SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant (x)

Filed by a Party other than the Registrant ( )

Check the appropriate box:

( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))

(x) Definitive Proxy Statement

( ) Definitive Additional Materials

( ) Soliciting Material Pursuant to Rule 14a-11© or Rule 14a-12

 

SYNALLOY CORPORATION

---------------------------------------------------------------------------

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box)

(x) No fee required

( ) $125 per Exchange Act Rules 0-11©(1)(ii), 14a-6(i)(1), or 14a6(i)(2) or
Item 22a(2) of Schedule 14A

( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.

1. Title of each class of securities to which transaction applies
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2. Aggregrate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

4. Proposed maximum aggregate value of transaction:

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5. Total fee paid:

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( ) Fee paid previously with preliminary materials.

( ) Check box if any part of the fee is offset as provided Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid:---------------

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Date Filed:----------------------------------------------

 

SYNALLOY CORPORATION
Post Office Box 5627
Spartanburg, South Carolina 29304

NOTICE OF ANNUAL MEETING
April 27, 2006

TO THE SHAREHOLDERS OF SYNALLOY CORPORATION

Notice is hereby given that the Annual Meeting of Shareholders of Synalloy Corporation will be held at the Company's Bristol Metals offices, 390 Bristol Metals Road, Bristol, Tennessee, on Thursday, April 27, 2006, at 10:00 a.m. local time. The following important matters will be presented for your consideration:

  1. To elect six (6) directors to serve until the next Annual Meeting of Shareholders or until their successors are elected and qualified;
  2. To act upon such other matters as may properly come before the meeting or any adjournment or adjournments thereof.

All of the above matters are more fully described in the accompanying Proxy Statement.

Only shareholders of record at the close of business on February 28, 2006 are entitled to notice of and to vote at the meeting.

 

By order of the Board of Directors

 /s/ Cheryl C. Carter

 Cheryl C. Carter
Secretary

Spartanburg, South Carolina
March 28, 2006

Important: You are cordially invited to attend the meeting, but whether or not you plan to attend, PLEASE FILL IN, DATE, SIGN AND MAIL the enclosed Proxy promptly. If you are a record shareholder and attend the meeting, you may either use your proxy, or withdraw your proxy and vote in person

The 2005 Annual Report on Form 10-K is furnished herewith.

 

SYNALLOY CORPORATION
CROFT INDUSTRIAL PARK
POST OFFICE BOX 5627
SPARTANBURG, SOUTH CAROLINA 29304

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS
April 27, 2006

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Synalloy Corporation (the "Company") of proxies to be voted at the Annual Shareholders' Meeting to be held at the Company's Bristol Metals offices, 390 Bristol Metals Road, Bristol, Tennessee, on April 27, 2006, at 10:00 a.m. local time, and at all adjournment(s) thereof. On or about March 28, 2006, we will begin mailing these proxy materials to all shareholders of record as of the close of business on February 28, 2006.

Quorum and Voting. The presence, in person or by proxy, of a majority of the outstanding shares of Common Stock of the Company is necessary to constitute a quorum at the Annual Meeting. If a share is represented for any purpose at the annual meeting by the presence of the registered owner or a person holding a valid proxy for the registered owner, it is deemed to be present for purposes of establishing a quorum. Therefore, valid proxies which are marked "Abstain" or "Withhold" and shares that are not voted, including proxies submitted by brokers that are the record owners of shares (so-called "broker non-votes"), will be included in determining the number of votes present or represented at the annual meeting. If a quorum is not present or represented at the meeting, the shareholders entitled to vote who are present in person or represented by proxy have the power to adjourn the meeting from time to time. If the meeting is to be reconvened within 30 days, no notice of the reconvened meeting will be given other than an announcement at the adjourned meeting. If the meeting is to be adjourned for 30 days or more, notice of the reconvened meeting will be given as provided in the Bylaws. At any reconvened meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

Voting Rights. The securities which can be voted at the Annual Meeting consist of Common Stock of the Company, $1.00 par value per share. The record date for determining the holders of Common Stock who are entitled to notice of and to vote at the Annual Meeting is February 28, 2006. On February 24, 2006, the Company had outstanding 6,109,989 (excluding 1,890,011 shares held in treasury) shares of Common Stock. Each shareholder of Common Stock is entitled in respect of each matter to be voted on at the meeting to one (1) vote per share, except that in the election of Directors shareholders have cumulative voting rights.

If a quorum is present at the Annual Meeting, Directors will be elected by a plurality of the votes cast by shares present in person and entitled to vote at the meeting. Votes that are withheld or shares that are not voted in the election of directors will have no effect on the outcome of election of directors. Each stockholder of Common Stock entitled to vote for the election of Directors shall have the right to cumulate his votes either (1) by giving to one candidate as many votes as shall equal the number of shares owned by such holder multiplied by the number of directors to be elected, or (2) by distributing his votes on the same principle among any number of candidates. Any stockholder who intends to cumulatively vote his shares shall either (1) give written notice of such intention to the Secretary of the Company not less than forty-eight (48) hours before the time fixed for the Annual Meeting, or (2) announce his intention in such meeting before the voting for Directors shall commence. If a stockholder gives notice of his intention to cumulate his votes, all shareholders entitled to vote at the meeting shall without further notice be entitled to cumulate their votes.

If a quorum is present, all other matters which may be considered and acted upon by the holders of Common Stock at the Annual Meeting will be approved if a majority of shares present and entitled to vote at the meeting cast their votes in favor of the proposals. Abstentions and broker non-votes will have the effect of a vote against such matters.

Cost of Solicitation. The entire cost of soliciting these proxies will be borne by the Company. The Company may make arrangements with brokerage houses, nominees, fiduciaries and other custodians to send proxies and proxy material to beneficial owners of the Company's stock and may reimburse them for their expenses in so doing. Proxies may be solicited personally or by telephone, other electronic means or mail by directors, officers and regular employees of the Company without additional compensation for such services. Synalloy has engaged the services of W. F. Doring & Company, a firm specializing in proxy solicitation, to solicit proxies and to assist in the distribution and collection of proxy

<page 1>

material for a fee estimated at approximately $2,500 plus reimbursement of out-of-pocket expenses.

Information About Voting. Shareholders of record can vote in person at the Annual Meeting or by proxy. Shareholders of record may vote their proxy by mail or by internet following the instructions on the proxy card. If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted. If your shares are not registered in your own name and you wish to vote your shares in person at the Annual Meeting, you should contact your broker or agent to obtain a broker's proxy card and bring it to the Annual Meeting in order to vote. If you hold shares in the Synalloy Corporation 401(k)/Employee Stock Ownership Plan, your voting instructions for those shares must be received by 5:00 p.m., local time, on April 20, 2006 to allow sufficient time for voting by the trustees and administrators of the plans.

