UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. __)
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
o
Preliminary Proxy Statement
o
Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
x Definitive
Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to Rule 14a-12
NN,
INC.
(Name
of
Registrant as Specified in Its Charter)
Not
Applicable
(Name
of
Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee
required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
(5)
Total fee paid:
o
Fee paid previously with preliminary materials:
o
Check box if any part of the fee is offset as provided by 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:
 |
NN, Inc.
Corporate
Office www.nnbr.com
2000
Waters Edge Drive • Building C, Suite 12 • Johnson City, TN
37604
423-743-9151
• fax 423-743-2670
|
April
17,
2007
Dear
Shareholder:
You
are
cordially invited to attend the 2007 Annual Meeting of NN, Inc., which will
be
held on May 17, 2007, at 10:00 a.m., local time, at the Renaissance Charleston
Hotel, 68 Wentworth Street, Charleston, South Carolina, 29401.
The
business to be conducted at the Annual Meeting is described in the attached
Notice of Meeting and Proxy Statement. You are urged to read the Proxy Statement
carefully before completing the enclosed proxy card.
To
assure
your representation at the meeting, please mark, date and sign the proxy
card
and return it in the enclosed envelope at your earliest convenience, whether
or
not you plan to attend the meeting. If you attend the Annual Meeting, you
may
revoke your proxy and vote in person if you so desire. Management will not
conduct a formal presentation at this year’s meeting.
Sincerely,
/s/Roderick
R. Baty
Roderick
R. Baty
Chairman
and Chief Executive Officer
NN,
Inc.
2000
Waters Edge Drive
Johnson
City, TN 37604
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
Notice
is
hereby given that the Annual Meeting of Shareholders of NN, Inc., a Delaware
corporation, will be held on May 17, 2007, at 10:00 a.m., local time, at
the
Renaissance Charleston Hotel, 68 Wentworth Street, Charleston, South Carolina,
29401, for the following purposes:
(1)
To
elect
two Class III directors, to serve for a term of three years;
(2)
To
ratify
the selection of PricewaterhouseCoopers LLP as the Company’s registered
independent public accounting firm for the fiscal year ending December 31,
2007;
and
(3) To conduct such other business as properly may come before the meeting.
THE
BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THESE PROPOSALS.
Details
regarding these matters are contained in the accompanying Proxy
Statement.
Holders
of record of Common Stock at the close of business on March 30, 2007, are
entitled to notice of and to vote at the Annual Meeting.
Please
mark, date and sign the enclosed proxy card and return it in the envelope
provided. You may revoke your proxy at any time before the votes are cast
at the
Annual Meeting in accordance with the instructions given in the accompanying
Proxy Statement.
By
Order
of the Board of Directors,
/s/
William C. Kelly, Jr.
William
C. Kelly, Jr.
Vice
President, Secretary, and Chief Administrative Officer
Johnson
City, Tennessee
April
17,
2007
NN,
INC.
PROXY
STATEMENT
FOR
2007
ANNUAL MEETING OF SHAREHOLDERS
Proxies
are being solicited by the Board of Directors of NN, Inc. (the "Company"),
in
connection with the annual meeting of shareholders to be held on May 17,
2007 at
the Renaissance
Charleston Hotel, 68 Wentworth Street, Charleston, South Carolina, 29401
(the
"Annual Meeting"), for the purpose of considering and acting upon the matters
set forth in the foregoing Notice of Annual Meeting of Shareholders (the
"Notice"). Shareholders of record of the Company's common stock, par value
$0.01
per share ("Common Stock"), as of the close of business on March 30, 2007,
will
be entitled to vote at the meeting. On March 30, 2007 (the "Record Date"),
16,848,082 shares of Common Stock were issued and outstanding.
The
entire cost of this proxy solicitation is being paid by the Company. In addition
to solicitation by mail, officers and employees of the Company, without
additional remuneration, may solicit proxies by telephone, facsimile
transmission or personal contact. Brokerage houses, banks, nominees, fiduciaries
and other custodians will be requested to forward soliciting material to
the
beneficial owners of shares held by them of record and will be reimbursed
by the
Company for their expenses in so doing.
The
mailing address of the Company's executive office is 2000 Waters Edge Drive,
Johnson City, Tennessee 37604. This Proxy Statement and the form of proxy
were
mailed to shareholders on or about April 17, 2007.
Voting;
Quorum; Proxies
Each
share of Common Stock outstanding on the Record Date is entitled to one vote
on
each matter submitted to a vote of shareholders at the Annual Meeting. A
quorum
for the conduct of business is established when the holders of at least a
majority of the outstanding shares of Common Stock entitled to vote in the
election of directors is present at the meeting or is represented by proxy.
Representatives of the Company will serve as inspectors of election for the
Annual Meeting.
Shares
represented by a properly executed proxy will be voted at the Annual Meeting
in
the manner specified. In the absence of specific instructions, shares
represented by a properly executed proxy will be voted for each of the nominees
for election to the Board of Directors named herein and for the proposal
to
ratify the selection of PricewaterhouseCoopers LLP to serve as the Company's
registered independent public accounting firm for 2007.
The
Board
of Directors does not now intend to bring before the Annual Meeting any matters
other than those disclosed in the Notice, and it is not aware of any business
that any other persons intend to bring before the Annual Meeting. Should
any
such matter requiring a vote of the shareholders arise, the enclosed form
of
proxy confers upon the persons named therein the discretionary authority
to vote
the shares represented by the proxy as they deem appropriate.
A
proxy
may be revoked at any time before it is exercised by delivery to the Secretary
of the Company of a written revocation or a subsequently dated proxy and
will be
deemed revoked if the shareholder votes in person at the Annual
Meeting.
1
Required
Vote
Proposal
I: Election
of Directors.
Directors are elected by a plurality vote and the nominee who receives the
most
votes will be elected. Abstentions and broker non-votes will not be taken
into
account in determining the outcome of the election.
Proposal
II: Ratification
of Registered Independent Public Accounting Firm.
To be
approved, this matter must receive the affirmative vote of the majority of
the
shares present in person or by proxy and entitled to vote on the matter.
Abstentions will have the effect of “no” votes on this matter. A broker non-vote
will not be considered present and will not be entitled to vote on non-routine
items and will have no impact on the vote for this proposal.
Submission
of Shareholder Proposals
Any
shareholder proposal intended to be presented at next year's Annual Meeting
must
be received by the Company at its executive offices not later than December
15,
2007 in order to be considered for inclusion in the Company's proxy statement
and form of proxy for such meeting. These proposals should be sent to NN,
Inc.,
Attention: Secretary, 2000 Waters Edge Drive, Johnson City, Tennessee 37604.
