. Recipients of deferred unit awards will not realize ordinary income upon grant of the award.The recipient will recognize income, and we will be entitled to a corresponding deduction, at the time of payment of the award in accordance with Section 409A of the Code. The amount that must be included in income is the value of the cash or shares received on the date of payment.
Dividend Equivalents and Cash Awards. Recipients of dividend equivalents and cash awards will be subject to taxation on such awards depending on whether such awards are subject to vesting conditions and whether such awards are subject to or exempt from Section 409A.
Withholding. The Plan permits us to withhold from awards or from any other amounts due the service provider an amount sufficient to cover any required withholding taxes. In lieu of cash, the Administrator may permit a participant to cover withholding obligations through (among other things) a reduction in the number of shares to be delivered to such participant or by delivery of shares already owned by the participant.
New Plan Benefits
The table below provides the benefits and amounts that will be received by or allocated to each of the named individuals if the Plan is approved by the stockholders.Because other awards under the Plan are within the discretion of the Administrator, except as set forth in the table below, future awards under the Plan are generally not determinable.
| | | | | | | | |
| 2022 Omnibus Equity Incentive Plan |
Name and Position(1) | Dollar Value ($) | Number of Units |
| Christopher G. Hutter, President and Chief Executive Officer | — | — |
| Aaron M. Tam, Chief Financial Officer | — | — |
| Timothy J. Lynch, EVP, Synalloy Metals | — | — |
| Current Executive Officers (as a group) | — | — |
Current Non-Employee Directors (as a group)(2) | $1,729,600 | 65,000 |
| All Employees, Excluding Executive Officers (as a group) | — | — |
(1) Ms. Cunningham and Mr. Gibson are no longer employed by the Company and are omitted from the table. |
(2) Effective as of March 18, 2022, Mr. Rosenzweig was appointed as the Executive Chairman of the Board. In connection with the appointment, in recognition of (among other things) significant responsibilities undertaken and his historic and anticipated time commitment to the Company, Mr. Rosenzweig was awarded, contingent upon and subject to approval of the Plan: (i) 15,000 restricted stock units, 50% of which will vest on April 26, 2023 and the remainder of which will vest on April 26, 2024, and (ii) 50,000 performance stock units, 12,500 of which will vest upon the achievement of a VWAP of the Company of $25.00, $27.50, $30.00 and $35.00, respectively, during the performance period from March 18, 2022 through April 26, 2025, in each case subject to certain terms and conditions. The dollar value set forth above is based on (a) the Company’s stock price as of March 7, 2022 for the restricted stock units and (b) for the performance stock units, the applicable VWAP targets causing the vesting of such performance stock unit awards. |
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2022 OMNIBUS EQUITY INCENTIVE PLAN.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has reviewed and discussed with management the Company’s audited consolidated financial statements for the year ended December 31, 2021. The Audit Committee has discussed with the Company’s independent auditors, BDO USA LLP, the matters required to be discussed by the standards of the Public Company Accounting Oversight Board ("PCAOB"). The Audit Committee has also received the written disclosures and the letter from BDO USA LLP required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with BDO USA LLP, its independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC.
The Audit Committee
John P. Schauerman
Henry L. Guy
Benjamin Rosenzweig
FeesPaid to Independent Registered Public Accounting Firm The following table sets forth the aggregate fees billed by
KPMGBDO USA LLP for audit services rendered in connection with the consolidated financial statements and reports for the fiscal
yearsyear ended December 31,
20192021 (referred to as
“Fiscal 2019”"Fiscal 2021") and
aggregate fees billed by KPMG LLP for audit services rendered in connection with the consolidated financial statements and reports for the fiscal year ended December 31,
2018 (“2020 ("referred to as
“Fiscal 2018”"Fiscal 2020") and for other services rendered
by each respective firm during fiscal years
20192021 and
2018,2020, on behalf of the Company and its subsidiaries, which have been billed or will be billed to the Company.
| 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 2021 | % of Total | Fiscal 2020 | % of Total |
| Audit Fees | $858,648 | 70.8% | $1,223,546 | 99.4% |
| | | | | | | |
| Audit Related Fees | $353,826 | 29.2% | $7,000 | 0.6% |
| | | | | | | |
| Tax Fees | — | —% | — | —% |
| | | | | | | |
| All Other Fees | — | —% | — | —% |
| | | | | | | |
| Total Fees | $1,212,474 | 100.0% | $1,230,546 | 100.0% |
Audit Fees: Audit fees include fees and out-of-pocket expenses billed for professional services rendered for the audit of the Company’s consolidated financial statements and review of the interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by the Company’s independent auditor in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation. Audit Fees also include fees for the audit of the Company’s internal controls related to Sarbanes-Oxley Section 404 compliance based on criteria established inInternal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Audit Related Fees: In Fiscal 2019,2021 audit related fees only include costs associated with the acquisition of DanChem Technologies, Inc. and costs associated with environmental compliance. In Fiscal 2018, the2020, audit related fees include costs associated with environmental compliance and costs associated with comfort letter procedures.
compliance.
Tax Fees: The Company didnot incur tax fees from KPMG in 20192021 or 2018.
In making its decision to appoint KPMG as the Company’sindependent registered public accounting firm for the fiscal year ending December 31, 2019, the Audit Committee considered whether services other than audit and audit-related services provided by that firm are compatible with maintaining the independence of KPMG.
2020.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accounting FirmAuditor
The Audit Committee pre-approves all audit and permitted non-audit services (including the fees and terms thereof) provided by the independent registered public accounting firm, subject to limited exceptions for non-audit services described in Section 10A of the
Securities Exchange Act
of 1934, which are approved by the Audit Committee prior to completion of the audit. The committee may delegate to one or more designated members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full committee at its next scheduled meeting. During Fiscal
2019,2021, all audit and permitted non-audit services were pre-approved by the Audit Committee.
AUDIT COMMITTEE REPORT
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has reviewed and discussed with managementconducted a competitive process to determine the Company’s independent registered public accounting firm for the year ending December 31, 2021, and the related interim periods. The Audit Committee invited several independent registered public accounting firms to participate in this process, including KPMG LLP, which audited the Company’s consolidated financial statements for the years ended December 31, 2020 and 2019. Following the competitive process, on March 12, 2021, the Audit Committee dismissed KPMG LLP as the Company’s independent registered public accounting firm. On March 12, 2021, the Audit Committee selected BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm for the year ended December 31, 2019. The Audit Committee has discussed with2021, and the related interim periods.BDO completed its standard client acceptance procedures on March 17, 2021.
KPMG LLP’s reports on the Company’s independent auditors, KPMG, the matters required to be discussed by the standards of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has also received the written disclosures and the letter from KPMG required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with KPMG, its independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the auditedconsolidated financial statements be included in the Company’s Annual Report on Form 10-Kas of and for the year ended December 31, 2019 for filing2020 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s two fiscal years ended December 31, 2021 and 2020, there were no: (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) between the Company and KPMG LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures that, if not resolved to the satisfaction of KPMG LLP, would have caused KPMG LLP to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events, except that KPMG LLP concurred with the
SEC.
| The Audit Committee |
| |
| Anthony A. Callander, Chair |
| Henry L. Guy |
| Jeffrey Kaczka |
| James W. Terry, Jr. |
Company’s assessment of a material weakness related to the Company’s control environment.
Proposal 3 - RatificationIn its Management’s Report on Internal Control Over Financial Reporting as set forth in item 4 “Controls and Procedures” of the AppointmentCompany’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, the Company reported a material weakness over internal controls, which constitutes a reportable event (as defined in Item 304(a)(1)(v) of Our Independent Registered Public Accounting Firm
Regulation S-K). The Audit Committee discussed the subject matter of the reportable events with KPMG LLP. Subsequently, the Audit Committee and management developed a remediation plan detailed in its Management’s Report on Internal Control Over Financial Reporting as set forth in item 4 “Controls and Procedures” of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. The Company has authorized KPMG LLP to respond fully to BDO’s inquiries concerning the subject matter of such reportable event.
During the years ended December 31, 2020 and 2019, and the subsequent interim period through March 12, 2021, neither the Company nor anyone on the Company’s behalf consulted BDO regarding any of the matters referred to in Item 304(a)(2)(i) or (ii) of Regulation S-K.
PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Although
applicable Delaware law and SEC rules do not require shareholder ratification to proceed with the appointment, our Audit Committee and our Board are requesting that our shareholders ratify the appointment of
KPMGBDO USA, LLP as our independent registered public accounting firm for fiscal year
2020.2022. Our Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal. However, if our shareholders do not ratify the appointment, our Audit Committee may investigate the reasons for shareholder rejection and may consider whether to retain
KPMGBDO USA, LLP or to appoint another independent registered public accounting firm. Furthermore, even if the appointment is ratified, our Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our shareholders or the Company. Representatives of
KPMGBDO USA, LLP are expected to be present at the Annual Meeting with an opportunity to make a statement, if they so desire, and to respond to appropriate questions with respect to that firm’s audit of the Company’s consolidated financial statements for the fiscal year ended December 31,
2019.2021.
A majority of the
voting power representedshares present and eligible to vote at the Annual Meeting
of Shareholders must vote
“FOR”“FOR” Proposal
34 to ratify our Audit Committee’s appointment of
KPMG,BDO USA, LLP as our independent
registered public accounting firmauditor for the fiscal year ended December 31,
2020.2022. The enclosed
BLUE Proxy Card form of proxy provides a means for you to vote
“FOR,“For,”
“AGAINST”“Against” or to
“ABSTAIN”“Abstain” on this proposal. Each properly executed proxy received in time for the Annual Meeting will be voted as specified therein. Abstentions
and broker non-votes will have the
same effect
asof a vote against this proposal.
Broker non-votes will have no effect on the outcome of the vote on this proposal.OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR”"FOR" RATIFICATION OF THE APPOINTMENT OF
KPMG,BDO USA, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR
2020.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.
SHAREHOLDER PROPOSALS FOR THE
20212023 ANNUAL MEETING OF SHAREHOLDERS
Any shareholder proposal to be included in the proxy materials for the 2021 2023Annual Meeting of Shareholders must be submitted in accordance with applicable regulations of the SEC and received by the Company at its principal executive offices, 4510 Cox Road,1400 16th Street, Suite 201, Richmond, VA 23060,270, Oak Brook, Illinois 60523, no later than________, 2020 (120 calendar days prior to the first anniversary of this Proxy Statement); provided, that, if the 2021 Annual Meeting of Shareholders is changed by more than 30 days from the date of the Annual Meeting, then the deadline is a reasonable time before the Company begins to print and send its proxy materials. December 29, 2022.