Voting by Proxy. In voting by proxy with regard to the election of directors, shareholders may vote in favor of all nominees, withhold their votes as to all nominees or withhold their votes as to specific nominees. Shareholders should specify their choices on the accompanying proxy card. All properly executed proxy cards delivered by shareholders to the Company and not revoked will be voted at the Annual Meeting in accordance with the directions given. If no specific instructions are given with regard to the matters to be voted upon, the shares represented by a signed proxy card will be voted "FOR" the election of the persons named in this Proxy Statement as the Board of Directors' nominees for the election to the Board of Directors. If any other matters properly come before the Annual Meeting, the persons named as proxies will vote upon such matters according to their judgment.

Revocability of Proxy. Any record stockholder delivering a proxy has the power to revoke it at any time before it is voted by giving written notice to the Secretary of the Company at Post Office Box 5627, Spartanburg, South Carolina 29304; by delivering a valid proxy bearing a later date to the Company's offices at 2155 West Croft Circle, Spartanburg, South Carolina; or by attending the meeting and voting in person.Written notice of revocation of a proxy or delivery of a later dated proxy will be effective upon receipt by the Company. Attendance at the annual meeting will not in itself constitute revocation of a proxy. Shareholders who hold their shares in street name with a broker or other nominee may change or revoke their proxy instructions by submitting new voting instructions to the broker or other nominee.

Householding. The Securities and Exchange Commission's rules permit us to deliver a single proxy statement and annual report to one address shared by two or more of our shareholders. This delivery method is referred to as "householding" and can result in significant cost savings. In order to take advantage of this opportunity, we have delivered only one proxy statement and annual report to multiple shareholders who share an address, unless we received contrary instructions from impacted shareholders prior to the mailing date. If you prefer to receive separate copies of a proxy statement or annual report, either now or in the future, please call us at 864-585-3605, or send your request in writing to the following address: Secretary of Synalloy Corporation, Post Office Box 5627, Spartanburg, SC 29304. If you are still receiving multiple reports and proxy statement for shareholders who share an address and would prefer to receive a single copy of the annual report and proxy statement in the future, please call or write to use at the above address or telephone number.

SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT

The Company's Annual Report to Shareholders including Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission, accompanies this Proxy Statement. Copies of exhibits to the Form 10-K will be provided upon written request to Cheryl C. Carter, Secretary, Synalloy Corporation, Post Office Box 5627, Spartanburg, South Carolina 29304 at a charge of $.10 per page. Copies of the Form 10-K and exhibits may also be downloaded from the Securities and Exchange Commission website at: http://www.sec.gov. Such Annual Report to Shareholders does not form any part of the material for soliciting proxies.

<page 2>

BENEFICIAL OWNERS OF MORE THAN FIVE (5%) PERCENT OF
THE COMPANY'S COMMON STOCK

The table below provides certain information regarding persons known by the Company to be the beneficial owners of more than five (5%) percent of the Company's Common Stock as of February 24, 2006.


Name and Address of Beneficial Owner

Amount and Nature
of Beneficial Ownership

Percent
of Class

Royce & Associates LLC
1414 Avenue of the Americas
New York, NY 10019

596,700 (1)

9.77

 

 

 

James G. Lane, Jr.
PO Box 5627
Spartanburg, SC 29304

399,105 (2)

6.53

 

 

 

Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401

387,778 (3)

6.35

  1. Royce & Associates, Inc. ("Royce") is an investment advisor registered with the Securities & Exchange Commission under the Investment Advisors Act of 1940. This information was obtained from Royce's Schedule 13G dated January 31, 2006, as filed with the Securities and Exchange Commission, and has not been independently verified.
  2. The aggregate number of shares of Common Stock owned beneficially by Mr. Lane includes direct ownership of 170,621 shares; 26,984 shares held in an IRA; 173,750 shares owned by his spouse as to which Mr. Lane disclaims beneficial ownership; and options to purchase 27,750 shares exercisable within 60 days.
  3. According to its Schedule 13G dated February 1, 2006, as filed with the Securities and Exchange Commission (the "Schedule 13G"), Dimensional Fund Advisors, Inc. ("Dimensional"), an investment advisor 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.These investment companies, trusts and accounts are the "Funds." In its role as investment advisor or manager, Dimensional possesses voting and/or investment power over the securities of the Company described in the Schedule 13G that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Company held by the Funds. However, all such securities reported in the Schedule 13G are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. In addition, Dimensional has asserted that the filing of this Schedule 13G shall not be construed as an admission that the reporting person or any of its affiliates is the beneficial owner of any securities covered by the Schedule 13G for any other purpose than Section 13(d) of the Securities Exchange Act of 1934. The Company has not independently verified the information in the Schedule 13G .

<page 3>

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information regarding the ownership of the Common Stock as of February 24, 2006 by each director and nominee for director and each executive officer of the Company for whom compensation information is disclosed under the heading "Executive Compensation."

*Less than 1%




Name of Beneficial Owner

Common Stock Beneficially Owned as of
February 24, 2006



Percent
of Class

James G. Lane, Jr.

399,105

6.53

Murray H. Wright

261,360

4.28

Sibyl N. Fishburn

81,540

1.33

Michael D. Boling

70,147

1.15

Ronald H. Braam

60,868

1.00

Gregory M. Bowie

55,460

*

Carroll D. Vinson

33,472

*

Craig C. Bram

21,913

*

All Directors and Executive Officers as a group (9 persons)

1,017,153

16.65

  1. Includes 26,984 shares held by an IRA; 173,750 shares owned by his spouse, as to which Mr. Lane disclaims beneficial ownership; and options to purchase 27,750 shares exercisable within 60 days.
  2. Includes indirect ownership of 45,000 shares held by an IRA; 4,340 held by spouse; 3,825 held in custodial accounts for minor children; and exercisable options to purchase 3,000 shares.
  3. Includes indirect ownership of 7,065 shares by spouse; and exercisable options to purchase 10,500 shares.
  4. Includes 9,072 shares allocated under the Company's 401(k)/ESOP and 19,000 which are subject to currently exercisable options.
  5. Includes 38,099 shares which are subject to currently exercisable options; 7,867 shares allocated under the Company's 401(k)/ESOP and 1,228 shares allocated to spouse under the Company's 401(k)/ESOP.
  6. Includes 27,599 shares which are subject to currently exercisable options; 9,100 shares held by an IRA; and 8,511 shares allocated under the Company's 401(k)/ESOP.
  7. Includes indirect ownership of 1,350 held by IRA, 1,350 shares held by spousal IRA; and exercisable options to purchase 10,500 shares.
  8. Includes indirect ownership of 3,811 shares held by an IRA and 2,055 shares held by spousal IRA.
  9. Includes 163,994 shares which are subject to currently exercisable options, and 31,888 shares allocated under the Company's 401(k)/ESOP.

<Page 4>

 

ELECTION OF DIRECTORS (Item 1 on Proxy Card)

The Certificate of Incorporation of the Company provides that the Board of Directors shall consist of not less than three nor more than 15 individuals. Upon recommendation of the Nominating Committee, the Board of Directors fixed the number of directors constituting the full Board at six members and recommends that the six nominees listed in the table which follows be elected as directors to serve for a term of one year until the next succeeding Annual Meeting or until their successors are elected and qualified. Each of the nominees has consented to be named in this Proxy Statement and to serve as a director if elected.

