SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange act of 1934 Filed by the Registrant ( ) 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(c) 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 approximate box): (x) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a6(i)(2) or Item 22(a)(2) of Schedule 14A ( ) $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). ( ) 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 trans action 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: -------------------------------------------------- 5) Total fee paid: -------------------------------------------------- ( ) 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. 1) Amount Previously Paid: --------------------------------------------- 2) Form, Schedule or Registration Statement No.: --------------------------------------------- 3) Filing Party: --------------------------------------------- 4) Date Filed: --------------------------------------------- SYNALLOY CORPORATION Post Office Box 5627 Spartanburg, South Carolina 29304 NOTICE OF ANNUAL MEETING April 28, 1995 TO THE STOCKHOLDERS OF SYNALLOY CORPORATION Notice is hereby given that the Annual Meeting of Shareholders of Synalloy Corporation will be held at the general offices of the Company, Croft Industrial Park, Spartanburg, South Carolina, on Friday, April 28, 1995, at 10:00 a.m. local time. The following three important matters will be presented for your consideration: (1) To elect five (5) directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified; (2) To amend the 1994 Non-Employee Directors' Stock Option Plan to eliminate certain requirements limiting the exercise of such options. (3) To ratify the selection of Ernst & Young LLP, independent certified public accountants, as independent auditors for fiscal year ending December 30, 1995; (4) 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 March 10, 1995 are entitled to notice of and to vote at the meeting. By Order of the Board of Directors Cheryl C. Carter Secretary Spartanburg, South Carolina March 31, 1995 Important: You are cordially invited to attend the meeting, but whether or not you plan to attend, PLEASE VOTE, DATE, SIGN AND MAIL the enclosed Proxy promptly. If you attend the meeting, you may either vote by your proxy, or withdraw your proxy and vote in person. The 1994 Annual Report on Form 10K is furnished herewith. SYNALLOY CORPORATION CROFT INDUSTRIAL PARK POST OFFICE BOX 5627 SPARTANBURG, SOUTH CAROLINA 29304 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS April 28, 1995 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 general offices of the Company, Croft Industrial Park, Spartanburg, South Carolina, on Friday, April 28, 1995, at 10:00 a.m. local time, and at all adjournment(s) thereof. The approximate date on which this Proxy Statement and the accompanying proxy card are first being sent or given to stockholders is March 31, 1995. Quorum and Vote Required. 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. 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, its only class of issued and outstanding capital stock. 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 10, 1995. On February 28, 1995, the Company had outstanding 4,801,778 (excluding 1,198,222 shares held in treasury) shares of Common Stock having one (1) vote per share. Each shareholder of Common Stock is entitled in respect to 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. Each shareholder 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 shares owned by such holder, or (2) by distributing his votes on the same principle among any number of candidates. Any shareholder who intends to so 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 shareholder 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. 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, telegram 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. Voting by Proxy. In voting by proxy with regard to the election of directors, stockholders may vote in favor of all nominees, withhold their votes as to all nominees or withhold their votes as to specific nominees. Stockholders should specify their choices on the accompanying proxy card. All properly executed proxy cards delivered by stockholders 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 all directors, approval to amend the 1994 Non-Employees Directors' Stock Option Plan and to ratify the appointment of Ernst & Young LLP as independent auditors. 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 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, by a valid proxy bearing a later date delivered to the Company or by attending the meeting and voting in person. STOCKHOLDERS' PROPOSALS FOR THE 1996 ANNUAL MEETING OF SHAREHOLDERS Stockholders' proposals submitted pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 intended to be presented at the 1995 Annual Meeting of Shareholders, tentatively scheduled for April 1996, must be sent certified mail, return receipt requested and received at the Company's Executive Offices, Post Office Box 5627, Spartanburg, South Carolina 29304, addressed to the attention of the Secretary by December 1, 1995 in order to be included in the Proxy Statement and form of proxy relating to such meeting. SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT The Company's Annual Report to Stockholders including Form 10-K for the year ended December 31, 1994, as filed with the Securities and Exchange Commission, accompanies this Proxy Statement and is incorporated by reference herein. BENEFICIAL OWNERS OF MORE THAN FIVE (5%) PERCENT OF THE COMPANY'S COMMON STOCK The table below details certain information regarding any person who is known by the Company to be the beneficial owner of more than five (5%) percent of the Company's Common Stock as of February 28, 1995.