In order for a shareholder to bring any business or nominations before the
20212023 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
3060 days nor more than
6090 days
in advance ofprior to the
2021 Annual Meeting which is tentatively scheduled on________, 2021); provided, however, that in the event that less than 40 days’ notice or prior public disclosurefirst anniversary of the date of the
20212022 Annual Meeting which is scheduled to be held on June 6, 2022; provided, however, that if the date of the 2023 Annual Meeting of Shareholders is
givenadvanced by more than 30 days or
made availabledelayed by more than 30 days from the first anniversary of the 2022 Annual Meeting of Shareholders, to
shareholders,be timely, notice
by the shareholder must be received by the Company
not earlier than the close of business on the 90th day prior to such meeting and not later than the close of business on the
60th day prior to such meeting or the 10th day following the day on which
such noticepublic announcement of the date of
the 2021 Annual Meeting of Shareholders was mailed or a public disclosure including such
date wasmeeting is first made.
Each With respect to any 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 requirednot received 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,Company’s Bylaws, 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.
REFERENCES TO OUR WEBSITE ADDRESS
References to our website address throughout this Proxy Statement and the accompanying materials are for informational purposes only, or to fulfill specific disclosure requirements of the SEC’s rules or the Nasdaq Rules. These references are not intended to, and do not, incorporate the contents of our website by reference into this Proxy Statement or the accompanying materials.
INCORPORATION BY REFERENCE
The
“Audit"Audit Committee
Report”Report" is not deemed to be filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act
of 1934, as amended, except to the extent the Company specifically incorporates such information by reference.
OTHER MATTERS TO COME BEFORE THE MEETING
As
The Board of
the date of this Proxy Statement, the BoardDirectors does not know of any
other matters
other than those stated above, thatwhich may
properly come before the
Annual Meeting.meeting. However, if any other matters do properly come before the
Annual Meeting,meeting, it is the intention of the persons named as proxies to vote upon them in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Doug Tackett, Corporate Secretary
Exhibit A
SYNALLOY CORPORATION
2022 OMNIBUS EQUITY INCENTIVE PLAN
Synalloy Corporation
2022 Omnibus Equity Incentive Plan
TABLE OF CONTENTS
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| Secretary |
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APPENDIX A
Additional Information Regarding
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Synalloy Corporation
2022 Omnibus Equity Incentive Plan
ARTICLE I
PURPOSES
The purpose of the Synalloy Corporation 2022 Omnibus Equity Incentive Plan, as may be amended from time to time (the “Plan”), is to aid the Company and its Subsidiaries in attracting, retaining, motivating and rewarding qualified Employees, Directors, and Consultants whose present and potential contributions to the Company and its Subsidiaries are of importance, by providing the opportunity to acquire and maintain Awards. The Company believes that the Plan will encourage long-term service, recognize individual contributions and reward achievement of Company goals, and will promote the creation of long-term value for stockholders by closely aligning the interests of Participants with those of stockholders.
ARTICLE II
DEFINITIONS
Whenever the following terms are used in the
SolicitationUnder applicable SEC rules and regulations, membersPlan, they shall have the meanings specified below unless the context clearly indicates to the contrary. The singular pronoun shall include the plural where the context so indicates.
Section 2.1 “Administrator” shall mean the Board or any committee of the Board designated by the Board’s nomineesBoard to administer the Plan, in each case as further provided in Article III.
Section 2.2 “Affiliate” shall mean, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and certain officers“under common control with”), as used with respect to any entity or organization, shall have the meaning given such term under Rule 405 of the Securities Act.
Section 2.3 “Alternative Award” shall have the meaning set forth in Section 14.1.
Section 2.4 “Applicable Laws” shall mean the requirements relating to [stock options, restricted stock, restricted stock units, performance shares, performance awards, and other equity-based compensation awards] and plans under U.S. federal and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Company Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the Plan.
Section 2.5 “Award” shall mean any Option, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Stock Appreciation Right (SAR), Dividend Equivalent, Deferred Share Unit or other Stock-Based Award granted to a Participant pursuant to the Plan, including an Award combining two or more types of Awards into a single grant.
Section 2.6 “Award Agreement” shall mean any written agreement, contract or other instrument or document that sets forth the terms, conditions, restrictions and/or limitations applicable to an Award in addition to those set forth in the Plan. The Administrator may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for Participant acceptance of, or actions under, an Award Agreement, unless otherwise expressly specified herein.
Section 2.7 “Base Price” shall have the meaning set forth in Section 2.49.
Section 2.8 “Board” shall mean the Board of Directors of the Company, are “participants”as constituted from time to time.
Section 2.9 “Cash Award” shall have the meaning set forth in Section 12.1.
Section 2.10 “Cause” 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 aany 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.
Name
| | Present Principal Occupation
|
| | |
Craig C. Bram | | President and Chief Executive Officer of the Company |
| | |
Anthony A. Callander | | Former (Retired) Partner of Ernst & Young, LLP |
| | |
Susan S. Gayner | | President and Chief Executive Officer of Parkland Ventures, Inc. |
| | |
Henry L. Guy | | President and Chief Executive Officer of Modern Holdings Incorporated |
| | |
Jeffrey Kaczka | | Former (Retired) Executive Vice President and Chief Financial Officer of MSC Industrial Direct Co., Inc. |
| | |
Amy J. Michtich | | Vice President – General Manager, North American Operations of the Scotts Miracle-Gro Company |
| | |
James W. Terry, Jr. | | Director of Strategic Assets & Investments for Hollingsworth Funds, Inc. |
| | |
Murray H. Wright | | Former (Retired) Senior Counsel of DurretteCrump, PLC |
Officers
The officersshall mean any one or more 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 abovefollowing, as a Director and Director Nominee.
Name | | Present Principal Occupation |
| | |
Dennis M. Loughran | | Senior Vice President & Chief Financial Officer of the Company |
| | |
J. Greg Gibson | | President of Synalloy Chemicals |
Information Regarding Ownership of the Company’s Securities by Participants
The number of the Company’s securities beneficially owneddetermined by the Participants as of March 17, 2020Administrator in its sole discretion, unless an alternative definition 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 salesan applicable Award Agreement or an applicable employment agreement of the Company’s securities byParticipant:
(a) a Participant’s commission of a felony or any crime of moral turpitude:
(b) a material violation of a written policy of the Participants withinCompany or any Subsidiary which is grounds for termination;
(c) failure on the past two years. No part of the purchase priceParticipant to perform his or market valueher officer, employment or other duties to the Company or any Subsidiary in any material respect, after notice of these securities is representedsuch failure and (if such may be corrected as determined by funds borrowedthe Administrator) a reasonable opportunity to correct it; or
(d) failure to comply in any material respect with any applicable legal or regulatory requirements, including but not limited to the Foreign Corrupt Practices Act, the Securities Act, the Exchange, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Truth in Negotiations Act, or any rules or regulations promulgated thereunder.
Section 2.11 “Change in Control” shall mean the first to occur of any of the following events after the Effective Date:
(a) any transaction or series of related transactions, whether by way of sales of capital stock, merger, consolidation or otherwise, obtained forthat results in the purposedirect or indirect beneficial ownership by any person, entity or “group” (as defined in Section 13(d) of acquiring or holding such securities.Name | | Date | | Title of Security | | Number of
Shares
| | Transaction |
| | | | | | | | |
Anthony A. Callander | | 01/24/2019
07/09/2019 | | Common Stock
Common Stock
| | 2,153
1,570 | | Grant, Award or Other Acquisition
Grant, Award or Other Acquisition
|
| | | | | | | | |
Susan S. Gayner | | 01/24/2019
07/09/2019 | | Common Stock
Common Stock
| | 5,491
5,338
| | Grant, Award or Other Acquisition
Grant, Award or Other Acquisition
|
| | | | | | | | |
Henry L. Guy | | 06/13/2018
12/12/2018
12/12/2018
01/24/2019
03/20/2019
07/09/2019
| | Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
| | 5,000
4.224
4.224
1,615
1,600
1,570
| | Open Market Purchase
Other Acquisition
Other Acquisition
Grant, Award or Other Acquisition
Open Market Purchase
Grant, Award or Other Acquisition
|
| | | | | | | | |
Jeffrey Kaczka | | 07/09/2019 | | Common Stock | | 2,617 | | Grant, Award or Other Acquisition |
| | | | | | | | |
Amy J. Michtich | | 01/24/2019
07/09/2019 | | Common Stock
Common Stock
| | 1,722
1,570 | | Grant, Award or Other Acquisition
Grant, Award or Other Acquisition
|
| | | | | | | | |
James W. Terry, Jr. | | 06/12/2018
01/24/2019
03/08/2019
07/09/2019
09/20/2019
03/12/2020
03/13/2020
| | Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
| | 1,968
2,261
1,500
1,674
3,300
500
500
| | Gift of Securities from Insider
Grant, Award or Other Acquisition
Open Market Purchase
Grant, Award or Other Acquisition
Gift of Securities from Insider
Open Market Purchase
Open Market Purchase
|
| | | | | | | | |
Murray H. Wright | | 06/11/2018
12/20/2018
01/24/2019
03/07/2019
03/08/2019
03/13/2019
07/09/2019
11/21/2019
11/27/2019
12/09/2019
12/17/2019
12/19/2019
| | Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
| | 10,000
1,900
1,615
5,916
4,084
980
1,570
1,000
200
1,800
500
1,000
| | Open Market Sale
Gift of Securities from Insider
Grant, Award or Other Acquisition
Open Market Purchase
Open Market Purchase
Open Market Purchase
Grant, Award or Other Acquisition
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
|
Name | | Date | | Title of Security | | Number of
Shares
| | Transaction |
Craig C. Bram | | 06/20/2018
6/20/2018
08/15/2018
08/15/2018
09/18/2018
12/10/2018
12/10/2018
12/13/2018
02/06/2019
02/12/2019
03/07/2019
03/07/2019
03/14/2019
11/19/2019
11/22/2019
12/02/2019
12/09/2019
12/09/2019
12/16/2019
02/05/2020
02/05/2020
02/20/2020
03/10/2020
03/11/2020
03/12/2020
03/16/2020
| | Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
| | 36,710
27,305
38,152
26,647
1,800
2,500
1,000
1,000
31,658
13,632
10,000
1,040
1,100
2,195
2,000
2,000
2,000
1,000
309
31,166
14,027
996
4,000
2,000
1,000
3,000
| | Exercise or Conversion of Derivative Security
Payment of Exercise Price or Tax Liability
Exercise or Conversion of Derivative Security
Payment of Exercise Price or Tax Liability
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
Grant, Award or Other Acquisition
Payment of Exercise Price or Tax Liability
Open Market Purchase
Payment of Exercise Price or Tax Liability
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
Grant, Award or Other Acquisition
Payment of Exercise Price or Tax Liability
Payment of Exercise Price or Tax Liability
Open Market Purchase
Open Market Purchase
Open Market Purchase
Open Market Purchase
|
| | | | | | | | |
Dennis M. Loughran | | 02/06/2019
02/12/2019
02/22/2019
05/08/2019
02/05/2020
02/05/2020
02/20/2020
| | Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
| | 15,770
5,049
512
950
15,816
4,839
457
| | Grant, Award or Other Acquisition
Payment of Exercise Price or Tax Liability
Payment of Exercise Price or Tax Liability
Payment of Exercise Price or Tax Liability
Grant, Award or Other Acquisition
Payment of Exercise Price or Tax Liability
Payment of Exercise Price or Tax Liability
|
| | | | | | | | |
J. Greg Gibson | | 02/06/2019
02/12/2019
02/22/2019
05/08/2019
02/05/2020
02/05/2020
02/20/2020
03/11/2020
| | Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
| | 9,671
3,426
335
578
8,408
2,107
317
130
| | Grant, Award or Other Acquisition
Payment of Exercise Price or Tax Liability
Payment of Exercise Price or Tax Liability
Payment of Exercise Price or Tax Liability
Grant, Award or Other Acquisition
Payment of Exercise Price or Tax Liability
Payment of Exercise Price or Tax Liability
Open Market Purchase
|
Miscellaneous Information Concerning Participants
Other than as set forth in this Appendix A or elsewhere in this proxy statement and based on the information provided by each Participant, none of the Participants or their associates (i) beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, or ownsexcluding the Company, any of record but not beneficially,its Subsidiaries, any shares of Common Stock or other securitiesemployee benefit plan of the Company or any of its subsidiariesSubsidiaries, or (ii) has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the Meeting. In addition, neither the Company norAffiliates of any of the Participants listed above is now or has been withinforegoing, of more than 50% of the past year a party to any contract, arrangement, or understanding with any person with respect to anycombined voting power of the Company’s securities, including, but(or, if applicable, the surviving company after such a merger) then outstanding voting securities;
(b) within any 12-month period, the persons who were members of the Board at the beginning of such period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board, provided that any director appointed or nominated for election to the Board by a majority of the Incumbent Directors then still in office shall be deemed to be an Incumbent Director for purposes of this clause (b); or
(c) the sale, transfer or other disposition of all or substantially all of the assets of the Company, in one or a series of related transactions, to one or more Persons that are not, limitedimmediately prior to joint ventures, loansuch sale, transfer or option arrangements, putsother disposition, Affiliates of the Company;
in each case, provided that, as to Awards subject to Section 409A of the Code, such event also constitutes a “change in control” within the meaning of Section 409A of the Code.
