FORM DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
A. Schulman, Inc.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
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and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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3550 West Market Street
Akron, Ohio 44333
November 24, 2008
To Our Stockholders:
You are cordially invited to attend the 2008 Annual Meeting of
Stockholders to be held on Thursday, December 18, 2008, at
10:00 A.M., local time, at The Hilton Inn West,
3180 West Market Street, Akron, Ohio 44333.
Details of the business to be conducted at the 2008 Annual
Meeting of Stockholders are provided in the attached Notice of
Annual Meeting and Proxy Statement. As a stockholder, you are
being asked to vote on a number of important matters.
Specifically, this year we are asking you to approve important
amendments to our Certificate of Incorporation, which if
adopted, will have the effect of declassifying our Board of
Directors and provide that Directors will be elected annually
for one year terms. If the amendments to our Certificate of
Incorporation are adopted, we will elect two Directors whose
terms will expire at the 2009 Annual Meeting of Stockholders. If
the amendments are not adopted, however, the two Directors will
be placed into Class I and will have a term that expires at
the 2011 Annual Meeting of Stockholders. In addition, we are
also asking you to ratify our selection of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm for fiscal 2009.
We hope that you will be able to attend the 2008 Annual Meeting.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. In order to
ensure your shares are represented, we urge you to execute and
return the enclosed form of Proxy, or that you submit your Proxy
electronically through the Internet or by telephone promptly.
Sincerely,
Joseph M. Gingo
Chairman, President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders
of A. Schulman, Inc. (the Corporation) will be held
at The Hilton Inn West, 3180 West Market Street, Akron,
Ohio 44333, on Thursday, December 18, 2008 at
10:00 A.M., local time, for the purpose of considering and
acting upon the following matters, all of which are more
completely set forth in the accompanying Proxy Statement:
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1.
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The election of two Directors;
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2.
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The ratification of the selection of PricewaterhouseCoopers LLP
as independent registered public accounting firm for the fiscal
year ending August 31, 2009;
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3.
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The amendment of the Corporations Certificate of
Incorporation in order to declassify the Board of Directors and
to provide that Directors will be elected for terms of one year
each commencing at this Annual Meeting; and
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4.
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The transaction of any other business as may properly come
before the stockholders at the Annual Meeting and any
adjournments thereof.
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Stockholders of record at the close of business on
October 20, 2008 are entitled to notice of and to vote at
the Annual Meeting and any adjournments thereof.
By order of the Board of Directors,
David C. Minc
Secretary
Akron, Ohio
November 24, 2008
Your vote is important. Stockholders are requested to
complete, date, sign and return the enclosed PROXY in the
envelope provided, which requires no postage if mailed in the
U.S., or to submit their votes electronically through the
Internet or by telephone.
IMPORTANT
NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS
The Securities and Exchange Commission permits companies to send
a single set of annual disclosure documents to any household at
which two or more stockholders reside, unless contrary
instructions have been received, but only if the corporation
provides advance notice and follows certain procedures. In such
cases, such stockholders continue to receive a separate notice
of the meeting and proxy card. This householding
process reduces the volume of duplicate information and reduces
printing and mailing expenses. A. Schulman, Inc. (the
Corporation) has not instituted householding for
stockholders of record; however, a limited number of brokerage
firms may have instituted householding for beneficial owners of
the Corporations shares of common stock held through such
brokerage firms. If your family has multiple accounts holding
shares of common stock of the Corporation, you already may have
received householding notification from your broker. Please
contact your broker directly if you have any questions or
require additional copies of the annual disclosure documents.
The broker will arrange for delivery of a separate copy of this
Proxy Statement or the Corporations Annual Report promptly
upon your written or oral request. You may decide at any time to
revoke your decision to household, and thereby receive multiple
copies.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON DECEMBER 18, 2008
The Proxy Statement,
Form 10-K
for the year ended August 31, 2008 and the 2008 Annual
Report to stockholders are available at
http://www.proxydocs.com/shlm.
TABLE OF CONTENTS
3550 West
Market Street
Akron, Ohio 44333
November 24,
2008
GENERAL
INFORMATION
The accompanying Proxy is being solicited by the Board of
Directors of A. Schulman, Inc. (the Corporation) for
use at the 2008 Annual Meeting of Stockholders to be held on
December 18, 2008, at 10:00 A.M., local time, and any
adjournments thereof (the 2008 Annual Meeting). The
mailing address of the principal executive offices of the
Corporation is 3550 West Market Street, Akron, Ohio 44333.
To obtain directions to attend the 2008 Annual Meeting, please
contact the Corporation at
(330) 666-3751.
This Proxy Statement and the accompanying form of Proxy were
first mailed to stockholders on or about November 24, 2008.
Voting
Rights
Stockholders of record at the close of business on
October 20, 2008 (the record date) will be entitled to vote
at the 2008 Annual Meeting. On that date, the Corporation had
issued and outstanding 26,132,897 shares of Common Stock,
$1.00 par value (the Common Stock). Each share
of Common Stock is entitled to one vote on all matters properly
coming before the 2008 Annual Meeting. At least
13,066,449 shares of Common Stock of the Corporation must
be represented at the meeting in person or by Proxy in order to
constitute a quorum for the transaction of business.
Voting of
Proxies; Revocation
Shares represented by properly executed Proxies will be voted at
the 2008 Annual Meeting, and if a stockholder has specified how
the shares represented thereby are to be voted, they will be
voted in accordance with such specification. It is intended that
shares represented by the enclosed Proxy, on which no
specification has been made, will be voted:
(1) FOR the election of the
Corporations two Director nominees;
(2) FOR the ratification of the
Corporations selection of PricewaterhouseCoopers LLP as
its independent registered public accounting firm for fiscal
2009; and (3) FOR the adoption of the
amendments to the Corporations Certificate of
Incorporation.
Proxies may be revoked at any time before a vote is taken or
the authority granted is otherwise exercised. Revocation may be
accomplished by the execution of a later dated Proxy, or a later
casted Internet or telephone vote, with regard to the same
shares, or by giving notice in writing to the Corporate
Secretary at A. Schulman, Inc., 3550 West Market Street,
Akron, Ohio 44333, or in person at the 2008 Annual Meeting.
Voting
Via Telephone or Internet
This year the Corporation is offering registered stockholders
the opportunity to vote their shares electronically through the
Internet or by telephone. Instead of submitting your vote by
mail on the enclosed Proxy Card, you may vote by telephone or
via the Internet by following the procedures described on your
Proxy Card. In order to vote via telephone or the Internet,
please have the enclosed Proxy Card in hand, and call the number
or go to the website
1
listed on the Proxy Card and follow the instructions. The
telephone and Internet voting procedures are designed to
authenticate stockholders identities, to allow
stockholders to give their voting instructions, and to confirm
that stockholders instructions have been recorded
properly. Stockholders voting through the Internet should
understand that they may bear certain costs associated with
Internet access, such as usage charges from their Internet
service providers.
Vote
Required
The vote required to approve each of the proposals that are
scheduled to be presented at the 2008 Annual Meeting is as
follows:
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Proposal
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Vote Required
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Proposal 1 Election
of Directors
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Election of the Director nominees
requires the favorable vote of a plurality of all votes cast by
the holders of the Corporations Common Stock at the 2008
Annual Meeting.
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Proposal 2
Ratification of Selection of Independent Registered Public
Accounting Firm
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For ratification, this proposal requires
the affirmative vote of the holders of a majority of the shares
of Common Stock having voting power present at the 2008 Annual
Meeting.
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Proposal 3 Approval
of Amendments to the Corporations Certificate of
Incorporation
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Pursuant to the provisions of the
Corporations Certificate of Incorporation, the proposed
amendments must be approved by the affirmative vote of the
holders of a majority of the shares of Common Stock outstanding
and entitled to vote at the 2008 Annual Meeting.
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Stockholder
Proposals for 2009 Annual Meeting of Stockholders
Any stockholder who intends to present a proposal at the annual
meeting in fiscal 2009 must deliver such proposal to the
Corporate Secretary at A. Schulman, Inc., 3550 West Market
Street, Akron, Ohio 44333:
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Not later than July 28, 2009, if the proposal is submitted
for inclusion in the Corporations proxy materials for that
meeting pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended; or
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Not earlier than September 20, 2009 and not later than
October 20, 2009, if the proposal is submitted pursuant to
the Corporations Amended and Restated By-Laws (the
By-Laws). The Corporation reserves the right to
exercise discretionary voting authority on such proposal if a
stockholder has failed to submit the proposal within such
designated time period.
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PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the provisions of the Corporations
Certificate of Incorporation and By-Laws, the Board of Directors
has currently fixed the number of Directors at 12. Previously,
the Board of Directors had fixed the number of Directors at 12,
however, on January 22, 2008, the Board of Directors
approved the expansion of the Board to 13 Directors in
order to reappoint Joseph M. Gingo, the Corporations
President and Chief Executive Officer, as a Class III
Director. In conjunction with the January 22, 2008
expansion, it was the Boards intention to return the
number of Directors to 12 as soon as practicable. Consequently,
on June 30, 2008, the Board of Directors unanimously
approved to reduce the size of the Board back to 12 and to let
one director position expire at the 2008 Annual Meeting. In
accordance with the Corporations retirement policy for
Directors, Director Willard R. Holland has reached the age of
72, and will not be standing for re-election. Additionally,
Dr. Peggy G. Miller has declined to stand for re-election
and resigned as a Director effective November 7, 2008,
thereby creating a vacancy on the Board. Consequently, while
there had been four Directors with terms expiring at the 2008
Annual Meeting, only three Director positions shall be open for
election and, as described further below, only two Directors are
being nominated. However, while there will be one vacancy on the
Board of Directors at the 2008 Annual Meeting,
2
Proxies may not be voted for a greater number of person than the
number of nominees named in this Proxy Statement.
On November 11, 2008, the Corporation entered into a
standstill agreement (the Standstill Agreement) with
a group of investors led by Ramius LLC (collectively, the
Ramius Group), in order to avoid a proxy contest for
the election of Directors at the 2008 Annual Meeting. Pursuant
to the Standstill Agreement, the Corporation and the Ramius
Group have agreed to a process for filling the vacancy created
by Dr. Miller. Specifically, pursuant to the terms of the
Standstill Agreement, the Corporation has agreed to form a
Selection Committee, consisting of independent Directors Howard
R. Curd (Chair), David G. Birney and Lee D. Meyer, to identify
and recommend an independent Director to fill the vacancy
created by Dr. Miller. In making its recommendation, the
Selection Committee will consider and interview at least two
candidates suggested by each of the Corporation and the Ramius
Group, provided that such recommendations are received by the
Selection Committee no later than December 31, 2008. As
contemplated in the Standstill Agreement, the Board of Directors
expects to appoint the nominee recommended by the Selection
Committee no later than January 31, 2009. For more
information regarding information regarding the Standstill
Agreement and the Ramius Group, see the Corporations
Current Report on
Form 8-K
filed with the Securities and Exchange Commission (the
SEC) on November 12, 2008.
Pursuant to the Certificate of Incorporation, Directors are
currently divided into three classes, and the By-Laws require
that, to the extent possible, there be the same number of
Directors in each class. In compliance with the By-Laws, there
are currently four Directors in each of Classes I
and II and five Directors in Class III. However, as
set forth in more detail in Proposal 3
Approval of Amendments to the Corporations Certificate of
Incorporation beginning on page 54, the Board of
Directors is recommending that stockholders approve amendments
to the Certificate of Incorporation, in order to consolidate the
Board of Directors into a single class. If such proposed
amendments are adopted by the stockholders, Directors elected at
the 2008 Annual Meeting, as well as the Director appointed
pursuant to the Standstill Agreement, will serve a term that
expires at the 2009 Annual Meeting of Stockholders. If these
amendments are not approved, however, the Board of
Directors current classified structure will remain and all
nominees elected at the 2008 Annual Meeting, as well as the
Director appointed pursuant to the Standstill Agreement, will
serve as Class I Directors with terms that expire at the
2011 Annual Meeting of Stockholders.
Unless a stockholder requests that voting of that
stockholders Proxy be withheld for any one or more of the
nominees for Director in accordance with the instructions set
forth on their Proxy Card, it is presently intended that shares
represented by Proxies in the enclosed form will be voted for
the election of each of the Corporations two Director
nominees named in the following table. All of the members of the
Nominating and Corporate Governance Committee have recommended,
and the Board of Directors has approved, the nomination of these
nominees.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THESE
NOMINEES.
All nominees appearing below have consented to being named in
this Proxy Statement and to serve if elected. Should any nominee
subsequently decline or be unable to accept such nomination to
serve as a Director, an event that the Board of Directors does
not now expect, the persons voting the shares represented by
Proxies solicited hereby may vote such shares for a reduced
number of nominees. The election of the Director nominees
requires the favorable vote of a plurality of all votes cast by
the holders of the Corporations Common Stock at a meeting
at which a quorum is present. Broker non-votes and Proxies
marked Withhold Authority will not be counted toward
the election of Directors or toward the election of individual
nominees specified in the form of Proxy and, thus, will have no
effect other than that they will be counted for establishing a
quorum.
3
The following information concerning each nominee and each
Director continuing in office is based in part on information
received from the respective nominees and Directors and in part
from the Corporations records.
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First
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Principal Occupation During Past Five Years
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Became
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Name of Nominee or Director
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and Age as of October 20, 2008
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Director
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Nominees For Election As Director
(If Amendments are Adopted, Term Expiring in 2009)
(If Amendments are not Adopted, Term Expiring in 2011)
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David G.
Birney(1)(2)
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Retired; formerly, President and Chief Executive Officer of
Solvay America, Inc. (chemicals, plastics and pharmaceuticals),
2001-2006; and President and Chief Executive Officer of Solvay
Polymers, Inc. (plastics), 1987-2000; Age 65.
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2006
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John B.
Yasinsky(1)(2)(3)
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Retired; formerly, Chairman and Chief Executive Officer of
Omnova Solutions, Inc. (decorative and building products and
performance chemicals), 1999-2001; and Chairman, President and
Chief Executive Officer of GenCorp., Inc. (aerospace,
automotive, chemicals and plastics), 1995-1999; Age 69.
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2000
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Class II Directors Continuing In Office (Term Expiring
in 2009)
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Howard R.
Curd(1)(3)(4)
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Chairman of the Board and Chief Executive Officer of Uniroyal
Engineered Products, LLC (plastic vinyl coated fabrics) since
2003; formerly, Chairman and Chief Executive Officer of Uniroyal
Technology Corporation (compound semiconductors, plastic vinyl
coated fabrics and specialty chemical), 1992-2003; Age 69.
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2006
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James S.
Marlen(1)(4)
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Chairman of the Board of Ameron International Corporation
(construction and industrial manufacturing) since 1995;
President and Chief Executive Officer of Ameron International
Corporation since 1993; formerly, Vice President, GenCorp., Inc.
(aerospace, automotive, chemicals and plastics); and President,
GenCorp. Polymer Products (a subsidiary of GenCorp., Inc.),
1988-1993; Age 67.
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1995
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Michael A.
McManus(2)(3)
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President and Chief Executive Officer of Misonix, Inc., (medical
devices) since 1998; formerly, President and Chief Executive
Officer of New York Bancorp Inc., 1991-1998; Age 65.
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2006
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Ernest J.
Novak(2)(4)
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Retired; formerly, Partner of Ernst & Young LLP (public
accounting), 1980-2003, including most recently, Managing
Partner of certain domestic offices, 1986-2003; Age 63.
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2003
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4
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First
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Principal Occupation During Past Five Years
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Became
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Name of Nominee or Director
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and Age as of October 20, 2008
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Director
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Class III Directors Continuing In Office (Term Expiring
in 2010)
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Michael Caporale,
Jr.(4)
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Retired; formerly, President and Chief Executive Officer of
Associated Materials, Inc. (manufacturer and distributor of
exterior building products), 2002-2006; President and Chief
Executive Officer of Associated Materials Holdings, Inc. (direct
parent of Associated Materials, Inc.), 2002-2006; and President
and Chief Executive Officer of AMI Holdings, Inc. (direct parent
of Associated Materials Holdings, Inc.), 2004-2006; Age 57.
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2008
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Joseph M.
Gingo(3)(5)
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President and Chief Executive Officer of the Corporation since
2008; formerly, Executive Vice President, Quality Systems and
Chief Technical Officer of The Goodyear Tire & Rubber
Company (tire and rubber manufacturing), 2003-2007; Senior Vice
President of Technology and Global Products Planning of The
Goodyear Tire & Rubber Company, 1999-2003; Vice President
and General Manager of The Goodyear Tire & Rubber
Companys Engineered Products business unit, 1998-1999; and
Vice President of The Goodyear Tire & Rubber Companys
Asia operations, 1995-1998; Age 63.
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2000
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Lee D.
Meyer(3)(4)
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Consultant to various investment firms and to Ply Gem
Industries, Inc. (building products manufacturer) since 2006;
formerly, President and Chief Executive Officer of Ply Gem
Industries, Inc. (building products manufacturer), 2002-2006;
Age 59.
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2008
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James A.
Mitarotonda(3)(5)
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Chairman of the Board, President and Chief Executive Officer of
Barington Capital Group, L.P. (an investment firm) since 1991;
formerly, President and Chief Executive Officer of Dynabazaar,
Inc. (now known as Sielox, Inc.) from January 2004 to December
2004 and from May 2006 to April 2007; Co-Chief Executive Officer
and Co-Chairman, from April 2003 until May 2004, and sole Chief
Executive Officer, from May 2004 until October 2004, of LQ
Corporation, Inc. (merged with Dynabazzar, Inc.); and President
and Chief Executive Officer of MM Companies, Inc. (now known as
George Foreman Enterprises, Inc.), 2001-2004; Age 54.
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2005
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5
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First
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Principal Occupation During Past Five Years
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Became
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Name of Nominee or Director
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and Age as of October 20, 2008
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Director
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Stanley W.
Silverman(2)
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Business advisor to private equity firms performing due
diligence on acquisition candidates in the manufacturing and
manufacturing services industries since 2007; President of
Horizon Venture Group LLC (private company investor) since 2005;
formerly, President and Chief Executive Officer of PQ
Corporation (global chemical and engineered glass materials),
2000-2005; and Vice President and Chief Operating Officer of PQ
Corporation, 1991-2000; Age 61.
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2008
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Non-Continuing Directors
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Willard R.
Holland(1)(2)(3)(4)(5)(6)
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Retired; formerly, Chairman of the Board of FirstEnergy Corp.
(electric utility), 1996-1999; President and Chief Executive
Officer, FirstEnergy Corp., 1993-1999; Chairman of the Board and
Chief Executive Officer of Pennsylvania Power Company
(subsidiary of FirstEnergy Corp.), 1993-1999; Chief Operating
Officer of Ohio Edison Company, 1991-1993; and Senior Vice
President, Detroit Edison Company (electric utility), 1988-1991;
Age 72.
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1995
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Peggy G.
Miller(1)(4)
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Retired; formerly, President, South Dakota State University,
1998-2006; Senior Fellow, National Center for Higher Education,
1996-1998; President, The University of Akron, 1992-1996; and
Chancellor and Chief Executive Officer, Indiana University
Northwest, 1984-1992; Age 71.
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1994
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(1) |
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Member of Nominating and Corporate Governance Committee |
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Member of Compensation Committee |
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Member of Special Strategic Committee (Mr. Gingo is a
nonvoting member) |
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Audit Committee |
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Member of Executive Committee |
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Lead Independent Director |
Mr. Birney is a director of Tronox, Inc. Mr. Marlen is
a director of Ameron International Corporation. Mr. McManus
is a director of American Home Mortgage Investment Corp.,
Novavax, Inc. and Misonix, Inc. Mr. Mitarotonda is a
director of The Pep Boys Manny, Moe & Jack
and Griffon Corporation. Mr. Novak is a director of
BorgWarner Inc. and FirstEnergy Corp. Mr. Silverman is a
director of C&D Technologies, Inc. Mr. Yasinsky is a
director of CMS Energy Corporation and Consumers Energy Co.
In August of 2002, Uniroyal Technical Corporation
(UTC), of which Mr. Curd was Chairman and Chief
Executive Officer, filed for reorganization under
Chapter 11 of the Bankruptcy Code (11 U.S.C. 1101
et seq.). In October 2003, Mr. Curd purchased the
assets of Uniroyal Engineered Products from UTC through a
Section 363 sale process at which time Mr. Curd
resigned from his positions with UTC and became Chairman and
Chief Executive Officer of the acquiring company, Uniroyal
Engineered Products, LLC.
6
Attendance
at Meetings
The Board of Directors held 18 meetings during the year ended
August 31, 2008. All incumbent Directors attended at least
75% of the total of all meetings of the Board of Directors and
any committees thereof on which such Director served during the
year. In accordance with the Corporations Corporate
Governance Guidelines for the Board of Directors (the
Corporate Governance Guidelines), Directors are
expected to attend all meetings of the Board of Directors
(although it is understood that, on occasion, a Director may not
be able to attend a meeting). Directors are encouraged to attend
the 2008 Annual Meeting. All of the members of the Board of
Directors except Messrs. Meyer and Caporale, Jr.,
attended the 2007 Annual Meeting held on January 10, 2008.
CORPORATE
GOVERNANCE
The Board of Directors has long followed, both formally and
informally, corporate governance principles designed to assure
that the Board, through its membership, composition and
committee structure, is able to provide informed, competent and
independent oversight of the Corporation.
Corporate
Governance Guidelines
The Board of Directors has adopted the Corporate Governance
Guidelines. These Corporate Governance Guidelines, which are
available on the Corporations website at
www.aschulman.com, are intended to assure that the
Director qualifications, committee structure and overall Board
processes provide good corporate governance and independent
oversight of the Corporations management.
Director
Independence
Under the corporate governance listing standards of The Nasdaq
Stock Market LLC (sometimes referred to as NASDAQ)
and the Corporate Governance Guidelines, a majority of the
members of the Board of Directors must satisfy NASDAQs
criteria for independence. The Board has determined
that the Directors and Nominees named below, which are all the
Directors other than Mr. Gingo, are independent under
applicable NASDAQ standards for the fiscal year ending
August 31, 2008.
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David G. Birney
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James S. Marlen
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Michael A. McManus, Jr.
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Michael Caporale, Jr.
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Lee D. Meyer
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Ernest J. Novak, Jr.
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Howard R. Curd
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Dr. Peggy Miller
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Stanley W. Silverman
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Willard R. Holland
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James A. Mitarotonda
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John B. Yasinsky
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Board
Committees
The Board of Directors has established the following standing
Committees: (1) Executive Committee; (2) Audit
Committee; (3) Compensation Committee; and
(4) Nominating and Corporate Governance Committee.
Additionally, during fiscal 2008, the Board of Directors
established a temporary Special Strategic Committee in order to
explore strategic alternatives to maximize shareholder value.
Executive
Committee
The Executive Committee is authorized to act on behalf of the
Board of Directors on all corporate actions for which applicable
law does not require participation by the full Board of
Directors. In practice, the Executive Committee acts in place of
the full Board of Directors only when emergency issues or
scheduling makes it difficult or impracticable to assemble the
full Board of Directors. All actions taken by the Executive
Committee must be reported at the next Board meeting. The
Executive Committee consists of Messrs. Gingo, Holland and
Mitarotonda. The Executive Committee held no formal meetings
during the year ended August 31, 2008.
Audit
Committee
The Audit Committee operates under a written charter that
reflects the corporate governance principals advocated by the
SEC and the rules and listing standards of NASDAQ. The Audit
Committee consists of Messrs. Novak (Chair), Caporale,
Curd, Marlen, Meyer and Dr. Peggy Miller. The primary
purposes of the Audit Committee are: (1) to assist the
Board in fulfilling its responsibility to oversee the accounting
and financial
7
reporting processes of the Corporation, including the quality
and integrity of the Corporations financial statements and
other financial information provided by the Corporation to any
governmental or regulatory body, the public or certain other
users thereof; (2) to assist the Corporation in fulfilling
its compliance with legal and regulatory requirements;
(3) to analyze and review the qualifications, independence
and performance of the Corporations independent registered
public accounting firm; (4) to analyze and review the
performance of the Corporations systems of internal
accounting and financial controls; (5) to analyze and
review the effectiveness of the Corporations processes of
internal auditing; and (6) to monitor the Board and the
Corporations independent registered public accounting firm
in the annual independent audit of the Corporations
financial statements and the effectiveness of its internal
control over financial reporting. The functions performed by the
Audit Committee include: (i) reviewing the financial
statements with management and the Corporations
independent registered public accounting firm before
publication; (ii) reviewing with management and the
Corporations independent registered public accounting firm
significant financial reporting issues and judgments made in
connection with the preparation of the Corporations
financial statements; (iii) reviewing with the Chief
Executive Officer (the CEO) and the Chief Financial
Officer (the CFO) any issues pertaining to the
certifications required to accompany the filing of the
Corporations Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
and any other information required to be disclosed in connection
therewith; (iv) overseeing the Corporations internal
accounting and financial controls; (v) reviewing legal
matters that may have a material impact on the
Corporations financial statements or the
Corporations compliance policies; (vi) establishing
procedures for the proper handling of complaints concerning
accounting or auditing matters; (vii) considering the scope
of non-audit services to be performed by the Corporations
independent registered public accounting firm;
(viii) reviewing and approving in advance the annual audit
plan and scope of work to be performed by the independent
registered public accounting firm; (ix) overseeing the
appointment, compensation, retention and independence of the
Corporations independent registered public accounting
firm; (x) pre-approving all auditing services and permitted
non-audit services to be performed for the Corporation by the
independent registered public accounting firm; and
(xi) reviewing all transactions that are required to be
reported under item 404(a) of
Regulation S-K.
Additionally, the Audit Committee oversees the
Corporations program to comply with Section 404 of
Sarbanes-Oxley, which requires the Corporation to establish,
maintain and assess adequate internal control structures and
procedures for financial reporting.
NASDAQ rules require each member of the Audit Committee to be
able to read and understand financial statements. The
Corporation believes that each member of the Audit Committee as
constituted satisfies this requirement. Members of the Committee
rely, without independent verification, on the information
provided to them and on the representations made by management
and the Corporations independent registered public
accounting firm, although each member of the Audit Committee has
the authority to engage and determine funding for independent
advisors as deemed necessary. Furthermore, the Audit
Committees considerations and discussions do not assure
that the audit of the Corporations financial statements
has been carried out in accordance with the standards of the
Public Company Accounting Oversight Board (United States), that
the financial statements are presented in accordance with the
accounting principles generally accepted in the United States or
that the Corporations independent registered public
accounting firm is in fact independent. A more
complete description of these and other Audit Committee
functions is contained in the Audit Committees Charter, a
copy of which is available on the Corporations website at
www.aschulman.com.
The Audit Committee held a total of six meetings during the year
ended August 31, 2008. The Audit Committee reviewed with
PricewaterhouseCoopers LLP and management the Corporations
interim financial results prior to the filing of each of the
Corporations Quarterly Reports on
Form 10-Q.
The Board has determined that each of the members of the Audit
Committee is independent as defined under Rule 4200(a)(15)
and Rule 4350(d) of the NASDAQ listing standards. The Board
has also determined that the Chair of the Audit Committee,
Ernest J. Novak, is an audit committee financial
expert as defined in regulations adopted by the SEC.