Name and Address of Amount and Nature of Percent of Class Beneficial Owner Beneficial Ownership ------------------- -------------------- ----------- T. Rowe Price 321,700 (1) 6.7 100 East Pratt Street Baltimore, MD 21201 James G. Lane, Jr. 265,207 (2) 5.5 Post Office Box 5627 Spartanburg, SC 29304 Dimensional Fund Advisors, 248,855 (3) 5.2 Inc. 1299 Ocean Avenue, Suite 650 Santa Monica, CA 90401 (1)These securities are owned by various individual and institutional investors, which T. Rowe Price Associates, Inc. ("Price Associates") serves as investment adviser with power to direct investments and/or shared power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price associates is deemed to be beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. This information was obtained from Price Associates' Schedule 13-G dated February 14, 1995. (2)The aggregate number of shares of Common Stock owned beneficially by Mr. Lane includes direct ownership of 177,133 shares; indirect ownership of 3,574 shares held by the trustee under Synalloy's 401(k)/ESOP Plan; 2,000 shares currently exercisable pursuant to the Company's 1988 Stock Option Plan; and 82,500 shares owned by his spouse of which Mr. Lane disclaims beneficial ownership. (3)Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment advisor, is deemed to have beneficial ownership of 248,855 shares of Synalloy Common Stock as of December 31, 1994, all of which shares are held in portfolios of DFA Investment Dimensions Group Inc., a registered open-end investment company, or in a series of the DFA Investment Trust Company, a Delaware business trust, or the DFA Group Trust and DFA Participation Group Trust, investment vehicles for qualified employee benefit plans, all of which Dimensional Fund Advisors, Inc. serves as investment manager. Dimensional disclaims beneficial ownership of all such shares. Dimensional has sole voting power of 179,816 shares and shares voting power of an additional 69,039 shares with officers of the DFA Investment Trust Group. Dimensional has sole dispositive power over all 248,855 shares. This information was obtained from Dimensional's Schedule 13-G dated January 31, 1995.
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 fifteen individuals. Upon recommendation of the Nominating Committee, the Board of Directors fixed the number of directors constituting the full Board at five members and recommends that the five 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 and 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 five 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. While the Board of Directors expects that all of the nominees will serve as directors, if, at the time of the Annual Meeting of Shareholders, or any adjournment(s) thereof, a situation should arise making it impossible for one or more of the nominees to serve, the holders of the enclosed proxy will vote for such substitute nominee as the Board of Directors recommends. The Board of Directors recommends that stockholders vote "FOR" the proposal to elect the five nominees listed below as directors of the Company. The election of directors requires the affirmative vote of the holders of a plurality of votes given for each director to be elected. The following table sets forth the names of nominees for director, their age, the year in which they were first elected a director, a brief description of their principal occupation and business experience during the last five years, all directorships of publicly held companies other than the Company, and the number of shares of the Company's Common Stock beneficially owned by them directly or indirectly, as of February 28, 1995, and certain other information. The Board Committee assignments are as of February 28, 1995.
Name, Age, Principal Director Common Stock Occupation,Other Since Beneficially Directorships and Owned as of Other Information February 28, 1995 (Percent of Class) ------------------------ ------- ------------------- Sibyl N. Fishburn, age 59 1979 53,342 (1)(4) Mrs. Fishburn is a graduate (1.1) of Hollins College, Roanoke, VA. She serves on the Board of the Virginia Nature Conservancy. Mrs. Fishburn is a member of the Audit and Nominating Committees. Richard E. Ingram, age 53 1989 12,390 (2)(4) Mr. Ingram has been Chairman (*) of the Board of Builder Marts of America, Inc. (BMA), Greenville, SC, a national distributor of lumber and building materials, since November 1988 and was Chief Executive Officer until November 1993. Since November 1, 1993 he has been President and Chief Executive Office of Snyders Auto Sales, a retail automobile dealer in Greenville, SC. He is a Director of Carolina First Holding and Carolina First Bank and Ingram Enterprises, Inc.,a real estate development company. He is a member of the Executive,Nominating and Compensation &Long-Term Incentive Committees. James G. Lane, Jr., age 61 1986 265,207(3) Mr. Lane has served as Chief (5.5) Executive Officer and Chairman of the Board of the Company since 1987. He also served as President of Bristol Metals, Inc., a subsidiary of the Company, from January 1988 to January 1, 1992. He is a member of the Board of Directors of The Sunbelt Companies, Inc., a public company that acquires and operates building materials retailers, headquartered in Greenville, SC. He is a member of the Executive and Nominating Committees. Glenn R. Oxner, age 56 1989 10,700 (4) Mr. Oxner is Chairman and Chief (*) Executive Officer