In addition, notwithstanding the foregoing, a “Change in Control” shall not be deemed to occur if the Company files for bankruptcy, liquidation or calls, guarantees against lossreorganization under the United States Bankruptcy Code or guaranteesas a result of profit, divisionany restructuring that occurs as a result of losses or profits, orany such proceeding.
Section 2.12 “Change in Control Price” shall mean the giving or withholdingprice per share of proxies. No Participant has been convictedCompany Common Stock paid in conjunction with any transaction resulting in a criminal proceeding (excluding traffic violationsChange in Control. If any part of the price is payable other than in cash, the value of the non-cash portion of the Change in Control Price shall be determined in good faith by the Administrator as constituted immediately prior to the Change in Control.
Section 2.13 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, including the guidance and similar misdemeanors) that is material to such person’s ability or integrity duringregulations promulgated thereunder and successor provisions, guidance and regulations thereto.
Section 2.14 “Company” shall mean Synalloy Corporation, a Delaware corporation, and shall include any successor thereto.
Section 2.15 “Company Common Stock” shall mean the past ten years. Other than as set forth in this AppendixClass A or elsewhere in this Proxy Statement and based on the information provided by each Participant, neithercommon stock, par value $1.00 per share, of the Company norand such other stock or securities into which such common stock is hereafter converted or for which such common stock is exchanged.
Section 2.16 “Consultant” shall mean 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 employmentPerson who is engaged by the Company or any of the Subsidiaries to render consulting or advisory services to such entity.
Section 2.17 “Corporate Event” shall mean, as determined by the Administrator in its affiliatessole discretion, any transaction or with respect toevent described in Section 4.2(a) or any future transactions to whichunusual or nonrecurring transaction or event affecting the Company, any Subsidiary, or the financial statements of the Company or any of its affiliatesSubsidiaries, or changes in Applicable Laws or accounting principles (including, without limitation, a recapitalization of the Company).
Section 2.18 “Deferred Share Unit” shall mean a unit credited to a Participant’s account in the books of the Company under Article X, which represents the right to receive one Share of Company Common Stock or cash equal to the Fair Market Value thereof on settlement of the account.
Section 2.19 “Director” shall mean a member of the Board or a member of the board of directors of any Subsidiary.
Section 2.20 “Disability” shall mean (x) for Awards that are not subject to Section 409A of the Code, “disability” as such term is defined in the long-term disability insurance plan or program of the Company or any Subsidiary then covering the Participant or, in the absence of such a plan or program, as determined by the Administrator, provided, that, with respect to Awards that are not subject to Section 409A of the Code, in the case of any Participant who, as of the date of determination, is a party to an effective employment, severance, consulting or other services agreement with the Company or any Subsidiary that employs such Participant, “Disability” shall have the meaning, if any, specified in such agreement, and (y) for Awards that are subject to Section 409A of the Code, “disability” shall have the meaning set forth in Section 409A(a)(2)(c) of the Code.
Section 2.21 “Dividend Equivalent” shall mean the right to receive payments, in cash or in Shares, based on dividends paid with respect to Shares.
Section 2.22 “Effective Date” shall have the meaning set forth in Section 15.7.
Section 2.23 “Eligible Representative” for a Participant shall mean such Participant’s personal representative or such other person as is empowered under the deceased Participant’s will or trust or the then applicable laws of descent and distribution to represent the Participant hereunder.
Section 2.24 “Employee” shall mean any individual classified as an employee by the Company or one of its Subsidiaries, whether such employee is so employed at the time this Plan is adopted or becomes so employed subsequent to the adoption of this Plan, including any person to whom an offer of employment has been extended (except that any Award granted to such person shall be conditioned on his or her commencement of service). A person shall not cease to be an Employee in the case of (a) any leave of absence approved by the Company or (b) transfers between locations of the Company or between the Company, any of its Subsidiaries, or any successor to the foregoing. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period, and such Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a partyNon-Qualified Stock Option on the first (1st) day immediately following a three (3)-month period from the date the employment relationship is deemed terminated.
Section 2.25 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, including the guidance, rules and regulations promulgated thereunder and successor provisions, guidance, rules and regulations thereto.
Section 2.26 “Executive Officer” shall mean each person who is an officer of the Company or (ii)any Subsidiary and who is subject to the reporting requirements under Section 16(a) of the Exchange Act.
Section 2.27 “Fair Market Value” of a directShare as of any date of determination shall be, unless otherwise determined by the Administrator:
(a) If the Company Common Stock is listed on any established stock exchange or indirect material interesta national market system, then the closing price on such date per Share as reported on such stock exchange or system shall be the Fair Market Value for the date of determination;
(b) If there are no transactions in the Company Common Stock that are available to the Company on any date of determination pursuant to clause (a) but transactions are available to the Company as of the immediately preceding trading date, then the Fair Market Value determined as of the immediately preceding trading date shall be the Fair Market Value for the date of determination; or
(c) If neither clause (a) nor clause (b) shall apply on any date of determination, then the Fair Market Value shall be determined in good faith by the Administrator.
Section 2.28 “FICA” shall mean the U.S. Federal Insurance Contributions Act, as amended.
Section 2.29 “Good Reason” with respect to any Participant, has the meaning, if any, set forth in an applicable Award Agreement or an applicable employment agreement (or, if there is no such definition in the Participant’s Award Agreement or employment agreement of the Participant, this term shall not apply to the Participant).
Section 2.30 “Incentive Stock Option” shall mean an “incentive stock option” within the meaning of Section 422 of the Code.
Section 2.31 “Incumbent Directors” shall have the meaning set forth in the definition of “Change in Control.”
Section 2.32 “Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option.
Section 2.33 “Option” shall mean an option to purchase Company Common Stock granted under the Plan. The term “Option” includes both an Incentive Stock Option and a Non-Qualified Stock Option.
Section 2.34 “Option Price” shall have the meaning set forth in Section 6.3.
Section 2.35 “Optionee” shall mean a Participant to whom an Option or SAR is granted under the Plan.
Section 2.36 “Participant” shall mean any Service Provider who has been granted an Award pursuant to the Plan that remains outstanding.
Section 2.37 “Performance Award” shall mean Performance Shares, Performance Units and all other Awards that vest (in whole or in part) upon the achievement of specified Performance Goals.
Section 2.38 “Performance Cycle” shall mean the period of time selected by the Administrator during which performance is measured for the purpose of determining whether or the extent to which a Performance Award has been earned or vested.
Section 2.39 “Performance Goals” means the objectives established by the Administrator for a Performance Cycle pursuant to Section 9.5 for the purpose of determining the extent to which a Performance Award has been earned or vested.
Section 2.40 “Performance Share” means an Award granted pursuant to Article IX of the Plan of a contractual right to receive a Share (or the cash equivalent thereof) upon the achievement, in whole or in part, of the applicable Performance Goals.
Section 2.41 “Performance Unit” means a U.S. Dollar denominated unit (or a unit denominated in the Participant’s local currency) granted pursuant to Article IX of the Plan, payable upon the achievement, in whole or in part, of the applicable Performance Goals.
Section 2.42 “Person” shall mean an individual, partnership, corporation, limited liability company, limited liability partnership, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or any other entity of whatever nature.
Section 2.43 “Plan” shall have the meaning set forth in Article I.
Section 2.44 “Replacement Awards” shall mean Shares or Awards, issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any transactionform or series of similar transactions sincecombination by the beginning of our last fiscal yearCompany or any currently proposed transactions,of the Subsidiaries as reasonably determined by the Administrator.
Section 2.45 “Restricted Stock” shall mean an Award granted pursuant to Section 8.1.
Section 2.46 “Restricted Stock Unit” shall mean a right, granted pursuant to Article VIII of the Plan, to receive Shares, cash or seriesa combination thereof at the end of a specified period (which may or may not be coterminous with the vesting schedule of the underlying Award).