Compensation
Committee
The primary purpose of the Compensation Committee is to
supervise and, to the extent consistent with the Corporate
Governance Guidelines, exercise the powers of the Board of
Directors with respect to overseeing the use of corporate assets
in compensating executive officers. The Compensation Committee
consists of Messrs. Yasinsky (Chair), Birney, Holland,
McManus, Novak and Silverman. The Compensation Committee has
overall
8
responsibility for executive succession planning (except for the
CEO, which is the responsibility of the Nominating and Corporate
Governance Committee), management development and approving and
evaluating the incentive compensation plans, policies and
programs of the Corporation. As set forth in the Compensation
Committees charter, the functions to be performed by the
Compensation Committee include: (1) setting the salary and
other compensation of the CEO and the other executive officers
of the Corporation; (2) reviewing incentive compensation
pools for the Corporation prior to the annual determination of
individual cash and equity-based incentive awards;
(3) approving all employment,
change-in-control
and severance agreements, as well as all annuity contracts and
benefit or perquisite plans or programs (other than broad-based
employee plans or programs), which are proposed for executive
officers and certain managers; (4) periodically reviewing
the Corporations compensation programs and policies to
align them with the Corporations annual and long-term
goals and the interests of the stockholders; and
(5) administering, implementing and interpreting the
Corporations long-term incentive plans, including stock
option, restricted stock, stock appreciation right, performance
incentives, and similar plans and arrangements. The Compensation
Committee may, in its discretion, delegate all or a portion of
its duties and responsibilities to one or more members of the
Committee; provided, however, that such members must conduct
business in accordance with the Committee charter. In addition,
the Compensation Committee may delegate to the CEO, or another
designee, the authority to approve salary and other compensation
for employees below the executive officer level in accordance
with overall pools, policy guidelines and limits approved by the
Committee. Pursuant to its charter, the Compensation Committee
has the authority to retain special counsel, compensation
consultants and other experts, as it deems appropriate, to carry
out its functions and to approve the retention terms for any
such counsel, consultants or experts. A more complete
description of these and other Compensation Committee functions
is contained in the Compensation Committees charter, which
is available on the Corporations website at
www.aschulman.com and in the Compensation Discussion
and Analysis section of this Proxy Statement, beginning on
page 15.
The Compensation Committee held 11 meetings during the fiscal
year ended August 31, 2008. The Board has determined that
each of the members of the Compensation Committee is independent
as defined under Rule 4200(a)(15) of the NASDAQ listing
standards.
Compensation
Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is, or has
been, an employee or officer of the Corporation. There are no
interlocking relationships between the Corporation and other
entities that might affect the determination of the compensation
of the Corporations executive officers.
Nominating
and Corporate Governance Committee
The primary purposes of the Nominating and Corporate Governance
Committee are to identify individuals qualified to become
Directors, recommend to the Board the candidates for election by
stockholders or appointment by the Board to fill a vacancy,
recommend to the Board the composition and Chairs of Board
committees, develop and recommend to the Board guidelines for
effective corporate governance and to lead an annual review of
the performance of the Board and each of its committees. The
Nominating and Corporate Governance Committee consists of
Dr. Peggy Miller (Chair) and Messrs. Birney, Curd,
Holland, Marlen and Yasinsky. A more complete description of
these and other Nominating and Corporate Governance Committee
functions is contained in the Nominating and Corporate
Governance Committees charter, which is available on the
Corporations website at www.aschulman.com.
In its role as the nominating body for the Board, the Nominating
and Corporate Governance Committee reviews the credentials of
potential Director candidates (including potential candidates
recommended by stockholders), conducts interviews and makes
formal recommendations to the Board for the annual election or
interim appointment of Directors. In making its recommendations,
the Nominating and Corporate Governance Committee considers a
variety of factors, including whether the individuals have
demonstrated achievements in business, education or public
service. In addition, the Committee considers whether candidates
for Director possess the requisite intelligence, education and
experience to make a significant contribution to the membership
of the Board of Directors and bring a range of skills, diverse
perspectives and backgrounds to the deliberations of the Board.
The Board of Directors Candidate Guidelines are attached to the
Corporate Governance Guidelines, a copy of which is
9
available on the Corporations website at
www.aschulman.com. The Committee also considers whether
candidates possess the highest ethical standards and a strong
sense of professionalism, are prepared to serve the interests of
all the stockholders and are able to make themselves available
to the Board of Directors in the fulfillment of their duties.
For those Director candidates who are also employees of the
Corporation, the Committee considers members of the executive
management of the Corporation who have or are in the position to
have a broad base of information about the Corporation and its
business. The Committee has in the past engaged a professional
search firm (to which it paid a fee) to assist in identifying
and evaluating potential nominees, and may do so again in the
future.
The Nominating and Corporate Governance Committee will consider
recommendations for nomination to stand for election as
Directors those persons who are recommended to it in writing by
any stockholder in accordance with the procedures for
Stockholders to Recommend Candidates for Directors (which are
available on the Corporations website at
www.aschulman.com). Any stockholder wishing to recommend
an individual to be considered by the Committee as a nominee for
election as a Director should send a signed letter of
recommendation to the following address: A. Schulman, Inc.,
3550 West Market Street, Akron, Ohio 44333, Attention:
Chair of the Nominating and Corporate Governance Committee,
c/o Corporate
Secretary. Recommendation letters must state the reasons for the
recommendation and contain the full name and address of each
proposed nominee, as well as a brief biographical history
setting forth past and present directorships, employments,
occupations and civic activities. Any such recommendation should
be accompanied by a written statement from the proposed nominee
consenting to be named as a candidate and, if nominated and
elected, consenting to serve as a Director. The Corporation may
also require a candidate to furnish additional information
regarding his or her eligibility and qualifications. The
Nominating and Corporate Governance Committee does not intend to
evaluate candidates proposed by stockholders differently than it
evaluates candidates that are suggested by Board members,
executive officers or other sources.
The Nominating and Corporate Governance Committee held six
meetings during the fiscal year ended August 31, 2008. The
Board has determined that each of the members of the Nominating
and Corporate Governance Committee is independent as defined
under Rule 4200(a)(15) of the NASDAQ listing standards.
Special
Strategic Committee
In accordance with the Corporations 2007 Agreement with a
group of investors led by Barington Capital Group, L.P.
(collectively, the Barington Group), the Board of
Directors created a Special Strategic Committee during 2008, in
order to explore strategic alternatives to maximize and improve
stockholder value, including, without limitation, a strategic
acquisition, merger or sale of the Corporation. The Special
Strategic Committee consists of Messrs. Curd (Chair),
Holland, Meyer, McManus, Mitarotonda and Yasinsky, with
Mr. Gingo serving as a nonvoting member. Consistent with
its mandate, the Special Strategic Committee held
approximately 10 meetings during 2008, in order to review
and evaluate the strategic options available to the Corporation.
During 2008, the Special Strategic Committee retained the
services of UBS AG to act as the Committees financial
advisor and to identify potential partners for a strategic
transaction. Pursuant to its retention mandate, UBS AG
identified a potential partner during the course of 2008,
resulting in discussions that reached the point of a tentative
offer to purchase the Corporation. However, upon evaluation of
the proposed offer, the Special Strategic Committee unanimously
concluded that the offer was inadequate and the other party
declined the opportunity to negotiate or make an improved offer.
During 2009, the Special Strategic Committee will continue to
meet and pursue all strategic options available to the
Corporation.
Code of
Conduct
The Board of Directors has adopted a Code of Conduct, available
on the Corporations website at www.aschulman.com,
applicable to the Corporations employees, officers and
Directors. To further assure compliance, the Corporation
maintains a worldwide hotline that allows employees to report
confidentially any suspected violation of its Code of Conduct.
The Corporation intends to satisfy the disclosure requirements
regarding an amendment to or a waiver from a provision of its
code of ethics that applies to the Corporations executive
officers by posting such information on its website at
www.aschulman.com.
10
Executive
Sessions
Executive sessions of non-management Directors are regularly
held after each meeting of the Board of Directors, including
meetings during the fiscal year ended August 31, 2008.
Stockholder
Communications with the Board of Directors
Stockholders may send communications to the Board of Directors
by mail or courier delivery addressed as follows: A. Schulman,
Inc.,
c/o
Corporate Secretary, 3550 West Market Street, Akron, Ohio
44333. In general, the Secretary will forward all such
communications to the Chair of the Nominating and Corporate
Governance Committee. The Committee Chair in turn determines
whether the communication should be forwarded to other members
of the Board and, if so, forwards them accordingly. However, for
communications addressed to a particular member of the Board or
the Chair of a particular Board Committee, the Secretary
forwards those communications directly to the Board member so
addressed.
11
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of
October 20, 2008 (except as otherwise indicated by
footnote) regarding the beneficial ownership of shares of Common
Stock by each Director and Nominee, by each named executive
officer, by all Directors and executive officers as a group, and
by each person known to the Corporation to own 5% or more of its
Common Stock. Unless otherwise indicated, each beneficial owner
has sole power to vote and dispose of the number of shares set
forth in the table:
|
|
|
|
|
|
|
|
|
|
|
Total Beneficial
|
|
|
Percent of
|
|
Name
|
|
Ownership(1)(2)
|
|
|
Outstanding
|
|
|
Directors, Executive Officers and Nominees
|
Joseph M. Gingo
|
|
|
17,000
|
|
|
|
*
|
|
Paul F.
DeSantis(3)
|
|
|
68,314
|
|
|
|
*
|
|
Jack B. Taylor
|
|
|
53,334
|
|
|
|
*
|
|
Bernard Rzepka
|
|
|
14,500
|
|
|
|
*
|
|
Walter Belderbos
|
|
|
7,000
|
|
|
|
*
|
|
Terry L. Haines
|
|
|
232,785
|
|
|
|
*
|
|
Barry A. Rhodes
|
|
|
10,000
|
|
|
|
*
|
|
David G.
Birney(4)
|
|
|
9,500
|
|
|
|
*
|
|
Michael Caporale, Jr.
|
|
|
2,500
|
|
|
|
*
|
|
Howard R. Curd
|
|
|
10,500
|
|
|
|
*
|
|
Willard R. Holland
|
|
|
22,500
|
|
|
|
*
|
|
James S. Marlen
|
|
|
22,000
|
|
|
|
*
|
|
Michael A. McManus, Jr.
|
|
|
5,000
|
|
|
|
*
|
|
Lee D. Meyer
|
|
|
2,500
|
|
|
|
*
|
|
Dr. Peggy G. Miller
|
|
|
20,500
|
|
|
|
*
|
|
James A.
Mitarotonda(5)
|
|
|
2,374,454
|
|
|
|
9.1
|
%
|
Ernest J. Novak, Jr.
|
|
|
14,700
|
|
|
|
*
|
|
Stanley W. Silverman
|
|
|
3,000
|
|
|
|
*
|
|
John B.
Yasinsky(6)
|
|
|
21,500
|
|
|
|
*
|
|
All Directors and Executive Officers as a group (21 persons)
|
|
|
2,923,587
|
|
|
|
11.1
|
%
|
5% Or Greater Stockholders
|
Temujin Fund Management,
LLC(7)
|
|
|
2,307,825
|
|
|
|
8.8
|
%
|
Thales Fund Management, LLC,
Marek T. Fludzinski and Marco Battaglia
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors
L.P.(8)
|
|
|
2,600,499
|
|
|
|
9.9
|
%
|
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
|
|
|
|
|
|
|
|
|
Barington Companies Equity Partners,
L.P.(9)
|
|
|
2,374,454
|
|
|
|
9.1
|
%
|
Barington Companies Offshore Fund, Ltd., Barington Investments,
L.P., LNA Capital Corp., Barington Capital Group, L.P.,
Barington Companies Advisors, LLC, Barington Companies
Investors, LLC, Barington Offshore Advisors II, LLC and James A.
Mitarotonda
|
|
|
|
|
|
|
|
|
Barclays Global Investors,
NA(10)
|
|
|
1,705,600
|
|
|
|
6.5
|
%
|
Barclays Global Fund Advisors, Barclays Global Investors,
Ltd; Barclays Global Investors Japan Trust and Banking Company
Limited, Barclays Global Investors Japan Limited, Barclays
Global Investors Canada Limited, Barclays Global Investors
Australia Limited, and Barclays Global Investors AG
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Less than 1% of the shares outstanding, based on
26,132,897 shares of Common Stock outstanding on
October 20, 2008. |
|
(1) |
|
Includes the following number of shares that are not owned, but
can be purchased within 60 days upon the exercise of
options granted under the Corporations 1992 Non-Employee
Directors Stock Option Plan, 2002 Equity Incentive Plan
and/or the 2006 Incentive Plan: 130,001 by Mr. Haines;
40,000 by Mr. DeSantis; 12,000 |
12
|
|
|
|
|
by Mr. Rzepka; 8,334 by Mr. Taylor; 6,000 by each of
Messrs. Holland, Yasinsky and Dr. Miller; 4,500 by
Mr. Marlen; and 212,835 by all Directors and executive
officers as a group. |
|
(2) |
|
Includes the following number of restricted shares of Common
Stock awarded under the Corporations 1992 Non-Employee
Directors Stock Option Plan, 2002 Equity Incentive Plan
and/or 2006 Incentive Plan: 24,000 by Mr. DeSantis; 8,667
by each of Messrs. Holland, Marlen, Novak, Yasinsky and
Dr. Peggy Miller; 6,167 by each of Messrs. Birney,
Gingo and Mitarotonda; 4,167 by each of Messrs. Curd and
McManus, Jr.; 2,500 by each of Messrs. Caporale, Jr., Meyer
and Silverman; and 116,670 for all Directors and executive
officers as a group. Directors and executive officers have the
power to vote, but not dispose, of these restricted shares of
Common Stock. |
|
(3) |
|
Mr. DeSantis owns his shares jointly with his spouse, and
he has shared voting and dispositive power with respect to such
shares. |
|
(4) |
|
Mr. Birney owns 2,833 shares jointly with his spouse,
and he has shared voting and dispositive power with respect to
such shares. |
|
(5) |
|
Includes 680,410 shares of Common Stock held directly by
Barington Companies Equity Partners, L.P.
(Barington), 1,202,331 shares held directly by
Barington Companies Offshore Fund, Ltd. (Barington
Fund) and 484,713 shares held directly by Barington
Investments, L.P. (Barington Investments).
Barington, Barington Fund and Barington Investments each may be
deemed to have sole power to vote and dispose of the shares it
beneficially owns. Mr. Mitarotonda is the sole stockholder
and director of LNA Capital Corp. (LNA), which is
the general partner of Barington Capital Group, L.P.
(Barington Capital), which is the majority member of
Barington Companies Advisors, LLC (Barington
Advisors), Barington Companies Investors, LLC
(Barington Investors) and Barington Offshore
Advisors II, LLC (Barington Offshore). Barington
Investors is the general partner of Barington. Barington
Investors may be deemed to have sole power to vote and dispose
of the shares owned by Barington. Barington Advisors is the
general partner of Barington Investments. Barington Advisors may
be deemed to have sole power to vote and dispose of the shares
owned by Barington Investments. Barington Offshore is the
investment advisor of Barington Fund. Barington Offshore may be
deemed to have sole power to vote and dispose of the shares
owned by Barington Fund. In addition, Mr. Mitarotonda, LNA
and Barington Capital each may be deemed to have sole power to
vote and dispose of the shares owned by Barington, Barington
Fund and Barington Investments. Mr. Mitarotonda disclaims
beneficial ownership of any such shares except to the extent of
his pecuniary interest therein. |
|
(6) |
|
Mr. Yasinsky owns 2,000 shares jointly with his
spouse, and he has shared voting and dispositive power with
respect to such shares. |
|
(7) |
|
As reported in a Schedule 13G/A filed with the SEC on
February 11, 2008, Temujin Fund Management, LLC
(Temujin Management), Thales Fund Management,
LLC (Thales), Marek T. Fludzinski and Marco
Battaglia beneficially own, in the aggregate,
2,307,825 shares of Common Stock. According to the
Schedule 13G/A, Temujin Management is an investment advisor
to Temujin Holdings, Ltd. (Temujin Holdings) with
respect to the shares of Common Stock directly owned by Temujin
Holdings, which is jointly owned by Thales, which serves as
investment manager to Temujin Holdings, Marek T. Fludzinski (the
CEO and Chairman of Thales) and Marco Battaglia, who serves as
CEO and Chief Investment Officer of Temujin Management. The
principal business address for each of Temujin Management,
Thales and Messrs. Fludzinski and Battaglia is 140
Broadway, 45th Floor, New York, New York 10005. |
|
(8) |
|
As reported in a Schedule 13G/A filed with the SEC on
February 6, 2008, Dimensional Fund Advisors LP.
(Dimensional) is the beneficial owner of, has the
sole power to vote or direct the voting of, and the sole power
to dispose or direct the disposition of, an aggregate of
2,600,499 shares of Common Stock. According to the
Schedule 13G/A, Dimensional is an investment advisor
registered under Section 203 of the Investment Advisors Act
of 1940, which furnishes investment advice to four investment
companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other commingled
group trusts and separate accounts (the Funds). As
reported in the Schedule 13G/A, Dimensional possesses
investment and/or voting power over the Common Stock owned by
the Funds, and may be deemed to be the beneficial owner of such
shares. However, all such shares are owned by the Funds, and
Dimensional disclaims beneficial ownership of such shares in its
Schedule 13G/A. |
13
|
|
|
(9) |
|
As reported in a Schedule 13D/A filed with the SEC on
September 15, 2008, Barington, Barington Fund, Barington
Investments, Barington Advisors, Barington Investors, Barington
Offshore, Barington Capital, LNA and Mr. Mitarotonda
beneficially own, in the aggregate, 2,374,454 shares of
Common Stock. As disclosed in the Schedule 13D/A, Barington
beneficially owns 680,410 shares, Barington Fund
beneficially owns 1,202,331 shares and Barington
Investments beneficially owns 484,713 shares.
Mr. Mitarotonda also beneficially owns 7,000 shares of
Common Stock, 6,167 of which are restricted, granted to him
under the 2002 Equity Incentive Plan and 2006 Incentive Plan.
Mr. Mitarotonda is the sole stockholder and director of
LNA, which is the general partner of Barington Capital, which is
the majority member of Barington Advisors, Barington Investors
and Barington Offshore. Barington Investors is the general
partner of Barington. Barington Investors may be deemed to have
sole power to vote and dispose of the shares owned by Barington.
Barington Advisors is the general partner of Barington
Investments. Barington Advisors may be deemed to have sole power
to vote and dispose of the shares owned by Barington
Investments. Barington Offshore is the investment advisor of
Barington Fund. Barington Offshore may be deemed to have sole
power to vote and dispose of the shares owned by Barington Fund.
In addition, Mr. Mitarotonda, LNA and Barington Capital
each may be deemed to have sole power to vote and dispose of the
shares owned by Barington, Barington Fund and Barington
Investments. Mr. Mitarotonda disclaims beneficial ownership
of any such shares except to the extent of his pecuniary
interest therein. Mr. Mitarotonda has sole voting power,
but not dispositive power, with respect to the 6,167 shares
of restricted Common Stock beneficially owned by him. The
principal business address for each of Barington, Barington
Investments, Barington Investors, Barington Advisors, Barington
Capital, Barington Offshore, LNA and Mr. Mitarotonda is 888
Seventh Avenue, 17th Floor, New York, NY 10019. Barington
Funds principal business address is
c/o Bison
Financial Services Limited, Bison Court, Road Town, Tortola,
British Virgin Islands. |
|
(10) |
|
As reported in a Schedule 13G filed with the SEC on
January 10, 2008, Barclays Global Investors, NA, Barclays
Global Fund Advisors, Barclays Global Investors, Ltd.,
Barclays Global Investors Japan Trust and Banking Company
Limited, Barclays Global Investors Japan Limited, Barclays
Global Investors Canada Limited, Barclays Global Investors
Australia Limited, and Barclays Global Investors AG,
beneficially own, in the aggregate, 1,705,600 shares of
Common Stock. As disclosed in Schedule 13G, Barclays Global
Investors, NA beneficially owns 823,245 shares, Barclays
Global Fund Advisors beneficially owns 853,738 shares
and Barclays Global Investors, Ltd. beneficially owns
28,617 shares. The principal business address of Barclays
Global Investors, NA and Barclays Global Fund Advisors is
45 Freemont Street, San Francisco, CA 94105. The principal
business address of Barclays Global Investors, Ltd. is 1 Royal
Mint Court, London EC3N 4HH England. The principal business
address of Barclays Global Investors Japan Trust and Banking
Company Limited and Barclays Global Investors Japan Limited is
Ebisu Prime Square Tower, 8th Floor, 1-1-39 Hiroo Shibuya-Ku,
Tokyo
150-8402
Japan. The principal address of Barclays Global Investors Canada
Limited is Brookfield Place, 161 Bay Street, Suite 2500,
P.O. Box 614, Toronto, Canada, Ontario M5J 2S1. The
principal address of Barclays Global Investors Australia Limited
is Level 43, Grosvenor Place, 225 George Street,
P.O. Box N43, Sydney, Australia NSW 1220. The
principal address of Barclays Global Investors AG is
Apianstrasse 6 D-85774, Unterfohring, Germany. |
14
Equity
Compensation Plan Information
The Corporations 2006 Incentive Plan authorizes the
Corporation to issue stock to its employees and non-employee
Directors in exchange for consideration in the form of goods or
services. The 2006 Incentive Plan authorizes the Corporation to
issue up to 3,472,686 of its shares to participants. Awards are
also outstanding under the Corporations 1992 Non-Employee
Directors Stock Option Plan and 2002 Equity Incentive Plan
(collectively with the 2006 Incentive Plan, the Equity
Plans). Information, as of August 31, 2008, on
outstanding awards under all of the Corporations Equity
Plans, and information on awards available for grant under the
2006 Incentive Plan, is set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
(a)
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
(b)
|
|
|
Remaining Available for
|
|
|
|
to be Issued
|
|
|
Weighted-Average
|
|
|
Future Issuance Under Equity
|
|
|
|
Upon Exercise of
|
|
|
Exercise
|
|
|
Compensation Plans
|
|
|
|
Outstanding
|
|
|
Price of Outstanding
|
|
|
(Excluding Securities
|
|
|
|
Options, Warrants
|
|
|
Options,
|
|
|
Reflected in Column
|
|
Plan Category
|
|
and
Rights(1)
|
|
|
Warrants and Rights
|
|
|
(a)
|
|
|
Equity compensation plans approved by security holders
|
|
|
809,268(2
|
)
|
|
$
|
19.12(3
|
)
|
|
|
2,812,407
|
|
Equity compensation plans not approved by security holders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
809,268
|
|
|
|
19.12
|
|
|
|
2,812,407
|
|
|
|
|
(1) |
|
The outstanding options do not have dividend equivalent rights
and are not transferable for value. |
|
(2) |
|
Amount includes 44,235 shares of performance-based
restricted stock and 197,786 performance shares granted pursuant
to the 2006 Incentive Plan, the vesting of which is contingent
upon corporate performance, which shall be measured by
evaluating the total shareholder returns of the
Corporations Common Stock relative to a peer group during
the applicable performance period. |
|
(3) |
|
The weighted average exercise price does not account for awards
of performance-based restricted stock or performance shares, as
described in footnote (2). |
COMPENSATION
DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis describes the
Compensation Committees executive compensation philosophy,
objectives and programs, and explains the basis on which fiscal
year 2008 compensation determinations were made by the
Compensation Committee with respect to the executive officers
who are identified in the Summary Compensation Table
(Named Executive Officers) located on
page 32. For purposes of this discussion, references to
we, our and us refer to the
Corporation.
Compensation
Committee Governance
The compensation program for our Named Executive Officers is
overseen by the Compensation Committee of the Board of
Directors. Compensation Committee members are appointed by the
Board and meet the independence and other requirements of NASDAQ
rules and other applicable laws and regulations. As described on
page 8 of this Proxy Statement, the duties of the
Compensation Committee include, among other things:
(1) determining the base salary levels and bonuses for our
Named Executive Officers; (2) approving the design and
awards of all other elements of our executive compensation
program; (3) evaluating the performance of our Named
Executive Officers; (4) executive officer succession
planning; and (5) addressing other matters related to
executive compensation. The Compensation Committee meets as
necessary to enable it to fulfill its responsibilities. The
Chair of the Compensation Committee is responsible for the
leadership of the Committee, presiding over Committee meetings,
making Committee assignments, reporting the Committees
actions to our Board of Directors from time to time and, with
the assistance of management, setting the agenda for Committee
meetings. The members of the Compensation Committee and the
Committees specific functions are described in further
detail on page 8 of this Proxy Statement, and the
Compensation Committee Charter is posted on our website at
www.aschulman.com.
15
Compensation
Philosophy and Objectives
In determining the amount and composition of executive
compensation, the Compensation Committees goal is to
provide a pay for performance compensation package that will
enable us to: (1) attract and retain talented executives;
(2) reward outstanding individual and corporate
performance; and (3) link the interests of our executive
officers to the interests of our stockholders, with the ultimate
goal of improving stockholder value. The Compensation
Committees overall pay strategy is to provide a median
market compensation opportunity for our Named Executive
Officers at their targeted performance levels. The Compensation
Committee attempts to align executive compensation with
stockholders interests through the use of
performance-based, at-risk compensation pay for a significant
portion of each Named Executive Officers total
compensation. Additionally, the Compensation Committee seeks to
achieve executive retention through the use of a balance of pay
mix and long-term equity vehicles. In order to emphasize pay
that is dependent on performance and aligned with stockholder
interests, we have adopted the following pay strategy:
|
|
|
|
|
Position base salaries between the 40th and
50th percentile of peer market levels;
|
|
|
|
Provide a median target annual incentive opportunity, with
upside and downside leverage depending on actual corporate and
personal performance; and
|
|
|
|
Position target long-term incentive opportunities between the
50th and 60th percentile of peer market levels in order to
enhance alignment with stockholders.
|
In determining actual compensation levels for our Named
Executive Officers, the Compensation Committee considers all
elements of the compensation program in total and also evaluates
whether the individual elements of our compensation program are
reflective of current market practices and our stated
compensation philosophy. The Compensation Committee believes
that offering performance-based, market-comparable pay
opportunities to our Named Executive Officers, bearing in mind
our relative size and performance, allows us to maintain a
stable, successful management team.
The Compensation Committee has full discretion to adjust our
compensation program, or any element thereof, at any time. It
has been the practice of the Compensation Committee to discuss
its compensation determinations with respect to the CEO with the
full Board of Directors and to have the full Board of Directors
(other than the CEO) approve such decisions. At times, however,
the Board of Directors may adjust certain elements of our
executive compensation program outside of the Compensation
Committees recommendations.
Compensation
Consultants
Mercer,
Inc.
As permitted by the Compensation Committee Charter, the
Compensation Committee retained Mercer, Inc.
(Mercer) as its outside compensation consultant
during the first and second quarters of fiscal 2008.
Specifically, the Compensation Committee engaged Mercer to
assist in the evaluation of compensation levels and program
design for fiscal 2008, and to provide the Compensation
Committee with market trend information and compensation
recommendations. Additionally, Mercer was engaged to help the
Compensation Committee address specific compensation-related
considerations surrounding our CEO transition, which are further
detailed under the caption Fiscal 2008 Executive Officer
Transitions on page 29 of this Proxy Statement.
During the first and second quarters of fiscal 2008, the
Compensation Committee determined the scope of work to be
performed by its outside consultant, and worked with Mercer to
establish the Corporations fiscal 2008 compensation levels
and objectives.
Towers
Perrin Inc.
During the third quarter of fiscal 2008, the Compensation
Committee evaluated the service levels of its outside
compensation consultant and decided to request and evaluate
proposals from different compensation consulting firms. After
reviewing various proposals and interviewing consultant
candidates, the Compensation Committee engaged Towers Perrin
Inc. (Towers Perrin) as its outside compensation
consultant for the remainder of fiscal 2008. Specifically, the
Compensation Committee retained Towers Perrin to conduct a
complete review of our compensation policies and programs and to
provide the Committee with substantive recommendations regarding
16
our compensation structure. Pursuant to the Compensation
Committee Charter, the Compensation Committee has the sole
authority to retain and terminate its outside compensation
consultant.
Pursuant to its retention mandate, Towers Perrin undertook an
evaluation of our compensation polices and programs during the
third and fourth quarters of fiscal 2008. As part of this
evaluation, Towers Perrin conducted an in-depth review of our
compensation components and evaluated current market trend data.
In particular, Towers Perrin: (1) reviewed our fiscal 2008
peer group and recommended changes to this group;
(2) analyzed our financial performance during the past five
years relative to our current peer group; (3) evaluated the
pay-for-performance components of our annual bonus and long-term
incentive programs; and (4) assessed the competitiveness of
our total compensation program relative to current market
practices.
As a result of the Towers Perrin evaluation and subsequent
recommendations, the Compensation Committee has approved changes
to certain elements of our compensation program for fiscal 2009,
which are described throughout the remainder of this
Compensation Discussion and Analysis. It is the opinion of the
Compensation Committee that the changes implemented for fiscal
2009 will provide us with a compensation program that creates
enhanced alignment between executive compensation levels and the
interests of our stockholders. Moreover, the Compensation
Committee believes that this revised compensation framework
establishes a compensation program that expands upon our
strengths and is more reflective of current market practices.
Compensation
Committee Delegation
Pursuant to the Compensation Committee Charter, the Committee
may delegate its authority to subcommittees or to the Chair of
the Compensation Committee when it deems such delegation
appropriate and in our best interests. Additionally, pursuant to
the Compensation Committee Charter, the Compensation Committee
may delegate to the CEO, or other executive designee, the
authority to approve salary and other compensation for employees
below the executive officer level in accordance with overall
pools, policy guidelines and limits approved by the Committee as
appropriate. During fiscal 2008, the Compensation Committee made
no subcommittee delegations.
Setting
Executive Compensation
At its first two regularly scheduled meetings of each fiscal
year (typically in September and October), the Compensation
Committee: (1) evaluates the performance of the CEO for the
prior fiscal year; (2) reviews the CEOs evaluation of
the performance of the other Named Executive Officers for the
prior fiscal year; (3) determines whether our Named
Executive Officers will receive bonuses for the prior fiscal
year based on the achievement of corporate performance targets
and their respective individual performance; and
(4) establishes the components and levels of Named
Executive Officer compensation (including the performance
criteria for annual performance bonuses) for the current fiscal
year. In the course of its deliberations, the Compensation
Committee from time to time solicits the recommendations of our
CEO and our other executive officers on various matters relating
to executive compensation. However, the Compensation Committee
makes all final determinations regarding the compensation
program for the Named Executive Officers and, with respect to
the CEO, seeks ratification of its decisions by the full Board
of Directors.
2008 Peer
Group
To assist the Compensation Committee in making compensation
decisions, Mercer provided the Compensation Committee with
competitive market data during the first and second quarters of
fiscal 2008. This information compared our executive
compensation practices to those of a specific group of
comparison companies and compensation surveys. The peer group
used for compensation comparison purposes was generally
comprised of specialty chemical companies, including both
similarly sized companies and other chemical and plastics
manufacturers recognized as our broader competitors. The
Compensation Committee reviews and approves the
17
selection of companies used for compensation comparisons on an
annual basis. In fiscal year 2008, the peer group consisted of
the following 22 companies (the 2008 Peer
Group):
|
|
|
|
|
Albemarle Corporation
|
|
Lubrizol Corporation
|
|
Sensient Technologies Corporation
|
Arch Chemicals, Inc.
|
|
Minerals Technologies Inc.
|
|
Sigma-Aldrich, Inc.
|
Chemtura Corporation
|
|
Myers Industries Inc.
|
|
Spartech Corporation
|
Cytec Industries, Inc.
|
|
NewMarket Corporation
|
|
Stepan Company
|
Ecolab Inc.
|
|
OM Group, Inc.
|
|
Valhi, Inc.
|
Ferro Corporation
|
|
Omnova Solutions Inc.
|
|
Valspar Corporation
|
H.B. Fuller Co.
|
|
PolyOne Company
|
|
|
Intl Flavors & Fragrances Inc.
|
|
RPM International Inc.
|
|
|
In addition to the use of peer group data, the Compensation
Committee reviewed compensation survey data in order to ensure
that our executive compensation program, as a whole, is
competitive. For fiscal 2008, the compensation survey data
consisted of
U.S.-based
manufacturing companies of a comparable size to our business.
For fiscal 2008, the Compensation Committees general
approach was to target executive officer pay opportunities at
the median of the 2008 Peer Group and the compensation survey
data.
2009 Peer
Group
Upon the recommendation of Towers Perrin, the Compensation
Committee has approved a revised peer group for fiscal 2009.
Specifically, the Compensation Committee believes that it is
appropriate to eliminate certain companies that differ
substantially from our size and lines of business, and to
include more corporations of similar geographic and market
presence. The Compensation Committee believes that the modified
peer group for fiscal 2009 will provide better representation of
similarly situated corporations within our geographic footprint
and will provide a superior benchmark against which to evaluate
our compensation policies. In fiscal 2009, our peer group will
consist of the following 22 companies (the 2009 Peer
Group):
|
|
|
|
|
Albemarle Corporation
|
|
Hexcel Corporation
|
|
Solutia Inc.
|
Arch Chemicals, Inc.
|
|
Minerals Technologies Inc.
|
|
Stepan Company
|
Cabot Corporation
|
|
OM Group, Inc.
|
|
Tronox Incorporated
|
Chemtura Corporation
|
|
Omnova Solutions Inc.
|
|
Valhi, Inc.
|
Cytec Industries, Inc.
|
|
PolyOne Company
|
|
Valspar Corporation
|
Ferro Corporation
|
|
Rockwood Holdings, Inc.
|
|
W.R. Grace & Co.
|
H.B. Fuller Co.
|
|
RPM International Inc.
|
|
|
Hercules Incorporated
|
|
Spartech Corporation
|
|
|
Components
of Executive Compensation
The key components of our executive compensation program, each
of which is addressed separately below, are:
|
|
|
|
|
base salary;
|
|
|
|
annual bonuses;
|
|
|
|
long-term incentives; and
|
|
|
|
retirement and other benefits.
|
In determining an executive officers total compensation
package, the Compensation Committee considers each of these key
components individually and in the aggregate. The Compensation
Committee attempts to establish an appropriate balance between
cash and non-cash compensation, and between short-term and
long-term compensation. The Compensation Committee annually
reviews the data provided by its independent compensation
consultant and the current facts and circumstances relating to
our performance, in order to determine the appropriate mix of
compensation for our Named Executive Officers.
18
Base
Salaries
Base salaries are intended to reward executive officers based
upon their roles with the Corporation and for their performance
in those roles. The Compensation Committee reviews and approves
each Named Executive Officers base salary annually. Base
salaries for executive officers initially are determined by
evaluating the officers respective levels of
responsibility, prior experience and breadth of knowledge, and
by taking into consideration internal equity issues and external
pay practices. Determinations of base salary adjustments are
driven primarily by competitive positioning and profitability,
with the stated goal of maintaining executive officer salaries
between the 40th and 50th percentile of market levels.
For fiscal 2008, the base salary for each of our Named Executive
Officers is provided in the Salary column of the
Summary Compensation Table located on page 32.
In April of 2008, the Compensation Committee eliminated most
perquisites and personal benefits that previously had been
extended to our North American executive officers, such as
providing automobiles and related costs, and increased their
base salaries as compensation for foregone benefits. In regards
to North American Named Executive Officers, Mr. Gingo
received a $32,000 base salary increase, while Mr. DeSantis
received a $8,000 salary increase. No changes were made to the
perquisites that have been provided to our European Named
Executive Officers.
In setting our base salary range at the 40th
50th percentile, the Compensation Committee believes that
we are able to properly motivate our executive officers and
fulfill our goals of rewarding outstanding performance and
achieving executive retention. It is the opinion of the
Compensation Committee that by setting base salary levels at
competitive rates, our executive officers are rewarded for
undertaking positions of leadership and provided with an
incentive to continue working for us. However, as base salary
compensation is not typically subject to reduction or forfeiture
based on corporate performance, the Compensation Committee
believes that it should comprise only one component of our
overall pay philosophy and that a majority of our executive
compensation structure should be comprised of at-risk components.
2008 Base
Salary Positioning and Policy for 2009
Upon review of the salary comparison data provided to the
Compensation Committee by Towers Perrin, the Compensation
Committee determined that although the base salary positioning
of Messrs. Gingo and DeSantis fell below our desired range,
these salaries nonetheless accomplished the Compensation
Committees stated positioning goals in fiscal 2008, as
their salaries represented 88% and 83%, respectively, of the
median salary for their comparable positions. However, in
regards to Messrs. Taylor, Rzepka and Belderbos, the
Compensation Committee determined that each of their respective
base salaries exceeded our stated base salary positioning goals.
During fiscal 2008, we undertook an extensive reorganization of
corporate management within our North American operations, which
resulted in the designation of Messrs. Taylor, Rzepka and
Belderbos (all of which are involved in our European operations)
becoming executive officers for the first time. Prior to fiscal
2008, the base salary compensation of Messrs. Taylor,
Rzepka and Belderbos did not fall under the purview of the
Compensation Committee.
As a result of the base salary positioning of our Named
Executive Officers in fiscal 2008, the Compensation Committee
has approved new base salary positioning policies for incumbent
executive officers for fiscal 2009. Specifically, in fiscal
2009, the Compensation Committee will maintain its objective of
positioning executive officers base salaries between the
40th and 50th percentile of our peer market, while
simultaneously beginning the process of managing base salaries
that exceed our peer market median back to our stated
compensation range. Consequently, beginning in fiscal 2009, the
Compensation Committee has approved that for all incumbent
executive officers with base salaries that exceed our peer
market median by more than 20%, such individuals will only be
eligible to receive base salary increases if: (1) such
increases are required pursuant to applicable law; or
(2) such salary increases are warranted based upon
outstanding personal performance.
Annual
Bonuses
Our annual bonus program promotes our pay-for-performance
philosophy by providing our Named Executive Officers with direct
financial incentives in the form of annual cash bonuses based on
our financial performance as well as individual performance.
Annual bonus opportunities allow us to communicate specific
goals that are of
19
primary importance during the coming year and to motivate
executive officers to achieve these goals. The annual bonus
program is designed to reward our Named Executive Officers for
the achievement of individual goals and performance targets that
the Compensation Committee believes align the interests of our
Named Executive Officers with the interests of our stockholders.
The Compensation Committee seeks to provide each Named Executive
Officer with a median annual bonus opportunity, as compared to
our peers. Under the fiscal 2008 annual bonus program, the
Compensation Committee established corporate and individual
performance goals for each Named Executive Officer at the
beginning of the year, including the threshold below which no
bonus would be paid and the maximum cash bonus each executive
would be eligible to receive.
2008
Bonus Targets
In October 2007, the Board of Directors, upon the approval of
the Compensation Committee, established the target bonus awards
(expressed as a percentage of base salary) for each of the Named
Executive Officers (excluding Mr. Gingo who was not yet an
employee) and established that each executives total bonus
opportunity would be based upon the achievement of certain
corporate performance metrics and individual performance. In
regards to Mr. Gingo, the specific terms of his
participation in our 2008 bonus plan were established in
accordance with the terms of his employment agreement, as
described under the caption Employment Agreement of
Mr. Gingo on page 43. For fiscal 2008, the Board
of Directors established the following target bonus
opportunities for each Named Executive Officer:
|
|
|
|
|
|
|
2008 Target Bonus Opportunity
|
|
Named Executives Officer
|
|
(as a% of base salary)
|
|
|
Joseph M. Gingo
|
|
|
70
|
%
|
Paul F. DeSantis
|
|
|
50
|
%
|
Jack Taylor
|
|
|
50
|
%
|
Bernard Rzepka
|
|
|
50
|
%
|
Walter Belderbos
|
|
|
40
|
%
|
In addition to establishing target bonus amounts for each Named
Executive Officer, the Compensation Committee also established
the respective weighting of corporate performance and personal
performance for each Named Executive Officer. Pursuant to the
terms of his employment agreement, the Compensation Committee
established that for fiscal 2008, 100% of Mr. Gingos
2008 bonus opportunity would be based upon our corporate
financial performance, with leverage ranging from zero to 150%
of target. For Messrs. DeSantis, Taylor, Rzepka and
Belderbos, the Compensation Committee determined that one-half
of their respective total bonus award potential would be based
on financial performance, with leverage ranging from zero to
150% of target, while the remaining one-half would be based upon
the achievement of individual goals. For Messrs. Gingo and
DeSantis, the Compensation Committee determined that the
financial performance portion of their respective annual bonus
opportunities would be measured by our consolidated worldwide
operations. For Messrs. Taylor, Rzpeka and Belderbos, the
Compensation Committee determined that the financial performance
portion of their respective annual bonus opportunities would be
based upon the performance of our European business segment.
Potential bonus awards, measured by reference to threshold,
target and maximum percentages of salary for each Named
Executive Officer are disclosed in the Grants Of Plan Based
Awards Table located on page 34.
2008
Corporate Performance
For fiscal year 2008, the Compensation Committee selected the
following performance metrics for evaluating corporate
performance: (1) net income from operations or operating
profit (excluding one-time or extraordinary items);
(2) cash flows from operations; and (3) internal
measurement of return on invested capital (ROIC).
These measures of financial performance were selected by the
Compensation Committee in order to focus the Named Executive
Officers on the key drivers of stockholder value. Because net
income and operating profit correlate strongly with the
Corporations stock price, such measures were given
relatively greater weight, as compared to cash flows from
operations and ROIC. The Compensation Committee believes that
its targets are challenging but achievable with successful
management performance.
20
For fiscal 2008, the Corporation utilized its budgeting model to
set the performance levels for each of the performance metrics.
The Compensation Committee believes that achieving the budget
requires strong management performance and is deserving of a
stretch bonus, or 125% of the targeted award. In
most years, the threshold bonus level is determined by the prior
years performance. For 2008, however, the Compensation
Committee determined that merely maintaining the 2007 level of
performance would not have merited bonus compensation. As a
result, the threshold performance level required for any bonus
was set at 75% of the budget (which threshold level still
significantly exceeded 2007 performance) and the target was
determined to be the midpoint between the threshold and the
budget. The maximum bonus level was set at 115% of the budget.
2008
Consolidated Worldwide Corporate Performance Goals (In Millions
of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
Performance Target
|
|
Weight
|
|
|
2008 Actual
|
|
|
Payout
|
|
Net Income (excluding one-time or extraordinary items)
|
|
|
20
|
%
|
|
$
|
37.1
|
|
|
Target
(20)%
|
Cash Flows From Operations
|
|
|
15
|
%
|
|
$
|
108.8
|
|
|
Maximum
(22.5)%
|
ROIC
|
|
|
15
|
%
|
|
|
9.8
|
%
|
|
Target
(15)%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
57.5%
|
2008
Performance Goals European Business Segment (In
Millions of U.S.
Dollars(1))
|
|
|
|
|
|
|
|
|
|
|
Performance Target
|
|
Weight
|
|
|
2008 Actual
|
|
|
Payout
|
|
Operating Profit (excluding one-time or extraordinary items)
|
|
|
20
|
%
|
|
$
|
98.05
|
|
|
Target
(20)%
|
Cash Flows From Operations
|
|
|
15
|
%
|
|
$
|
169.61
|
|
|
Maximum
(22.5)%
|
ROIC
|
|
|
15
|
%
|
|
|
21.1
|
%
|
|
Target
(15)%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
57.5%
|
|
|
|
(1) |
|
Amounts translated from Euros to U.S. Dollars using a 12-month
weighted average of 1.497. |
Based upon our 2008 consolidated worldwide corporate performance
and 2008 European performance, each Named Executive Officer
(excluding Mr. Gingo) received 57.5% of their total target
bonus opportunity. Because Mr. Gingos bonus was based
entirely on financial performance, his bonus was 115% of his
target opportunity.
2008 Personal
Performance
The remaining one-half of the 2008 bonus potential for each
Named Executive Officer (excluding Mr. Gingo) was based
upon their respective individual performance, as measured
against various personal goals established by the CEO and
approved by the Compensation Committee. In general, such
personal goals focus on the successful implementation of primary
corporate goals for the fiscal year, and may include particular
or general objectives for areas of responsibility. The
Compensation Committee reviews the CEOs evaluation of
whether each personal goal has been achieved, and each Named
Executive Officers contribution to achieving such goals.
The Compensation Committee believes that these personal goals
can be achieved each year.
In fiscal 2008, Mr. Gingo determined that the personal
goals for Messrs. DeSantis, Taylor, Rzepka and Belderbos
should not only reflect each executives individual
performance, but should also be directly tied to our current
restructuring and working capital initiatives. Consequently,
Mr. Gingo established that a major component of each
executives personal performance bonus opportunity would be
dependent upon the achievement of our target goals in the areas
of net income or operating profit and cash flow, with each
metric being measured using the same performance evaluators
(i.e. worldwide consolidated financial performance or European
segment
21
performance) as under the financial performance portion of our
annual bonus plan. For fiscal 2008, Mr. Gingo determined,
and the Compensation Committee approved, that each of
Messrs. DeSantis, Taylor, Rzepka and Belderbos would
receive 50% of their respective total target bonus opportunities
based upon each executives individual performance, as well
as our consolidated worldwide and European segment performance
in the areas of net income or operating profit and cash flow.
The annual bonus payments made to our Named Executive Officers
for fiscal year 2008 are reported in the Summary Compensation
Table in the Non-Equity Incentive Plan Compensation
Column located on page 32.
2009
Annual Bonus Program
In order to further align our annual bonus program with
stockholder interests and peer group practice, the Compensation
Committee, with the assistance of Towers Perrin, has approved
substantial revisions to our annual bonus program for fiscal
2009. Specifically, beginning in fiscal 2009, the Compensation
Committee has made the following modifications to our annual
bonus program:
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The 2009 annual bonus will be based entirely on the achievement
of performance metrics rather than individual performance. To
ensure individual accountability under the plan, however, the
CEO has the authority to adjust individual award payments up to
20% more than the calculated award amount and down to 0% of such
award amount, provided that the aggregate amount of all bonus
payments (i.e. the bonus pool) is neither increased nor
decreased.
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The 2009 corporate performance metrics will be (1) net
income, (2) operating income and (3) days working
capital, with each metric comprising one-third of each executive
officers total annual bonus opportunity.
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The maximum total annual bonus opportunity for each of our
executive officers will be expanded from a maximum leverage of
150% of target to a maximum leverage of 200% of target.
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Through the adoption of these modifications, the Compensation
Committee believes that the annual bonus portion of our
executive compensation program will be more strongly focused on
the ultimate drivers of corporate performance, resulting in
increased stockholder value. Specifically, it is the opinion of
the Compensation Committee that by reducing the emphasis of
individual performance within our annual bonus program, there
will be an enhanced alignment between the short-term goals of
our Named Executive Officers and the value maximization goals of
our stockholders. Additionally, through the modification of the
performance metrics used to evaluate corporate performance, it
is the belief of the Compensation Committee that our annual
bonus program will be more reflective of our near-term
priorities of improving operating profitability and freeing cash
flows. In particular, by replacing cash flows from operations
with days of working capital, the Compensation Committee
believes that our annual bonus program will place a greater
emphasis on efficient capital usage and focus our executives on
maximizing corporate efficiency. Finally, by increasing the
maximum bonus opportunity for each of our Named Executive
Officers to 200% of target, the Compensation Committee believes
that our annual bonus program will not only be more reflective
of current market practices, but will also strengthen our annual
bonus plans motivational value to enable the achievement
of financial performance beyond target goals.
Long-Term
Incentives
As part of our executive compensation program, the Compensation
Committee has generally made annual grants of long-term
stock-based incentive awards to our Named Executive Officers
(and other members of management), including grants of
restricted stock, restricted stock units and performance shares.
Long-term incentives are used by the Compensation Committee to:
(1) balance the short-term focus of base salaries and the
annual bonus program by tying equity-based rewards to
performance achieved over multi-year periods; (2) ensure
that each Named Executive Officers total compensation
package includes an additional at-risk component of pay;
(3) align compensation incentives with stockholder
interests; and (4) provide our Named Executive Officers
with long term retention incentives. When making our annual
equity-based awards to our Named Executive Officers, the
Compensation Committee considers, but does not exclusively rely
on any one of, the following: (i) our financial performance
in the prior fiscal year; (ii) historical award data;
(iii) compensation practices at peer group companies;
22
and (iv) each Named Executive Officers respective
individual performance, prior experience and levels of
responsibility with, and contributions to, the Corporation.
Prior to December 7, 2006, long-term incentives were
granted to Named Executive Officers under our 2002 Equity
Incentive Plan. At our 2006 Annual Meeting of Stockholders, the
stockholders approved our 2006 Incentive Plan, and shares
available for grant under the 2002 Equity Incentive Plan were
added to the 2006 Incentive Plan and the 2002 Equity Incentive
Plan was terminated. Following its approval by the stockholders,
the 2006 Incentive Plan became the vehicle under which long-term
incentives may be granted to employees (including our Named
Executive Officers) and our non-employee Directors. The 2006
Incentive Plan is intended to foster and promote our long-term
financial success and to increase stockholder value by:
(1) providing participants with an opportunity to acquire
and maintain an ownership interest; and (2) enabling us to
attract and retain the services of outstanding executive
officers. The Compensation Committee believes that stockholder
interests are best served if compensation paid to the persons
providing us with leadership depends, in significant part, on
the profitable growth of our business.
Under the 2006 Incentive Plan, the Compensation Committee has
the authority to grant a variety of long-term incentive awards,
including stock options (both nonqualified and incentive),
restricted stock, restricted stock units, stock appreciation
rights, performance shares, performance units, cash-based
awards, dividend equivalents and performance-based awards. The
Compensation Committee believes that the wide range of awards
available under the 2006 Incentive Plan provides flexibility in
tailoring the long-term incentive component of executive
compensation in a way that enhances our success. During fiscal
year 2008, the Compensation Committee relied on a combination of
restricted stock awards, restricted stock unit awards and
performance share awards, each of which is discussed below.
Because of the long-term vesting or performance requirements of
each of these types of awards, the Compensation Committee
believes that such awards enhance our ability to maintain a
stable executive team that is focused on our long-term success.
The Compensation Committee further believes that each of these
types of awards effectively ties each Named Executive
Officers compensation to long-term stockholder returns,
thereby providing the Named Executive Officers with a direct
link to stockholder interests as well as our long-term
performance.
Restricted
Stock
On February 29, 2008 (the Grant Date), the
Compensation Committee awarded shares of restricted stock to
certain of our North American executives. Of the Named Executive
Officers, Mr. DeSantis received an award of
9,000 shares of restricted stock pursuant to the 2006
Incentive Plan. With respect to the restricted stock awarded to
Mr. DeSantis, such shares vest ratably over time, subject
to continued employment, on each of the first three
anniversaries of the award grant date. During the restriction
period, Mr. DeSantis may exercise full voting rights
associated with his shares of restricted stock. In addition,
during the restriction period, we will hold all dividends paid
with respect to Mr. DeSantis shares of restricted
stock until the restrictions on the underlying restricted stock
have lapsed.
Restricted
Stock Units
On February 29, 2008, the Compensation Committee issued
awards of restricted stock units to certain of our European
executives, including Messrs. Rzepka and Belderbos,
pursuant to the 2006 Incentive Plan. Specifically, on the Grant
Date, Messrs. Rzepka and Belderbos were issued restricted
stock units in the following amounts:
Mr. Rzepka 11,250 units (4,500 time-based
and 6,750 performance-based); and Mr. Belderbos
10,000 units (4,000 time-based and 6,000 performance-based).
Generally, under the 2006 Incentive Plan, restricted stock units
are settled for cash in an amount equal to the fair market value
of a share of our Common Stock on the applicable vesting date,
multiplied by the number of restricted stock units to be
settled. During the restriction period, holders of restricted
stock units have no voting rights with respect to the shares of
Common Stock underlying the restricted units. In regards to the
awards of time-based restricted stock units, the vesting
parameters of such awards mirror those of the restricted stock
issued to our North American executives. Specifically, all
awards of time-based restricted stock units vest ratably over
time,
23
subject to continued employment, on each of the first three
anniversaries of the award grant date. In regards to the awards
of performance-based restricted stock units, such awards may
vest upon the occurrence of certain performance criteria.
Specifically, all awards of performance-based restricted stock
units to Messrs. Rzekpa and Belderbos may vest on
March 1, 2011 (the Settlement Date), pursuant
to the following performance criteria: (1) if between the
Grant Date and the Settlement Date total shareholder returns on
the Corporations shares relative to a peer group of
similar companies (Share Value) is below the
25th percentile, all of the restricted stock units will be
forfeited; (2) if the Share Value meets or exceeds the
25th percentile, but is less than the 50th percentile,
two-thirds of the restricted stock units will be forfeited;
(3) if the Share Value meets or exceeds the
50th percentile, but is less than the 75th percentile,
one-third of the restricted stock units will be forfeited; and
(4) if the Share Value meets or exceeds the
75th percentile, all restricted stock units will vest. For
those restricted stock units conferring dividend rights (all
time-based restricted stock units and two-thirds of the
performance-based restricted units have dividend rights), we
hold all dividends paid on the underlying shares of Common Stock
and award such dividends with the cash settlement of underlying
shares upon vesting.
It has generally been the policy of the Compensation Committee
to grant our European Named Executive Officers awards of
restricted stock units, as compared to restricted stock, based
upon certain tax treatment considerations. However, while the
nature of the equity awards issued to our European Named
Executive Officers differs substantially from those of our North
American Named Executive Officers, the Compensation Committee
believes such awards achieve the stated goals of officer
retention and incentive alignment in a similar manner as awards
of restricted stock and performance shares.
In addition to the aforementioned grants to Messrs. Rzepka
and Belderbos, the Compensation Committee also issued an award
of performance-based restricted stock units to Mr. Gingo as
compensation for his acceptance of the positions of President
and CEO. For more information regarding the terms of
Mr. Gingos retention, see Fiscal 2008 Executive
Officer Transitions located on page 29 of this Proxy
Statement.
Performance
Shares
In connection with the grant of restricted stock to certain of
our North American executives, the Compensation Committee also
awarded performance shares to Messrs. Gingo and DeSantis,
pursuant to the 2006 Incentive Plan, in the following amounts:
Mr. Gingo 100,000 shares (66,667 with
dividend rights); and Mr. DeSantis
13,500 shares (9,000 with dividend rights). Under the 2006
Incentive Plan, performance shares give the recipient the right
to receive a specified number of shares of our Common Stock only
if certain terms and conditions are met as of the end of the
performance period. Specifically, all awards of performance
shares to Messrs. Gingo and DeSantis may vest on the
Settlement Date based upon the following performance criteria:
(1) if between the Grant Date and the Settlement Date Share
Value is below the 25th percentile, all of the performance
shares will be forfeited; (2) if the Share Value meets or
exceeds the 25th percentile, but is less than the
50th percentile, two-thirds of the performance shares will
be forfeited; (3) if the Share Value meets or exceeds the
50th percentile, but is less than the 75th percentile,
one-third of the performance shares will be forfeited; and
(4) if the Share Value meets or exceeds the
75th percentile, all performance shares will vest. In
regards to dividend rights, we utilize two types of performance
shares: (1) shares that provide the award recipient with
dividend rights during the vesting period; and (2) shares
that do not provide dividend rights with respect to the
underlying shares. For those performance shares conferring
dividend rights, we hold all dividends paid on the underlying
shares of Common Stock and award such dividends with the
underlying shares upon vesting.
Fiscal
2009 Long-Term Incentive Policy
In conjunction with the approved modifications to our base
salary and annual bonus structures for fiscal 2009, the
Compensation Committee has also considered, deliberated and
approved certain modifications to our long-term incentive
policy. Specifically, beginning in fiscal 2009, the Compensation
Committee will implement the following modifications to our
long-term incentive program:
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The ratio of performance-based incentive awards to service-based
incentive awards will be increased from its current 50/50 ratio
to a 65/35 ratio;
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For all performance-based awards issued in fiscal 2009, the
number of shares that will vest will be interpolated, on a
straight line basis, for performance that falls between
thresholds (i.e. performance that exceeds the threshold but is
only 80% of the target will receive 80% of the number of shares
available at the target rather than the threshold number of
shares);
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Long-term incentive awards to our European Named Executive
Officers will no longer be in the form of restricted stock
units, and instead will be in the form of cash awards with
vesting parameters similar to those used for grants of
restricted stock; and
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Prior to issuance, the Compensation Committee will determine,
with input from Towers Perrin, which corporate performance
metrics are appropriate for fiscal 2009 performance-based
long-term incentive award grants.
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Through consultation with Towers Perrin, the Compensation
Committee believes that by restructuring the terms of our
long-term incentive program, we can better achieve our goal of
creating long-term incentives for our Named Executive Officers,
while simultaneously structuring our executive compensation
policies to take advantage of current taxation policies in the
countries in which we operate. Specifically, it is the opinion
of the Compensation Committee that by reducing the emphasis of
service-based awards within our long-term incentive program, our
program will be recalibrated to provide more emphasis on
corporate performance, while still addressing our executive
retention concerns. Additionally, by providing for the vesting
of performance-based awards on an interpolated straight-line
basis, it is the opinion of the Compensation Committee that our
long-term incentive program will be more reflective of current
market practices, and will provide increased motivation for our
Named Executive Officers to increase our overall corporate
performance vis-à-vis our market competitors. Finally, the
Compensation Committee has determined that in order to take
advantage of the tax structures in the European nations in which
we conduct business operations, all of our European Named
Executive Officers will receive cash-based long-term incentive
awards, as compared to cash-settled restricted stock units.
Timing of
Grants
The Compensation Committee generally determines equity grants at
a meeting that immediately precedes our release of earnings
results from the most recently completed quarter. Since the
information in these earnings releases has not yet been
incorporated into the market price of our shares of Common
Stock, the Compensation Committee has historically set the grant
date as of the fifth business day after the release of the
earnings information. While this introduces some level of
variability in our cost incurred in making awards and the value
of the awards to our Named Executive Officers, the Compensation
Committee believes that this practice helps to ensure that
information in its possession when determining award grants is
reflected in the grant date stock price. For future grants, the
Compensation Committee will continue to adhere to its current
policy of scheduling award grants at least five business days
after the release of earnings information.
Historically, it has been the general policy of the Compensation
Committee to target the issuance of our yearly equity grants
during the second quarter of each fiscal year. However, in
conjunction with the aforementioned modifications to our
executive compensation program, the Compensation Committee has
decided to move the issuance of our equity award grants to the
first quarter beginning in fiscal 2010. Specifically, it is the
opinion of the Compensation Committee that modifying the timing
of our equity award grants to the first fiscal quarter is
appropriate, as such adjustment will help align the incentives
provided by our yearly grants with decisions on other components
of executive compensation that are made earlier in the fiscal
year.
Total
Compensation Opportunity
In addition to reviewing the competitive positioning of each
aspect of our compensation program, the Compensation Committee
annually reviews the total compensation opportunity for each of
our Named Executive Officers. The Compensation Committee
attempts to position our executives total compensation
opportunity near our peer market median in order to provide each
executive officer with a competitive compensation opportunity
and properly focus them on our long-term success.
The Compensation Committee requested that its compensation
consultant compile the total direct compensation (Base Salary +
Annual Bonus Target + Estimated Value of our Long-Term Incentive
Grants) of our Named Executive Officers in comparison to the
total compensation opportunities provided by our 2008 Peer
Group. In
25
evaluating this data for fiscal 2008, which appears in the table
below, the Compensation Committee recognized that certain of our
Named Executive Officers fell outside of our stated total target
compensation range. Consequently, to the extent practicable, in
fiscal 2009, the Compensation Committee will continue to
implement changes to the components of our executive
compensation program in order to bring the total target
compensation opportunity for our Named Executive Officers closer
to our peer median.
TARGET
TOTAL DIRECT COMPENSATION COMPARISON: A. SCHULMAN vs.
MARKET(1)
(In Thousands)
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Target
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Total
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Survey or Proxy
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50th
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Executive
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Title or Position
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Direct
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Benchmark
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%ile
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Corporate Officers
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Gingo
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COB & CEO
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$
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2,578
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CEO(2)
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$
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4,065
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Peers:
CEO(3)
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$
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3,840
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DeSantis
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CFO & Treasurer
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$
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866
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CFO(2)
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$
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1,260
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Peers: 3rd
High(3)
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$
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1,110
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International Officers
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Taylor(4)
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GM Asia & Europe
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$
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984
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Division Head
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$
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955
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Rzepka(4)(5)
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Business Unit Manager
Masterbatch
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$
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729
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Division Head
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$
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570
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Belderbos(4)
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CFO Europe
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$
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672
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Finance Director
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$
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370
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Totals for Corporate
Staff(6)
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$
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5,466
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$
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7,948
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Totals for International
Staff(7)
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$
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3,064
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$
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2,685
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(1) |
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Data as presented to the Compensation Committee by its outside
compensation consultant, Towers Perrin. Market data is derived
from proxies and compensations surveys. For Messrs. Taylor,
Rzepka and Belderbos, Target Total Direct Compensation is based,
in part, on actual bonuses paid during 2007, and not upon their
respective actual target bonus for 2008, as such numbers were
not available to Towers Perrin at the time of compilation. |
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Survey data is derived from five surveys of general industrial
companies of similar size and the current positions of the
Corporations incumbents. |
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Proxy data is derived from the past five years of proxies for
the five highest paid officers of our 2008 Peer Group and the
pay rank of our executives. |
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Data for international officers reflects pay for similar jobs in
the geographic market in which they are currently located. |
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Comparison data for Mr. Rzepka was compiled prior to the
announcement of the bifurcation of the position of General
Manager Asia and Europe between Mr. Taylor and
Mr. Rzepka. |
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Includes current salary data for Messrs. Gingo and
DeSantis, as well as other North American officers other than
our Named Executive Officers. |
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Includes current salary data for Messrs. Taylor, Rzpeka and
Belderbos, as well as other international officers. |
Retirement
and Other Benefits
The retirement and benefits program component of our Named
Executive Officer compensation program includes:
(1) payment of certain perquisites and other personal
benefits; (2) participation in a qualified retirement plan;
and (3) participation in a non-qualified retirement plan.
For Terry Haines, our former Chairman, President and CEO,
benefits also include a supplemental executive retirement plan
and a deferred compensation agreement. We also maintain other
post-retirement benefit plans, primarily health care and life
insurance, that are available to certain of our U.S. employees,
including certain of our Named Executive Officers, on a
non-discriminatory basis. The objectives of our retirement and
benefits programs are: (i) to provide the Named Executive
Officers with reasonable and competitive levels of protection
against contingencies, including retirement, death and
disability, which could interrupt their employment and income
received from us; and (ii) reward the Named Executive
Officers for continued service with us.
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Periodically, the Compensation Committee reviews how each
element of our retirement and benefits program functions to
achieve the Compensation Committees goals. At the
discretion of the Compensation Committee, these programs may be
modified, supplemented or removed. In general, the Compensation
Committee looks at competitive market practices and the costs of
each of these programs, and weighs that cost against the stated
objectives for maintaining retirement and other benefits. The
components of the fiscal year 2008 retirement and benefits
program for the Named Executive Officers are discussed
individually below.
Perquisites
and Personal Benefits
Historically, we have provided our Named Executive Officers with
limited perquisites and personal benefits that the Compensation
Committee believes are reasonable and consistent with our
executive compensation philosophy and competitive market
practices. Certain perquisites were used to encourage Named
Executive Officers to take particular actions (such as financial
tax planning and consulting in prior fiscal years), which the
Compensation Committee has determined to be beneficial to the
Corporation. In addition, we provided certain perquisites and
personal benefits to our Named Executive Officers in order to
supply them with the opportunity to foster and create business
relationships that will benefit our long-term success.
In April of 2008, the Compensation Committee eliminated most
perquisites and personal benefits that previously had been
extended to our North American Named Executive Officers, such as
providing automobiles and related costs, and increased their
base salaries as compensation for foregone benefits ($32,000 for
Mr. Gingo and $8,000 for Mr. DeSantis). No changes
were made to the perquisites provided to our European Named
Executive Officers, as such perquisites are more in line with
European compensation practices. We continue to maintain a
founders membership at Firestone Country Club, which
membership entitles us to designate five persons as members, one
of whom is Mr. Gingo. The Compensation Committee believes
that this membership is a cost-effective method of providing
business related entertainment to our customers and business
partners. The Compensation Committee also determined to continue
reimbursing a Named Executive Officer for temporary housing
expenses because the continued uncertainty relating to activist
shareholders demands makes it difficult to require the
Named Executive Officer to permanently relocate to Northeastern
Ohio.
During fiscal 2008, the Compensation Committee determined that
maintaining a lease on a private airplane was no longer a
cost-effective method for providing business-related
transportation to our Named Executive Officers and Directors.
The airplane was used only for business-related travel, and
personal use was not permitted. With the termination of the
lease on the airplane, it also became increasingly difficult and
cost prohibitive to access our Canadian fish camp. Consequently,
the fish camp, which was only used for business entertainment
purposes, was offered for sale during 2008. The only offer to
purchase the fish camp came from Terry L. Haines, our former
Chief Executive Officer and President. Ultimately we negotiated
with Mr. Haines to sell the fish camp for a purchase price
of $55,000 and the transaction closed during fiscal year 2009.
For fiscal 2009, the only other personal benefit that will be
provided to all executive officers is a mandatory physical every
two years to help ensure the health and welfare of our key
personnel.
Qualified
Retirement Plan
We have a qualified retirement plan for certain of our North
American executives (the Retirement Plan) pursuant
to which the Board of Directors, in its discretion, may
authorize the payment of contributions to our Retirement Plan
Trust to be allocated among participants. The maximum annual
amount that may be allocated to a participant under the
Retirement Plan generally is limited to the lesser of:
(1) $40,000; or (2) 100% of the participants
compensation. Participation in the Retirement Plan is available
to all of our U.S. salaried and non-represented employees
(and participating subsidiaries) who are employed as of the last
day of the Retirement Plan year. Benefits under the Retirement
Plan vest in accordance with a specified formula that provides
for partial vesting starting after two years of employment with
us and full vesting after seven years of employment with us. The
assets of the Retirement Plan Trust are invested and each
participants account reflects the aggregate investment
performance of the Trust assets. The amounts contributed by us
to the Retirement Plan accounts for our North American Named
Executive Officers for the fiscal 2008 year are reported in
the Summary Compensation Table located on page 32.
27
Non-Qualified
Retirement Plan.
We also maintain a non-qualified Retirement Plan for certain of
our North American executives (the Non-Qualified
Plan) pursuant to which the Compensation Committee may
accrue certain amounts for the benefit of plan participants in
order to provide such participants with benefits not available
to them under the Retirement Plan, due to certain tax-law driven
compensation limitations. Benefits under the Non-Qualified Plan
vest and become non-forfeitable in accordance with a specified
formula that provides for partial vesting starting after two
years of employment with us and full vesting after seven years
of employment with us. In addition, upon a
Change-in-Control
(as defined in the Non-Qualified Plan), participants
benefits under the Non-Qualified Plan become fully vested and
non-forfeitable. Moreover, if a participants employment is
terminated for any reason within two years of the occurrence of
a
Change-in-Control,
payment of such participants vested account balance shall
be made in a lump sum payment within five days of such
termination. Amounts accrued by us under the Non-Qualified Plan
for the benefit of each participant reflect the investment
performance that would have been realized had a corresponding
amount been invested for the benefit of such participant during
such year in the Retirement Plan. The amounts accrued (excluding
the assumed investment based performance earnings thereon) by us
pursuant to the Non-Qualified Plan for the benefit of our North
American Named Executive Officers for fiscal year 2008 are
disclosed in the Summary Compensation Table located on
page 32. This plan was originated and maintained in order
to provide benefits to North American executives who are not
able to fully participate in the Retirement Plan. The
Compensation Committee believes that maintaining this plan keeps
our retirement package competitive.
European
Retirement Plans
The Corporation maintains defined benefit plans for certain of
our foreign employees. Our European Named Executive Officers
participate in these defined benefit plans on the same
non-discriminatory basis as other foreign employees who are
participants. Additional information for these plans can be
found in the Pension Benefits Table located on
page 41 and the accompanying narrative description.
Supplemental
Executive Retirement Plan
Our Supplemental Executive Retirement Plan (the
SERP), which the Compensation Committee administers,
provides retirement benefits to executive officers named as
participants by resolution of the Board of Directors.
Mr. Haines, our former Chairman, President and CEO, was the
only executive officer authorized to participate in the SERP.
Consequently, after Mr. Haines retirement, none of
our current executive officers are participating in the SERP.
Under the SERP, participants earn a pension benefit that is
equal to 30% of such participants final average plan
compensation, plus an additional 1% for each year of service up
to a maximum of 30 years. Thus, a participant who retires
with 30 or more years of service would receive an annual benefit
equal to 60% of the participants final average plan
compensation. The pension benefits payable to a participant
under the SERP are then reduced by the actuarial value of
certain other plans and deferred compensation that is payable to
the participant. The SERP was originally adopted in 2004 after a
change in tax laws reduced the benefits that the Corporation
would otherwise have provided to certain of its executive
officers.
Pursuant to the terms of the SERP, we will commence the payment
of Mr. Haines SERP benefits upon his reaching the age
of 65. As of March 21, 2008, the final average plan
compensation for Mr. Haines under the SERP was $887,746 and
Mr. Haines has been credited with the maximum of
30 years of service. Consequently, beginning in fiscal
2011, we will begin making monthly payments to Mr. Haines
for a total annual benefit of $141,703. Additional information
on the SERP is available on page 41 of this Proxy Statement.
Deferred
Compensation Agreement
In addition to the provision of SERP benefits, we also
maintained a deferred compensation agreement with
Mr. Haines prior to his retirement. Pursuant to the terms
of such agreement, as well as the terms of Mr. Haines
retirement, Mr. Haines currently receives an annual cash
benefit of $100,000, paid in monthly installments, for a period
of ten years. In connection with the maintenance of
Mr. Haines deferred compensation arrangement, we
continue to maintain a life insurance policy on Mr. Haines
in the amount of $1,000,000. Other than Mr. Haines, we do
not maintain a deferred compensation arrangement with any
current executive officers.
28
Fiscal
2008 Executive Officer Transitions
During the course of fiscal 2008, we addressed a number of
compensation issues related to the retirement and transition of
our former President and CEO, Mr. Haines and the
appointment of his successor, Mr. Gingo, effective
January 1, 2008. As part of this transition process, the
Compensation Committee retained the services of Mercer to
analyze and recommend a compensation package for Mr. Gingo,
taking into account both market and individual factors regarding
Mr. Gingo and his potential employment by us. In regards to
market considerations, Mercer analyzed the compensation packages
currently in place for the CEOs of all 22 of the 2008 Peer Group
corporations. Additionally, Mercer analyzed individual
considerations regarding Mr. Gingo, including the effects
of his early retirement from his former employer, The Goodyear
Tire & Rubber Company.
Through consultations with Mercer, the Compensation Committee
designed a detailed compensation offer for Mr. Gingo, which
it recommended to the full Board of Directors. In designing its
compensation offer for Mr. Gingo, the Compensation
Committee sought to ensure that Mr. Gingo was motivated to
join us and that his compensation was structured in a fashion
that would appropriately motivate him to promote our long-term
success. In addition, the Compensation Committee sought to make
certain the following: (1) that Mr. Gingos
compensation was comparable to his market peers; (2) that
Mr. Gingo receive the opportunity, through
performance-based equity compensation, to be made
whole for any forgone compensation as a result of his
transition; and (3) that Mr. Gingos compensation
be sufficiently performance-based, so as to align his
compensation with our long-term success. Upon receiving the
recommended proposal of the Compensation Committee, the full
Board of Directors reviewed the terms of Mr. Gingos
proposed compensation offer and adopted the Compensation
Committees recommendation with certain modifications. It
is the opinion of the Board of Directors that the compensation
package offered to Mr. Gingo addressed each aspect of its
executive compensation objectives, and allowed us to retain a
highly qualified executive to lead us into the future. For more
information regarding the substantive terms of
Mr. Gingos employment, see Employment Agreement of
Mr. Gingo located on page 43 of this Proxy
Statement.
In addition to the retention of Mr. Gingo, we also
addressed the transition and retirement of Mr. Haines in
fiscal 2008. Specifically, on March 14, 2008, we entered
into a transition agreement (the Transition
Agreement) with Mr. Haines to facilitate his
retirement from the positions of President and CEO. In the
course of negotiating Mr. Haines Transition
Agreement, the Board of Directors, in consultation with
management, analyzed the specific terms of Mr. Haines
employment, compensation and benefit arrangements, and sought to
facilitate the payment of all compensation owed to
Mr. Haines. Additionally, we also negotiated the payment of
additional compensation to Mr. Haines in return for his
agreement to certain non-competition provisions. For more
information regarding the substantive terms of
Mr. Haines retirement, see Transition Agreement
with Mr. Haines located on page 47 of this Proxy
Statement.
Finally, in fiscal 2008, we entered into a Separation Agreement
(the Separation Agreement) with Barry A. Rhodes, our
former Executive Vice President and Chief Operating
Officer North America in connection with his
departure from service with us. Like Mr. Haines, the Board
of Directors, in consultation with management, reviewed the
specific terms of Mr. Rhodes employment, compensation
and benefit arrangements, and sought to facilitate the payment
of all compensation owed to Mr. Rhodes. Additionally, we
also negotiated the payment of additional compensation to
Mr. Rhodes in return for his agreement to certain
non-competition provisions. For more information regarding the
substantive terms of Mr. Rhodes separation, see
Separation Agreement with Mr. Rhodes located on
page 47 of this Proxy Statement.
Employment
Agreements and
Change-In-Control
Arrangements
The Compensation Committee carefully considers the use and
conditions of employment agreements. The Compensation Committee
recognizes that employment agreements containing severance and
change-in-control
arrangements are often necessary to attract prospective
executives who forego significant compensation and opportunities
at the companies they are leaving, or who face relocation
expenses in order to accept employment with us. Generally,
executives are not willing to accept such risks and costs
without protection in the event that their employment with us is
terminated due to unanticipated changes, including a
change-in-control.
The Compensation Committee believes that our current employment
agreements serve to protect stockholder interests by assuring
that we will have the continued dedication, undivided loyalty
and objective advice from key executives in the event of a
proposed transaction, or the threat of a transaction, which
could result in a
change-in-control.
All of our employment agreements, however, only provide payments
to an employee if his or her employment is terminated
29
as a result of (or within a specified period after) a
change-in-control,
a so-called double trigger. The Compensation
Committee does not believe that employees should receive
additional compensation merely as a result of a
change-in-control
and believes that our employment agreements provide our
executive officers with adequate protection to ensure that
change-in-control
offers will be evaluated in the best interest of the
stockholders, without fear that a transaction could cost his or
her job without compensation. The Compensation Committee
recognizes, however, that these employment agreements may tend
to discourage a takeover attempt as a
change-in-control
could trigger increased compensation expense.
As part of its compensation review in fiscal 2008, the
Compensation Committee reviewed the
change-in-control
elements of its outstanding employment agreements and decided to
re-evaluate the potential negative effects of such provisions.
Specifically, the Compensation Committee believes that a
re-evaluation of such agreements is necessary, in that such
change-in-control
elements may provide severance compensation that is inconsistent
with our compensation philosophy and current market practices.
Consequently, in fiscal 2009, the Compensation Committee will
continue to review and assess the
change-in-control
elements of its outstanding employment agreements and seek to
amend such agreements, to the extent practicable, in order to
ensure that such agreements do not provide
change-in-control
severance compensation that is outside of current market
practices.
In addition to the use of employment agreements, the
Compensation Committee has authorized the use of separate
change-in-control
agreements with certain key executive personnel, who currently
do not have employment agreements with us. While the
Compensation Committee believes that it is in our best interest
to retain most of our employees on an at will basis,
the Committee also recognizes that we will not be able to retain
key personnel without providing certain protections in the event
of a
change-in-control.
Like the
change-in-control
provisions utilized in our employment agreements, all of our
separate
change-in-control
agreements provide payments to covered employees only if his or
her employment is terminated as a result of (or within a
specified period after) a
change-in-control
(i.e. a double trigger). The Compensation Committee believes
that such agreements help to mitigate the fear of job loss
associated with potential
change-in-control
transactions and allow our key executive personnel to evaluate
such offers in an appropriate fashion.
Under the terms of our 2006 Incentive Plan, unless specified
otherwise in the associated award agreement or in a separate
employment or
change-in-control
agreement: (1) all of a participants awards will be
fully vested and exercisable upon a Business Combination or
Change-in-Control
(as such terms are defined in the 2006 Incentive Plan); and
(2) all performance objectives will be deemed to have been
met as of the date of the Business Combination or
Change-in-Control.
Except with respect to Mr. Gingo (for whom we will provide
a partial
gross-up),
if we conclude that any payment or benefit due to a Named
Executive Officer would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended (the Code), then we will consider:
(i) the feasibility of offering substitute awards that
would not constitute parachute payments under
Section 280G of the Code and that would not generate
penalties under Section 409A of the Code; and (ii) to
the extent that a substitution is not feasible or that the
payments and benefits due to the participant still would be
subject to the excise tax imposed by Section 4999 of the
Code, we will reduce the payments and benefits due to a
participant to the greatest amount that would not generate an
excise tax under Section 409A of the Code.
Pursuant to the terms of our 2002 Equity Incentive Plan, upon
the occurrence of a
Change-in-Control
(as such term is defined in the 2002 Equity Incentive Plan),
unless we determine otherwise in a participants award
agreement: (1) all stock options shall become immediately
vested and exercisable; (2) any restrictions imposed on
restricted stock or restricted stock units shall lapse;
(3) the vesting of all awards denominated in shares of
Common Stock shall be accelerated and be paid out within
30 days following the
Change-in-Control;
(4) awards denominated in cash shall be paid to
participants in cash within 30 days following the
Change-in-Control;
and (5) all awards shall become non-cancelable
(i.e., such awards cannot be cancelled without the
participant receiving appropriate compensation as determined by
the Compensation Committee).
Tax and
Accounting Considerations
As a general matter, the Compensation Committee considers the
various tax and accounting implications of the different
compensation vehicles that are employed, and the Compensation
Committee seeks to structure executive compensation in a tax
efficient manner.
30
Deductibility
of Executive Compensation
Section 162(m) of the Code prohibits us from taking a
federal income tax deduction for compensation paid in excess of
$1.0 million in any taxable year to our Named Executive
Officers, unless certain conditions are met. Exceptions are made
for qualified performance-based compensation, among other
things. As part of its role, the Compensation Committee annually
considers the deductibility of executive compensation under
Section 162(m) in structuring our executive compensation
program. The Compensation Committee believes, however, that
compensation and benefit decisions should be primarily driven by
the needs of our business, rather than by tax considerations.
Accordingly, the Compensation Committee may choose to award
compensation that does not meet the requirements of
Section 162(m) where, in its judgment, such payments are
necessary to achieve its compensation philosophy and objectives.
Because our U.S. operations are not currently profitable,
the inability to deduct compensation in excess of
$1.0 million does not have any effect on our current year
earnings.
Nonqualified
Deferred Compensation
Section 409A of the Code, which took effect on
January 1, 2005, imposes certain restrictions on amounts
deferred under nonqualified deferred compensation plans and a
20% excise tax on amounts that are subject to, but do not comply
with, Section 409A. Section 409A includes a broad
definition of nonqualified deferred compensation plans, which
may extend to various plans and arrangements that we maintain.
On April 10, 2007, the Treasury Department and the Internal
Revenue Service (the IRS) issued final regulations
relating to the treatment of nonqualified deferred compensation
plans under Section 409A. The Board of Directors and the
Compensation Committee intend to administer our plans and
arrangements to avoid or minimize the effect of
Section 409A and, if necessary, amend the plans and
arrangements to comply with the final regulations issued under
Section 409A on or before December 31, 2008 (or a
later date specified by the IRS).
Statement
of Financial Accounting Standards No. 123(R)
When determining amounts of long-term incentive grants to the
Named Executive Officers and other employees, the Compensation
Committee examines the accounting cost associated with the
grants. Under Statement of Financial Accounting Standard
No. 123(R), Share-Based Payment, grants of stock
options, restricted stock, restricted stock units and other
share-based payments result in an accounting charge.
Stock
Ownership Guidelines
In 2006, the Compensation Committee adopted stock ownership
guidelines for our executive officers. These guidelines require
that, within a five year period from the date of its adoption
or, if later, the date a person becomes an executive officer,
the CEO will maintain share ownership in value equal to
approximately five times his base salary, while all other
executive officers are expected to hold shares in value equal to
approximately three times their base salary. As has been stated
previously, the Compensation Committee bases a large part of its
compensation philosophy on aligning the interests of our
executive officers and our stockholders. Such efforts could be
undermined in the event that executive officers sold all or a
large part of their awards at vesting. In determining compliance
with these guidelines, the Compensation Committee considers the
beneficial ownership of our executive officers as required to be
reported in a proxy statement.
Compensation
of Directors
The Compensation Committee is also responsible for determining
compensation for our non-employee Directors. Generally, the
Compensation Committee structures Director compensation in a
fashion to attract and retain high quality individuals to serve
on the Board of Directors, to compensate such individuals for
the time and energy expended in providing us their expertise
and, in part, to provide Directors with compensation that is
tied to the performance of our Common Stock. Director
compensation levels are reflected in the Director
Compensation Table located on page 51. The Compensation
Committee has adopted guidelines requiring each Director to
maintain share ownership in value equal to approximately five
times his or her base retainer on and after the fifth year of
service on the Board of Directors. In reviewing each
Directors share ownership, the Compensation Committee
considers the beneficial ownership of each Director as required
to be reported in a proxy statement. Mr. Gingo, who is
currently the only employee Director, does not receive
additional compensation for service on our Board of Directors;
however, he did receive compensation for service as a Director
prior to his appointment as President and CEO. All director fees
paid to Mr. Gingo for service as a Director prior to the
commencement of his
31
employment are reflected in the All Other Compensation
column of the Summary Compensation Table located on
page 32 and in the Director Compensation Table
located on page 51.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussion, the
Compensation Committee recommended to the Board of Directors
that the foregoing Compensation Discussion and Analysis be
included in this Proxy Statement.
Respectfully submitted,
Compensation Committee
John B. Yasinsky, Chair
David G. Birney
Willard R. Holland
Michael A. McManus, Jr.
Ernest J. Novak, Jr.
Stanley W. Silverman
COMPENSATION
TABLES
Summary
Compensation Table
The table below provides information regarding the compensation
of the Corporations: (1) CEO; (2) CFO;
(3) three other most highly compensated executive officers
at August 31, 2008; (4) former Chairman, President and
CEO; and (5) former Executive Vice President and Chief
Operating Officer North America, as of
August 31, 2008.
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Change in
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Pension
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Value and
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Nonqualified
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Deferred
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Stock
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Option
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Non-Equity
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Compensation
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All Other
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Awards
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Awards
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Incentive Plan
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Earnings
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Compensation
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Name and Principal Position
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Year
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Salary ($)
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Bonus ($)
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($)(1)
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($)(2)
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Compensation
($)(3)
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($)(4)
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($)
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Total ($)
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Joseph M. Gingo
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2008
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$
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480,000
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(5)
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$
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490,000
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(6)
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$
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690,766
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$
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$
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589,260
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$
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$
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65,846
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(7)
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$
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2,315,872
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President, Chief Executive Officer and Chairman of the Board
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Paul F. DeSantis
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2008
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$
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319,292
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$
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$
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243,959
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$
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158,984
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$
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181,138
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$
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$
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50,366
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(8)
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$
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953,739
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Chief Financial Officer, Vice President and Treasurer
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2007
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$
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295,833
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$
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$
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71,069
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$
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158,812
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$
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86,250
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$
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$
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51,621
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$
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663,585
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Jack B.
Taylor(9)
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2008
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$
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545,381
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$
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$
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304,235
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$
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$
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293,143
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$
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1,308
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$
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62,559
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(10)
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$
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1,206,626
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General Manager and Chief Operating Officer Asia
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Bernard
Rzepka(11)
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2008
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$
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440,028
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$
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$
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219,208
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$
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$
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246,509
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$
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26,292
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$
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11,469
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(12)
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$
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943,506
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General Manager and Chief Operating Officer Europe
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Walter
Belderbos(11)
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2008
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$
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392,924
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$
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$
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217,389
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$
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$
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166,881
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$
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66,766
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$
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73,009
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(13)
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$
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699,580
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Chief Financial Officer Europe and Asia
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Terry L.
Haines(14)
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2008
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$
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390,148
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$
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$
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955,197
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$
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36,579
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$
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$
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4,700
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$
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2,524,328
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(15)
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$
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3,910,952
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Former President, Chief Executive Officer and Chairman of the
Board
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2007
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$
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665,854
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$
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$
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383,821
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$
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293,614
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$
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235,438
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$
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84,167
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$
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159,874
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$
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1,822,768
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Barry A.
Rhodes(16)
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2008
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$
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191,006
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$
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$
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325,399
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$
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58,037
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$
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$
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$
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1,032,326
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(17)
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$
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1,606,768
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Former Executive Vice President and Chief Operating
Officer North America
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2007
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$
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295,833
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$
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$
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168,045
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$
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94,609
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$
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108,750
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$
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$
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62,890
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$
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730,127
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(1) |
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Stock Awards include the Corporations expense recorded for
fiscal 2008 and 2007 for restricted stock awards as well as
restricted stock units. Restricted stock units are settled in
cash at the end of the vesting period based on the stock price
on that same date. The Corporation recorded restricted stock
unit expense through a mark- |
32
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to-market adjustment of the units vested to date based on the
closing price of the Corporations Common Stock at the end
of each corresponding fiscal year. In addition, expense is
recorded for dividend equivalents on those units carrying
dividend rights. The expense for restricted stock awards is
based on either the market value on the date of grant or a fair
value of the award based on the terms of the award. The various
awards are explained further in the Grants of Plan-Based
Awards Table located on page 34 and the Outstanding
Equity Awards Table located on page 38. |
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(2) |
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This column represents the amount recognized for financial
statement reporting purposes for fiscal 2008 and 2007 for
outstanding option awards in accordance with Statement of
Financial Accounting Standard (SFAS) 123R, Share-based Payment,
excluding estimated forfeitures. No option awards were granted
during fiscal 2008 and 2007. |
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(3) |
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The amounts for 2008 in this column represent compensation
awarded based on performance during fiscal 2008 under the
Corporations annual bonus plan. The amounts for 2007 in
this column represent compensation awarded based on performance
during fiscal 2007 under the Corporations annual bonus
plan. |
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(4) |
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Amounts reflect changes in the respective pension values for
Messrs. Taylor, Rzepka and Belderbos. As further described
in the Pension Benefits Table located on page 41, as
well as under the caption European Pension Plans located
on page 42, each of the European Named Executive Officers
participate in pension plans that are generally available to
employees within the country of the applicable plan.
Additionally, for Mr. Haines, such amount reflects the
change in the value of the SERP. Mr. Haines is the only
Named Executive Officer who participates in the SERP. |
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(5) |
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Mr. Gingo commenced his service as President and CEO of the
Corporation on January 1, 2008. Salary amount reflective of
base salary compensation paid to Mr. Gingo between
January 1, 2008 and August 31, 2008. |
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(6) |
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Pursuant to the terms of his employment agreement,
Mr. Gingo was awarded a cash bonus of $750,000 on
January 1, 2008, the commencement date of his employment
with the Corporation. In conjunction with his employment,
Mr. Gingo committed to reimburse the Corporation by the
amount of any payment of discretionary incentive compensation he
received from his previous employer. Ultimately, Mr. Gingo
reimbursed the Corporation $260,000, which resulted in a net
bonus to Mr. Gingo of $490,000. |
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(7) |
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For Mr. Gingo, amounts include $20,250 in director fees
earned for service as a non-employee Director, $15,750 in
contributions to the Retirement Plan and $10,167 in contribution
to the Non-Qualified Plan. Other amounts include mandatory safe
harbor contributions made by the Corporation into
Mr. Gingos 401(k) plan, country club dues and
dividends paid on restricted stock awards for which the
restrictions lapsed in fiscal 2008. |
|
(8) |
|
For Mr. DeSantis, amounts include $15,750 in contributions
to the Retirement Plan and contributions to the Non-Qualified
Plan. Other amounts include $12,097 in certain living expenses,
including rent and utilities, personal financial planning
services, an automobile lease, fuel for the leased vehicle,
automobile insurance, mandatory safe harbor contributions made
by the Corporation into Mr. DeSantis 401(k) plan and
dividends paid on restricted stock awards for which the
restrictions lapsed in fiscal 2008. |
|
(9) |
|
The Salary and Non-equity Incentive Plan Compensation data for
Mr. Taylor was translated from the Euro to U.S. dollars
using a 12-month average rate of 1.497. The Change in Pension
Value, Nonqualified Deferred Compensation Earnings and All Other
Compensation data was translated from British Pounds to U.S.
dollars using a 12-month average rate of 1.9932. No foreign
currency translation was necessary for Stock Award data. |
|
(10) |
|
For Mr. Taylor, amounts include $35,878 relating to company
vehicle costs and $15,960 in dividends paid on restricted stock
awards for which the restrictions lapsed in fiscal 2008. Other
amounts include club memberships, personal financial planning
services and certain medical insurance expenses. |
|
(11) |
|
The Summary Compensation Table data, excluding Stock Awards, for
Messrs. Rzepka and Belderbos was translated to U.S. dollars
from the Euro using a 12-month average rate of 1.497. No foreign
currency translation was necessary for Stock Award data. |
|
(12) |
|
For Mr. Rzepka, amounts include certain company vehicle
expenses and dividends paid on restricted stock awards for which
the restrictions lapsed in fiscal 2008 |
33
|
|
|
(13) |
|
For Mr. Belderbos, amounts include $24,480 in certain
company vehicles expenses, $39,409 in paid life insurance
premiums and dividends paid on restricted stock awards for which
the restrictions lapsed in fiscal 2008. |
|
(14) |
|
Pursuant to the terms of his transition agreement,
Mr. Haines retired from the Corporation on March 21,
2008. |
|
(15) |
|
For Mr. Haines, amounts include $58,765 in dividends paid
on restricted stock awards for which the restrictions lapsed in
fiscal 2008. Additionally, such amount includes a one-time
payment of $2,421,971 by the Corporation to Mr. Haines
pursuant to the terms of his Transition Agreement. Additionally,
pursuant to Mr. Haines Transition Agreement,
Mr. Haines retained a company vehicle, which resulted in
$42,147 of charges and lease payments by the Corporation, which
are included. Other amounts include annual dues for club
memberships, fuel for the leased vehicle and automobile
insurance. For additional information regarding the terms of
Mr. Haines Transition Agreement, see page 47 of
this Proxy Statement. |
|
(16) |
|
Pursuant to the terms of his separation agreement,
Mr. Rhodes service with the Corporation ended on
April 11, 2008. |
|
(17) |
|
For Mr. Rhodes, amounts include $29,450 in dividends paid
on restricted stock awards for which the restrictions lapsed in
fiscal 2008. Additionally, such amount includes a one-time
payment of $983,825 by the Corporation to Mr. Rhodes
pursuant to his Separation Agreement, which includes payment for
earned but unused vacation. Other amounts include annual dues
for club memberships, an automobile lease, fuel for the leased
vehicle and automobile insurance. For additional information
regarding the terms of Mr. Rhodes Separation
Agreement, see page 47 of this Proxy Statement. |
Grants of
Plan Based Awards
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Estimated Future Payouts
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Estimated Possible Payouts Under
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Under Equity Incentive Plan
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Non-Equity Incentive Plan Awards
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Awards
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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All Other
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Stock
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Awards:
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Grant
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Number of
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Date
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Shares
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Fair Value
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Board
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of Stock
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of Stock
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Grant
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Approval
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Threshold
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Target
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Maximum
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Threshold
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Target
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Maximum
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or Units
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and Option
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Name
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Date
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Date
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($)
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($)
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($)
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(#)
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(#)
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(#)
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(#)
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Awards
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Joseph M. Gingo
|
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12/17/2008
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12/17/2008
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$
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256,200
|
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$
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512,400
|
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$
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1,098,000
|
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|
|
|
|
|
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|
|
|
|
|
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|
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|
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02/29/2008
|
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02/22/2008
|
|
|
|
|
|
|
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|
|
|
|
|
|
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33,333
|
|
|
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66,667
|
|
|
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100,000
|
|
|
|
|
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$
|
1,313,000
|
(1)
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|
|
|
02/29/2008
|
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|
|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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8,064
|
|
|
|
16,291
|
|
|
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24,436
|
|
|
|
|
|
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$
|
591,840
|
(2)
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Paul F. DeSantis
|
|
|
10/17/2007
|
|
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10/17/2007
|
|
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$
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84,250
|
|
|
$
|
168,500
|
|
|
$
|
252,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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02/29/2008
|
|
|
|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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4,500
|
|
|
|
9,000
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
177,255
|
(1)
|
|
|
|
02/29/2008
|
|
|
|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
$
|
183,960
|
(3)
|
Jack B.
Taylor(4)
|
|
|
10/17/2008
|
|
|
|
10/17/2008
|
|
|
$
|
136,345
|
|
|
$
|
272,691
|
|
|
$
|
409,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernard
Rzepka(4)
|
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|
10/17/2008
|
|
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10/17/2008
|
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|
$
|
114,655
|
|
|
$
|
229,310
|
|
|
$
|
343,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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02/29/2008
|
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|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,250
|
|
|
|
4,500
|
|
|
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6,750
|
|
|
|
|
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$
|
163,485
|
(5)
|
|
|
|
02/29/2008
|
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02/22/2008
|
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|
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|
|
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|
|
|
|
|
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|
4,500
|
|
|
$
|
108,990
|
(6)
|
Walter
Belderbos(4)
|
|
|
10/17/2008
|
|
|
|
10/17/2008
|
|
|
$
|
77,619
|
|
|
$
|
155,238
|
|
|
$
|
232,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/29/2008
|
|
|
|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
4,000
|
|
|
|
6,000
|
|
|
|
|
|
|
$
|
78,780
|
(5)
|
|
|
|
02/29/2008
|
|
|
|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
$
|
81,760
|
(6)
|
Terry L. Haines
|
|
|
10/17/2008
|
|
|
|
10/17/2008
|
|
|
$
|
243,338
|
|
|
$
|
486,675
|
|
|
$
|
730,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry A. Rhodes
|
|
|
10/17/2008
|
|
|
|
10/17/2008
|
|
|
$
|
77,250
|
|
|
$
|
154,500
|
|
|
$
|
231,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/29/2008
|
|
|
|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
9,000
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
177,225
|
(1)
|
|
|
|
02/29/2008
|
|
|
|
02/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
$
|
183,960
|
(3)
|
|
|
|
(1) |
|
Award of Performance Shares, the terms of which are described
under the caption 2008 Named Executive Officer Compensation
Components Performance Shares located on
page 37. The grant date fair value of these Performance
Shares was computed using the target level award in column
(g) and was calculated using a Monte Carlo simulation,
which considered the terms of these Performance Share awards.
This simulation resulted in a grant date fair value of $13.13
for the Performance Share awards granted on February 29,
2008. |
34
|
|
|
(2) |
|
Award of performance-based restricted stock units granted to
Mr. Gingo on February 29, 2008, in which each unit is
equal to the market value of one share of the Corporations
Common Stock. The grant date fair value was computed using the
closing price of the Corporations Common Stock on
August 31, 2008 of $24.22. Pursuant to the terms of the
award grant, the vesting of such performance-based restricted
stock units was contingent upon the Corporations
consolidated worldwide performance in fiscal 2008 in the areas
of net income (excluding one-time or extraordinary items), cash
flows from operations and ROIC. Based upon the
Corporations fiscal 2008 performance, as measured on
August 31, 2008, Mr. Gingo was entitled to the
settlement of 18,734.36 units, which occurred on
October 24, 2008 at a price of $15.39. Pursuant to the
award grant, Mr. Gingo forfeited all unvested
performance-based restricted stock units on October 24,
2008. |
|
(3) |
|
Award of restricted stock which vests ratably on the first three
anniversaries of the award grant date. The grant date fair value
of such awards is equal to the closing price of the
Corporations Common Stock on the date of grant, which was
$20.44 per share. |
|
(4) |
|
The Estimated Possible Payouts Under Non-Equity Incentive Plan
Awards for Messrs. Taylor, Rzepka and Belderbos were
translated the Euros to U.S. Dollars using a 12-month average of
1.497. |
|
(5) |
|
Award of performance-based restricted stock units in which each
unit is equal to the market value of one share of the
Corporations Common Stock. The vesting for these awards is
described under the caption 2008 Named Executive Officer
Compensation Components Restricted Stock Units
located on page 37. The grant date fair value of such
units was computed using the closing price of the
Corporations Common Stock on August 31, 2008, which
was $24.22 per share. |
|
(6) |
|
Award of time-based restricted stock units in which each unit is
equal to the market value of one share of the Corporations
Common Stock. These units vest ratably on the first three
anniversaries of the award grant date. The grant date fair value
of such units was computed using the closing price of the
Corporations Common Stock on August 31, 2008, which
was $24.22 per share. |
2008
Named Executive Officer Compensation Components
Base
Salary
During fiscal 2008, the Compensation Committee determined that
although the base salary positioning of Messrs. Gingo and
DeSantis fell outside of the desired range, these salaries
nonetheless accomplished its stated positioning goals, as their
salaries represented 88% and 83%, respectively, of the median
salary for their comparable positions. However, in regards to
Messrs. Taylor, Rzepka and Belderbos, the Compensation
Committee determined that each of their respective base salaries
exceeded the Corporations stated base salary positioning
goals. During fiscal 2008, the Corporation undertook an
extensive reorganization of corporate management within North
American operations, which resulted in the designation of
Messrs. Taylor, Rzepka and Belderbos (all of which are
involved in our European operations) becoming executive officers
for the first time. Prior to fiscal 2008, the base salary
compensation of Messrs. Taylor, Rzepka and Belderbos did
not fall under the purview of the Compensation Committee. As
disclosed in the Compensation Discussion and Analysis on
page 19 of this Proxy Statement, the Compensation Committee
has approved certain modifications to its base salary
positioning policies for fiscal 2009 in order to manage base
salaries that exceed the Corporations peer market median
back to its stated positioning levels.
Annual
Bonuses
Under the annual bonus program, the Compensation Committee
establishes the award formulas and the performance goals to be
measured in order to determine the cash performance bonus that
may be earned by each Named Executive Officer for that year,
including the maximum cash bonus each will be eligible to
receive. The bonuses that each of the Named Executive Officers
could have earned are set forth in the Grants of Plan Based
Awards Table located on page 34, and the bonuses
actually paid are set forth in the Summary Compensation Table
in the Non-Equity Incentive Plan Compensation column
located on page 32.
In October 2007, the Board of Directors, upon the approval of
the Compensation Committee, established the target bonus awards
for each of the Named Executive Officers (excluding
Mr. Gingo who was not yet serving as an executive officer)
and established that each executives total bonus opportunity
would be based upon the
35
achievement of certain corporate performance metrics and
individual performance. In regards to Mr. Gingo, the
specific terms of his participation in our 2008 bonus plan were
established in accordance with terms of his employment
agreement. Fiscal 2008 bonus targets for each Named Executive
Officer are disclosed on page 20 of the Compensation
Discussion and Analysis.
In addition to establishing target bonus amounts for each Named
Executive Officer, the Compensation Committee also established
the respective weighting of corporate performance and personal
performance for each Named Executive Officer. Pursuant to the
terms of his employment agreement, the Compensation Committee
established that for fiscal 2008, 100% of Mr. Gingos
target bonus opportunity would be based upon our corporate
financial performance, with leverage ranging from zero to 150%
of target. For Messrs. DeSantis, Taylor, Rzepka and
Belderbos, the Compensation Committee determined that one-half
of their respective total target award potential would be based
on financial performance, with leverage ranging from zero to
150% of target, while the remaining one-half would be based upon
the achievement of individual goals. For Messrs. Gingo and
DeSantis, the Compensation Committee determined that the
financial performance portion of their respective annual bonus
opportunities would be measured by our consolidated worldwide
operations. For Messrs. Taylor, Rzpeka and Belderbos, the
Compensation Committee determined that the financial performance
portion of their respective annual bonus opportunities would be
based upon the performance of our European business segment.
For fiscal year 2008, the Compensation Committee selected the
following performance metrics for evaluating corporate
performance: (1) net income from operations/operating
profit (excluding one-time or extraordinary items);
(2) cash flows from operations; and (3) ROIC. These
measures of financial performance were selected by the
Compensation Committee in order to focus the Named Executive
Officers on the key drivers of stockholder value. Because net
income and operating profit strongly correlate with the
Corporations stock price, such measures are given
relatively greater weight, as compared to cash flows from
operations and ROIC. The Compensation Committee believes that
its targets are challenging but achievable with successful
management performance.
For fiscal 2008, the Corporation utilized its budgeting model to
set the performance levels for each of the performance metrics.
The Compensation Committee believes that achieving the budget
requires both strong management performance and is deserving of
a stretch bonus or 125% of the targeted award. In
most years, the threshold bonus level is determined by the prior
years performance. For 2008, however, the Compensation
Committee determined that merely maintaining the 2007 level of
performance would not have merited bonus compensation. As a
result, the threshold performance level required for any bonus
was set at 75% of the budget (which threshold level still
significantly exceeded 2007 performance) and the target was
determined to be the midpoint between the threshold and the
budget. The maximum bonus level was set at 115% of the budget.
For a detailed discussion regarding fiscal 2008 corporate
performance, see page 20 of the Compensation Discussion
and Analysis.
The remaining one-half total target potential for each Named
Executive Officer (excluding Mr. Gingo) was based upon
their respective individual performance, as measured against
various personal goals established by the CEO and approved by
the Compensation Committee. In fiscal 2008, Mr. Gingo
determined that the personal goals for Messrs. DeSantis,
Taylor, Rzepka and Belderbos should not only reflect individual
performance, but should also be directly tied to our current
restructuring and working capital initiatives. Consequently, in
addition to establishing individual personal performance goals
for each executives individual areas of responsibility,
Mr. Gingo established that a major component of each
executives personal performance bonus opportunity would be
depended upon the achievement of the Corporations target
goals in the areas of net income or operating profit (excluding
one-time or extra ordinary items) and cash flow from operations,
with each metric being measured using the same performance
evaluator (i.e., worldwide consolidated financial performance or
European segment performance) as under the corporate performance
portion of our annual bonus plan. For fiscal 2008,
Mr. Gingo determined, and the Compensation Committee
approved, that each of Messrs. DeSantis, Taylor, Rzepka and
Belderbos should receive 50% of their respective target bonus
opportunity based upon each executives individual
performance, as well as the Corporations consolidated
worldwide and European segment performance in the areas of net
income or operating profit and cash flows from operations.
36
Restricted
Stock Grants
On February 29, 2008, the Compensation Committee awarded
shares of restricted stock to certain North American executives.
Of the Named Executive Officers, only Mr. DeSantis received
an award of restricted stock pursuant to the 2006 Incentive
Plan, the amount of which is set forth in column (i) in the
Grants of Plan-Based Awards Table located on
page 34. The shares of restricted stock awarded to
Mr. DeSantis reported in column (i) will vest ratably
over time, subject to continued employment with the Corporation
on each of the first three anniversaries of the award grant
date. During the restriction period, Mr. DeSantis may
exercise full voting rights associated with these shares of
restricted stock, and dividends paid with respect to such shares
will be held by the Corporation until the restrictions on the
underlying stock have lapsed, subject to the same risk of
forfeiture.
Restricted
Stock Units
On February 29, 2008, the Compensation Committee issued
awards of restricted stock units to Messrs. Rzepka and
Belderbos pursuant to the 2006 Incentive Plan in the following
amounts: Mr. Rzepka 11,250 units (4,500
time-based and 6,750 performance-based); and
Mr. Belderbos 10,000 units (4,000
time-based and 6,000 performance-based). Under the 2006
Incentive Plan, restricted stock units are settled for cash in
an amount equal to the fair market value of a share of our
Common Stock on the applicable vesting date, multiplied by the
number of restricted stock units to be settled. During the
restriction period, holders of restricted stock units have no
voting rights with respect to the shares of Common Stock
underlying the restricted units. In fiscal 2008, the
Compensation Committee issued two types of restricted stock
units to Messrs. Rzepka and Belderbos: (1) time-based
restricted stock unit awards; and (2) performance-based
restricted stock unit awards. In regards to the awards of
time-based restricted stock units, all awards vest ratably over
time, subject to continued employment, on each of the first
three anniversaries of the award grant date. In regards to the
awards of performance-based restricted stock units, such awards
may vest upon the occurrence of certain performance criteria, as
disclosed on page 23 of the Compensation Discussion and
Analysis section. For those restricted stock units
conferring dividend rights (all time-based restricted stock
units and two-thirds of the performance-based restricted stock
units have dividend rights), the Corporation holds all dividends
paid on the underlying shares of Common Stock and awards such
dividends with the cash settlement of the underlying shares upon
vesting.
Performance
Shares
In connection with the grant of restricted stock to certain of
our North American executives, the Compensation Committee also
awarded performance shares to Messrs. Gingo and DeSantis
pursuant to the 2006 Incentive Plan, in the following amounts:
Mr. Gingo 100,000 shares (66,667 with
dividend rights); and Mr. DeSantis
13,500 shares (9,000 with dividend rights). Performance
shares give the recipient the right to receive a specified
number of shares of our Common Stock only if certain terms and
conditions are met as of the end of the performance period, as
disclosed on page 24 of the Compensation Discussion and
Analysis section. In regards to dividend rights, the
Corporation utilizes two types of performance shares:
(1) shares that provide the award recipient with dividend
rights during the vesting period; and (2) shares that do
not provide dividend rights with respect to the underlying
shares. For those performance shares conferring dividend rights,
the Corporation holds all dividends paid on the underlying
shares of Common Stock and awards such dividends with the
underlying shares upon vesting.
37
Outstanding
Equity Awards at Fiscal Year-End
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Option Awards
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Stock Awards
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Equity
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Equity
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Equity
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Incentive
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Incentive
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Incentive
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Plan
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Plan Awards:
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Plan Awards:
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Awards:
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Number of
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Market or
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Number of
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Number of
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Number of
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Number of
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Unearned
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Payout Value
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Securities
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Securities
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Securities
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Shares or
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Market Value
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Shares,
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of Unearned
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Underlying
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Underlying
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Underlying
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Units of
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of Shares or
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Units or Other
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Shares, Units
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Unexercised
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Unexercised
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Unexercised
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Option
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Option
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Stock That
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Units of Stock
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Rights That
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or Other Rights
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Options (#)
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Options (#)
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Unearned
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Exercise
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Expiration
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Have Not
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That Have Not
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Have Not
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That Have Not
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Name
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(Exercisable)
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(Unexercisable)
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Options (#)
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Price ($)
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Date
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Vested (#)
|
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Vested
($)(1)
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Vested
(#)(2)
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Vested ($)(1)
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Joseph M. Gingo
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$
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4,500
|
(3)
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$
|
108,990
|
|
|
|
100,000
|
(4)
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|
$
|
2,422,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
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1,667
|
(5)
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$
|
40,375
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
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|
|
|
|
|
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$
|
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|
|
|
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334
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(6)
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$
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8,089
|
|
|
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24,436
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(7)
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$
|
591,840
|
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Paul F. DeSantis
|
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40,000
|
|
|
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20,000
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(8)
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$
|
24.69
|
|
|
|
1/23/2016
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$
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$
|
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$
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15,000
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(9)
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$
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363,300
|
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13,500
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(4)
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$
|
326,970
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
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$
|
|
|
|
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9,000
|
(10)
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$
|
217,980
|
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|
|
|
|
|
|
|
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|
|
|
|
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$
|
|
|
|
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$
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4,500
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(11)
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$
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108,990
|
|
Jack B. Taylor
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8,334
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|
|
|
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|
|
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$
|
18.02
|
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|
10/21/2013
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$
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$
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$
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45,000
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(12)
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$
|
1,089,900
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$
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|
|
Bernard Rzepka
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2,000
|
|
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|
|
|
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|
|
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$
|
13.99
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|
|
|
10/17/2012
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$
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$
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|
10,000
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$
|
18.02
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10/21/2013
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$
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$
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$
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23,000
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(13)
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$
|
557,060
|
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|
|
6,750
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(14)
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$
|
163,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
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4,500
|
(15)
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$
|
108,990
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|
|
|
|
|
|
$
|
|
|
Walter Belderbos
|
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|
|
|
|
|
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|
|
|
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$
|
|
|
|
|
|
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|
24,000
|
(16)
|
|
$
|
581,280
|
|
|
|
6,000
|
(14)
|
|
$
|
145,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
4,000
|
(17)
|
|
$
|
96,979
|
|
|
|
|
|
|
$
|
|
|
Terry L. Haines
|
|
|
43,334
|
(18)
|
|
|
|
|
|
|
|
|
|
$
|
19.85
|
|
|
|
03/21/2010
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
86,667
|
(18)
|
|
|
|
|
|
|
|
|
|
$
|
19.20
|
|
|
|
03/21/2010
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
8,750
|
(19)
|
|
$
|
177,538
|
|
|
|
45,833
|
(20)
|
|
$
|
1,110,075
|
|
Barry A. Rhodes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Market value computed using $24.22, the closing share price of
the Corporations Common Stock on August 31, 2008. |
|
(2) |
|
Awards presented based upon achievement of maximum performance
goals. |
|
(3) |
|
Award of time-based restricted stock, 2,500 of which will vest
on February 1, 2009 and 2,000 of which will vest of
February 1, 2010. These restricted stock awards were
awarded to Mr. Gingo during the time he served as a
non-employee Director of the Corporation. |
|
(4) |
|
Award of performance shares, the vesting of which is described
under the caption 2008 Named Executive Officer Compensation
Components Performance Shares located on
page 37. Such performance shares will vest, if at all, on
February 28, 2011. |
|
(5) |
|
Award of time-based restricted stock, 833 of which will vest on
April 11, 2009 and 834 of which will vest on April 11,
2010. This restricted stock award was issued to Mr. Gingo
during the time he served as a non-employee Director of the
Corporation. |
|
(6) |
|
Award of time-based restricted stock units, of which each unit
is equal to the market value of one share of the
Corporations Common Stock. These restricted stock units
will be settled in equal 167 unit amounts on each of
April 11, 2009 and 2010. These restricted stock units were
issued to Mr. Gingo during the time he served as a
non-employee Director of the Corporation. |
|
(7) |
|
Award of performance-based restricted stock units granted to
Mr. Gingo on February 29, 2008, in which each unit is
equal to the market value of one share of the Corporations
Common Stock. The market value was computed using the closing
price of the Corporations Common Stock on August 31,
2008 of $24.22. Pursuant to the terms of the award grant, the
vesting of such performance-based restricted stock units was
contingent upon the Corporations consolidated worldwide
performance in fiscal 2008 in the areas of net income (excluding
one-time or extraordinary items), cash flows from operations and
ROIC. Based upon the Corporations fiscal 2008 performance,
as measured on August 31, 2008, Mr. Gingo was entitled
to the |
38
|
|
|
|
|
settlement of 18,735 units, which occurred on
October 24, 2008 at a price of $15.39. Pursuant to the
award grant, Mr. Gingo forfeited all unvested
performance-based restricted stock units on October 24,
2008. |
|
(8) |
|
Award of stock options, all of which will vest on
January 23, 2009. |
|
(9) |
|
Award of time-based restricted stock, 3,000 of which will vest
on each of the following dates: (1) February 28, 2009;
(2) April 11, 2009; (3) February 28, 2010;
(4) April 11, 2010; and (5) February 28,
2011. |
|
(10) |
|
Award of performance-based restricted stock, which will vest, if
at all, on April 11, 2010. Specifically, if the market
value of the Corporations Common Stock relative to the
Peer Group on April 11, 2010 is: (1) below the 25th
percentile, all of Mr. DeSantis shares will be
forfeited; (2) between the 25th and 50th percentile,
one-half of Mr. DeSantis shares will be forfeited; or
(3) at or above the 50th percentile, none of
Mr. DeSantis shares will be forfeited. During the
restriction period, Mr. DeSantis may exercise full voting
rights associated with these shares of restricted stock and the
Corporation will hold dividends paid with respect to such shares
until the restrictions on the underlying restricted stock have
lapsed, subject to the same risk of forfeiture. |
|
(11) |
|
Award of performance shares, the vesting of which is described
under the caption 2008 Named Executive Officer Compensation
Components Performance Shares located on
page 37. Such performance shares will vest, if at all, on
April 11, 2010. |
|
(12) |
|
Award of time-based restricted stock units, in which each unit
is equal to the market value of one share of the
Corporations Common Stock. These restricted stock units
will be settled in equal 15,000 unit amounts on each of
October 21, 2009 and May 2, 2011. Additionally, 15,000
of such restricted stock units were settled on October 22,
2008 at $14.92, the closing price of the Corporations
Common Stock on that date. |
|
(13) |
|
Award of time-based restricted stock units, in which each unit
is equal to the market value of one share of the
Corporations Common Stock. These time-based restricted
stock units vest at the end of four years following the award
grant date. These time-based restricted stock units will be
settled as follows: (1) on October 21, 2009,
7,000 units will be settled; and (2) on May 2,
2011, 9,000 units will be settled. Additionally, 7,000 of
such restricted stock units were settled on October 22,
2008 at $14.92, the closing price of the Corporations
Common Stock on that date. |
|
(14) |
|
Award of performance-based restricted stock units, the vesting
of which is described under the caption 2008 Named Executive
Officer Compensation Components Restricted Stock
Units located on page 37. Such performance-based
restricted stock units will vest, if at all, on
February 28, 2011. |
|
(15) |
|
Award of time-based restricted stock units, in which each unit
is equal to the market value of one share of the
Corporations Common Stock. These restricted stock units
vest ratably on the first three anniversaries of the award grant
date. These time-based restricted stock units will be settled in
equal 1,500 unit amounts on each of February 28, 2009,
2010 and 2011. |
|
(16) |
|
Award of time-based restricted stock units, in which each unit
is equal to the market value of one share of the
Corporations Common Stock. These restricted stock units
vest at the end of four years following the award grant date.
These time-based restricted stock units will be settled as
follows: (1) on October 21, 2009, 8,000 units
will be settled; and (2) on May 2, 2011,
8,000 units will be settled. Additionally, 8,000 of such
restricted stock units were settled on October 22, 2008 at
$14.92, the closing price of the Corporations Common Stock
on that date. |
|
(17) |
|
Award of time-based restricted stock units, in which each unit
is equal to the market value of one share of the
Corporations Common Stock. These restricted stock units
vest ratably on the first three anniversaries of the award grant
date. These time-based restricted stock units will be settled in
equal 1,333 unit amounts on each of February 28, 2009
and 2010 and 1,334 units will be settled on
February 28, 2011. |
|
(18) |
|
Pursuant to the terms of Mr. Haines Transition
Agreement, the vesting for these options was accelerated on
March 21, 2008. Additionally, the option expiration date
was also accelerated. |
|
(19) |
|
Award of time-based restricted stock units issued to
Mr. Haines in April 2007. Pursuant to his Transition
Agreement, a portion of the original 15,000 unit grant was
cancelled and the remaining portion remained outstanding for a
period of seven months following his retirement date of
March 21, 2008. These 8,750 units were paid in October
2008 using the closing price of the Corporations Common
Stock on March 21, 2008 of $20.29. |
39
|
|
|
(20) |
|
Award of performance-based restricted stock issued to
Mr. Haines in April 2007. Pursuant to his Transition
Agreement, Mr. Haines was able to maintain a portion of the
awards grants until the vesting date of April 11, 2010.
Ultimate vesting of these awards depends on the outcome of the
performance measures for these awards as described in footnote
10. |
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise ($)
|
|
|
Vesting (#)
|
|
|
Vesting ($)
|
|
|
Joseph M. Gingo
|
|
|
6,000
|
|
|
$
|
27,770
|
|
|
|
21,568
|
(1)
|
|
$
|
351,301
|
|
Paul F. DeSantis
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
61,050
|
(2)
|
Jack B. Taylor
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
167,440
|
(3)
|
Bernard Rzepka
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
47,840
|
(3)
|
Walter Belderbos
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
95,680
|
(3)
|
Terry L. Haines
|
|
|
|
|
|
|
|
|
|
|
80,083
|
(4)
|
|
|
1,672,074
|
|
Barry A. Rhodes
|
|
|
50,667
|
|
|
|
139,376
|
|
|
|
15,000
|
(5)
|
|
|
323,100
|
|
|
|
|
(1) |
|
These awards include 2,000 restricted stock awards which vested
on February 2, 2008 with a value realized on vesting based
on the closing price on the date of vesting of $21.32, 833
shares of restricted stock and 166 restricted stock units both
which vested on April 11, 2008 with a value realized on
vesting based on the closing price on the date of vesting of
$20.35. Amount also includes 18,735 performance-based restricted
stock units, which vested on August 31, 2008, but were not
valued or settled until October 24, 2008 at $15.39, the
third day following the Corporations earnings release date. |
|
(2) |
|
The value realized on vesting is based on the closing market
price on April 11, 2008, which was $20.35. |
|
(3) |
|
The value realized on vesting is based on the closing market
price on October 22, 2007, which was $23.92. |
|
(4) |
|
The number of shares acquired on vesting includes 13,000 which
vested on October 22, 2007, and 67,083 which vested on
March 21, 2008 pursuant to Mr. Haines Retirement
Agreement. The 13,000 shares have a value realized on
vesting based on the closing price of the Corporations
Common Stock on October 22, 2007 of $23.92. The value of
the remaining 67,083 shares was based on the closing price
of the Corporations Common Stock on March 21, 2008 of
$20.29. Included in the 67,083 shares vested on
March 21, 2008 are 45,833 shares, which were not
released on the same day. These shares are performance-based
restricted stock whose final vesting is contingent on
market-based performance criteria as of April 11, 2010. |
|
(5) |
|
The number of shares acquired on vesting includes
5,000 shares which vested on October 22, 2007 and
10,000 shares, which vested on April 11, 2008 pursuant
to Mr. Rhodes Separation Agreement. The
5,000 shares have a value realized on vesting based on the
closing price of the Corporations Common Stock on
October 22, 2007 of $23.92. The value of the
10,000 shares vested on April 11, 2008 was based on
the closing market price of the Corporations Common Stock
on the same day of $20.35. |
40
Pension
Benefits Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
|
|
Number of Years
|
|
|
Present Value of
|
|
|
Payments During
|
|
Name
|
|
Plan Name
|
|
Credited Service (#)
|
|
|
Accumulated Benefit ($)
|
|
|
Last Fiscal Year ($)
|
|
|
Joseph M. Gingo
|
|
N/A
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
Paul F. DeSantis
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack B.
Taylor(1)
|
|
A. Schulman, Inc.
LTD 1978 Retirement
Benefits Scheme
|
|
|
40
|
|
|
|
6,025,954
|
|
|
|
381,435
|
|
Bernard
Rzepka(2)
|
|
A. Schulman GmbH,
Kerpen Pension Plan
|
|
|
15
|
|
|
|
682,177
|
|
|
|
|
|
Walter
Belderbos(3)
|
|
A. Schulman
Plastics Belgium
Retirement Plan
|
|
|
19
|
|
|
|
1,055,834
|
|
|
|
|
|
Terry L.
Haines(4)
|
|
SERP
|
|
|
41
|
|
|
|
1,105,412
|
|
|
|
|
|
Barry A. Rhodes
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The values presented for Mr. Taylor were converted from
British Pounds to U.S. Dollars at a 12-month average rate of
1.9932. Assumptions include a discount rate of 6.40% at
August 31, 2008 and the PA92 Long Cohort Year of Birth +2
age rating mortality table. There has been no further benefit
accrual for Mr. Taylor since he turned age 60 in
October 2006. |
|
(2) |
|
The value presented for Mr. Rzepka was converted from Euros
to U.S. Dollars at a 12-month average rate of 1.497. Assumptions
include age 65 commencement, no decrements for neither
death or termination prior to age 65, Heubeck 2005
Generational mortality after 65 and a discount rate of 6.25% at
August 31, 2008. |
|
(3) |
|
The value presented for Mr. Belderbos was converted from
Euros to U.S. Dollars at a 12-month average rate of 1.497.
Assumptions include age 65 commencement, no decrements for
death or termination prior to age 65 and a discount rate of
6.25% at August 31, 2008. |
|
(4) |
|
The value presented for Mr. Haines is an estimate, as of
August 31, 2008, of the total value of pension benefits
under the SERP earned as of that date. The pension formula
restricts credited years of service to a maximum of
30 years. This is reflected in the present value disclosed
in the table. Assumptions include age 65 commencement, no
decrements for death or termination prior to age 65,
RP-mortality after 65 and discount rates of 7.00% as of
August 31, 2008. |
Supplemental
Executive Retirement Plan
The Corporations SERP, which is administered by the
Compensation Committee, provides retirement benefits to
executive officers named as participants by resolution of the
Board of Directors. Under the SERP, participants earn a pension
benefit that is equal to 30% of such participants final
average plan compensation, plus an additional 1% for each year
of service up to a maximum of 30 such years. Thus, a participant
who retires with 30 or more years of service would receive an
annual benefit equal to 60% of the participants final
average plan compensation. The pension benefits payable to a
participant under the SERP are then reduced by the actuarial
value of certain other plans and deferred compensation that is
payable to the participant. SERP pension payments are payable as
a life annuity under which a monthly pension is payable to the
participant up until such participants death. The SERP was
originally adopted in 2004 after a change in tax laws reduced
the benefits that the Corporation would otherwise have provided
to certain of its executive officers.
Mr. Haines, the Corporations former Chairman,
President and CEO, was the only executive officer of the
Corporation participating in the SERP. Consequently, after
Mr. Haines retirement, none of the Corporations
current executive officers are currently participating in the
SERP. Pursuant to the terms of the SERP, the Corporation will
commence the payment of Mr. Haines SERP benefits upon
his reaching of the age of 65. As of March 21, 2008, the
final average plan compensation of Mr. Haines under the
SERP was $887,746. Mr. Haines has been credited with the
maximum of 30 years of service under the SERP.
Consequently, beginning in fiscal 2011, the Corporation will
begin making monthly payments to Mr. Haines, who will
receive a total annual benefit of $141,703.
41
European
Pension Plans
Each of the European Named Executive Officers participate in
pension plans that are generally available to employees within
the country of the applicable plan. For Mr. Rzepka, his
pension benefits are calculated at a rate of 0.8% of his final
pensionable salary up to the applicable social security pension
ceiling per year of service with a maximum of 20% and an
additional 2.4% of pensionable salary for that portion exceeding
the social security pension ceiling, with a maximum of 60%.
Under German law, Mr. Rzepkas benefits under the plan
are fully vested and include a widows pension of 50% of
the amount payable. If Mr. Rzepkas employment
terminates prior to his reaching age 65, his benefits would
be reduced based upon his total years of service divided by the
number of years of service he would need to reach age 65.
Mr. Rzepkas spouse is entitled to receive 50% of his
pension upon his death in service or during retirement.
For Mr. Belderbos, his pension benefits are payable to him
at retirement in a lump sum equal to the formula (70% x
pensionable salary estimated state pension) x N/40 x
F. Pensionable salary is the average of his final 5 annual
salaries, with the annual salaries being measured as 14.12 times
his monthly January salary. The estimated state pension is
estimated based on that which is available to a single person
with a complete career. N is the number of years of service (up
to a maximum of 40) and F is a conversion factor equal to
12.3514. Mr. Belderbos benefits under this plan are
fully vested and, should his employment terminate prior to
retirement age, he would be eligible to receive the greater of
the accrued reserves attributable to him under the pension plan
(plus any required profit sharing) and the minimum required
under Belgian law. If Mr. Belderbos dies during service,
his spouse will be entitled to a lump sum payment calculated
under a reduced formula (42% x pensionable salary) and offset by
any estimated widows state payment, provided that the lump
sum can not be less than 1 x his pensionable salary.
Mr. Taylor is currently receiving benefits under his
pension plan, based upon 2/3 of his final salary and is fully
vested in those amounts. Portions of his pension (approximately
one-third) are subject to adjustment for inflation. Upon
Mr. Taylors death, his widow is entitled to receive
two-thirds of his pre-commutation pension.
Non-qualified
Deferred Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Withdrawals/
|
|
|
Earnings in Last
|
|
|
Balance at Last
|
|
Name
|
|
Last FY ($)
|
|
|
Last FY
($)(1)
|
|
|
Distributions ($)
|
|
|
FY
($)(2)
|
|
|
FYE ($)
|
|
|
Joseph M. Gingo
|
|
$
|
|
|
|
$
|
10,167
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
10,167
|
|
Paul F. DeSantis
|
|
$
|
|
|
|
$
|
1,300
|
|
|
$
|
|
|
|
$
|
758
|
|
|
$
|
9,641
|
|
Jack B. Taylor
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Bernard Rzepka
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Walter Belderbos
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Terry L.
Haines(3)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(41,667
|
)
|
|
$
|
11,438
|
|
|
$
|
1,598,604
|
|
Barry A. Rhodes
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(132
|
)
|
|
$
|
9,051
|
|
|
|
|
(1) |
|
Column contains contributions by the Corporation in the last
fiscal year under the Non-Qualified Plan, which provides for
benefits in excess of amounts permitted to be contributed under
the Retirement Plan. Amounts shown are included in the All
Other Compensation column shown in the Summary
Compensation Table located on page 32. |
|
(2) |
|
Earnings in this column represent estimated earnings on the
Non-Qualified Plan. These amounts are not included in the
Summary Compensation Table since they do not constitute
above market interest or preferential earnings. |
|
(3) |
|
A portion of the aggregate balance for Mr. Haines includes
benefits related to a deferred compensation plan. The deferred
compensation arrangement provides for monthly cash benefits for
ten years in the annual amount of $100,000. The balance of the
ending benefit to Mr. Haines of $958,333 is included in the
aggregate balance, which is the $1,000,000 total benefits, less
payments made during fiscal 2008. This plan does not have any
earnings. Mr. Haines is the only Named Executive Officer
who participated in this deferred compensation plan. The
remaining portion of the aggregate balance is the ending balance
of $640,271 in the Non-Qualified Plan for Mr. Haines. |
42
Employment
Agreements
The Corporation currently maintains employment agreements with
certain members of its senior personnel. Of the Named Executive
Officers, the Corporation currently has entered into employment
agreements with Messrs. Gingo, DeSantis and Taylor, the
material terms of which are outlined below. In regards to
Messrs. Rzepka and Belderbos, the Corporation does not
currently maintain employment agreements with such individuals,
however, each have executed
Change-in-Control
Agreements with the Corporation
Employment
Agreement of Mr. Gingo
On December 17, 2007, the Corporation entered into an
employment agreement with Joseph M. Gingo (the Gingo
Agreement) in order to retain him as its President and
CEO, with a term of that ends on December 31, 2010.
Pursuant to the terms of the Gingo Agreement,
Mr. Gingos initial base salary is $700,000, which may
be increased during the term at the discretion of the Board of
Directors. Mr. Gingo is also eligible for participation in
the Corporations bonus program for senior executives, with
an initial target level of 70%, with leverage ranging from zero
to 150% based upon performance metrics to be established by
Mr. Gingo and the Compensation Committee and approved by
the Board of Directors. Additionally, upon commencement of his
employment on January 1, 2008, Mr. Gingo received a
lump sum payment of $750,000, and he is entitled to receive
additional lump sum cash payments of $250,000 on January 1,
2009, January 1, 2010 and December 31, 2010, subject
to his continued employment. In the event that
Mr. Gingos employment is terminated for any reason,
other than termination for Cause (as defined in the Gingo
Agreement) by the Corporation or his voluntary resignation, each
remaining unpaid cash bonus will become immediately due and
payable.
In addition to the lump sum cash payments, Mr. Gingo is
also entitled to receive performance-based restricted stock unit
grants, totaling $1.5 million in initial grant value.
Specifically, the restricted stock units to be issued to
Mr. Gingo are as follows: (1) on February 29,
2008, Mr. Gingo received $333,000 (grant value) of
restricted stock units; (2) on January 10, 2009,
Mr. Gingo shall receive $500,000 (grant value) of
restricted stock units (RSU Award 2); and
(3) on January 10, 2010, Mr. Gingo shall receive
$667,000 (grant value) of restricted stock units (RSU
Award 3). In the event Mr. Gingos employment is
terminated: (i) without Cause or for Good Reason following
a
Change-in-Control
(as such terms are defined in the Gingo Agreement);
(ii) due to Resignation for Cause (as defined in the Gingo
Agreement); or (iii) without Cause prior to a
Change-in-Control,
and either or both RSU Award 2 or RSU Award 3 has not been
issued, then Mr. Gingo is entitled to be paid an amount
equal to the aggregate initial share grant value of the RSU
award(s) not yet granted within 90 days of his termination.
The Corporation agreed to provide Mr. Gingo such
performance-based restricted stock units as a way of making him
whole for the long term incentive compensation that the
Corporation believes would have been payable to Mr. Gingo
had he remained at his prior employer until retirement. In
regards to the February 29, 2008 grant, the Corporation and
Mr. Gingo agreed to have vesting contingent upon the same
performance metrics as under Corporations fiscal 2008
bonus plan. As a result of fiscal 2008 performance,
Mr. Gingo settled approximately 18,735 performance-based
restricted stock units on October, 28, 2008 for a total value of
$288,326.
Each year during the term of the Gingo Agreement, Mr. Gingo
is eligible to receive an award of performance shares as
long-term incentive compensation under the Corporations
2006 Incentive Plan. Specifically, each award of performance
shares shall be based on a target grant value of 200% of
Mr. Gingos base salary, with vesting based upon
performance metrics to be agreed upon by the Compensation
Committee and Mr. Gingo, and approved by the full Board of
Directors. Additionally, Mr. Gingo is entitled to receive
all fringe benefits made generally available to the
Corporations executives (including, without limitation,
the use of a company car, cellular telephone/pager, laptop
computer and printer) in accordance with the Corporations
policies and is eligible to participate in all other employee
compensation and benefit plans available generally to executives
of the Corporation at a level appropriate for his position.
During fiscal 2008, the Compensation Committee determined to
eliminate most perquisites for North American Named Executive
Officers, including the use of company cars. As a result,
Mr. Gingos base salary was increased by $32,000 in
fiscal 2008.
Upon termination of Mr. Gingos employment,
Mr. Gingo may be entitled to receive certain
post-termination benefits depending upon whether such
termination is by the Corporation without Cause, in relation to
a
Change-in-Control,
or by reason of Mr. Gingos death or Disability (as
such terms are defined in the Gingo
43
Agreement). In the event that the Corporation terminates
Mr. Gingos employment without Cause prior to the
expiration of the Gingo Agreement and prior to a
Change-in-Control,
Mr. Gingo shall receive his salary for the remaining term
of his agreement, plus a bonus for each year of the remaining
term, each of which shall be equal to either the greater of:
(i) $490,000; or (ii) the average annual bonus during
the most recent three calendar years of Mr. Gingos
employment or such shorter period during which Mr. Gingo
has been employed. In the event that Mr. Gingo is
terminated by reason of death, the Corporation shall pay a lump
sum amount equal to 60% of Mr. Gingos salary for
24 months to a designated beneficiary. In the event that
Mr. Gingo becomes Disabled during the term of the Gingo
Agreement, the Corporation shall pay Mr. Gingo 60% of his
base salary during the period of his Disability (not to exceed
24 months). After six months of Disability, the Corporation
shall have the right to terminate Mr. Gingo; provided,
however that the 60% payments shall continue for the remainder
of the 24 month period.
The Gingo Agreement also provides that, in the event
Mr. Gingo is terminated following a
Change-in-Control
event for any reason, except: (1) termination by the
Corporation for Cause; (2) termination by reason of death
or Disability; or (3) termination by Mr. Gingo without
Good Reason (as such terms are defined in the Gingo Agreement),
Mr. Gingo shall be paid a lump sum amount equal to:
(i) Mr. Gingos base salary in effect divided by
12 and multiplied by the number of full months remaining on the
term; and (ii) the average annual bonus earned by
Mr. Gingo in the immediately preceding fiscal years
multiplied by the number of fiscal years remaining under the
term when a bonus was not paid. In addition, Mr. Gingo
shall remain entitled to receive any of the aforementioned
unpaid lump sum cash or RSU awards that have not been issued or
paid. Finally, Mr. Gingo shall also continue to receive
certain insurance benefits (reduced to the extent comparable
benefits are actually provided without cost to him by another
source after termination) from the date of termination until
December 31, 2010.
For a period of one year following any termination of
Mr. Gingos employment (which occurs prior to a
Change-in-Control),
Mr. Gingo will not, directly or indirectly, either as an
individual for his own account or as an investor, or other
participant in, or as an employee, agent, or representative of,
any other business enterprise: (1) solicit, employ, entice
take away or interfere with, or attempt to solicit, employ,
entice, take away or interfere with, any employee of the
Corporation; or (2) engage, participate in, finance, aid or
be connected with any enterprise that competes with the business
of the Corporation. The geographical limitations on the
foregoing restrictions on Mr. Gingo include any country in
which the Corporation is doing business as of
Mr. Gingos termination date.
The amounts described above payable under the Gingo Agreement
shall be grossed up to cover certain taxes payable
by him on certain of the amounts paid to him in respect of a
Change-in-Control.
Employment
Agreement of Mr. DeSantis
On January 4, 2006, the Corporation entered into an
employment agreement with Paul F. DeSantis
(the DeSantis Agreement) to retain him as its
Vice President of Finance, Treasurer and CFO. As executed, the
term of the DeSantis Agreement ends on January 31, 2009;
provided, however, that the DeSantis Agreement shall
automatically extend at the end of each month for one additional
month, unless prior notice of termination is given by either
party to constitute at all times a three year agreement. Under
the DeSantis Agreement, no such monthly extension shall occur
after the last day of the calendar month in which
Mr. DeSantis turns 62.
Under the terms of the DeSantis Agreement, Mr. DeSantis is
provided a base salary of $275,000, which may be increased
during the term at the discretion of the Board of Directors.
Mr. DeSantis is also eligible for participation in the
Corporations bonus program for senior executives, with an
initial target level of 50%. Additionally, upon commencement of
his employment, Mr. DeSantis received a grant of 60,000
nonqualified stock options and a bonus of $120,000.
Mr. DeSantis is also entitled to receive all fringe
benefits made generally available to the Corporations
executives in accordance with the Corporations policies
and is eligible to participate in all other employee
compensation and benefit plans available generally to executives
of the Corporation at a level appropriate for his position.
Furthermore, the Corporation agreed to reimburse
Mr. DeSantis for certain reasonable relocation expenses
upon commencement of his employment.
Upon termination of Mr. DeSantis employment,
Mr. DeSantis may be entitled to receive certain
post-termination benefits depending upon whether such
termination is by the Corporation without Cause, in relation to
a
44
Change-in-Control,
or by reason of Mr. DeSantis death or Disability (as
such terms are defined in the DeSantis Agreement). In the event
that the Corporation terminates Mr. DeSantis
employment without Cause prior to the expiration of the DeSantis
Agreement and prior to a
Change-in-Control,
Mr. DeSantis shall receive his salary for the remaining
term of the DeSantis Agreement, plus a bonus for each year of
the remaining term in an amount equal to 50% of his average
annual bonus during the most recent five calendar years of
employment. In the event that Mr. DeSantis is terminated by
reason of death, the Corporation shall pay a lump sum amount
equal to 60% of his salary for a period of 24 months to a
designated beneficiary. In the event that Mr. DeSantis
becomes Disabled during the term of the DeSantis Agreement, the
Corporation shall pay Mr. DeSantis 60% of his base salary
during the period of his Disability (not to exceed
24 months). After six months of Disability, the Corporation
shall have the right to terminate Mr. DeSantis; provided,
however, that the 60% payments shall continue for the remainder
of the
24-month
period.
The DeSantis Agreement also provides that, in the event
Mr. DeSantis is terminated following a
Change-in-Control
event for any reason except: (1) termination by the
Corporation for Cause; (2) termination by reason of death
or Disability; or (3) termination by Mr. DeSantis
without Good Reason, Mr. DeSantis shall be paid a lump sum
amount equal to three times the sum of: (i) the higher of
his annual base salary payable immediately (a) prior to the
event causing the termination or (b) the
Change-in-Control;
plus (ii) an amount equal to the higher of his annual bonus
earned in the fiscal year preceding the date of termination or
the average annual bonus earned by him in the three fiscal years
immediately preceding the
Change-in-Control.
In addition, Mr. DeSantis shall be paid a lump sum amount
equal to the sum of: (1) any unpaid annual incentive
compensation previously awarded for any completed fiscal year
preceding the termination, the payment of which was contingent
only upon continued employment to a subsequent date; and
(2) a pro rata portion of his deemed annual bonus for the
fiscal year in which the termination occurred. Mr. DeSantis
will also continue to receive certain insurance benefits
(reduced to the extent comparable benefits are actually provided
without cost to him by another source after termination) for a
period of 36 months following the date of termination.
For a period of one year following any termination of
Mr. DeSantis employment (which occurs prior to a
Change-in-Control),
Mr. DeSantis shall not, directly or indirectly, either as
an individual for his own account or as an investor, or other
participant in, or as an employee, agent, or representative of,
any other business enterprise: (1) solicit, employ, entice
take away or interfere with, or attempt to solicit, employ,
entice, take away or interfere with, any employee of the
Corporation; or (2) engage, participate in, finance, aid or
be connected with any enterprise that competes with the business
of the Corporation. The geographical limitations on the
foregoing restrictions on Mr. DeSantis include any country
in which the Corporation is doing business as of
Mr. DeSantis termination date.
Employment Agreement of Mr. Taylor
On May 28, 2003, the Corporation entered into an employment
agreement with Jack B. Taylor (the Taylor Agreement)
in order to continue his employment as General
Manager Europe and Asia, which was subsequently
amended on August 31, 2008 in conjunction with
Mr. Taylors appointment as General Manager and Chief
Operating Officer Asia. As amended, the term of the
Taylor Agreement ends on December 31, 2009; however, the
Taylor Agreement may be further amended and extended upon the
mutual agreement of the parties.
As amended, the Taylor Agreement provides Mr. Taylor with a
fixed base salary (as in effect on May 28, 2003), which may
be increased (but not decreased) during the term at the
discretion of the CEO. However, with Mr. Taylor becoming a
Named Executive Officer in fiscal 2008, any increase in his base
salary will be made only at the discretion of the Compensation
Committee. Mr. Taylor is also eligible for participation in
the Corporations bonus program for senior executives and
is also entitled to participate in all employee compensation and
benefit plans available generally to employees of the
Corporation on a level appropriate to his position.
Additionally, Mr. Taylor is also entitled to receive all
employee fringe benefits available general to employees of the
Corporation having comparable levels of responsibility,
including, without limitation, the use of a company car.
Finally, Mr. Taylor is authorized to incur reasonable
expenses for promoting the business of the Corporation,
including expenses for entertainment, travel and similar items,
and shall receive reimbursement for all such expenses.
45
Upon termination of Mr. Taylors employment,
Mr. Taylor may be entitled to receive certain
post-termination benefits depending upon whether such
termination is by the Corporation without Cause, in relation to
a
Change-in-Control,
or by reason of Mr. Taylors death or Disability (as
such terms are defined in the Taylor Agreement). In the event
that the Corporation terminates Mr. Taylors
employment without Cause prior to the expiration of the Taylor
Agreement and prior to a
Change-in-Control,
Mr. Taylor shall receive his salary for the remaining term
of the Taylor Agreement, plus a bonus for each year of the
remaining term in an amount equal to 50% of his average annual
bonus during the most recent five calendar years of employment.
In the event that Mr. Taylors employment is
terminated by reason of his death, the Corporation shall pay, in
addition to all compensation and benefits earned by
Mr. Taylor prior to his death, a lump sum payment equal to
60% of his salary for a period of 24 months to a designated
beneficiary. In the event that Mr. Taylor becomes Disabled
during the term of the Taylor Agreement, the Corporation shall
pay Mr. Taylor 60% of his base salary during the period of
his Disability (not to exceed 24 months). After six months
of Disability, the Corporation shall have the right to terminate
Mr. Taylor; provided, however, that the 60% payments shall
continue for the remainder of the
24-month
period.
The Taylor Agreement also provides that, in the event
Mr. Taylor is terminated following a
Change-in-Control
event for any reason except: (1) termination by the
Corporation for Cause; (2) termination by reason of death
or Disability; or (3) termination by Mr. Taylor
without Good Reason, Mr. Taylor shall be paid (in lieu of
any further salary or severance benefit payments) a lump sum
amount equal to three times the sum of: (i) the higher of
his annual base salary payable immediately prior to (a) the
event causing the termination or (b) the
Change-in-Control;
plus (ii) an amount equal to the higher of his annual bonus
earned in the fiscal year preceding the date of termination or
the average annual bonus earned by him in the three fiscal years
immediately preceding the
Change-in-Control.
In addition, Mr. Taylor shall be paid a lump sum amount
equal to the sum of: (1) any unpaid annual incentive
compensation previously awarded for any completed fiscal year
preceding the termination, the payment of which was contingent
only upon continued employment to a subsequent date; and
(2) a pro rata portion of his deemed annual bonus for the
fiscal year in which the termination occurred. Mr. Taylor
will also continue to receive certain insurance benefits
(reduced to the extent comparable benefits are actually provided
without cost to him by another source after termination) for a
period of 36 months following the date of termination.
For a period of three years following any termination of
Mr. Taylors employment (which occurs prior to a
Change-in-Control),
Mr. Taylor shall not, directly or indirectly, either as an
individual for his own account or as an investor, or other
participant in, or as an employee, agent, or representative of,
any other business enterprise: (1) solicit, employ, entice
take away or interfere with, or attempt to solicit, employ,
entice, take away or interfere with, any employee of the
Corporation; or (2) engage, participate in, finance, aid or
be connected with any enterprise that competes with the business
of the Corporation. The geographical limitations on the
foregoing restrictions on Mr. Taylor include any country in
which the Corporation is doing business as of
Mr. Taylors termination date.
Change-in-Control
Agreements
The Corporation has substantially similar
change-in-control
agreements with Bernard Rzepka and Walter Belderbos
(collectively, the CIC Agreements), in order to
provide them with certain benefits in the event of a
Change-in-Control
(as such term is defined in the CIC Agreements). The CIC
Agreements each provide that, in the event the executive is
terminated following a
Change-in-Control
event for any reason except: (1) termination by the
Corporation for Cause; (2) termination by reason of death
or Disability; or (3) termination by the executive without
Good Reason, the executive will be paid (in lieu of any further
salary or severance benefit payments) a lump sum amount equal to
three times the sum of: (i) the higher of (A) the
executives annual base salary payable immediately prior to
the event causing the termination or (B) the
Change-in-Control;
plus (ii) an amount equal to the higher of (A) the
executives annual bonus earned in the fiscal year
preceding the date of termination or (B) the average annual
bonus earned by the executive in the three fiscal years
immediately preceding the
Change-in-Control
(as such terms are defined in the CIC Agreements). In addition,
the executive will be paid a lump sum amount equal to the sum
of: (1) any unpaid annual incentive compensation previously
awarded for any completed fiscal year preceding the termination,
the payment of which was contingent only upon continued
employment to a subsequent date; and (2) a pro rata portion
of the executives deemed annual bonus for the fiscal year
in which the termination
46
occurred. The executive will also continue to receive certain
insurance benefits (reduced to the extent comparable benefits
are actually provided without cost to the executive by another
source after termination) for a period of 36 months
following the date of termination.
Transition
and Separation Agreements
Transition
Agreement with Mr. Haines
On March 14, 2008, the Corporation entered into a
Transition Agreement with Terry L. Haines, the
Corporations former Chairman, President and CEO, in
connection with his retirement. Under the terms of the
Transition Agreement, Mr. Haines retirement from the
Corporation became effective March 21, 2008 (the
Retirement Date) and his employment agreement dated
January 31, 1996 terminated. On the Retirement Date,
Mr. Haines received a lump sum payment of $2,421,971 in
lieu of his base salary, bonus compensation and certain benefits
under his former employment agreement. In addition to this lump
sum payment, the Corporation also agreed to facilitate payment
or the availability of benefits or amounts due under any benefit
program the Corporation maintained and in which Mr. Haines
participated (including, without limitation, the 1991 Deferred
Compensation Agreement, the Qualified Profit Sharing Plan, the
Non-Qualified Profit Sharing Plan and the SERP) but only to the
extent that such benefits were earned and vested on or before
the Retirement Date. The Transition Agreement also confirmed
that on the Retirement Date, Mr. Haines and his spouse were
entitled to participate in the Corporations retiree
medical program, and in the event such program is terminated or
amended, the Corporation will provide Mr. Haines and his
spouse with comparable replacement coverage. The Corporation
also agreed to continue the insurance policy it currently
maintains on Mr. Haines life with a $1,000,000 death
benefit until the earlier of the payment of all amounts required
under the 1991 Deferred Compensation Agreement or
Mr. Haines death. Additionally, in regards to
Mr. Haines previously granted equity-based awards,
Mr. Haines received: (1) the vesting of all unvested
nonqualified stock options; (2) the vesting of
12,500 shares of the 15,000 shares of time-based
restricted stock granted to Mr. Haines and the dividends
earned and paid with respect thereto under the terms of such
award agreement; (3) continued eligibility for vesting of
45,833 of the 75,000 shares of performance-based restricted
stock granted to Mr. Haines if the performance criteria set
forth in the award agreement is met on April 11, 2010;
(4) continued eligibility for vesting of 22,916 shares
of the 37,500 performance shares granted to Mr. Haines if
the performance vesting criteria set forth in the award
agreement is met on April 11, 2010; and (5) the
vesting of 8,750 of 15,000 time-based restricted stock units
granted to Mr. Haines, to be settled by cash payment on the
first business day of the seventh month following the Retirement
Date based on the fair market value of the Corporations
Common Stock at the close of business on the Retirement Date.
Under the Transition Agreement, Mr. Haines agreed not to
reveal confidential information of the Corporation, and not to
compete with the Corporation for a period of 36 months
after the Retirement Date. Moreover, in consideration of the
receipt of the payments and benefits set forth in the Transition
Agreement, Mr. Haines releases and waives all nature of
employment and discrimination claims against the Corporation.
Separation
Agreement with Mr. Rhodes
On March 14, 2008, the Corporation entered into a
Separation Agreement (the Separation Agreement) with
Mr. Rhodes in connection with his resignation from the
positions of Executive Vice President and Chief Operating
Officer North America. Under the terms of the
Separation Agreement, Mr. Rhodes resignation from the
Corporation became effective April 11, 2008 (the
Separation Date) and his employment agreement dated
January 10, 2002 (as amended on March 19,
2007) terminated. On the Separation Date, Mr. Rhodes
received a lump sum payment of $968,375 in lieu of the base
salary and bonus compensation provided under his former
employment agreement. In addition to this lump sum payment, the
Corporation also agreed to facilitate payment or the
availability of benefits or amounts due under any benefit
program the Corporation maintained and in which Mr. Rhodes
participated (including, without limitation, the Qualified
Profit Sharing Plan and the Non-Qualified Profit Sharing Plan)
but only to the extent that such benefits were earned and vested
on or before the Separation Date. Furthermore, pursuant to the
Separation Agreement, the Corporation also agreed to provide
Mr. Rhodes with medical benefits and access to executive
outplacement services for a period of one year, as well as
compensation for accrued and unpaid leave in the amount of
$15,450. The Separation Agreement also confirmed that the
vesting and exercise of all outstanding equity awards held by
Mr. Rhodes would be determined in accordance with the terms
of
47
the respective award agreements, except that: (1) the
Corporation provided Mr. Rhodes with the automatic vesting
of 7,334 nonqualified stock options, which had not vested as of
the Separation Date; and (2) the Corporation provided
Mr. Rhodes with the automatic vesting of 7,000 shares
of time-based restricted stock on the Separation Date. Pursuant
to the Separation Agreement, Mr. Rhodes was not entitled to
receive any incentive compensation payments for the fiscal
2008 year.
Under the Separation Agreement, Mr. Rhodes agreed not to
reveal confidential information of the Corporation, and not to
compete with the Corporation for a period of 12 months
after the Separation Date. Moreover, in consideration of the
receipt of the payments and benefits set forth in the Separation
Agreement, Mr. Rhodes releases and waives all nature of
employment and discrimination claims against the Corporation,
subject to applicable revocation periods.
Potential
Payments upon Termination or
Change-in-Control
Pursuant to the terms of each Named Executive Officers
respective employment/change-in-control agreement, each Named
Executive Officer is entitled to certain benefits depending upon
the nature of their separation from service with the
Corporation. The table below represents amounts that would be
payable or benefits owed to each of the Named Executive Officers
as of August 31, 2008, upon termination of their employment
as a result of the scenarios indicated in each column. The
amounts were calculated assuming the termination occurred on
August 31, 2008. Mr. Haines and Mr. Rhodes were
no longer with the Corporation as of August 31, 2008,
therefore, a termination analysis for such individuals is
unnecessary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
Termination upon
|
|
|
|
|
|
|
Death or
|
|
|
Termination with
|
|
|
Termination
|
|
|
Change-in-
|
|
Compensation Components
|
|
Retirement(1)
|
|
|
Disability(2)
|
|
|
Cause(3)
|
|
|
Without
Cause(4)
|
|
|
Control(5)
|
|
|
For Joseph M. Gingo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
878,400
|
|
|
$
|
|
|
|
$
|
2,361,249
|
|
|
$
|
3,628,158
|
|
Guaranteed bonus
|
|
$
|
750,000
|
|
|
$
|
750,000
|
|
|
$
|
|
|
|
$
|
1,917,000
|
|
|
$
|
1,917,000
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
38,000
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
516,699
|
|
|
$
|
561,107
|
|
|
$
|
85,981
|
|
|
$
|
85,981
|
|
|
$
|
2,571,365
|
|
Restricted stock units
|
|
$
|
457,564
|
|
|
$
|
461,851
|
|
|
$
|
453,762
|
|
|
$
|
453,762
|
|
|
$
|
461,851
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plan(7)
|
|
$
|
31,768
|
|
|
$
|
31,768
|
|
|
$
|
24,206
|
|
|
$
|
24,206
|
|
|
$
|
31,768
|
|
Non-Qualified
Plan(7)
|
|
$
|
10,167
|
|
|
$
|
10,167
|
|
|
$
|
10,167
|
|
|
$
|
10,167
|
|
|
$
|
10,167
|
|
Section 280G gross up
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,566,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,766,198
|
|
|
$
|
2,693,293
|
|
|
$
|
574,116
|
|
|
$
|
4,852,365
|
|
|
$
|
12,224,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Paul F. DeSantis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
404,400
|
|
|
$
|
|
|
|
$
|
1,204,694
|
|
|
$
|
1,735,552
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
38,000
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
263,393
|
|
|
$
|
521,336
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
908,250
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plan(7)
|
|
$
|
30,468
|
|
|
$
|
69,383
|
|
|
$
|
30,468
|
|
|
$
|
30,468
|
|
|
$
|
69,383
|
|
Non-Qualified
Plan(7)
|
|
$
|
|
|
|
$
|
9,642
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,642
|
|
Section 280G gross up
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
763,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
293,861
|
|
|
$
|
1,004,761
|
|
|
$
|
30,468
|
|
|
$
|
1,235,162
|
|
|
$
|
2,260,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Jack B.
Taylor(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
661,154
|
|
|
$
|
|
|
|
$
|
890,383
|
|
|
$
|
2,825,456
|
|
Health/Welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
17,200
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units
|
|
$
|
777,462
|
|
|
$
|
1,089,900
|
|
|
$
|
613,977
|
|
|
$
|
613,977
|
|
|
$
|
1,089,900
|
|
Stock options
|
|
$
|
51,671
|
|
|
$
|
51,671
|
|
|
$
|
|
|
|
$
|
51,671
|
|
|
$
|
51,671
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Plan(8)
|
|
$
|
6,025,954
|
|
|
$
|
6,025,954
|
|
|
$
|
6,025,954
|
|
|
$
|
6,025,954
|
|
|
$
|
6,025,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,855,087
|
|
|
$
|
7,828,679
|
|
|
$
|
6,639,931
|
|
|
$
|
7,581,985
|
|
|
$
|
10,010,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
Termination upon
|
|
|
|
|
|
|
Death or
|
|
|
Termination with
|
|
|
Termination
|
|
|
Change-in-
|
|
Compensation Components
|
|
Retirement(1)
|
|
|
Disability(2)
|
|
|
Cause(3)
|
|
|
Without
Cause(4)
|
|
|
Control(5)
|
|
|
For Bernard
Rzepka(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,306,123
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units
|
|
$
|
430,954
|
|
|
$
|
693,842
|
|
|
$
|
286,523
|
|
|
$
|
286,523
|
|
|
$
|
829,535
|
|
Stock options
|
|
$
|
82,460
|
|
|
$
|
82,460
|
|
|
$
|
|
|
|
$
|
82,460
|
|
|
$
|
82,460
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
plan(8)
|
|
$
|
341,089
|
|
|
$
|
341,089
|
|
|
$
|
341,089
|
|
|
$
|
341,089
|
|
|
$
|
341,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
854,503
|
|
|
$
|
1,117,391
|
|
|
$
|
627,612
|
|
|
$
|
710,072
|
|
|
$
|
3,559,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Walter
Belderbos(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
760,155
|
(10)
|
|
$
|
1,881,091
|
|
Health/Welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
57,218
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units
|
|
$
|
455,820
|
|
|
$
|
702,864
|
|
|
$
|
327,454
|
|
|
$
|
327,454
|
|
|
$
|
823,480
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
plan(8)
|
|
$
|
1,055,834
|
|
|
$
|
1,055,834
|
|
|
$
|
1,055,834
|
|
|
$
|
1,055,834
|
|
|
$
|
1,055,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,511,654
|
|
|
$
|
1,758,698
|
|
|
$
|
1,383,288
|
|
|
$
|
2,143,443
|
|
|
$
|
3,817,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Corporation considers normal retirement age to be
60 years of age, therefore, Messrs. DeSantis, Rzepka
and Belderbos would not be eligible for retirement at
August 31, 2008. A portion of restricted stock units and
restricted stock awards are released upon retirement. The number
of awards released is determined by the time elapsed since the
date of grant. Upon retirement, the Named Executive Officers
will receive a portion of any outstanding performance-based
awards, based on the time elapsed since the date of grant;
however, such awards will only be released at the end of the
vesting period if the performance criteria has been met. All
options vest upon retirement. This calculation assumes all
options were exercised on date of termination. The value of
equity awards was calculated using the closing price of the
Corporations Common Stock on August 31, 2008. |
|
(2) |
|
The severance amount is a lump sum payment equal to
sixty-percent (60%) of the base salary for twenty-four months.
All time-based restricted stock units and restricted stock
awards are considered fully vested upon death or disability,
therefore the amount reflects the value of all time-based
restricted stock and restricted stock units outstanding for the
Named Executive Officers. Upon death or disability, the Named
Executive Officers will receive a portion of any outstanding
performance-based awards, based on the time elapsed since the
date of grant; however, such awards will only be released at the
end of the vesting period if the performance criteria has been
met. All options vest upon death or disability. This calculation
assumes all options were exercised on date of termination. The
value of equity awards was calculated using the closing price of
the Corporations Common Stock on August 31, 2008. |
|
(3) |
|
The Corporation does not provide for any severance when
termination occurs with cause. Under the 2002 Equity Incentive
Plan, a portion of restricted stock units and restricted stock
awards are released upon termination with cause. The number of
awards released is determined by the time elapsed since the date
of grant. Under the 2006 Incentive Plan, all restricted stock
units and restricted stock awards are cancelled upon termination
with cause. All options, vested and unvested, are forfeited
immediately upon termination with no remaining time to exercise.
The value of equity awards was calculated using the closing
price of the Corporations Common Stock on August 31,
2008. |
|
(4) |
|
The severance benefits for Messrs. Gingo, DeSantis and Taylor
reflect the severance compensation provided under each
executives respective employment agreement. Under the 2002
Equity Incentive Plan, a portion of restricted stock units and
restricted stock awards are released upon termination without
cause. The number of awards released is determined by the time
elapsed since the date of grant. Under the 2006 Incentive Plan,
all restricted stock units and restricted stock awards are
cancelled upon termination without cause. Unvested options will
be forfeited, however, unexercised vested options will remain
exercisable for 90 days past termination. The value of
equity awards was calculated using the closing price of the
Corporations Common Stock on August 31, 2008. |
49
|
|
|
(5) |
|
Severance benefits determined pursuant to each Named Executive
Officers respective employment/change-in-control
agreement. Upon a change-in-control, all equity awards become
fully vested regardless of whether there is a subsequent
termination. All time based restricted stock units and
restricted stock awards are considered fully vested upon a
change-in-control,
therefore, the amount reflects the value of all restricted stock
awards outstanding for the Named Executive Officers. All
performance criteria included in the vesting terms of any
outstanding equity awards are deemed to have been met as of the
date of a
change-in-control.
All options vest immediately upon a
change-in-control.
Amount assumes all options will be exercised on the date of
termination. The value of equity awards was calculated using the
closing price of the Corporations Common Stock on
August 31, 2008. |
|
(6) |
|
In the event of termination following a
change-in-control,
each Named Executive Officer is eligible to 36 months of
life, disability, accident and health insurance without cost.
These amounts are estimated based on current costs for insurance
and could change depending on the actual timing of such an event. |
|
(7) |
|
The balances in the Retirement Plan and Non-Qualified Plan for
each Named Executive Officer who participates become 100% vested
upon eligible retirement disability, death or a
change-in-control. The Corporation considers normal retirement
age to 60, therefore, Mr. DeSantis was not eligible for
retirement at August 31, 2008; however, the potential
vested balance is included. Messrs. Taylor, Rzepka and
Belderbos do not participate in the Retirement or Non-Qualified
plans. For termination with or without cause, the Named
Executive Officers only have rights to the vested balance at the
termination date. The amounts for the Retirement Plan are based
on actual cash contributions into an account for each
participant, with associated earnings. The Non-Qualified Plan is
unfunded and the balance represents the contributions accrued
and the earnings that are estimated based on the earnings of the
Retirement Plan. The amount is estimated based on balances as of
August 31, 2008. |
|
(8) |
|
Values for the pension plans are the present values of the
accumulated benefit as of August 31, 2008. |
|
(9) |
|
The amounts for Messrs. Taylor, Rzepka and Belderbos were
calculated using primarily Euro amounts, which were converted to
U.S. Dollars using a 12-month average rate of 1.497. Certain
amounts for Mr. Taylor were calculated using amounts in
British Pounds, which were converted to U.S. dollars using a
12-month average rate of 1.9932. |
|
(10) |
|
Amounts payable are those the Corporation believes it would owe
Mr. Belderbos under applicable local law. Other than the
CIC Agreement, there are no outstanding employment agreements
with Mr. Belderbos that would provide for payment upon the
termination of his employment. |
50
Director
Compensation Table
The following table sets forth compensation information for each
of the Corporations non-employee Directors. Directors who
are also employees of the Corporation receive no additional
compensation for their services as a Director.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Awards ($)
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name
|
|
in Cash ($)
|
|
|
($)(1)
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation(2)
|
|
|
Total
|
|
|
David G. Birney
|
|
$
|
65,750
|
|
|
$
|
54,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
483
|
|
|
$
|
121,174
|
|
Michael Caporale, Jr.
|
|
$
|
38,000
|
|
|
$
|
15,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
53,739
|
|
Howard R. Curd
|
|
$
|
66,750
|
|
|
$
|
42,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
483
|
|
|
$
|
109,563
|
|
Joseph M.
Gingo(3)
|
|
$
|
20,250
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
20,250
|
|
Willard R.
Holland(4)
|
|
$
|
87,376
|
|
|
$
|
76,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,083
|
|
|
$
|
168,767
|
|
James A. Karman
|
|
$
|
24,750
|
|
|
$
|
71,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,083
|
|
|
$
|
100,992
|
|
James S. Marlen
|
|
$
|
68,750
|
|
|
$
|
76,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,083
|
|
|
$
|
150,141
|
|
Michael A. McManus, Jr.
|
|
$
|
71,250
|
|
|
$
|
42,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
483
|
|
|
$
|
114,063
|
|
Lee D. Meyer
|
|
$
|
39,500
|
|
|
$
|
15,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
55,239
|
|
Dr. Peggy Miller
|
|
$
|
83,000
|
|
|
$
|
76,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,083
|
|
|
$
|
164,391
|
|
James A. Mitarotonda
|
|
$
|
59,250
|
|
|
$
|
61,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
483
|
|
|
$
|
120,793
|
|
Ernest J. Novak, Jr.
|
|
$
|
86,250
|
|
|
$
|
76,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,083
|
|
|
$
|
167,641
|
|
Stanley W. Silverman
|
|
$
|
41,000
|
|
|
$
|
15,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
56,739
|
|
John B. Yasinsky
|
|
$
|
79,875
|
|
|
$
|
76,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,083
|
|
|
$
|
161,266
|
|
As of
August 31, 2008, the Directors held the following
stock-based awards and options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Restricted
|
|
|
Number of Restricted
|
|
|
Number of Options
|
|
Name
|
|
Stock
Awards(5)
|
|
|
Stock
Units(6)
|
|
|
Outstanding
|
|
|
David G. Birney
|
|
|
6,167
|
(7)
|
|
|
334
|
|
|
|
|
|
Michael Caporale, Jr.
|
|
|
2,500
|
(8)
|
|
|
|
|
|
|
|
|
Howard R. Curd
|
|
|
4,167
|
(9)
|
|
|
|
|
|
|
|
|
Joseph M. Gingo
|
|
|
6,167
|
(10)
|
|
|
334
|
|
|
|
|
|
Willard R. Holland
|
|
|
8,667
|
(11)
|
|
|
334
|
|
|
|
6,000
|
(12)
|
James S. Marlen
|
|
|
8,667
|
(11)
|
|
|
334
|
|
|
|
4,500
|
(13)
|
Michael A. McManus, Jr.
|
|
|
4,167
|
(9)
|
|
|
|
|
|
|
|
|
Lee D. Meyer
|
|
|
2,500
|
(8)
|
|
|
|
|
|
|
|
|
Dr. Peggy Miller
|
|
|
8,667
|
(11)
|
|
|
334
|
|
|
|
6,000
|
(12)
|
James A. Mitarotonda
|
|
|
6,167
|
(7)
|
|
|
334
|
|
|
|
|
|
Ernest J. Novak, Jr.
|
|
|
8,667
|
(11)
|
|
|
334
|
|
|
|
|
|
Stanley W. Silverman
|
|
|
2,500
|
(8)
|
|
|
|
|
|
|
|
|
John B. Yasinsky
|
|
|
8,667
|
(11)
|
|
|
334
|
|
|
|
6,000
|
(12)
|
|
|
|
(1) |
|
Stock Award expense includes restricted stock award and
restricted stock unit expense recorded in fiscal 2008, excluding
forfeitures. The expense for restricted stock awards is based on
the grant date market value, based on the closing price of the
Corporations Common Stock on that date. Restricted stock
units are settled in cash at the end of the vesting period based
on the closing price of the Corporations Common Stock on
that date. The Corporation recorded expense through a
mark-to-market adjustment of the units vested to date, based on
the August 31, 2008 closing price of the Corporations
Common Stock and accrued dividends for those units. |
|
(2) |
|
During fiscal 2008, two restricted stock grants for the Board of
Directors vested. Included in this column are the accrued
dividends, which were earned on restricted stock during the
vesting period. |
51
|
|
|
(3) |
|
For Mr. Gingo, all fees reflected were earned for service
as a non-employee Director of the Corporation. Any expense for
stock awards is included in the Summary Compensation Table
located on page 32. |
|
(4) |
|
Mr. Holland deferred $43,688 of fees earned and paid of the
total $87,376 fees. The deferred amount is converted into
deferred directors units, which are equivalent to one share of
the Corporations Common Stock per unit. These units are
calculated at the end of each calendar quarter based on amounts
deferred and dividends earned. |
|
(5) |
|
During fiscal 2008, each Director, excluding Mr. Gingo, was
awarded 2,500 restricted stock awards at a grant date fair value
of $51,100 per Director. These awards vest ratably on the first
three anniversaries of the award grant date. |
|
(6) |
|
Awards of time-based restricted stock units, in which each unit
is equal to the market value of one share of the
Corporations Common Stock. These units vest ratably on the
first three anniversaries of the award grant date. At each
vesting date, one-third of the units will be settled in cash
based on the market price of the Corporations Common Stock
on the vest date. In regards to vesting, 167 restricted units
shall vest and be settled on each of April 11, 2009 and
2010. |
|
(7) |
|
Award of restricted stock, the vesting of which will occur as
follows: (1) on each of February 28, 2009 and 2010,
833 restricted shares shall vest; (2) on April 11,
2009, 833 restricted shares shall vest; (3) on
February 1, 2010, 2,000 restricted shares shall vest; and
(4) on each of April 11, 2010 and February 28,
2011, 834 restricted shares shall vest. |
|
(8) |
|
Award of restricted stock, the vesting of which will occur as
follows: (1) on each of February 28, 2009 and 2010,
833 restricted shares shall vest; and (2) of
February 28, 2011, 834 restricted shares shall vest. |
|
(9) |
|
Award of restricted stock, the vesting of which will occur as
follows: (1) on each of February 28, 2009 and 2010,
833 restricted shares shall vest; (2) on April 11,
2009, 833 restricted shares shall vest; and (3) on each of
April 11, 2010 and February 28, 2011, 834 restricted
shares shall vest. |
|
(10) |
|
Amount does not include grants of 100,000 performance shares and
24,436 performance-based restricted stock units granted to
Mr. Gingo as CEO and which are listed in the Outstanding
Equity Awards at Fiscal Year End Table located on page 38. |
|
(11) |
|
Award of restricted stock, the vesting of which will occur as
follows: (1) on February 1, 2009, 2,500 restricted
shares shall vest; (2) on each of February 28, 2009
and 2010, 833 restricted shares shall vest; (3) on
April 11, 2009, 833 restricted shares shall vest;
(4) on February 1, 2010, 2,000 restricted shares will
vest; and (5) on each of April 11, 2010 and
February 28, 2011, 834 restricted shares shall vest. |
|
(12) |
|
Award of stock options exercisable and outstanding, the
expiration of which will occur as follows: (1) on each of
January 31, 2011 and 2012, 2,000 options will expire; and
(2) on February 2, 2013, 2,000 options will expire. |
|
(13) |
|
Award of stock options exercisable and outstanding, the
expiration of which will occur as follows: (1) on
January 31, 2011, 500 options will expire; (2) on
January 31, 2012, 2,000 options will expire; and
(3) on February 2, 2013, 2,000 options will expire. |
Pursuant to the Amended and Restated Directors Deferred Units
Plan (the Directors Plan), a Director may elect,
prior to the first day of any calendar year, to defer all or a
portion of his or her director fees in such calendar year.
Deferred director fees for each calendar quarter are aggregated
and credited to an account for each participating Director (the
Account) until the last day of each quarter (a
Valuation Date). In addition, on each Valuation
Date, the Account is credited with the amount of any dividends
that would have been paid to the Director had he or she actually
owned shares of the Corporations Common Stock equal to the
number of units in the Account at the time of the dividend
payment. On each Valuation Date, all amounts credited to the
Account are converted into units by dividing the amount in the
Account by the closing price of the Corporations Common
Stock on the Valuation Date. Upon the earlier of a
Directors separation from service as a Director, a change
of control or a Directors disability (each a
Triggering Event), units will be converted into cash
and paid to the Director in a single lump sum no later than
March 15 of the calendar year that begins after the calendar
year during which a Triggering Event occurs. The conversion into
cash will be made using the closing price of the
Corporations Common Stock on the date prior to the date
that payment is made.
52
AUDIT
COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the
Corporations previous or future filings under the
Securities Act of 1933 or the Securities Exchange Act of 1934
that might incorporate this Proxy Statement or future filings
with the SEC, in whole or in part, the following report shall
not be deemed to be incorporated by reference into any such
filing.
The Audit Committee includes the following members of the Board
of Directors: Ernest J. Novak, Jr. (Chair), Howard R. Curd,
James S. Marlen, Dr. Peggy G. Miller, Michael
Caporale, Jr. and Lee D. Meyer.
The Audit Committee has met, reviewed and discussed the audited
consolidated financial statements of the Corporation for the
fiscal year ended August 31, 2008, with the
Corporations management, who represented to the Audit
Committee that the financial statements were prepared in
accordance with accounting principles generally accepted in the
United States. The Audit Committee has discussed with
PricewaterhouseCoopers LLP, the Corporations independent
registered public accounting firm, the matters required to be
discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended and PCAOB
Auditing Standard No. 5 (An Audit of Internal Control Over
Financial Reporting that is Integrated with an Audit of
Financial Statements).
The Audit Committee also has received the written disclosures
and the letter from PricewaterhouseCoopers LLP required by
Independence Standards Board Standard No. 1 (Independence
Discussion with Audit Committee) as adopted by the PCAOB in
Rule 3600T and the Audit Committee has discussed the
independence of PricewaterhouseCoopers LLP with that firm.
Based upon the Audit Committees review and discussions
noted above, the Audit Committee recommended that the
Corporations audited financial statements be included in
the Corporations Annual Report on
Form 10-K
for the fiscal year ended August 31, 2008 for filing with
the SEC.
The Audit Committee:
Ernest J. Novak, Jr., Chair
Howard R. Curd
James S. Marlen
Dr. Peggy G. Miller
Michael Caporale, Jr.
Lee D. Meyer
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected
PricewaterhouseCoopers LLP as the independent registered public
accounting firm to examine the books, records and accounts of
the Corporation and its subsidiaries for the fiscal year ending
August 31, 2009. This selection is being presented to
stockholders for ratification or rejection at the 2008 Annual
Meeting. THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS
RECOMMEND THAT SUCH SELECTION BE RATIFIED.
PricewaterhouseCoopers LLP was the independent registered public
accounting firm of the Corporation for the fiscal year ended
August 31, 2008, and is considered by the Audit Committee
and the Board of Directors to be well qualified. Representatives
of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to make a statement if they desire to do so and will be
available to respond to appropriate questions.
For ratification, this Proposal Two will require the affirmative
vote of the holders of a majority of the shares of Common Stock
having voting power present at the Annual Meeting in person or
represented by proxy. In determining whether Proposal Two has
received the requisite vote for approval, abstentions and broker
non-votes are not counted as having voting power and, therefore,
would be disregarded in determining the outcome of this Proposal
Two. If Proposal Two is rejected, or if PricewaterhouseCoopers
LLP declines to act or becomes incapable
53
of acting as the independent registered public accounting firm
of the Corporation, or if its employment is discontinued, the
Audit Committee will appoint another public auditor, the
continued employment of whom, after the 2008 Annual Meeting of
Stockholders, will be subject to ratification by the
stockholders.
Fees
Incurred by Independent Registered Public Accounting
Firm
Set forth below are the aggregate fees and expenses for
professional services rendered to the Corporation by
PricewaterhouseCoopers LLP, the Corporations independent
registered public accounting firm for fiscal 2008 and fiscal
2007.
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2008
|
|
|
Fiscal 2007
|
|
|
Audit
Fees(1)
|
|
$
|
2,838,000
|
|
|
$
|
2,728,000
|
|
Audit-Related
Fees(2)
|
|
$
|
75,800
|
|
|
$
|
151,400
|
|
Tax
Fees(3)
|
|
$
|
1,522,000
|
|
|
$
|
1,766,000
|
|
All Other Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1) |
|
Comprised of the aggregate fees for professional services
rendered by PricewaterhouseCoopers LLP in connection with its
integrated audit of the Corporations consolidated
financial statements and its internal control over financial
reporting, and its limited reviews of the Corporations
unaudited consolidated interim financial statements included in
the Corporations Quarterly Reports on
Form 10-Q,
as well as statutory audits of the Corporations
subsidiaries and consents to SEC filings. |
|
(2) |
|
Comprised of services rendered by PricewaterhouseCoopers LLP
primarily related to business acquisitions and a review of
subsidiary financial statements. |
|
(3) |
|
Comprised of professional services rendered by
PricewaterhouseCoopers LLP for tax planning and advice and
domestic and international tax compliance and tax return
preparation. |
Pre-Approval
of Fees
The Audit Committee pre-approves the audit and non-audit
services performed by the independent registered public
accounting firm to assure that the provision of the services
does not impair the registered public accounting firms
independence. Unless a type of service to be provided by the
independent registered public accounting firm has received
general pre-approval, it requires specific pre-approval by the
Committee. In addition, any proposed services exceeding
pre-approved cost levels require specific Audit Committee
pre-approval. The Audit Committee has delegated pre-approval
authority to its Chairman, provided that the pre-approval is
reviewed by the full Audit Committee at its next regular meeting.
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE CORPORATIONS CERTIFICATE OF
INCORPORATION.
General
The Corporation is asking stockholders to approve certain
amendments to the Corporations Certificate of
Incorporation.
The Board of Directors has unanimously approved the proposed
amendments to the Corporations Certificate of
Incorporation, which, if adopted, would result in the
declassification of the Corporations Board of Directors.
If the proposed amendments are approved, the proposed Director
nominees will be elected for a term of one year. Directors who
currently have terms that expire after the 2008 Annual Meeting
will not stand for election until the expiration of their
respective terms at the 2009 and 2010 Annual Meetings, as the
case may be. Additionally, in conjunction with the proposed
declassification, the Board of Directors has proposed additional
conforming amendments to Article EIGHTH, in order to
conform the Corporations director removal provisions to
Delaware corporate law. Specifically, the Board of Directors has
proposed that the text of Article EIGHTH be amended to
provide that directors may be removed from office
with or without cause by a vote of the
stockholders. Finally,
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the Board of Directors has proposed the elimination of
Article EIGHTHs supermajority voting provision for
amendments to Article EIGHTH.
Proposal
to Amend Article EIGHTH
The Corporation is seeking stockholder approval to enact
amendments to Article EIGHTH of the Corporations
Certificate of Incorporation in order to eliminate the
classification of the directorships on the Corporations
Board of Directors. At present, the Corporations Board of
Directors is divided into three classes, each with three year
terms. While the Board of Directors believes that the current
policy of director classification provides certain
organizational benefits, such as consistency and continuity of
management, the Board of Directors believes that adherence to
outstanding corporate governance is vital for maximizing
stockholder value. Specifically, it is the opinion of the Board
of Directors that by providing for the annual election of
Directors, all Directors will be subject to an environment of
increased accountability that reflects the Corporations
commitment to the interests of its stockholders.
In conjunction with the proposed declassification, the Board of
Directors has also proposed amendments to Article EIGHTH in
order to clarify that Directors may be removed with
or without cause once the declassification process
is complete. Specifically, pursuant to Delaware corporate law,
Delaware corporations may only limit the ability of stockholders
to remove directors for cause if a corporation has a
classified board structure. For Delaware corporations without a
classified board, however, Delaware corporate law requires that
directors be removable by stockholders with or
without cause. At present, Article EIGHTH of
the Corporations Certificate of Incorporation provides
that Directors may only be removed for cause by
stockholders. Consequently, if the proposed declassification
amendment is passed, Delaware law requires that conforming
amendments be made to amend Article EIGHTH and provide for
the removal of Directors with or without
cause.
Finally, the Board of Directors has proposed an amendment to
Article EIGHTH in order to remove the supermajority voting
requirement for amendments to Article EIGHTH. Currently,
Article EIGHTH provides that all amendments to that article
are subject to a supermajority voting clause, which requires the
affirmative vote of the holders of not less than 80% of the
outstanding voting shares of Common Stock entitled to vote
generally, unless such amendment is recommended by the
affirmative vote of at least two-thirds of the Directors then in
office. Upon review of this supermajority voting provision, the
Board of Directors believes that such provision is no longer in
the best interests of the Corporation, as its original intent of
preserving a classified structure is no longer applicable.
Accordingly, it is the opinion of the Board of Directors that
removal of Article EIGHTHs supermajority voting
restrictions will benefit both the Corporation and its
stockholders.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THESE
AMENDMENTS.
Proposed
Text of Article EIGHTH
If this Proposal Three is approved by the stockholders, new
Article EIGHTH will read in its entirety as follows:
ARTICLE EIGHTH
(A) The number of Directors shall be fixed from time to
time exclusively by the Board of Directors pursuant to
resolution adopted by a majority of the Directors then in
office, provided, however, that the number of Directors shall
not be less than three.
(B) Directors of the Corporation shall be elected annually
and shall hold office until the next annual meeting of
stockholders (provided, however, that the foregoing shall not
have the effect of shortening the term of any Director to which
they have been previously elected) and their successors are
elected, or until earlier resignation, removal from office or
death.
(C) Subject to the rights of holders of any special stock,
vacancies in the Board of Directors, however caused, and newly
created directorships shall be filled solely by a majority vote
of the Directors then in office, whether or not a quorum, or by
a sole remaining Director, and any Director so chosen shall hold
office for a term expiring at the next annual meeting of
stockholders.
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(D) Subject to the rights of holders of any special stock,
any Director or the entire Board of Directors may be removed,
with or without cause, by the affirmative vote of the holders of
a majority of the shares of Common Stock of the Corporation
outstanding and entitled to vote for the election of Directors
at an annual meeting of stockholders.
Required
Vote of Stockholders
Pursuant to the provisions of Subsection (E) of
Article EIGHTH of the Corporations Certificate of
Incorporation and Section 242(b)(1) of the Delaware General
Corporations Law, any amendments proposed to Article EIGHTH
of the Corporations Certificate of Incorporation that have
been recommended by a majority of the members of the Board of
Directors must be approved by the affirmative vote of the
holders of a majority of the shares of Common Stock of the
Corporation outstanding and entitled to vote at the 2008 Annual
Meeting. Consequently, since the proposed amendments to
Article EIGHTH have been unanimously recommended by the
Board of Directors, approval of such amendments must be
confirmed by the affirmative vote of the holders of a majority
of the shares of Common Stock of the Corporation outstanding and
entitled to vote at the 2008 Annual Meeting. Abstentions and
broker non-votes will have the same effect as votes against
Proposal Three for determining whether a majority of the voting
power of the Corporation has approved the amendments to the
Certificate of Incorporation.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On October 21, 2005, the Corporation reached an agreement
with the Barington Group regarding the nomination of persons for
election as Director at the Corporations 2005 Annual
Meeting (the 2005 Agreement). Under the terms of the
2005 Agreement, among other things, the Barington Group withdrew
its notice of intent to nominate persons for election as
Directors at the Corporations 2005 Annual Meeting and
agreed to abide by certain standstill provisions until the
Corporations 2007 Annual Meeting (the Standstill
Period), while the Corporation, through its Board of
Directors, expanded the size of the Board from 10 to 12 and
appointed James A. Mitarotonda, a member of the Barington Group,
to serve as a Class III Director with a term expiring at
the 2007 Annual Meeting.
On October 25, 2006, the Corporation reached another
agreement with the Barington Group regarding the nomination of
persons for election as Director at the Corporations 2006
Annual Meeting (the 2006 Agreement). Under the terms
of the 2006 Agreement, the Barington Group withdrew a notice of
its intent to nominate certain persons for election as Directors
at the 2006 Annual Meeting, agreed to dismiss a lawsuit it had
filed against the Corporation in Delaware seeking to enforce its
rights as a stockholder to inspect and copy certain books,
records and documents of the Corporation, and agreed to abide by
certain standstill provisions until the Corporations 2007
Annual Meeting. The Corporation agreed, among other things, to
nominate James S. Marlen, Ernest J. Novak, Jr., Howard R.
Curd and Michael A. McManus, Jr. as nominees for election
as Class II Directors of the Corporation at the 2006 Annual
Meeting and to redeem the rights issued to the
Corporations stockholders under its Rights Agreement on or
prior to the 2006 Annual Meeting.
On November 15, 2007, the Corporation reached an agreement
with the Barington Group regarding the nomination of persons for
election as Director at the Corporations 2007 Annual
Meeting (the 2007 Agreement). Under the 2007
Agreement, among other things, the Barington Group withdrew its
intent to nominate two persons to the Board at the 2007 Annual
Meeting and the Corporation agreed to nominate
Messrs. Haines, Karman and Mitarotonda to the Board. The
2007 Agreement provided that the Corporation would nominate for
election as a Director at the 2007 Annual Meeting an independent
nominee recommended by the Barington Group. Mr. Silverman
was the nominee recommended by the Barington Group. Upon the
appointment of Mr. Gingo as the Corporations
President and CEO, the Barington Group and the Corporation
agreed that Mr. Gingo would be nominated as a Director in
lieu of Mr. Haines. The 2007 Agreement also required the
announcement of Mr. Haines retirement as CEO,
President and Chairman of the Board, effective no later than
March 1, 2008, and the formation of a special committee
consisting of Messrs. Curd, Yasinsky, Holland, McManus,
Mr. Mitarotonda and the Corporations CEO
(Mr. Gingo), with Mr. Curd serving as Chairman to
explore all strategic alternatives to maximize and improve
shareholder value, including, without limitation, a strategic
acquisition, merger or sale of the Corporation. The 2007
Agreement provided that the Barington Group would vote its
shares of Common Stock of
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the Corporation in favor of the Boards nominees and that
Mr. Mitarotonda would reasonably assist the Corporation in
the solicitation of proxies in favor of the Boards slate
of nominees for election at the 2007 Annual Meeting, including
reasonable participation with the Corporation in meetings with
stockholders and shareholder advisory services. The 2007
Agreement also provided that the Board would increase to
5,000,000 the number of shares authorized to be repurchased
under the Corporations current share repurchase program,
with a goal of repurchasing at least 2,000,000 shares under
the program in the fiscal year ending August 31, 2008,
subject to market conditions and compliance with applicable laws.
Each of the 2005 Agreement, the 2006 Agreement and the 2007
Agreement (collectively, the Barington Agreements)
provided that the Corporation would reimburse the Barington
Group for certain expenses incurred in matters relating to the
Agreements. In
2005-2007,
these reimbursements totaled $150,000, $140,000 and $143,404
respectively.
In general, the Audit Committee is charged under its charter
with reviewing and approving any transaction with a related
party, which may require reporting under Item 404 of
Regulation S-K.
With respect to the Barington Agreements above, however, the
full Board of Directors (other than Mr. Mitarotonda),
approved each of the Agreements after determining such
Agreements to be in the best interests of the Corporations
stockholders. The Audit Committees unwritten policy is to
review any transaction with a related party on a
case-by-case
basis and to determine whether such a transaction is in the best
interest of the Corporation and is on terms that are
substantially similar to transactions with unrelated parties.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporations officers and Directors, and
persons who own more than ten percent (10%) of the
Corporations Common Stock, to file reports of ownership
and changes in ownership with the SEC. To the Corporations
knowledge, based solely on its review of the copies of such
forms received by the Corporation, all such persons timely filed
their respective reports during the year ended August 31,
2008.
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OTHER
MATTERS
The Board of Directors knows of no matters to be presented for
action at the 2008 Annual Meeting other than those described in
this Proxy Statement. The Corporations By-Laws describe
procedures, including minimum notice provisions, for stockholder
nomination of Directors and submission of other stockholder
business to be transacted at any Annual Meeting. A copy of the
pertinent By-Law provisions is available on request to the
Corporate Secretary at A. Schulman, Inc., 3550 West Market
Street, Akron, Ohio 44333. If any such stockholder proposals or
other business to be transacted properly comes before the 2008
Annual Meeting, it is intended that shares represented by
Proxies solicited hereby will be voted in respect thereof in
accordance with the best judgment of the proxy holders.
SOLICITATION
OF PROXIES
The cost of soliciting the accompanying proxy will be borne by
the Corporation. The Corporation may reimburse brokers,
nominees, fiduciaries and custodians their reasonable expenses
for sending proxy material to principals and obtaining their
instructions. In addition to solicitation by mail, proxies may
be solicited in person, by telephone or telegraph or by
officers, Directors and regular employees of the Corporation.
Further, the Corporation has retained Georgeson Inc. to perform
solicitation and tabulation services in connection with this
Proxy Statement. For such services, the Corporation will pay
Georgeson Inc. a fee of approximately $10,000. Additionally,
Georgeson Inc. will be reimbursed for certain out-of-pocket
expenses and indemnified against certain liabilities incurred in
connection with this proxy solicitation.
By order of the Board of Directors,
Secretary
November 24, 2008
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TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
A. SCHULMAN, INC.
This Proxy is Solicited on Behalf of the Board of Directors of A. Schulman, Inc. for the
Annual Meeting of Stockholders to be Held on December 18, 2008
The undersigned hereby appoints JOSEPH M. GINGO, PAUL F. DESANTIS, and DAVID C. MINC and each of
them as Proxies, each with the full power to appoint his substitute, and hereby authorizes them to
represent and to vote all of the shares of Common Stock of A. Schulman, Inc. the undersigned is
entitled to vote at the Annual Meeting of Stockholders of A. Schulman, Inc. to be held on December
18, 2008 and at any adjournments and postponements thereof, in the manner specified on this Proxy
Card and as fully as the undersigned could do if personally present at the meeting. Receipt of a
separate Notice of Annual Meeting and Proxy Statement is acknowledged by return of the Card or by
voting via telephone or Internet in accordance with the instructions on the other side of this
Card.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE,
but
you need not mark any boxes if you wish to vote in accordance with the Board of Directors
recommendations. If you vote by telephone or Internet you do not need
to mail back this Card.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE OR VOTE VIA
TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE OTHER SIDE OF THIS CARD.
This Proxy is solicited on behalf of the Board of Directors of A. Schulman, Inc. This Proxy will
be voted as directed, but if no instructions are specified, this Proxy will be voted FOR
Proposals 1, 2 and 3.
(Continued and to be voted on reverse side.)
A. SCHULMAN, INC. OFFERS STOCKHOLDERS OF RECORD
THREE WAYS TO VOTE YOUR PROXY
Your telephone or Internet vote authorizes the named Proxies to vote your shares in the same
manner as if you had returned your proxy card. We encourage you to use these cost effective and
convenient ways of voting, 24 hours a day, 7 days a week.
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TELEPHONE VOTING
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INTERNET VOTING
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VOTING BY MAIL |
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This method is
available for
residents of the
U.S. and Canada. On
a touch tone
telephone, call
TOLL FREE
1-800-928-0380. You
will be asked
to enter ONLY the
CONTROL NUMBER
shown below. Have
your Proxy Card
ready, then
follow the
prerecorded
instructions.
Available until
11:59 p.m. Eastern
Time on December
17, 2008.
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Visit the Internet
website at
http://proxy.georgeson.com.
Enter the COMPANY NUMBER and
CONTROL NUMBER shown below
and follow the instructions
on your screen. Available
until 11:59 p.m. Eastern
Time on December 17,
2008.
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Simply complete, sign
and date your Proxy
Card and return it in the
postage-paid envelope. If
you are delivering your
Proxy by telephone or the
Internet, please do not
mail your Proxy Card. |
COMPANY
NUMBER
CONTROL NUMBER
▼ TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE ▼
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Please mark
votes as in
this example.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
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1. Election of Directors:
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(1) David G. Birney
(2) John B. Yasinsky
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2. |
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To ratify the selection of
PricewaterhouseCoopers
LLP as
independent registered public
accounting
firm for the year ending
August 31, 2009.
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FOR
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AGAINST
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ABSTAIN
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FOR all nominees,
listed above.
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WITHHOLD
AUTHORITY to vote
lor all nominees
listed above.
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FOR all nominees,
listed above except
as marked to the
contrary below.
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3. |
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To approve the amendments to
A. Schulman Inc.s Certificate of Incorporation.
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FOR
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AGAINST
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ABSTAIN
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To withhold
authority to vote for any individual, mark FOR all
nominees listed above except as marked to the contrary below and write that
nominees name on the line below. |
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4. |
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The Proxies are authorized to vote in
their discretion upon such other business
as may properly come before the meeting. |
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Date
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Signature (if held jointly) |
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Title or Authority |
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NOTE: Please sign exactly as
your name appears hereon. When
shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
trustee, administrator, or
guardian, please give
title as such. It stockholder is a corporation, please sign in full
corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person. |
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This Proxy, when properly executed, will be voted in the manner directed herein.