If cumulative voting is not requested, the holders of the Board of Directors' proxies will vote the proxies received by them for the election as directors of the six persons named below. If cumulative voting is requested, the holders of the Board of Directors' proxies will vote the proxies received by them cumulatively for some or all of the nominees in such manner as may be determined at the time by the proxy holders.

If, at the time of the Annual Meeting of Shareholders, or any adjournment(s) thereof, one or more of the nominees is not available to serve by reason of any unforeseen contingency, the holders of the enclosed proxy will vote for such substitute nominee as the Board of Directors recommends.

The Board of Directors recommends that shareholders vote "FOR" the election of the six nominees listed below as directors of the Company.

The following table sets forth the names of nominees for director, their ages, the years in which they were first elected directors, a brief description of their principal occupations and business experience during the last five years. There are no family relationships among any of the directors and executive officers. The Board Committee assignments are as of February 28, 2006.


Name, Age, Principal Occupation, Other Directorships and Other Information

Director   Since 

Sibyl N. Fishburn, age 70
Mrs. Fishburn is a graduate of Hollins University, Roanoke, VA. Mrs. Fishburn is a member of the Nominating/Corporate Governance and Compensation & Long-Term Incentive Committees.

1979

 

 

James G. Lane, Jr., age 72
Mr. Lane served as Chief Executive Officer of the Company from 1987 until his retirement on January 31, 2002. He has served as Chairman of the Board since 1987 and is a member of the Executive, Compensation & Long-Term Incentive, and the Nominating/Corporate Governance Committees.

1986

 

 

Carroll D. Vinson, age 65
Mr. Vinson is Principal and Managing Member of VH, LLC, a private real estate investment company. He is a member of the Audit, Executive and Nominating/Corporate Governance and Compensation & Long-Term Incentive Committees.

1987

 

 

Murray H. Wright, age 60
Mr. Wright is the founder and managing director of Avitas Capital, LLC, a closely held investment banking firm, founded in 1999, in Richmond, VA. In 1986, he founded and recently retired as Chief Executive Officer of the law firm of Wright, Robinson, Osthimer & Tatum, Richmond, VA. He serves on the Audit, Nominating/Corporate Governance and Compensation & Long-Term Incentive Committees.

2001

 

 

Craig C. Bram, age 47
Mr. Bram is the founder and President of Horizon Capital Management, Inc., an investment advisory firm, founded in 1996, in Richmond, VA. Since 1995, he has also been a Managing Director with McCammon Group, a mediation and consulting company based in Richmond, VA. Mr. Bram has also served as the President of Bizport, Ltd., a document management company in Richmond, VA, since 2002. Mr. Bram serves on the Audit, Compensation and Long-Term Incentive and Nominating/Corporate Governance Committees.

2004

 

 

Ronald H. Braam, age 62
Mr. Braam has served as Chief Executive Officer of Synalloy Corporation since January 1, 2006. Since December 1999, he has been President of the Company's Specialty Chemicals Group, which is comprised of Manufacturers Soap and Chemical Company and Organic Pigments, wholly-owned subsidiaries of the Company, and Blackman Uhler Chemical Company, a division of the Company. Mr. Braam serves on the Executive Committee.

2006

<page 5>

BOARD OF DIRECTORS AND COMMITTEES

The business and affairs of the Company are under the general management of its Board of Directors as provided by the laws of Delaware and the Bylaws of the Company. The Board of Directors has determined that the following directors are "independent" directors as defined by the NASDAQ Stock Market, Inc. Marketplace Rules ("NASDAQ Rules"): Craig Bram, Sibyl Fishburn, James G. Lane, Jr., Carroll Vinson and Murray Wright. During fiscal year 2005, the Board of Directors met five times. All members of the Board attended 75% or more of the aggregate of the total number of meetings of the Board of Directors and of the committees of the Board on which they served. The Company encourages, but does not require, its directors to attend the Annual Meeting of Shareholders. Last year, all directors attended the annual meeting. The Company has standing Executive, Audit, Compensation & Long-Term Incentive and Nominating/Corporate Governance Committees of the Board of Directors.

Executive Committee. The members of the Executive Committee are James Lane, Chair, Carroll Vinson and Ronald Braam. This Committee exercises the authority of the Board of Directors in the management of the business of the Company between the meetings of the Board of Directors. However, this Committee does not have, among other powers, the authority to amend the Certificate of Incorporation or Bylaws, to adopt an agreement of merger or consolidation, to recommend to the shareholders the sale, lease or exchange of the Company's property and assets, to declare a dividend, or to authorize the issuance of stock. During the past fiscal year, this Committee did not meet.

Audit Committee. The Company has an Audit Committee established in accordance with Section 3(a)(58(A) of the Securities Exchange Act of 1934.The Audit Committee members are Carroll Vinson, Chair, Murray Wright and Craig Bram. The Audit Committee acts pursuant to a written charter adopted by the Board of Directors. Each member of the Audit Committee is independent as defined in NASDAQ Stock Market, Inc. Marketplace Rules. The Audit Committee held four meetings during the year. During these meetings, the Audit Committee reviewed and discussed the audited financial statements to be included in the Company's Annual Report on Form 10-K, and the Form 10-Qs for each quarter prior to filing with the SEC with management and the independent auditors, met independently with the independent auditors, interviewed and selected the independent auditors, reviewed the Audit Committee Charter and had oversight of the development and implementation of the Company's Code of Conduct.

Compensation & Long-Term Incentive Committee. The Compensation & Long-Term Incentive Committee, currently comprised of Murray Wright, Chair, Sibyl Fishburn, Craig Bram, James Lane and Carroll Vinson, is responsible for reviewing and making recommendations to the Board related to salaries, wages, bonuses and benefits for officers of the Company and for administering the Company's stock option and stock grant programs including the granting of options and shares thereunder. Each member of the Committee is independent as defined in the NASDAQ rules. This Committee met twice during the last fiscal year.

Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committee is comprised of Sibyl Fishburn, Chair, Carroll Vinson, Murray Wright, James Lane and Craig Bram, all of whom are independent as defined in the NASDAQ rules. This Committee is governed by a charter which is available on the Company's website at: www.synalloy.com. This Committee is responsible for reviewing and recommending changes in size and composition of the Board of Directors and evaluating and recommending candidates for election to the Company's Board. This Committee also reviews and oversees corporate governance issues and makes recommendations to the Board related to the adoption of policies regulated by the Securities and Exchange Commission, NASDAQ, Sarbanes Oxley and other governing authorities. This Committee met twice in 2005.

In recommending and evaluating candidates, the Nominating Committee takes into consideration such factors as it deems appropriate based on the Company's current needs. These factors may include diversity, age, skills such as understanding of appropriate technologies and general finance, decision-making ability, inter-personal skills, experience with businesses and other organizations of comparable size, and the interrelationship between the candidate's experience and business background and other Board members' experience and business background. Additionally, candidates for director should possess the highest personal and professional ethics, and they should be committed to the long-term interests of the shareholders.

The Nominating Committee does not have any specific process for identifying director candidates. Such candidates are routinely identified through personal and business relationships and contacts of the directors and executive officers. Mr. Braam was recommended for nomination by a non-management director.

<page 6>

The Nominating Committee will consider as potential Board of Directors' nominees persons recommended by shareholders if the following requirements are met. If a shareholder wishes to recommend a director candidate to the Nominating Committee for consideration as a Board of Directors' nominee, the shareholder must submit in writing to the Nominating Committee the recommended candidate's name, a brief resume setting forth the recommended candidate's business and educational background and qualifications for service, and a notarized consent signed by the recommended candidate stating the recommended candidate's willingness to be nominated and to serve. This information must be delivered to the Secretary of the Company at Post Office Box 5627, Spartanburg, South Carolina 29304 or Croft Industrial Park, Spartanburg, South Carolina 29302, for transmission to the Nominating Committee, and must be received not less than 30 days nor more than 60 days prior to the Annual Meeting of Shareholders. The Committee may request further information if it determines a potential candidate may be an appropriate nominee. Director candidates recommended by shareholders that comply with these requirements will receive the same consideration that the committee's candidates receive. The Nominating Committee routinely meets at the regular quarterly meeting of the Board of Directors next preceding the Annual Meeting. Nominations for election as Directors may also be made by shareholders from the floor at the Annual Meeting of Shareholders provided such nominations are made in accordance with the notice procedures set forth in the Company's Bylaws.

Shareholder Communications With Directors

Any shareholder who wishes to send communications to the Board of Directors should mail them addressed to the intended recipient by name or position in care of: Corporate Secretary, Synalloy Corporation, Post Office Box 5627, Spartanburg, SC 29304. Upon receipt of any such communications, the Corporate Secretary will determine the identity of the intended recipient and whether the communication is an appropriate shareholder communication. The Corporate Secretary will send all appropriate shareholder communications to the intended recipient. An "appropriate shareholder communication" is a communication from a person claiming to be a shareholder in the communication the subject of which relates solely to the sender's interest as a shareholder and not to any other personal or business interest.

In the case of communications addressed to the Board of Directors, the Corporate Secretary will send appropriate shareholder communications to the Chairman of the Board. In the case of communications addressed to the independent or outside directors, the Corporate Secretary will send appropriate shareholder communications to the Chairman of the Audit Committee. In the case of communications addressed to committees of the Board, the Corporate Secretary will send appropriate shareholder communications to the Chairman of such committee.

EXECUTIVE OFFICERS

Information about Mr. Braam, the Company's Chief Executive Officer, is set forth above under "Election of Directors."

Name, Age and Principal Position and Five-Year Business Experience

Gregory M. Bowie, age 56
Vice President, Finance since May 1994.

 

Cheryl C. Carter, age 55
Corporate Secretary since June 1987.

 

Michael D. Boling, age 51
Mr. Boling has been President of Bristol Metals, L. P., a subsidiary of the Company, since October 1, 2005. He served as Vice President of Bristol Metals' Piping Systems unit from 1987 to 2005.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and any persons who own more than 10% of the common stock of the Company to file with the Securities and Exchange Commission reports of beneficial ownership and changes in beneficial ownership of common stock. Officers and directors are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such reports furnished to the Company or written representations that no other reports were required, the Company believes that, during 2005, all filing requirements applicable to its officers and directors were met.

<page 7>

THE BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's compensation policies are intended to induce senior managers, including executive officers, to maximize value for shareholders over the long term. There are three components of each compensation package: Base Salary, Cash Bonus and Long-Term Incentive Compensation. Base salaries are set toward the low end of a range defined by our peers at comparable companies.

Augmenting base compensation is a cash bonus program which compensates each manager eligible for such bonus pursuant to a formula based upon returns of average shareholders' equity in his business unit during the year. Subsidiary and divisional senior managers participate in profit sharing pools determined by the performance of their business unit, while the Chief Executive Officer's bonus is based on consolidated profitability.

The intent is to make every senior manager's cash compensation dependent upon measurable performance criteria. The cash compensation arrangements with senior officers are summarized under "Remuneration of Directors and Officers - Employment Contracts."

The Summary Compensation Table and Notes thereto provide details of the short-term incentives provided to the Chief Executive Officer and other executive officers (except the Vice President, Finance) for each of the past three years. It also shows for each of the past three years the portion of cash compensation representing bonuses dependent upon profitability.

The Vice President, Finance is paid a salary believed to be toward the lower end of the range of salaries for this position in comparable companies. He is also eligible for a discretionary bonus based on various considerations, including the Company's financial results, compensation of other executive employees and an evaluation of his job performance.

The Company also provides to senior managers a long-term incentive component to compensation. In 2004 and prior years, the vehicle for this component was a series of stock option plans. Options have been granted in 2005 and prior years pursuant to incentive stock option plans adopted in 1988 and 1998. For 2006 and future years, the Compensation & Long-Term Incentive Committee of the Board of Directors has recommended, and shareholders have approved, awarding incentives through grants of restricted stock. This plan is expected to benefit the Company in that it will avoid the complicating issues of accounting for the cost of option grants and reduce the potential dilution to existing shareholders, while exposing the grantees to both the positive and negative aspects of changes in market price of the Company's common stock over time.

Pursuant to the restricted stock plan, the Chief Executive Officer and the Compensation and Long-Term Incentive Committee together determine a potential grant pool for the current year. They also agree upon specific milestones, largely comprised of measurable business metrics which can be impacted by management. These goals are established and communicated to managers in February of each year.

In February of each year, awards are made from the pool based upon performance of the stated goals. No restricted stock grants were made in 2005. Goals for 2006 have been established and communicated to management, and it is expected that grants will be made under the plan in February or March 2007.

The Committee reviews all forms of compensation of the Company's executive officers annually and believes such compensation has been fair to both the executives and the Company's shareholders.

The Compensation & Long-Term Incentive Committee
Murray Wright, Sibyl Fishburn, Craig Bram,
James G. Lane, Jr. and Carroll D. VinsonCommon Stock Performance

<page 8>

Common Stock Performance

As part of the executive compensation information presented in this Proxy Statement, the Securities and Exchange Commission requires a five-year comparison of cumulative total shareholder return for the Company with the cumulative total return of a broad equity market index and an index of appropriate similar companies. The Company has selected as a broad equity market index comparison the Nasdaq Non-Financial Index. Because the Company is in two distinctly different businesses, there is no similar industry "peer" group with which to compare. Thus, the Company has selected as the most appropriate peer group the Russell 2000 which is an index of companies with comparable market capitalizations.

 

12/00

12/01

12/02

12/03

12/04

12/05

Synalloy Corporation

100.00

74.91

89.81

149.39

213.72

225.89

Russell 2000

100.00

102.49

81.49

120.00

142.00

148.46

Nasdaq Non-Financial

100.00

77.54

52.52

79.52

86.01

87.67

 

*$100 invested on 12/31/00 in stock or index including reinvestment of dividends. Fiscal year ending December 31.

<page 9>

REMUNERATION OF DIRECTORS AND OFFICERS

The following table sets forth the total annual compensation paid or accrued by the Company and/or its subsidiaries to or for the account of each of the chief executive officer and the executive officers of the Company whose total annual salary and bonus for the fiscal year ended December 31, 2005 exceeded $100,000.

 

Summary Compensation Table

 
 


Annual Compensation

Long-Term Compensation       Awards    

 



Name, Age and Principal Position



Year


Salary($)


Bonus
($) (1)

Securities
Underlying
Options (#)

All Other
Compensation     ($) (2)    

Ronald H. Braam
Chief Executive Officer since January 1, 2006

2005
2004
2003

175,000
171,667
157,700

-
- -
- -

35,000
- -
- -

12,852
12,719
183,513

 

 

 

 

 

 

 

 

 

 

 

 

Gregory M. Bowie
Vice President, Finance

2005
2004
2003

165,000
161,667
139,000

65,000
- -
19,600

35,000
- -
- -

6,600
7,251
6,800

 

 

 

 

 

 

Michael D. Boling
President, Bristol Metals, L. P.

2005

117,580

129,149

-

6,703

 

 

 

 

 

 

Ralph Matera
Chief Executive Officer and President of Company from February 1, 2002 until September 1, 2005; Chief Executive Officer of Bristol Metals, L.P. from July 25, 2001 until September 30, 2005.

2005
2004
2003

161,538
193,333
180,000

-
- -
- -

-
- -
75,000

62,715
7,733
7,200

 

NOTES

(1) Bonuses - Cash bonuses based on a short-term incentive plan provide for bonuses to be paid to senior divisional managers in an aggregate amount equal to 10% of the net earnings before income taxes in excess of a predetermined percentage (10% in 2005, 2004 and 2003) of average stockholders' equity for the applicable division or subsidiary. Mr. Boling is eligible for bonuses under this plan. In his previous role as President of the Company's Specialty Chemicals Segment, Mr. Braam was a participant in this Plan through December 31, 2005; however, he received no bonus under the Plan. Mr. Bowie is not a participant in this plan.

(2) All Other Compensation - Includes for Messrs. Bowie and Boling the Company's contributions pursuant to the 401(k)/Employee Stock Ownership Plan. Includes for Mr. Braam contributions pursuant to the 401(k)/Employee Stock Ownership Plan of $7,000 in 2005, $6,867 in 2004 and $6,308 in 2003; the full dollar value of the entire premiums paid by the Company for split dollar life insurance policies of $5,852 in 2005, $5,852 in 2004 and $7,016 in 2003; and the lump sum value of a salary continuation agreement in the amount of $170,189 in 2003. (See discussion below under "Retirement Plans - Salary Continuation Agreements."). Includes for Mr. Matera compensation of $50,000 in 2005 pursuant to a consulting agreement for a three-month period from October 1 2005 through December 31, 2005; restricted stock of 549 shares ($6,253) representing non-employee directors' retainer fees for the fourth quarter of 2005 (see Compensation of Directors), and the Company's contributions pursuant to the 401(k)/Employee Stock Ownership Plan of $6,462 for 2005, $7,733 for 2004 and $7,200 for 2003.

Employment Contracts - The Company has a written employment agreement with Mr. Braam, effective January 1, 2006 pursuant to his appointment as Chief Executive Officer, that provides for an annual salary of $200,000. In addition, he is entitled to "bonus-compensation" equal to a percentage (5% for 2006) of net earnings before income taxes in excess of a predetermined percent (10% for 2006) of average stockholders' equity. This agreement also provides certain fringe benefits and contains provisions for salary continuation benefits in the event of Mr. Braam's disability or death, under specified conditions, during the term of his employment with the Company. Mr. Braam was a participant in the Management Incentive Plan for the Specialty Chemicals Segment from January 1, 2003 through December 31, 2005.

<page 10>

From the September 30, 2005 effective date of Mr. Matera's resignation until Mr. Braam's appointment as Chief Executive Officer, effective January 1, 2006, no one served as Chief Executive Officer of the Company. During this period, corporate officers and the Presidents of the Chemicals and Metals Segments reported directly to the Board of Directors.

 

Stock Option Plans

Currently, there are options outstanding under the 1988, 1994 and 1998 Stock Option Plans and options available for grant under the 1998 Plan. The grant period for the 1988 Plan expired in January 1998, and the grant period for the 1994 Plan expired in April 2004. All of the plans have been approved by shareholders. The 1998 Plan provides for such options to be granted to officers and key employees of the Company, its subsidiaries and divisions to provide them with an opportunity to obtain an equity interest in the Company and to increase their stake in the future growth and prosperity of the Company. The 1994 Plan provided for such options to be granted to non-employee directors. The option price for options granted under these plans is 100% of the fair market value of the Company's Common Stock on the date the option was granted. Certain restrictions exist as to the time in which options can be exercised. With regard to the 1988 Plan, approved at the May 26, 1988 Annual Meeting and the 1998 Plan, approved at the April 30, 1998 Annual Meeting, options may be exercised beginning one year after date of grant at a rate of 20% annually on a cumulative basis. In the event that (a) all or substantially all of the assets or Common Stock of the Company (or a subsidiary or division of the Company in which the option holder is employed) is sold to an entity not affiliated with the Company, or (b) a merger or share exchange with an unaffiliated party occurs in which the Company is not the surviving entity, an option holder may exercise in addition to the above, 50% of the options not otherwise exercisable because of the vesting period requirement subject to certain limitations. No options may be exercised under the 1988 and 1998 Plans after 10 years from date of grant. The incentive stock options are not transferable other than by death and can only be exercised during the employee's lifetime by the employee. In no event shall incentive stock options under all Plans having an aggregate fair market value in excess of $100,000 at the dates the grants become exercisable by an optionee for the first time during a calendar year. Under the 1994 Plan, approved at the April 29, 1994 Annual Meeting, each non-employee director as of his or her election or re-election as a member of the Board automatically received an option for 1,500 common shares. In the event a person ceases to be a non-employee director for reasons other than death, the unexpired options must be exercised within three years not to exceed 10 years after date of grant. On December 20, 2005, the Board of Directors elected to accelerate vesting of 44,144 outstanding unvested stock options under the 1998 Stock Option Plan. At February 24, 2006, there were 329,950 options outstanding under all plans of which 274,094 were exercisable.

At February 24, 2006, 199,100 shares remain available for grant pursuant to the 1998 Stock Option Plan; however, the Compensation Committee has no present plans to grant further options under this plan though it continues to have the right to do so. The Committee currently plans to issue future equity compensation pursuant to the 2005 Stock Awards Plan.

 

Stock Awards Plan

The 2005 Stock Awards Plan, approved by shareholders at the April 28, 2005 Annual Meeting, authorizes issuance of up to 300,000 shares which may be awarded for ten years from the effective date of the plan. Stock awards will vest in 20% increments annually on a cumulative basis, beginning one year after the date of grant. In order for the awards to vest, the employee must be in the continuous employment of the Company or a subsidiary since the date of the award. Any portion of an award that has not vested will terminate upon termination. The Company may terminate any portion of the award that has not vested upon an employee's failure to comply with all conditions of the award of the plan. Vesting of up to 50% of awards will automatically accelerate in the event of (i) a sale of all or substantially all of the assets of the Company (or a subsidiary or division of the Company in which the employee is employed) to an entity not affiliated with the Company, (ii) a merger or share exchange with an unaffiliated party in which the Company is not the surviving entity, or (iii) a similar sale or exchange transaction that, in the Committee's sole discretion, justifies such vesting. Shares representing awards that have not yet vested will be held in escrow by the Company and an employee will not be entitled to any voting rights with respect to any such shares. Share awards that have not vested will not be transferable. At February 24, 2006, no awards have been granted under the Plan. The Board of Directors implemented an incentive compensation program pursuant to which it reserved 45,000 shares for potential grant to officers, including the named executive officers in the compensation table, and certain key employees if they achieve pre-determined quantifiable and quantitative goals during 2006. After the close of the 2006 fiscal year, the Board will make a determination of whether and how many restricted stock grants will be granted subject to assessment of whether the goals have been achieved.

 

Option/SAR Grants in Last Fiscal Year

The following executives named in the Summary Compensation Table were awarded stock options in 2005:



Name

# of Securities Underlying
Options Granted

% of Total Options
Granted to Employees
in the Fiscal Year

Exercise or Base
Price ($/Sh)


Expiration Date (1)

Grant Date Present
Value (2)

Ronald H. Braam

35,000

43.75%

$9.96

2/03/2015

$236,950

 

 

 

 

 

 

Gregory M. Bowie

35,000

43.75%

$9.96

2/03/2015

$236,950

  1. On December 20, 2005, the Board of Directors elected to accelerate vesting of outstanding unvested stock options under the 1998 Stock Option Plan. Both Messrs. Braam and Bowie were granted 35,000 options each on February 3, 2005. As a result, 7,799 options each became vested on December 20, 2005. For more information, see "Stock Option Plans" on page 11.
  2. The dollar amounts under this column are the result of calculations using the Black-Scholes based option valuation model. The Company's use of this model should not be construed as an endorsement of its accuracy at valuing options. The following weighted-average assumptions were used in the above table: risk-free interest rate of five percent; volatility factors of the expected market price of the Company's Common Shares of .676; and an expected life of the option of seven years. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock option plans are not registered, optionees are required to hold the stock for a minimum of one year after exercise. Because the Company's options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its options. The actual value of the options, if any, will depend on the extent to which the market value of the Common Stock exceeds the exercise price of the option one year after the date of exercise.

 

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Table

The following table summarizes the number of options exercised in 2005, and the number of shares underlying unexercised options held by the executives named in the Summary Compensation Table at fiscal 2005 year end.






Name




Shares
Acquired
on Exercise





Value
Realized (1)

Number of Securities Underlying
Unexercised Options at Fiscal
Year-End; Exercisable (E)
    Unexercisable (U)   



Value of Unexercised in-the-
Money Options at Fiscal Year; End Exercisable (E)
    Unexercisable (U) (2)   

R. H. Braam

4,400

$ 20,806

38,099 (E)
27,201 (U)

$ 77,649 (E)
$ 13,709 (U)

 

 

 

 

 

G. M. Bowie

2,400

$ 13,440

27,599 (E)
27,201 (U)

$ 52,193 (E)
$ 13,709 (U)

 

 

 

 

 

M. D. Boling

0

$ 0

19,000 (E)
0 (U)

$ 62,796 (E)
$ 0 (U)

 

 

 

 

 

R. Matera

108,200

$ 550,357

0 (E)
0 (U)

$ 0 (E)
$ 0 (U)

  1. Values are calculated by subtracting the exercise price from the average of the high and low stock price on the date prior to exercise.
  2. Values are calculated by subtracting the exercise prices from the closing price as quoted on NASDAQ National Market Listing on the last trading day of the year. The closing stock price at fiscal year end 2005 was $10.464.

<page 12>

 

RETIREMENT PLANS

Salary Continuation Agreements

Mr. Braam has a salary continuation agreement with the Company whereby, if he continues employment until his retirement in 2009, he will receive the cash value proceeds of an insurance policy with a current cash value of approximately $94,000. In the event Mr. Braam elects to retire early, entitlement to this cash value will be forfeited. The Company had a salary continuation agreement with R. H. Braam which provided for payments of $15,000 per annum in the event of pre-retirement death, or $40,000 per annum following retirement, for 10 years. Effective February 5, 2003, the agreement was amended and Mr. Braam received a lump sum cash valuation of the annuity of $170,189 during 2003. The Company also has salary continuation agreements with six former officers, which provide for payments at retirement or death ranging from $9,750 to $28,500 per annum for 10 years in the event of pre-retirement death, or the longer of 10 years or life following retirement. The present value of the future payments which will be due at retirement are accrued annually through the retirement date. The Company is the owner and beneficiary of life insurance policies on the lives of these persons. Based upon reasonable assumptions as to mortality, dividends and other factors, the Company expects to recover the cost of paying the benefits, including a factor for the use of corporate funds, through keyman life insurance proceeds. The present values of the above agreements are accrued. The cumulative amount of this accrual is $542,000.

401(k)/ESOP Plan

The Company has a 401(k)/Employee Stock Ownership Plan (the "Plan"). All employees (except those employees who are entitled to participate in Union-sponsored plans) who are 21 years or older will be eligible to participate on any January 1, April 1, July 1 or October 1 following one year of service with the Company.

Employees are permitted to contribute up to 100% of earnings not to exceed a dollar amount set by the Internal Revenue Service on a pretax basis through payroll deduction. Employees are permitted to change the election daily and can revoke the election at any time. Employee contributions are 100% vested at all times. The employee can invest his deferred contribution in any of the investment funds offered; however, employee contributions cannot be invested in Company stock.

Contributions by the Company are made primarily in Company Stock. For each plan year, the Company contributes on behalf of each participant who is eligible to share in matching contributions for the plan year, a discretionary matching contribution equal to a percentage which is determined each year by the Board of Directors subject to a maximum of 4% in 2005 and 2006. The matching contribution is allocated within 15 days of each pay period. In addition to the matching contribution, the Company may make a discretionary contribution which shall be distributed to all eligible participants regardless of whether they contribute to the Plan. No discretionary contributions have been made to the Plan.

Distributions are not permitted before age 59 1/2 except in the event of death, disability, termination of employment or reason of proven financial hardship as defined according to IRS guidelines. The Plan provides for payment of the participant's account balance upon death, disability or retirement in the form of cash or Company stock or both. If employment terminates for reasons other than retirement, disability or death (e.g. resignation or termination), the discretionary portion of a participant's account balance will be vested based as follows: zero to four years service - 0% vested; five or more years - 100% vested.

Unvested amounts are forfeited and allocated to participants eligible to participate for a plan year. The Plan permits rollovers from qualified plans at the discretion of the Company. The ESOP is permitted to borrow money to purchase Company stock. All Company stock acquired by the Plan with the proceeds of a loan is maintained in a suspense account and is withdrawn and allocated to participant's accounts as the loan is paid. While a participant in the Plan, an employee may direct the trustee to vote shares allocated to his or her account in accordance with his or her wishes.

All Plan assets are held by an independent trustee. The trustee invests all assets and makes payment of Plan benefits. The Plan is managed and administered by an independent administrator and a Pension Committee comprised of the corporate officers of the Company. Expenses incurred for the administration of the Plan are paid by the Company. The Plan reserves to the Board of Directors of the Company the right to amend the Plan in any manner or terminate the Plan at any time. The Plan may be amended to preserve the qualification of the Plan under the applicable provisions of the Internal Revenue Code, as amended from time to time. For 2005, the Company's total matching contribution was $321,000.

<page 13>

Compensation of Directors

On February 9, 2006, the Board of Directors approved the director's compensation for the 2006-07 year. Each non-employee director elected by shareholders at the annual meeting in April will receive an annual retainer of $35,000, with $20,000 in cash, paid quarterly, and $15,000 in restricted stock. The number of restricted shares will be determined by the average of the high and low stock price on the day prior to the Annual Meeting of Shareholders. The shares granted to the directors are not registered under the Securities Act of 1933 and are subject to forfeiture in whole or in part upon the occurrence of certain events. In addition, directors will be compensated $1,500 for each board meeting attended in person; $1,000 for each telephone Board meeting; and $1,000 for attendance at committee meetings not held on Board meeting days. The Chairman of the Board and the Audit Committee Chair will receive additional annual compensation of $5,000 each; and the Compensation Committee Chair will receive annual compensation of $2,500. Directors are reimbursed for travel and other expenses related to attendance at meetings. Directors who are employees are not paid extra compensation for service on the Board or any committee of the Board.

In 2005 the Board set the retainer at an amount equivalent to $25,000 paid in stock, with the number of shares to be determined by the average of the high and low stock price on the day prior to the Annual Meeting of Shareholders. The shares granted to the directors were not registered under the Securities Act of 1933 and were subject to forfeiture in whole or in part upon the occurrence of certain events. Directors also received a fee of $1,000 for attendance at each board meeting. Committee members received a fee of $500 for each committee meeting attended not held on the same day as a board meeting. The Chairman of the Audit Committee received $750 per Audit Committee meeting not held on the same day as a board meeting. Directors are reimbursed for travel and other expenses related to attendance at meetings. In fiscal year 2005, directors received cash compensation as follows: Mrs. Fishburn - $6,000, Mr. Lane - $7,500, Mr. Vinson - $9,000, Mr. Wright - $9,500, Mr. Bram - $9,500 and Mr. Matera - $2,000. Each director received 2,195 shares of Company stock for board-related service, except Mr. Matera who received 549 shares for the period he served as a non-employee director. As discussed in Note 2 to the "Summary Compensation Table," the Company entered into a consulting agreement with Ralph Matera, its former chief executive officer and a director, for the three-month period from October 1, 2005 through December 31, 2005, pursuant to which he was paid $50,000.

INDEPENDENT PUBLIC ACCOUNTANTS

Dixon Hughes PLLC was selected to serve as the Company's principal independent accountant for fiscal 2005. Representatives of Dixon Hughes PLLC are expected to be present at the Annual Meeting with an opportunity to make statements, if they so desire, and to respond to appropriate questions with respect to that firm's audit of the Company's financial statements for the fiscal year ended December 31, 2005.

Elliott Davis, LLP, certified public accountants, was engaged by the Company on September 26, 2003 to audit the Company's financial statements for the year ending January 3, 2004. During the Company's two most recent fiscal years and the subsequent interim periods prior to engaging Elliott Davis, the Company did not consult Elliott Davis regarding any matter required to be reported under Item 304(a)(2) of the SEC's Regulation S-K. Elliott Davis was subsequently dismissed as the Company's independent auditors, effective December 2, 2003. Elliott Davis did not audit the Company's financial statements and did not issue an opinion on the Company's financial statements. The decision to dismiss Elliott Davis was approved by the Audit Committee of the Board of Directors. From the engagement of Elliott Davis until its dismissal, there were no disagreements with the firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Elliott Davis, would have caused it to make reference to the subject matter of the disagreement in its reports on the financial statements. None of the kinds of events required to be reported under Item 304(a) (1) (v) of the SEC's Regulation S-K occurred during Company's two most recent fiscal years and the subsequent interim periods preceding the dismissal of Elliott Davis.

The Audit Committee of the Board of Directors of Synalloy Corporation (the "Company") approved the engagement of Dixon Hughes PLLC, the successor in the merger of its current independent auditors, Crisp Hughes Evans LLP, and the firm of Dixon Odom PLLC, as its independent auditors effective with the successful merger of the two firms. On March 1, 2004, the Audit Committee of the Board of Directors was notified that the merger of the two firms was completed and that the firm of Crisp Hughes Evans LLP ceased to exist. The Company engaged Crisp Hughes Evans LLP on December 2, 2003, as its new Independent public accountants. Crisp Hughes Evans LLP did not audit the Company's

<page 14>

consolidated financial statements and has not issued an opinion on the Company's consolidated financial statements. During the period from December 2, 2003 through the merger of Crisp Hughes Evans LLP with Dixon Odom PLLC, there were no disagreements between the Company and Crisp Hughes Evans LLP on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Crisp Hughes Evans LLP, would have caused it to make reference to the subject matter of the disagreements in connection with its report. During the Company's two most recent fiscal years and the subsequent interim periods prior to engaging Dixon Hughes, the Company did not consult Dixon Hughes regarding any of the matters required to be reported under Item 304(a) (2) of the SEC's Regulation S-K.

Fees Paid to Independent Auditors

The following table sets forth the aggregate fees billed by the Company's independent auditors for audit services rendered in connection with the consolidated financial statements and reports for the fiscal years ended December 31, 2005 (referred to as "fiscal 2005") and January 1, 2005 (referred to as "fiscal 2004") and for other services rendered during fiscal years 2005 and 2004, on behalf of the Company and its subsidiaries, as well as all out-of-pocket costs incurred in connection with these services, which have been billed to the Company.

Fee Category

Fiscal 2005

% of Total

Fiscal 2004

% of Total

Audit Fees (1)

 

 

 

 

    Dixon Hughes PLLC

$106,800

69%

$91,800

76%

Audit-Related Fees

 

 

 

 

    Dixon Hughes PLLC

10,910

7%

-

 

    Ernst & Young, LLP

11,000

7%

4,852

4%

        Total Audit-Related Fees

21,910

14%

4,852

4%

Tax Fees:

 

 

 

 

  Tax compliance/preparation

 

 

 

 

      Dixon Hughes PLLC

22,500

14%

22,500

18%

  Other Tax Services

 

 

 

 

    Dixon Hughes PLLC

3,965

3%

2,315

2%

All Other Fees

 

 

 

 

        Total Fees

$155,175

 

$121,467

 

========

========

  1. For the audit of the consolidated financial statement and the current year's quarterly reviews.

Audit Fees: Audit fees include fees billed for professional services rendered for the audit of the Company's consolidated financial statements and review of the interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by the Company's independent auditor in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation.

Audit-Related Fees: Audit-related fees include fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company's consolidated financial statements and are not reported under "Audit Fees." These services include employee benefit plan audits, accounting consultations in connection with acquisitions and divestitures, and consultations concerning financial accounting and reporting standards.

Tax Fees: Tax fees include fees for tax compliance/preparation and other tax services. Tax compliance/preparation include fees billed for professional services related to federal, state and international tax compliance, assistance with tax audits and appeals, expatriate tax services, and assistance related to the impact of mergers, acquisitions and divestitures on tax return preparation. Other tax services include fees billed for other miscellaneous tax consulting and planning.

All Other Fees: All other fees would include fees for all other services other than those reported above.

<page 15>

In making its decision to appoint Dixon Hughes PLLC as the Company's independent auditors for the fiscal year ending January 1, 2006, the Audit Committee considered whether services other than audit and audit-related services provided by that firm are compatible with maintaining the independence of Dixon Hughes.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

The Audit Committee pre-approves all audit and permitted non-audit services (including the fees and terms thereof) provided by the independent auditors, subject to limited exceptions for non-audit services described in Section 10A of the Securities Exchange Act of 1934, which are approved by the Audit Committee prior to completion of the audit. The Committee may delegate to one or more designated members of the Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full Committee at its next scheduled meeting. During 2005, all audit and permitted non-audit services were pre-approved by the Committee.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors has reviewed and discussed with management the Company's audited financial statements for the year ended December 31, 2005. The Audit Committee has discussed with the Company's independent auditors, Dixon Hughes PLLC, the matters required to be discussed by SAS 61, as may be modified or supplemented. The Audit Committee has also received the written disclosures and the letter from Dixon Hughes, required by Independence Standards Board Standard No. 1, as may be modified or supplemented, and has discussed with Dixon Hughes, their independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2005 for filing with the Securities and Exchange Commission.

The Audit Committee - Carroll Vinson, Murray Wright and Craig Bram

SHAREHOLDERS' PROPOSALS FOR THE 2007 ANNUAL MEETING OF SHAREHOLDERS

Any shareholder proposal to be included in the proxy materials for the 2007 Annual Meeting of Shareholders must be submitted in accordance with applicable regulations of the Securities and Exchange Commission and received by the Company at its principal executive offices, Croft Industrial Park, PO Box 5627, Spartanburg, SC 29304, no later than November 30, 2006. In order for a shareholder to bring any business or nominations before the 2007 Annual Meeting of Shareholders, certain conditions set forth in the Company's Bylaws must be complied with, including but not limited to, the delivery of a notice to the Secretary of the Company not less than 30 nor more than 60 days in advance of the 2007 Annual Meeting which is tentatively scheduled on April 26, 2007. With respect to any shareholder proposal not received by the Company prior to February 11, 2007, the designated proxy agents will vote on the proposal in their discretion.

REFERENCES TO OUR WEBSITE ADDRESS

References to our website address throughout this Proxy Statement and the accompanying materials are for informational purposes only, or to fulfill specific disclosure requirements of the Securities and Exchange Commission's rules or the NASDAQ Rules. These references are not intended to, and do not, incorporate the contents of our website by reference into this Proxy Statement or the accompanying materials.

INCORPORATION BY REFERENCE

The "Board Compensation Committee Report on Executive Compensation," the "Audit Committee Report" and the stock performance graph set forth under "Common Stock Performance" are not deemed to be filed with the Securities and Exchange Commission and shall not be deemed incorporated by reference into any prior or future filings made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such information by reference.

<page 16>

OTHER MATTERS TO COME BEFORE THE MEETING

The Board of Directors does not know of any other matters which may come before the meeting. However, if any other matters do properly come before the meeting, it is the intention of the persons named as proxies to vote upon them in accordance with their best judgment.

 

BY ORDER OF THE BOARD OF DIRECTORS

Cheryl C. Carter
Secretary

<page 17>

 

SYNALLOY CORPORATION
POST OFFICE BOX 5627. SPARTANBURG, SC 29304

This Proxy is Solicited by The Board of Directors for the
Annual Meeting of Shareholders on April 27, 2006

The undersigned hereby appoints Gregory M. Bowie and Cheryl C. Carter, or either of them, each with power of substitution, as lawful proxy, to vote all the shares of Common Stock of Synalloy Corporation which the undersigned would be entitled to vote if personally present at the Annual Shareholders' Meeting of Synalloy Corporation to be held at its Bristol Metals offices, Bristol, Tennessee on Thursday, April 27, 2006, at 10:00 a.m. local time, and at any adjournment thereof, upon such business as may properly come before the meeting.

The proxies will vote on the items set forth in the Notice of Annual Meeting and Proxy Statement (receipt of which is hereby acknowledged) as specified on this card, and are authorized to vote in their discretion when a vote is not specified. If no specification is made, it is the intention of said proxies to vote the shares represented by the proxy in favor of the proposal.

This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this Proxy will be voted FOR election of all the director nominees in proposal.

Mail - Date, sign and mail your proxy card in the envelope provided as soon as possible.

 

Internet - Access "www.voteproxy.com" and follow the on-screen instructions. Have your proxy card available when you access the web page.

Please sign, date and return your proxy card promptly in the enclosed envelope. Please mark your vote in blue or black ink as shown here. X

 

Proposal 1. Election of Directors

 

____

For All Nominees

Nominees

 

 

___

Sibyl N. Fishburn

____

Withhold Authority For All Nominees

___

James G. Lane, Jr.

 

 

___

Ronald H. Braam

____

For All Except

___

Craig C. Bram

 

(See Instructions below)

___

Carroll D. Vinson

 

 

___

Murray H. Wright

Instructions: To withhold authority to vote for any individual nominee(s) mark 'FOR ALL EXCEPT' and fill in the circle next to each nominee you wish to withhold, as shown here.

2. Upon any other matter that may properly come before the meeting or any adjournment thereof, as the proxies in their discretion may determine.

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.

  

Signature of Shareholder

__________________

Date

__________________

Please sign exactly as your name appears hereon. Joint owners should each sign. Trustees, executors, administrators and others signing in a representative capacity should indicate that capacity. An authorized officer may sign on behalf of a corporation and should indicate the name of the corporation and his capacity.