Section 2.47 “Securities Act” shall mean the Securities Act of 1933, as amended from time to time, including the guidance, rules and regulations promulgated thereunder and successor provisions, guidance, rules and regulations thereto.
Section 2.48 “Service Provider” shall mean an Employee, Consultant or Director.
Section 2.49 “Share” shall mean a share of Company Common Stock.
Section 2.50 “Stock Appreciation Right” or “SAR” shall mean the right to receive a payment from the Company in cash and/or Shares equal to the product of (i) the excess, if any, of the Fair Market Value of one Share on the exercise date over a specified price (the “Base Price”) fixed by the Administrator (which specified price shall not be less than the Fair Market Value of one Share on the grant date), multiplied by (ii) a stated number of Shares.
Section 2.51 “Stock-Based Award” shall have the meaning set forth in Article XI.
Section 2.52 “Subsidiary” shall mean any entity that is directly or indirectly controlled by the Company or any entity in which the Company directly or indirectly controls at least a 50% equity interest, provided that, to the extent required under Section 422 of the Code when granting an Incentive Stock Option, Subsidiary shall mean any corporation in an unbroken chain of corporations beginning with such entity if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
Section 2.53 “termination of employment,” “termination of service” and any similar transactions,term or terms shall mean, with respect to whichan Employee, the date the Participant ceases to be an Employee (determined without regard to any statutory or deemed or express contractual notice period); with respect to a Director who is not an Employee of the Company or any of its subsidiaries was or isSubsidiaries, the date upon which such Director ceases to be a partymember of the Board; and, with respect to a Consultant who is not an Employee of the Company or any of its Subsidiaries, the date upon which such Consultant ceases to provide consulting or advisory services to the Company or any of its Subsidiaries; provided that with respect to any Award subject to Section 409A of the Code, such terms shall mean “separation
from service,” as defined in Section 409A of the Code and the rules, regulations and guidance promulgated thereunder.
Section 2.54 “Withholding Taxes” shall mean any federal, state, local or foreign income, employment or other taxes, however denominated, required to be deducted or withheld under Applicable Law, as determined by the Company.
ARTICLE III
ADMINISTRATION
Section 3.1 Administrator. The Plan shall be administered by the Board or a committee appointed by the Board.
Section 3.2 Powers of the Administrator. Subject to the provisions of the Plan, the Administrator shall have the authority to do the following:
(a) determine the Fair Market Value;
(b) determine the type or types of Awards to be granted to each Participant;
(c) select the Service Providers to whom Awards may from time to time be granted hereunder;
(d) determine the number of Awards to be granted and the number of Shares to which an Award will relate;
(e) approve forms of Award Agreements for use under the Plan, which need not be identical for each Service Provider;
(f) determine the terms and conditions of any Awards granted hereunder (including, without limitation, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions and any restriction or limitation regarding any Awards or the Company Common Stock relating thereto) based in each case on such factors as the Administrator, in its sole discretion, shall determine;
(g) determine all matters and questions related to the termination of service of a Service Provider with respect to any Award, including, but not by way of limitation of, all questions of whether a particular Service Provider has taken a leave of absence, all questions of whether a leave of absence taken by a particular Service Provider constitutes a termination of service, and all questions of whether a termination of service of a particular Service Provider was for Cause;
(h) prescribe, amend and rescind rules and regulations relating to the Plan;
(i) determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise or purchase price of an Award may be paid in, cash, Company Common Stock, other Awards, or other property, or an Award may be canceled, forfeited or surrendered;
(j) suspend or accelerate the vesting of any Award or waive the forfeiture restrictions or any other restriction or limitation regarding any Awards or the Company Common Stock relating thereto;
(k) construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(l) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan;
(m) authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; and
(n) make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.
Any determination made by the Administrator under the Plan, including, without limitation, under Section 4.2, shall be final, binding and conclusive on all Participants and other persons having or claiming any right or interest under the Plan.
Section 3.3 Delegation by the Administrator. The Administrator may delegate any portion of its authority, duties and powers under the Plan with respect to Participants who are not the Chief Executive Officer, Executive Officers or non-employee Directors of the Board, subject to such terms or conditions or guidelines as the Board or Administrator shall determine (in the case of a committee acting as the Administrator, to the extent of its authority under the committee’s charter or as otherwise approved by the Board), to any officer or group of officers, or Director or group of Directors of the Company or its Affiliates; provided that any delegation to one or more officers of the Company shall be subject to and comply with Section 157(c) of the Delaware General Corporation Law (or successor provision). In addition, with respect to any Award intended to qualify for the exemption contained in Rule 16b-3 promulgated under the Exchange Act, it is intended that such Award be granted by a committee consisting of solely two or more “non-employee directors” within the meaning of such rule, or, in the alternative, the entire Board.
Section 3.4 Professional Assistance, Good Faith Actions. The Administrator may, in its discretion, elect to engage the services of attorneys, consultants, accountants, appraisers, brokers or other persons assisting in the administration of the Plan. The Administrator, the Company and its officers and Directors shall be entitled to, in good faith, rely upon the advice, reports, opinions or valuations of any such persons. All actions taken and all interpretations, decisions and determinations made by the Administrator, in good faith shall be final and binding upon all Participants, the Company and all other interested persons. The Administrator’s determinations under the Plan need not be uniform and may be made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. The Administrator (and its members) shall not be personally liable for any action, determination or interpretation made with respect to the Plan or the Awards, and the Administrator (and its members) shall be fully indemnified and held harmless by the Company with respect to any such action, determination or interpretation.
Section 3.5 (e) Participants in Non-U.S. Jurisdictions. Notwithstanding any provision of the Plan to the contrary, to comply with applicable laws in countries other than the United States in which the amount involved exceeds $120,000.Company or any Affiliate operates or has employees, directors or other service providers from time to time, or to ensure that the Company complies with any applicable requirements of foreign securities exchanges, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which of the Affiliates shall be covered by the Plan; (ii) determine which Service Providers outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to Service Providers outside the United States to comply with applicable foreign laws or listing requirements of any foreign exchange; (iv) establish sub-plans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such sub-plans and/or modifications shall be attached to the Plan as appendices), provided, however, that no such sub-plans and/or modifications shall increase the share limitations contained in Article IV of the Plan; and (v) take any action, before or after an Award is granted, that it deems advisable to comply with any applicable governmental regulatory exemptions or approval or listing requirements of any such foreign securities exchange. For purposes of the Plan, all references to foreign laws, rules, regulations or taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof.
ARTICLE IV
PRELIMINARY COPYSHARES SUBJECT TO COMPLETION – DATED APRIL 6, 2020PLAN
Section 4.1 SYNALLOY CORPORATION
4510 COX ROAD, SUITE 201
RICHMOND, VA 23060
VOTE BY INTERNET - www.proxyvoting.com/SYNL
UseShares Subject to Plan.
(a) Subject to adjustment in a manner consistent with Section 4.2, the Internetaggregate number of Shares which are reserved and available for issuance under this Plan is equal to transmit your voting instructions750,000, and for electronic delivery of information up until 11:59 P.M. ETwithout limitation all such Shares may be granted as Incentive Stock Options. The Shares issued under the day beforePlan may be
authorized but unissued or reacquired Company Common Stock, including Shares purchased by the meeting date or 11:59 P.M. ETCompany on the open market for purposes of the Plan. No provision of this Plan Cut-Off Dateshall be construed to require the Company to maintain the Shares in certificated form.
(b) Upon the grant of an Award, the maximum number of Shares set forth in Section 4.1(a) shall be reduced by the maximum number of Shares that are issued or may be issued pursuant to such Award. Upon the exercise, settlement or conversion of any Award or portion thereof, there shall again be available for grant under the 401(k)/ESOPPlan the number of Shares subject to such Award or portion thereof minus the actual number of Shares issued in connection with such exercise, settlement or conversion. If any such Award or portion thereof is for any reason forfeited, canceled, expired or otherwise terminated without the issuance of Shares, the Shares subject to such forfeited, canceled, expired or otherwise terminated Award or portion thereof shall again be available for grant under the Plan. Have your proxy cardThe Administrator may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting and make adjustments if the number of Shares actually delivered differs from the number of Shares previously counted in hand when you accessconnection with an Award. For the web siteavoidance of doubt, if Shares are withheld from issuance with respect to an Award by the Company in satisfaction of any tax withholding or similar obligations, such withheld Shares shall again be available for grant under the Plan. Awards which the Administrator reasonably determines will be settled in cash shall not reduce the Plan maximum set forth in Section 4.1(a). Notwithstanding the foregoing, and followexcept to the instructionsextent required by Applicable Law, Replacement Awards shall not be counted against Shares available for grant pursuant to obtain your recordsthis Plan.
Section 4.2 Changes in Company Common Stock; Disposition of Assets and Corporate Events.
(a) If and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would likethe extent necessary or appropriate to reducereflect any stock dividend, extraordinary dividend, stock split or share combination or any recapitalization, merger, consolidation, exchange of shares, spin-off, liquidation or dissolution of the costs incurred by our company in mailing proxy materials, you can consentCompany or other similar transaction affecting the Company Common Stock or other Corporate Event, the Administrator shall adjust the number of shares of Company Common Stock available for issuance under the Plan and the number, class and Option Price (if applicable) or Base Price (if applicable) of any outstanding Award, and/or make such substitution, revision or other provisions or take such other actions with respect to receiving all future proxy statements, proxy cards and annual reports electronically via e-mailany outstanding Award or the Internet. To sign up for electronic delivery, please followholder or holders thereof, in each case as it determines to be equitable. Without limiting the instructions abovegenerality of the foregoing sentence, in the event of any Corporate Event, the Administrator shall have the power to vote usingmake such changes as it deems appropriate in (
i) the Internetnumber and when prompted, indicate that you agreetype of shares or other securities covered by outstanding Awards, (ii) the prices specified therein (if applicable), (iii) the securities, cash or other property to receivebe received upon the exercise, settlement or access proxy materials electronicallyconversion of such outstanding Awards or otherwise to be received in future years.VOTE BY PHONE - 1-800-213- 6370
Useconnection with such outstanding Awards, and (
iv) and any touch-tone telephoneapplicable Performance Goals. After any adjustment made by the Administrator pursuant to transmit your voting instructions up until 11:59 P.M. ETthis Section 4.2, the day beforenumber of shares subject to each outstanding Award shall be rounded down to the meeting date or 11:59 P.M. ET onnearest whole number. (b) Any adjustment of an Award pursuant to this Section 4.2 shall be made in compliance with Section 422 and 409A of the Code, to the extent applicable.
Section 4.3 Award Agreement Provisions. The Administrator may include such further provisions and limitations in any Award Agreement as it may deem equitable and in the best interests of the Company and its Subsidiaries. Awards granted under the Plan Cut-Off Date for the 401(k)/ESOP Plan. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAIL
Mark, sign and date your 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.