of Edgar M. Norris Co., Inc., an investment securities company in Green- ville,SC. From 1989 to 1992 Mr. Oxner was Senior Vice President of NationsBank, and Managing Director of NationsBank Invest- ment Banking Company. He was Chairman of the Board of First Tryon Securities, Charlotte, NC from 1986 to 1989. He serves on the Board of Piemonte Foods Incorporated. He is a member of the Audit and Compensation & Long-Term Incentive Committees. Carroll D. Vinson, age 54 1987 2,150 (4)(5) Mr. Vinson is President and a (*) Director of Metropolitan Asset Enhancement Group, a private real estate holding company affiliated with Insignia Financial Group, Inc. ("Insignia") in Greenville, SC. He is also owner of C. D. Vinson & Associates, a consulting firm. He was President, Chief Executive Officer and a Director of Angeles Corporation, a real estate investment company in Los Angeles, CA. between February 18, 1993 and March 15, 1993. He was previously employed by Insignia first as President and Chief Operating Officer and then as President and Chief Executive Officer of Insignia Capital Corporation until February 15, 1993. Until December 31, 1990, he was President of U. S. Shelter Corporation, a real estate service company. He joined U.S. Shelter in 1985 as Vice President of Finance and Treasurer. He is a member of the Audit, Executive and Compensation & Long-Term Incentive Committees. All Directors and Officers as 417,999(6) a group(8 including those (8.7) listed above) *Less than one percent (1%). (1) Includes indirect ownership of 4,710 shares by spouse; 7,588 shares owned by the Estate of Sibyl Uhler, the mother of Mrs. Fishburn; and 10,047 shares held in irrevocable trust over which Mrs. Fishburn has certain powers. (2) Includes indirect ownership of 2,500 shares held by Donna C. Ingram Trust, 600 shares held in an IRA, and 490 shares held in the Ingram Foundation. (3) Includes indirect ownership of 3,574 shares held by the trustee under Synalloy's 401(k)/ESOP Plan; 2,000 shares currently exercisable pursuant to the Company's 1988 Stock Option Plan, and 82,500 shares owned by his spouse. (4) Includes options to purchase 200 shares exercisable pursuant to the 1994 Non-Employee Directors' Stock Option Plan. If this plan is amended as proposed, options for an additional 800 shares will be exercisable. (5) Includes indirect ownership by spouse of 1,050 shares. (6) Includes 26,100 shares which are currently subject to exercisable options, and 8,499 shares allocated under the Company's 401(k)/ESOP. If the 1994 Non-Employee Directors' Stock Option Plan is amended as proposed, an additional 3,200 shares will be subject to currently exercisable options.
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 Company has standing Executive, Audit, Compensation & Long-Term Incentive, and Nominating Committees of the Board of Directors. The members of the Executive Committee are James Lane*, Richard Ingram and Carroll Vinson. 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 shall 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 met one time. The Audit Committee members are Glenn Oxner*, Sibyl Fishburn and Carroll Vinson. This Committee makes recommendations to the Board of Directors regarding the selection of independent auditors; reviews the independence of such auditors; approves the scope of the annual audit activities of the independent auditors; approves the rendering of any material non-audit services; approves the audit fee payable to the independent auditors; reviews audit results; and reviews the expense accounts of Company officers. During the past fiscal year, this Committee held three meetings. The Compensation & Long-Term Incentive Committee, currently comprised of Richard Ingram*, Carroll Vinson, and Glenn Oxner, 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 program including the granting of options thereunder. This Committee held two meetings during the last fiscal year. The Nominating Committee is comprised of James Lane*, Richard Ingram and Sibyl Fishburn. 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 met once in 1994. The Nominating Committee will consider nominees recommended by shareholders if the recommendations are forwarded to the Secretary of the Company for transmission to the Nominating Committee not less than 30 days nor more than 60 days prior to the meeting, and are otherwise in compliance with the Company's Bylaws. The 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 from the floor at the Annual Meeting of Shareholders provided such nominations are in accordance with the notice procedures set in the Company's Bylaws. During fiscal year 1994, the Board of Directors met four 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. Directors who are not employees of the Company presently receive a fee of $1,000 for attendance at each meeting of the Board of Directors, a $6,000 annual retainer fee, and reimbursement for travel and other expenses related to attendance at meetings. Committee members presently receive a fee of $500 for each meeting attended which is not held on the same day as a Board meeting. Effective April 1995, the annual retainer will increase to $8,000 annually. The Director who is an employee is not paid extra compensation for his service on the Board or any committee of the Board. *Denotes chairman of respective committee. COMPLIANCE WITH SECTION 16(a) 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 and the Nasdaq National