Securities
and Exchange Commission
Washington,
D. C. 20549
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
(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)
( ) $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: _____
2. Aggregate number of securities to
which transaction applies: _____
3. Per unit price or other underlying
value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which
the filing
fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of
transaction:
___
( ) 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:
_____
For, Schedule or Registration Statement
No.: _____
Filing
Party:_________________________
Date
Filed:__________________________
Post
Office Box 5627
Spartanburg,
South Carolina 29304
April
29, 2010
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
corporate offices, 2155 West Croft Circle, Spartanburg, South Carolina on
Thursday, April 29, 2010, at 10:00 a.m. local time. The following important
matters will be presented for your consideration:
|
1.
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To
elect six directors to serve until the next Annual Meeting of Shareholders
or until their successors are elected and
qualified;
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2.
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To
act upon such other matters as may properly come before the meeting or any
adjournment or adjournments
thereof.
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All of the above matters are more fully
described in the accompanying Proxy Statement.
Only shareholders of record at the
close of business on March 1, 2010 are entitled to notice of and to vote at the
meeting.
By order of the Board of Directors
Secretary
Spartanburg, South
Carolina
March 26,
2010
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 2009 Annual Report on Form 10-K
is furnished herewith.
CROFT
INDUSTRIAL PARK
POST
OFFICE BOX 5627
SPARTANBURG,
SOUTH CAROLINA 29304
ANNUAL MEETING OF
SHAREHOLDERS
April
29, 2010
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 corporate office, 2155 West Croft Circle,
Spartanburg, South Carolina, on Thursday, April 29, 2010, at 10:00 a.m. local
time, and at all adjournment(s) thereof. On or about March 26, 2010, we will
begin mailing these proxy materials to all shareholders of record as of the
close of business on March 1, 2010.
Quorum. 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 and that either choose not to vote or do not have authority to vote
(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 March
1, 2010. On March 1, 2010, the Company had outstanding 6,277,235 (excluding
1,722,765 shares held in treasury) shares of Common Stock. Each share of Common
Stock is entitled to one vote on each matter to be voted on at the meeting,
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 or by proxy and entitled to vote at the meeting. "Plurality"
means that, if there were more nominees than positions to be filled, the
individuals who received the largest number of votes cast for directors would be
elected. 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 has
the right to cumulate his votes either (1) by giving to one candidate as many
votes as 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 must either (a) 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 (b) announce his intention in
such meeting before the voting for Directors commences. If a stockholder gives
notice of his intention to cumulate his votes, all shareholders entitled to vote
at the meeting will, 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 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 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 nominee, you will receive instructions from the nominee that you
must follow in order for your shares to be voted. Because of recent
changes in rules that relate to broker voting, your broker is no longer
permitted to vote your shares on election of directors unless you provide voting
instructions. Therefore, if your shares are held in the name of a broker, to be
sure your shares are voted, please instruct your broker as to how you wish it to
vote. If your shares are not registered in your own name and you wish to
vote your shares in person 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 proxy for these shares must be received by 5:00 p.m., local time, on April
20, 2010 to allow sufficient time for voting by the trustees and administrators
of the plan.
Voting by Proxy. When 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 Board of Directors’ proxy card or broker voting instructions. All
properly executed Board of Directors’ 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 Board of
Directors’ 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 by the Board of Directors 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 for us. 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 statements for
shareholders who share an address and would prefer to receive a single copy of
the annual report and proxy statement in the future, please call or write to us
at the above address or telephone number.
NOTICE OF INTERNET AVAILABILITY OF PROXY
MATERIALS
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIAL FOR THE SHAREHOLDERS’
MEETING TO BE HELD ON APRIL 29, 2010
The
Company’s 2009 Annual Report and 2010 Proxy Statement are available via the
Internet at: http://investor.synalloy.com.
ANNUAL
REPORT ON FORM 10-K
The Company's Annual Report to
Shareholders including the Form 10-K for the year ended January 2, 2010, 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's website at: http://www.sec.gov. Such Annual Report to
Shareholders does not form any part of the material for soliciting
proxies.
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 December 31,
2009. This information has been obtained from Schedules 13D and 13G filed with
the Securities and Exchange Commission, and has not been independently verified
by the Company.
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Name and Address of Beneficial
Owner
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Amount
and Nature of Beneficial Ownership
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Percent
of Class
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Royce
& Associates LLC
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447,700
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(1)
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7.13
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1414
Avene of the Americas
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New
York, NY 10019
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Ta
Chen (B.V.I.) Holdings LTD
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445,993
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(2)
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7.10
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PO
Box 3444 Road Town
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Tortola,
British Virgin Islands
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Mr. Rung-Kun Robert Shieh
(2)
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(2)
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7110
Rio Flora Place
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Downy,
CA 90241
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Ta Chen Sainless Pipe Co. LTD
(2)
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(2)
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No.
25, Sintian 2nd
St., Rende Township
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Tainan
County 717
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Taiwan,
R.O.C.
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(1) Royce
& Associates, Inc. ("Royce") is an investment advisor registered with the
Securities & exchange Commission under the Investment Advisors Act of
1940.
(2) One 13D
was filed by all three entities. The ownership represents 445,993 shares held by
Ta Chen (B.V.I.) Holdings LTD., a British Virgin Islands company, which is
beneficially owned and controlled by Ta Chen Stainless Pipe Co. Ltd., a Taiwan
R.O.C. corporation, its sole shareholder. Ta Chen Stainless Pipe Co., Ltd. and
Mr. Rung-Kun Robert Shieh expressly disclaim beneficial ownership of these
shares.
The
following table sets forth information regarding the ownership of the Company's
Common Stock as of March 1, 2010 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."
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Name
of Beneficial Owner
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Common Stock
Beneficially
Owned
as of March 1, 2010
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Percent
of
Class
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219,460(1)
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3.92
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213,694(2)
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78,807(3)
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1.41
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57,756(4)
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1.03
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55,161(5)
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45,634(6)
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*
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32,558(7)
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23,947(8)
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J.