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
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1. Company’s proposal to elect the eight nominees named in this Proxy Statement to serve on the Company’s Board of Directors, each to hold office until the 2021 Annual Meeting of Shareholders or until his or her respective successor is elected and qualified.
The Board of Directors recommends you vote FOR the following:
| For
All
☐
| Withhold
All
☐
| For All
Except
☐
| To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
|
01) Craig C. Bram | 02) Anthony A. Callander | 03) Susan S. Gayner | 04) Henry L. Guy |
05) Jeffrey Kaczka | 06) Amy J. Michtich | 07) James W. Terry, Jr. | 08) Murray H. Wright |
CUMULATIVE VOTING INSTRUCTIONS: Provide below any instructions with respect to how the undersigned’s shares should be cumulatively voted at the Annual Meeting, including the number of shares of Common Stock to be voted for any particular Nominee and/or the name of any Nominee with respect to whom the undersigned is withholding authority to cumulate votes, as applicable. Unless indicated to the contrary in the space provided below, all cumulative votes of such shareholder will be distributed among the nominees at the discretion of the Proxies named herein. |
|
|
|
The Board of Directors recommends you vote FOR proposals 2 and 3.
2. | Company’s proposal of the non-binding, advisory resolution approving the compensation of our named executive officers. | For
☐
| Against
☐
| Abstain
☐
|
3. | Company’s proposal of the ratification of the appointment of KPMG, LLP as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2020. | For
☐
| Against
☐
| Abstain
☐
|
NOTE:And in the discretion of the Administrator, be granted either alone, in addition to, or in tandem with any other Award. In addition, the Administrator may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to
Section 15.2), such proxy agents, uponadditional terms and conditions, not inconsistent with the provisions of the Plan, as the Administrator shall determine. Without limiting the scope of the preceding sentence, the Administrator may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance goals applicable to an Award, and any such performance goals may differ among Awards granted to any one Participant or to different Participants. Notwithstanding anything to the contrary herein, an Award Agreement must be accepted within a period of ninety (90) days (or such other businessperiod as the Administrator may properly come beforespecify in such Award Agreement) after the meetinggrant date or any adjournment or postponement thereofelse such Award Agreement shall be ineffective and matters incident to the conduct of the meeting,void.
Section 4.4 Prohibition Against Repricing. Except to the extent authorized under Rule 14a-4(c)(i) approved in advance by holders of a majority of the Shares entitled to vote generally in the election of Directors of the Company or (ii) pursuant to Section 4.2 as a result of any Corporate Event, the Administrator shall not have the power or authority to reduce, whether through amendment or otherwise, the exercise price of any outstanding Option or Base Price of any outstanding SAR.
ARTICLE V
GRANTING OF OPTIONS AND SARS
AND SALE OF COMPANY COMMON STOCK
Section 5.1 Eligibility. Non-Qualified Stock Options and SARs may be granted to Service Providers. Subject to Section 5.2, Incentive Stock Options may only be granted to Employees.
Section 5.2 Qualification of Incentive Stock Options. The terms of any Incentive Stock Option granted under the Securities Exchange ActPlan shall comply in all respects with the provisions of 1934.Please sign exactlySection 422 of the Code. Incentive Stock Options may only be granted to Employees. Incentive Stock Options shall not be granted more than ten (10) years after the earlier of the adoption of the Plan or the approval of the Plan by the Company’s stockholders. Notwithstanding the foregoing, to the extent that the aggregate Fair Market Value of Shares subject to an Incentive Stock Option and the aggregate Fair Market Value of shares of stock of any parent or subsidiary corporation (within the meaning of Sections 424(e) and (f) of the Code) subject to any other incentive stock options of the Company or a parent or subsidiary corporation (within the meaning of Sections 424(e) and (f) of the Code) that are exercisable for the first time by a Participant during any calendar year exceeds $100,000, or such other amount as your name(s) appear(s) hereon. When signingmay be prescribed under Section 422 of the Code, such excess shall be treated as attorney, executor, administrator, or other fiduciary, please give full titleNon-Qualified Stock Options in accordance with the Code. As used in the previous sentence, Fair Market Value shall be determined as such. Joint owners should each sign personally. All holders must sign.of the date the Incentive Stock Option is granted. If a corporationParticipant shall make any disposition of Shares issued pursuant to an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to disqualifying dispositions), the Participant shall notify the Company of such disposition within the time provided to do so in the applicable award agreement. No Employee may be granted an Incentive Stock Option under the Plan if such Employee, at the time the Incentive Stock Option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or partnership, please signany then-existing Subsidiary or “parent corporation” (within the meaning of Section 424(e) of the Code) unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code.
Section 5.3 Granting of Options and SARs to Service Providers.
(a) Options and SARs. The Administrator may from time to time:
(i) Select from among the Service Providers (including those to whom Options or SARs have been previously granted under the Plan) such of them as in full corporate its opinion should be granted Options and/or partnership name, by authorized officer. | | | | | | |
Signature [PLEASE SIGN WITHIN BOX] | | Date | | Signature (Joint Owners) | | Date |
PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION – DATED APRIL 6, 2020(ii)
Important Notice RegardingDetermine the Availabilitynumber of Proxy Materials forShares to be subject to such Options and/or SARs granted to such Service Provider, and determine whether such Options are to be Incentive Stock Options or Non-Qualified Stock Options; and
(iii) Determine the Annual Meeting:The Notice & Proxy Statementterms and Annual Report are available at www.proxyvote.com
SYNALLOY CORPORATION
Annual Meetingconditions of Shareholders
________, 2020 [9:00 AM] ET
This proxy is solicitedsuch Options and SARs, consistent with the Plan.
(b) SARs may be granted in tandem with Options or may be granted on a freestanding basis, not related to any Option. Unless otherwise determined by the BoardAdministrator at the grant date or determined thereafter in a manner more favorable to the Participant, SARs granted in tandem with Options shall have substantially similar terms and conditions to such Options to the extent applicable, or may be granted on a freestanding basis, not related to any Option.
(c) Upon the selection of DirectorsThe undersigned hereby appoints Sally M. Cunninghama Service Provider to be granted an Option or SAR under this Section 5.3, the Administrator shall issue, or shall instruct an authorized officer to issue, such Option or SAR and Dennis M. Loughran,may impose such conditions on the grant of such Option or eitherSAR as it deems appropriate. Subject to Section 15.2 of them,the Plan, any Incentive Stock Option granted under the Plan may be modified by the Administrator, without the consent of the Optionee, even if such modification would result in the disqualification of such Option as an “incentive stock option” under Section 422 of the Code.
ARTICLE VI
TERMS OF OPTIONS AND SARS
Section 6.1 Award Agreement. Each Option and each SAR shall be evidenced by an Award Agreement, which shall be accepted and acknowledged by the Optionee, including by electronic means, and which shall contain such terms and conditions as the Administrator shall determine, consistent with the Plan. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to qualify such Options as “incentive stock options” under Section 422 of them acting individuallythe Code.
Section 6.2 Exercisability and Vesting of Options and SARs.
(a) Each Option and SAR shall vest and become exercisable according to the terms of the applicable Award Agreement; provided, however, that by a resolution adopted after an Option or SAR is granted the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the time at which such Option or SAR or any portion thereof may be vested or exercised.
(b) Except as otherwise provided by the Administrator or in the absenceapplicable Award Agreement, no portion of others,an Option or SAR which is unexercisable on the date that an Optionee incurs a termination of service as a Service Provider shall thereafter become exercisable.
(c) The aggregate Fair Market Value (determined as of the time the Option is granted) of all Shares with respect to which Incentive Stock Options are first exercisable by a Service Provider in any calendar year may not exceed U.S. $100,000 or such other limitation as imposed by Section 422(d) of the fullCode, or any successor provision. To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Stock Options.
(d) SARs granted in tandem with an Option shall become vested and exercisable on the same date or dates as the Options with which such SARs are associated vest and become exercisable. SARs that are granted in tandem with an Option may only be exercised upon the surrender of the right to exercise such Option for an equivalent number of Shares, and may be exercised only with respect to the Shares for which the related Option is then exercisable.
Section 6.3 Option Price and Base Price. Excluding Replacement Awards, the per Share purchase price of the Shares subject to each Option (the “Option Price”) and the Base Price of each SAR shall be set by the Administrator and shall be not less than 100% of the Fair Market Value of such Shares on the date such Option or SAR is granted.
Section 6.4 Expiration of Options and SARs. No Option or SAR may be exercised after the first to occur of the following events:
(a) The expiration of ten (10) years from the date the Option or SAR was granted; or
(b) With respect to an Incentive Stock Option, in the case of an Optionee owning (within the meaning of Section 424(d) of the Code), at the time the Incentive Stock Option was granted, more than 10% of the total combined voting power of substitution, as lawful proxy,all classes of stock of the Company or any Subsidiary, the expiration of five (5) years from the date the Incentive Stock Option was granted.
ARTICLE VII
EXERCISE OF OPTIONS AND SARS
Section 7.1 Person Eligible to Exercise. During the lifetime of the Optionee, only the Optionee may exercise an Option or SAR (or any portion thereof) granted to him or her; provided, however, that the Optionee’s Eligible Representative may exercise his or her Option or SAR or portion thereof during the period of the Optionee’s disability. After the death of the Optionee, any exercisable portion of an Option or SAR may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Award Agreement, be exercised by his or her Eligible Representative.
Section 7.2 Partial Exercise. At any time and hereby authorizes themfrom time to represent and vote alltime prior to the shares of Common Stock of Synalloy Corporationdate on which the undersigned wouldOption or SAR becomes unexercisable under the Plan or the applicable Award Agreement, the exercisable portion of an Option or SAR may be exercised in whole or in part; provided, however, that the Company shall not be required to issue fractional Shares and the Administrator may, by the terms of the Option or SAR, require any partial exercise to exceed a specified minimum number of Shares.
