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. )
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SL INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
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SL INDUSTRIES, INC.
520 FELLOWSHIP ROAD
SUITE A-114
MOUNT LAUREL, NEW JERSEY 08054
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 2008
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To The Holders of Our Common Stock:
We invite you to attend our annual shareholders' meeting on May 14, 2008 at
the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, 65 East 55th
Street, New York, New York at 1:00 P.M., Eastern Time. At the meeting, you will
hear an update on our operations, have a chance to meet some of our directors
and executives, and vote on the following matters:
1. To elect seven (7) directors until the next annual meeting in 2009 or
until their successors have been elected and qualified;
2. To approve the Company's 2008 Incentive Stock Plan;
3. To ratify the appointment of Grant Thornton LLP as our independent
accountants for fiscal 2008; and
4. Any other matters that properly come before the meeting.
This booklet includes a formal notice of the meeting and the proxy
statement. The proxy statement tells you more about the agenda and procedures
for the meeting. It also describes how our Board of Directors operates and gives
personal information about our director nominees.
Only record holders of SL Industries, Inc. common stock at the close of
business on March 28, 2008 will be entitled to vote on the foregoing matters at
the annual meeting. Even if you only own a few shares of common stock, we want
your shares to be represented at the annual meeting. I urge you to complete,
sign, date and return your proxy card promptly in the enclosed envelope.
We have also provided you with the exact place and time of the meeting if
you wish to attend in person.
Sincerely yours,
DAVID R. NUZZO
Secretary
Mount Laurel, New Jersey
April 14, 2008
SL INDUSTRIES, INC.
520 FELLOWSHIP ROAD
SUITE A-114
MOUNT LAUREL, NEW JERSEY 08054
(856) 727-1500
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of SL Industries, Inc., a New Jersey
corporation (the "Company") of proxies in the accompanying form to be used at
the Annual Meeting of Shareholders of the Company to be held on May 14, 2008,
and any adjournment or postponement thereof (the "Meeting"). This Proxy
Statement, the accompanying form of proxy and the Company's Annual Report for
the fiscal year ended December 31, 2007 (the "2007 Annual Report") are being
mailed to shareholders on or about April 14, 2008. The shares represented by the
proxies received pursuant to the solicitation made hereby and not revoked will
be voted at the Meeting.
MEETING OF SHAREHOLDERS
The Meeting will be held at the offices of Olshan Grundman Frome Rosenzweig
& Wolosky LLP, 65 East 55th Street, New York, New York, on May 14, 2008, at 1:00
P.M., Eastern Time.
RECORD DATE AND VOTING
The Board has fixed the close of business on March 28, 2008, as the record
date (the "Record Date") for the determination of holders of outstanding shares
of the Company entitled to notice of and to vote on all matters presented at the
Meeting. Such shareholders will be entitled to one vote for each share held on
each matter submitted to a vote at the Meeting. On the Record Date, there were
5,856,746 shares of the Company's common stock, $.20 par value per share (the
"Common Stock"), issued and outstanding, each of which is entitled to one vote
on each matter to be voted upon.
PURPOSES OF THE MEETING
The purposes of the Meeting are to vote upon (i) the election of seven (7)
directors until the next annual meeting in 2009, or until their successors have
been elected and qualified; (ii) the approval of Company's 2008 Incentive Stock
Plan; (iii) the ratification of Grant Thornton LLP as the Company's independent
accountants for the fiscal year ending December 31, 2008, and (iv) such other
business as may properly come before the Meeting.
QUORUM AND REQUIRED VOTE
Under the By-Laws of the Company, the presence of a quorum is required for
each matter to be acted upon at the Meeting. The presence, either in person or
by properly executed proxy, of the holders of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum for the purpose of
acting on the matters referred to in the Notice of Annual Meeting of
Shareholders accompanying this Proxy Statement and any other proposals that may
properly come before the Meeting. Broker non-votes and abstentions will be
counted only for the purpose of determining whether a quorum is present at the
Meeting. Broker non-votes occur when a broker returns a proxy but does not have
the authority to vote on a particular proposal.
The director nominees receiving a plurality of the votes cast during the
Meeting will be elected to fill the seats of the Board. For the other proposals
to be approved, the favorable vote of a majority of shares present and entitled
to vote thereon is required. Abstentions count for quorum purposes and will have
the same effect as a vote against the other proposal.