Market System reports of ownership and changes in 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 representation that no other reports were required, the Company believes that, during 1994, all filing requirements applicable to its officers and directors were complied with except that Richard E. Ingram, Director, inadvertently filed late one report covering two transactions; and Herbert B. Moore, Jr., President of Blackman Uhler Chemical, inadvertently filed one report late covering one transaction. THE BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The basic policies that determine cash compensation for the Company's executive officers were formulated in 1987. Some factors that were considered in developing the policies were as follows. The Company had suffered net losses in each of the previous five years. Return on average equity had been below 10% in 14 of the previous 19 years. The Chemical Segment incurred a loss in 1986 and sales were lower than 10 years earlier. The Metals Segment had losses for each of the prior four years. Management changes included a new Chief Executive Officer, a new President for the Chemical Division and restructuring of management that increased the responsibility and authority of certain senior managers. The cash compensation policies implemented in 1987 were intended to provide senior managers, including the executive officers, with strong motivation to strive diligently to produce and maintain a high level of profitability. The principal elements of the policies are as follows. Base salaries are increased only as a result of promotions or to establish parity among senior managers. The intent is to provide senior managers with base salaries lower than their peers in comparable companies. Offsetting the low salaries are short-term incentive plans that provide cash bonuses equal to a percent of profits before income taxes in excess of a predetermined percentage of equity. Subsidiary and divisional senior managers participate in profit sharing pools determined solely by the performance of their respective subsidiary or division while the Chief Executive Officer's bonus is based on consolidated profitability. The overall effect is to make every senior manager's cash compensation highly dependent on the profitability of the unit for which they work. No performance criteria except profits as related to equity were used to determine 1994 compensation for the Chief Executive Officer and other executive officers. The Summary Compensation Table and Notes thereto provide details of the short-term incentives covering the Chief Executive Officer and other executive officers 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 Committee believes that the price of the Company's stock in the long run will reflect the Company's growth and profitability. The short-term incentives described above motivate senior management to strive for such growth and profitability. A long-term incentive is also provided to senior managers that links their interests directly to those of the Company's shareholders. Options are granted to executive officers under a qualified stock option plan that only rewards them if the price of the Company's stock increases after the dates on which the options are granted. The Committee believes that the incentive programs provided to senior managers have contributed significantly to the Company's improved financial performance since 1987. The Committee reviews the 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 Richard E. Ingram, Chairman Glenn R. Oxner Carroll D. Vinson 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 stock performance for the Company with stock performances 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 S&P 500. 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.
SYNALLOY CORPORATION COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN SYNALLOY CORPORATION, S&P 500 AND THE RUSSELL 2000 SYNALLOY CORPORATION S&P 500 RUSSELL 2000 -------------------- ------- ------------ 100 100 100 1990 77 97 80 1991 140 126 117 1992 429 136 139 1993 240 150 166 1994 305 152 163 Indexed total return with dividends reinvested Base=100.
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 executive officers of the Company whose total cash compensation for the fiscal year ended December 31, 1994 exceeded $100,000.
Summary Compensation Table Long-Term Compensation Annual Compensation Awards ------------------- ----------- Name, Age and Year Salary Bonus Options All Other Principal ($) ($) (#) Compensation Position ($) ------------- ---- ------ ------ ------- ---------- James G. Lane, 1994 $120,000 $397,981 0 4,500 Jr.,Age 61, 1993 120,000 239,231 10,000 7,075 Chairman of 1992 120,000 360,769 0 6,866 the Board and Chief Executive Officer since 1987. Joseph N. Avento, 1994 72,000 172,000 0 4,251 Age 53, President, 1993 72,000 69,684 10,000 5,902 Bristol Metals, 1992 72,000 124,719 0 3,925 Inc., a wholly-owned subsidiary of the Company, since January 1992. He joined the Company in 1984 and served as Vice President of Sales for 8 years. Herbert B. Moore, 1994 67,000 151,129 0 4,500 Jr.,Age 49, 1993 67,000 105,057 10,000 6,474 President, 1992 67,000 148,795 0 5,232 Blackman Uhler Chemical,a Division of the Company, since September 1986. Erwin C. Thornton, 1994 57,000 110,000 0 20,251 Age 66 Executive 1993 57,000 83,400 0 20,282 Vice President, 1992 57,000 113,600 0 29,408 Blackman Uhler Chemical Division,since 1987.
NOTES Employment Contract - The Company has a written employment agreement with James G. Lane, Jr. entered into September 24, 1986 and amended January 28, 1988, February 2, 1989, February 7, 1991 and November 3, 1993 pursuant to which he is entitled to received an annual base salary of $120,000 beginning October 1, 1986 and continuing until December 31, 1995. In addition to his salary, he is entitled to a "bonus-compensation" equal to 5% of net earnings before income taxes in excess of a predetermined percent (7.5% in 1992, 10% for 1993, 1994 and 1995) of average shareholders' equity. In the event of the sale of the Company or a major division or subsidiary, Mr. Lane's employment agreement would remain in effect and, in addition, the agreement provides for a bonus equal to 1% of the excess of sales price over book value subject to a maximum bonus of $150,000. This agreement also provides certain fringe benefits and contains provisions for salary continuation benefits in the event of Mr. Lane's disability or death, under specified conditions, during the term of his employment by the Company. 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 (7.5% in 1992, 10% in 1993, 1994 and 1995) of average shareholders' equity for the applicable division or subsidiary. Mr. Lane does not participate in these bonus plans. For 1994, the incentives shown above were calculated on net earnings before deducting environmental cleanup charges since such charges related to pre-1986 conditions. Other Annual Compensation - No executive officer named in the cash compensation table nor the executive officers of the Company as a group received from the Company or any of its subsidiaries personal benefits or any other compensation which is the lesser of either $50,000 or 10% of the compensation reported in the cash compensation table above. Long-Term Compensation - There were 24,000 options granted in the last fiscal year. The Company's only long-term incentive plan is its qualified stock option plans. There were no stock options granted during 1992. All Other Compensation - Includes the following plans which are detailed under Retirement Plans.
Company Contributions to 401(k) Savings Plan Named Executive 1994 1993 1992 --------------- ------ ------ ------ J.G.Lane, Jr. $4,500 $7,075 $6,866 J.N. Avento 4,251 5,902 3,925 H.B. Moore, Jr. 4,500 6,474 5,232 E.C. Thornton 4,212 5,118 4,350
Company Contributions to Salary Continuation Agreements Named Executive 1994 1993 1992 --------------- ------- ------- ------- E.C. Thornton $16,039 $15,164 $25,058
Stock Options Plans Currently there are options outstanding under the 1983 Stock Option Plan, and outstanding and available to grant under the 1988 and 1994 Stock Option Plans approved by stockholders. The Plans provide for such options to be granted to officers, non-employed directors 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 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 is granted. Certain restrictions exist as to the time in which options can be exercised. Under the 1983 Plan, all options are presently 100% vested and the grant period has expired. With regard to the 1988 Plan, approved at the May 26, 1988 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 he 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 holding period requirement subject to certain limitations. No options may be exercised under the 1983 and 1988 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 options under all Plans having an aggregate fair market value in excess of $100,000 at the dates of 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, non-employed directors as of his or her election or re-election as a member of the Board will automatically receive an option for 1,000 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. Options may be exercised beginning one year after date of grant at a rate of 20% annually on a cumulative basis and no options may be exercised after 10 years from date of grant. At February 28, 1995, there were 161,155 options outstanding under all plans of which 89,155 were exercisable. Option/SAR Grants in Last Fiscal Year The following table sets forth as of December 31, 1995, certain information concerning options granted and options exercised during 1994 and presents the value of unexercised options held by the named executives at fiscal year end. Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Table The following table summarizes options granted and exercised during 1994 and presents the value of unexercised options held by the named executives at fiscal year end.
Value of Unexer- Number Shares Number of cised of Acquired Value Unexercised in- Securities on Realized Options at the Underlying Exercise (1) (2) Fiscal Money Options/ Year-End Options SARS Exercisable at Granted (E) Unexer- Year-End cisable (U) Exercis- able (E) Unexer- cisable Name (U) ------- -------- -------- ------ ----------- --------- J.G.Lane 0 7,500 $90,315 22,000(E) $314.590(E) Jr. 8,000(U) 25,000(U) J.N.Avento 0 0 $ 0 24,000(E) $350,133(E) 8,000(U) 25,000(U) H.B. Moore 0 4,500 $53,627 2,000(E) $ 6,250(E) Jr. 8,000(U) 25,000(U) E.C. Thornton 0 6,425 $95,658 3,300(E) $ 50,876(E) (1)Values are calculated by subtracting the exercise price from the average of the high and low prices as quoted on NASDAQ National Market Listing on the date prior to exercise or at year end, as appropriate. (2)Shares acquired in 1993 on exercise of options have not been registered and cannot be freely traded in the open market for two years after the exercise date. Based on a study of actual trades in restricted stock as reported in a weekly national business magazine, the Company believes that the fair market value of the shares on the date of exercise were approximately 35% less than the average of the high and low prices as quoted on NASDAQ National Market Listing. Based on this valuation, the value realized would be as follows: J.G. Lane, Jr. - $52,580; H.B. Moore - $31,182; and E.C. Thornton - $55,807.
Retirement Plans Salary Continuation Agreements The Company has salary continuation agreements with one officer and five 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 assumption as to mortality, dividends and other factors, the Company expects to recover the cost of paying said benefits, including a factor for the use of corporate funds, through keyman life insurance proceeds. The present value of the above agreements are accrued. The cumulative amount of this accrual is $554,236. 401(k)/ESOP Plan The Company adopted a 401(k)/ESOP Plan (the "Plan"), effective July 1, 1990, to replace the terminated Defined Benefit Plan. The purpose of the Plan is to reward eligible employees for long and loyal service by providing them with retirement benefits. All employees of the Company who were eligible to participate in the terminated pension plan became eligible to participate in the 401(k)/ESOP Plan on July 1, 1990. All other 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 or July 1 following one year of service with the Company. Employees are permitted to contribute up to 20% 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 quarterly and can revoke the election at any time. Employee contributions are 100% vested at all times. The employee can invest his deferred contribution in one or all of six (6) funds; however, employee contributions cannot be invested in Company stock. Contributions by the Company will be made primarily in Company Stock. For each plan year, the Company shall contribute on behalf of each participant who is eligible to share in matching contribution 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 3% in 1994 and 1995. The matching contribution is allocated on June 30 and December 31 of each plan year. 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. Participants must be actively employed on June 30 and December 31 in order to share in the matching contribution and discretionary contribution for the respective valuation periods. 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 services - 0% vested; five or more years - 100% vested. Unvested amounts are forfeited and allocated to participants eligible to share 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 are maintained in a suspense account and are withdrawn and allocated to participant's accounts as the loan is paid. While a participant in the Plan, employees may direct the trustee to vote shares allocated to their account in accordance with their 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 qualifications of the Plan under the applicable provisions of the Internal Revenue Code, as amended from time to time. For the year ended 1994, the Company's total matching contribution was $202,375. PROPOSAL TO AMEND THE 1994 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN (Item 2 on Proxy Card) At the April 29, 1994, Annual Meeting, the Company's shareholders approved the Company's 1994 Directors' Stock Option Plan (the "Plan"). Under the Plan, a non-employee director automatically receives an option to purchase 1,000 shares of the Company's Common Stock, $1.00 par value, on his election or re-election to the Company's Board of Directors. Each such option has a ten (10) year term. The exercise price is one hundred (100%) percent of the fair market value of the shares on the date of grant. The options are not transferrable except by will or the laws of descent and distribution and may be exercised during an option holder's lifetime only by the non-employee director. The Company receives no consideration upon the grant of options under the Plan. The exercise price of the option must be paid in full upon exercise. Payment may be made in cash, check, or, in whole or part, in common shares of the Company already owned by the person exercising the option, valued at fair market value. The total number of common shares of the Company subject to options issued pursuant to this Plan is 25,000. This number and the terms of the outstanding options are subject to automatic adjustment in the event of reorganization, merger, consolidation, recapitalization, stock splits, combination or exchange of shares, stock dividends or other similar events. The Plan has a ten (10) year term and is administered by the Board of Directors. The Plan includes a provision that such options, on grant to a director, will become exercisable over five (5) years at the rate of twenty (20%) percent per year with all options being fully exercisable after five (5) years (the "Exercisable Limitation"). Limitations on exercisability, including vesting over time, are often included in stock options to encourage key optionholders to remain in the employment of the Company. Such provisions are included in the Company's option plans which provide for option grants to key employees. The Company believes that the purpose of this Plan -- to strengthen non-employee director's linkage with shareholders' interests and to compliment the Company's other director compensation practices -- is not furthered by limiting exercisability over five (5) years. Under the Plan, there is no requirement that the individual be a director during the five years to become eligible to exercise in full the option. Consequently, the Company believes the Exercisability Limitation should be deleted from the Plan. No other provision of the Plan will be affected. A copy of the Plan, as amended, is available upon request from the Company's Secretary. Vote Required for Approval Approved by the affirmative vote of the holders of a majority of the common shares of the Company present or represented and entitled to vote at the Annual Meeting is required to approve this proposal. Accordingly, your Board of Directors recommends a vote "for" the following resolution: RESOLVED, that, the Company's 1994 Non-Employee Director Stock Option Plan be amended to delete subparagraph 5 (d) (i) which limits for a period of up to five (5) years the exercisability of options granted thereunder. APPROVAL OF INDEPENDENT AUDITORS (Item 3 on Proxy Card) The Board of Directors, at the recommendation of its Audit Committee, elected Ernst & Young LLP to conduct the annual examination of the financial statements of the Company and its consolidated subsidiaries for the fiscal year ended December 31, 1994. The selection of this firm for fiscal year ending December 30, 1995, will be submitted for ratification by the shareholders at the Annual Meeting. Ernst & Young LLP has no financial interest, direct or indirect, in the Company or any of its subsidiaries, and they do not have any connection with the Company or any of its subsidiaries except in their professional capacity as independent auditors. The ratification by the shareholders of the selection of Ernst & Young LLP as independent auditors is not required by law or by the Bylaws of the Company. The Board of Directors consistent with previous practices is, nevertheless, submitting this selection to the shareholders to ascertain their views. If this selection is not ratified at the Annual Meeting, the Board of Directors intends to reconsider its selection of independent auditors for fiscal year ending December 30, 1995. The Audit Committee, which is comprised of Directors who are not employees of the Company, approves in advance all non-audit services to be provided by Ernst & Young LLP and believes they have no effect on audit independence. Representatives of Ernst & Young LLP will 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 examination of the Company's financial statements for the fiscal year ended December 31, 1994. The Board of Directors recommends a vote "FOR" ratification of the selection of Ernst & Young LLP as independent auditors for the fiscal year ending December 30, 1995. 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 _______________________________ APPENDIX - PROXY CARD SYNALLOY CORPORATION POST OFFICE BOX 5627. SPARTANBURG, SC 29304 PROXY This proxy is Solicited by The Board of Directors for the Annual Meeting of Shareholders on April 28, 1995. The undersigned hereby appoints James G. Lane, Jr., Carroll D. Vinson and Glenn R. Oxner, or any one or more 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 Spartanburg, S.C. on Friday, April 28, 1995, at 10:00 a.m. local time, and at any adjournment thereof, upon such business as may properly come before the meeting. Said 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 proposals. Please sign on reverse side and return in the enclosed postage-paid envelope. (1) Election of Directors --- For all nominees listed (except as marked to the contrary) --- Withhold authority to vote for all nominees listed Sibyl N. Fishburn, Richard E. Ingram, James G. Lane, Jr., Glenn R. Oxner and Carroll D. Vinson (To withhold authority to vote for any of the above nominees, write that nominee's name below) ----------------------------------------------------------- (2) Proposal to amend the 1994 Non-Employee Directors' Stock Option Plan to delete certain requirements limiting the exercise of such options. FOR AGAINST ABSTAIN (3) Proposal to approve the selection of Ernst & Young as auditors for the fiscal year ending December 30, 1995. FOR AGAINST ABSTAIN (4) Upon any other matter that may properly come before the meeting or any adjournment thereof, as the proxies in their discretion may determine. 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 proposals 1, 2 and 3. Date:--------------------------- -------------------------------- -------------------------------- Signature of Stockholder(s) Please sign this proxy 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.