Section 7.3 Manner of Exercise. Subject to any generally applicable conditions or procedures that may be imposed by the Administrator, an exercisable Option or SAR, or any exercisable portion thereof, may be exercised solely by delivery to the Administrator or its designee of all of the following prior to the time when such Option or SAR or such portion becomes unexercisable under the Plan or the applicable Award Agreement:
(a) Notice in writing delivered by the Optionee or his or her Eligible Representative, stating that such Option or SAR or portion is being exercised, and specifically stating the number of Shares with respect to which the Option or SAR is being exercised (which form of notice shall be provided by the Administrator upon request and may be electronic);
(b) A copy of any agreements or other documentation required by the Company at the time of exercise;
(c) (i) With respect to the exercise of any Option, full payment of the aggregate Option Price of the Shares in cash (through wire transfer or by personal, certified, or bank cashier check) or cash equivalents, Shares (including previously owned Shares or through a cashless exercise, i.e., “net settlement,” a broker-assisted exercise, or other reduction of the amount of Shares otherwise issuable pursuant to the Option), other Awards or awards granted under other plans of the Company or any Affiliate, other property, or any other legal consideration the Administrator deems appropriate (including notes or other contractual obligations of Participants to make payment on a deferred basis). In the case of an exercise whereby the Option Price is paid with Shares, such Shares shall be valued based on Fair Market Value as of the date of exercise. No Option may be exercisable for a period of more than ten (10) years following the date of grant of the Option (or in the case of an Incentive Stock Option granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, for a period of more than five (5) years following the date of grant of the Incentive Stock Option).
(d) In the event that the Option or SAR or portion thereof shall be exercised as permitted under Section 7.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option or SAR or portion thereof; and
(e) Satisfaction of any applicable Withholding Taxes, as contemplated by Section 15.11.
Section 7.4 Optionee Representations. The Company, in its sole discretion, may require an Optionee to make certain representations or acknowledgements, on or prior to the purchase of any Shares pursuant to any Option or SAR granted under this Plan, in respect thereof including, without limitation, that the Optionee is acquiring the Shares for an investment purpose and not for resale, and, if the Optionee is an Affiliate, additional acknowledgements regarding when and to what extent any transfers of such Shares may occur.
Section 7.5 Settlement of SARs. Unless otherwise determined by the Administrator, upon exercise of a SAR, the Participant shall be entitled to vote if personally presentreceive payment in the form, determined by the Administrator, of Shares, or cash, or a combination of Shares and cash having an aggregate value equal to the amount determined by multiplying:
(a) any increase in the Fair Market Value of one Share on the exercise date over the Base Price of such SAR, by
(b) the number of Shares with respect to which such SAR is exercised;
provided, however, that on the grant date, the Administrator may establish, in its sole discretion, a maximum amount per Share that may be payable upon exercise of a SAR, and provided, further, that in no event shall the value of the Company Common Stock or cash delivered on exercise of a SAR exceed the excess of the Fair Market Value of the Shares with respect to which the SAR is exercised over the Fair Market Value of such Shares on the grant date of such SAR.
Section 7.6 Conditions to Issuance of Shares. The Company shall evidence the issuance of Shares delivered upon exercise of an Option or SAR in the books and records of the Company or in a manner determined by the Company. The Administrator shall not have any liability to any Optionee for any delay in the delivery of Shares to be issued upon an Optionee’s exercise of an Option or SAR.
Section 7.7 Rights as Stockholders. The holder of an Option or SAR shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any Shares purchasable upon the exercise of any part of an Option or SAR unless and until the Shares attributable to the exercise of the Option or SAR have been issued by the Company to such holder.
Section 7.8 Transfer Restrictions. The Administrator, in its sole discretion, may set forth in an Award Agreement or in such other agreements to be entered into at the Annual Meetingtime of Shareholdersexercise, such further restrictions on the transferability of Synalloy Corporationthe Shares purchasable upon the exercise of an Option or SAR as it deems appropriate. Any such restriction may be referred to in the Share register maintained by the Company or otherwise in a manner reflecting its applicability to the Shares. An Employee must give the Company prompt notice of any disposition of Shares acquired by exercise of an Incentive Stock Option, within two (2) years from the date of granting such Option or one (1) year after the transfer of such Shares to such Employee.
ARTICLE VIII
RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNIT AWARDS
Section 8.1 Restricted Stock.
(a) Grant of Restricted Stock. The Administrator is authorized to make Awards of Restricted Stock to any Service Provider selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. All Awards of Restricted Stock shall be evidenced by an Award Agreement.
(b) Issuance and Restrictions. Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Administrator may impose. These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter.
(c) Issuance of Restricted Stock. The issuance of Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine.
(d) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Administrator may allow a Participant to elect, or may require, that any cash dividends paid on a Share of Restricted Stock be automatically reinvested in additional Shares of Restricted Stock, applied to the purchase of additional
Awards or deferred without interest to the date of vesting of the associated Award of Restricted Stock. Unless otherwise determined by the Administrator and specified in the applicable Award Agreement, Shares distributed in connection with a stock split or stock dividend, and other property (other than cash) distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such stock or other property has been distributed.
Section 8.2 Restricted Stock Units. The Administrator is authorized to make Awards of Restricted Stock Units to any Service Provider selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable and may specify such conditions to vesting as it deems appropriate. At the time of grant, the Administrator shall specify the settlement date applicable to each grant of Restricted Stock Units. Unless otherwise provided in an Award Agreement, on the settlement date, the Company shall, subject to the terms of this Plan (including satisfaction of applicable Withholding Taxes), transfer to the Participant (i) a number of Shares equal to the number of Restricted Stock Units, or (ii) cash in an amount equal to the Fair Market Value of the specified number of Shares equal to the number of Restricted Stock Units, or a combination thereof, as determined by the Administrator at the date of grant or thereafter for each Restricted Stock Unit scheduled to be held at ________settled on ________, 2020 at [9:00 a.m.] ET,such date and not previously forfeited. The Administrator shall specify the purchase price, if any, to be paid by the grantee to the Company for such Shares.
Section 8.3 Rights as a Stockholder. A Participant shall not be, nor have any of the rights or privileges of, a stockholder in respect of Restricted Stock Units awarded pursuant to the Plan unless and until the Shares attributable to such Restricted Stock Units have been issued to such Participant.
ARTICLE IX
PERFORMANCE SHARES AND PERFORMANCE UNITS
Section 9.1 Grant of Performance Awards. The Administrator is authorized to make Awards of Performance Shares and Performance Units to any Participant selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. All Performance Shares and Performance Units shall be evidenced by an Award Agreement.
Section 9.2 Issuance and Restrictions. The Administrator shall have the authority to determine the Participants who shall receive Performance Shares and Performance Units, the number of Performance Shares and the number and value of Performance Units each Participant receives for any Performance Cycle, and the Performance Goals applicable in respect of such Performance Shares and Performance Units for each Performance Cycle. The Administrator shall determine the duration of each Performance Cycle (and the duration of Performance Cycles may differ from one another), and there may be more than one Performance Cycle in existence at any adjournmentone time. An Award Agreement evidencing the grant of Performance Shares or postponement thereof,Performance Units shall specify the number of Performance Shares and the number and value of Performance Units awarded to the Participant, the Performance Goals applicable thereto, and such other terms and conditions not inconsistent with the Plan as the Administrator shall determine. No Company Common Stock will be issued at the time an Award of Performance Shares is made.
Section 9.3 Earned Performance Shares and Performance Units. Performance Shares and Performance Units shall become earned, in whole or in part, based upon the attainment of specified Performance Goals or the occurrence of any event or events, as the Administrator shall determine, either in an Award Agreement or thereafter on terms more favorable to the Participant. In addition to the achievement of the specified Performance Goals, the Administrator may condition payment of Performance Shares and Performance Units on such other conditions as the Administrator shall specify in an Award Agreement. The Administrator may also provide in an Award Agreement for the completion of a minimum period of service (in addition to the achievement of any applicable Performance Goals) as a condition to the vesting of any Performance Share or Performance Unit Award.
Section 9.4 Rights as a Stockholder. A Participant shall not have any rights as a stockholder in respect of Performance Shares or Performance Units awarded pursuant to the Plan (including, without limitation, the right to
vote on any matter submitted to the Company’s stockholders) until such time as the Shares attributable to such Performance Shares or Performance Units have been issued to such Participant or his or her beneficiary.
Section 9.5 Performance Goals. The Administrator shall establish in the Award Agreement or otherwise the Performance Goals that must be satisfied in order for a Participant to receive an Award for a Performance Period or for an Award of Performance Shares or Performance Units to be earned or vested. The Administrator may provide for a threshold level of performance below which no amount of compensation will be paid and a maximum level of performance above which no additional amount of compensation will be paid under the Plan, and it may provide for the payment of differing amounts of compensation for different levels of performance. Performance Goals may be established on a Company-wide basis, with respect to one or more business units, divisions, Subsidiaries or products or based on individual performance measures, and may be expressed in absolute terms or relative to other metrics including internal targets or budgets, past performance of the Company, the performance of one or more similarly situated companies, performance of an index, outstanding equity or other external measures. In the case of earning-based measures, Performance Goals may include comparisons relating to capital (including but limited to, the cost of capital), shareholders’ equity, shares outstanding, assets or net assets, or any combination thereof. Performance Goals may also be subject to such other terms and conditions as the Administrator may properly come beforedetermine appropriate. The Administrator may also adjust the meeting. The undersigned hereby revokesPerformance Goals for any proxyPerformance Cycle as it deems equitable or proxies heretofore givenappropriate in recognition of unusual or nonrecurring events affecting the Company, changes in applicable tax laws or accounting principles or such other events, changes or factors as the Administrator may determine.
Section 9.6 Determination of Attainment of Performance Goals. As soon as practicable following the end of a Performance Cycle and prior to any payment or vesting in respect of such Performance Cycle, the Administrator shall determine the number of Performance Shares, other Performance Awards, the number and value of Performance Units or the amount of any cash entitlement, as applicable that has been earned or vested. Notwithstanding anything in this Article IX to the contrary, the Administrator shall have the right, in its absolute discretion, to reduce or eliminate the amount otherwise payable to any Participant based on individual performance or any other factors that the Administrator, in its discretion, shall deem appropriate.
Section 9.7 Newly Eligible Participants. Notwithstanding anything in this Article IX to the contrary, the Administrator shall be entitled to make such rules, determinations and adjustments as it deems appropriate with respect to any Participant who becomes eligible to receive Performance Shares, Performance Units or other Performance Awards after the commencement of a Performance Cycle.
ARTICLE X
DEFERRED SHARE UNITS
Section 10.1Grant. Subject to Article III, the Administrator is authorized to make awards of Deferred Share Units to any Participant selected by the undersignedAdministrator at such time or times as shall be determined by the Administrator without regard to any election by the Participant to defer receipt of any compensation or bonus amount payable to him. The grant date of any Deferred Share Unit under the Plan will be the date on which such Deferred Share Unit is awarded by the Administrator or on such other future date as the Administrator shall determine in its sole discretion. Upon the grant of Deferred Share Units pursuant to the Plan, the Company shall establish a notional account for the Annual Meeting.The proxiesParticipant and will voterecord in such account the number of Deferred Share Units awarded to the Participant. No Shares will be issued to the Participant at the time an award of Deferred Share Units is granted. Subject to Article III and Applicable Law (including Section 409A of the Code), Deferred Share Units may become payable on the itemsa Corporate Event, termination of employment or service or on a specified date or dates set forth in the NoticeAward Agreement evidencing such Deferred Share Units.
Section 10.2Rights as a Stockholder. A Participant shall not be, nor have any of Annual Meetingthe rights and Proxy Statement (receiptprivileges of, which is hereby acknowledged)a stockholder of the Company in respect of Deferred Share Units awarded pursuant to the Plan unless and until such time as the Shares attributable to such Deferred Share Units have been issued to such Participant.
Section 10.3Vesting. Unless the Administrator provides otherwise at the grant date or provides thereafter in a manner more favorable to the Participant, Deferred Share Units shall be fully vested and nonforfeitable when granted.
Section 10.4Settlement. Subject to this Article X, upon the date specified in the Award Agreement evidencing the Deferred Share Units, for each such Deferred Share Unit the Participant shall receive, as specified on this proxy cardin the Award Agreement (and subject to satisfaction of applicable Withholding Taxes), (i) a cash payment equal to the Fair Market Value of one (1) Share as of such payment date, (ii) one (1) Share or (iii) any combination of clauses (i) and are(ii).
ARTICLE XI
OTHER STOCK-BASED AWARDS
Section 11.1Grants of Stock-Based Awards. The Administrator is authorized to votemake Awards of other types of equity-based or equity-related awards (“Stock-Based Awards”) not otherwise described by the terms of the Plan in theirsuch amounts and subject to such terms and conditions as the Administrator shall determine. All Stock-Based Awards shall be evidenced by an Award Agreement. Such Stock-Based Awards may be granted as an inducement to enter the employ of the Company or any Subsidiary or in satisfaction of any obligation of the Company or any Subsidiary to a Service Provider, whether pursuant to this Plan or otherwise, that would otherwise have been payable in cash or in respect of any other obligation of the Company. Such Stock-Based Awards may entail the transfer of actual Shares, or payment in cash or otherwise of amounts based on the value of Shares.
ARTICLE XII
CASH AWARDS AND DIVIDEND EQUIVALENTS
Section 12.1Cash Awards. The Administrator is authorized to grant Awards denominated in cash (“Cash Awards”), on a free-standing basis or as an element of, a supplement to, or in lieu of any other Award under the Plan to Service Providers in such amounts and subject to such other terms as the Administrator in its discretion determines to be appropriate.
Section 12.2Dividend Equivalents. Dividend Equivalents may be granted to Participants at such time or times as shall be determined by the Administrator. Dividend Equivalents may be granted in tandem with other Awards, in addition to other Awards, or freestanding and unrelated to other Awards. The grant date of any Dividend Equivalents under the Plan will be the date on which the Dividend Equivalent is awarded by the Administrator, or such other date permitted by Applicable Laws as the Administrator shall determine in its sole discretion. Dividend Equivalents may, at the discretion of the Administrator, be fully vested and nonforfeitable when granted or subject to such vesting conditions as determined by the Administrator. For the avoidance of doubt, Dividend Equivalents with respect to Awards shall not be fully vested until the Awards have been earned and shall be forfeited if the related Award is forfeited. Dividend Equivalents shall be evidenced in writing, whether as part of the Award Agreement governing the terms of the Award, if any, to which such Dividend Equivalent relates, or pursuant to a voteseparate Award Agreement with respect to freestanding Dividend Equivalents.
ARTICLE XIII
TERMINATION AND FORFEITURE
Section 13.1Termination. Except as provided in Article XIV or in the applicable Award Agreement, or as determined by the Administrator, unvested Awards granted under the Plan will be forfeited upon a Participant’s termination of employment or service to the Company for any reason.
Section 13.2Forfeiture and Recoupment of Awards. Awards granted under this Plan (and gains earned or accrued in connection with Awards) shall be subject to such generally applicable policies as to forfeiture and recoupment (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct) as may be adopted by the Administrator or the Board from time to time. Any such policies may (in the discretion of the Administrator or the Board) be applied to outstanding Awards at the time of adoption of
such policies, or on a prospective basis only. Participants shall also forfeit and disgorge to the Company any Awards granted or vested and any gains earned or accrued due to the exercise of Options or SARs or the sale of any Company Common Stock to the extent required by Applicable Law or as required by any stock exchange or quotation system on which the Company Common Stock is listed or quoted, in each case in effect on or after the Effective Date, including Section 304 of the Sarbanes-Oxley Act of 2002 and Section 10D of the Exchange Act and any regulations promulgated thereunder. For the avoidance of doubt, the Administrator shall have full authority to implement any policies and procedures necessary to comply with Applicable Law and/or the requirements of any stock exchange or quotation system on which the Company Common Stock is listed or quoted. The implementation of policies and procedures pursuant to this Section 13.2 and any modification of the same shall not specified.be subject to any restrictions on amendment or modification of Awards.
Section 13.3Clawbacks. Awards shall be subject to any generally applicable clawback policy adopted by the Administrator, the Board, the Company or any Subsidiary of the Company that is communicated to the Participants or any such policy adopted to comply with Applicable Law. Any such policy may subject Awards and Shares or amounts paid or realized with respect to Awards to reduction, cancelation, forfeiture or recoupment if certain specified events or wrongful conduct occur, including an accounting restatement due to the Company’s material noncompliance with financial reporting regulations or other events or wrongful conduct specified in any such clawback policy.
ARTICLE XIV
CHANGE IN CONTROL
Section 14.1Alternative Awards. Unless otherwise expressly provided in an Award Agreement or determined by the Administrator at any time prior to a Change in Control, subject to Section 14.2, no cancellation, acceleration of vesting or other payment shall occur in connection with a Change in Control with respect to any (i) unvested or unexercisable Award and/or (ii) if reasonably determined in good faith by the Administrator prior to the occurrence of the Change in Control, vested Awards, and such Award shall be honored or assumed, or new rights substituted therefor following the Change in Control (such honored, assumed or substituted award, an “Alternative Award”), provided that any Alternative Award must (x) give the Participant who held such Award rights and entitlements substantially equivalent to or better than the rights and terms applicable under such Award immediately prior to the Change in Control, including, without limitation, an identical or better schedule as to vesting and/or exercisability and that Alternative Awards that are stock options have identical or better methods of payment of the exercise price thereof; (y) as to any service-based vesting requirement applicable to the Award, provide for full vesting of the Alternative Award, if within twelve (12) months following a Change in Control, the Participant’s employment or service is terminated by the Company without Cause or by the Participant for Good Reason during the remaining vesting period thereof; and (z) as to any performance-based vesting requirement applicable to the Award, provide for vesting of the Alternative Award at target levels, if within twelve (12) months following a Change in Control, the Participant’s employment or service is terminated by the Company without Cause or by the Participant for Good Reason during the remaining vesting period thereof. If the Administrator determines in connection with a Change in Control that performance-based vesting requirements applicable to an Award will no specification is made, it islonger operate as intended following the intentionChange in Control or will no longer provide the intended incentive, the Administrator may modify such performance-based vesting requirements or impose new performance-based vesting requirements so long as the Administrator determines that such modified or new performance-based vesting requirements are not materially more difficult to achieve than the performance-based vesting requirements applicable to the Award immediately prior to the Change in Control, or determine to vest such Awards.
Notwithstanding this Section 14.1, if the securities underlying the Alternative Award are not publicly traded, (i) the acquisition, holding and disposition of said proxies to vote the shares representedunderlying the Alternative Award may be subject to such terms and conditions as are established by the proxyAdministrator prior to the Change in favorControl and (ii) the Company or the acquiror in such Change in Control shall be required to repurchase any vested Alternative Awards or securities underlying such Alternative Awards following termination of employment (other than termination for Cause or other circumstances resulting in the proposal. The proxies are also authorized to voteforfeiture of such Alternative Awards in accordance with their discretion upon such other matters as may properly come before the meetingSection 13.2 or any adjournmentan applicable award agreement) for cash or postponement thereof and matters incidentmarketable securities equal to the conductfair market value of the Annual Meeting,securities subject to such Alternative Award on the effective date of termination (and, in the case of Alternative Awards that are stock
options or stock appreciation rights, in excess of the exercise price or base price that the Participant would be required to pay in respect of such Alternative Award).
Section 14.2Settlement. Except as otherwise provided in this Article XIV or in an Award Agreement or thereafter on terms more favorable to a Participant, if the Administrator reasonably determines in good faith, prior to the occurrence of a Change in Control, that no Alternative Awards will (or should) be provided upon a Change in Control:
(a) each unvested Award (other than Performance Awards and freestanding Dividend Equivalents not granted in connection with another Award) shall vest;
(b) each outstanding Option and SAR shall be canceled in exchange for a payment equal to the excess, if any, of the Change in Control Price over the applicable Option Price or Base Price;
(c) Shares underlying all Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units, and other Stock-Based Awards that are vested (as provided in this Section 14.2 or otherwise) shall be issued or released to the Participant holding such Award, except to the extent authorized under Rule 14a-4(c)that the Administrator has determined, in accordance with authority granted to it by the Plan or the applicable Award Agreement to settle such Award in cash in lieu of shares;
(d) Each outstanding unvested Performance Award shall be cancelled without payment therefor, unless otherwise provided in the individual Award Agreement governing such Performance Award or determined by the Administrator; and
(e) all freestanding Dividend Equivalents not granted in connection with another Award shall be cancelled without payment therefor.
To the extent any portion of the Change in Control Price is payable other than in cash and/or other than at the time of the Change in Control, Award holders under the Plan shall receive the same value in respect of their Awards (less any applicable exercise price, Base Price or similar feature) as is received by the Company’s stockholders in respect of their Company Common Stock (as determined by the Administrator), and the Administrator shall determine the extent to which such value shall be paid in cash, in securities or other property, or in a combination of cash and securities or other property, consistent with Applicable Law. To the extent any portion of the Change in Control Price is payable other than at the time of the Change in Control, the Administrator shall determine the time and form of payment to the holders of Award consistent with Section 409A of the Code and other Applicable Laws. For avoidance of doubt, upon a Change in Control the Administrator may cancel Options and SARs for no consideration if the aggregate Fair Market Value of the Shares subject to Options and SARs is less than or equal to the Option Price of such Options or the Base Price of such SARs.
Section 14.3Section 409A. Notwithstanding the discretion in Sections 14.1 and 14.2, if any Award is subject to Section 409A of the Code and an Alternative Award would be deemed a non-compliant modification of such Award under Section 409A of the Code, then no Alternative Award shall be provided and such Award shall instead be treated as provided in Section 14.2 or in the Award Agreement (or in such other manner determined by the Administrator that is a compliant modification under Section 409A of the Code).
ARTICLE XV
OTHER PROVISIONS
Section 15.1Awards Not Transferable. Unless otherwise approved by the Administrator, no Award or interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that nothing in this Section
15.1 shall prevent transfers by will or by the applicable laws of descent and distribution or, with the prior approval of the Company’s General Counsel or the Administrator, estate planning transfers.
Section 15.2Amendment, Suspension or Termination of the Plan or Award Agreements.
(a) The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator; provided that without the approval by a majority of the shares entitled to vote at a duly constituted meeting of shareholders of the Company, no amendment or modification to the Plan may (i) except as otherwise expressly provided in Section 4.1(a) or Section 4.2, increase the number of Shares subject to the Plan, (ii) modify the class of persons eligible for participation in the Plan; (iii) modify the prohibition against repricing in Section 4.4; or (iv) materially modify the Plan in any other way that would require shareholder approval under Applicable Law.
(b) Except as otherwise expressly provided in the Plan, neither the amendment, suspension nor termination of the Plan shall, without the consent of the holder of the Award, adversely alter or impair any rights or obligations under any Award theretofore granted.
(c) Notwithstanding any provision of the Plan to the contrary, in no event shall adjustments made by the Administrator pursuant to Section 4.2 or the application of Section 13.2, Section 13.3, Section 14.1, Section 14.2, Section 15.6 or Section 15.12 to any Participant constitute an amendment of the Plan or of any Award Agreement requiring the consent of any Participant.
(d) No Award may be granted during any period of suspension or after termination of the Plan, and in no event may any Award be granted under this Plan after the expiration of ten (10) years from the Effective Date.
Section 15.3Effect of Plan upon Other Award and Compensation Plans. The adoption of this Plan shall not affect any other compensation or incentive plans in effect for the Company or any of its Subsidiaries. Nothing in this Plan shall be construed to limit the right of the Company or any of the Subsidiaries (a) to establish any other forms of incentives or compensation for Service Providers or (b) to grant or assume options or restricted stock other than under this Plan in connection with any proper corporate purpose, including, but not by way of limitation, the grant or assumption of options or restricted stock in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, firm or association.
Section 15.4At-Will Employment. Nothing in the Plan or any Award Agreement hereunder shall confer upon the Participant any right to continue as a Service Provider of the Company or any of the Subsidiaries or shall interfere with or restrict in any way the rights of the Company and any of its Subsidiaries, which are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without Cause.
Section 15.5Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.
Section 15.6Conformity to Securities Laws. The Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated under any of 1934.This proxy card, when properly executed,the foregoing, to the extent the Company, any of the Subsidiaries or any Participant is subject to the provisions thereof. Notwithstanding anything herein to the contrary, the Plan shall be administered, and Awards shall be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by Applicable Law, the Plan and Awards granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
Section 15.7Term of Plan. The Plan shall be effective upon and subject to the approval by the stockholders of the Company in accordance with Applicable Law (the “Effective Date”) and shall continue in effect, unless sooner terminated pursuant to Section 15.2, until the day immediately preceding the tenth (10th) anniversary of the Effective Date. The provisions of the Plan shall continue thereafter to govern all outstanding Awards.
Section 15.8Governing Law. To the extent not preempted by federal law, the Plan shall be construed in accordance with and governed by the laws of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction. With respect to any claim or dispute related to or arising under the Plan, the Company and each Participant who accepts an Award hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Cook County, Illinois.
Section 15.9Severability. In the event any portion of the Plan or any action taken pursuant thereto shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provisions had not been included, and the illegal or invalid action shall be null and void.
Section 15.10Governing Documents. In the event of any express contradiction between the Plan and any Award Agreement or any other written agreement between a Participant and the Company or any Subsidiary that has been approved by the Administrator, the express terms of the Plan shall govern, unless it is expressly specified in such Award Agreement or other written document that such express provision of the Plan shall not apply.
Section 15.11Withholding Taxes. In addition to any rights or obligations with respect to Withholding Taxes under any applicable Award Agreement, this Plan provides that the Company or any Subsidiary employing a Service Provider shall have the right to deduct and withhold from the Service Provider, or otherwise require the Service Provider or an assignee to pay to the Company or any such Subsidiary, any Withholding Taxes arising out of or due as a result of the grant, exercise, vesting, settlement or transfer of any Award or any other event occurring pursuant to the Plan or any Award Agreement, that may give rise to a Withholding Tax obligation. The Company and any such Subsidiary shall be entitled, without limitation to deduct any amount the Company determines constitutes the applicable Withholding Taxes from any payment of any kind or from any amount otherwise due to the Service Provider or to take such other actions (including, without limitation and in the sole discretion of the Company, withholding cash deliverable pursuant to any Award, delivery of previously owned Shares, net settlement, a broker-assisted sale, or other cashless withholding or reduction of the amount of Shares otherwise issuable or delivered pursuant to the Award) as the Company may determine is necessary to satisfy all or any portion of such Withholding Taxes; provided, however, that in the event that the Company withholds Shares issued or issuable to the Participant to satisfy all or any portion of the Withholding Taxes, the Company shall withhold a number of whole Shares having a Fair Market Value, determined as of the date of withholding, that shall satisfy the maximum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid liability award accounting); and provided, further, that with respect to any Award subject to Section 409A of the Code, in no event shall Shares be withheld pursuant to this Section 15.11 (other than upon or immediately prior to settlement in accordance with the Plan and the applicable Award Agreement) other than to pay taxes imposed under FICA and any associated U.S. federal withholding tax imposed under Section 3401 of the Code and in no event shall the value of such Shares (other than upon immediately prior to settlement) exceed the amount of the tax imposed under FICA and any associated U.S. federal withholding tax imposed under Section 3401 of the Code. For the avoidance of doubt, the Company (or the Administrator) shall not be obligated to withhold Shares otherwise deliverable to a Participant to satisfy any applicable Withholding Taxes. Notwithstanding the Company’s ability deduct and withhold Withholding Taxes, Participant shall in all cases be and remain responsible for all Participant taxes and any tax consequences of any Award.
Section 15.12Section 409A. It is the general intention, but not the obligation, of the Administrator to design Awards to comply with or to be exempt from Section 409A of the Code, and Awards will be votedoperated and construed accordingly. Neither this Section 15.12 nor any other provision of the Plan is or contains a representation to any Participant regarding the tax consequences of the grant, vesting, exercise, settlement, or sale of any Award (or the Shares underlying such Award) granted hereunder, and should not be interpreted as such. In no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of the Code. To the extent that the Administrator determines that any Award is subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate any terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the adoption of the Plan. Notwithstanding any provision of the Plan to the contrary, in the manner directed hereinevent that following the adoption of the Plan, the Administrator determines that any Award may be subject to Section 409A of the Code and related regulations and Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the adoption of the Plan), the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance or (c) comply with any correction procedures available with respect to Section 409A of the Code. Notwithstanding anything else contained in this Plan or any Award Agreement to the contrary, if a Service Provider is a “specified employee” as determined pursuant to Section 409A of the Code under any Company Specified Employee policy in effect at the time of the Service Provider’s “separation from service” (as determined under Section 409A of the Code) or, if no such policy is in effect, as defined in Section 409A of the Code), then, to the extent necessary to comply with, and avoid imposition on such Service Provider of any tax penalty imposed under, Section 409A of the Code, any payment required to be made to a Service Provider hereunder upon or following his or her separation from service shall be delayed until the first to occur of (i) the six (6)-month anniversary of the Service Provider’s separation from service and (ii) the Service Provider’s death. Should payments be delayed in accordance with the preceding sentence, the accumulated payment that would have been made but for the period of the delay shall be paid in a single lump sum during the ten (10)-day period following the lapsing of the delay period. No provision of this Plan or an Award Agreement shall be construed to indemnify any Service Provider for any taxes incurred by reason of Section 409A of the Code (or timing of incurrence thereof), other than an express indemnification provision therefor.
Section 15.13Notices. Except as provided otherwise in an Award Agreement, all notices and other communications required or permitted to be given under this Plan or any Award Agreement shall be in writing and shall be deemed to have been given if delivered personally, sent by email or any other form of electronic transfer approved by the undersigned shareholder. If no directionAdministrator, sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such delivery, (i) in the case of notices and communications to the Company, to its current business address and to the attention of the General Counsel of the Company or (ii) in the case of a Participant, to the last known address, or email address or, where the individual is made, this Proxy willan employee of the Company or one of its subsidiaries, to the individual’s workplace address or email address or by other means of electronic transfer acceptable to the Administrator. All such notices and communications shall be voted FOR the election of all the director nominees in Proposal 1; FOR Proposal 2 - approvaldeemed to have been received on the non-binding, advisory resolution approvingdate of delivery, if sent by email or any other form of electronic transfer, at the compensationtime of our named executive officers;dispatch or on the third business day after the mailing thereof.
Section 15.14Beneficiary Designation. Each Participant under the Plan may from time to time pursuant to procedures approved by the Company name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in case of such Participant’s death.
Section 15.15Establishment of Sub-plans. The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as the Board deems necessary or desirable and FOR Proposal 3 -(ii) such additional terms and conditions not otherwise inconsistent with the ratificationPlan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the appointmentPlan, but each supplement shall apply only to Participants within the affected jurisdiction and the Employer shall not be required to provide copies of KPMG, LLP asany supplement to Participants in any jurisdiction that is not affected.
Section 15.16Funding of the Company’s independent registered public accounting firm forPlan; Limitation on Rights. This Plan shall be unfunded. Neither the fiscal year ended December 31, 2020.The BoardCompany nor any other Employer shall be required to establish any special or separate fund or to make any other segregation of Directors doesNOT endorseassets to assure the nominees put forth by Privet Fund LP, UPG Enterprises LLC and certainpayment of their respective affiliates (collectively,any Awards under this Plan. No Participant or any other person shall under any circumstances acquire any property interest in any specific assets of the “Dissident Group”) and strongly urges youCompany or any Subsidiary. To the extent that any person acquires a right toDISCARD all proxy cards or other materials sent to you by receive payment from the Dissident Group. If you have previously submitted a white proxy card sent to you byCompany hereunder, such right shall be no greater than the Dissident Group, you can revoke that proxy (includingright of any matter set forth therein, whether or not such matter is listed onunsecured general creditor of the reverse side of this card) by signing and dating this card and returning it in the postage-paid envelope or by voting via the Internet or by telephone by following the instructions provided on the reverse side of this card.
Continued and to be signed on reverse side
Company.