PROXIES
The Board requests your proxy. Giving the Board your proxy means you
authorize it to vote your shares at the Meeting in the manner you direct. You
may vote for all, some or none of the director nominees. You may also vote for
or against the other proposal or abstain from voting.
On the matters coming before the Meeting as to which a choice has been
specified by a shareholder by means of the ballot on the proxy, the shares will
be voted accordingly. If no choice is so specified, the shares will be voted for
(i) the election of the nominees for director listed in this Proxy Statement,
(ii) the approval of the Company's 2008 Incentive Stock Plan, and (iii) the
ratification of Grant Thornton LLP as the Company's independent accountants, all
as referred to in Items 1, 2 and 3, respectively, in the Notice of Annual
Meeting of Shareholders and as described in this Proxy Statement.
The form of proxy accompanying this Proxy Statement confers discretionary
authority upon the named proxy holders with respect to amendments or variations
to the matters identified in the accompanying Notice of Annual Meeting of
Shareholders and with respect to any other matters which may properly come
before the Meeting. As of the date of this Proxy Statement, management of the
Company knows of no such amendment or variation or of any matters expected to
come before the Meeting which are not referred to in the accompanying Notice of
Annual Meeting of Shareholders.
A shareholder who has given a proxy may revoke it by voting in person at
the Meeting, by giving written notice of revocation to the Secretary of the
Company or by giving a later dated proxy at any time before voting.
Only holders of Common Stock, their proxy holders, and the Company's
invited guests may attend the Meeting. If you wish to attend the Meeting in
person but you hold your shares through someone else, such as a stockbroker, you
must bring proof of your ownership and identification with a photo at the
Meeting. For example, you could bring an account statement showing that you
beneficially owned shares of the Common Stock as of March 28, 2008 as acceptable
proof of ownership.
COSTS OF SOLICITATION
The Company will bear the cost of printing and mailing proxy materials,
including the reasonable expenses of brokerage firms and others for forwarding
the proxy materials to beneficial owners of Common Stock. In addition to
solicitation by mail, solicitation may be made by certain directors, officers
and employees of the Company, or firms specializing in solicitation, and may be
made in person or by telephone or email. No additional compensation will be paid
to any director, officer or employee of the Company for such solicitation. The
Company has retained Innisfree M&A, Inc. to assist the Company in the
solicitation of proxies for a fee of $6,500, plus expenses.
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ITEM 1: ELECTION OF DIRECTORS
The Company has one class of directors, each serving a one-year term.
Directors elected at the Meeting will serve until the 2009 Annual Meeting of
Shareholders and until their respective successors are duly elected and
qualified. As previously announced, Warren Lichtenstein has declined to stand
for re-election. In his place, the Nominating and Corporate Governance Committee
has nominated John McNamara for election as director. The Nominating and
Corporate Governance Committee has also nominated each of the other present
directors for re-election.
INFORMATION WITH RESPECT TO NOMINEES AND DIRECTORS
Set forth below are the names and ages of the nominees for directors and
their principal occupations at present and for the past five years. There are,
to the knowledge of the Company, no agreements or understandings by which these
individuals were so selected. No family relationships exist between any
directors or executive officers, as such term is defined in Item 402 of
Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Board has adopted independence standards for directors
that conform to the standards required by the American Stock Exchange ("AMEX")
for listed companies. Based on the Company's director independence standards,
the Board has affirmatively determined that each of the nominees, other than
Messrs. Kassan, Henderson and McNamara is independent, including each of the
non-management directors, consisting of Messrs. Baumgardner, Schwarz, Gray and
Risher.
Director
Name Age Current Offices with the Company Since
---- --- -------------------------------- --------
Glen M. Kassan(1) 64 Vice Chairman, Director 2002
J. Dwane Baumgardner(2)(4) 67 Director 1990
James R. Henderson 50 Director 2002
Mark E. Schwarz(1) (3)(4) 47 Director 2002
Avrum Gray(2)(3)(4) 72 Director 2002
James A. Risher(2)(3) 65 Director 2003
John McNamara 44 None N/A
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
(4) Member of Nominating and Corporate Governance Committee.