Kyle Pennington
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1,359(8)
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*
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All Directors and Executive
Officers as a group (10 persons)
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755,646(9)
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13.50
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(1) Includes
26,984 shares held by an IRA; and 93,750 shares owned by his spouse, as to
which Mr. Lane disclaims beneficial ownership.
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(2) Includes
indirect ownership of 35,580 shares held by an IRA; 4,830 held by spouse;
and 11,890 held in custodial accounts for minor
children.
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(3) Includes
31,800 shares which are subject to currently exercisable options; 11,973
shares allocated under the Company's 401(k)/ESOP; and 1,480 shares
allocated to spouse under the Company's 401(k)/ESOP.
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(4) Includes
4,500 shares which are subject to currently exercisable
options.
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(5) Includes
29,093 shares which are subject to currently exercisable options; and
5,329 shares allocated under the Company's 401(k)/ESOP.
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(6) Includes
7,081 shares allocated under the Company's 401(k)/ESOP.
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(7) Includes
8,105 shares held by spouse which are held in a margin account and may
from time-to-time be pledged as collateral.
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(8) Includes
1,279 shares allocated under the Company’s 401(k)/ESOP.
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(9) Includes
exercisable options to purchase 75,393 shares of common stock that
beneficial owners have a right to acquire within 60 days; and 30,986
shares allocated under the Company's
401(k)/ESOP.
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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/Corporate Governance Committee, the Board of Directors has 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 Annual Meeting or until their
successors are elected and qualified to serve. 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 proxy agents named in the Board of Directors’ form of proxy that accompanies
this proxy statement will vote the proxies received by them “FOR” the election
as directors of the six persons named below. If cumulative voting is requested,
the proxy agents named in the Board of Directors' form of
proxy
that accompanies this proxy statement intend to vote the proxies received by
them cumulatively for some or all of the nominees in such manner as may be
determined at the time by such proxy agents.
If, at the time of the Annual Meeting of
Shareholders, or any adjournment(s) thereof, one or more of the nominees is not
available to serve by reason of any unforeseen contingency, the proxy agents
intend to vote for such substitute nominee(s) 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
Nominating/Corporate Governance Committee believes the combined business and
professional experience of the Company’s directors, and their various areas of
expertise make them a useful resource to management and qualify them for service
on the Board. Most of the Company’s Board members, including Ms. Fishburn, Mr.
Lane, Mr. Vinson, Mr. Wright and Mr. Bram, have served on the Board for a
significant period of time, and Mr. Braam has been an executive officer of a
significant segment of the Company for over ten years. During their tenures,
these directors have gained considerable institutional knowledge about the
Company and its operations, which has made them effective board members. Because
the Company’s operations are complex, continuity of service and this development
of institutional knowledge help make the Board more efficient and more effective
at developing long-range plans than it would be if there were frequent turnover
in Board membership. When Board members retire from the Board, the Nominating
Committee seeks out replacements who it believes will make significant
contributions to the Board for a variety of reasons, including among others,
business and financial experience and expertise, business and government
contacts, relationship skills, knowledge of the Company, and
diversity.
The following table sets forth the names
of nominees for director, their ages, the years in which they were first elected
directors and a brief description of their principal occupations and business
experience during the last five years. There are no family relationships among
any of the directors and executive officers. The Board Committee assignments are
as of March 1, 2010.
|
Name,
Age, Principal Occupation, Other Directorships and Other
Information
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Since
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Sibyl N. Fishburn, age
74
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.
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1979
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James G. Lane, Jr., age
76
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 Committee.
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1986
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Carroll D. Vinson, age
69
Prior
to his retirement, Mr. Vinson was Principal and Managing Member of VH,
LLC, a private real estate investment company from 2000 to
2007. Other experience includes Chief Operating Officer
of Insignia Properties Trust, a $2,500,000,000 real estate investment
trust; Director and President of Metropolitan Asset Enhancement Group, a
series of entities that controlled $2,000,000,000 in real estate;
President of Insignia Financial Group, Inc., a real estate services and
merchant banking company; and Partner with a national firm
of certified public accountants. He is a member of the Audit,
Executive, Nominating/Corporate Governance and Compensation &
Long-Term Incentive Committees.
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1987
|
|
Mr.
Wright has been the Senior Counsel at the law firm of VanDeventer Black
LLP, Richmond, VA since 2009. He is also founder and managing director of
Avitas Capital, LLC, a closely held investment banking firm, founded in
1999, in Richmond, VA. In 1986, he founded the law firm of Wright,
Robinson, Osthimer & Tatum, Richmond, VA. He served as Chief Executive
Officer of the law firm from 1986 until his retirement in 2006. He serves
on the Audit, Nominating/Corporate Governance and Compensation &
Long-Term Incentive Committees.
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2001
|
|
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 been the President
of Bizport, Ltd., a document management company in Richmond, VA, since
2002. Since 1997, Mr. Bram has served as the CFO for TrialNet, Inc., an
electronic billing company based in Richmond, VA. Mr. Bram serves on the
Audit, Compensation and Long-Term Incentive and Nominating/Corporate
Governance Committees.
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2004
|
|
Mr.
Braam has served as President and Chief Executive Officer of Synalloy
Corporation since January 1, 2006. Since December 1999, he has also been
President of the Company's Specialty Chemicals Group, which is comprised
of Manufacturers Chemicals, LLC, wholly-owned by the Company. Mr. Braam
has been an executive officer of a significant segment of the Company for
over ten years. Mr. Braam serves on the Executive
Committee.
|
2006
|
BOARD OF DIRECTORS AND COMMITTEES
Director Independence. The
Board of Directors has determined that each of the following directors is
independent as such term is defined by the NASDAQ Global Market Rules: Craig
Bram, Sibyl Fishburn, James G. Lane, Jr., Carroll Vinson and Murray Wright. The
Board has also determined that each of the members of the Audit Committee, the
Compensation & Long-Term Incentive Committee and the Nominating/Corporate
Governance Committee is independent within the meaning of the NASDAQ
Rules.
Board and Board Committee Meetings
and Attendance at Shareholder Meetings. During fiscal year 2009, the
Board of Directors met six 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. This Committee met one time in
2009.
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 which is available on the Company's website at: www.synalloy.com. Each
member of the Audit Committee is independent as defined in the NASDAQ Rules. The
Audit Committee held six 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, reviewed and discussed the
Forms 10-Q for each quarter with management and the independent auditors prior
to filing with the Securities and Exchange Commission (“SEC”), met independently
with the independent auditors, interviewed and selected the independent
auditors, reviewed the Audit Committee Charter, and had oversight of the
Company's Code of Conduct.
Compensation & Long-Term
Incentive Committee. The Compensation & Long-Term Incentive Committee
is currently comprised of Murray Wright, Chair, Sibyl Fishburn, Craig Bram and
Carroll Vinson, all of whom are independent as defined in the NASDAQ Rules. This
Committee acts pursuant to a written charter which is available on the Company's
website at: www.synalloy.com. This Committee met three times during the last
fiscal year. During these meetings, the Committee reviewed and approved
salaries, bonuses, incentive compensation and benefits for executive officers of
the Company, and administered and made recommendations with respect to the
Company's stock grant program, including the granting of shares thereunder, and
reviewed the Committee’s charter.
The Committee considers recommendations
from the Company's Chief Executive Officer in setting compensation for executive
officers. The Director of Human Resources supports the Committee in its duties,
and the Committee may delegate authority to the Human Resources Department to
fulfill administrative duties relating to the Company's compensation programs.
The Committee has the authority under its charter to retain and terminate, and
approve fees for, compensation consultants and other advisors as it deems
appropriate to assist it in the fulfillment of its duties. The Committee did not
use the services of a compensation consultant in 2009
, but in early 2010, the Committee
retained HR Resources to provide advice with respect to executive
compensation.
Nominating/Corporate Governance
Committee. The Nominating/Corporate Governance Committee is comprised of
Sibyl Fishburn, Chair, Carroll Vinson, Murray Wright and Craig Bram, all of whom
are independent as defined in the NASDAQ Rules. This Committee acts pursuant to
a written 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 pursuant to rules of the SEC, the
NASDAQ, and other governing authorities, and as required by the Sarbanes Oxley
Act. This Committee met once in 2009.
Compensation Committee Interlocks and
Insider Participation. Murray Wright, Carroll
Vinson, Craig Bram and Sibyl Fishburn served on the Compensation &
Long-Term Incentive Committee.
Related Party Transactions.
The Company requires that each executive officer, director and director nominee
complete an annual questionnaire and report all transactions with the Company in
which such persons (or their immediate family members) had or will have a direct
or indirect material interest (except for salaries, directors' fees and
dividends on our stock). Management reviews responses to the questionnaires and,
if any such transactions are disclosed, they are reviewed by Board of Directors.
The Company does not, however, have a formal written policy setting out these
procedures. There were no such transactions during the years ended January 2,
2010 or January 3, 2009.
Board Leadership Structure and Board’s
Role in Risk Oversight
Our
Bylaws provide for a Chairman elected by the Board from among its members, and
our Bylaws further provide that two or more offices may be held by the same
person. Our Bylaws also make it clear that the business and affairs
of the Company are managed under the direction of the Board of Directors, and
that management control is subject to the authority of the Board of Directors to
appoint and remove any of our officers at any time. Our Board does
not have a specific policy as to whether the role of Chairman and Chief
Executive Officer should be held by separate persons, but rather makes an
assessment of the appropriate form of leadership structure on a case-by-case
basis. The Board believes that this issue can be a part of the
succession planning process and recognizes that there are various circumstances
that weigh in favor of or against both combination and separation of these
offices. In fact, within the last decade we have employed both
structures – combined offices and separate offices. The Board
believes it is in the best interests of the Company for the Board to make such a
determination in light of current circumstances when it considers the selection
of a new Chief Executive Officer or at such other time as is
appropriate.
Since
2002, the roles of Chairman and Chief Executive Officer have been held by
separate persons. Our current Chairman, Mr. Lane, served as Chairman
and Chief Executive Officer from 1987 until his retirement as Chief Executive
Officer in 2002. Because of his extensive knowledge of the business
and operations of our Company, the Board believed it appropriate, and in our
Company’s best interests, for him to continue to serve as Chairman upon election
of the Chief Executive Officer who succeeded him, and upon election of our
current Chief Executive Officer. In this role, he provides important
insights to the Board, and his institutional knowledge and experience with our
Company make him a valuable resource to our Chief Executive Officer, other
members of management, and our Board.
Our Board
is actively involved in oversight of risks that could affect our
Company. The Board receives regular reports from members of
senior management on areas of material risk to us, including operational,
financial, legal and regulatory, and strategic risks. These
reports are reviewed by the full Board, or, where responsibility for a
particular area of risk oversight is delegated to a committee of the Board, that
committee reviews the report and then reports to the full
Board. The Audit Committee’s Charter requires the Committee to
inquire of management and the registered public accountants about significant
risks or exposures and assess the steps management has taken to manage such
risks, and further requires the Committee to discuss with the registered public
accountants the Company’s policies and procedures to assess, monitor, and manage
business risk, and legal and ethical compliance programs (e.g., the Company’s
Code of Conduct).
Director Qualifications and
Nomination Process.
In
recommending and evaluating candidates, the Nominating/Corporate Governance
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. Although the Nominating/Corporate Governance
Committee does not have a specific policy with regard to the consideration of
diversity in identifying director nominees, the Committee considers racial and
gender diversity, as well as diversity in business and educational experience
among all of the directors, as part of the total mix of information it takes
into account in identifying nominees. 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/Corporate Governance
Committee believes the current Board members are highly qualified to serve and
each member has unique qualifications and business expertise that benefit the
Company. Mrs. Fishburn is a member of the founding family of the Company. Her 30
years’ experience on the Board is considered a valuable asset to the
Board. Mr. Lane was a CPA on the audit staff of a national certified public
accounting firm now a part of Ernst & Young. His business career
also includes Vice President-Finance for a data processing service company and
president, Chief Executive Officer and a Director of a self-insurance service
company that was a subsidiary of The Continental Group, Inc., President and
Chief Executive Officer of the Company from 1987 to 2002 and Chairman of the
Board since 1987. Mr. Vinson also was a CPA and was a Partner with a national
firm of certified public accountants. He has extensive experience in the real
estate investment business having served in a variety of positions including
Chief Operating Officer, Director and President of a major real estate services
and merchant banking company. Mr. Wright’s career as a trial lawyer, founder and
Chief Executive Officer of a law firm and his business and financial experience
as managing director of a closely held investment banking firm are considered to
be valuable attributes to the Board. Mr. Bram has 30 years of experience in
business management, financial operations, management consulting, business
start-ups and strategic planning for a variety of business and government
organizations. Early in his business career, Mr. Bram was employed by the
Reynolds Metals Company, a global aluminum manufacturer, in their corporate
Logistics and Sales and Marketing departments. He has served on the boards of
several private companies as well as played an active role in their day-to-day
operations. Mr. Braam’s educational background and his entire business career
have been in the chemicals business. His experience includes 20 years as
President of Manufacturers Soap and Chemicals Company, which was acquired by the
Company in 1996 where he continued his role as President.
The
Nominating/Corporate Governance Committee does not have any specific process for
identifying director candidates. Such candidates are routinely identified
through personal and business relationships and contacts of the directors and
executive officers.
The Nominating/Corporate Governance
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/Corporate
Governance Committee for consideration as a Board of Directors'
nominee,
the shareholder must submit in writing to the Nominating/Corporate Governance
Committee the recommended candidate's name, a brief resume setting forth the
recommended candidate's business and educational background and qualifications
for service, the number of the Company's shares beneficially owned by the
person, and a notarized consent signed by the recommended candidate stating the
recommended candidate's willingness to be nominated and to serve. Additionally,
the recommending shareholder must provide his or her name and address and the
number of the Company's shares beneficially owned by such person. This
information must be delivered to the 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/Corporate Governance
Committee, and must be received not less than 90 days nor more than 120 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/Corporate Governance 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 received by the Company not less than
30 nor more than 60 days prior to the Annual Meeting, contain the information
set forth above, and otherwise are made in accordance with the procedures set
forth in the Company's Bylaws.
Shareholder Communications with
Directors
Any shareholder who wishes to send
communications to the Board of Directors should mail them addressed to the
intended recipient by name or position in care of: Corporate Secretary, Synalloy
Corporation, 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.
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
|
|
Chief
Financial Officer and Vice President, Finance since May
1994
|
|
Michael
D. Boling, age 55
President
of Bristol Metals, LLC’s Piping Systems division, a subsidiary of the
Company, since September 2009; President of Bristol Metals, LLC, from
October 2005 to September 2009; and Vice President of Bristol Metals'
Piping Systems division from 1987 to 2005.
|
|
|
|
J.
Kyle Pennington, age 52
President
of Bristol Metals, LLC’s Brismet Pipe division since
September 2009; Vice President of Manufacturing , Bristol
Metals, LLC from December 2007 through September 2009. From 2006 to 2007,
Mr. Pennington was Manufacturing/Logistics Manager at General Dynamics,
Kilgore, TX; and from 2005 to 2006, he was Manager, Universal Packaging,
Dell Computer Corporation, Nashville, TN. Prior to joining
Bristol Metals in 2007, Mr. Pennington worked 17 years in the metals
industry including 12 years experience in executive management and service
on the Board of Directors of Lone Star
Steel.
|
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 2009, all filing requirements
applicable to its officers and directors were met on a timely
basis.
Objectives of the Company’s
Compensation Program. 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, short-term cash incentive
compensation and long-term incentive compensation. Together, the
three elements of compensation for named executives are intended to attract,
retain and give incentives to those individuals to the ultimate benefit of the
Company and its shareholders.
The three
elements of executive compensation are more fully described below, as are the
methods used in determining their values.
Base
Compensation. The Committee determines base salaries by
considering market forces in the geographic area and in the industry applicable
to each business unit. In 2009 the Company did not engage in benchmarking
executive compensation. Information on executive compensation is obtained by
reviewing executive compensation information in proxy statements, and various
publications and surveys that contain data about executive compensation for
manufacturing companies. In addition, the Company considers the attributes of
each individual executive, including but not limited to his or her longevity
with the Company, his or her educational background and experience, the
particular responsibilities of his or her position, the compensation of others
with similar background, credentials and responsibilities, and his or her past
level of performance, as well as prospective assumptions. The Company believes
it executive base compensation is in the lower range of similarly situated
companies.
Short-Term Incentive
Compensation. The Company maintains a short-term cash
incentive program which tends to be somewhat more generous than that of our
peers when profits are robust, and pays the employees nothing unless minimum
returns on average shareholders’ equity are achieved. The cash
incentive program compensates each manager eligible for such incentive
compensation pursuant to a formula based upon returns on average equity in his
business unit during the year. The intention is to make every senior
manager’s cash compensation dependent upon measurable objective performance
criteria. Subsidiary senior managers participate in profit sharing
pools determined by the performance of their business units, while the Chief
Executive Officer’s incentive compensation is based on consolidated
profitability.
The
formula employed with respect to the cash incentive program is to award an
incentive pool to each business unit in an amount equal to 10% of the unit’s
operating income in excess of a threshold of 10% return on average shareholders’
equity employed in that business unit. A minimum of 60% of the
incentive will be paid to designated participants pro rata to their salaries. A
minimum of 10% and a maximum of 40% of the incentive pool may also be paid to
designated participants in any proportion based on subjective criteria solely at
the discretion of the Chief Executive Officer and approval of the Compensation
& Long-Term Incentive Committee. A maximum of 30% of the
incentive pool may be distributed to employees who are not designated
participants in any proportion at the discretion of the Chief Executive
Officer.
The Chief
Executive Officer’s cash short-term incentive compensation is specified in his
employment contract, which extends through December 31, 2010 and is
automatically extended for an additional year unless either party gives 90 days
advance notice of intention to cancel the agreement and is based on consolidated
profitability. The employment contract provides a short-term incentive
compensation equal to 5% of operating income before income taxes in excess of an
amount equal to 10% of average stockholders' equity.
Because
criteria for the short-term incentive plan were not met in 2009, no such awards
were made to our executive officers named in the Summary Compensation Table for
the 2009 year.
Bonuses. Other senior managers
at the Company’s headquarters, including the Chief Financial Officer and other
senior executives, receive cash bonuses based upon their individual performance
as determined subjectively by the Chief Executive Officer and the Compensation
& Long-Term Incentive Committee. There is no maximum or minimum amount
currently established for these individuals, but there has been an indirect
linkage between the size of the cash bonus pool, and the amounts allocated to
these individuals. Mr. Bowie’s 2009 bonus was based on his efforts in
accomplishing specific directives of the Board including the divestiture of the
specialty chemical business of Blackman Uhler Specialties, LLC and the
acquisition of Ram-Fab, Inc.
Long-Term Incentive
Compensation. The Company also provides to senior
managers a long-term incentive compensation component. Since 2005,
the Compensation & Long-Term Incentive Committee of the Board of Directors
has recommended, and shareholders approved, awarding incentives through grants
of restricted stock under the 2005 Stock Awards Plan. Grants of
restricted shares instead of options are expected to benefit the Company in that
such grants avoid the complicating issues of accounting for the cost of option
grants, while exposing the grantees to both the positive and negative aspects of
changes in market price of the Company’s common stock over time. Grants of
restricted stock augment the cash component of compensation in a number of
ways. The grants vest in 20% increments over a period of five years
from the date of grant as long as the employee remains employed by the
Company. Over time, the program provides an incentive for the
executive to remain with the Company in the long term, as vesting depends upon
continued employment.
The
Compensation Committee does not establish targeted awards for the named
executives. The awards to the named executives are based on a discretionary
evaluation. The Committee evaluates the achievement of the goals of the
executive’s business unit, which are also considered the executive’s goals since
he has management responsibility for the unit. The granting of awards under the
2005 Stock Awards Plan begins with a discretionary determination by the Chief
Executive Officer and the Compensation & Long-Term Incentive Committee of
the dollar value of the stock available to be awarded for performance in a given
year. For the 2009 awards, this dollar amount was $400,000. The size of the
grant pool may rise or fall over time, depending on the long-term performance of
the Company. The awards are made the following year and the total number of
restricted shares available to be awarded is determined by dividing the
previously determined dollar value of available stock by the average of the high
and low sales prices on the trading day immediately prior to the determination
date. The number of shares so determined is the maximum number that may be
awarded to all participants for the prior year’s performance.
The Chief
Executive Officer and the Compensation & Long-Term Incentive Committee also
agree at the beginning of the performance year upon specific milestones, largely
comprised of measurable business metrics within each business unit which can be
impacted by management. The Committee’s goal is to apply certain common goals
across all levels of senior management, in addition to specific goals within
their area of responsibility. These goals are established and communicated to
managers in February or March of each year. The Committee reviews progress
towards the goals during the performance year and evaluates the performance of
each business unit after the end of the year. Based on its evaluation, the
Committee awards restricted shares to the participants as it deems appropriate.
Corporate goals for 2009 included both financial and operating
targets. Financial targets included, among others, revenue and profit
growth, return on invested capital, and cost control. Operating targets
included, among others, customer relationship issues, product quality and plant
process efficiency. Quarterly reports on progress toward goals were produced by
each business unit and senior management, and communicated to the Committee for
review.
The
Committee has and uses its discretion to determine the number of shares awarded
to each named executive officer. The Committee does not use multiple levels of
performance which are tied to multiple levels of awards. Rather, it subjectively
evaluates the extent to which a named executive officer’s business unit has
achieved or made progress toward achieving its goals after considering the
available data and it then uses its collective judgment to make awards it
believes to be appropriate to the level of performance of the named
executive.
Other
Matters. Executive officers make recommendations with respect
to salaries of their subordinates. The Compensation & Long-Term
Incentive Committee sets the salaries of the Chief Executive Officer, Chief
Financial Officer, Corporate Secretary and the head of each business
unit.
The following table sets forth
information about 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 three highest paid executive officers of the Company whose
compensation for the fiscal year ended January 2, 2010 exceeded
$100,000.
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
All
Other Compensation ($)
|
Total
($)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(g)
|
(i)
|
(j)
|
|
Ronald
H. Braam
|
2009
|
200,000
|
-
|
5,220
|
-
|
9,800
|
215,020
|
|
President
and CEO
|
2008
|
200,000
|
-
|
29,744
|
165,873
|
9,200
|
404,817
|
|
|
|
|
|
|
|
|
|
|
Gregory
M. Bowie
|
2009
|
180,000
|
150,000
|
7,830
|
-
|
9,800
|
347,630
|
|
CFO
|
2008
|
178,333
|
90,000
|
24,742
|
-
|
9,200
|
302,275
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Boling
|
2009
|
150,000
|
-
|
-
|
-
|
9,800
|
159,800
|
|
President
of Bristol
|
2008
|
150,000
|
-
|
23,187
|
221,169
|
9,200
|
403,556
|
|
Metals,
LLC's Piping
|
|
|
|
|
|
|
|
|
Systems
division, a subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Kyle Pennington(1)
|
2009
|
135,209
|
-
|
-
|
-
|
7,343
|
142,552
|
|
President
of Bristol
|
|
|
|
|
|
|
|
|
Metals,
LLC's Brismet Pipe
|
|
|
|
|
|
|
|
|
division,
a subsidiary
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Pennington was named
President of Bristol's Brismet Piping division effective September 22,
2009.
|
Bonuses - Mr. Bowie
was paid discretionary cash bonuses based on various considerations, including
the Company's financial results, compensation of other executive officers and an
evaluation of his job performance. For more information on cash bonus
compensation, see “Discussion of Executive Compensation – Bonuses.”
Stock Awards – The
information in this column relates to restricted stock awards. The amounts in
this column represent the dollar amounts of the aggregate grant date fair value
computed in accordance with FASB ASC Topic 718. Based on FASB ASC Topic 718, the
dollar value of the stock awards is the grant-date fair value, calculated using
the average of the high and low stock price on the day prior to grant date. For
2009 and 2008 the grant price per share was $5.22 and $13.52, respectively. See
Note G to the Company’s consolidated financial statements for the year ended
January 2, 2010, which are included in the Company’s 2009 Annual Report on Form
10-K for additional disclosure of all assumptions made with respect to valuation
of both stock and option awards.
Non-Equity Incentive Plan
Compensation - Cash incentive compensation based on a short-term
incentive plan that provides for incentive awards 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 2009) of
average stockholders' equity for the applicable division or subsidiary. Messrs.
Boling and Pennington are eligible for incentive awards under this plan. Messrs.
Braam and Bowie are not participants in this plan. Mr. Braam is entitled to cash
incentive compensation under a written employment contract equal to a percentage
(5% for 2009) of net earnings before income taxes in excess of a predetermined
percentage (10% for 2009) of average stockholders' equity. No payouts were made
for 2009 under the Company's non-equity incentive plans to Messrs. Boling and
Pennington or to Mr. Braam pursuant to his employment contract.
For more
information on short-term incentive compensation, see the “Discussion of
Executive Compensation – Short-Term Incentive Compensation.”
All Other
Compensation – The amounts
shown in this column represent the Company’s contributions pursuant to the
401(k)/Employee Stock Ownership Plan for the named executives. Perquisites for
each named executive officer were less than $10,000.
|
Name
(a)
|
Grant
Date
(b)
|
All
Other Stock Awards Number of Shares of Stock or Units (#) (1)
|
Exercise
or Base Price of Option Awards ($/Sh)
|
Grant
Date Fair Value of Stock and Option Awards ($) (2)
|
| |
|
|
|
|
|
|
|
(i)
|
(k)
|
(l)
|
|
Ronald
H. Braam
|
2/12/2009
|
1,000
|
5.22
|
5,220
|
|
Gregory
M. Bowie
|
2/12/2009
|
1,500
|
5.22
|
7,830
|
|
Michael
D. Boling
|
2/12/2009
|
0
|
-
|
0
|
|
J.
Kyle Pennington
|
2/12/2009
|
0
|
-
|
0
|
|
(1)
|
Awards of restricted shares to
the named executives in 2009 pursuant to the 2005 Stock Awards Plan based
on achievement of pre-determined quantifiable and qualitative goals during
2008. The shares vest in 20% increments beginning one year from date of
grant, and any unvested shares are forfeited upon termination of
employment. Dividends accrue and are paid to named executives upon vesting
of any portion of the restricted
stock.
|
|
|
Awards
of restricted shares were also made on February 24, 2010 to the named
executives pursuant to the 2005 Stock Awards Plan for 2009 performance.
Under the Plan awards of restricted stock were made to certain key
executives based on achievement of pre-determined quantifiable and
qualitative goals during 2009 as follows: Mr. Braam – 20,000 shares and
Mr. Bowie – 16,250 shares. See Discussion of Executive Compensation for
more information on long-term incentive
compensation.
|
|
(2)
|
Computed
in accordance with FASB ASC Topic
718.
|
The following table sets forth
information about stock option and restricted stock awards outstanding at the
end of 2009 for each of our named executive officers. No other stock awards were
outstanding at the end of 2009.
|
|
Option
Awards
|
Stock
Awards
|
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date (1)
|
Number
of Shares or Units of Stock That Have Not Vested (2)
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested (3)
($)
|
|
(a)
|
(b)
|
(c)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Ronald
H. Braam
|
4,800
|
0
|
$4.65
|
4/25/2012
|
4,560
|
$42,955
|
|
|
20,000
|
7,000
|
9.96
|
2/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
M. Bowie
|
22,093
|
7,000
|
9.96
|
2/3/2015
|
4,464
|
42,051
|
|
|
|
|
|
|
|
|
|
Michael
D. Boling
|
0
|
0
|
|
|
4,228
|
39,828
|
|
|
|
|
|
|
|
|
|
J.
Kyle Pennington
|
0
|
0
|
|
|
160
|
1,507
|
|
(1)
|
Stock options expiring April 25,
2012 vested as follows: 20% beginning on April 25, 2003, 40% at April 25,
2004, 60% at April 25, 2005, and the remaining shares granted to the named
executive officers vested on December 20, 2005 as a result of the Board of
Directors' resolution to accelerate the vesting schedules of substantially
all outstanding unvested options issued to officers and key employees
effective as of the date of the resolution. Options expiring February 3,
2015 vest as follows for the named executives: 15,598 options granted
vested on December 20, 2005 as a result of a Board of Directors'
resolution to accelerate the vesting schedules described above; no options
vested in 2006; 6,201 shares vested on February 3, 2007 for Messrs. Braam
and Bowie; 7,000 options vested per year for Messrs. Braam and Bowie on
February 3, 2008, February 3, 2009; and 7,000 options for Messrs. Braam
and Bowie vested on February 3,
2010.
|
|
(2)
|
Includes
restricted stock awards granted February 12, 2007, of which 20% vest
annually beginning February 12, 2008; and restricted stock awards granted
February 12, 2008 of which 20% vest annually beginning February 12, 2009.
Stock awards are subject to the recipient’s continuing to be employed by
the Company and other conditions described under “Equity Plans—Stock
Awards Plan.”
|
|
(3)
|
Based
on the December 31, 2009 closing stock price of $9.42 per
share.
|
The
following table sets forth information about restricted stock awards that vested
in 2009. None of the named executive officers exercised stock options in
2009.
|
|
Stock
Awards
|
|
Name
|
Number
of Shares Acquired on Vesting (#)
|
Value
Realized on Vesting ($) (1)
|
|
(a)
|
(d)
|
(e)
|
|
Ronald
H. Braam
|
1,640
|
$
8,561
|
|
Gregory
M. Bowie
|
1,366
|
7,131
|
|
Michael
D. Boling
|
2,247
|
11,729
|
|
J.
Kyle Pennington
|
40
|
209
|
|
(1)
|
Based on the market value of the
shares on the vesting date.
|
Non-employee directors are paid an
annual retainer of $35,000, and each director has the opportunity to elect to
receive $15,000 of the retainer in restricted stock. For 2009 and 2010, each
director elected to receive $15,000 of the annual retainer in restricted stock.
The number of restricted shares issued is determined by the average of the high
and low stock price on the day prior to the Annual Meeting of Shareholders. In
2009 each non-employee director received 2,532 shares of restricted stock (an
aggregate of 12,660 shares). 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
are 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 receive additional annual compensation of $5,000 each, and the
Compensation & Long-Term Incentive Committee Chair received an additional
$2,500 in 2009 and will receive an additional $5,000 in 2010. Directors are
reimbursed for travel and other expenses related to attendance at meetings.
Directors who are employees are not paid extra compensation for service on the
Board or any committee of the Board.
The following table sets forth
information about compensation paid by the Company to non-employee directors for
the year ended January 2, 2010.
|
Name
|
Fees
Earned or Paid in Cash ($) (1)
|
Total
|
|
(a)
|
(b)
|
(h)
|
|
James
G. Lane, Jr.
|
$49,500
|
$49,500
|
|
Sibyl
N. Fishburn
|
45,000
|
45,000
|
|
Carroll
D. Vinson
|
56,500
|
56,500
|
|
Murray
H. Wright
|
54,000
|
54,000
|
|
Craig
C. Bram
|
51,500
|
51,500
|
|
(1)
|
As discussed above, each director
elected to be paid $15,000 of his annual retainer in stock (2,532 shares
each).
|
The Company has a written employment
agreement with Mr. Braam, which was effective January 1, 2006, pursuant to his
appointment as Chief Executive Officer. The agreement provides for an annual
salary of $200,000. In addition, he is entitled to "bonus-compensation" equal to
5% of operating income before income taxes (as further defined in the agreement)
in excess of an amount equal to 10% of average stockholders' equity. The
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 as described in the next paragraph, during the term
of his employment with the Company. The agreement was for an initial term of one
year, which is automatically extended for an additional year on each anniversary
unless either party gives 90 days advance notice of intention to cancel the
agreement.
The agreement also provides that Mr.
Braam will be entitled to participate in all employee benefit plans in
accordance with the terms of those plans. In the event of Mr. Braam's permanent
disability or death while employed by the Company, he will be entitled to a
payment equal to his current base salary at the date of death or disability
until the next anniversary date of the agreement, which shall in no event be
less than three months, together with his bonus compensation for that fiscal
year prorated to the date of termination of his employment as a result of
permanent disability or death. If Mr. Braam's employment with the Company had
terminated on January 2, 2010, as a result of his permanent disability or death,
he would have been entitled to a payment of $50,000 with respect to his base
salary and no compensation with respect to his short-term cash incentive
compensation. The agreement contains Mr. Braam's covenant not to engage,
directly or indirectly, in competition with the Company with respect to the
businesses in which it is engaged on the date his employment is terminated for a
period of one year after termination of his employment. Mr. Braam also agrees
not to disclose, at any time during his employment with the Company or
thereafter, any of the Company's confidential information.
The Company has two stock option plans,
both of which were approved by shareholders. The 1998 Plan is an incentive stock
option plan. Both plans had ten year terms and have terminated, and no further
grants may be made under either plan. The Company did not grant any options
during 2009 or 2008. Under the 1998 Plan covering officers and key employees,
options were exercisable beginning one year after date of grant at a rate of 20%
annually on a cumulative basis, and unexercised options expire ten years from
the grant date. Under the 1994 Non-Employee Directors’ Plan, options were
exercisable at the date of grant. Currently, there are options outstanding under
both plans. The grant period for the 1994 Plan expired in April 2004, but
options may be exercised under the 1994 Plan until April 2012. The
grant period for the 1998 Plan expired April 30, 2008, but options may be
exercised under this Plan until February 2015. The exercise 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. 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) are/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. If one of the events described in (a) or (b)
above had occurred as of January 2, 2010, half of the options shown in the
“Number of Securities Underlying Unexercised Options (#) Unexercisable” column
of the Outstanding Equity Awards at Fiscal Year End 2009 table would have vested
immediately.
Incentive
stock options are not transferable other than by death and can only be exercised
during the employee's lifetime by the employee. Under the 1994 Plan, in the
event a person ceases to be a non-employee director for reasons other than
death, the unexpired options must be exercised by the earlier of three years
after termination of Board service 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
March 1, 2010, there were 79,393 options outstanding and exercisable under both
plans.
The 2005 Stock Awards Plan, approved by
shareholders at the April 28, 2005 Annual Meeting, and amended by the Board of
Directors effective at its February 2008 meeting, authorizes issuance of up to
300,000 shares which may be awarded for a period of 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 be forfeited upon termination of employment. The Company may
also terminate any portion of an award that has not vested upon an employee's
failure to comply with all conditions of the award or the plan. 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. If
one of the events described in (i), (ii) or (iii) above had occurred as of
January 2, 2010, half of the restricted shares shown in the “Number of Shares or
Units that have not Vested” column of the Outstanding Equity Awards at Fiscal
Year Ended 2009 table would have vested immediately.
Shares
representing awards that have not yet vested are held in escrow by the Company
and an employee is not entitled to any voting rights with respect to any such
shares. Share awards that have not vested are not transferable.
On
February 12, 2008, a total of 11,480 shares were awarded under this incentive
program, including 5,945 awarded to the named executive officers, of which 1,189
shares vested on both February 12, 2009 and February 12, 2010.
On
February 12, 2009, a total of 5,500 shares were awarded under this incentive
program, including 2,500 awarded to the named executive officers, of which 500
shares vested on February 12, 2010.
On
February 24, 2010, a total of 51,500 shares were awarded under this incentive
program, including 36,250 to the named executive officers.
The Company sponsors 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 are
automatically enrolled at a pre-determined percentage following 60 days of
full-time employment with the Company. Employees may choose to opt out or elect
to change the default deferral rate. Employees are eligible to receive a
matching contribution in the month following their one-year
anniversary.
Employees are permitted to contribute up
to 100% of earnings not to exceed a dollar amount set by the Internal Revenue
Service 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 2009 and 2010. 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 by the Company), any discretionary portion of a
participant's account balance will vest as follows: less than three years
service - 0% vested; three or more years - 100% vested.
Unvested amounts are forfeited and
allocated to participants eligible to participate for a plan year. The Plan
permits rollovers from qualified plans at the discretion of the Company. The
Plan 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 employees'
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 2009,
the Company's total matching contribution was $330,000.
Dixon Hughes PLLC ("DH") was selected
to serve as the Company's independent registered public accounting firm for
fiscal 2009. Representatives of DH are expected to be present at the Annual
Meeting with an opportunity to make a statement, if they so desire, and to
respond to appropriate questions with respect to that firm's audit of the
Company's financial statements for the fiscal year ended January 2,
2010.
Fees
Paid to Independent Registered Public Accounting Firm
The
following table sets forth the aggregate fees billed by DH for audit services
rendered in connection with the consolidated financial statements and reports
for the fiscal years ended January 2, 2010 (referred to as “fiscal 2009”) and
January 3, 2008 (referred to as "fiscal 2008") and for other services rendered
during fiscal years 2009 and 2008, 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
2009
|
%
of Total
|
|
Fiscal
2008
|
%
of Total
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
|
|
|
|
|
|
Audit
|
$ 176,000
|
|
|
$ 159,500
|
|
|
|
Sarbanes
Oxley Section 404
|
-
|
|
|
110,000
|
|
|
|
|
|
176,000
|
74%
|
|
269,500
|
88%
|
|
|
|
|
|
|
|
|
|
|
Audit
Related Fees
|
-
|
0%
|
|
-
|
0%
|
|
|
|
|
|
|
|
|
|
|
Tax
Fees
|
|
|
|
|
|
|
|
|
Tax
Compliance/Preparation
|
38,000
|
16%
|
|
32,000
|
11%
|
|
|
Other
Tax Services
|
|
|
|
|
|
|
|
|
Dixon
Hughes, PLLC
|
800
|
0%
|
|
3,800
|
1%
|
|
|
|
|
|
|
|
|
|
|
All
Other Fees
|
|
|
|
|
|
|
|
|
Dixon
Hughes, PLLC
|
23,200
|
10%
|
|
-
|
0%
|
|
|
|
|
|
|
|
|
|
|
Total
Fees
|
$ 238,000
|
100%
|
|
$ 305,300
|
100%
|
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. Such fees were significantly
lower in 2009 because the Company became a “smaller reporting company,” as
defined by the Securities and Exchange Commission, and, therefore, no audit of
the Company’s internal control over financial reporting was required for
2009.
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 include fees for assistance with the acquisition of Ram-Fab, Inc. and the
sale of the specialty chemical business of Blackman Uhler, LLC along with
certain assets held by the corporation.
In making
its decision to appoint DH as the Company's independent registered public
accounting firm for the fiscal year ending January 2, 2010, the Audit Committee
considered whether services other than audit and audit-related services provided by that
firm are compatible with maintaining the independence of DH.
Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services
of
Independent
Registered Public Accounting Firm
The Audit Committee pre-approves all
audit and permitted non-audit services (including the fees and terms thereof)
provided by the independent registered public accounting firm, subject to
limited exceptions for non-audit services described in Section 10A of the
Securities Exchange Act of 1934, which are approved by the Audit Committee prior
to completion of the audit. The Committee may delegate to one or more designated
members of the Committee the authority to pre-approve audit and permissible
non-audit services, provided such pre-approval decision is presented to the full
Committee at its next scheduled meeting. During fiscal 2009, all audit and
permitted non-audit services were pre-approved by the Committee.
The Audit Committee of the Board of
Directors has reviewed and discussed with management the Company's audited
financial statements for the year ended January 2, 2010. The Audit Committee has
discussed with the Company's independent auditors, Dixon Hughes PLLC, the
matters required to be discussed by SAS 61, as amended (AICPA, Professional
Standards, Vol. 1. AU Section 380) as adopted by the Public Company Accounting
Oversight Board in Rule 3200T. The Audit Committee has also received the written
disclosures and the letter from Dixon Hughes, required by applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent accountant’s communications with the Audit Committee concerning
independence, 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 January 2, 2010 for
filing with the Securities and Exchange Commission.
Carroll D.
Vinson, Chair
Murray H.
Wright
Craig C.
Bram
Any shareholder proposal to be included
in the proxy materials for the 2011 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 27, 2010. In order for a shareholder to bring any business or
nominations before the 2011 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 2011 Annual Meeting which is
tentatively scheduled on April 28, 2011. With respect to any shareholder
proposal not received by the Company prior to February 10, 2011, 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 "Audit Committee Report" is 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.
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
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 29, 2010
As
an alternative to completing this form, you may enter your vote instruction via
the Internet at WWW.VOTEPROXY.COM and
follow the simple instructions. Use the Company Number and Account Number shown
on your proxy card.
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 corporate offices, 2155 West Croft
Circle, Spartanburg, South Carolina 29302 on Thursday, April 29, 2010 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 1.
.
Internet - Access "www.voteproxy.com" and follow
the on-screen instructions. Have your proxy card available when you access the
web page, and use the Company Number and Account Number shown on your proxy
card.
Vote
online until 11:59 PM EST the day before the meeting.
Mail - Date, sign and mail
your proxy card in the envelope provided as soon as possible.
In Person - You may vote your
shares in person by attending the Annual Meeting.
NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The
Notice of Meeting, proxy statement and proxy card are available at
http://investor.synalloy.com
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 Date Signature
if held
jointly 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.