UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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o
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Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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þ
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to § 240.14a-12
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MILLER
INDUSTRIES, INC.
(Name
of Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
þ No fee
required.
o Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1.
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Title
of each class of securities to which transaction
applies:
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2.
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Aggregate
number of securities to which transaction
applies:
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3.
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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4.
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Proposed
maximum aggregate value of
transaction:
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5.
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Total
fee paid:
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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.
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1.
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Amount
Previously Paid:
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2.
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Form,
Schedule or Registration Statement No.:
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3.
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Filing
Party:
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4.
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Date
Filed:
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8503
Hilltop Drive
Ooltewah,
Tennessee 37363
(423)
238-4171
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NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MAY 23, 2008
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The
annual meeting of shareholders of Miller Industries, Inc. will be held at 9:00
a.m. (Eastern Time), on Friday, May 23, 2008, at 1100 Peachtree Street, Suite
2800, Atlanta, Georgia, for the following purposes:
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1.
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to
elect five directors to hold office for a term of one year or until their
successors are duly elected and qualified; and
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2.
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to
transact such other business as may properly come before the meeting or
any adjournment thereof.
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Only
shareholders of record at the close of business on April 8, 2008 are entitled to
notice of and to vote at the annual meeting. Your attention is
directed to the proxy statement accompanying this notice for a complete
statement regarding matters to be acted upon at the annual meeting.
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By
order of the Board of Directors,
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/s/
Frank Madonia
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Frank
Madonia
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Secretary
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Ooltewah,
Tennessee
April 16,
2008
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We
urge you to attend the annual meeting. Whether or not you plan
to attend, please complete, date and sign the enclosed proxy card and
return it in the enclosed postage-paid envelope. You may revoke
the proxy at any time before it is voted.
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TABLE
OF CONTENTS
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GENERAL
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1
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VOTING
PROCEDURES
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1
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PROPOSAL
1 — ELECTION OF DIRECTORS
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2
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Introduction
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2
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Information
Regarding Nominees
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2
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CORPORATE
GOVERNANCE
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3
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Independence,
Board Meetings and Related Information
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3
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Committees
of the Board of Directors
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4
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Director
Nominations
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5
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Related
Transactions and Business Relationships
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5
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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6
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COMPENSATION
OF EXECUTIVE OFFICERS AND DIRECTORS
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7
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Compensation
Discussion and Analysis
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7
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Report
of the Compensation Committee
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9
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Compensation
Committee Interlocks and Insider Participation
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9
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Summary
Compensation Table
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10
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Additional
Discussion of Material Items in Summary Compensation Table
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10
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Outstanding
Equity Awards at Fiscal Year-End 2007
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11
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Option
Exercises and Stock Vested in 2007
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12
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Potential
Payments Upon Termination or Change in Control
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12
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Non-Employee
Director Compensation for 2007
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15
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ACCOUNTING
MATTERS
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15
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Audit
Committee Report
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Independent
Public Accountants
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CODE
OF BUSINESS CONDUCT AND ETHICS
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EQUITY
COMPENSATION PLAN INFORMATION
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COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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OTHER
MATTERS
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Deadline
for Shareholder Proposals for 2009 Annual Meeting
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18
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Expenses
of Solicitation
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18
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MILLER
INDUSTRIES, INC.
8503
Hilltop Drive
Ooltewah,
Tennessee 37363
(423)
238-4171
PROXY
STATEMENT FOR
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD MAY 23, 2008
GENERAL
This
proxy statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of Miller Industries, Inc. (the “Company” or
“Miller Industries”) for use at the annual meeting of shareholders
(the “Annual Meeting”) to be held at 1100 Peachtree Street, Suite 2800,
Atlanta, Georgia, on Friday, May 23, 2008, at 9:00 a.m. (Eastern Time), and any
adjournments or postponements thereof. This proxy statement and the
accompanying proxy card were first mailed to shareholders on or about April 18,
2008.
Only
holders of the Company’s common stock, $0.01 par value per share (the “Common
Stock”) at the close of business on April 8, 2008 are entitled to notice of and
to vote at the Annual Meeting. On such date, the Company had issued
and outstanding 11,593,588 shares of Common Stock. A list of all
shareholders entitled to vote will be available for inspection at the Annual
Meeting.
VOTING
PROCEDURES
A
majority of shares entitled to vote and represented in person or by proxy at the
Annual Meeting will constitute a quorum. Abstentions and “non-votes”
will be counted for the purpose of determining a quorum. Each
outstanding share of Common Stock is entitled to one vote.
The
election of the nominees to the Board of Directors requires a plurality of the
votes cast by holders of shares of Common Stock present in person or represented
by proxy at the Annual Meeting. Therefore, those nominees receiving
the greatest number of votes at the Annual Meeting shall be elected, even though
such nominees may not receive a majority of the votes cast.
Abstentions
and non-votes will not be considered in the election of the nominees to the
Board of Directors, but will be treated as votes against any other proposals
presented to the shareholders. A “non-vote” occurs when a broker or
other nominee holding shares for a beneficial owner votes on one proposal, but
does not vote on another proposal because the broker or other nominee does not
have discretionary voting power and has not received voting instructions from
the beneficial owner.
If a
shareholder holds shares of Common Stock through a broker or other nominee
(i.e., in “street name”), the broker or other nominee should provide
instructions on how the shareholder may instruct the broker or other nominee to
vote those shares on the shareholder’s behalf.
The Board
of Directors has designated William G. Miller and Frank Madonia, and each or
either of them, as proxies to vote the shares of Common Stock solicited on its
behalf. A shareholder who signs and returns a proxy may revoke the
proxy at any time before it has been exercised by: (i) attending
the Annual Meeting, notifying the Secretary of the Company (or his delegate),
and voting in person; (ii) filing with the Secretary of the Company a
written revocation; or (iii) executing and delivering a timely and valid
proxy bearing a later date. Unless revoked, where a choice is
specified on the proxy, the shares represented thereby will be voted in
accordance with such choice. If no choice is specified, such shares
will be voted FOR the
election of each of the five director nominees, and in the discretion of the
proxy holders on any other matter that may properly come before the
meeting.
The Board
of Directors knows of no matters which are to be brought to a vote at the Annual
Meeting other than those set forth in the accompanying Notice of Annual
Meeting. However, if any other matter properly does come before the
Annual Meeting, the persons appointed in the proxy, or their substitutes, will
vote in accordance with their best judgment on such matters.
1
PROPOSAL
1
ELECTION
OF DIRECTORS
Introduction
Pursuant
to the Company’s Charter and Bylaws, the Board of Directors has fixed the number
of directors at five. The members of the Board of Directors comprise
a single class, and at each annual meeting of shareholders all directors are
elected. The directors elected at the Annual Meeting will serve until
the annual meeting of shareholders in 2009, or until their successors are duly
elected and qualified. The Board of Directors may fill directorships
resulting from vacancies, and may increase or decrease the number of directors
to as many as fifteen or as few as three. Executive officers are
appointed annually and serve at the discretion of the Board of
Directors.
Upon the
recommendation of the Nominating Committee, the Board of Directors has nominated
Jeffrey I. Badgley, A. Russell Chandler, III, Paul E. Drack, William G. Miller
and Richard H. Roberts, the current members of the Board, for re-election as
directors. Each such nominee has consented to be named herein and to
serve as a director, if elected.
Unless
contrary instructions are received, shares of Common Stock represented by duly
executed proxies will be voted in favor of the election of each of the five
nominees named above to constitute the entire Board of Directors. The
Board of Directors has no reason to expect that any nominee will be unable to
serve and, therefore, at this time it does not have any substitute nominees
under consideration.
Directors
are elected by a plurality of the votes cast by holders of the shares of Common
Stock entitled to vote at the Annual Meeting. Shareholders have no
right to vote cumulatively for directors. Each shareholder shall have
one vote for each director for each share of Common Stock held by such
shareholder.
Information
concerning the nominees for election, based on data furnished by them, is set
forth below. Currently, they are all directors of the
Company. The Board of Directors has determined that three of the five
nominees are independent directors under the listing standards of the New York
Stock Exchange (“NYSE”).
THE
BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE ELECTION OF
EACH OF THE FIVE DIRECTOR NOMINEES.
Information
Regarding Nominees
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Name
of Director
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Background
Information
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Jeffrey
I. Badgley
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Mr.
Badgley, 56, has served as Co-Chief Executive Officer of the Company with
William G. Miller since October 2003, as President of the Company since
June 1996 and as a director since January 1996. Mr. Badgley
served as Chief Executive Officer of the Company from November 1997 to
October 2003. In June 1997, he was named Co-Chief Executive
Officer of the Company, a title he shared with Mr. Miller until November
1997. Mr. Badgley served as Vice President of the Company from
1994 to 1996, and as Chief Operating Officer of the Company from June 1996
to June 1997. In addition, Mr. Badgley has served as President
of Miller Industries Towing Equipment Inc. since 1996. Mr.
Badgley served as Vice President—Sales of Miller Industries Towing
Equipment Inc. from 1988 to 1996. He previously served as Vice
President—Sales and Marketing of Challenger Wrecker Corporation from 1982
until joining Miller Industries Towing Equipment
Inc.
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2
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Name
of Director
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Background
Information
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A.
Russell Chandler, III
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Mr.
Chandler, 63, has served as a director of the Company since April
1994. He is founder and Chairman of Whitehall Group Ltd., a
private investment firm based in Atlanta, Georgia. Mr. Chandler
served as Chairman of Datapath, Inc., a company that builds mobile
communications trailers for military application, from October 2004 until
June 2006, and he served as the Mayor of the Olympic Village for the
Atlanta Committee for the Olympic Games from 1990 through August
1996. From 1987 to 1993, he served as Chairman of United
Plastic Films, Inc., a manufacturer and distributor of plastic
bags. He founded Qualicare, Inc., a hospital management
company, in 1972 and served as its President and Chief Executive Officer
until its sale in 1983.
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Paul
E. Drack
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Mr.
Drack, 79, has served as a director of the Company since April
1994. Mr. Drack retired in December 1993 as President and Chief
Operating Officer of AMAX Inc., positions he held since August
1991. From 1985 to 1991, Mr. Drack served in various capacities
for operating subsidiaries of AMAX Inc., including Chairman, President and
Chief Executive Officer of Alumax Inc. and President of Kawneer
Company. He was a director of AMAX Inc. from 1988 to
1993. Prior to its acquisition by Cyprus Minerals in November
1993, AMAX Inc. was a producer of aluminum and manufactured aluminum
products with interests in domestic energy and gold
production.
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William
G. Miller
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Mr.
Miller, 61, has served as Chairman of the Board since April 1994 and
Co-Chief Executive Officer of the Company since October
2003. Mr. Miller served as Chief Executive Officer of the
Company from April 1994 until June 1997. In June 1997, he was
named Co-Chief Executive Officer, a title he shared with Jeffrey I.
Badgley until November 1997. Mr. Miller also served as
President of the Company from April 1994 to June 1996. He
served as Chairman of Miller Group, Inc., from August 1990 through May
1994, as its President from August 1990 to March 1993, and as its Chief
Executive Officer from March 1993 until May 1994. Prior to
1987, Mr. Miller served in various management positions for Bendix
Corporation, Neptune International Corporation, Wheelabrator-Frye Inc. and
The Signal Companies, Inc.
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Richard
H. Roberts
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Mr.
Roberts, 53, has served as a director of the Company since April
1994. From August 2007 until February 2008, Mr. Roberts served
as the Chief Financial Officer of Friends of Fred Thompson,
Inc. Mr. Roberts served as Senior Vice President and Secretary
of Landair Transport, Inc. from July 1994 to April 2003, and from July
1994 until April 2003, Mr. Roberts served as Senior Vice President,
General Counsel and Secretary of Forward Air Corporation. From
May 1995 until May 2002, Mr. Roberts served as a director of Forward Air
Corporation. Mr. Roberts also was a director of Landair
Corporation from September 1998 until February 2003. Mr.
Roberts was a partner in the law firm of Baker, Worthington, Crossley
& Stansberry from January 1991 to August 1994, and prior thereto was
an associate of the firm.
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CORPORATE
GOVERNANCE
Independence,
Board Meetings and Related Information
Independence
The Board
of Directors has determined that a majority of the members of the Board of
Directors are “independent,” as “independent” is defined under applicable
federal securities laws and the listing standards of the NYSE. The
independent directors are Messrs. Chandler, Drack and Roberts.
3
Meetings
The Board
of Directors held five meetings during 2007. All incumbent directors
attended more than 75% of the meetings of the Board of Directors and the
respective committees of which they are members. The non-management
directors meet in executive session as a part of the meetings of the Audit
Committee. The presiding director at those sessions is selected by
the non-management directors on a meeting-by-meeting basis. The
Company does not require its directors to attend its annual meeting of
shareholders. In 2007, two of the Company’s five directors attended
the annual meeting of shareholders.
Communication
with Directors
Interested
parties may communicate with any non-management director by mailing a
communication to the attention of that director at 8503 Hilltop Drive, Ooltewah,
Tennessee 37363.
Committees
of the Board of Directors
The Board
of Directors has standing Audit, Compensation and Nominating
Committees. Generally, members of these committees are elected
annually by the Board of Directors, but changes to the committees may be made at
the Board of Directors’ discretion at any time. These committees
operate pursuant to separate written charters adopted by the Board of
Directors. The charter of the Audit Committee was amended and
restated by the Board in March 2007. These charters, along with the
Company’s Corporate Governance Guidelines, are available on the Company’s
website at www.millerind.com through the “Investor Relations”
link. In addition, copies of these charters and guidelines can be
obtained upon request from the Company’s Corporate Secretary.
Audit
Committee
The Audit
Committee is comprised of Messrs. Chandler, Drack and Roberts. The
Board of Directors has determined that each of the members of the audit
committee is “financially literate” within the meaning of the listing standards
of the NYSE, and qualifies as an “audit committee financial expert” as defined
by applicable SEC rules.
The Audit
Committee, among other things, recommends the appointment of the Company’s
independent public accountants, reviews the scope of audits proposed by the
Company’s independent public accountants, reviews audit reports on various
aspects of corporate operations, and periodically consults with the Company’s
independent public accountants on matters relating to internal financial
controls and procedures. The Audit Committee held five meetings
during 2007. The report of the Audit Committee is included in this
proxy statement beginning on page 15.
Compensation
Committee
The
Compensation Committee is comprised of Messrs. Chandler, Drack and
Roberts. The Compensation Committee establishes, among other things,
salaries, bonuses and other compensation for the Company’s officers, and
administers the Company’s stock option and other employee benefit
plans. The Compensation Committee held two meetings during
2007. The report of the Compensation Committee is included in this
proxy statement beginning on page 9.
Nominating
Committee
The
Nominating Committee is comprised of Messrs. Chandler, Drack and
Roberts. The Nominating Committee was established to evaluate
candidates for service as directors to the Company and to conduct the Board’s
annual self-assessment process. The Nominating Committee will
consider candidates recommended by shareholders. Shareholder
recommendations must comply with the procedures for director nominations set
forth in Article I, Section 1.2, of the Company’s Bylaws and applicable
law. The Nominating Committee held two meetings during
2007.
Director
Nominations
The
Nominating Committee considers qualifications and characteristics that it, from
time to time, deems appropriate when it selects individuals to be nominated for
election to the Board of Directors. These qualifications and
characteristics may include, without limitation, independence, integrity,
business experience, education, accounting and financial expertise, age,
diversity, reputation, civic and community relationships and industry knowledge
and experience. In addition, prior to nominating an existing director
for re-election to the Board of Directors, the Nominating Committee will
consider and review the existing director’s Board and committee attendance,
performance and length of Board service.
4
Related
Transactions and Business Relationships
Policy
on Related Party Transactions
The
Company recognizes that transactions between the Company or its subsidiaries and
any of its directors or executive officers can present potential or actual
conflicts of interest. Accordingly, as a general matter it is the
Company’s preference to avoid such transactions. Nevertheless, the
Company recognizes that there are circumstances where such transactions may be
in, or not inconsistent with, the best interests of the
Company. Therefore, the Company has adopted a formal policy that
requires the Company’s Audit Committee to review and, if appropriate, approve or
ratify any such transactions. Pursuant to the policy, the Committee
will review any transaction in which the Company is or will be a participant and
the amount involved exceeds $120,000, and in which any of the Company’s
directors, executive officers or 5% shareholders had, has or will have a direct
or indirect material interest. After its review, the Committee will
only approve or ratify those transactions that are in, or are not inconsistent
with, the best interests of the Company and its shareholders.
Certain
Related Transactions and Business Relationships
William
G. Miller, the Company’s Chairman and Co-Chief Executive Officer and holder of
approximately 11.90% of the Company’s outstanding Common Stock, was the sole
lender under the Company’s former junior credit facility. At January
1, 2007, the aggregate amount of debt under the junior credit facility was $5.0
million. In May 2007, the Company repaid the $5.0 million outstanding
principal balance under the junior credit facility, and with such payment, all
loans from Mr. Miller to the Company were paid in full. The Company
paid approximately $228,000 in interest under the junior credit facility in
2007. In July 2007, the junior credit facility was
terminated.
From
January 2007 to October 2007, Mr. Miller’s son was employed by a subsidiary of
the Company as a manager and salesperson and, from October 2007 through the
remainder of 2007, Mr. Miller’s son was employed by the Company as Assistant to
the Chairman, focusing on strategic planning and business
development. In 2007, he received salary and bonus payments of
$138,998, and sales commission payments of $80,347. The commission
payments, which were attributable to his employment as a manager and
salesperson, were based on the subsidiary’s commission structure that is
applicable to all of its salespersons.
5
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of March 31, 2008, certain information with
respect to: (a) all shareholders known to be beneficial owners
(as that term is defined under SEC rules) of more than 5% of the Common Stock;
and (b) the Common Stock beneficially owned by (i) each director or
nominee for director, (ii) the executive officers named in the Summary
Compensation Table and (iii) all executive officers and directors of the
Company as a group. Except as otherwise indicated, the shareholders
listed in the table have sole voting and investment powers with respect to the
Common Stock owned by them.
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Name
and Address of Beneficial Owner
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Amount
and Nature of
Beneficial
Ownership (1)
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Percent
of Class (2)
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Hotchkis
and Wiley Capital Management, LLC
725
Figueroa Street, 39th
Floor
Los
Angeles, CA 90017
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2,023,498 | (3) |
17.45%
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William
G. Miller
8503
Hilltop Drive
Ooltewah,
TN 37363
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1,379,619 | (4) |
11.90%
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Ashford
Capital Management, Inc
P.O.
Box 4172
Wilmington,
DE 19807
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880,950 | (5) |
7.60%
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Wellington
Management Company, LLC
75
State Street
Boston,
MA 02109
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876,700 | (6) |
7.56%
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Jeffrey
I. Badgley
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49,000 | (7) |
*
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Frank
Madonia
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25,501 | (8) |
*
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J.
Vincent Mish
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22,501 | (9) |
*
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A.
Russell Chandler, III
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119,062 | (10) |
1.03%
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Richard
H. Roberts
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12,922 |
*
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Paul
E. Drack
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16,855 |
*
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All
Directors and Executive Officers as a Group
(7
persons)
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1,625,460 | (11) |
13.91%
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____________________
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*
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Less
than one percent.
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(1)
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Includes
shares of Common Stock that the named person or entity has the right to
acquire beneficial ownership within 60 days of March 31, 2008 through the
exercise of any stock option or other right.
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(2)
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The
percentage of beneficial ownership is based on 11,593,588 shares of Common
Stock outstanding on March 31, 2008, and represents the percentage that
the named person or entity would beneficially own if such person or
entity, and only such person or entity, exercised all options and rights
to acquire shares of Common Stock that are held by such person or entity
and that are exercisable within 60 days of March 31,
2008.
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(3)
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As
reported in an amendment to Schedule 13G filed with the SEC on February
13, 2008 by Hotchkiss and Wiley Capital Management, LLC, a registered
investment adviser.
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(4)
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As
reported in an amendment to Schedule 13D filed with the SEC on December 5,
2006.
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(5)
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As
reported in an amendment to Schedule 13G filed with the SEC on February
14, 2008 by Ashford Capital Management, Inc., a registered investment
adviser. Such shares of Common Stock are held in separate
individual client accounts, two separate limited partnerships and eleven
commingled funds.
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(6)
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As
reported in an amendment to Schedule 13G filed with the SEC on February
14, 2008 by Wellington Management Company, LLC, a registered investment
advisor.
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(7)
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Includes
49,000 shares issuable pursuant to options that are exercisable within 60
days of March 31, 2008.
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(8)
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Includes
25,500 shares issuable pursuant to options that are exercisable within 60
days of March 31, 2008.
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(9)
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Includes
16,500 shares issuable pursuant to options that are exercisable within 60
days of March 31, 2008.
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(10)
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Includes
36,452 shares held by a limited partnership of which Mr. Chandler’s
children are limited partners, and 29,847 shares held in trust for the
benefit of Mr. Chandler’s children. Mr. Chandler disclaims
beneficial ownership with respect to these shares.
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(11)
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Includes
91,000 shares issuable pursuant to options that are exercisable within 60
days of March 31, 2008.
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6
COMPENSATION
OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation
Discussion and Analysis
Overview
This
discussion and analysis addresses the material elements of the Company’s
compensation program for named executive officers, including the Company’s
compensation objectives and overall compensation philosophy, the compensation
process and the administration of the compensation program. It is
intended to complement and enhance an understanding of the compensation
information presented in the “Summary Compensation Table” and other accompanying
tables in this proxy statement.
As used
in this proxy statement, the term “named executive officers” means the Company’s
Chairman and Co-Chief Executive Officer; President and Co-Chief Executive
Officer; Executive Vice President and Chief Financial Officer; and Executive
Vice President, Secretary and General Counsel. In this “Compensation
Discussion and Analysis” section, the terms “we,” “our,” “us” and the
“Committee” refer to the Compensation Committee of the Company’s Board of
Directors.
Compensation
Objectives and Overall Compensation Philosophy
The
Company’s executive compensation program is designed to enhance Company
profitability, and thus shareholder value, by aligning executive compensation
with the Company’s business goals and performance, and by establishing a system
that can attract, retain and reward executive officers who contribute to the
long-term success of the Company. More specifically, the overall
goals of the executive compensation program include:
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offering
competitive total compensation opportunities to attract and retain
talented executives;
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●
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providing
strong links between Company performance and total compensation earned –
i.e., paying for performance;
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●
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emphasizing
long-term performance of the Company, thus enhancing shareholder value;
and
|
|
|
●
|
promoting
and facilitating executive officer stock
ownership.
|
We
believe that it is in the best interests of the Company’s shareholders and its
named executive officers that the Company’s executive compensation program, and
each of its elements, remain simple and straightforward. This
approach should reduce the time and cost involved in setting the Company’s
executive compensation policies and calculating the payments under such
policies, and should enhance the transparency of, and the ability to comprehend,
these policies.
Administration
The
Compensation Committee has overall responsibility with respect to approving and
monitoring the Company’s executive compensation program, and operates under a
Charter that was approved by the Company’s Board of Directors in
2004. None of the members of the Compensation Committee has been an
officer or employee of the Company, and the Board of Directors has considered
and determined that all of the members are independent as “independent” is
defined under NYSE rules and otherwise meet the criteria set forth in the
Committee’s Charter.
In
fulfilling its responsibilities, the Compensation Committee, among other things,
establishes and approves the compensation level of each of the named executive
officers, reviews and approves corporate goals and objectives relevant to the
compensation of the named executive officers, evaluates the performance of the
named executive officers in light of these goals and objectives, determines and
approves compensation based on these objectives and its evaluations, establishes
criteria for granting stock options to the named executive officers and the
Company’s other employees, considering the recommendations of senior management,
and approves such stock option grants.
We
regularly review and discuss the compensation of the named executive officers
with William G. Miller, the Company’s Chairman and Co-Chief Executive Officer,
and consult with Mr. Miller in evaluating the performance of the named executive
officers. In addition, Mr. Miller may make recommendations to us
regarding compensation for all of the named executive officers, other than for
himself.
7
As
discussed in greater detail below, the levels of each element of compensation
for the named executive officers are determined based on several factors, which
may include the Company’s performance and relative shareholder return, our
informal assessment of compensation paid to executives in comparable industries,
compensation provided in previous years, the terms of each named executive
officer’s employment agreement with the Company and other matters that we deem
relevant. In addition, we consider the level of experience and the
responsibilities of each named executive officer, his performance as well as the
personal contributions he makes to the success of the
Company. Qualitative factors such as leadership skills, analytical
skills, organization development, public affairs and civic involvement have been
and will continue to be deemed to be important qualitative factors to take into
account in considering elements and levels of compensation. We have
not adopted any formal or informal policy for allocating compensation between
long-term and short-term elements, between cash and non-cash or among the
different possible forms of non-cash compensation.
In 2007,
the Company’s executive compensation program consisted of two primary
elements: base salary and annual discretionary cash performance
bonuses (which are disclosed in the “Summary Compensation Table” under the
“Bonus” column). In addition, while the Company did not grant any
stock option awards in 2007, stock options have historically been an element of
the Company’s executive compensation program, and equity-based awards may again
be an element of the Company’s executive compensation program in the
future. In addition to these primary elements, the Company has
provided, and will continue to provide, its named executive officers with
certain benefits, such as healthcare plans, that are available to all
employees.
Elements
of Compensation
Base Salary. On an
annual basis we determine the base salary for each of the named executive
officers. The base salary for a named executive officer is
established based on, among other things, his experience and the scope of his
responsibilities, his performance and the performance of the Company and our
informal assessment of salaries paid to executives in comparable
industries. The minimum levels of some of these base salaries are
mandated by employment agreements with the named executive officers (which are
described in more detail below under the heading “Additional Discussion of
Material Items in Summary Compensation Table―Employment Agreements
with Named Executive Officers”). We believe that base salaries
are an important part of the Company’s executive compensation program because
they provide the named executive officers with a steady income stream that is
not contingent upon the Company’s overall performance.
For 2007,
Mr. Badgley’s base salary was increased $20,830, Mr. Mish’s base salary was
increased $20,831 and Mr. Madonia’s base salary was increased
$10,415. Under Mr. Miller’s employment agreement with the Company,
Mr. Miller is entitled to receive a base salary that is substantially the same
as the Company’s other Co-Chief Executive Officer, however, from 1999 through
2006 he declined increases to which he was entitled under his
agreement. Beginning in July 2007, the Compensation Committee
adjusted Mr. Miller’s salary to match the salary of the other Co-Chief Executive
Officer in accordance with his employment agreement. Mr. Miller’s
base salary was increased $78,746 for 2007 as a result.
Annual Discretionary Cash
Bonuses. We utilize annual discretionary cash bonuses to
reward the named executive officers for their performance and the performance of
the Company during the prior year. We have not adopted any formal or
informal performance objectives for the calculation or payment of these
discretionary bonuses. Instead, in determining an annual
discretionary bonus, we consider, among other things, the Company’s performance
and relative shareholder value, discretionary bonuses awarded in previous years,
the performance of the named executive officer and his personal contributions to
the success of the Company.
Annual
discretionary cash bonuses, as opposed to grants of stock options or other
equity-based awards, are designed to more immediately reward the named executive
officers for their performance. The immediacy of these bonuses
provides an incentive to the named executive officers to raise their level of
performance, and thus the Company’s overall level of
performance. Thus, we believe that discretionary cash bonuses are an
important motivating factor for the named executive officers.
8
We
approved the payment of cash bonuses in 2007 to Messrs. Badgley, Mish and
Madonia in the amounts set forth in the “Summary Compensation
Table.” In 2007, as in prior years, Mr. Miller declined an annual
cash bonus from the Company.
Equity Awards. In
2004 and in prior years, we awarded stock options to the named executive
officers other than Mr. Miller, and, although we have not awarded stock options
to the named executive officers since 2004, we consider equity-based awards to
be an important part of the Company’s overall executive compensation
philosophy. Historically, Mr. Miller has declined grants of equity
awards from the Company.
Stock
options and other equity-based awards provide the named executive officers with
a strong link to the Company’s long-term performance, promote an ownership
culture and more closely align the interest of the named executive officers and
the Company’s shareholders. Equity incentive awards are granted under
the Company’s 2005 Equity Incentive Plan. This plan provides us with
broad discretion to fashion the terms of awards to provide eligible participants
with such stock-based incentives as we deem appropriate. It permits
the issuance of awards in a variety of forms, including non-qualified stock
options and incentive stock options, stock appreciation rights, restricted stock
awards and performance shares.
In
general, options for the purchase of 500 or more shares vest in four equal
annual installments, and all options for the purchase of fewer than 500 shares
vest in two equal annual installments. All stock options are
exercisable until the tenth anniversary of the grant date unless otherwise
earlier terminated pursuant to the terms of the individual option
agreement.
Severance
and Change of Control Arrangements. As discussed
in more detail in the “Additional Discussion of Material Items in Summary
Compensation Table―Employment Agreements with Named Executive Officers”
and “Potential Payments Upon Termination or Change in Control” sections below,
the named executive officers may be entitled to certain benefits upon the
termination of their respective employment or change in control
agreements.
Other
Compensation. The named executive officers currently are
entitled to participate in the Company’s health, life and disability insurance
plans and in our 401(k) plan to the same extent that the Company’s employees are
entitled to participate.
Report
of the Compensation Committee
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis contained under that heading in this proxy
statement. On the basis of its reviews and discussions, the Committee
has recommended that the Compensation Discussion and Analysis be included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2007, and
this proxy statement.
|
Compensation
Committee
|
||
|
Paul
E. Drack
|
||
|
A.
Russell Chandler, III
|
||
|
Richard
H. Roberts
|
Compensation
Committee Interlocks and Insider Participation
During
2007, the Compensation Committee was comprised of Messrs. Chandler, Drack and
Roberts, all of whom were non-employee, independent directors. During
2007, no executive officer of the Company served as a member of the board of
directors or compensation committee of any other entity whose executive
officer(s) served on the Company’s Board of Directors or Compensation
Committee.
9
Summary
Compensation Table
The
following table sets forth the compensation awarded to, earned by, or paid by
the Company during the years ended December 31, 2007 and 2006, respectively, to
the Company’s Co-Chief Executive Officers, Chief Financial Officer and the
Company’s other most highly compensated executive officer (who are referred to
together as the Company’s named executive officers).
|
Name
and Principal Position
|
Year
|
Salary (1)
|
Bonus (2)
|
Option
Awards (3)
|
All
Other Compensation
(4)
|
Total
|
||||||||||||||||
|
William
G. Miller
|
2007
|
$ | 258,753 | (5) | $ | – | $ | – | $ | – | $ | 258,753 | ||||||||||
|
Chairman
and Co-Chief Executive Officer
|
2006
|
$ | 180,007 | $ | – | $ | – | $ | – | $ | 180,007 | |||||||||||
|
Jeffrey
I. Badgley
|
2007
|
$ | 312,033 | $ | 69,250 | $ | 90,529 | $ | 7,484 | (6) | $ | 479,296 | ||||||||||
|
President
and Co-Chief Executive Officer
|
2006
|
$ | 291,203 | $ | 60,600 | $ | 90,529 | $ | 5,629 | (6) | $ | 447,961 | ||||||||||
|
Frank
Madonia
|
2007
|
$ | 214,117 | $ | 46,250 | $ | 27,159 | $ | 5,642 | (6) | $ | 293,168 | ||||||||||
|
Executive
Vice President, Secretary and General Counsel
|
2006
|
$ | 203,702 | $ | 40,600 | $ | 27,159 | $ | 4,564 | (6) | $ | 276,025 | ||||||||||
|
J.
Vincent Mish
|
2007
|
$ | 212,033 | $ | 46,250 | $ | 27,159 | $ | 4,683 | (6) | $ | 290,125 | ||||||||||
|
Executive
Vice President, Treasurer and Chief Financial Officer
|
2006
|
$ | 191,202 | $ | 40,600 | $ | 27,159 | $ | 3,739 | (6) | $ | 262,700 | ||||||||||
____________________
|
(1)
|
Base
salary paid to officers.
|
|
(2)
|
Discretionary
cash bonus awarded in respect of the performance of the named executive
officer and the performance of the Company.
|
|
(3)
|
Amounts
represent compensation costs recognized by the Company for financial
statement reporting purposes under FAS 123R, based on the valuation of
option awards granted in prior years utilizing assumptions discussed in
Note 2 to the Company’s audited financial statements in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2007.
|
|
(4)
|
No
amounts are indicated for perquisites and personal benefits as the value
provided did not exceed $10,000 for any named executive
officer.
|
|
(5)
|
Beginning
in July 2007, the Compensation Committee adjusted Mr. Miller’s salary to
match the salary of the other Co-Chief Executive Officer in accordance
with his employment agreement.
|
|
(6)
|
Amount
represents the Company’s contribution to the named executive officer’s
401(k) plan under the plan’s matching
program.
|
Additional
Discussion of Material Items in Summary Compensation Table
The
Company’s executive compensation policies and practices, pursuant to which the
compensation set forth in the Summary Compensation Table was paid or awarded,
are described above under “Compensation Discussion and Analysis.” A
summary of certain material terms of the Company’s compensation plans and
arrangements is set forth below.
Employment
Agreements with Named Executive Officers
William G.
Miller. In July 1997, the Company entered into an employment
agreement with Mr. Miller that provides for a base salary as agreed to by the
Company and Mr. Miller from time to time, but which shall in any event be
substantially the same as the base salary of the Chief Executive Officer of the
Company. Mr. Miller also receives certain insurance and other
benefits as are generally provided by the Company to its executive
employees. Mr. Miller’s employment agreement is for an indeterminate
term and allows Mr. Miller to pursue other business related interests as long as
they do not interfere with his duties for the Company. Employment may
be terminated by either party upon three years’ written notice or for “cause,”
as defined in the employment agreement.
10
Jeffrey I. Badgley and Frank
Madonia. In September 1998, the Company entered into
employment agreements with Messrs. Badgley and Madonia. Each
employment agreement provides for a rolling three-year term, extended
automatically each day for an additional day such that the remaining term of
each employment agreement is three years. However, on each
individual’s 62nd
birthday, the employment agreement ceases to extend automatically, and instead
terminates three years from that date. The employment agreements
provide for initial base salaries of $200,000 to Mr. Badgley, and $165,000 to
Mr. Madonia, each subject to annual review and adjustment by the Board of
Directors. Additionally, each individual may participate in any bonus
plans or other benefits generally available to executive officers of the
Company. The Company may terminate Messrs. Badgley or Madonia
pursuant to their respective employment agreements for any reason upon written
notice. However, if termination is for other than “just cause” (as
defined in the employment agreements), the individual is entitled to certain
benefits described under the heading “Potential Payments Upon Termination or
Change in Control” below.
J. Vincent
Mish. In December 2002, the Company entered into an employment
agreement with Mr. Mish. The employment agreement provides for a
rolling three-year term, extended automatically as of each annual shareholders’
meeting such that the remaining term of the employment agreement is three years
as of that date. Notwithstanding the foregoing, the term of the
agreement ends on Mr. Mish’s 65th
birthday. The employment agreement provides for an initial base
salary of $175,000, subject to annual review and adjustment by the Board of
Directors. Additionally, Mr. Mish may participate in any bonus plans
or other benefits generally available to executive officers of the
Company. The Company may terminate Mr. Mish pursuant to this
employment agreement for any reason upon written notice. However, if termination
is for other than “just cause” (as defined in the employment agreement), Mr.
Mish is entitled to certain benefits described under the heading “Potential
Payments Upon Termination or Change in Control” below.
2005
Equity Incentive Plan
The
Company’s shareholder-approved 2005 Equity Incentive Plan is a flexible plan
that provides the Compensation Committee with broad discretion to fashion the
terms of awards to provide eligible participants with such equity-based
incentives as the Committee deems appropriate. It permits the
issuance of awards in a variety of forms, including non-qualified stock options
and incentive stock options, stock appreciation rights, restricted stock awards
and performance shares. During 2007, no awards were granted to the
Company’s named executive officers under the 2005 Equity Incentive
Plan.
Contributory
Retirement Plan
The
Company maintains a contributory retirement plan for all full-time employees
with at least 90 days of service. The plan is designed to provide
tax-deferred income to the Company’s employees in accordance with the provisions
of Section 401(k) of the Internal Revenue Code. The plan provides
that each participant may contribute up to 15% of his or her
salary. For 2007, the Company matched 50% of the first 5% of
participant contributions. Matching contributions vest over the first
five years of employment.
Outstanding
Equity Awards at Fiscal Year-End 2007
The
following table provides information on the holdings of stock options by the
named executive officers, including both unexercised and unvested awards, at
December 31, 2007.
|
Option
Grant
Date (1)
|
Number
of Shares Underlying
Unexercised
Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
||||||||||||||
|
Name
|
Exercisable
|
Unexercisable
|
|||||||||||||||
|
William
G. Miller
|
– | – | $ | – |
–
|
||||||||||||
|
Jeffrey
I. Badgley
|
9/11/1998
|
24,000 | – | $ | 20.625 |
9/11/2008
|
|||||||||||
|
3/26/2004
|
– | 25,000 | 8.31 |
3/26/2014
|
|||||||||||||
|
Frank
Madonia
|
9/11/1998
|
18,000 | – | $ | 20.625 |
9/11/2008
|
|||||||||||
|
3/26/2004
|
– | 7,500 | 8.31 |
3/26/2014
|
|||||||||||||
|
J.
Vincent Mish
|
6/26/1998
|
1,500 | – | $ | 35.3125 |
6/26/2008
|
|||||||||||
|
3/26/2004
|
7,500 | 7,500 | 8.31 |
3/26/2014
|
|||||||||||||
____________________
|
(1)
|
Vesting
for each listed stock option grant occurs in 25% increments on each yearly
anniversary of the date of grant.
|
11
Option
Exercises and Stock Vested in 2007
The
following table provides information, for the named executive officers, on stock
option exercises during 2007, including the number of shares acquired upon
exercise and the value realized, in each case before payment of any applicable
withholding tax and broker commissions.
|
Name
|
Number
of Shares Acquired on Exercise
|
Value
Realized on Exercise
|
||||||
|
William
G. Miller
|
– | $ | – | |||||
|
Jeffery
I. Badgley
|
25,000 | $ | 233,829.88 | |||||
|
Frank
Madonia
|
7,500 | $ | 70,200.00 | |||||
|
J.
Vincent Mish
|
– | $ | – | |||||
Potential
Payments Upon Termination or Change in Control
The
Company is party to employment agreements with each of its named executive
officers, and has also entered into change in control agreements with three of
its named executive officers. Each of these employment and change in
control agreements address, among other things, compensation and benefits that
would be paid to the applicable named executive officer in the event that his
employment is terminated for different reasons, including termination for cause
or without cause, and termination in connection with a change in
control.
Employment
Agreements
William G.
Miller. The Company’s employment agreement with Mr. Miller
provides that either the Company or Mr. Miller may terminate the agreement for
any reason upon three years’ prior notice, that Mr. Miller may terminate the
agreement upon 60 days’ notice in the event of a change in control, and that the
Company may terminate the agreement at any time for “cause,” or if Mr. Miller
dies or becomes disabled. Upon any termination of the employment
agreement, Mr. Miller will be entitled to receive all compensation due to him
through his last day of employment. However, the agreement does not
provide for any post-termination payments. Under the employment
agreements, “cause” means: (i) willful malfeasance or gross
negligence; or (ii) knowingly engaging in wrongful conduct resulting in
detriment to the goodwill of the Company or damage to the Company’s
relationships with its customers, suppliers or employees. The
employment agreement also provides for confidentiality during employment, and
for non-competition during employment and for a three-year period from
termination if the Company terminates the agreement for cause or Mr. Miller
terminates his employment in breach of the agreement.
Jeffrey I. Badgley, Frank Madonia
and J. Vincent Mish. The Company’s employment agreements with
Messrs. Badgley, Madonia and Mish address the rights and obligations of the
Company in connection with the termination of the executive’s employment in
different situations including in connection with a change in
control. Under each agreement:
|
●
|
Upon
any termination of the executive’s employment, including if the executive
terminates his employment voluntarily, or if the Company terminates the
executive’s employment for “just cause,” the executive will be entitled to
receive all compensation due to him through his last day of
employment.
|
|
|
●
|
If
the executive’s employment is terminated due to death, the executive’s
beneficiary will be entitled to receive, in one lump sum, an amount equal
to: (i) 12 months of his then-current base salary;
(ii) 12 months of the average monthly bonus earned by him for the
three calendar years immediately preceding the year in which his
employment is terminated; and (iii) a pro-rated bonus, based on the
average monthly bonus earned by him for the three calendar years
immediately preceding the year in which his employment is terminated, for
the number of days he worked during the year in which his employment is
terminated.
|
|
|
●
|
If
the executive’s employment is terminated due to disability, all of the
executive’s outstanding stock options will vest and become exercisable,
the executive (or his beneficiary) will be entitled to receive a lump sum
pro-rated bonus (based on the average monthly bonus earned by him for the
three calendar years immediately preceding the year in which his
employment is terminated) for the number of days he worked during the year
in which his employment is terminated, and the executive (or his
beneficiary) will be entitled to receive, monthly over a period of 24
months from the last day of employment: (i) his
then-current base salary; (ii) the average monthly bonus earned by
him for the three calendar years immediately preceding the year in which
his employment is terminated; and (iii) continued health and life
insurance coverage.
|
12
|
●
|
If
the executive’s employment is terminated by the Company without “just
cause,” or if the executive’s employment is terminated under circumstances
that would entitle him to receive benefits under his change in control
agreement (i.e., in connection with a change in control of the Company)
with the Company, if any, all of the executive’s outstanding stock options
will vest and become exercisable, the executive will be entitled to
receive a lump sum pro-rated bonus (based on the average monthly bonus
earned by him for the three calendar years immediately preceding the year
in which his employment is terminated) for the number of days he worked
during the year in which his employment is terminated, and the executive
will be entitled to receive, monthly over the shorter of a 36-month period
or the remaining term of the employment agreement: (i) his
then-current base salary; (ii) the average monthly bonus earned by
him for the three calendar years immediately preceding the year in which
his employment is terminated; and (iii) continued health and life
insurance coverage; provided, that if the executive dies during the
post-termination period in which these benefits are being paid, the
monthly base salary and bonus payments will continue for the shorter of 12
months after his death or the remaining term of the employment
agreement.
|
Under the
employment agreements, “just cause” means: (i) executive’s
material fraud, malfeasance, gross negligence or willful misconduct with respect
to the business affairs of the Company which is directly or materially harmful
to the business or reputation of the Company or its subsidiaries, and which is
incapable of being remedied or not remedied within 30 days of notice from the
Company; (ii) executive’s conviction of or failure to contest prosecution
for a felony or a crime involving moral turpitude; or (iii) executive’s
material breach of the employment agreement which is incapable of being remedied
or not remedied within 30 days of notice from the Company.
Each
employment agreement also provides for non-competition and confidentiality
during employment and for a period ending two years from termination or
expiration of the employment agreement (or one year if termination occurs
pursuant to a change in control).
Change
in Control Agreements
In
September 1998, the Company entered into change in control agreements with
Messrs. Badgley and Madonia, and in December 2002, the Company entered into a
change in control agreement with Mr. Mish. Under each agreement, if
the executive’s employment is terminated within six months before, or 24 months
after, a “change in control,” and the termination was either involuntary on the
part of the executive (other than for cause, disability or death), or
“voluntary” on the part of the executive, then all of the executive’s
outstanding stock options will vest and become exercisable, and the executive
will be entitled to receive:
|
●
|
a
lump sum payment equal to the present value of 36 months
of:
|
||
|
-
|
his
then-current base salary; and
|
||
|
-
|
the
average monthly bonus earned by him for the three calendar years
immediately preceding the year in which his employment is
terminated;
|
||
|
●
|
a
lump sum pro-rated bonus, based on the average monthly bonus earned by him
for the three calendar years immediately preceding the year in which his
employment is terminated, for the number of days he worked during the year
in which his employment is terminated, discounted to present value;
and
|
||
|
●
|
health
and life insurance benefits over the shorter of a 36-month period or the
remaining term of the employment
agreement.
|
||
However,
any amounts paid under the change in control agreements will be reduced to the
extent that the executive receives or is entitled to receive payments in respect
of the change in control under the executive’s employment
agreement. If the executive does not actually receive payments under
the employment agreement, or the employment agreement is breached by the
Company, payments will be made under the change in control
agreement. Additionally, under the change in control agreements, the
Company has agreed to provide the executive with a gross-up payment for federal
and state income taxes and federal excise taxes imposed on any “excess parachute
payment.”
13
Under the
change in control agreements, “voluntary” termination by the executive means
termination of employment that is voluntary on the part of the executive, and,
in the judgment of the executive, is due to: (i) a reduction of
the executive’s responsibilities, title or status resulting from a formal change
in title or status, or from the assignment to the executive of any duties
inconsistent with his title, duties or responsibilities in effect within the
year prior to the change in control; (ii) a reduction in the executive’s
compensation or benefits, or (iii) a Company-required involuntary
relocation or the executive’s place of residence or a significant increase in
the executive’s travel requirements.
Potential
Payments
Assuming
that a termination event or change in control occurred on December 31, 2007, the
value of potential payments and benefits payable to each named executive officer
who was employed by the Company on such date is summarized in the following
table. The price per share of Common Stock used for purposes of the
following calculation is the closing market price on the NYSE as of December 31,
2007, the last trading day in 2007, which was $13.69. The table
excludes (i) amounts accrued through December 31, 2007 that would be paid
in the normal course of continued employment, such as accrued but unpaid salary,
(ii) vested account balances in the Company’s contributory retirement plan
that are generally available to all of the Company’s U.S. salaried employees,
and (iii) any amounts to be provided under any arrangement that does not
discriminate in scope, terms or operation in favor of named executive officers
and that is available generally to all salaried employees. Actual
amounts to be paid can only be determined at the time of such executive’s
termination.
|
Name
and payment or benefit
|
Termination
by
Company
without
just
cause
|
Involuntary
termination
by
Company
or
“voluntary”
termination
by
executive
after
change
in control
|
Disability
|
Death
|
||||||||||||
|
William
G. Miller
|
||||||||||||||||
|
Payments
and benefits
|
$ | – | $ | – | $ | – | $ | – | ||||||||
|
Jeffrey
I. Badgley
|
||||||||||||||||
|
Salary
and bonus
|
$ | 1,057,566 | (1) | $ | 1,057,566 | (1) | $ | 715,166 | (2) | $ | 372,766 | (3) | ||||
|
Healthcare
and life insurance coverage
|
40,750 | (4) | 40,750 | (4) | 27,167 | (5) | – | |||||||||
|
Tax
gross-up
|
– | – | – | – | ||||||||||||
|
Market
value of stock options vesting on termination
|
134,500 | 134,500 | 134,500 | – | ||||||||||||
|
Frank
Madonia
|
||||||||||||||||
|
Salary
and bonus
|
$ | 731,351 | (1) | $ | 731,351 | (1) | $ | 494,984 | (2) | $ | 258,617 | (3) | ||||
|
Healthcare
and life insurance coverage
|
28,507 | (4) | 28,507 | (4) | 19,005 | (5) | – | |||||||||
|
Tax
gross-up
|
– | – | – | – | ||||||||||||
|
Market
value of stock options vesting on termination
|
40,350 | 40,350 | 40,350 | – | ||||||||||||
|
J.
Vincent Mish
|
||||||||||||||||
|
Salary
and bonus
|
$ | 725,099 | (1) | $ | 725,099 | (1) | $ | 490,816 | (2) | $ | 256,533 | (3) | ||||
|
Healthcare
and life insurance coverage
|
39,166 | (4) | 39,166 | (4) | 26,111 | (5) | – | |||||||||
|
Tax
gross-up
|
– | 255,713 | (6) | – | – | |||||||||||
|
Market
value of stock options vesting on termination
|
40,350 | 40,350 | 40,350 | – | ||||||||||||
____________________
|
(1)
|
Reflects
the value of (i) monthly payments over the shorter of 36 months or the
remaining term of the executive’s employment agreement of salary and
average monthly bonus and (ii) a lump sum pro-rated bonus, based on
average monthly bonus, for the number of days worked by the executive
during the year in which his employment is terminated.
|
|
(2)
|
Reflects
the value of (i) monthly payments over 24 months of salary and average
monthly bonus and (ii) a lump sum pro-rated bonus, based on average
monthly bonus, for the number of days worked by the executive during the
year in which his employment is
terminated.
|
14
|
(3)
|
Reflects
the value of a lump sum payment of (i) 12 months of salary and average
monthly bonus and (ii) pro-rated bonus, based on average monthly bonus,
for the number of days worked by the executive during the year in which
his employment is terminated.
|
|
(4)
|
Reflects
the employer share of premiums for continued healthcare and life insurance
coverage for 36 months.
|
|
(5)
|
Reflects
the employer share of premiums for continued healthcare and life insurance
coverage for 24 months.
|
|
(6)
|
The
tax gross-up payment payable for the executive was estimated without
assigning a value to the restrictive covenants to which he would be
subject under his employment and change in control agreement with the
Company following termination.
|
Non-Employee
Director Compensation for 2007
The
current compensation program for the Company’s non-employee directors is
designed to pay directors for work required for a company of Miller Industries’
size and scope and to align the director’s interests with the long-term
interests of Company shareholders.
Non-employee
directors receive annual compensation comprised of a cash component and an
equity component. Under the cash component, each non-employee
director receives an annual cash payment of $25,000 as compensation for service
on the Board of Directors. Additionally, each non-employee director
receives a cash payment of $3,000 for each Board of Directors meeting that he
attends and a cash payment of $1,000 for each committee meeting that he
attends. Under the equity component, each non-employee director is
entitled to an annual award under the Company’s Non-Employee Director Stock
Plan, to be paid in fully-vested shares of Common Stock, equal to $25,000
divided by the closing price of the Common Stock on the first trading day of
such year. On January 1, 2007, each of Messrs. Chandler, Drack and
Roberts was granted 1,050 shares of Common Stock, which number of shares was
determined by dividing $25,000 by $23.80, the closing price per share of Common
Stock as reported on the NYSE on January 3, 2007, the first trading day in
2007. Each of Messrs. Chandler, Drack and Roberts has been granted an
aggregate of 15,852 shares of Common Stock under the terms of the Company’s
Non-Employee Director Stock Plan through the end of 2007.
The
members of the Board of Directors who are employees of the Company do not
receive additional compensation for Board or committee service.
|
Name
|
Fees
Earned
or
Paid in
Cash
|
Stock
Awards
|
Total
|
|||||||||
|
A.
Russell Chandler, III
(1)
|
$ | 48,000 | $ | 25,000 | $ | 73,000 | ||||||
|
Paul
E. Drack
(1)
|
$ | 48,000 | $ | 25,000 | $ | 73,000 | ||||||
|
Richard
H. Roberts
(1)
|
$ | 48,000 | $ | 25,000 | $ | 73,000 | ||||||
____________________
|
(1)
|
Member
of the Audit, Compensation and Nominating Committees of the Board of
Directors.
|
ACCOUNTING
MATTERS
Audit
Committee Report
The
Company’s Audit Committee is comprised of three independent members, as required
by applicable listing standards of the NYSE. The Audit Committee acts
pursuant to a written Charter, which was amended and restated by the Board of
Directors in March 2007. The Company’s management is responsible for
its internal accounting controls and the financial reporting
process. The Company’s independent accountants, Joseph Decosimo and
Company, PLLC, are responsible for performing an audit of the Company’s
consolidated financial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and for expressing an opinion
as to their conformity with generally accepted accounting
principles. The Audit Committee’s responsibility is to monitor and
oversee these processes.
15
In
keeping with that responsibility, the Audit Committee has reviewed and discussed
the Company’s audited consolidated financial statements with management and the
independent accountants. In addition, the Audit Committee has
discussed with the Company’s independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61, “Communications with Audit
Committee,” as currently in effect. In addition, the Audit Committee
has received the written disclosures from the independent accountants required
by Independence Standards Board Standard No. 1, “Independence Discussions with
Audit Committees,” and has discussed with the independent accountants their
independence. The Audit Committee has also considered whether the
provision of non-audit services by the independent accountants is compatible
with maintaining such accountants’ independence.
The
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not experts in the fields of accounting or
auditing, including in respect of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them and on the representations made by management and the independent
accountants. Accordingly, the Audit Committee’s oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or appropriate
internal control and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee’s considerations and discussions referred to above do not assure that
the audit of the Company’s consolidated financial statements has been carried
out in accordance with the standards of the Public Company Accounting Oversight
Board (United States), that the consolidated financial statements are presented
in accordance with generally accepted accounting principles, or that the
Company’s auditors are in fact “independent.”
Based on
the reports and discussions described in this report, and subject to the
limitations on the role and responsibilities of the Committee referred to above
and in the Audit Committee Charter, the Audit Committee recommended to the Board
of Directors that the audited consolidated financial statements of the Company
be included in the Annual Report on Form 10-K for the year ended December 31,
2007 for filing with the SEC.
This
report is respectfully submitted by the Audit Committee of the Board of
Directors.
|
Audit
Committee
|
||
|
Paul
E. Drack
|
||
|
A.
Russell Chandler, III
|
||
|
Richard
H. Roberts
|
Independent
Public Accountants
General
Joseph
Decosimo and Company, PLLC were the Company’s independent public accountants for
2007, and the Company anticipates that Joseph Decosimo and Company, PLLC will be
retained as the Company’s independent public accountants for
2008. Representatives of Joseph Decosimo and Company, PLLC are
expected to be present at the Annual Meeting, and will have the opportunity to
make statements and to respond to appropriate questions.
The
decision to engage Joseph Decosimo and Company, PLLC was made upon the
recommendation of the Company’s Audit Committee and the approval of the Board of
Directors.
Audit
Fees
Joseph
Decosimo and Company, PLLC billed fees of $263,000 and $278,864 for 2007 and
2006, respectively, for professional services rendered for the audit of the
Company’s consolidated financial statements included within the Company’s Form
10-K, and review of interim consolidated financial statements included within
Form 10-Qs during such periods, and for the audit of the Company’s internal
control over financial reporting.
Audit-Related
Fees
Joseph
Decosimo and Company, PLLC did not perform any, or bill the Company for,
assurance and related services related to the performance of the audit and
review of financial statements for 2007 or 2006.
16
Tax
Fees
Joseph
Decosimo and Company, PLLC billed fees of $89,000 and $3,485 for tax services
for 2007 and 2006, respectively.
All
Other Fees
Joseph
Decosimo and Company, PLLC did not perform or bill the Company for any other
services during 2007 or 2006.
Approval
of Audit and Non-Audit Services
The Audit
Committee of the Board of Directors pre-approves all audit and non-audit
services performed by the Company’s independent auditor. The Audit
Committee specifically approves the annual audit services
engagement. Certain non-audit services that are permitted under the
federal securities laws may be approved from time to time by the Audit
Committee.
CODE
OF BUSINESS CONDUCT AND ETHICS
The
Company has adopted a Code of Business Conduct and Ethics that applies to its
directors, officers and employees. A copy of the Code is available on
the Company’s website at www.millerind.com through the “Investor Relations”
link. A copy of the Code can also be obtained upon request from the
Company’s Corporate Secretary.
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth aggregate information as of December 31, 2007 about
all of the Company’s compensation plans, including individual compensation
arrangements, under which the Company’s equity securities are authorized for
issuance.
|
Plan
category
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
|
||||||||
|
Equity
compensation plans approved
by
security holders
|
205,110 | (1) | $ | 15.24 | (1) |
See
Note (2)
|
|||||
|
Equity
compensation plans not approved
by
security holders
|
0 | 0 |
0
|
||||||||
____________________
|
(1)
|
Includes
only options outstanding under the Company’s 1994 Stock Option Plan and
2005 Equity Incentive Plan. Does not include shares of common
stock issued to non-employee directors under the Company’s Non-Employee
Director Stock Plan, which shares are fully vested and exercisable upon
issuance.
|
|
(2)
|
The
1994 Stock Option Plan expired in August 2004, therefore no securities are
available for future issuance under this plan. As of December
31, 2007, there were 1,288,260 securities available for future issuance
under the 2005 Equity Incentive Plan. Grants are made annually
to non-employee directors under the Non-Employee Director Stock Plan, and
the number of shares of common stock to be granted to each non-employee
director for a particular year is determined by dividing $25,000 by the
closing price of a share of the Company common stock on the first trading
day of such year. Therefore, the number of securities remaining
available for future issuance under the Non-Employee Director Stock Plan
is not presently determinable.
|
COMPLIANCE
WITH SECTION 16(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Section
16(a) of the Securities Exchange Act of 1934 and the disclosure requirements of
Item 405 of Regulation S-K require the directors and executive officers of the
Company, and any persons holding more than 10% of any class of equity securities
of the Company, to report their ownership of such equity securities and any
subsequent changes in that ownership to the Securities and Exchange Commission,
the NYSE and the Company. Based solely on a review of the written
statements and copies of such reports furnished to the Company by its executive
officers and directors, the Company believes that, during 2007, all Section
16(a) filing requirements were met.
17
OTHER
MATTERS
Deadline
for Shareholder Proposals for 2009 Annual Meeting
Any
proposal intended to be presented for action at the 2009 annual meeting of
shareholders by any shareholder of the Company must be received by the Secretary
of the Company not later than December 15, 2008 in order for such proposal to be
considered for inclusion in the Company’s proxy statement and proxy relating to
that meeting. Any such shareholder proposal must meet all the
requirements for such inclusion established by the Securities and Exchange
Commission in effect at the time.
In
addition, any proposal intended to be presented for action at the 2009 annual
meeting of shareholders (other than a proposal submitted for inclusion in the
Company’s proxy statement and proxy) by any shareholder of the Company must be
received by the Secretary of the Company no later than 90 nor more than 120 days
before that annual meeting (which deadline is currently expected to be between
January 22, 2009 and February 21, 2009) in the case of a nomination for
director, and no later than 60 days prior to that annual meeting (which deadline
currently is expected to be March 23, 2009) in the case of any other proposal,
otherwise such proposal will not be considered at the 2009 annual meeting of
shareholders.
Expenses
of Solicitation
The cost
of solicitation of proxies will be borne by the Company, including expenses in
connection with preparing, assembling and mailing this proxy
statement. The Company’s executive officers or employees, who will
not receive compensation for their services other than their regular salaries,
may solicit proxies personally or by telephone. The Company does not
anticipate paying any other compensation to any other party for solicitation of
proxies, but may reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to beneficial owners.
A
COPY OF THE COMPANY’S ANNUAL REPORT TO SHAREHOLDERS FOR 2007 IS ENCLOSED WITH
THIS PROXY STATEMENT. COPIES OF EXHIBITS FILED WITH THE COMPANY’S
ANNUAL REPORT FORM 10-K AND OTHER REPORTS OF THE COMPANY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE UPON WRITTEN REQUEST AT NO COST
TO THE REQUESTING SHAREHOLDER. REQUESTS SHOULD BE MADE IN WRITING TO
FRANK MADONIA, EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL, MILLER
INDUSTRIES, INC., 8503 HILLTOP DRIVE, OOLTEWAH,
TENNESSEE 37363.
18
▼ PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE ▼
Proxy
– Miller Industries, Inc.
This
Proxy is Solicited by the Board of Directors for the
Annual
Meeting of Shareholders to be Held on May 23, 2008
The
undersigned shareholder of Miller Industries, Inc. hereby constitutes and
appoints William G. Miller and Frank Madonia, or either of them, the true and
lawful attorneys and proxies of the undersigned with full power of substitution
and appointment, for and in the name, place and stead of the undersigned, to
vote all of the undersigned's shares of Common Stock of Miller Industries, Inc.,
at the Annual Meeting of the Shareholders to be held at 1100 Peachtree Street,
Suite 2800, Atlanta, Georgia 30309, on Friday, the 23rd of May,
2008, at 9:00 a.m., and at any and all adjournments thereof as indicated on the
reverse side.
This
proxy is revocable at or at any time prior to the meeting. Please
sign and return this proxy to Computershare Investor Services, LLC, P.O. Box
43102, Providence, RI 02940-5067, in the accompanying prepaid
envelope.
MILLER
INDUSTRIES, INC.
|
Using
a black ink pen,
mark your votes with an X as shown
in
this
example. Please do not write outside the designated
areas
|
x |
| Annual Meeting Proxy Card |
▼ PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE ▼
A Election
of Directors — The Board of Directors recommends a vote FOR all the nominees
listed.
|
1.
|
Nominees:
|
|
For
|
Withhold
|
For
|
Withhold
|
For
|
Withhold
|
||||
|
01
– Jeffrey I. Badgley
|
o
|
o
|
02
– A. Russell Chandler, III
|
o
|
o
|
03
– Paul E. Drack
|
o
|
o
|
|
|
|
|||||||||
|
04
– William G. Miller
|
o
|
o
|
05
– Richard H. Roberts
|
o
|
o
|
THE
BOARD OF DIRECTORS FAVORS A VOTE “FOR” EACH OF THE NOMINEES LISTED ABOVE AND
UNLESS
INSTRUCTIONS
TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THE PROXY WILL BE SO
VOTED.
Other
Business:
|
2.
|
For
the transaction of such other business as may lawfully come before the
meeting, hereby revoking any proxies as to said shares
|
|
heretofore
given by the undersigned and ratifying and confirming all that said
attorneys and proxies may lawfully do by virtue
hereof.
|
It is
understood that this proxy confers discretionary authority in respect to matters
not known or determined at the time of the mailing of the notice of the meeting
to the undersigned.
The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders dated April 16, 2008 and the Proxy Statement furnished
therewith.
B Authorized
Signatures — This section must be completed for your vote to be counted. — Date
and Sign Below
Signature
should agree with the name(s) hereon. Executors, administrators,
trustees, guardians and attorneys should so indicate when
signing. For joint accounts each owner should
sign. Corporations should sign their full corporate name by a duly
authorized officer.
|
Date
(mm/dd/yyyy) – Please print date below.
|
Signature
1 – Please keep signature within the box.
|
Signature
2 – Please keep signature within the
box.
|
|
/ /
|