BUSINESS BACKGROUND
The following is a summary of the business background and experience of
each of the persons named above:
GLEN M. KASSAN was elected as Vice Chairman of the Board on August 10, 2005 and
elected as director since January 24, 2002. From February 4, 2002 until August
10, 2005, Mr. Kassan served as President of the Company. He has been an
Operating Partner of Steel Partners, Ltd. ("SPL") since August 1999 and an
Operating Partner of its predecessor from October 1999 to May 2001. Mr. Kassan
has served as Vice
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President and Secretary of WebFinancial since June 2000 and as Chief Financial
Officer from June 2000 through 2007. Mr. Kassan has served as a director of WHX
since July 2005 and as its Vice Chairman of the Board, Chief Executive Officer
and Secretary since October 2005.
J. DWANE BAUMGARDNER has been a director since 1991. From January 2003 to May
2004, Mr. Baumgardner served as Vice Chairman and President of Magna Donnelly
Corporation, an automotive supplier of exterior and interior mirror, lighting
and engineered glass systems. Prior to January 2003, he had been the Chief
Executive Officer and President of Magna Donnelly Corporation since October
2002. Magna Donnelly Corporation is a wholly owned subsidiary of Magna
International Inc. that was established in October 2002 by the merger of
Donnelly Corporation and Magna Mirror Systems. Prior to October 2002, Mr.
Baumgardner had been the Chairman and Chief Executive Officer of Donnelly
Corporation, an automotive supplier, since 1986. Mr. Baumgardner is currently a
director of Wescast Industries, Inc., a global automotive supplier, and of
Landscape Forms, Inc., a designer and manufacturer of outdoor commercial
furnishings. He is also a member of the Board of Advisors for the Strive Group,
an integrated merchandising supply chain company to large consumer product
companies. He also serves as the President of the Scanlon Foundation.
JAMES R. HENDERSON was elected as a director on January 24, 2002. Mr. Henderson
is a Managing Director and operating partner of Steel Partners LLC, a global
investment management firm, which is the Investment Manager for Steel Partners
II Master Fund L.P., Steel Partners II, L.P. and Steel Partners II (Onshore) LP.
Mr. Henderson has been associated with Steel Partners LLC and its affiliates
since August 1999. Mr. Henderson has, since March 1, 2007, served as an
Executive Vice President of SP Acquisition Holdings, Inc., a "blank check
company" formed for the purpose of acquiring, through a merger, capital stock
exchange, asset acquisition or other similar business combination, one or more
businesses or assets. Mr. Henderson has served as President and Chief Operating
Officer of WebFinancial Corporation ("WebFinancial"), which, through its
operating subsidiaries, operates in niche banking markets, since November 2003
and as Chief Executive Officer and a director since June 2005. He has been a
director (currently Chairman of the Board) of Del Global Technologies Corp., a
designer and manufacturer of medical imaging and diagnostic systems, since
November 2003. Mr. Henderson has served as a director of Angelica Corporation,
an outsourced linen management services provider to the healthcare industry,
since August 2006. He has also served as President of Gateway Industries, Inc.,
a provider of database development and website design and development services,
since December 2001. Mr. Henderson has served as a director of BNS Holdings,
Inc., a holding company that owns a majority of Collins Industries, Inc., a
manufacturer of school buses, ambulances, and terminal trucks, since June 2004.
Mr. Henderson served as a director of ECC International Corp., a manufacturer
and marketer of computer controlled simulators for training personnel to perform
maintenance and operation procedures on military weapons, from December 1999
until September 2003, and as acting Chief Executive Officer, from July 2002
until March 2003. From January 2001 to August 2001, Mr. Henderson served as
President of MDM Technologies, Inc., a direct mail and marketing company. From
1996 to July 1999, Mr. Henderson was employed in various positions with Aydin
Corporation which included tenure as President and Chief Operating Officer from
October 1998 to June 1999. Prior to his employment with Aydin Corporation, Mr.
Henderson was employed as an executive with UNISYS Corporation, an e-business
solutions provider.
MARK E. SCHWARZ was elected as a director on January 24, 2002. He is the
Chairman, Chief Executive Officer and Portfolio Manager of Newcastle Capital
Management, L.P., a private investment management firm he founded in 1992 that
is the general partner of Newcastle Partners, L.P., a private investment firm.
Mr. Schwarz is also Chairman of the Board and CEO of Geoworks Corporation, Inc.
Mr. Schwarz has served as Chairman of the Board of Hallmark Financial Services,
Inc., a property and casualty insurance company, since October 2001 and was its
Chief Executive Officer from January 2003 until August 2006. He currently serves
as Chairman of the Board of Bell Industries, Inc., a computer systems
integrator, Pizza Inn, Inc., a franchisor and food and supply distributor, New
Century Equity Holdings Corp., an asset management company, and Pinnacle Frames
& Accents Inc. Mr. Schwarz is a director of Nashua
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Corporation, a specialty paper, label and printing supplies manufacturer,
WebFinancial and MedQuist, Inc.
AVRUM GRAY was elected as a director on May 23, 2002. Mr. Gray is the Chairman
of G-Bar Limited Partnership, one of the nation's largest independent options
trading firms and a leading specialist in computer-based arbitrage activities in
the derivative markets, and has held this position since 1981. Mr. Gray is the
former Chairman of the Board of Lynch Systems, Inc., a glass press supplier to
the television and computer industry, and a former Chief Executive Officer of a
privately held manufacturer of components and devices for the automotive
aftermarket. Mr. Gray is also a director of Nashua Corporation, a specialty
paper, label and printing supplies manufacturer; Lynch Corporation, a holding
company with subsidiaries engaged in manufacturing and distributing frequency
control devices and glass forming and other equipment; and Material Sciences
Corporation, a materials solution provider. Additionally, Mr. Gray has been
Chairman of the Board of Spertus College, as well as a board member of the
Illinois Institute of Technology, the Stuart School, and a number of
philanthropic organizations, including the Jewish Federation of Chicago.
JAMES A. RISHER was elected as a director on May 29, 2003. Mr. Risher has been
the Managing Partner of Lumina Group, LLC, a private company engaged in the
business of consulting and investing in small and mid-size companies, since
1998. Since August 2006, Mr. Risher has served as the Chief Executive Officer of
Del Global Technologies Corp. From February 2001 to May 2002, Mr. Risher served
as Chairman and Chief Executive Officer of BlueStar Battery Systems
International, Inc. ("BlueStar"), a Canadian public company that is an
e-commerce distributor of electrical and electronic products to selected
automotive aftermarket segments and targeted industrial markets. BlueStar filed
CCAA (a petition for reorganization under Canadian bankruptcy laws) in August
2001, and a plan of reorganization was approved in November 2001. From 1986 to
1998, Mr. Risher served as a director, Chief Executive Officer and President of
Exide Electronics Group, Inc. ("Exide"), a global leader in the uninterruptible
power supply industry. He also served as Chairman of Exide from December 1997 to
July 1998.
JOHN H. MCNAMARA, JR. has been an investment professional at SPL since May 2006.
SPL is an affiliate of Steel Partners II, LP., which owns approximately 27.5% of
the Company's outstanding common stock. Prior to working at SPL, Mr. McNamara
was a Managing Director and Partner at Imperial Capital LLC, an investment
banking firm, which he joined in 1995. As a member of its Corporate Finance
Group he provided advisory services for middle market companies in the areas of
mergers and acquisitions, restructurings and financings. Mr. McNamara began his
career at Bay Banks, Inc., a commercial bank, where he served in lending and
work-out capacities.
DIRECTOR COMPENSATION
Director compensation is more fully described below in the "Director
Compensation Table" located in the "Executive Compensation" portion of this
Proxy Statement.
BOARD COMMITTEES AND MEETINGS
The Board met on three occasions during the year ended December 31, 2007
and acted by written consent on three occasions. Each of the directors attended
at least 75% of the aggregate of (i) the total number of meetings of the Board;
and (ii) the total number of meetings held by all committees of the Board on
which he served. There are four committees of the Board: the Executive
Committee, the Audit Committee, the Compensation Committee and the Nominating
and Corporate Governance Committee.
Each director is expected to make reasonable efforts to attend Board
meetings, meetings of committees of which such director is a member and the
Annual Meeting of Shareholders. Two directors attended the 2007 Annual Meeting
of Shareholders.
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EXECUTIVE COMMITTEE
The Executive Committee has and may exercise all the authority of the
Board, except that the Executive Committee cannot make, alter or repeal any
By-Law of the Company, elect or appoint any director or remove any officer or
director, submit to shareholders any action that requires shareholder approval,
or amend or repeal any resolution previously adopted by the Board, which by its
terms is amendable or repealable only by the Board. The members of the Executive
Committee during 2007 were Warren Lichtenstein, Glen M. Kassan and Mark E.
Schwarz. As Mr. Lichtenstein has declined to stand for re-election to the Board,
he will no longer be a member of the Executive Committee once directors have
been elected at the Meeting. The Executive Committee did not meet during the
fiscal year ended December 31, 2007.
AUDIT COMMITTEE
The Company has a separately-designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act. The
Audit Committee has adopted a written charter, which is available on the
Company's website at www.slindustries.com. The adequacy of the charter has been
reviewed and assessed by the Audit Committee on an annual basis. The members of
the Audit Committee are Avrum Gray, James A. Risher and J. Dwane Baumgardner,
each of whom is independent under the criteria for being "independent" set forth
under Section 121(A) of the listing standards of the AMEX. In addition, the
Board has determined that Avrum Gray, the Chairman of the Audit Committee and a
non-management director, is an audit committee financial expert serving on the
Audit Committee. The primary purpose of the Audit Committee is to assist the
Board in fulfilling its responsibility to oversee the Company's financial
reporting activities. The Audit Committee annually selects independent public
accountants to serve as auditors of the Company's books, records and accounts.
The Audit Committee reviews the scope of the audits performed by such auditors,
the audit reports prepared by them and discusses with the auditors those matters
required to be discussed by Statement on Auditing Standards No. 61. The Audit
Committee also reviews and monitors the Company's internal accounting procedures
and discusses the Company's Audited Financial Statements with management. A
report from the Audit Committee is also included in this Proxy Statement. See
Audit Committee Report. The Audit Committee met on five occasions during the
fiscal year ended December 31, 2007 and acted by written consent on one
occasion.
COMPENSATION COMMITTEE
The Compensation Committee reviews compensation arrangements and personnel
matters. The Compensation Committee has adopted a written charter, which is
available on the Company's website at www.slindustries.com. The members of the
Compensation Committee are James A. Risher, Mark E. Schwarz and Avrum Gray. Each
member of the Compensation Committee meets the criteria for being "independent"
set forth under Section 121(A) of the listing standards of the AMEX. A report
from the Compensation Committee is also included in this Proxy Statement. The
Compensation Committee met on one occasion during the fiscal year ended December
31, 2007 and acted by written consent on one occasion.
The Compensation Committee has the ultimate authority to determine
compensation of the Company's executive officers, but may form and delegate
authority to subcommittees when appropriate. The Compensation Committee's
procedures for considering and determining executive and director compensation
is detailed in "Executive Compensation Discussion and Analysis" provided below.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee recommends criteria for
service as a director, reviews candidates and recommends appropriate governance
practices and compensation for
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directors. The Nominating and Corporate Governance Committee has adopted a
written charter, which is available on the Company's website at
www.slindustries.com. The members of the Nominating and Corporate Governance
Committee are Mark E. Schwarz, Avrum Gray and J. Dwane Baumgardner. Each member
of the Nominating and Corporate Governance Committee meets the criteria for
being "independent" set forth under Section 121(A) of the listing standards of
the AMEX. The Nominating and Corporate Governance Committee did not meet during
the fiscal year ended December 31, 2007 and acted by written consent on one
occasion.
The Nominating and Corporate Governance Committee considers and makes
recommendations to the Board with respect to the size and composition of the
Board and identifies potential candidates to serve as directors, to the extent
there are vacancies on the Board. The Nominating and Corporate Governance
Committee considers recommendations for director nominees from a wide variety of
sources, including members of the Board, business contacts, community leaders,
third-party advisory services and members of management. The Nominating and
Corporate Governance Committee also considers shareholder recommendations for
director nominees that are properly received in accordance with the Company's
By-laws, and applicable rules and regulations of the Securities and Exchange
Commission (the "SEC"). The Nominating and Corporate Governance Committee does
not evaluate director candidates recommended by shareholders differently than
director candidates recommended by other sources.
In considering Board candidates, members of the Nominating and Corporate
Governance Committee take into consideration all factors that it deems
appropriate, including, but not limited to, the individual's character,
education, experience, knowledge and skills. The Nominating and Corporate
Governance Committee will also consider the extent of the individual's
experience in business, education or public service, his or her ability to bring
a desired range of skills, diverse perspectives and experience to the Board and
whether the individual possesses high ethical standards, a strong sense of
professionalism and is capable of serving the interests of shareholders. In
addition to reviewing a candidate's background and accomplishments, candidates
for director nominees are reviewed in the context of the current composition of
the Board and the evolving needs of the Company's businesses. It is the policy
of the Board that at all times at least a majority of its members meet the
standards of independence promulgated by the AMEX and the SEC. Additionally, the
Nominating and Corporate Governance Committee will consider the number of boards
on which the candidate already serves when assessing whether the candidate has
the appropriate time to devote to service on the Board.
Shareholders wishing to bring a nomination for a director candidate prior
to a shareholders meeting must give written notice to David R. Nuzzo, Secretary,
SL Industries, Inc., 520 Fellowship Road, Suite A-114, Mount Laurel, New Jersey
08054, either by personal delivery or by United States mail, postage prepaid.
The shareholder's notice must be received by the Secretary not later than the
close of business on the 120th calendar day prior to the anniversary date on
which notice of the prior year's annual meeting was first mailed to
shareholders. The shareholder's written notice to the Secretary shall set forth
(i) as to each person whom the shareholder proposes to nominate for election or
reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act, including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected; and (ii)
as to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination is made, the name and address of such shareholder,
as they appear on the Company's books; and of such beneficial owner, (a) the
class and number of shares of the Common Stock that are owned beneficially and
of record by such shareholder and such beneficial owner; and (b) a
representation that the shareholder is a holder of record of shares of the
Common Stock and intends to appear in person or by proxy at the meeting to
propose such business.
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The Nominating and Corporate Governance Committee initially evaluates a
prospective nominee on the basis of his or her resume and other background
information that has been made available to the Committee. A member of the
Nominating and Corporate Governance Committee will contact for further review
those candidates who the Committee believes are qualified, who may fulfill a
specific Board need, and who would otherwise best make a contribution to the
Board. If, after further discussions with the candidate, and other further
review and consideration as necessary, the Nominating and Corporate Governance
Committee believes that it has identified a qualified candidate, it will make a
recommendation to the Board.
Except as set forth above, the Nominating and Corporate Governance
Committee does not have a formal policy regarding the handling or consideration
of director candidate recommendations received from a shareholder, or a formal
process for identifying and evaluating nominees for directors (including
nominees recommended by shareholders).
CODE OF CONDUCT AND ETHICS
The Company has adopted a code of conduct and ethics (the "Code") that
applies to all of its directors, officers and employees. The Code is reasonably
designed to deter wrongdoing and to promote (i) honest and ethical conduct,
including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships, (ii) full, fair, accurate,
timely and understandable disclosure in reports and documents filed with, or
submitted to, the SEC and in other public communications made by the Company,
(iii) compliance with applicable governmental laws, rules and regulations, (iv)
the prompt internal reporting of violations of the Code to appropriate persons
identified in the Code, and (v) accountability for adherence to the Code. The
Code has been filed as an exhibit to the Company's annual report on Form 10-K
for the fiscal year ended December 31, 2003 and is available on the Company's
website at www.slindustries.com. The Code may also be requested in print,
without charge, by writing to: David R. Nuzzo, Secretary, SL Industries, Inc.,
520 Fellowship Road, Suite A-114, Mount Laurel, New Jersey 08054. Amendments to
the Code and any grant of a waiver from a provision of the Code requiring
disclosure under applicable SEC rules will be disclosed on the Company's website
at www.slindustries.com.
PROCEDURES FOR CONTACTING DIRECTORS
The Company has adopted a procedure by which shareholders may send
communications to one or more directors by writing to such director(s) or to the
whole Board, care of the Corporate Secretary, SL Industries, Inc., 520
Fellowship Road, Suite A-114, Mount Laurel, New Jersey 08054. Any such
communications will be promptly distributed by the Secretary to such individual
director(s) or to all directors if addressed to the whole Board.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of its equity
securities, to file reports of ownership and changes in ownership (typically,
Forms 3, 4 and/or 5) of such equity securities with the SEC and the AMEX. Such
entities are also required by SEC regulations to furnish the Company with copies
of all such Section 16(a) reports.
Based solely on a review of Forms 3 and 4 and amendments thereto furnished
to the Company and written representations that no Form 5 or amendments thereto
were required, the Company believes that during the fiscal year ended December
31, 2007, its directors and officers, and greater than 10% beneficial owners,
have complied with all Section 16(a) filing requirements except for (a) Mr.
Baumgardner's inadvertent late filing of thee Form 4s, reporting 12
transactions, (b) Mr. Nuzzo's
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inadvertent late filing of one Form 5, reporting one transaction and (c) Mr.
Taylor's inadvertent late filing of one Form 5, reporting one transaction.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
JAMES C. TAYLOR has served as Chief Executive Officer and President of the
Company since August 10, 2005. Mr. Taylor previously served as Executive Vice
President and Chief Operating Officer of the Company since January 2004, as
President of the Company's Power Electronics Group since August 2002, and as
President of the Company's subsidiary, Teal Electronics Corp., since January
2000. From September 1997 to December 1999, Mr. Taylor was President of
Transicoil, a division of Horizon Aerospace, LLC, a privately held company
specializing in military, aerospace, and medical motors.
DAVID R. NUZZO has served as Vice President and Chief Financial Officer and
Secretary since December 1997. Mr. Nuzzo has served as Treasurer since January
2001.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Common Stock, as of March 28, 2008 (except as otherwise noted), by: (i) each
person or entity (including such person's or entity's address) who is known by
the Company to own beneficially more than five percent of the Common Stock; (ii)
each of the Company's directors and nominees for director who beneficially owns
shares of Common Stock; (iii) each Named Executive Officer (as defined under the
Executive Compensation section of this Proxy Statement) who beneficially owns
shares of Common Stock; and (iv) all executive officers and directors as a
group. The information presented in the table is based upon the most recent
filings with the SEC by such persons or upon information otherwise provided by
such persons to the Company. Unless otherwise indicated, the address for all of
the executive officers, directors and shareholders named below is c/o SL
Industries, Inc., 520 Fellowship Road, Suite A-114, Mount Laurel, New Jersey
08054.
Number of Shares
Name of Beneficial Owner Beneficially Owned(1) Percentage Owned(2)
------------------------ --------------------- -------------------
The Gabelli Funds 1,222,783(3) 20.9%
One Corporate Center
Rye, NY 10580-1435
Steel Partners II, L.P. 1,608,550(4) 27.5%
590 Madison Avenue
32nd Floor
New York, NY 10022
Warren G. Lichtenstein 1,618,850(4)(5) 27.6%
Glen M. Kassan 0(4) *
Mark E. Schwarz 243,473(6) 4.1%
J. Dwane Baumgardner 107,595(7) 1.8%
David R. Nuzzo 47,838(8) *
James C. Taylor 61,710(9) 1.0%
9
Number of Shares
Name of Beneficial Owner Beneficially Owned(1) Percentage Owned(2)
------------------------ --------------------- -------------------
Avrum Gray 39,578(10) *
James R. Henderson 20,824(4) *
James A. Risher 0 *
All Directors and Executive
Officers as a Group 2,139,868(11) 35.3%
* Less than one percent (1%)
(1) Beneficial ownership is determined in accordance with the rules of the SEC.
Under such rules, shares are deemed to be beneficially owned by a person or
entity if such person or entity has or shares the power to vote or dispose
of the shares, whether or not such person or entity has any economic
interest in such shares. Except as otherwise indicated, and subject to
community property laws where applicable, the persons and entities named in
the table above have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them. Shares of
Common Stock subject to options or warrants currently exercisable or
exercisable within 60 days are deemed outstanding for purposes of computing
the percentage ownership of the person or entity holding such option or
warrant, but are not deemed outstanding for purposes of computing the
percentage ownership of any other person or entity.
(2) Based upon 5,856,746 shares outstanding as of March 28, 2008.
(3) Based upon a Schedule 13D/A Amendment No. 30 filed on September 12, 2007
with the SEC by GGCP, Inc. formerly known as Gabelli Group Capital
Partners, Inc. ("GGCP"), GAMCO Investors, Inc. formerly known as Gabelli
Asset Management Inc. ("GBL"), Gabelli Funds, LLC ("Gabelli Funds"), GAMCO
Asset Management Inc. formerly known as GAMCO Investors, Inc. ("GAMCO"),
Gabelli Advisers, Inc. ("Gabelli Advisers"), Gabelli Securities, Inc.
("GSI"), Gabelli & Company, Inc. ("Gabelli & Company"), MJG Associates,
Inc. ("MJG Associates"), Gabelli Foundation, Inc. ("Foundation"), Mario
Gabelli, and LICT Corporation ("LICT"). GGCP makes investments for its own
account and is the parent company of GBL. GBL, a public company listed on
the New York Stock Exchange, is the parent company for a variety of
companies engaged in the securities business, including those named below.
GAMCO, a wholly-owned subsidiary of GBL, is an investment adviser
registered under the Investment Advisers Act of 1940, as amended ("Advisers
Act"). GAMCO is an investment manager providing discretionary managed
account services for employee benefit plans, private investors, endowments,
foundations and others. GSI, a majority-owned subsidiary of GBL, is an
investment adviser registered under the Advisers Act and serves as a
general partner or investment manager to limited partnerships and offshore
investment companies. As a part of its business, GSI may purchase or sell
securities for its own account.
Gabelli & Company, a wholly-owned subsidiary of GSI, is a broker-dealer
registered under the Exchange Act, which as a part of its business
regularly purchases and sells securities for its own account. Gabelli
Funds, a wholly-owned subsidiary of GBL, is a limited liability company.
Gabelli Funds is an investment adviser registered under the Advisers Act
which presently provides discretionary managed account services for various
registered investment companies. Gabelli Advisers, a subsidiary of GBL, is
an investment adviser which provides discretionary advisory services to The
GAMCO Westwood Mighty Mites Fund, The GAMCO Westwood
10
Income Fund and The GAMCO Westwood Small Cap Fund. MJG Associates provides
advisory services to private investment partnerships and offshore funds.
Mario Gabelli is the sole shareholder, director and employee of MJG
Associates. MJG Associates is the Investment Manager of Gabelli
International Limited, Gabelli International II Limited, Gabelli
Performance Partnership and Gabelli Fund, LDC. The Foundation is a private
foundation. Mario Gabelli is the President, a Trustee and the Investment
Manager of the Foundation. LICT is a holding company with operating
subsidiaries engaged primarily in the rural telephone industry. LICT
actively pursues new business ventures and acquisitions. LICT makes
investments in marketable securities to preserve capital and maintain
liquidity for financing their business activities and acquisitions and are
not engaged in the business of investing, reinvesting, or trading in
securities. Mario Gabelli is a director and substantial shareholder of
LICT. Mario Gabelli is the majority shareholder and Chief Executive Officer
of GGCP and Chairman and Chief Executive Officer of GBL. GGCP is the
majority shareholder of GBL. GBL, in turn, is the sole stockholder of
GAMCO. GBL is also the majority stockholder of GSI and the largest
shareholder of Gabelli Advisers. Gabelli & Company is a wholly-owned
subsidiary of GSI.
Includes the following shares deemed to be owned beneficially by the
following affiliates: 1,039,683 shares held by GAMCO; 65,000 shares held by
MJG Associates; 95,000 shares held by Gabelli Funds; 13,600 shares held by
Gabelli Advisors; 2,000 shares held by Foundation and 7,500 shares held by
GSI. The foregoing persons do not admit to constituting a group within the
meaning of Section 13(d) of the Exchange Act. Mario Gabelli is deemed to
have beneficial ownership of the securities owned beneficially by each of
the foregoing persons. GSI is deemed to have beneficial ownership of the
securities owned beneficially by Gabelli & Company. GBL and GGCP are deemed
to have beneficial ownership of the securities owned beneficially by each
of the foregoing persons other than Mario Gabelli and the Foundation.
GGCP, GBL, GAMCO, and Gabelli & Company are New York corporations and GSI
and Gabelli Advisers are Delaware corporations, each having its principal
business office at One Corporate Center, Rye, New York 10580. Gabelli Funds
is a New York limited liability company having its principal business
office at One Corporate Center, Rye, New York 10580. MJG Associates is a
Connecticut corporation having its principal business office at 140
Greenwich Avenue, Greenwich, CT 06830. The Foundation is a Nevada
corporation having its principal offices at 165 West Liberty Street, Reno,
Nevada 89501. Interactive is a Delaware corporation having its principal
place of business at 401 Theodore Fremd Avenue, Rye, New York 10580.
(4) Based upon a Schedule 13D/A Amendment No. 17 filed jointly on December 31,
2007 with the SEC by Mr. Lichtenstein, Mr. Kassan and Mr. Henderson and
Steel Partners II, L.P., a Delaware limited partnership ("Steel Partners
II"), Steel Partners II owns 1,608,550 shares of the Common Stock and Steel
Partners II GP LLC, a Delaware limited liability company ("Steel GP LLC"),
Steel Partners II Master Fund L.P., a Cayman Islands exempted limited
partnership ("Steel Master"), Steel Partners LLC, a Delaware limited
liability company ("Partners LLC") and Warren G. Lichtenstein may be deemed
to beneficially own such shares. Steel Master is the sole limited partner
of Steel Partners II. Steel GP LLC is the general partner of Steel Partners
II and Steel Master. Partners LLC is the investment manager of Steel
Partners II and Steel Master. