A. Schulman, Inc. PRER14A
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. )
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þ Preliminary
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o 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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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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Proposed maximum aggregate value of transaction:
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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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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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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, on Thursday, January 10, 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 four (4) Class III Directors for a
three-year term expiring in 2010;
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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, 2008;
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To consider a Stockholder Proposal, if presented at the Annual
Meeting, as described on pages 40 to 41 of the Proxy
Statement; and
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The transaction of any other business as may properly come
before the meeting and any adjournments thereof.
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Stockholders of record at the close of business on
November 27, 2007 are entitled to notice of and to vote at
the Annual Meeting and any adjournments thereof.
By order of the Board of Directors
Gary J. Elek
Secretary
Akron, Ohio
December 19, 2007
Your vote is important. Stockholders are requested to
complete, date, sign and return the enclosed WHITE PROXY in the
envelope provided, which requires no postage if mailed in the
United States.
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.
TABLE OF CONTENTS
3550 West
Market Street
Akron, Ohio 44333
December 19,
2007
The accompanying proxy is solicited by the Board of Directors of
A. Schulman, Inc. (the Corporation) for use at the
2007 Annual Meeting of Stockholders to be held on
January 10, 2008, at 10:00 A.M., local time, and any
adjournments thereof (the 2007 Annual Meeting).
Stockholders of record at the close of business on
November 27, 2007 (the record date) will be entitled to
vote at the 2007 Annual Meeting. On that date, the Corporation
had issued and outstanding 27,954,541 shares of common
stock, $1.00 par value (the Common Stock). Each
such share is entitled to one vote on all matters properly
coming before the 2007 Annual Meeting. At least
13,977,271 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.
This Proxy Statement and the accompanying form of proxy were
first mailed to stockholders on or about December 19, 2007.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the provisions of the Corporations
By-Laws, as amended (the By-Laws), and Restated
Certificate of Incorporation, as amended (the Certificate
of Incorporation), the Board of Directors has fixed the
number of Directors at twelve. The Directors of the Corporation
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 class. The Directors
elected at the 2007 Annual Meeting will be elected to serve for
three-year terms expiring in 2010 and until their respective
successors are duly elected and qualified.
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 the WHITE Proxy Card, it is presently intended that
shares represented by proxies in the enclosed form will be voted
for the election as Directors of the four Class III
nominees named in the table on the following page. 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. Mr. Silverman was recommended
to the Nominating and Corporate Governance Committee by the
Barington Group pursuant to its rights under the 2007 Agreement.
See CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS for
more information on the Barington Group and the 2007 Agreement.
On October 3, 2007, the Corporation received notice from
Starboard Value and Opportunity Master Fund Ltd., a Cayman
Islands exempted company, of its intent to nominate each of
Jeffrey Solomon, Mark Mitchell, Michael Caporale, Jr. and
Lee Meyer for election to the Board of Directors of the
Corporation at the 2007 Annual Meeting.
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 WHITE Proxy Card, you may vote by telephone
or online via the Internet by following the
procedures described on your WHITE
1
Proxy Card. In order to vote online or via telephone, please
have the enclosed WHITE Proxy Card in hand, and call the number
or go to the website listed on the WHITE 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 Internet access
providers and telephone companies. If you hold your shares in
street-name through a broker, you may also be able
to vote by telephone or online by following the instructions in
the materials delivered to you.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THESE
NOMINEES.
All nominees 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 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.
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 November 27, 2007
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Director
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Nominees to Serve Until 2010 Annual Meeting of Stockholders
(Class III)
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Joseph M. Gingo(1)(2)
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President and Chief Executive Officer of the Corporation
(commencing January 1, 2008); formerly, Executive Vice
President, Quality Systems and Chief Technical Officer of The
Goodyear Tire & Rubber Company (tire and rubber
manufacturing) since 2003; Senior Vice President for 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 and Rubber Companys Asia operations, 1995-1998; age 62
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2000
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James A.
Karman(1)(3)
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Retired; formerly, Vice Chairman, RPM International, Inc.
(coatings, sealants and specialty chemicals), 1999-2002;
President of RPM International, Inc., 1978-1999; and Chief
Financial Officer of RPM International, Inc., 1982-1993; age 70
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1995
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2
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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 November 27, 2007
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Director
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James A.
Mitarotonda(3)(4)
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Chairman of the Board, President and Chief Executive Officer of
Barington Capital Group, L.P. (an investment firm) since 1991;
President and Chief Executive Officer from January 2004 to
December 2004 and from May 2006 to April 2007 of Dynabazaar,
Inc.; 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.; and from
January 2001 until May 2004, President and Chief Executive
Officer of MM Companies, Inc. (now known as George Foreman
Enterprises, Inc.); age 53
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2005
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Stanley W. Silverman
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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 and President
Horizon Venture Group LLC (private company investor) since 2005;
formerly, President, Chief Executive Officer and director of PQ
Corporation (global chemical and engineered glass materials),
2000-2005; Vice President and Chief Operating Officer of PQ
Corporation, 1991-2000; age 60.
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Nominee
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Continuing Directors Serving Until 2008 Annual Meeting of
Stockholders (Class I)
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Dr. Peggy
Miller(1)(2)
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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 70
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1994
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Willard R.
Holland(1)(2)(3)(4)(5)
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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 FirstEnergy Corp.s subsidiary,
Pennsylvania Power Company, 1993-1999; Chief Operating Officer,
Ohio Edison Company, 1991-1993; and Senior Vice President,
Detroit Edison Company (electric utility), 1988-1991; age 71
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1995
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John B.
Yasinsky(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, chemical and plastics), 1995-1999; age 68
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2000
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3
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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 November 27, 2007
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Director
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David G.
Birney(1)
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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 company), 1987-2000; age 64
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2006
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Continuing Directors Serving Until 2009 Annual Meeting of
Stockholders (Class II)
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James S.
Marlen(2)(3)
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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, chemical and plastics) and President,
GenCorp. Polymer Products, a subsidiary of GenCorp., Inc.,
1988-1993; age 66
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1995
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Ernest J. Novak,
Jr.(1)(3)
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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 62
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2003
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Howard R.
Curd(2)
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Chairman of the Board and Chief Executive Officer of Uniroyal
Engineered Products, LLC (plastic vinyl coated fabrics), since
2003; Trustee for Brothers Gourmet Coffee, Inc., 2002-2006;
Trustee to DeGeorgio, 2000-2003; Chairman and Chief Executive
Officer Uniroyal Technology Corporation (compound semiconductor,
plastic vinyl coated fabrics and specialty chemical), 1992-2003;
age 68
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2006
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Michael A. McManus,
Jr.(1)
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President, Chief Executive Officer and a director of Misonix,
Inc., (a medical device company) since 1998; President and Chief
Executive Officer of New York Bancorp Inc. from 1991 to 1998 and
a director from 1990 to 1998; age 64
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2006
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Director With a Term Expiring at the 2007 Annual Meeting
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Terry L.
Haines(4)
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President and Chief Executive Officer of the Corporation,
1991-December 31, 2007 and Chairman of the Board since
2006; formerly, Chief Operating Officer of the Corporation,
1990-1991; age 61
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1990
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(1) |
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Member of Compensation Committee |
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Member of Nominating and Corporate Governance Committee |
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Member of Audit Committee |
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Member of Executive Committee |
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Lead Independent Director |
4
Mr. Haines is a director of FirstMerit Corporation and
Ameron International Corporation. Mr. Karman is a director
of RPM International, Inc. Mr. Marlen is a director of
Ameron International Corporation and Parsons Corporation.
Mr. Novak is a director of BorgWarner Inc. and FirstEnergy
Corp. Mr. Yasinsky is a director of CMS Energy Corporation
and Consumers Energy Co. Mr. Mitarotonda is a director of
The Pep Boys Manny, Moe & Jack and Griffon
Corporation. Mr. Birney is a director of Tronox, Inc.
Mr. McManus is a director of American Home Mortgage
Investment Corp., Novavax, Inc. and Misonix, Inc.
Mr. Silverman is a director of C&D Technologies, Inc.
In August of 2002, Uniroyal Technical Corporation
(UTC), of which Mr. Curd was Chairman, Chief
Executive Officer and a director, 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 his positions with UTC and became Chairman and Chief
Executive Officer of the acquiring company, Uniroyal Engineered
Products, LLC.
Attendance
at Meetings
The Board of Directors held 11 meetings during the year ended
August 31, 2007. 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, 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 Annual Meeting of Stockholders. All of the members of the
Board of Directors attended the Annual Meeting of Stockholders
held on December 7, 2006.
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 Corporations
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
Directors other than Mr. Haines, are independent under
applicable NASDAQ standards for the fiscal year ending
August 31, 2007.
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David G. Birney
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James A. Karman
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Michael A. McManus, Jr.
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Howard R. Curd
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James S. Marlen
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Ernest J. Novak, Jr.
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Joseph M. Gingo
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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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As of December 17, 2007, Mr. Gingo is no longer an
independent director as a result of his appointment, effective
January 1, 2008, as the Corporations President and
Chief Executive Officer.
Board
Committees
The Board of Directors has established the following standing
Committees: Executive Committee, Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee.
5
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 make 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 held no formal meetings during the year
ended August 31, 2007.
Audit
Committee
The Audit Committee operates under a written charter that
reflects the corporate governance reforms embodied by the
Securities and Exchange Commission (the SEC) and the
rules and listing standards of NASDAQ. The Audit Committee
consists of Messrs. Novak (Chair), Holland, Karman, Marlen,
Mitarotonda, and Yasinsky. The primary purpose of the Audit
Committee is to assist the Board in fulfilling its
responsibility to oversee the accounting and financial reporting
process 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 other users
thereof; the Corporations compliance with legal and
regulatory requirements; the qualifications, independence and
performance of, and the Corporations relationship with,
its independent registered public accounting firm; the
performance of the Corporations systems of internal
accounting and financial controls; the performance of the
Corporations systems of internal auditing; and the annual
independent audit of the Corporations financial statements
and 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 independent registered public accounting firm
before publication; (ii) reviewing with management and the
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 and the
Chief Financial Officer any issues pertaining to the
certifications required to accompany the filing of the
Corporations Annual Report on
Form 10-K
and 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
compatibility of the independent registered public accounting
firm non-audit services with the independent registered public
accounting firms independence; (viii) reviewing and
approving in advance the annual audit plan and scope of work of
the independent registered public accounting firm and reviewing
with the independent registered public accounting firm any
audit-related concerns and managements response;
(ix) being directly responsible for the appointment,
compensation, retention and oversight 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.
6
The Audit Committee held a total of 6 meetings during the year
ended August 31, 2007. The Audit Committee reviewed with
PricewaterhouseCoopers LLP and the Corporations 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. Holland (Chair), Birney, Gingo, Karman,
McManus and Novak and Dr. Peggy Miller. The Compensation
Committee has overall responsibility for executive succession
planning (except for the Chief Executive Officer, 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 (i) setting the salary and other
compensation of the Chief Executive Officer and the other
executive officers of the Corporation; (ii) reviewing
incentive compensation pools for the Corporation prior to the
annual determination of individual cash and equity based
incentive awards; (iii) approving all employment or
change-in-control
severance agreements, annuity contracts and benefit or
perquisite plans or programs (other than broad-based employee
plans or programs) proposed for executive officers and certain
managers; (iv) 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 (v) administering,
implementing and interpreting the Corporations long term
incentive plans, including stock option, restricted stock, stock
appreciation right, performance incentive, and similar plans and
arrangements. 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 the
Compensation Discussion and Analysis beginning on page 13
of this Proxy Statement.
The Compensation Committee held 6 meetings during the fiscal
year ended August 31, 2007. 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 purpose of the Nominating and Corporate Governance
Committee is 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 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. Curd, Gingo, 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 Committee considers a variety of factors, including
7
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 of Directors. The
Board of Directors Candidate Guidelines are attached to the
Corporations Corporate Governance Guidelines, a copy of
which is available on the Corporations website at
www.aschulman.com. The Committee also considers whether
the 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 3
meetings during the fiscal year ended August 31, 2007. 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.
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.
Executive
Sessions
Executive sessions of non-management Directors (consisting of
all Directors other than Mr. Haines) are regularly held
after each meeting of the Board of Directors, including meetings
during the fiscal year ended August 31, 2007.
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 Corporate 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 Corporate
Secretary forwards those communications directly to the Board
member so addressed.
8
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of
November 27, 2007 (except as otherwise indicated by
footnote) in respect of 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 five percent 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
|
|
|
Outstanding
|
|
|
Directors, Executive Officers and Nominees
|
Terry L.
Haines(1)(2)
|
|
|
399,333
|
|
|
|
1.42
|
%
|
Ronald G.
Andres(1)(2)(3)
|
|
|
119,433
|
|
|
|
*
|
|
Paul F.
DeSantis(1)(2)(4)
|
|
|
60,396
|
|
|
|
*
|
|
John M.
Myles(1)
|
|
|
34,925
|
|
|
|
*
|
|
Barry A.
Rhodes(1)(2)
|
|
|
92,033
|
|
|
|
*
|
|
David G.
Birney(2)(5)
|
|
|
7,000
|
|
|
|
*
|
|
Howard R.
Curd(2)
|
|
|
4,500
|
|
|
|
*
|
|
Joseph M.
Gingo(1)(2)
|
|
|
17,000
|
|
|
|
*
|
|
Willard R.
Holland(1)(2)
|
|
|
20,000
|
|
|
|
*
|
|
James A.
Karman(1)(2)
|
|
|
21,000
|
|
|
|
*
|
|
James S.
Marlen(1)(2)
|
|
|
19,500
|
|
|
|
*
|
|
Dr. Peggy
Miller(1)(2)
|
|
|
18,000
|
|
|
|
*
|
|
James A.
Mitarotonda(2)(6)(10)
|
|
|
2,371,954
|
|
|
|
8.48
|
%
|
Michael A. McManus,
Jr.(2)
|
|
|
2,500
|
|
|
|
*
|
|
Ernest J. Novak,
Jr.(2)
|
|
|
12,200
|
|
|
|
*
|
|
Stanley W. Silverman
|
|
|
|
|
|
|
*
|
|
John B.
Yasinsky(1)(2)(7)
|
|
|
19,000
|
|
|
|
*
|
|
All Directors and Executive Officers as a group
(19 persons)(1)(2)
|
|
|
3,286,973
|
|
|
|
11.62
|
%
|
5% Or Greater Stockholders
|
Temujin Fund Management,
LLC(8)
|
|
|
2,696,226
|
|
|
|
9.65
|
%
|
140 Broadway, 45th Floor
New York, New York 10005
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors
Inc.(9)
|
|
|
2,640,475
|
|
|
|
9.45
|
%
|
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
|
|
|
|
|
|
|
|
|
Barington Companies Offshore Fund, Ltd.
|
|
|
2,506,362
|
|
|
|
8.97
|
%
|
Barington Companies Equity Partners, L.P., Barington
Investments, L.P., James A. Mitarotonda, RJG Capital Partners,
L.P., D.B. Zwirn Special Opportunities Fund, L.P., D.B. Zwirn
Special Opportunities Fund, Ltd and HCM/Z Special Opportunities
LLC(10)
|
|
|
|
|
|
|
|
|
Ramius Capital Group, L.L.C.
|
|
|
2,062,795
|
|
|
|
7.38
|
%
|
Parche, LLC; Starboard Value and Opportunity Master
Fund Ltd.;
Starboard Value & Opportunity Fund, LLC; RCG Starboard
Advisors, LLC; C4S% Co., L.L.C.; Peter A. Cohen; Morgan B.
Stark; Jeffrey M. Solomon; Thomas W. Strauss, Michael Caporale,
Jr.; Lee Meyer and Mark
Mitchell(11)
|
|
|
|
|
|
|
|
|
Barclays Global Investors NA
|
|
|
1,420,102
|
|
|
|
5.08
|
%
|
Barclays Global Fund Advisors; Barclays Global Investors,
Ltd; Barclays Global Investors Japan Trust and Banking Company
Limited; and Barclays Global Investors Japan
Limited(12)
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Less than 1% of the shares outstanding |
|
(1) |
|
Includes the following number of shares that are not owned, but
can be purchased within sixty 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: 86,667 by Terry L. Haines;
64,333 by Ronald G. Andres; |
9
|
|
|
|
|
43,333 by Barry A. Rhodes; 40,000 by Paul F. DeSantis; 20,000 by
John M. Myles; 6,000 by each of Dr. Peggy Miller, James A.
Karman, Willard R. Holland, John B. Yasinsky and Joseph M.
Gingo; 4,500 by James S. Marlen; and 332,832 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: 90,000 for Terry L. Haines; 26,000
for Ronald G. Andres; 33,000 for Barry A. Rhodes; 18,000 for
Paul F. DeSantis; 9,000 for each of Dr. Peggy Miller,
Willard R. Holland, James A. Karman, James S. Marlen,
Ernest J. Novak, Jr., John B. Yasinsky and Joseph M. Gingo;
4,500 for each of David G. Birney and James A. Mitarotonda;
2,500 for each of Michael A. McManus, Jr. and Howard R. Curd;
and 264,000 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. Andres owns 5,300 shares jointly with his spouse,
and he has shared voting and dispositive power with respect to
such shares. |
|
(4) |
|
Mr. DeSantis owns his shares jointly with his spouse, and
he has shared voting and dispositive power with respect to such
shares. |
|
(5) |
|
Mr. Birney owns 2,500 shares jointly with his spouse,
and he has shared voting and dispositive power with respect to
such shares. |
|
(6) |
|
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. Also, 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. |
|
(7) |
|
Mr. Yasinsky owns 2,000 shares jointly with his
spouse, and he has shared voting and dispositive power with
respect to such shares. |
|
(8) |
|
As reported in a Schedule 13G filed with the SEC on
June 19, 2007, Temujin Fund Management, LLC (Temujin
Management), Thales Fund Management, LLC
(Thales), Marek T. Fludzinski and Marco Battaglia
beneficially own, in the aggregate, 2,696,226 shares of
Common Stock. According to the Schedule 13G, 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 and Marco Battaglia, who
serves as chief executive officer and chief investment officer
of Temujin Management. |
|
(9) |
|
As reported in a Schedule 13G/A dated February 1, 2007
and filed with the SEC on February 9, 2007, Dimensional
Fund Advisors Inc. (Dimensional) is the
beneficial owner of and 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 2,640,475 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, 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 |
10
|
|
|
|
|
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 the
Schedule 13G/A. |
|
(10) |
|
As reported in a Schedule 13D/A filed with the SEC on
November 19, 2007, Barington, Barington Fund, Barington
Investments, Barington Advisors, Barington Investors, Barington
Offshore, Barington Capital, LNA, Mr. Mitarotonda, RJG
Capital Partners, L.P. (RJG Partners), RJG Capital
Management, LLC (RJG Management), Ronald J. Gross
(Gross), D.B. Zwirn Special Opportunities Fund, L.P.
(Zwirn Fund L.P.), D.B. Zwirn Special Opportunities
Fund, Ltd. (Zwirn Fund Ltd.), HCM/Z Special
Opportunities LLC (HCM/Z), D.B. Zwirn &
Co., L.P.(Zwirn & Co.), DBZ GP, LLC
(DBZ), Zwirn Holdings, LLC (Zwirn
Holdings), and Daniel B. Zwirn (Zwirn)
beneficially own, in the aggregate, 2,506,362 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, Barington Investments
beneficially owns 484,713 shares, RJG Partners beneficially
owns 15,000 shares, Zwirn Fund L.P. beneficially owns
16,573 shares, Zwirn Fund Ltd. beneficially owns
73,423 shares, and HCM/Z beneficially owns
29,412 shares. Mr. Mitarotonda also beneficially owns
4,500 restricted shares of Common Stock 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.
Also, 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 4,500 shares of restricted
Common Stock beneficially owned by him. Mr. Gross is the
managing member of RJG Management, which in turn is the general
partner of RJG Partners, and, accordingly, Mr. Gross and
RJG Management each may be deemed to have the power to vote and
dispose of the shares owned by RJG Partners. Mr. Gross
disclaims beneficial ownership of such shares except to the
extent of his pecuniary interest therein. Mr. Zwirn is the
managing member of Zwirn Holdings, which is the managing member
of DBZ, which is the general partner of Zwirn & Co.,
which is the manager of each of Zwirn Fund L.P., Zwirn
Fund Ltd., HCM/Z, and, accordingly, Mr. Zwirn, Zwirn
Holdings, DBZ and Zwirn & Co. each may be deemed to
have the power to vote and dispose of the shares owned by Zwirn
Fund L.P., Zwirn Fund Ltd. and HCM/Z. Mr. Zwirn
disclaims beneficial ownership of such shares except to the
extent of his pecuniary interest therein. 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. The principal business address for each
of RJG Partners, RJG Management and Mr. Gross is
11517 West Hill Drive, North Bethesda, Maryland 20852.
Zwirn Fund L.P.s principal business address is
745 Fifth Avenue, 18th Floor, New York, New York
10151. Zwirn Fund Ltd.s principal business address is
c/o Goldman
Sachs (Cayman) Trust, Limited, P.O. Box 896 GT, George
Town, Harbour Centre, 2nd Floor, Grand Cayman, Cayman
Island, British West Indies. HCM/Zs principal business
address is
c/o Highbridge
Capital Corporation, Corporate Centre, 4th Floor, 27
Hospital Road, Grand Cayman, Cayman Islands, British West
Indies. The principal business address for each of
Zwirn & Co., DBZ, Zwirn Holdings and Mr. Zwirn is
745 Fifth Avenue, 18th Floor, New York, New York 10151. |
|
(11) |
|
As reported in a Schedule 13D filed with the SEC on
October 22, 2007, Parche, LLC (Parche),
Starboard Value and Opportunity Master Fund Ltd.
(Starboard), Starboard Value & Opportunity
Fund, LLC (Starboard LLC), RCG Starboard Advisors,
LLC (RCG), Ramius Capital Group, L.L.C.
(Ramius), C4S & Co., L.L.C.
(C4S), Peter A. Cohen, Morgan B. Stark, Jeffrey M.
Solomon, Thomas W. Strauss, Michael Caporale, Jr., Lee
Meyer and Mark R. Mitchell beneficially own, in the aggregate,
2,062,795 shares of Common Stock. As disclosed in the
Schedule 13D, Parche beneficially owns 327,738 shares,
Starboard |
11
|
|
|
|
|
beneficially owns 998,073 shares and Starboard LLC
beneficially owns 736,984 shares. RCG is the managing
member of Parche and Starboard LLC, and the investment manager
of Starboard. RCG may be deemed the beneficial owner of the
shares owned by Parche, Starboard and Starboard LLC. Ramius is
the sole member of RCG and may be deemed the beneficial owner of
the shares owned by Parche, Starboard and Starboard LLC. C4S is
the managing member of Ramius. C4S may be deemed the beneficial
owner of the shares owned by Parche, Starboard and Starboard
LLC. Messrs. Cohen, Stark, Strauss and Solomon are the
managing members of C4S. Messrs. Cohen, Stark, Strauss and
Solomon may be deemed the beneficial owners of the shares owned
by Parche, Starboard and Starboard LLC. None of
Messrs. Caporale, Jr., Meyer and Mitchell directly own
shares of Corporation. As members of the group for the purposes
of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, Messrs. Caporale, Jr., Meyer and Mitchell may
be deemed to be beneficial owners of the shares owned by Parche,
Starboard and Starboard LLC. Each of Messrs. Caporale, Jr.,
Meyer and Mitchell disclaim beneficial ownership of such shares.
The principal business office of each of Parche, Starboard LLC,
RCG, Ramius, C4S and Messrs. Cohen, Stark, Strauss, Solomon
and Mitchell is 666 Third Avenue, 26th Floor, New York, New York
10017. The principal office of Starboard is
c/o Citco
Fund Services (Cayman Islands) Limited, Corporate Center,
West Bay Road, Grand Cayman, Cayman Islands, British West
Indies. The principal business office of Mr. Caporale, Jr.
is 3668 Shetland Trail, Richfield, Ohio 44286. The principal
business office of Mr. Meyer is 208 Shawna Drive, Kearney,
Missouri 64060. |
|
(12) |
|
As reported in a Schedule 13G filed with the SEC on
January 23, 2007, Barclays Global Investors, NA, Barclays
Global Fund Advisors, Barclays Global Investors, Ltd.,
Barclays Global Investors Japan Trust and Banking Company
Limited and Barclays Global Investors Japan Limited beneficially
own, in the aggregate, 1,420,103 shares of Common Stock. As
disclosed in Schedule 13G, Barclays Global Investors, NA
beneficially owns 628,510 shares, Barclays Global
Fund Advisors beneficially owns 775,201 shares and
Barclays Global Investors, Ltd. beneficially owns
15,391 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 is Ebisu Prime Square Tower, 8th Floor, 1-1-39
Hiroo Shibuya-Ku, Tokyo
150-0012
Japan. The principal business address of Barclays Global
Investors Japan Limited is Ebisu Prime Square Tower, 8th Floor,
1-1-39 Hiroo Shibuya-Ku, Tokyo
150-8402
Japan. |
Equity
Compensation Plan Information
The Corporations 2006 Incentive Plan authorizes the
Corporation to issue stock to its employees (including Named
Executive Officers) 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, 2007, 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
|
|
|
882,710(2
|
)
|
|
$
|
19.10(3
|
)
|
|
|
2,959,883
|
|
Equity compensation plans not approved by security holders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
882,710
|
|
|
$
|
19.10
|
|
|
|
2,959,883
|
|
|
|
|
(1) |
|
The outstanding options do not have dividend equivalent rights
and are not transferable for value. |
12
|
|
|
(2) |
|
Includes 69,000 performance shares granted pursuant to the 2006
Incentive Plan. The performance shares will vest, if at all, on
April 11, 2010, only if the fair market value of the
Corporations common stock relative to the Peer Group on
April 11, 2010 is above the 75th percentile. |
|
(3) |
|
The weighted average exercise price does not account for the
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 2007 compensation determinations were made by the
Compensation Committee in respect of the executive officers who
are identified in the Summary Compensation Table
(Named Executive Officers). For purposes of this
discussion, references to we, our and
us refer to the Corporation.
Compensation
Committee Governance
The compensation program for our 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 7 of this Proxy Statement, the duties of the
Compensation Committee include, among other things, determining
the base salary levels and bonuses for our Named Executive
Officers, approving the design and awards of all other elements
of our executive compensation program, evaluating the
performance of our Named Executive Officers, executive officer
succession planning and addressing other matters related to
executive compensation.
The members of the Compensation Committee and the
Committees specific functions are described on page 7
of this Proxy Statement. The Compensation Committee Charter is
posted on our website at www.aschulman.com. 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.
Compensation
Philosophy and Objectives
In determining the amount and composition of executive
compensation, the Compensation Committees goal is to
provide a 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 opportunity
for our executive officers at their targeted compensation level.
The Compensation Committee provides alignment with stockholders
through the use of performance-based, at-risk compensation pay.
Retention is provided through the use of a balanced pay mix and
equity vehicles. In order to emphasize pay that is dependent on
performance and more aligned with stockholders, we have adopted
a pay strategy as follows:
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Position base salaries between the 40th and
50th percentile of market levels;
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|
Provide a median target annual incentive opportunity, with
upside and downside leverage depending on actual corporate and
personal performance achieved; and
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|
|
Position target long-term incentive opportunities at the
50th 60th percentile of market 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 the program target
compensation levels at rates that are reflective of current
market practices. The Compensation Committee believes that
offering performance-based, market-comparable pay opportunities
for our Named Executive Officers, bearing in mind the relative
performance and size of the Corporation, allows us to maintain a
stable, successful management team.
13
The Compensation Committee has full discretion to adjust our
compensation program, or any element of the compensation
program, at any time. It has been the practice of the
Compensation Committee to discuss its compensation
determinations with respect to the Chief Executive Officer
(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 the compensation program. For example, on
the recommendation of the Compensation Committee, the full Board
of Directors determined that 100% of the CEOs equity award
for the 2007 fiscal year would have market performance-based
vesting (as compared to 50% market performance based vesting and
50% time-based vesting for all other executive officers). In
making this decision, the Board determined that a grant of 100%
performance-based awards to the CEO would provide for greater
focus on the Corporations performance.
Compensation
Consultant
As permitted by the Compensation Committee Charter, the
Committee, in consultation with management, retained Mercer,
Inc. (Mercer) as its outside compensation consultant
to assist in the evaluation of compensation levels and program
design for the Named Executive Officers during the 2007 fiscal
year. Mercer was specifically engaged to provide the
Compensation Committee with market trend information, data and
recommendations to assist the Committee in making informed
decisions, staying abreast of changing market practices and
balancing external forces with our compensation philosophy and
objectives.
The Compensation Committee, considering recommendations from
management, determined the scope of work to be performed by the
outside compensation consultant. At the direction of the
Compensation Committee, Mercer worked with management to gather
data used in preparing an executive compensation program
analysis for review by the Compensation Committee. The
Compensation Committee has the sole authority to retain and
terminate the outside compensation consultant.
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 to be
appropriate and in our best interests. No such delegations were
made in the last fiscal year.
Setting
Executive Compensation
At its first regularly scheduled meeting of each fiscal year
(typically in 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 individual goals and corporate performance targets
established therefor 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.
To assist the Compensation Committee in making compensation
decisions, competitive market data was provided periodically
during the 2007 fiscal year by the outside compensation
consultant. The data provided 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 is 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 believes that this group represents an appropriate
comparator set for establishing competitive market compensation
levels and performance comparisons due to its similarities in
industry and general size.
14
The Compensation Committee reviews and approves the selection of
companies used for compensation comparison purposes on an annual
basis. In fiscal year 2007, the peer group consisted of the
following 22 companies (the Peer Group):
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Albemarle
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Lubrizol
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Sensient Technologies
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Arch Chemicals
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Minerals Technologies
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Sigma-Aldrich
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Chemtura Corporation
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Myers Industries
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Spartech
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Cytec
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Newmarket
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Stepan
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Ecolab
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OM Group
|
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Valhi
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Ferro
|
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Omnova Solutions
|
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Valspar
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H.B. Fuller
|
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Polyone
|
|
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Intl Flavors & Fragrances
|
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RPM International
|
|
|
The compensation survey used for the compensation comparisons
consists of
U.S.-based
manufacturing companies of a comparable size to the Corporation.
Our officers are benchmarked against a market pay composite
level that consists of a 50% weighting on the peer group and 50%
on the compensation surveys.
The Compensation Committee analyzes the market composite
compensation data to ensure that the executive compensation
program as a whole, and the principal components of the program,
are competitive and consistent with the form and levels of
compensation paid by our competitors. The Compensation
Committees general approach is to target a pay opportunity
at the median of the peer group, with additional considerations
applied as needed by the Compensation Committee. Such
considerations could include competitive pressures, recognition
of specific achievements, or other pertinent items.
After reviewing executive officer pay in October 2006, the
Compensation Committee determined that the current total direct
compensation (base salary plus target bonus opportunity and
long-term incentive grant values) was under the market median
for the CEO, Chief Financial Officer, and Chief Operating
Officer North America. In order to bring their pay levels more
in line with our pay strategy, the Compensation Committee
provided the compensation outlined in the Summary
Compensation Table and long-term incentive grants as
outlined in the Grant of Plan-Based Awards table.
Components
of Executive Compensation
The key components of our executive compensation program, each
of which is addressed separately below, are:
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base salary;
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|
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annual bonuses;
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long-term incentives; and
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|
|
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 does not have a pre-established policy or target for
the allocation between cash and non-cash compensation or
short-term and long-term compensation. Instead, the Compensation
Committee annually reviews the Peer Group data provided by its
independent compensation consultant and the current facts and
circumstances relating to the Corporation and our executive
officers to determine an appropriate mix of compensation for the
Named Executive Officers that furthers our compensation
philosophy and objectives.
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. Determination of adjustments to base salaries are
driven primarily
15
by competitive positioning and our profitability. Where
corporate profitability has not justified raises, the
Compensation Committee has, in the past, frozen the base
salaries of its executive officers. Taking these considerations
into account, in October 2006, the Compensation Committee
awarded base salary increases as follows:
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|
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Named Executive Officer
|
|
2007 Raise
|
|
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Terry L. Haines,
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$
|
54,875
|
|
President, Chief Executive
Officer and Chairman of the Board
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|
|
|
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Paul F. DeSantis,
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$
|
25,000
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Chief Financial Officer,
Vice President and Treasurer
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|
|
|
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Barry A. Rhodes,
|
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$
|
25,000
|
|
Executive Vice President, Chief
Operating Officer, North America
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|
|
|
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Ronald G. Andres,
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$
|
13,062
|
|
Vice President and General Manager
of Engineered Compounds
|
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John M. Myles,
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$
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8,805
|
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Former Vice President
Research and Development
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In fiscal 2006, base salaries for all of our Named Executive
Officers were below the Peer Group median. The pay increases for
fiscal 2007 moved the officers base salary compensation
generally within the targeted 40th to 50th percentile
of market, consistent with our overall pay philosophy.
Individual performance did not effect the size of the raises
granted to the Named Executive Officers.
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 primary importance during the coming year and
motivate executive officers to achieve these goals. The annual
bonus program is designed to reward our Named Executive Officers
based on 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.
Under the annual bonus program, the Compensation Committee
establishes the award formulas and the performance goals to be
measured to determine the amount of 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 achievement of these performance goals is unknown
at the time they are established by the Compensation Committee.
For fiscal year 2007, the Compensation Committee selected
(1) net income from operations (excluding one-time or
extraordinary items), (2) cash flows from operations and
(3) return on invested capital as the corporate performance
goals.
In October 2006, the Compensation Committee established a total
target bonus award for each Named Executive Officer for fiscal
year 2007 performance. The total target award for each Named
Executive Officer was set at a level that was approximately
equal to the average award provided to executives holding
similar positions in the Peer Group. The bonus awards were
measured by reference to threshold, target and maximum
percentages of salary for each Named Executive Officer and are
disclosed in the Grant of Plan Based Awards table.
Under our fiscal year 2007 bonus plan, one-half of the total
target award potential for each Named Executive Officer was
based on our financial performance, measured by levels of net
income, cash flows from operations and return on invested
capital. For Mr. Haines and Mr. DeSantis, the
corporate financial performance portion of the bonus was based
on our consolidated worldwide operations. For each of the other
Named Executive Officers, the corporate financial performance
portion of the bonus was based on our North American
segments performance.
16
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 correlates strongly with the Corporations stock
price, it was given relatively greater weight (20% of the total
award) as compared to cash flows from operations and return on
invested capital (15% of total award). The Compensation
Committee believes that its targets are not unreasonably
difficult to achieve but that they cannot be reached without
successful management performance.
For 2007, cash flow from operations was the only performance
target that was achieved. For North American operations, the
maximum level of cash flow from operations was achieved, thereby
entitling executive officers to a bonus of approximately 23% of
their total target bonus. Cash flow from operations on a
consolidated worldwide basis reached the threshold level,
entitling the Chief Executive Officer and the Chief Financial
Officer to an award of approximately 7.5% of their target bonus.
The remaining one-half of the total target award potential was
based upon the individual performance of each Named Executive
Officer, as measured against various personal goals established
by the Compensation Committee for the Chief Executive Officer
and by the Chief Executive Officer (and approved by the
Compensation Committee) for all other Named Executive Officers.
The Compensation Committee believes that having a mix of
objective and subjective goals provides the Chief Executive
Officer with the flexibility to effectively manage his direct
reports, especially in circumstances where strictly objective
performance targets may be achieved (or missed) early in the
fiscal year. The payments to our Named Executive Officers for
fiscal year 2007 are reported in the Summary Compensation
Table in the Non-Equity Incentive Plan Compensation Column.
For fiscal year 2007, the Compensation Committee set four
individual performance goals for the CEO. The goals were
(1) to launch the Invision product line by implementing
manufacturing plants and to further commercialize and market
Invision products in North America and internationally,
(2) to improve profitability in North America by reducing
inventory and the manufacturing cost per unit produced,
(3) to reduce supply chain and logistics expenses and
(4) to undertake various operational, strategic planning
and acquisition related tasks in Europe and Asia. The
Compensation Committee reviewed in detail with the CEO the
extent to which he had satisfied each of the four performance
goals identified above. After reviewing the Corporations
performance and the CEOs contributions to achieving these
goals, the Compensation Committee determined that approximately
85% of the goals were achieved and awarded a bonus accordingly.
The CEO recommended to the Compensation Committee, and the
Compensation Committee approved, that all other Named Executive
Officers receive a full bonus for achieving their personal goals
during 2007.
The personal goals for the remaining Named Executive Officers
are determined by the CEO (for Messrs. DeSantis and Rhodes)
and the Vice President North American Operations
(for Messrs. Andres and Myles) and are, in each case,
approved by the Compensation Committees. In general, the
personal goals focus on the implementation of primary Corporate
strategies for the fiscal year (such as the North American
restructuring and the launch of Invision) but may also include
particular or general objectives for the executive
officers areas of responsibility. The Compensation
Committee reviews the CEOs subjective evaluation of
whether each personal goal has been achieved and the Named
Executive Officers contributions to achieving these goals.
The Corporation expects that most of the personal goals will be
achieved each year.
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 stock options and
restricted stock. 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 executive officers
total compensation package includes an at-risk component of pay
and (3) align executive officers incentives with
stockholders. 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:
(1) our financial performance in the prior fiscal
17
year, (2) historical award data, (3) compensation
practices at comparison companies and (4) the
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 executive officers under our 2002 Equity Incentive
Plan. At our 2006 annual stockholder meeting, the stockholders
approved our 2006 Incentive Plan, 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 in the Corporation 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 incentives component of executive
compensation in a way that enhances our success. During fiscal
year 2007, the Compensation Committee relied on a combination of
restricted stock awards, performance shares awards and
restricted stock units 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 which 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 an immediate
link to stockholder interests as well as our long-term
performance.
Restricted
Stock
On April 11, 2007, the Compensation Committee awarded
shares of restricted stock to the Named Executive Officers
pursuant to the 2006 Incentive Plan in the amounts set forth in
the Grants of Plan-Based Awards table on page 26 of
this Proxy Statement. The shares of restricted stock awarded to
Mr. Haines will vest (subject to forfeiture) based upon our
total stockholder returns measured as of April 11, 2010.
Specifically, if the market value of our common stock relative
to the Peer Group on such date is (1) below the
25th percentile, all of Mr. Haines shares will
be forfeited, (2) between the 25th and
50th percentile, one-half of Mr. Haines shares
will be forfeited or (3) at or above the
50th percentile, none of Mr. Haines shares will
be forfeited. With respect to the shares of restricted stock
awarded to the other Named Executive Officers, one-half of each
officers shares will vest based upon our total stockholder
returns measured as of April 11, 2010, on the same basis
and subject to the same risk of forfeiture as is applicable to
Mr. Haines award. The remaining one-half of each
officers shares will vest over time, subject to continued
employment with us, at the rate of 33% on each of the first
three anniversaries of the date of grant. During the restriction
period, the Named Executive Officers may exercise full voting
rights associated with their shares of restricted stock. In
addition, we will hold dividends paid with respect to their
shares of restricted stock until the restrictions on the
underlying restricted stock have lapsed. The Board of Directors,
upon the recommendation of the Compensation Committee,
determined that all grants to Mr. Haines would have
performance vesting requirements in order to provide for greater
focus on the Corporations performance.
Performance
Shares
In connection with the grant of restricted stock to each of the
Named Executive Officers, the Compensation Committee also
awarded performance shares to each of the Named Executive
Officers pursuant to the 2006 Incentive Plan in the following
amounts: Mr. Haines 37,500 shares (or 50%
of his restricted stock award), Mr. DeSantis
4,500 shares, Mr. Rhodes
4,500 shares, Mr. Andres 3,250 shares
and Mr. Myles 0 shares (or 25% of each of
their respective restricted stock awards). Performance shares
give the recipient the right to
18
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. The performance shares granted to each of
the Named Executive Officers will vest on April 11, 2010
only if the fair market value of our common stock relative to
the Peer Group on such date is at or above the 75% percentile.
During the performance period, the Named Executive Officers do
not have voting or dividend rights with respect to the shares of
common stock underlying the performance shares.
Restricted
Stock Units
On April 11, 2007, the Compensation Committee awarded
15,000 restricted stock units to Mr. Haines pursuant to the
2006 Incentive Plan. The restricted stock units will be 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.
Mr. Haines restricted stock units will vest over
time, subject to continued employment with us, at the rate of
33% on each of the first three anniversaries of the date of
grant. During the restriction period, Mr. Haines will have
no voting rights with respect to the shares of common stock
underlying the restricted stock units but dividends paid on such
underlying shares will accrue and be paid to Mr. Haines at
the time the restricted stock unit is settled. These restricted
stock units were awarded to Mr. Haines because, during the
2006 fiscal year, we did not have a sufficient number of shares
available under the 2002 Equity Incentive Plan to award
Mr. Haines a grant of restricted stock. After the approval
of the 2006 Incentive Plan, the Compensation Committee
determined during the 2007 fiscal year that it would be
appropriate to make a grant to Mr. Haines of restricted
stock units in an amount equal to that which he would have
otherwise received the prior year. Other equity awards granted
during the 2006 fiscal year did not have performance vesting
characteristics and the Compensation Committee determined that
this one-time award should not have any performance vesting.
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 the third business day after the release of the earnings
information. While this introduces some level of variability in
our cost incurred in making the award and the value of the award
to the Named Executive Officer, the Compensation Committee
believes that this practice helps to insure that information in
its possession when determining the grants is reflected in the
market price of the stock. For future grants, the Compensation
Committee expects to make the grant date the fifth business day
after the release of earnings information in order to provide
management with enough time to communicate and administer the
awards throughout the Corporation. The Compensation Committee
believes that it is important to have a uniform grant date for
executive officers and other Corporation employees, and that the
cost of delaying the grant date by 5 business days is minimal
since the awards are expected to consist solely of restricted
stock and not stock options.
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 profit sharing plan,
(3) participation in a non-qualified profit sharing plan
and, in the case of Mr. Haines, (4) a supplemental
executive retirement plan and (5) a deferred compensation
agreement. We also maintain defined benefit pension plans and
other post-retirement benefit plans, primarily health care and
life insurance, that are available to all of our employees,
including our Named Executive Officers, on a non-discriminatory
basis. The objectives of our retirement and benefits programs
are (1) 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 with and income received from
us and (2) reward the Named Executive Officers for
continued service with us.
Periodically, the Compensation Committee reviews with its
outside consultant 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
19
cost against the stated objectives for maintaining retirement
and other benefits. The components of the fiscal year 2007
retirement and benefits program for the Named Executive Officers
are discussed individually below.
Perquisites
and Personal Benefits
We provide 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 objectives and competitive market practices.
Certain perquisites are used to encourage Named Executive
Officers to take particular actions (such financial tax planning
and consulting) which the Compensation Committee has determined
to be beneficial to the Corporation. In addition, the
Corporation also pays for country club memberships for certain
of its Named Executive Officers because the Compensation
Committee believes that these memberships provide excellent
opportunities for customer entertainment. No personal use of
country clubs is reimbursed or paid for by the Corporation.
The Corporation has owned a fishing camp in Canada since 1952.
It is the policy of the Compensation Committee that the fish
camp may be used solely for business purposes and no officer,
employee or director of the Corporation is permitted to use or
has used the fishing camp for personal reasons. The Corporation
also leases an airplane. The airplane may only be used for
business-related travel and no officer, employee or director is
permitted to use or has used the airplane for personal travel.
Qualified
Retirement Plan
We have a qualified Retirement Plan (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 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 three 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 the Named Executive Officers
for the fiscal 2007 year are reported in the Summary
Compensation Table.
Non-Qualified
Retirement Plan
We also maintain a non-qualified Retirement Plan (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 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 three years of
employment with us and full vesting after seven years of
employment with us. In addition, upon a Change in Control (as
defined therein), 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 the Named
Executive Officers for fiscal year 2007 are disclosed in the
Summary Compensation Table. This plan was originated and
maintained in order to provide benefits to Named Executed
Officers who are not able to fully participate in the Retirement
Plan. The Compensation Committee believes that maintaining this
plan keeps our retirement package competitive within our Peer
Group.
20
Supplemental
Executive Retirement Plan
Our Supplemental Executive Retirement Benefits 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 is currently the only Named Executive Officer
participating in the SERP. Under the SERP, a participant will
earn a pension benefit that is equal to 30% of the
participants final average plan compensation, plus an
additional one percent for each year of service up to a maximum
of thirty such years. Thus, a participant who retires with 30 or
more years of service will 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
reduced by the actuarial value of certain other plan 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. As a matter of
fairness to its executive officers, and to remain competitive
with other companies that were adopting plans like the SERP at
the time, the Compensation Committee determined that SERP was
appropriate to restore benefits to its executive officers.
As of August 31, 2007, the final average plan compensation
of Mr. Haines under the SERP was $882,267. Mr. Haines
has earned the maximum of 30 years of service for purposes
of the SERP and would therefore be entitled to an annual benefit
of $529,360 upon retirement. After accounting for the various
applicable offsets, Mr. Haines would be entitled to an
annual SERP benefit of $139,082. Additional information on the
SERP is available on page 30 of this Proxy Statement.
Deferred
Compensation Agreement
We also have a deferred compensation agreement with
Mr. Haines, effective as of March 1991, which provides for
the payment of monthly cash benefits to Mr. Haines for ten
years following his retirement, disability or death in the
annual amount of $100,000. We are not required to make or
continue to make such payments to Mr. Haines in the event
that he is terminated for Cause (as defined therein) or breaches
the non-competition covenant set forth in the agreement.
However, in the event that Mr. Haines employment is
terminated within two years of a Change in Control (as defined
therein), (1) the payment of benefits under the agreement
shall be accelerated and paid to Mr. Haines in a lump sum
within five days of such termination and (2) the
non-competition covenants set forth in the agreement and in
Mr. Haines employment agreement shall no longer be
applicable. In connection with this agreement, we own and are
the beneficiary of a life insurance policy upon the life of
Mr. Haines in the amount of $1,000,000.
Employment
Agreements and
Change-In-Control
Arrangements
The Compensation Committee carefully considers the use and
conditions of employment agreements. The Compensation Committee
recognizes that entering into employment agreements containing
severance and
change-in-control
arrangements is 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 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 Named Executive Officers with
adequate protection to insure that change in control offers can
be evaluated on the best interest of the stockholders without
fear that a transaction could cost a Named Executive Officer 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.
21
Other
Change in Control Arrangements
Under the terms of our 2006 Incentive Plan, unless specified
otherwise in the associated award agreement or in a separate
change in control agreement, (1) all of a
participants awards will be fully vested and exercisable
upon a Business Combination or Change in Control (each as
defined therein) 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. Haines (for whom we will provide a
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 defined therein),
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 thirty
days following the Change in Control, (4) awards
denominated in cash shall be paid to participants in cash within
thirty days following the Change in Control and (5) all
awards shall become noncancellable (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.
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 benefits 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 North American 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. Any such non-deductible amounts of compensation would,
however, reduce the amount of tax-losses on the
Corporations balance sheet that may be applied against
taxable income in future years.
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
22
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 Named Executive Officers. These guidelines
require that, within a five year period from the date of
its adoption, the Chief Executive Officer will maintain share
ownership in value equal to approximately five times his base
salary, while each other Named Executive Officer is expected to
hold shares in value equal to approximately three times his base
salary. As has been stated previously, the Compensation
Committee bases a large part of its compensation philosophy on
aligning the interests of our Named Executive Officers and our
stockholders. Such efforts could be undermined in the event that
Named 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 Named 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. The compensation is
structured in order to attract and retain high quality
individuals to serve on the Board of Directors, to compensate
such individuals for their 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. 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 the
Directors as required to be reported in a proxy statement.
Mr. Haines, who is currently the only employee Director,
does not receive additional compensation for service on our
Board of Directors but does receive additional compensation for
service on the board of one of our subsidiaries. Those
additional fees are reflected in the Summary Compensation
Table.
23
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
Willard R. Holland, Chair
David G. Birney
Joseph M. Gingo
James A. Karman
Michael A. McManus, Jr.
Dr. Peggy Miller
Ernest J. Novak, Jr.
COMPENSATION
TABLES
Summary
Compensation Table
The table below provides information regarding the compensation
of the Chief Executive Officer, Chief Financial Officer and the
other three most highly compensated executive officers of A.
Schulman, Inc. at August 31, 2007 (collectively, the
Named Executive Officers).
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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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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name and Principal Position
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Year
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Salary
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Awards(1)
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Awards(2)
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Compensation(3)
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Earnings(4)
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Compensation
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Total
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Terry L. Haines
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2007
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$
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665,854
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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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271,688
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$
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84,167
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$
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159,874(5
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)
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$
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1,859,018
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President, Chief Executive
Officer and Chairman of the Board
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Paul F. DeSantis
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2007
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$
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295,833
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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(6
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)
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$
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663,585
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Chief Financial Officer,
Vice President and Treasurer
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Barry A. Rhodes
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2007
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$
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295,833
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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(7
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)
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$
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730,127
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Executive Vice President Chief Operating Officer,
North America
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Ronald G. Andres
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2007
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$
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192,823
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$
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138,544
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$
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85,675
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$
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56,550
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$
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$
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47,693(8
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)
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$
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521,285
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Vice President and General Manager of Engineered Compounds
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John M. Myles
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2007
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$
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187,533
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$
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29,527
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$
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30,479
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$
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52,200
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$
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$
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80,346(9
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$
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380,085
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Former Vice President Research and Development
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(1) |
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The stock awards include the Corporations expense for
outstanding restricted stock awards as well as outstanding
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 to market adjustment of the units
vested to date based on the August 31, 2007 closing price
of the Corporations common stock. In addition, expense is
recorded for dividend equivalents on those units. 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 and the Outstanding
Equity Awards tables. |
24
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(2) |
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This column represents the amount recognized for financial
statement reporting purposes for fiscal 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 2007. |
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(3) |
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This column represents amounts awarded based on performance
during fiscal 2007 under the Corporations incentive bonus
plan. |
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(4) |
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This includes the change in the value of the SERP. The
non-qualified deferred compensation earnings are not required to
be reported. Mr. Haines is the only Named Executive Officer
who participates in the SERP. |
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(5) |
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All Other Compensation for Mr. Haines includes
contributions to the Retirement Plan of $22,000 and $44,585 to
the Non-Qualified Plan. It also includes dividends paid of
$37,300 which were earned on restricted stock awards for which
the restrictions lapsed in fiscal 2007. Mr. Haines also
received directors fees of $13,558 from one of the
Corporations Belgian subsidiaries. Other amounts include
personal financial planning services, annual dues for club
memberships ($24,508), internet services, depreciation expense
for purchased automobile ($12,042), fuel for vehicle and
automobile insurance. |
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(6) |
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All Other Compensation for Mr. DeSantis includes
contributions to the Retirement Plan of $22,000 and $7,583 to
the Non-Qualified Plan. Other amounts include personal financial
planning services, certain living expenses including rent and
utilities, automobile lease ($12,203), fuel for leased vehicle
and automobile insurance. |
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(7) |
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All Other Compensation for Mr. Rhodes includes
contributions to the Retirement Plan of $22,000 and $7,583 to
the Non-Qualified Plan. It also includes dividends paid of
$6,690 which were earned on restricted stock awards for which
the restrictions lapsed in fiscal 2007. Other amounts include
annual dues for club memberships ($11,795), automobile lease
($12,024), fuel for leased vehicle and automobile insurance. |
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(8) |
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All Other Compensation for Mr. Andres includes
contributions to the Retirement Plan of $19,282. It also
includes dividends paid of $6,690 which were earned on
restricted stock awards for which the restrictions lapsed in
fiscal 2007. Other amounts include annual dues for club
memberships, automobile lease, fuel for leased vehicle and
automobile insurance. |
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(9) |
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All Other Compensation for Mr. Myles includes contributions
to the Retirement Plan of $18,753. It also includes dividends
paid of $4,906 which were earned on restricted stock awards for
which the restrictions lapsed in fiscal 2007. Mr. Myles
retired as of August 31, 2007. As part of his retirement
agreement, he was paid a lump sum of $37,738 in compensation for
his forfeited restricted stock. This amount was accrued as of
August 31, 2007 and was subsequently paid, and is therefore
included in this column. Other amounts include annual dues for
club memberships, automobile lease ($11,387), fuel for leased
vehicle and automobile insurance. |
25
Grants of
Plan-Based Awards
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Estimated Possible Payouts Under Non-Equity Incentive Plan
Awards
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Estimated Future Payouts Under Equity Incentive Plan
Awards(1)
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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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of
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of Stock
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Board
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Stock
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and Option
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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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Awards
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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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($)
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Terry L. Haines
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10/16/2007
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$
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236,250
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$
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472,500
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$
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708,750
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4/11/2007
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4/03/07
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37,500
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75,000
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112,500
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$
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1,541,250(1
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)
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4/11/2007
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4/03/07
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15,000(2
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)
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$
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323,100(2
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)
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Paul F. DeSantis
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10/16/2006
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$
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75,000
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$
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150,000
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$
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225,000
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4/11/2007
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4/03/07
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9,000(3
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$
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198,540(3
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4/11/2007
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4/03/07
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|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
9,000
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
184,950(4
|
)
|
Barry A. Rhodes
|
|
|
10/16/2006
|
|
|
|
|
|
|
$
|
75,000
|
|
|
$
|
150,000
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/11/2007
|
|
|
|
4/03/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000(3
|
)
|
|
$
|
198,540(3
|
)
|
|
|
|
4/11/2007
|
|
|
|
4/03/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
9,000
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
184,950(4
|
)
|
Ronald G. Andres
|
|
|
10/16/2006
|
|
|
|
|
|
|
$
|
39,000
|
|
|
$
|
78,000
|
|
|
$
|
117,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/11/2007
|
|
|
|
4/03/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500(3
|
)
|
|
$
|
143,390(3
|
)
|
|
|
|
4/11/2007
|
|
|
|
4/03/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,250
|
|
|
|
6,500
|
|
|
|
9,750
|
|
|
|
|
|
|
$
|
133,575(4
|
)
|
John M. Myles
|
|
|
10/16/2006
|
|
|
|
|
|
|
$
|
36,000
|
|
|
$
|
72,000
|
|
|
$
|
108,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The grant date fair value of the market based performance
restricted stock was computed using the target level award in
column (g). The fair value was calculated using a Monte Carlo
simulation which considered the terms of these awards described
under the captions Restricted Stock Grants and
Performance Shares. This simulation resulted in a grant
date fair value of $20.55 per share. |
|
(2) |
|
These awards are restricted stock units in which each unit is
equal to the market value of one share of the Corporations
common stock. This grant vests annually over three years
following the date of grant. 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. The grant
date fair value was computed using the closing price on
August 31, 2007 of $21.54. |
|
(3) |
|
These awards are restricted stock awards which vest annually
over three years following the date of grant. The grant date
fair value was equal to the closing market price of the
Corporations common stock on the date of grant, which was
$22.06 per share. |
Base
Salaries
In fiscal 2006, base salaries for all of the Corporations
Named Executive Officers was below the Peer Group median. As
disclosed in the Compensation Discussion & Analysis on
page 13 of this Proxy Statement, the Corporation increased
the officers base salary compensation to generally within
the targeted 40th to 50th percentile of market,
Annual
Bonuses
Under the annual bonus program, the Compensation Committee
establishes the award formulas and the performance goals to be
measured to determine the amount of 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 Named Executive Officers could
have earned are set forth in the Grants of Plan Based Awards
table and the bonuses actually paid are set forth in the
Summary Compensation Table in the Non-Equity Incentive
Plan Compensation column.
Under the fiscal year 2007 bonus plan, one-half of the total
target award potential for each Named Executive Officer was
determined based on our financial performance, measured by
levels of net income, cash flows from operations and return on
invested capital. For Mr. Haines and Mr. DeSantis, the
corporate financial performance portion of the bonus was based
upon our consolidated worldwide operations. For each of the
other Named Executive
26
Officers, the corporate financial performance portion of the
bonus was based on our North American segments
performance. The targeted level of performance is based upon the
Corporations internal budget such that if performance is
achieved at the targeted levels, the Corporation should achieve
its earnings per share goal. The Corporation believes that its
targets are not unreasonably difficult to achieve but that they
cannot be reached without successful management performance.
For 2007, cash flow from operations was the only performance
target that was achieved. For North American operations, cash
flow from operations achieved the maximum level, thereby
entitling executive officers to a bonus of approximately 23% of
their total target bonus. Cash flow from operations on a
consolidated worldwide basis reached the threshold level,
entitling the Chief Executive Officer and the Chief Financial
Officer to an award of approximately 7.5% of their target bonus.
The remaining one-half of the total target award potential was
based upon the individual performance of each Named Executive
Officer, as measured against various personal goals established
by the Compensation Committee for the Chief Executive Officer
and by the Chief Executive Officer (and approved by the
Compensation Committee) for all other Named Executive Officers.
For fiscal year 2007, the Compensation Committee set four
individual performance goals for the Chief Executive Officer.
The goals were (1) to launch the Invision product line by
implementing manufacturing plants and to further commercialize
and market Invision products in North America and
internationally, (2) to improve profitability in North
America by reducing inventory and the manufacturing cost per
unit produced, (3) to reduce supply chain and logistics
expenses and (4) to undertake various operational,
strategic planning and acquisition related tasks in Europe and
Asia. The Compensation Committee reviewed in detail with the
Chief Executive Officer the extent to which he had satisfied
each of the four performance goals identified above. After
reviewing the Corporations performance and the Chief
Executive Officers contributions to achieving these goals,
the Compensation Committee determined that approximately 85% of
the goals were achieved and awarded a bonus accordingly. The
Chief Executive Officer recommended to the Compensation
Committee, and the Compensation Committee approved, that all
other Named Executive Officers receive a full bonus for
achieving their personal goals during 2007.
The personal goals for the remaining Named Executive Officers
are determined by the Chief Executive Officer (for
Messrs. DeSantis and Rhodes) and the Vice
President North American Operations (for
Messrs. Andres and Myles) and are in each case approved by
the Compensation Committees. In general, the personal goals
focus on the implementation of primary Corporate strategies for
the fiscal year (such as the North American restructuring and
the launch of Invision) but also may include a variety of
particular areas of focus for each Named Executive Officer. The
Compensation Commitee expects that most of the personal goals
will be achieved each year.
Restricted
Stock Grants
On April 11, 2007, the Compensation Committee awarded
shares of restricted stock to the Named Executive Officers
pursuant to the 2006 Incentive Plan in the amounts set forth in
columns (g) and (i) in the Grants of Plan-Based Awards
table above. The shares of restricted stock awarded to
Mr. Haines will vest (subject to forfeiture) based upon
total stockholder returns measured as of April 11, 2010.
Specifically, if the market value of the Corporations
common stock relative to the Peer Group on such date is
(1) below the 25th percentile, all of
Mr. Haines shares will be forfeited, (2) between
the 25th and 50th percentile, one-half of
Mr. Haines shares will be forfeited (resulting in the
earning of the number of shares set forth in column (f)) or
(3) at or above the 50th percentile, none of
Mr. Haines shares will be forfeited (resulting in the
earning of the number of share set forth in column (g)). With
respect to the shares of restricted stock awarded to the other
Named Executive Officers, the shares reported in column (g) will
vest based upon the Corporations total stockholder return
measured as of April 11, 2010, on the same basis and
subject to the same risk of forfeiture as are applicable to
Mr. Haines award. The shares reported in
column (i) will vest over time, subject to continued
employment with the Corporation, at the rate of 33% on each of
the first three anniversaries of the date of grant. During the
restriction period, the Named Executive Officers may exercise
full voting rights associated with their shares of restricted
stock. In addition, dividends paid with respect to their shares
of restricted stock will be held by the Corporation until the
restrictions on the underlying restricted stock have lapsed,
subject to the same risk of forfeiture.
27
Performance
Shares
In connection with the grant of restricted stock to each of the
Named Executive Officers, the Compensation Committee also
awarded performance shares to each of the Named Executive
Officers pursuant to the 2006 Incentive Plan in the following
amounts: Mr. Haines 37,500 shares (or 50%
of his restricted stock award), Mr. DeSantis
4,500 shares, Mr. Rhodes
4,500 shares, Mr. Andres 3,250 shares
and Mr. Myles 0 shares (or 25% of each of
their respective restricted stock awards). Performance shares
give the recipient the right to receive a specified number of
shares of the Corporations common stock only if certain
terms and conditions are met as of the end of the performance
period. The performance shares granted to each of the Named
Executive Officers will vest on April 11, 2010, only if the
fair market value of the Corporations common stock
relative to the Peer Group on such date is at or above the 75%
percentile (resulting in the earning of the aggregate number of
shares set forth in column (h)). The number of shares reported
in column (h) represents the total number of shares,
including the restricted shares and the performance shares, that
a Named Executive Officer would earn. During the performance
period, the Named Executive Officers do not have voting or
dividend rights with respect to the shares of common stock
underlying the performance shares.
Restricted
Stock Units
The Compensation Committee also awarded 15,000 restricted stock
units to Mr. Haines in fiscal year 2007 pursuant to the
2006 Incentive Plan. The restricted stock units will be settled
for cash in an amount equal to the fair market value of a share
of the Corporations common stock on the applicable vesting
date multiplied by the number of restricted stock units to be
settled. Mr. Haines restricted stock units will vest
over time, subject to continued employment with the Corporation,
at the rate of 33% on each of the first three anniversaries of
the date of grant. During the restriction period,
Mr. Haines will have no voting rights with respect to the
shares of common stock underlying the restricted stock units but
dividends paid on such underlying shares will accrue and be paid
to Mr. Haines at the time the restricted stock units are
settled.
28
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Market or
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Payout Value
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
Plan Awards:
|
|
of Unearned
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
of Shares or
|
|
Number of
|
|
Shares, Units
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of Stock
|
|
Units of Stock
|
|
Unearned Shares,
|
|
or Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
That Have
|
|
That Have
|
|
Units or Other
|
|
Rights
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Not Vested
|
|
Not Vested
|
|
Rights That Have
|
|
That Have
|
Name
|
|
(Exercisable)
|
|
(Unexercisable)
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
Not Vested
|
|
Not Vested(1)
|
|
Terry L. Haines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
(2)
|
|
$
|
603,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
(3)
|
|
$
|
1,615,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
(4)
|
|
$
|
807,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(5)
|
|
$
|
323,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,334
|
(8)
|
|
|
|
|
|
$
|
19.85
|
|
|
|
10/21/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,667
|
(9)
|
|
|
|
|
|
$
|
19.20
|
|
|
|
10/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul F. DeSantis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
(6)
|
|
$
|
193,860
|
|
|
|
9,000
|
(7)
|
|
$
|
193,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
(4)
|
|
$
|
96,930
|
|
|
|
|
20,000
|
|
|
|
40,000
|
(10)
|
|
|
|
|
|
$
|
24.69
|
|
|
|
1/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry A. Rhodes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(2)
|
|
$
|
430,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
(6)
|
|
$
|
193,860
|
|
|
|
9,000
|
(7)
|
|
$
|
193,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
(4)
|
|
$
|
96,930
|
|
|
|
|
6,667
|
|
|
|
|
|
|
|
|
|
|
$
|
18.02
|
|
|
|
10/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,666
|
|
|
|
7,334
|
(8)
|
|
|
|
|
|
$
|
19.85
|
|
|
|
10/21/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,333
|
|
|
|
14,667
|
(9)
|
|
|
|
|
|
$
|
19.20
|
|
|
|
10/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald G. Andres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000
|
(2)
|
|
$
|
387,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500
|
(6)
|
|
$
|
140,010
|
|
|
|
6,500
|
(7)
|
|
$
|
140,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,250
|
(4)
|
|
$
|
70,005
|
|
|
|
|
14,000
|
|
|
|
|
|
|
|
|
|
|
$
|
13.99
|
|
|
|
10/17/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
|
|
|
|
|
|
|
$
|
18.02
|
|
|
|
10/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,333
|
|
|
|
6,667
|
(8)
|
|
|
|
|
|
$
|
19.85
|
|
|
|
10/21/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,666
|
|
|
|
13,334
|
(9)
|
|
|
|
|
|
$
|
19.20
|
|
|
|
10/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Myles
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
$
|
18.02
|
|
|
|
8/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
(11)
|
|
|
|
|
|
|
|
|
|
$
|
19.85
|
|
|
|
8/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
(11)
|
|
|
|
|
|
|
|
|
|
$
|
19.20
|
|
|
|
8/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The market value was computed using $21.54, the closing share
price of the Corporations common stock on August 31,
2007. |
|
(2) |
|
These are restricted stock awards which vest at the end of four
years following the dates of grant. |
|
(3) |
|
These restricted shares were granted in April 2007 and are
earned upon achievement of market based performance goals at the
end of a three year period, as described under the caption
Grant of Plan-Based Awards Restricted
Stock Grants. |
|
(4) |
|
These performance shares are earned as described under the
caption Grant of Plan-Based Awards Performance
Shares. |
|
(5) |
|
These awards are restricted stock units in which each unit is
equal to the market value of one share of the Corporations
common stock. This grant vests annually over three years
following the date of grant, which was April 11, 2007. 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. |
|
(6) |
|
This award represents a grant of restricted stock, which will
vest at a rate of
331/3%
per year on the anniversary of the grant date. |
|
(7) |
|
These awards are market performance based restricted stock that
may be earned or forfeited as described under the caption
Grant of Plan Based Awards Restricted Stock
Grants. |
|
(8) |
|
These options vested on October 22, 2007. |
|
(9) |
|
One-half of these options vested on October 21, 2007 and
one-half of the options will vest on October 21, 2008. |
29
|
|
|
(10) |
|
One-half of these options will vest on January 23, 2008 and
one-half of the options will vest on January 23, 2009. |
|
(11) |
|
The vesting for these options was accelerated due to the
retirement of Mr. Myles on August 31, 2007. The option
expiration date also was accelerated as a result of his
retirement. |
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 ($)
|
|
|
Terry L. Haines
|
|
|
259,999
|
|
|
$
|
1,580,361
|
|
|
|
16,000
|
(1)
|
|
$
|
388,300
|
(1)
|
Paul F. DeSantis
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Barry A. Rhodes
|
|
|
|
|
|
$
|
|
|
|
|
3,000
|
|
|
$
|
72,480
|
(2)
|
Ronald G. Andres
|
|
|
|
|
|
$
|
|
|
|
|
3,000
|
|
|
$
|
72,480
|
(2)
|
John M. Myles
|
|
|
8,000
|
|
|
$
|
83,440
|
|
|
|
6,448
|
(3)
|
|
$
|
144,655
|
(3)
|
|
|
|
(1) |
|
The number of shares acquired on vesting include
13,000 shares which vested on October 18, 2006 and
3,000 shares which vested on October 19, 2006. The
13,000 shares have a value realized on vesting based on the
closing price on the date of vesting of $24.16. The value of the
3,000 shares vested on October 19, 2006 was based on
the closing market price of the Corporations common stock
on the same day of $24.74. |
|
(2) |
|
Based on the closing market price of the Corporations
common stock on the vest date of October 18, 2006 which was
$24.16. |
|
(3) |
|
The number of shares acquired on vesting include
2,200 shares which vested on October 18, 2006 and
4,248 shares which vested on August 31, 2007 due to
Mr. Myles retirement on that date. The 2,200 shares
have a value realized on vesting based on the closing price on
the date of vesting of $24.16. The value of the
4,248 shares vested on August 31, 2007 was based on
the closing market price of the Corporations common stock
on the same day of $21.54. |
Pension
Benefits Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
|
|
|
Number of Years
|
|
|
Present Value of
|
|
|
Payments During Last
|
|
Name
|
|
Plan Name
|
|
|
Credited Service (#)
|
|
|
Accumulated Benefit ($)
|
|
|
Fiscal Year ($)
|
|
|
Terry L.
Haines(1)
|
|
|
SERP
|
|
|
|
41
|
(2)
|
|
$
|
1,105,412
|
(3)
|
|
$
|
|
|
Paul F. DeSantis
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry A. Rhodes
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald G. Andres
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Myles
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amount shown is an estimate as of August 31, 2007 of
the total value of pension benefits under the SERP earned as of
that date. The actual benefits to be paid will be based on
Mr. Haines credited service, compensation and other
factors at the time of his retirement. Mr. Haines is the
only Named Executive Officer who participates in the SERP. |
|
(2) |
|
The pension benefit formula restricts credited services to a
maximum of 30 years. This is reflected in the present value
disclosed in the table. |
|
(3) |
|
Assumptions include age 65 commencement, no decrements for
death nor termination prior to age 65, RP-2000 mortality
after 65, and a discount rate of 6.25% as of August 31,
2007. |
Supplemental
Executive Retirement Plan
The Corporations Supplemental Executive Retirement
Benefits Plan (the SERP), which the Compensation
Committee administers, provides retirement benefits to executive
officers named as participants by resolution of the
30
Board of Directors. Mr. Haines is currently the only Named
Executive Officer participating in the SERP. Under the SERP, a
participant will earn a pension benefit that is equal to 30% of
the participants final average plan compensation, plus an
additional one percent for each year of service up to a maximum
of thirty such years. Thus, a participant who retires with 30 or
more years of service will 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
reduced by the actuarial value of certain other plan and
deferred compensation that is payable to the participant.
The following table shows estimated annual benefits payable to
SERP participants upon retirement at age 65.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Plan
|
|
|
Years of Service
|
|
Compensation
|
|
|
15
|
|
|
20
|
|
|
25
|
|
|
30
|
|
|
$
|
200,000
|
|
|
$
|
90,000
|
|
|
$
|
100,000
|
|
|
$
|
110,000
|
|
|
$
|
120,000
|
|
$
|
300,000
|
|
|
$
|
135,000
|
|
|
$
|
150,000
|
|
|
$
|
165,000
|
|
|
$
|
180,000
|
|
$
|
400,000
|
|
|
$
|
180,000
|
|
|
$
|
200,000
|
|
|
$
|
220,000
|
|
|
$
|
240,000
|
|
$
|
500,000
|
|
|
$
|
225,000
|
|
|
$
|
250,000
|
|
|
$
|
275,000
|
|
|
$
|
300,000
|
|
$
|
600,000
|
|
|
$
|
270,000
|
|
|
$
|
300,000
|
|
|
$
|
330,000
|
|
|
$
|
360,000
|
|
$
|
700,000
|
|
|
$
|
315,000
|
|
|
$
|
350,000
|
|
|
$
|
385,000
|
|
|
$
|
420,000
|
|
$
|
800,000
|
|
|
$
|
360,000
|
|
|
$
|
400,000
|
|
|
$
|
440,000
|
|
|
$
|
480,000
|
|
$
|
900,000
|
|
|
$
|
405,000
|
|
|
$
|
450,000
|
|
|
$
|
495,000
|
|
|
$
|
540,000
|
|
$
|
1,000,000
|
|
|
$
|
450,000
|
|
|
$
|
500,000
|
|
|
$
|
550,000
|
|
|
$
|
600,000
|
|
$
|
1,100,000
|
|
|
$
|
495,000
|
|
|
$
|
550,000
|
|
|
$
|
605,000
|
|
|
$
|
660,000
|
|
For purposes of determining pension benefits payable under the
SERP, final average plan compensation is the participants
average annual compensation for the highest
36-month
period in the participants last 60 months of
employment, and takes into account the participants base
salary and cash bonuses. The pension benefits payable under the
SERP are reduced by the actuarial equivalent of (1) the
participants primary social security benefits,
(2) benefits payable to the participant under the
Retirement Plan and the Non-Qualified Plan and, (3) with
respect to Mr. Haines, benefits payable under his deferred
compensation agreement without regard to any forfeiture of or
other loss of benefits that may occur under such agreement on
account of a termination for cause or any other reason.
SERP benefits are payable as a monthly pension equal to the
participants accrued benefits under the SERP, generally
beginning at age 65 or after the participants
retirement, if later. If a participant retires at or after
age 55, or becomes totally and permanently disabled, and is
credited with at least ten years of eligible service, the Board
of Directors by resolution may grant the participant payment of
pension benefits before age 65 in an actuarially reduced
amount. In general, SERP pension payments are payable to the
participant as a life annuity under which a monthly pension is
payable to the participant up until such participants
death. Participants may elect to receive SERP pension payments
in various optional forms that are the actuarial equivalent of
the participants life annuity. However, the election of a
lump sum payment or installment payments may only be made with
the approval of the Board of Directors.
As of August 31, 2007, the final average plan compensation
of Mr. Haines under the SERP was $882,267. Mr. Haines
has been credited with the maximum of 30 years of service
under the SERP and would therefore be entitled to an annual
benefit of $529,360 upon retirement. After accounting for the
various applicable offsets, Mr. Haines would be entitled to
an annual SERP benefit of $139,082 upon retirement.
31
Non-qualified
Deferred Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
(a)
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Withdrawals/
|
|
|
Earnings in Last
|
|
|
Balance at Last
|
|
Name
|
|
Last FY ($)
|
|
|
Last FY ($)(1)
|
|
|
Distributions ($)
|
|
|
FY ($)(2)
|
|
|
FYE ($)
|
|
|
Terry L. Haines
|
|
$
|
|
|
|
$
|
44,585
|
|
|
$
|
|
|
|
$
|
70,274
|
|
|
$
|
1,628,833
|
(3)
|
Paul F. DeSantis
|
|
|
|
|
|
|
7,583
|
|
|
|
|
|
|
|
|
|
|
|
7,583
|
|
Barry A. Rhodes
|
|
|
|
|
|
|
7,583
|
|
|
|
|
|
|
|
145
|
|
|
|
9,183
|
|
Ronald G. Andres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Myles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This 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. These amounts shown are included in
the all other compensation column shown in the Summary
Compensation Table. |
|
(2) |
|
The 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 relate 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 $1,000,000 is included in
the aggregate balance. This plan does not have any earnings.
Mr. Haines is the only Named Executive Officer who
participates in this deferred compensation plan. |
Employment
Agreements
The Corporation has employment agreements with
Messrs. Haines, DeSantis, Rhodes and Andres and certain
other senior personnel. The employment agreements of
Messrs. Haines, DeSantis, Rhodes and Andres have initial
three-year terms. Such agreements are automatically extended 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; provided, however, that no
such monthly extension shall occur after the last day of the
calendar month in which the Named Executive Officer turns 62.
The employment agreements provide that, in the event employment
is terminated following a merger, consolidation, liquidation or
other change in control event (each, a Change in
Control) for any reason, except for termination by the
Corporation for Cause, termination by reason of death or
Disability or termination by the employee without Good Reason
(as such terms are defined therein), the employee shall be paid
a lump sum amount equal to three times the sum of (1) the
higher of his annual base salary payable immediately prior to
the event causing the termination or the Change in Control, plus
(2) 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, the
employee will be paid a lump sum amount equal to the sum of
(1) any unpaid annual incentive compensation previously
awarded to the employee 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, as calculated in accordance with
the agreement. The employee will also continue to receive
certain insurance benefits (reduced to the extent comparable
benefits are actually provided without cost to the employee by
another source after termination) for a period of 36 months
following the date of termination. Mr. Haines
employment agreement also provides that, during the one-month
period beginning with the first day of the month immediately
following the first anniversary of a Change in Control,
Mr. Haines may terminate his employment for any reason and
still be entitled to the
Change-in-Control
payments described above.
If the Corporation terminates an employees employment
without Cause prior to the expiration of the term of the
employment agreement and prior to a Change in Control, the
employee shall receive his salary for the remaining term of his
employment agreement, plus a bonus each year for the remaining
term of his agreement in an amount
32
equal to 50% of his average annual bonus during the most recent
five calendar years of employment. If the employee is terminated
by reason of death, the Corporation shall pay a lump sum amount
equal to 60% of the employees salary for 24 months to
a designated beneficiary.
The amounts described above payable under Mr. Haines
employment 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. Notwithstanding the
foregoing, in respect of the employment agreements of
Messrs. DeSantis, Rhodes and Andres, the Corporation is not
obligated to make any payment or benefit that is in excess of
the maximum amount that the Corporation can deduct for federal
income tax purposes.
In consideration for the benefits payable under their respective
employment agreements, each of Messrs. Haines, DeSantis,
Rhodes and Andres agreed to be bound by perpetual
confidentiality and non-disclosure covenants as well as
non-competition and non-solicitation restrictions for one year
(three years in the case of Mr. Haines) following their
respective termination of employment.
On August 31, 2007 (the Retirement Date),
Mr. Myles, the Corporations former Vice President
Research and Development, retired from the Corporation. In
connection with Mr. Myles retirement, the Corporation
entered into a Separation Agreement and a Consulting Agreement
with Mr. Myles, dated as of the Retirement Date and
September 1, 2007, respectively (collectively, the
Agreements). The Agreements were filed as
Exhibit 99.1 and Exhibit 99.2 to the
Corporations Current Report on
Form 8-K
filed with the SEC on September 6, 2007. The Corporation
subsequently filed an amendment to the Current Report on
Form 8-K/A
with the SEC on September 14, 2007, which disclosed certain
benefits received by Mr. Myles upon his separation from the
Corporation, as further described in Exhibit 99.1, Summary
of Benefits Upon Separation (Summary of Benefits),
to the
Form 8-K/A.
The summary of the Agreements and the Summary of Benefits below
is qualified in its entirety by reference to the complete text
of the Agreements and the Summary of Benefits.
Pursuant to the Separation Agreement, Mr. Myles remains
eligible to participate in certain retirement benefits under
certain retirement benefit plans and the Corporations
fiscal year 2007 bonus plan. In addition, Mr. Myles may not
(i) solicit, employ, entice or interfere with any employee
of the Corporation or any other entity that is related to the
Corporation through common ownership (an Affiliate)
or (ii) engage, participate in, aid or finance any
enterprise that competes with the Corporation or an Affiliate.
Pursuant to the Summary of Benefits, Mr. Myles and his
dependants are eligible to participate in the Corporations
retiree medical program until he is 65 years of age, at
which time Medicare becomes the primary program and the
Corporations program becomes secondary. The Summary of
Benefits confirms that Mr. Myles is eligible to receive any
allocation from the Retirement Plan prior to the Retirement
Date. In addition, after the Retirement Date, all of
Mr. Myles stock options are considered vested and
exercisable for a period of two years in accordance with those
stock option agreements.
According to the Consulting Agreement, Mr. Myles will
receive a monthly consulting fee of $15,750 for one year ending
on August 31, 2008, in exchange for rendering consulting
services to the Corporation. Mr. Myles consulting
services consist of, among other things, supporting (i) the
Corporations research and development while it searches
for a research and development manager and (ii) special
projects as designated by the Corporations Engineered
Compounds General Manager.
33
Potential
Payments upon Termination or
Change-in-Control
The Named Executive Officers have employment agreements which
contain severance and
change-in-control
arrangements with benefits that vary depending upon the nature
of their separation from service. The table below represents
amounts that would be payable or benefits owed to each of the
Named Executive Officers as of August 31, 2007, 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, 2007. Mr. Myles
retired as of August 31, 2007; therefore a termination
analysis is not included for him.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
Termination upon
|
|
|
|
|
|
|
Death or
|
|
|
Termination with
|
|
|
Termination without
|
|
|
Change-in-Control
|
|
Compensation Components
|
|
Retirement(1)
|
|
|
Disability(2)
|
|
|
Cause(3)
|
|
|
Cause(4)
|
|
|
(5)
|
|
|
For Terry L. Haines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
810,000
|
|
|
$
|
|
|
|
$
|
2,355,284
|
|
|
$
|
3,111,752
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
20,343
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
614,536
|
|
|
$
|
716,205
|
|
|
$
|
501,451
|
|
|
$
|
501,451
|
|
|
$
|
3,026,370
|
|
Restricted stock units
|
|
$
|
45,234
|
|
|
$
|
323,100
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
323,100
|
|
Stock options
|
|
$
|
276,035
|
|
|
$
|
276,035
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
276,035
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP(7)
|
|
$
|
1,105,412
|
|
|
$
|
1,105,412
|
|
|
$
|
1,105,412
|
|
|
$
|
1,105,412
|
|
|
$
|
1,105,412
|
|
Qualified retirement
plan(8)
|
|
$
|
1,695,669
|
|
|
$
|
1,695,669
|
|
|
$
|
1,695,669
|
|
|
$
|
1,695,669
|
|
|
$
|
1,695,669
|
|
Non-qualified retirement
plan(8)
|
|
$
|
628,833
|
|
|
$
|
628,833
|
|
|
$
|
628,833
|
|
|
$
|
628,833
|
|
|
$
|
628,833
|
|
Deferred compensation
plan(9)
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
$
|
|
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
Section 280G gross up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,956,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,365,719
|
|
|
$
|
6,555,254
|
|
|
$
|
3,931,365
|
|
|
$
|
7,286,649
|
|
|
$
|
13,143,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Paul F. DeSantis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
360,000
|
|
|
$
|
|
|
|
$
|
1,054,688
|
|
|
$
|
1,295,625
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
20,343
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
40,711
|
|
|
$
|
207,430
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
484,650
|
|
Restricted stock units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Stock options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified retirement
plan(8)
|
|
$
|
|
|
|
$
|
44,255
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
44,255
|
|
Non-qualified retirement
plan(8)
|
|
$
|
|
|
|
$
|
7,583
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
7,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
40,711
|
|
|
$
|
619,268
|
|
|
$
|
|
|
|
$
|
1,054,688
|
|
|
$
|
1,852,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Barry A. Rhodes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
360,000
|
|
|
$
|
|
|
|
$
|
1,024,125
|
|
|
$
|
1,335,000
|
|
Health/Welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
20,343
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
333,655
|
|
|
$
|
638,230
|
|
|
$
|
292,944
|
|
|
$
|
292,944
|
|
|
$
|
915,450
|
|
Restricted stock units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Stock options
|
|
$
|
112,128
|
|
|
$
|
112,128
|
|
|
$
|
|
|
|
$
|
65,413
|
|
|
$
|
112,128
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified retirement
plan(8)
|
|
$
|
434,442
|
|
|
$
|
434,442
|
|
|
$
|
434,442
|
|
|
$
|
434,442
|
|
|
$
|
434,442
|
|
Non-qualified retirement
plan(8)
|
|
$
|
9,183
|
|
|
$
|
9,183
|
|
|
$
|
9,183
|
|
|
$
|
9,183
|
|
|
$
|
9,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
889,408
|
|
|
$
|
1,553,983
|
|
|
$
|
736,569
|
|
|
$
|
1,826,107
|
|
|
$
|
2,826,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Ronald G. Andres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
234,000
|
|
|
$
|
|
|
|
$
|
667,965
|
|
|
$
|
813,100
|
|
Health/Welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
20,343
|
|
Equity awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
296,714
|
|
|
$
|
537,531
|
|
|
$
|
267,311
|
|
|
$
|
267,311
|
|
|
$
|
737,745
|
|
Restricted stock units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Stock options
|
|
$
|
246,140
|
|
|
$
|
246,140
|
|
|
$
|
|
|
|
$
|
203,671
|
|
|
$
|
246,140
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified retirement
plan(8)
|
|
$
|
522,734
|
|
|
$
|
522,734
|
|
|
$
|
522,734
|
|
|
$
|
522,734
|
|
|
$
|
522,734
|
|
Non-qualified retirement
plan(8)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,065,588
|
|
|
$
|
1,540,405
|
|
|
$
|
790,045
|
|
|
$
|
1,661,681
|
|
|
$
|
2,340,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
(1) |
|
The Corporation considers normal retirement age to be
60 years of age; therefore certain Named Executive Officers
would not be eligible for retirement at August 31, 2007.
Mr. Haines is the only Named Executive Officer eligible for
retirement as of August 31, 2007. 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. Similar to the provisions
for death and disability, the Named Executive Officers will
receive a portion of the performance awards based on time
elapsed since the date of grant. However, the awards will not be
released until the end of the performance vesting period at
which time it will be determined if such awards vest. All
options vest upon retirement. 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, 2007. |
|
(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 restricted stock
awards outstanding for the Named Executive Officers. Upon death
or disability, the individual will receive part of any
performance based awards based on time elapsed since the date of
grant and 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. 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, 2007. |
|
(3) |
|
The Corporation does not offer 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 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. 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,
2007. |
|
(4) |
|
The severance amount equals the salary for the remaining term
(three years) plus annual bonuses for the same time frame equal
to one-half the average of the last five years of bonus. Under
the 2002 Equity Incentive Plans, 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, 2007. |
|
(5) |
|
The calculation of severance benefits equals the most recent
fiscal years earned bonus plus three times the sum of:
(1) the higher of the base salary in effect immediately
prior to the event or the base salary immediately in effect
prior to
change-in-control
and (2) the higher of the annual bonus earned for the most
recent fiscal year or average of last three years. The severance
amounts are generally payable if the Corporation terminates the
Named Executive Officers employment or if the employee
terminates his employment with good reason following a
change-in-control
or prior to the end of the
change-in-control
period. A Named Executive Officer would also be eligible for
such payments if he voluntarily terminated employment within a
specified period following a
change-in-control.
|
|
|
|
All equity awards become fully vested upon a
change-in-control
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 the equity
awards are deemed to have been met as of the date of a
change-in-control,
therefore all shares were assumed to have vested. All options
vest immediately upon
change-in-control.
The Corporation assumed 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, 2007. |
|
(6) |
|
In the event of termination of the Named Executive
Officers employment following a
change-in-control,
the Named Executive Officers are eligible to thirty-six months
of life, disability, accident and health insurance |
35
|
|
|
|
|
without cost to the Named Executive Officer. These amounts are
based on current costs for insurance and could change depending
on the actual timing of such an event. |
|
(7) |
|
The value for the SERP is the present value of the accumulated
benefit as of August 31, 2007. Mr. Haines is the only
Named Executive Officer who participates in the SERP. |
|
(8) |
|
The balances in the qualified retirement plan and non-qualified
retirement plan for each Named Executive Officer become 100%
vested upon
change-in-control,
death or disability or eligible retirement. The Corporation
considers normal retirement age to 60, therefore certain Named
Executive Officers would not be eligible for retirement at
August 31, 2007. Mr. Haines is the only Named
Executive Officer eligible for retirement as of August 31,
2007. 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 qualified retirement plan
are based on actual cash contributions into an account for each
participant, with associated earnings. The non-qualified
retirement 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 balance is estimated
based on balances at August 31, 2007. |
|
(9) |
|
Mr. Haines is eligible to receive payments of monthly cash
benefits for ten years following his retirement, disability or
death in the annual amount of $100,000 under a deferred
compensation plan. The Corporation is not be required to make or
continue to make such payments to Mr. Haines in the event
that he is terminated for cause or breaches the non-competition
covenant set forth in his agreement. However, in the event that
Mr. Haines employment is terminated within two years
of a
change-in-control,
the payment of benefits under the agreement shall be accelerated
and paid to Mr. Haines in a lump sum within five days of
such termination. In connection with this agreement, the
Corporation owns and is the beneficiary of a life insurance
policy upon the life of Mr. Haines in the amount of
$1,000,000. Mr. Haines is the only Named Executive Officer
who participates in the deferred compensation plan. |
Director
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Awards ($)
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name
|
|
in Cash ($)
|
|
|
(2)(3)
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation(4)
|
|
|
Total
|
|
|
James S. Marlen
|
|
$
|
59,000
|
|
|
$
|
49,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,660
|
|
|
$
|
112,395
|
|
Ernest J. Novak, Jr.
|
|
|
67,500
|
|
|
|
47,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,916
|
|
Howard R. Curd
|
|
|
41,000
|
|
|
|
13,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,083
|
|
Michael A. McManus, Jr.
|
|
|
42,500
|
|
|
|
13,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,583
|
|
Dr. Peggy Miller
|
|
|
63,500
|
|
|
|
49,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,660
|
|
|
|
116,895
|
|
Willard R.
Holland(1)
|
|
|
95,500
|
|
|
|
49,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,660
|
|
|
|
148,895
|
|
John B. Yasinsky
|
|
|
64,000
|
|
|
|
49,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,660
|
|
|
|
117,395
|
|
David G. Birney
|
|
|
58,000
|
|
|
|
27,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,137
|
|
James A. Karman
|
|
|
60,500
|
|
|
|
49,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,660
|
|
|
|
113,895
|
|
Joseph M. Gingo
|
|
|
57,500
|
|
|
|
49,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,660
|
|
|
|
110,895
|
|
James A. Mitarontonda
|
|
|
55,000
|
|
|
|
27,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,137
|
|
Dr. Paul C.
Roberts(5)
|
|
|
10,500
|
|
|
|
85,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,965
|
|
|
|
106,224
|
|
36
As of
August 31, 2007, the directors held the following
stock-based awards and options:
|
|
|
|
|
|
|
|
|
|
|
Number of restricted
|
|
|
Name
|
|
stock awards or units(3)
|
|
Number of options outstanding
|
|
James S. Marlen
|
|
|
9,000(6
|
)
|
|
|
4,500(8
|
)
|
|
|
|
500(7
|
)
|
|
|
|
|
Ernest J. Novak, Jr.
|
|
|
9,000(6
|
)
|
|
|
|
|
|
|
|
500(7
|
)
|
|
|
|
|
Howard R. Curd
|
|
|
2,500(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. McManus, Jr.
|
|
|
2,500(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Peggy Miller
|
|
|
9,000(6
|
)
|
|
|
6,000(9
|
)
|
|
|
|
500(7
|
)
|
|
|
|
|
Willard R. Holland
|
|
|
9,000(6
|
)
|
|
|
6,000(9
|
)
|
|
|
|
500(7
|
)
|
|
|
|
|
John B. Yasinsky
|
|
|
9,000(6
|
)
|
|
|
6,000(9
|
)
|
|
|
|
500(7
|
)
|
|
|
|
|
David G. Birney
|
|
|
4,500(6
|
)
|
|
|
|
|
|
|
|
500(7
|
)
|
|
|
|
|
James A. Karman
|
|
|
9,000(6
|
)
|
|
|
6,000(9
|
)
|
|
|
|
500(7
|
)
|
|
|
|
|
Joseph M. Gingo
|
|
|
9,000(6
|
)
|
|
|
6,000(9
|
)
|
|
|
|
500(7
|
)
|
|
|
|
|
James A. Mitarontonda
|
|
|
4,500(6
|
)
|
|
|
|
|
|
|
|
500(7
|
)
|
|
|
|
|
Dr. Paul C. Roberts
|
|
|
|
|
|
|
4,500(8
|
)
|
|
|
|
(1) |
|
Mr. Holland deferred $47,750 of his total fees earned and
paid of $95,500. 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. |
|
(2) |
|
Stock award expense includes the restricted stock award and
restricted stock unit expense recorded in fiscal 2007, excluding
forfeitures. The expense for restricted stock awards is based on
the market value on the date of grant based on the closing price
of the Corporations common stock on that date. The
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 same date. The
Corporation recorded expense through a mark to market adjustment
of the units vested to date based on the August 31, 2007
closing price of the Corporations common stock and accrued
dividends for those units. |
|
(3) |
|
During fiscal 2007, each director was awarded 2,500 restricted
stock awards at a grant date fair value of $55,150. These awards
vest annually over three years following the date of grant.
Those who were directors at February 28, 2006 were awarded
500 restricted stock units in fiscal 2007 at a grant date fair
value of $11,030. |
|
(4) |
|
During fiscal 2007, two restricted stock grants for the Board of
Directors vested. In connection with this vesting,
Mr. Gingo, Mr. Holland, Mr. Karman,
Mr. Marlen, Dr. Miller and Mr. Yasinsky received
$3,660 for dividends earned on restricted stock during the
vesting period. |
|
(5) |
|
Dr. Roberts retired from the Board of Directors on
December 7, 2006. He received $9,965 for dividends on the
restricted stock that was released as a result of his retirement. |
|
(6) |
|
These are restricted stock awards, 2,500 of which vest
331/3%
per year over three years following the date of grant. The
remaining portion will vest at the end of four years following
the date of grant. All of these awards were valued at the grant
date fair value which was equal to the closing market price of
the Corporations common stock on the date of grant. |
|
(7) |
|
These are awards are restricted stock units in which each unit
is equal to the market value of one share of the
Corporations common stock. The units vest annually over
three years following the date of grant. At each |
37
|
|
|
|
|
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. |
|
|
|
(8) |
|
These are stock options exercisable and outstanding, 500 of
these stock option awards will expire in 2011, 2,000 will expire
in 2012 and the remaining 2,000 will expire in 2013. No expense
was recorded for stock options as all options were fully vested
prior to fiscal 2007. |
|
(9) |
|
These are stock options exercisable and outstanding, 2,000 of
these stock option awards will expire each in 2011, 2012 and
2013. No expense was recorded for stock options as all options
were fully vested prior to fiscal 2007. |
Each member of the Board of Directors who is not an employee of
the Corporation receives an annual Directors retainer of
$29,000 plus $1,500 for each Board or committee meeting
attended. The Lead Independent Director receives an additional
retainer of $20,000. In addition, each Director who serves as a
Chair of the Audit Committee, the Compensation Committee or the
Nominating and Corporate Governance Committee receives an
additional annual fee of $8,500, $7,500 and $6,000,
respectively. In addition, on April 11, 2007, each
non-employee Director of the Corporation received an award of
2,500 restricted shares of common stock pursuant to the 2006
Incentive Plan and each non-employee Director who served on the
Board on February 1, 2006 was granted 500 restricted stock
units. The restricted stock grants vest in equal increments on
the first three anniversaries of the grant date. The restricted
stock units vest in equal amounts on each of the first three
anniversaries of the grant date and will be settled for cash in
an amount equal to the fair market value of the
Corporations common stock on the applicable vesting date.
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 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 shares of
common stock on the date prior to the date that payment is made.
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), Willard R.
Holland, James A. Karman, James S. Marlen, James A. Mitarotonda,
and John B. Yasinsky.
The Audit Committee has met, reviewed and discussed the audited
consolidated financial statements of the Corporation for the
fiscal year ended August 31, 2007, 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)
38
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, 2007 for filing with
the SEC.
The Audit Committee:
Ernest J. Novak, Jr., Chair
Willard R. Holland
James A. Karman
James S. Marlen
James A. Mitarotonda
John B. Yasinsky
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors of the Corporation
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, 2008. This selection is being
presented to stockholders for ratification or rejection at this
Annual Meeting. The Audit Committee and the Board of
Directors each recommends that such selection be ratified.
PricewaterhouseCoopers LLP was the independent registered public
accounting firm of the Corporation for the fiscal year ended
August 31, 2007, 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 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 the Proposal has
received the requisite vote for approval, abstentions and broker
non-votes are not counted as having voting power with respect to
this Proposal and, therefore, would be disregarded in
determining the outcome of this Proposal. If the resolution is
rejected, or if PricewaterhouseCoopers LLP declines to act or
becomes incapable 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, 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, its independent registered public
accounting firm for fiscal 2007 and fiscal 2006.
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
Audit
Fees(1)
|
|
$
|
2,728,000
|
|
|
$
|
2,860,500
|
|
Audit-Related
Fees(2)
|
|
$
|
151,400
|
|
|
$
|
17,000
|
|
Tax
Fees(3)
|
|
$
|
1,766,000
|
|
|
$
|
847,000
|
|
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 |
39
|
|
|
|
|
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 to
be reviewed with the Audit Committee at its next regular meeting.
STOCKHOLDER
PROPOSAL
(Proposal No. 3)
The following stockholder proposal and supporting statement is
presented as received by Starboard Value & Opportunity
Fund, LLC, which we refer to as Starboard, of 666
Third Ave., New York, NY 10017 (which has notified us that it
owns 736,984 shares of our common stock and that it is a
member of a Section 13(d) group that
collectively owns 2,062,795 shares of our common stock),
for consideration by our stockholders. All statements therein
are the exclusive responsibility of Starboard.
Stockholder
Proposal
RESOLVED, that the stockholders of A. Schulman, Inc.
(Schulman or the Company), hereby
request that the Board of Directors immediately set up a special
committee consisting solely of independent directors that would
engage the services of a nationally recognized investment
banking firm to evaluate strategic alternatives that would
maximize stockholder value, including, but not limited to, a
sale of the North American business, or a merger or an outright
sale of the Company.
Supporting
Statement:
This proposal provides stockholders with the opportunity to
advise the Board of Directors of their concerns regarding
Schulmans strategic direction and to express their desire
to realize the full value of their investment in Schulman. As an
owner, together with our affiliates, of approximately 3.0% of
Schulmans common shares outstanding, we believe that in
order to maximize stockholder value the North American business
or the Company should be sold.
In our view, the Company is significantly undervalued due to
steadily declining gross profit and operating margins, which
represent managements failure to proactively rationalize
manufacturing capacity and reduce operating expenses in light of
changing industry dynamics. We believe managements focus
on top line growth at the expense of maximizing return on
invested capital has weakened the Companys competitive
position.
The recent operating performance provides little hope for
improvement in the status quo. Since fiscal year 2003, despite
recording restructuring charges totaling approximately
$8.2 million in four of the last five fiscal years, the
North American segment has remained unprofitable, generating a
cumulative operating loss of approximately $63.1 million,
including $18.9 million in the first nine months of fiscal
2007.
We do not believe this is an industry problem. In the last
decade, Schulmans two closest public company peers,
Spartech Corporation (SEH) and PolyOne Corporation (POL), have
grown net income at a compounded
40
annual growth rate of approximately 7.0% and 15.3%,
respectively1.
By way of comparison, Schulmans ten-year net income
compounded annual growth rate is negative 7.9%.
This performance, spanning a decade, necessitates a change in
strategy. In our opinion, Schulman has a portfolio of valuable
assets, the intrinsic value of which is not reflected in the
current market value. Given managements track record, we
do not believe the current management is capable of executing
the necessary changes in strategy to realize the full value of
the Companys assets.
Given the Board of Directors fiduciary obligation to
maximize stockholder value, we believe that a sale of the North
American business, or the entire Company, is in the best
interest of stockholders at this time. While the adoption of
this proposal will not legally bind the Board of Directors, we
trust that given their fiduciary responsibilities, the Directors
will honor their stockholders request.
If you believe the Company should immediately explore
opportunities to maximize the value of your shares, please vote
FOR this proposal.
Required
Vote
The approval of Starboards proposal requires the
affirmative vote of the holders of a majority of the shares of
common stock of the Corporation having voting power present at
the Annual Meeting in person or represented by proxy. In
determining whether the proposal has received the requisite vote
for approval, abstentions and broker non-votes, are not counted
as having voting power with respect to this Proposal and,
therefore, would be disregarded in determining the outcome of
this Proposal.
The Board of Directors recommends a vote AGAINST the
adoption of Stockholder Proposal No. 3. Proxies
solicited by the Board of Directors will be so voted unless
stockholders otherwise specify in their proxies.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In October 2005, the Corporation reached an agreement with the
Barington Group. 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 2006 Annual Meeting of Stockholders 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 of Stockholders.
On October 25, 2006, the Corporation reached another
agreement (the 2006 Agreement) with the Barington
Group. 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 another
agreement with the Barington Group (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 is the nominee recommended by the
Barington Group. Upon the appointment of Mr. Gingo as the
1 Source:
Public company documents. Net income numbers are as reported in
each companys respective public filings.
41
Corporations President and Chief Executive Officer, the
Barington Group and the Corporation agreed that Mr. Gingo
will be nominated as a Director in lieu of Mr. Haines. The
2007 Agreement also required the announcement of
Mr. Haines retirement as Chief Executive Officer,
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 Chief Executive
Officer (which will be 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 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 five
(5) million the number of shares authorized to be
repurchased under the Corporations current share
repurchase program, with a goal of repurchasing at least two
(2) million 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 and 2006, these reimbursements totaled
$150,000 and $140,000 and in 2007, are not to exceed $200,000.
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 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, 2007,
except for the following filings: (i) a Form 4 filed
with the SEC on August 30, 2007 on Mr. Birneys
behalf to report an acquisition of 2,500 shares of common
stock on August 16, 2007, (ii) an amended Form 4
filed with the SEC on November 21, 2007 to amend
Mr. Haines prior report of an exercise of options on
July 19, 2007 to increase the number of shares of common
stock reported as acquired by 34,999 for a total of
259,999 shares of common stock acquired.
OTHER
MATTERS
The Board of Directors knows of no matters to be presented for
action at the 2007 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 come before the 2007
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.
42
GENERAL
INFORMATION
Voting of
Proxies
Shares represented by properly executed proxies will be voted at
the 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 proxies on which no specification has been made
will be voted (i) for the election of Directors,
(ii) for the ratification of the selection of the
independent registered public accounting firm, and
(iii) against the adoption of stockholder Proposal
No. 3.
Stockholder
Proposals
Any stockholder who intends to present a proposal at the annual
meeting in the year 2008 must deliver the proposal to the
Corporate Secretary at A. Schulman, Inc., 3550 West Market
Street, Akron, Ohio 44333:
|
|
|
|
|
Not later than August 21, 2008, 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; or
|
|
|
|
Not earlier than October 12, 2008 and not later than
November 11, 2008 if the proposal is submitted pursuant to
the Corporations 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 October 12, 2008 through November 11, 2008
time period.
|
A copy of the Corporations By-Laws is available on request
to the Corporate Secretary at A. Schulman, Inc., 3550 West
Market Street, Akron, Ohio 44333.
Revocation
of Proxies
A proxy 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 2007 Annual Meeting.
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 services in connection with this Proxy Statement.
For such services, the Corporation will pay Georgeson Inc. a
base fee of $25,000, an additional fee of $50,000 upon the
mailing of any solicitation opposing the Corporations
solicitation and a fee of $25,000 if the nominees of the Board
of Directors are elected at the 2007 Annual Meeting. Georgeson
Inc. will also 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
December 19, 2007
43
APPENDIX A
PARTICIPANT
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
Shares of Common
|
|
|
|
|
|
Stock Beneficially
|
|
Name
|
|
Title
|
|
Owned(1)
|
|
|
Terry L. Haines
|
|
Chairman of the Board, President and Chief Executive Officer
|
|
|
399,333
|
|
Paul F. DeSantis
|
|
Chief Financial Officer and Treasurer and Vice President of
Finance
|
|
|
60,396
|
(2)
|
Barry A. Rhodes
|
|
Executive Vice President and Chief Operating Officer for North
America
|
|
|
92,033
|
|
Ronald G. Andres
|
|
Vice President and General Manager of Engineered Compounds
|
|
|
119,433
|
(3)
|
Gary J. Elek
|
|
Vice President and Controller for North America
|
|
|
28,666
|
|
David G. Birney
|
|
Director
|
|
|
7,000
|
(4)
|
Howard R. Curd
|
|
Director
|
|
|
4,500
|
|
Joseph M. Gingo
|
|
Director
|
|
|
17,000
|
|
Willard R. Holland
|
|
Director
|
|
|
20,000
|
|
James A. Karman
|
|
Director
|
|
|
21,000
|
|
James S. Marlen
|
|
Director
|
|
|
19,500
|
|
Dr. Peggy Miller
|
|
Director
|
|
|
18,000
|
|
James A. Mitarotonda
|
|
Director
|
|
|
2,371,954
|
(5)
|
Michael A. McManus, Jr.
|
|
Director
|
|
|
2,500
|
|
Ernest J. Novak, Jr.
|
|
Director
|
|
|
12,200
|
|
John B. Yasinsky
|
|
Director
|
|
|
19,000
|
(6)
|
Stanley W. Silverman
|
|
Nominee
|
|
|
|
|
|
|
|
(1) |
|
Includes the following number of shares that are not owned, but
can be purchased within sixty days upon the exercise of options
granted under 1992 Non-Employee Directors Stock Option
Plan, 2002 Equity Incentive Plan and/or the 2006 Incentive Plan:
86,667 by Terry L. Haines; 43,333 by Barry A. Rhodes; 40,000 by
Paul F. DeSantis; 64,333 by Ronald G. Andres; 16,666 by Gary J.
Elek; 6,000 by each of Dr. Peggy Miller, James A. Karman,
Willard R. Holland, John B. Yasinsky and Joseph M. Gingo; and
4,500 by James S. Marlen. 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: 90,000 for Terry L. Haines; 26,000 for Ronald G.
Andres; 33,000 for Barry A. Rhodes; 18,000 for Paul F. DeSantis;
12,000 for Gary J. Elek; 9,000 for each of Dr. Peggy
Miller, Willard R. Holland, James A. Karman, James S. Marlen,
Ernest J. Novak, Jr., John B. Yasinsky and Joseph M. Gingo;
4,500 for each of David G. Birney and James A. Mitarotonda;
2,500 for each of Michael A. McManus, Jr. and Howard R.
Curd. Participants have the power to vote, but not dispose, of
these shares. |
|
(2) |
|
Mr. DeSantis owns his shares jointly with his spouse, and
he has shared voting and dispositive power with respect to such
shares. |
|
(3) |
|
Mr. Andres owns 5,300 shares jointly with his spouse,
and he has shared voting and dispositive power with respect to
such shares. |
|
(4) |
|
Mr. Birney owns 2,500 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, |
A-1
|
|
|
|
|
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. Also, 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. |
INFORMATION
REGARDING TRANSACTIONS IN THE CORPORATIONS SECURITIES
BY
PARTICIPANTS
The following table sets forth information regarding purchases
and sales within the past two years of the Corporations
stock by the Corporations directors, director nominees,
officers and employees who, under the Securities and Exchange
Commissions rules, are participants in the
Corporations solicitation of proxies in connection with
the 2007 Annual Meeting of Stockholders. Except as set forth
below or as otherwise disclosed in the Proxy Statement, none of
the purchase price or market value of the stock is represented
by funds borrowed or otherwise obtained for the purpose or
acquiring or holding such securities.
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Name and Address
|
|
Date of Sale or Purchase
|
|
Shares
|
|
|
Terry L. Haines
|
|
Exercise of stock options on January 19, 2006
|
|
|
134,167
|
|
Chairman of the Board, President and
|
|
Sale of shares of common stock on January 19, 2006
|
|
|
(106,300
|
)
|
Chief Executive Officer until December 31, 2007
|
|
Sale of shares of common stock on November 1, 2006
|
|
|
(4,700
|
)
|
A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
75,000
|
|
3550 West Market Street
|
|
Sale of shares of common stock on July 18, 2007
|
|
|
(100,000
|
)
|
Akron, Ohio 44333
|
|
Exercise of stock options on July 19, 2007
|
|
|
259,999
|
|
|
|
Sale of shares of common stock on July 19, 2007
|
|
|
(100,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul F. DeSantis
|
|
Acquisition of shares of common stock through
|
|
|
34
|
|
Chief Financial Officer and Treasurer
|
|
a broker dividend reinvestment program in 2006
|
|
|
|
|
and Vice President of Finance
|
|
|
|
|
|
|
A. Schulman, Inc.
|
|
Purchase of shares of common stock on January 9, 2007
|
|
|
500
|
|
3550 West Market Street
|
|
Grant of restricted stock on April 11, 2007
|
|
|
18,000
|
|
Akron, Ohio 44333
|
|
Acquisition of shares of common stock through a broker dividend
reinvestment program in 2007
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry A. Rhodes
|
|
Exercise of stock option on January 12, 2006
|
|
|
20,500
|
|
Executive Vice President and Chief
|
|
Sale of shares of common stock on January 12, 2006
|
|
|
(18,000
|
)
|
Operating Officer for North America
|
|
Grant of restricted stock on April 11, 2007
|
|
|
18,000
|
|
A. Schulman, Inc.
3550 West Market Street
Akron, Ohio 44333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald G. Andres
|
|
Exercise of stock option on January 11, 2006
|
|
|
12,000
|
|
Vice President of North American
|
|
Sale of shares of common stock on January 11, 2006
|
|
|
(9,000
|
)
|
Operations
|
|
Grant of restricted stock on April 11, 2007
|
|
|
13,000
|
|
A. Schulman, Inc.
3550 West Market Street
Akron, Ohio 4333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-2
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Name and Address
|
|
Date of Sale or Purchase
|
|
Shares
|
|
|
Gary J. Elek
|
|
Grant of restricted stock on April 11, 2007
|
|
|
6,000
|
|
Vice President and Controller for North
America
|
|
|
|
|
|
|
A. Schulman, Inc.
3550 West Market Street
Akron, Ohio 44333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David G. Birney
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
14211 Indian Wells Drive
|
|
Purchase of shares of common stock on August 16, 2007
|
|
|
2,500
|
|
Houston, Texas 77069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard R. Curd
|
|
Purchase of shares of common stock on July 27, 2007
|
|
|
1,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
Chairman of the Board and Chief
|
|
Purchase of shares of common stock on February 27, 2007
|
|
|
500
|
|
Executive Officer of Uniroyal
|
|
Purchase of shares of common stock on February 28, 2007
|
|
|
500
|
|
Engineered Products, LLC
290 Cocoanut Avenue,
Suite 1-A
Sarasota, Florida 34236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph M. Gingo
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
President and Chief Executive Officer
commencing January 1, 2008
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
A. Schulman, Inc.
3550 West Market Street
Akron, Ohio 44333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Holland
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
2 Shadow Brook Lane
Savannah, Georgia 31411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James M. Karman
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
110 Seaspray Avenue
Palm Beach, Florida 33480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James S. Marlen
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
Chairman of the Board, President and
Chief Executive Officer of Ameron
International Corporation
245 South Los Robles Avenue
8th Floor
Pasadena, California 91011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. McManus, Jr.
Director A. Schulman, Inc.
President, Chief Executive Officer
and Director of Misonix, Inc.
100 White Plains Road
Bronxville, New York 10708
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peggy G. Miller
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
506 Meadow Creek Drive
Volga, South Dakota 57071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James A. Mitarotonda
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
Chairman of the Board, President
|
|
|
|
|
|
|
and Chief Executive Officer of Barington
|
|
See also the purchases by various affiliates of
|
|
|
|
|
Capital Group, L.P., Barington
|
|
Mr. Mitarotonda below.
|
|
|
|
|
Companies Investors, LLC
and Barington Offshore Advisors II, LLC
888 Seventh Avenue, 17th Floor
New York, New York 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-3
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Name and Address
|
|
Date of Sale or Purchase
|
|
Shares
|
|
|
Ernest J. Novak, Jr.
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
8665 Century Lane
Russell, Ohio 44072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John B. Yasinsky
|
|
Grant of restricted stock on February 1, 2006
|
|
|
2,000
|
|
Director A. Schulman, Inc.
|
|
Purchase of shares of common stock on July 10, 2006
|
|
|
1,000
|
|
945 Red Oak Drive
|
|
Grant of restricted stock on April 11, 2007
|
|
|
2,500
|
|
Pittsburgh, Pennsylvania 15238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barington Companies Offshore Fund,
|
|
Purchase of shares of common stock on May 02, 2006
|
|
|
8,649
|
|
Ltd.
|
|
Purchase of shares of common stock on May 03, 2006
|
|
|
92
|
|
888 Seventh Avenue
|
|
Purchase of shares of common stock on May 04, 2006
|
|
|
39,969
|
|
New York, New York 10019
|
|
Purchase of shares of common stock on May 08, 2006
|
|
|
8,993
|
|
|
|
Purchase of shares of common stock on May 11, 2006
|
|
|
36,581
|
|
|
|
Purchase of shares of common stock on May 12, 2006
|
|
|
9,682
|
|
|
|
Purchase of shares of common stock on May 17, 2006
|
|
|
25,000
|
|
|
|
Purchase of shares of common stock on May 18, 2006
|
|
|
25,000
|
|
|
|
Purchase of shares of common stock on May 19, 2006
|
|
|
25,000
|
|
|
|
Purchase of shares of common stock on May 24, 2006
|
|
|
41,405
|
|
|
|
Purchase of shares of common stock on May 25, 2006
|
|
|
18,239
|
|
|
|
Purchase of shares of common stock on July 10, 2006
|
|
|
5,710
|
|
|
|
Purchase of shares of common stock on July 11, 2006
|
|
|
24,106
|
|
|
|
Purchase of shares of common stock on July 12, 2006
|
|
|
2,000
|
|
|
|
Purchase of shares of common stock on July 14, 2006
|
|
|
9,810
|
|
|
|
Purchase of shares of common stock on July 27, 2006
|
|
|
50,000
|
|
|
|
Purchase of shares of common stock on August 21, 2006
|
|
|
5,876
|
|
|
|
Purchase of shares of common stock on October 31, 2006
|
|
|
36,600
|
|
|
|
Purchase of shares of common stock on November 01, 2006
|
|
|
28,400
|
|
|
|
Purchase of shares of common stock on November 02, 2006
|
|
|
10,681
|
|
|
|
Purchase of shares of common stock on November 17, 2006
|
|
|
8,000
|
|
|
|
Purchase of shares of common stock on November 27, 2006
|
|
|
32,699
|
|
|
|
Purchase of shares of common stock on November 28, 2006
|
|
|
10,240
|
|
|
|
Purchase of shares of common stock on November 29, 2006
|
|
|
470
|
|
|
|
Purchase of shares of common stock on January 09, 2007
|
|
|
16,170
|
|
|
|
Purchase of shares of common stock on January 10, 2007
|
|
|
6,301
|
|
|
|
Purchase of shares of common stock on January 16, 2007
|
|
|
25,535
|
|
|
|
Purchase of shares of common stock on January 17, 2007
|
|
|
17,875
|
|
|
|
Purchase of shares of common stock on January 18, 2007
|
|
|
25,535
|
|
|
|
Purchase of shares of common stock on February 23, 2007
|
|
|
17,753
|
|
|
|
Purchase of shares of common stock on February 26, 2007
|
|
|
18,005
|
|
|
|
Purchase of shares of common stock on February 27, 2007
|
|
|
35,386
|
|
|
|
Purchase of shares of common stock on April 11, 2007
|
|
|
2,745
|
|
|
|
Purchase of shares of common stock on April 12, 2007
|
|
|
6,459
|
|
|
|
Purchase of shares of common stock on May 01, 2007
|
|
|
6,371
|
|
|
|
Purchase of shares of common stock on July 26, 2007
|
|
|
20,583
|
|
|
|
Purchase of shares of common stock on July 27, 2007
|
|
|
20,368
|
|
|
|
Purchase of shares of common stock on August 02, 2007
|
|
|
28,649
|
|
|
|
Purchase of shares of common stock on August 03, 2007
|
|
|
32,071
|
|
|
|
Purchase of shares of common stock on August 06, 2007
|
|
|
25,028
|
|
|
|
Purchase of shares of common stock on August 08, 2007
|
|
|
27,202
|
|
|
|
Purchase of shares of common stock on August 09, 2007
|
|
|
51,734
|
|
|
|
Purchase of shares of common stock on August 16, 2007
|
|
|
19,171
|
|
|
|
Purchase of shares of common stock on August 21, 2006
|
|
|
4,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barington Companies Equity Partners,
|
|
Purchase of shares of common stock on November 27, 2006
|
|
|
12,289
|
|
L.P.
|
|
Purchase of shares of common stock on November 28, 2006
|
|
|
6,655
|
|
888 Seventh Avenue
|
|
Purchase of shares of common stock on November 29, 2006
|
|
|
306
|
|
New York, New York 10019
|
|
Purchase of shares of common stock on January 09, 2007
|
|
|
10,508
|
|
|
|
Purchase of shares of common stock on January 10, 2007
|
|
|
4,095
|
|
|
|
Purchase of shares of common stock on January 16, 2007
|
|
|
16,595
|
|
|
|
Purchase of shares of common stock on January 17, 2007
|
|
|
11,616
|
|
|
|
Purchase of shares of common stock on January 18, 2007
|
|
|
16,595
|
|
A-4
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Name and Address
|
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Date of Sale or Purchase
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Shares
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|
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Purchase of shares of common stock on April 11, 2007
|
|
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14,821
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|
|
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Purchase of shares of common stock on April 12, 2007
|
|
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4,169
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|
|
|
Purchase of shares of common stock on May 01, 2007
|
|
|
5,804
|
|
|
|
Purchase of shares of common stock on July 26, 2007
|
|
|
19,867
|
|
|
|
Purchase of shares of common stock on July 27, 2007
|
|
|
13,368
|
|
|
|
Purchase of shares of common stock on August 08, 2007
|
|
|
12,588
|
|
|
|
Purchase of shares of common stock on August 09, 2007
|
|
|
27,846
|
|
|
|
Purchase of shares of common stock on August 16, 2007
|
|
|
3,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Barington Investments, L.P.
|
|
Purchase of shares of common stock on August 21, 2006
|
|
|
3,186
|
|
888 Seventh Avenue
|
|
Purchase of shares of common stock on November 27, 2006
|
|
|
5,012
|
|
New York, New York 10019
|
|
Purchase of shares of common stock on November 28, 2006
|
|
|
2,705
|
|
|
|
Purchase of shares of common stock on November 29, 2006
|
|
|
124
|
|
|
|
Purchase of shares of common stock on January 09, 2007
|
|
|
3,766
|
|
|
|
Purchase of shares of common stock on January 10, 2007
|
|
|
1,468
|
|
|
|
Purchase of shares of common stock on January 16, 2007
|
|
|
6,020
|
|
|
|
Purchase of shares of common stock on January 17, 2007
|
|
|
4,214
|
|
|
|
Purchase of shares of common stock on February 23, 2007
|
|
|
2,620
|
|
|
|
Purchase of shares of common stock on February 26, 2007
|
|
|
2,657
|
|
|
|
Purchase of shares of common stock on February 27, 2007
|
|
|
5,223
|
|
|
|
Purchase of shares of common stock on April 11, 2007
|
|
|
5,391
|
|
|
|
Purchase of shares of common stock on April 12, 2007
|
|
|
3,262
|
|
|
|
Purchase of shares of common stock on May 01, 2007
|
|
|
3,752
|
|
|
|
Purchase of shares of common stock on July 26, 2007
|
|
|
7,830
|
|
|
|
Purchase of shares of common stock on July 27, 2007
|
|
|
6,530
|
|
|
|
Purchase of shares of common stock on August 02, 2007
|
|
|
7,351
|
|
|
|
Purchase of shares of common stock on August 03, 2007
|
|
|
8,229
|
|
|
|
Purchase of shares of common stock on August 06, 2007
|
|
|
6,422
|
|
|
|
Purchase of shares of common stock on August 08, 2007
|
|
|
10,210
|
|
|
|
Purchase of shares of common stock on August 09, 2007
|
|
|
20,420
|
|
|
|
Purchase of shares of common stock on August 16, 2007
|
|
|
7,400
|
|
MISCELLANEOUS
INFORMATION CONCERNING PARTICIPANTS
Except as provided in this Appendix or otherwise disclosed in
this Proxy Statement, to the best of the Corporations
knowledge, no associate of any person listed above under
Participant Information beneficially owns any common
stock or other securities of the Corporation. In addition,
except as described in this Appendix or otherwise disclosed in
this Proxy Statement, to the best of the Corporations
knowledge, no person listed above under Participant
Information or any of his or her associates, is either a
party to any transactions or series of similar transactions
since the beginning of the Corporations last fiscal year,
or any currently proposed transaction or series of similar
transactions, (1) in which the Corporation or any of the
Corporations subsidiaries was or is to be a party,
(2) in which the amount involved exceeds $120,000 or
(3) in which any such person or any of his or her
associates had or will have, a direct or indirect material
interest.
To the best of the Corporations knowledge, except as
described in this Appendix or as otherwise disclosed in this
Proxy Statement, no person listed above under Participant
Information or any of his or her associates has entered
into an arrangement or understanding with any person with
respect to any future employment by the Corporation or its
affiliates, or any future transactions to which the Corporation
or any of its affiliates will or may be a party. In addition, to
the best of the Corporations knowledge, except as
described in this Appendix or otherwise disclosed in this Proxy
Statement, there are no contracts, arrangements or
understandings with any of the persons listed above under
Participant Information within the past year and any
person with respect to any securities of the Corporation,
including, but not limited to joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the
giving or withholding of proxies.
To the best of the Corporations knowledge, except as
described in this Appendix or as otherwise disclosed in this
Proxy Statement, none of the persons listed above under
Participant Information beneficially owns any
securities of any subsidiary of the Corporation. Except as
described in this Appendix or as otherwise disclosed in
A-5
this Proxy Statement, to the best of the Corporations
knowledge, no person listed above under Participant
Information has any substantial interest, direct or
indirect, by security holdings or otherwise, in any matter to be
acted upon at the 2007 Annual Meeting of Stockholders.
There are no material proceedings to which any person listed
above under Participant Information or any associate
of any such person is a party adverse to the Corporation or any
of its subsidiaries or has a material interest adverse to the
Corporation or any of its subsidiaries. There are no family
relationships among the directors, director nominees and
executive officers of the Corporation.
A-6
(This Page
Intentionally Left Blank)
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 January 10, 2008
The undersigned hereby appoints PAUL F. DESANTIS and GARY J. ELEK 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 January 10, 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 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 and 2, and AGAINST
Stockholder Proposal 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
|
|
INTERNET VOTING
|
|
VOTING BY MAIL |
|
|
|
|
|
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 Sunday,
January 9, 2008.
|
|
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
Sunday, January 9,
2008.
|
|
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
6
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE 6
|
|
|
|
|
x
|
|
Please mark
votes as in
this example
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 and 2. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL 3.
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FOR |
|
AGAINST |
|
ABSTAIN |
1. Election of Class III directors: |
(1) Joseph M. Gingo |
|
(2) James A. Karman |
2. |
To ratify the selection of PricewaterhouseCoopers LLP as independent
registered public
accounting firm for the year ending August 31, 2008. |
|
o |
|
o |
|
o |
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(3) James A. Mitarotonda |
|
(4) Stanley W. Silverman |
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FOR all nominees, |
|
WITHHOLD |
|
FOR all nominees, |
|
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listed above |
|
AUTHORITY to vote |
|
listed above except |
|
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for all nominees |
|
as marked to the |
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FOR |
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AGAINST |
|
ABSTAIN |
|
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listed above. |
|
contrary below. |
3. |
To approve a
stockholder proposal to have the Board of
Directors create a special committee of
independent directors to engage an investment banking firm
to evaluate strategic alternatives for the Corporation. |
|
o |
|
o |
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o |
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o |
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o |
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o |
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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. |
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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, 200 |
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Signature |
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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. If
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.