Proposals of shareholders not intended for inclusion in the Company’s 2008 proxy
statement must be received by the Company in writing no later than February
29,
2008 in order to preclude the Company’s use of its discretionary proxy voting
authority to vote on the proposal or nominee if the proponent is present
at the
2008 annual meeting.
2
PROPOSAL
I
Election
of Directors
The
Company's Certificate of Incorporation provides for the division of the Board
of
Directors into three classes: Class I, Class II and Class III. Only one class
of
directors is elected at each annual meeting. Each director so elected serves
for
a three-year term and until his or her successor is elected and qualified,
subject to such director's earlier death, resignation or removal.
Nominees
Two
Class
III directors will be elected to the Board of Directors at the Annual Meeting.
The Company has nominated for election Richard G. Fanelli and Michael E.
Werner,
each a current director of the Company. The nominees have both indicated
a
willingness to continue to serve as directors if elected, but if either of
them
should decline or be unable to serve, the persons named as proxies intend
to
vote all shares in favor of the election of such other persons who may be
nominated as replacements by the Board of Directors.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
PROPOSAL
II
Ratification
of Selection of Registered Independent Public Accounting
Firm
The
firm
of PricewaterhouseCoopers LLP has been selected by the Audit Committee of
the
Board of Directors as the Company's registered independent public accounting
firm for 2007. Although it is not required to do so, the Board has determined
that it is desirable to seek shareholders' ratification of the selection
of
PricewaterhouseCoopers LLP. If the shareholders should not ratify the
appointment of PricewaterhouseCoopers LLP, the Audit Committee will reconsider
the appointment.
A
representative of PricewaterhouseCoopers LLP is expected to be present at
the
Annual Meeting and will have an opportunity to make a statement, if he or
she so
desires, and will be available to respond to appropriate questions.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
3
Information
about the Directors
The
board
of directors consists of 6 directors. The board has determined that each
of the
directors, with the exception of Mr. Baty, qualify as ‘independent” as defined
by the Nasdaq rules. In making this determination, the board has concluded
that
none of these members has a relationship which, in the opinion of the board,
would interfere with the exercise of independent judgment in carrying out
the
responsibilities of a director.
The
following table sets forth the names of each current director (including
the
nominees for election), their age, their years of service as a director,
the
year in which their current term expires and their current positions with
the
Company. The table is followed by a more detailed biographical description
for
each director.
|
Name
|
Age
|
Director
Since
|
Term
Expires
|
Positions
with the Company
|
|
Michael
E. Werner
|
62
|
1995
|
2007
|
Director
- nominee for re-election
|
|
Richard
G. Fanelli
|
68
|
2005
|
2007
|
Director
- nominee for re-election
|
|
G.
Ronald Morris
|
70
|
1994
|
2008
|
Director
|
|
Steven
T. Warshaw
|
58
|
1997
|
2008
|
Director
|
|
Robert
M. Aiken, Jr.
|
64
|
2003
|
2009
|
Director
|
|
Roderick
R. Baty
|
53
|
1995
|
2009
|
Chairman
of the Board, Chief Executive Officer, President and
Director
|
Michael
E. Werner is a management consultant with Werner & Associates, a management
consulting firm that Mr. Werner co-founded in 1982 specializing in manufacturing
companies. During the five years prior to starting his business, Mr. Werner
served as Director of Strategic Planning and Business Development for the
Uniroyal Chemical Company. He also has held positions with the New York Central
Company, Western Electric Company and the Continental Group.
Richard
G. Fanelli retired in 2000 from Enthone-OMI, Inc., where he spent the majority
of his career. Enthone-OMI, Inc. is a global specialty chemical company that
develops, produces and markets high performance coatings for metals and plastics
for the electronics, automotive, aerospace and telecommunications industries.
Mr. Fanelli served as President and Chief Executive Officer of Enthone-OMI,
Inc.
from 1992 to his retirement in 2000. Prior to this position, Mr. Fanelli
served
as President of Enthone-OMI - Europe from 1991 to 1992. From 1989 to 1991,
he
served as Executive Vice President and Chief Operating Officer of Enthone-OMI-
North America. Prior to this position, Mr. Fanelli held a variety of positions
within Enthone-OMI, Inc. including positions in sales and marketing and general
management.
G.
Ronald
Morris retired during 1999 from Western Industries, Inc., a contract
manufacturer of metal and plastic products. Mr. Morris had served as President,
Chief Executive Officer and director of Western Industries, Inc. since July
1991. From 1989 to 1991, Mr. Morris served as Chairman of the Board of
Integrated Technologies, Inc., a manufacturer of computer software, and from
1988 to 1989, he served as Vice Chairman of Rexnord Corporation, a manufacturer
of mechanical power transmission components and related products, including
anti-friction bearings. From 1982 to 1988, Mr. Morris served as President
and
Chief Executive Officer of PT Components, Inc., a manufacturer of mechanical
power transmission components and related products that was acquired by Rexnord
Corporation in 1988. Mr. Morris serves on the board of directors of Hines
Horticulture, Inc., a publicly held company.
Steven
T.
Warshaw resigned during 2005 from M Cubed Technologies, a developer and
manufacturer of advanced composite materials and ultra-precise electronic
components and modules. Mr. Warshaw had served as President and Chief Executive
Officer of M Cubed Technologies since July 2002. Prior to this position he
served as President of Hexcel Schwebel, a global producer of advanced structural
materials, from April 2000 to November 2001. Mr. Warshaw served from February
1999 as Senior Vice President of Photronics, Inc., a global supplier to the
semiconductor industry. From 1996 to 1999, he served as President of Olin
Microelectronic Materials, a company supplying technologically advanced
chemicals, products, and services to semiconductor manufacturers. Mr. Warshaw
serves on the board of directors of Park Electrochemical Corp., a publicly
held
company.
Robert
M.
Aiken, Jr. retired in December 2003 as President of RMA Consulting, Inc.,
a
management consulting firm he founded in 1998. Prior to this position, Mr.
Aiken
served as Executive Vice President and Chief Financial Officer of Sunoco,
an
independent refiner and marketer of petroleum and petrochemical products.
Mr.
Aiken held this position from 1996 and served as Senior Vice President and
Chief
Financial Officer from 1990 to 1996. From 1970 to 1990 Mr. Aiken held various
financial positions within Sunoco, Inc. Prior to Mr. Aiken joining Sunoco,
he
held positions with Coopers and Lybrand and earlier with Hershey Foods.
4
Roderick
R. Baty became President and Chief Executive Officer in July 1997 and was
elected Chairman of the Board in September 2001. He joined the Company in
July
1995 as Vice President and Chief Financial Officer and was elected to the
Board
of Directors to fill a vacant seat in August 1995. Prior to joining the Company,
Mr. Baty served as President and Chief Operating Officer of Hoover Precision
Products from 1990 to January 1995 and as Vice President and General Manager
of
Hoover Group from 1985 to 1990.
Compensation
of Directors
Directors
who are not employees of the Company are paid an annual retainer of $25,000
and
a fee of $1,000 for each Board meeting attended, $750 for each committee
meeting
attended and $500 for each teleconference meeting attended. Additionally,
committee chairs are paid an annual retainer of $3,250. Directors who are
employees of the Company do not receive any compensation for their service
as
directors. Directors may elect to defer some or all of the compensation they
are
provided by the Company. Additionally, the Compensation Committee has from
time
to time granted options to the non-employee directors. The Company also
reimburses all directors for out-of-pocket expenses incurred in attending
Board
and committee meetings.
The
table
below provides information about the compensation our directors received
during
2006.
Director
Compensation Table For 2006
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Awards ($)
|
Option
Awards ($)(1)
|
Non-equity
Incentive
Plan
Compensation
($)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)
|
All
Other Compen-sation ($)
|
Total
($)
|
||
|
G.
Ronald Morris
|
38,427
|
--
|
26,875
|
--
|
40,055
|
--
|
105,357
|
||
|
Steven
T. Warshaw
|
41,917
|
--
|
26,875
|
--
|
67,051
|
--
|
135,843
|
||
|
Michael
E. Werner
|
41,417
|
--
|
26,875
|
--
|
51,698
|
--
|
119,990
|
||
|
Robert
M. Aiken, Jr.
|
40,667
|
--
|
26,875
|
--
|
--
|
--
|
67,542
|
||
|
Richard
G. Fanelli
|
35,167
|
--
|
26,875
|
--
|
--
|
--
|
62,042
|
||
| (1) |
Amounts
represent the market value, as calculated under the provisions of
FAS
123(R), of 6,250 shares of stock options awarded Messrs. Morris,
Warshaw,
Werner, Aiken and Fanelli. On August 14, 2006, the Company awarded
154,250
options to purchase the Company’s stock to five non-employee directors and
eight executive officers and other key employees. The market value
of
these shares on the date of grant was $11.50 per share. The shares
granted
to non-employee directors vest 100% on the first anniversary of the
date
of grant and are exercisable at the closing market price of the date
of
grant.
|
5
The
following table sets forth information with respect to nonqualified deferred
compensation during 2006.
Nonqualified
Deferred Compensation For 2006
|
Name
|
Executive
Contributions in
Last
FY ($)
|
Registrant
Contributions in
Last
FY ($)
|
Aggregate
Earnings in Last FY ($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance at Last FYE ($)
|
|
G.
Ronald Morris
|
38,427
|
--
|
40,055
|
--
|
308,189
|
|
Steven
T. Warshaw
|
41,917
|
--
|
67,051
|
--
|
398,919
|
|
Michael
E. Werner
|
--
|
--
|
51,698
|
--
|
290,846
|
|
Robert
M. Aiken, Jr.
|
--
|
--
|
--
|
--
|
--
|
|
Richard
G. Fanelli
|
--
|
--
|
--
|
--
|
--
|
Committees
of the Board
Audit
Committee.
The
Audit Committee of the Board of Directors consists of Robert M. Aiken, Jr.,
Michael E. Werner, and Steven T. Warshaw. All members of the Audit Committee
are
independent as defined in the Nasdaq rules and Mr. Aiken has been designated
as
the “audit committee financial expert” as defined by Item 401(h) of Regulation
S-K. Among other matters described in its charter, the Audit Committee is
responsible for engaging the registered independent public accounting firm
to
conduct the annual audit of the books and accounts of the Company and for
reviewing the effectiveness of the internal auditing, accounting and financial
controls of the Company with the registered independent public accounting
firm
and the Company's internal financial and accounting staff. The Audit Committee
originally adopted a written charter in June 2000. This charter, which has
been
amended, is subject to review and reassessment at least annually. This revised
charter is included on the Company's website at www.nnbr.com.
The
Audit Committee met ten times in 2006.
Compensation
Committee.
The
Compensation Committee of the Board of Directors consists of G. Ronald Morris,
Steven T. Warshaw and Richard G. Fanelli. All members of the Compensation
Committee are independent as defined by Nasdaq rules. The Compensation Committee
annually reviews and approves corporate goals and objectives relative to
the
Chief Executive Officer evaluation, compensation and performance. Additionally,
the Compensation Committee is responsible for reviewing and approving the
Company's executive compensation policies and practices and supervising the
administration of the Company's employee benefit plans, including the NN,
Inc.
Incentive Plan. In April 2003, the Compensation Committee presented to the
Board
and the Board approved a written charter. This charter, which has been amended,
is subject to review and reassessment at least annually. This revised charter
is
included on the Company's website at www.nnbr.com.
The
functions of the Compensation Committee are discussed in further detail in
the
section entitled "Report of the Compensation Committee" herein. The Compensation
Committee met six times in 2006.
Governance
Committee.
The
Governance Committee of the Board of Directors was formed by the Board of
Directors in 2002. The Committee consists of Michael E. Werner, G. Ronald
Morris
and Richard G. Fanelli. All members of the Governance Committee are independent
as defined by Nasdaq rules.
As
provided in its charter, the Governance Committee is responsible for reviewing
and recommending qualified candidates for membership on the Board of Directors.
The Committee seeks input from the Chairman of the Board, other Board members,
and professional search firms, if applicable. The Committee will also consider
and evaluate any qualified candidates recommended by shareholders. In accordance
with the Board's governance principles, the Committee seeks to establish
a Board
that will bring to the Company a broad range of experience, knowledge and
professional judgment. The Committee believes that the Board should have
collective competency, knowledge and experience with respect to Corporate
Governance, Business, Finance and Accounting, Economics, Industry Knowledge,
Manufacturing, Technology, Legal and Government Affairs, and International
Operations, among other things.
A
candidate's competencies, experience and knowledge should enable him or her
to
contribute significantly to the governance of a complex, multi-million dollar
business enterprise. The candidate should be independent in judgment and
not
represent the interests of particular constituencies. The Committee will
review
a candidate's qualifications and any potential conflicts they may have with
the
Company's interests. In evaluating director nominees, including candidates
submitted by shareholders, the Governance Committee will consider the
candidate's experience, integrity, ability to make independent analytical
inquiries, understanding of the Company's business environment and willingness
to devote adequate time to Board duties. The Governance Committee will also
consider whether a candidate meets the definition of "independent director"
under Nasdaq rules.
6
Shareholders
who wish to recommend director candidates for the 2008 Annual Meeting of
Shareholders should notify the Secretary in writing at NN, Inc., 2000 Waters
Edge Drive, Johnson City, Tennessee 37604. This notification must be received
by
the Company by December 15, 2007, and must provide information about the
nominee's qualifications for Board membership. This requirement does not
apply
to the deadline for submitting shareholder proposals for inclusion in the
Proxy
Statement (see "Submission of Shareholder Proposals" on page 2), nor does
it
apply to questions a shareholder may want to ask at the Annual Meeting. The
Governance Committee Charter lists the qualifications against which a nominee
will be judged. A copy of the Charter can be obtained by writing to the
Secretary at the address set forth above. Alternatively, a copy of the Charter
is available on the Company's website, www.nnbr.com.
The
Committee will evaluate any director candidate nominated by shareholders
according to the criteria discussed above and, based on the results of that
evaluation, will determine whether to include the candidate in its recommended
slate of director nominees in the Proxy Statement.
The
Company retains discretion to vote proxies it receives with respect to director
nominations or any other business proposals received after December 15, 2007.
The Company retains discretion to vote proxies it receives with respect to
such
proposals received prior to December 15, 2007 provided (a) the Company
includes in its proxy statement advice on the nature of the proposal and
how it
intends to exercise its voting discretion, and (b) the proponent does not
issue its own proxy statement.
The
Company has not paid any third party a fee to assist in the process of
identifying or evaluating director candidates. No shareholder or group of
shareholders who beneficially owned more than 5% of the Common Stock for
at
least one year at the time of such recommendation have recommended candidates
for election to the Board of Directors.
Additionally,
the Governance Committee is responsible for overseeing the process of providing
information to the Board, developing corporate governance principles applicable
to the Company and oversight and annual evaluation of the Board of Directors.
In
October 2002, the Governance Committee adopted a statement of Principles
of
Corporate Governance. In April 2003, the Governance Committee presented to
the
Board and the Board approved a written charter. This charter, which has been
amended, is subject to review and reassessment at least annually. This revised
charter is included on the Company's website at www.nnbr.com.
The
Governance Committee met two times in 2006.
Attendance
at Board and Committee Meetings
The
Board
of Directors held seven meetings in 2006. All current directors attended
at
least 75 % of the aggregate of the total number of meetings of the Board
and the
total number of meetings held by all committees of the Board on which they
served. While the Company does not have a policy requiring attendance by
members
of the Board of Directors at the Annual Meeting, all of the current directors
attended the 2006 Annual Meeting.
Communicating
with the Board
Interested
parties may contact the Board of Directors by sending correspondence to the
attention of the Secretary, NN, Inc., 2000 Waters Edge Drive, Johnson City,
Tennessee 37604. Any mail received by the Secretary with the exception of
improper commercial solicitations will then be forwarded to the members of
the
Board of Directors (or committee members, as appropriate) for their further
action, if necessary.
7
Beneficial
Ownership of Common Stock
Security
Ownership of Management
The
following table shows, as of March 30, 2007, the beneficial ownership of
Common
Stock by each director and nominee, each executive officer named in the Summary
Compensation Table (the "Named Executive Officers"), and all directors and
executive officers as a group, in each case as reported to the Company by
such
persons.
|
Name
and Address of
Beneficial
Owner (1)
|
Number
of Shares
Beneficially
Owned (2)
|
Percentage
Beneficially
Owned (2)
|
|
|
Roderick
R. Baty
|
393,695
|
(3)
|
2.3%
|
|
James
H. Dorton
|
21,000
|
(4)
|
*
|
|
Nicola
Trombetti
|
58,000
|
(5)
|
*
|
|
Frank
T. Gentry III
|
67,561
|
(6)
|
*
|
|
Robert
R. Sams
|
99,700
|
(7)
|
*
|
|
Michael
E. Werner
|
58,287
|
(8)
|
*
|
|
G.
Ronald Morris
|
58,000
|
(9)
|
*
|
|
Steven
T. Warshaw
|
55,000
|
(10)
|
*
|
|
Robert
M. Aiken, Jr.
|
33,000
|
(11)
|
*
|
|
Richard
G. Fanelli
|
2,000
|
*
|
|
|
All
directors and executive officers as a group (15 persons)
|
975,318
|
5.8%
|
|
_______________________________
* Less
than
1%
| (1) |
The
address of the beneficial owner is c/o NN, Inc., 2000 Waters Edge
Drive,
Johnson City, Tennessee 37604.
|
| (2) |
Computed
in accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
as
amended.
|
| (3) |
Includes
376,300 shares of Common Stock subject to presently exercisable options
and 10,000 shares of restricted Common Stock subject to risk of
forfeiture.
|
| (4) |
Includes
15,000 shares of Common Stock subject to presently exercisable options
and
3,334 shares of restricted Common Stock subject to risk of
forfeiture.
|
| (5) |
Includes
53,000 shares of Common Stock subject to presently exercisable options
and
3,334 shares of restricted Common Stock subject to risk of
forfeiture.
|
| (6) |
Includes
31,000 shares of Common Stock subject to presently exercisable options
and
3,334 shares of restricted Common Stock subject to risk of
forfeiture.
|
| (7) |
Includes
95,600 shares of Common Stock subject to presently exercisable options
and
2,667 shares of restricted Common Stock subject to risk of
forfeiture.
|
| (8) |
Includes
53,000 shares of Common Stock subject to presently exercisable options
and
5,287 shares of Common stock owned by Mr. Werner’s
spouse.
|
| (9) |
Includes
53,000 shares of Common Stock subject to presently exercisable options.
|
| (10) |
Includes
53,000 shares of Common Stock subject to presently exercisable options.
|
| (11) |
Includes
30,000 shares of Common Stock subject to presently exercisable
options.
|
8
Security
Ownership of Certain Beneficial Owners
The
following table sets forth the number of shares of the Company's Common Stock
beneficially owned by the only parties known to the Company's management
to own
more than 5% of the Company's Common Stock.
|
Name
and Address of
Beneficial
Owner
|
Number
of Shares
Beneficially
Owned
|
Percentage
Beneficially
Owned
|
|
|
Wells
Capital Management Incorporated
525
Market Street
10th
Floor
San
Francisco, CA 94104
|
1,882,700
|
(1)
|
11.0%
|
|
Wellington
Management Company, LLP
75
State Street
Boston,
MA 02109
|
1,408,900
|
(2)
|
8.2%
|
|
Dimensional
Fund Advisors LP
1299
Ocean Avenue
Santa
Monica, CA 90401
|
1,340,716
|
(3)
|
7.8%
|
|
Barclays
Global Investors, NA
45
Fremont Street
San
Francisco, CA 94105
|
1,285,243
|
(4)
|
7.5%
|
|
Paradigm
Capital Management, Inc.
Nine
Elk Street
Albany,
NY 12207
|
1,177,350
|
(5)
|
6.9%
|
|
The
TCW Group, Inc.,
on
Behalf of the TCW Business Unit
865
South Figueroa Street
Los
Angeles, CA 90017
|
938,916
|
(6)
|
5.5%
|
_______________________________
| (1) |
Amount
based on Schedule 13G filed on February 5, 2007 with the Securities
and
Exchange Commission by Wells Fargo & Company, on behalf of Wells
Capital Management Incorporated, its
subsidiary.
|
| (2) |
Amount
based on Schedule 13G filed on February 14, 2007 with the Securities
and
Exchange Commission by Wellington Management Company, LLP. Includes
808,900 shares for which Wellington Management Company, LLP reports
shared
voting power with the beneficial owners of such shares and 1,408,900
shares for which Wellington Management Company, LLP reports shared
dispositive power with the beneficial owners of such shares.
|
| (3) |
Amount
based on Schedule 13G filed on February 1, 2007 with the Securities
and
Exchange Commission by Dimensional Fund Advisors
LP.
|
| (4) |
Amount
based on Schedule 13G filed on January 31, 2007 with the Securities
and
Exchange Commission by Barclays Global Investors,
LTD.
|
| (5) |
Amount
based on Schedule 13G filed on February 14, 2007 with the Securities
and
Exchange Commission by Paradigm Capital Management,
Inc.
|
| (6) |
Amount
based on Schedule 13G filed on February 9, 2007 with the Securities
and
Exchange Commission by The TCW Group, Inc., on behalf of the TCW
Business
Unit. Includes 686,374 shares for which The TCW Group, Inc., on behalf
of
the TCW Business Unit, reports shared voting power with the beneficial
owners of such shares and 938,916 shares for which The TCW Group,
Inc., on
behalf of the TCW Business Unit, reports shared dispositive power
with the
beneficial owners of such shares.
|
9
Section
16(a) Beneficial Ownership Reporting Compliance
Under
Section 16(a) of the Securities Exchange Act of 1934, as amended, each of
the
Company's directors and executive officers, and any beneficial owner of more
than 10% of the Common Stock, is required to file with the SEC initial reports
of beneficial ownership of the Common Stock and reports of changes in beneficial
ownership of the Common Stock. These persons also are required by SEC
regulations to furnish the Company with copies of all filed
reports.
Based
solely on its review of the copies of these reports furnished to the Company
for
the year ended December 31, 2006, the Company is not aware of any instance
of
noncompliance with Section 16(a) by its directors, executive officers or
owners
of more than 10% of the Common Stock.
10
Compensation
Discussion and Analysis
Compensation
Principles
The
goal
of the Company is to structure its compensation arrangements for executive
officers in a manner that will promote the Company's profitability and enhance
shareholder value. In designing its compensation arrangements to achieve
this
goal, the Company is guided by the following objectives:
| · |
attracting
and retaining qualified and dedicated executives who are essential
to the
long-term success of the Company;
|
| · |
providing
compensation packages that are competitive with the compensation
arrangements offered by comparable companies, including the Company's
competitors;
|
| · |
tying
a significant portion of an executive officer's compensation to the
Company's and the individual's performance;
and
|
| · |
directly
aligning the interests of management with the interests of the
shareholders through stock-based compensation
arrangements.
|
In
2006,
the components of the Company's executive compensation arrangements consisted
of
salary, cash bonus and stock option award opportunities pursuant to the
Incentive Plan.
Executive
Officer Compensation
As
a
general matter, the Company believes the interests of the Company and its
shareholders are best served by developing and maintaining compensation policies
that are consistent and competitive with peer group industrial companies.
The
Company, therefore, periodically conducts peer group benchmarking of public
industrial companies and utilizes this information to aid in establishing
a
competitive compensation program for the Company. The following criteria
are
utilized as a basis for this program: performance (revenue growth, earnings
per
share growth, return on net assets, return on equity, and total shareholder
return), executive pay, annual incentive/bonus, benefits, and stock incentive
awards.
The
current executive compensation structure includes a formal salary grade
structure that establishes five levels of executive compensation within the
Company. Base salary ranges (low, mid and high) are established for each
salary
grade. In addition, a formal annual incentive bonus plan includes threshold,
target, and maximum awards based upon pre-established financial performance
criteria.
Salary
The
salary levels for the Company’s executive officers and managers are reviewed and
determined annually. Adjustments to executive officer compensation are evaluated
based upon the individual’s and Company’s performance within the framework of
the Company’s formal compensation policies.
Annual
Bonus
Annual
bonuses are based solely on a formalized plan. Bonus payments are contingent
upon achieving pre-established net income goals and certain strategic goals
for
each operating business unit and the total company. The Compensation Committee,
at its discretion, may make adjustments to the net income goals and the
strategic goals based on certain factors as it feels appropriate and may
grant
bonuses using other criteria at its sole discretion. The bonuses paid to
Named
Executive Officers for 2006 are set forth in the Summary Compensation
Table.
Incentive
Plan
The
Incentive Plan which was adopted by the Board of Directors on April 8, 2005
and
approved by the shareholders on May 18, 2005 reserves 1.0 million shares
of
Common Stock for the issuance of options and stock appreciation rights and
300,000 shares of restricted stock, restricted stock units, performance shares
and stock awards to Directors, Executive Officers and other key employees.
This
Incentive Plan replaced the NN, Inc. Stock Incentive Plan which was adopted
on
March 2, 1994 and expired on March 2, 2004. Stock options granted under the
former plan prior to its expiration are exercisable upon vesting for a period
of
ten years after the date of grant.
11
Stock
options and restricted share grants to the Company’s executive officers and
managers are generally reviewed and determined annually by the Compensation
Committee. With respect to options and restricted shares awarded, the Committee
utilizes a structure based upon the following: recommendations from the
independent compensation review, Mr. Baty’s recommendations (other than for
himself), and rewards to officers and other key employees for superior
performance and to provide financial incentives for officers and employees
to
continue to perform in a superior manner. The Company awarded 114,000 options
to
ten executive officers during 2006.
Compensation
of the Chief Executive Officer
The
Company's decisions regarding compensation of its Chief Executive Officer
are
guided by the same policies and considerations that govern compensation of
the
Company's other executive officers. Mr. Baty's salary was set at a level
that
the Committee determined was appropriate on the basis of the following factors:
1) the Company’s overall performance, 2) Mr. Baty’s individual performance and
3) the competitiveness of Mr. Baty’s salary in comparison to similar industrial
companies.
Compliance
with Internal Revenue Code Section 162(m)
Section
162(m) of the Internal Revenue Code of 1986, as amended, precludes any public
corporation from taking a deduction for compensation in excess of $1 million
paid to its chief executive officer or any of its other executive officers.
Certain performance-based compensation, however, is exempt from the deduction
limit. No formal policy has been adopted by the Company with respect to
minimizing the risk that compensation paid to its executive officers will
exceed
the deduction limit. No compensation paid to the executive officers in 2006
exceeded the limit imposed by Section 162(m).
12
Executive
Compensation
The
following table sets forth for the year ended December 31, 2006 information
concerning the compensation paid for services rendered in all capacities
by the
Company to its Chief Executive Officer and Chief Financial Officer and to
each
of the other three most highly compensated executive officers of the Company
whose annual salary and bonus in 2006 exceeded $100,000.
Summary
Compensation Table for 2006
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)(1)
|
Non-equity
Incentive Plan
Compen-sation
($)
|
Change
in Nonqualified Deferred Compen-sation Earnings
($)
|
All
Other Compensation
($)(2)
|
Total
($)
|
|
Roderick
R. Baty
Chairman/Chief
Executive
Officer
|
2006
|
418,397
|
200,000
|
--
|
112,875
|
--
|
--
|
18,100(2,3,4,5)
|
749,372
|
|
James
H. Dorton
Chief
Financial
Officer
|
2006
|
206,304
|
69,800
|
--
|
48,375
|
--
|
--
|
15,242(2,3,4,5)
|
339,721
|
|
Nicola
Trombetti
Vice
President -
Managing
Director,
NN
Europe
|
2006
|
319,542
|
108,886
|
--
|
48,375
|
--
|
--
|
4,851(3,6)
|
481,654
|
|
Frank
T. Gentry III
Vice
President - General Manager, U.S. Ball & Roller
Division
|
2006
|
215,289
|
90,873
|
--
|
48,375
|
--
|
--
|
15,362(2,3,4,5)
|
369,899
|
|
Robert
R. Sams
Vice
President--
Sales
|
2006
|
178,885
|
60,028
|
--
|
38,700
|
--
|
--
|
14,168(2,3,4,5)
|
291,781
|
______________________________
| (1) |
Amounts
represent the market value, as calculated under the provisions of
FAS
123(R), of 26,250 shares, 11,250 shares, 11,250 shares, 11,2500 shares
and
9,000 shares of stock options awarded Messrs. Baty, Dorton, Trombetti,
Gentry and, Sams, respectively. On August 14, 2006, the Company awarded
154,250 options to purchase the Company’s stock to five non-employee
directors and eight executive officers and other key employees. The
market
value of these shares on the date of grant was $11.50 per share.
The
shares granted to officers and other key employees vest over a period
of
three years beginning on the first anniversary of the date of grant
and
are exercisable at the closing market price of the date of grant.
The
shares granted to non-employee directors vest 100% on the anniversary
date
of the grant and are exercisable at the closing market price of the
date
of grant.
|
| (2) |
Amounts
include $9,000 for a car allowance for each of Messrs. Baty, Dorton,
Gentry and Sams.
|
| (3) |
Amounts
include $4,000, $1,333, $1,333, $1,333 and $1,067 in dividends received
on
unvested restricted stock for each of Messrs. Baty, Dorton, Trombetti,
Gentry and, Sams, respectively.
|
| (4) |
Amounts
include $4,400, $4,306, $4,400 and $3,758 in Company matching
contributions under a “401(k)” savings plan for Messrs. Baty, Dorton,
Gentry and Sams, respectively. This plan is open to substantially
all of
the Company’s U.S. employees and officers who have met certain service and
age requirements.
|
| (5) |
Amounts
include $700, $603, $628 and $343 in premiums paid by the Company
for
supplemental life insurance for the benefit of Messrs. Baty, Dorton,
Gentry and Sams, respectively.
|
| (6) |
Amounts
include $3,518 for a travel indemnity paid to Mr. Trombetti by the
Company.
|
13
The
following table sets forth information with respect to options granted during
2006 to the Named Executive Officers.
Grants
of Plan-Based Awards For 2006
|
Estimated
Future payouts Under Non-Equity Incentive Plan
Awards
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($/sh)
|
Grant
Date Fair Value ($) (1)
|
||||||
|
Name
|
Grant
Date
|
Thres-hold
($)
|
Target($)
|
Maxi-mum
($)
|
Thres-hold
($)
|
Target
($)
|
Maxi-mum
($)
|
||||
|
Mr.
Baty
|
2006
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
26,250
|
11.50
|
112,875
|
|
Mr.
Dorton
|
2006
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
11,250
|
11.50
|
48,375
|
|
Mr.
Trombetti
|
2006
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
11,250
|
11.50
|
48,375
|
|
Mr.
Gentry
|
2006
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
11,250
|
11.50
|
48,375
|
|
Mr.
Sams
|
2006
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
9,000
|
11.50
|
38,700
|
| (1) |
Amounts
represent the market value, as calculated under the provisions of
FAS
123(R), of 26,250 shares, 11,250 shares, 11,250 shares, 11,2500 shares
and
9,000 shares of stock options awarded Messrs. Baty, Dorton, Trombetti,
Gentry and, Sams, respectively. On August 14, 2006, the Company awarded
154,250 options to purchase the Company’s stock to five non-employee
directors and eight executive officers and other key employees. The
market
value of these shares on the date of grant was $11.50 per share.
The
shares granted to officers and other key employees vest over a period
of
three years beginning on the first anniversary of the date of grant
and
are exercisable at the closing market price of the date of grant.
|
14
The
following table sets forth information with respect to outstanding equity
awards
as of December 31, 2006.
Outstanding
Equity Awards at Fiscal Year-End 2006
|
Option
Rewards
|
Stock
Rewards
|
||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration
Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other
Rights
That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or
Other Rights That Have Not Vested ($)
|
|
Mr.
Baty
|
85,000
|
--
|
--
|
5.94
|
7/4/2009
|
--
|
--
|
--
|
--
|
|
141,300
|
--
|
--
|
7.63
|
10/10/2010
|
--
|
--
|
--
|
--
|
|
|
75,000
|
--
|
--
|
8.09
|
9/17/2011
|
--
|
--
|
--
|
--
|
|
|
40,000
|
--
|
--
|
12.62
|
3/1/2014
|
--
|
--
|
--
|
--
|
|
|
35,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
|
--
|
26,250
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
|||
|
--
|
--
|
--
|
--
|
--
|
10,000
|
124,300
|
--
|
--
|
|
|
Mr.
Dorton
|
15,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
--
|
11,250
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
|
--
|
--
|
--
|
--
|
--
|
3,334
|
41,442
|
--
|
--
|
|
|
Mr.
Trombetti
|
15,000
|
--
|
--
|
8.09
|
9/17/2011
|
--
|
--
|
--
|
--
|
|
10,000
|
--
|
--
|
10.67
|
5/28/2013
|
--
|
--
|
--
|
--
|
|
|
13,000
|
--
|
--
|
12.62
|
3/1/2014
|
--
|
--
|
--
|
--
|
|
|
15,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
|
--
|
11,250
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
|
--
|
--
|
--
|
--
|
--
|
3,334
|
41,442
|
--
|
--
|
|
|
Mr.
Gentry
|
16,000
|
--
|
--
|
12.62
|
3/1/2014
|
--
|
--
|
--
|
--
|
|
15,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
|
--
|
11,250
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
|
--
|
--
|
--
|
--
|
--
|
3,334
|
41,442
|
--
|
--
|
|
|
Mr.
Sams
|
16,600
|
--
|
--
|
5.94
|
7/4/2009
|
--
|
--
|
--
|
--
|
|
32,400
|
--
|
--
|
7.63
|
10/10/2010
|
--
|
--
|
--
|
--
|
|
|
21,600
|
--
|
--
|
8.09
|
9/17/2011
|
--
|
--
|
--
|
--
|
|
|
13,000
|
--
|
--
|
12.62
|
3/1/2014
|
--
|
--
|
--
|
--
|
|
|
12,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
|
--
|
9,000
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
|
--
|
--
|
--
|
--
|
--
|
2,667
|
33,151
|
--
|
--
|
|
15
The
following table sets forth information with respect to option exercises and
stock vesting as of December 31, 2006.
Option
Exercises and Stock Vested During 2006
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
Number
of Shares Acquired on Vesting (#)
|
Value
Realized on Vesting ($)
|
|
Mr.
Baty
|
--
|
--
|
5,000
|
65,550
|
|
Mr.
Dorton
|
--
|
--
|
1,666
|
21,841
|
|
Mr.
Trombetti
|
--
|
--
|
1,666
|
21,841
|
|
Mr.
Gentry
|
--
|
--
|
1,666
|
21,841
|
|
Mr.
Sams
|
--
|
--
|
1,333
|
17,476
|
Equity
Compensation Plan Information
The
following table provides information about the Company’s shares of Common Stock
that may be issued upon the exercise of options, warrants and rights under
all
of its existing equity compensation plans as of December 31, 2006. All plans
have been approved by the Company’s shareholders.
|
Plan
Category
|
(a)
Number
of securities to be issued upon exercise of outstanding
options,
warrants
and rights.
|
(b)
Weighted-average
exercise price of outstanding options, warrants and
rights.
|
(c)
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities
reflected
in column a)
|
|
Equity
compensation plans approved by shareholders
|
1,452,042
|
$9.81
|
807,750
|
|
Equity
compensation plans not approved by shareholders
|
--
|
--
|
--
|
|
Total
|
1,452,042
|
$9.81
|
807,750
|
16
Employment
and Change of Control Agreements with Named Executive
Officers
Messrs.
Baty, Dorton, Trombetti, Gentry and Sams have written employment agreements
to
serve in their respective positions that extend automatically for successive
one-year terms unless either party gives notice of termination. The Company
may
terminate each executive’s employment with or without cause, but if terminated
without cause, the executive would continue to receive his annual salary,
paid
on a monthly basis, for one year from the date of termination. Additionally,
Messrs. Baty, Dorton, Trombetti, Gentry and Sams have a written change of
control agreement. These agreements state if an executive’s employment is
terminated within two years following a change of control as defined in the
document that each executive will receive a lump sum payment of a multiple
of
his annual salary. The multiple for each of the executive officers is as
follows: Mr. Baty - 2.5; Mr. Dorton - 2.0, Mr. Trombetti - 2.0, Mr. Gentry
-
2.0; and Mr. Sams - 2.0. Additionally, some benefits will continue to be
paid by
the Company to each executive officer for a period of time of 12 months.
Each of
Messrs. Baty, Dorton, Trombetti, Gentry and Sams have also agreed to a
non-competition agreement that ends two years after the conclusion of his
employment with the Company.
The
following table shows the compensation these officers would have received
under
the employment agreements had a change in control occurred as of December
31,
2006.
|
Name
|
Compensation($)
|
|
Mr.
Baty
|
1,249,515
|
|
Mr.
Dorton
|
509,386
|
|
Mr.
Trombetti
|
750,924
|
|
Mr.
Gentry
|
496,515
|
|
Mr.
Sams
|
413,760
|
Compensation
Committee Report
The
Compensation Committee of the Board of Directors
| · |
Has
reviewed and discussed the section in this proxy statement entitled
“Compensation Discussion and Analysis” with management
and
|
| · |
Based
on the review and discussions referred to above, the Compensation
Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this proxy
statement.
|
Members
of the Compensation Committee:
G.
Ronald
Morris
Steven
T.
Warshaw
Richard
G. Fanelli
Compensation
Committee Interlock and Insider Participation
All
compensation decisions during the fiscal year ended December 31, 2006 for
each
of the Named Executive Officers were made by the Compensation Committee of
the
Board of Directors, consisting of Messrs Morris, Warshaw and Fanelli, none
of
whom is or was an officer or employee of the company during the last fiscal
year.
Audit
Committee Report to Shareholders
In
accordance with its written charter adopted by the Board of Directors, the
Audit
Committee assists the Board in fulfilling its responsibility for oversight
of
the quality and integrity of the accounting, auditing and financial reporting
practices of the Company. Management has responsibility for preparation of
the
Company’s financial statements and the registered independent public accounting
firm has responsibility for the examination of those statements. Each of
the
members of the Audit Committee meets the independence requirements of the
Nasdaq
rules.
The
Audit
Committee has reviewed and discussed with the Company’s management and
PricewaterhouseCoopers LLP, the Company’s registered independent public
accounting firm, the audited financial statements of the Company for 2006;
has
discussed with PricewaterhouseCoopers LLP matters required to be discussed
by
applicable Auditing Standards; has received from the registered independent
public accounting firm the written disclosures and letter required by
Independence Standards No. 1; and has discussed with the registered independent
public accounting firm their independence, including whether
PricewaterhouseCoopers LLP’s provision of non-audit services to the Company was
compatible with maintaining PricewaterhouseCoopers LLP’s independence. Based on
the review and discussions described above, the Audit Committee recommended
to
the Company’s Board of Directors that the audited financial statements be
included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 for filing with the Securities and Exchange
Commission.
17
The
Audit
Committee originally adopted a written charter in June 2000. In April 2003,
March 2004, March 2005 and March 2006, the Audit Committee approved a revised
charter for the Audit Committee.
Robert M. Aiken, Jr.
Michael E. Werner
Steven T. Warshaw
Fees
Paid to Independent Registered Accounting Firm
During
2006, PricewaterhouseCoopers LLP not only acted as the registered independent
public accounting firm for the Company (work related to auditing the annual
financial statements for fiscal year 2006 and reviewing the financial statements
included in our Forms 10-Q) but also rendered on our behalf other services,
including tax-related services, and other accounting and auditing services.
The
following table sets forth the aggregate fees billed by PricewaterhouseCoopers
LLP for audit services rendered in connection with the financial statements
and
reports for fiscal years 2006 and 2005 and for other services rendered during
fiscal years 2006 and 2005 on our behalf, as well as all expenses incurred
in
connection with these services, which have been or will be billed to
us.
|
2006
|
2005
|
|
|
Audit
Fees
|
$1,393,552
|
$1,253,684
|
|
Audit
Related Fees
|
39,942
|
42,266
|
|
Tax
Consulting and Compliance Fees
|
318,716
|
220,307
|
|
All
Other Fees
|
21,072
|
18,656
|
|
Total
|
$1,773,281
|
$1,534,913
|
Pre-Approval
Policies and Procedures
The
Audit
Committee pre-approves all audit and permissible non-audit services to be
provided to the Company by its registered independent public accounting firm
prior to commencement of services. The Audit Committee Chairman has the
authority to pre-approve such services up to a specified fee amount and these
pre-approved decisions are presented to the full Audit Committee at its next
scheduled meeting. Since the effective date of the Securities and Exchange
Commission’s rules regarding strengthening auditor independence, all of the
audit, audit-related, and tax services by PricewaterhouseCoopers LLP were
pre-approved in accordance with the Audit Committee’s policies and
procedures.
Certain
Relationships and Related Transactions
Except
as
described below, the Company did not engage in any transaction with a related
person as defined under the rules of the Securities and Exchange Commission.
While the Board of Directors currently does not have a written policy with
respect to approval of transactions with related parties, it is the policy
of
the Board to approve any transactions with related persons. Any approvals
would
be reflected in the minutes of the meeting of the Board of Directors at which
the Board approved the transaction. Other than the transaction described
below,
the Company has not engaged in a related party transaction in the last six
years.
As
part
of the board-approved acquisition of Whirlaway Corporation on November 30,
2006,
the Company incurred a $21.3 million short-term note payable to the former
shareholder of Whirlaway, Thomas Zupan, who is now Vice President - President
of
Whirlaway Corporation, our wholly owned subsidiary. Additionally, on November
30, 2006 the Company entered into operating leases covering two of the Whirlaway
manufacturing facilities with a company owned by Mr. Zupan. The terms of
the
leases are at prevailing market rates of the rental market in which the
facilities are located. The rent payments in 2006 to Mr. Zupan, were $0.1
million. The total future rental payments will be $3.2 million over 5 years
or
$0.6 million per year.
18
Annual
Report
The
Company's 2006 Annual Report to Shareholders, which includes its Annual Report
on Form 10-K for the year ended December 31, 2006, is being mailed together
with
this Proxy Statement. Exhibits to the Annual Report on Form 10-K may be obtained
by contacting the Secretary of the company at 2000 Waters Edge Drive, Johnson
City, Tennessee 37604.
Notwithstanding
anything to the contrary set forth in the Company’s previous filings under the
Securities Act of 1933, as amended, or the Exchange Act that might incorporate
future filings, including this Proxy Statement, in whole or in part, the
Audit
Committee Report, and the Compensation Committee Report (included herein)
shall
not be incorporated by reference into any such filings.
By Order of the Board of Directors,
/s/
William C. Kelly, Jr.
William C. Kelly, Jr.
Vice President, Secretary and Chief Administrative Officer
SHAREHOLDERS
ARE REQUESTED TO MARK, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
IN
THE ENCLOSED ENVELOPE. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR
COOPERATION WILL BE APPRECIATED.
19
NN,
Inc.
2000
Waters Edge Drive, Bldg. C., Ste. 12
Johnson
City, TN 37604
SOLICITED
BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON
MAY 17, 2007, AT THE RENAISSANCE CHARLESTON HOTEL, 68 WENTWORTH STREET,
CHARLESTON, SC 29401.
The
undersigned stockholder hereby appoints Roderick R. Baty and James H.
Dorton, each of them, with full power of substitution and revocation,
the
proxies of the undersigned to vote all shares registered in the name
of the
undersigned on all matters set forth in the proxy statement and on any
other matters that may properly come before the Annual Meeting and all
adjournments thereof.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER.
IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR EACH OF THE DIRECTOR
NOMINEES
AND FOR THE PROPOSAL LISTED BELOW.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES
AND FOR
THE PROPOSAL LISTED BELOW.
Please
mark your votes as indicated in the example S
| 1. |
Election
of Directors.
|
Nominees:
Michael
E.
Werner £ For £ Withheld
Richard
G.
Fanelli
£ For
£ Withheld
| 2. |
For
ratification of the selection of PRICEWATERHOUSECOOPERS LLP as
registered
independent public accounting firm.
|
£ For £ Against £ Abstain
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 EACH OF THE DIRECTOR NOMINEES AND FOR THE RATIFICATION OF THE SELECTION
OF
PRICEWATERHOUSE LLP AS THE COMPANY'S REGISTERED INDEPENDENT PUBLIC ACCOUNTING
FIRM.
In
their
discretion, the proxies are authorized to vote upon such other matters as may
properly come before the meeting.
Note:
Please sign exactly as name appears hereon. Joint owners should each sign.
When
signing as an attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
SIGNATURE
(S)
DATE:
SIGNATURE
(S)
DATE: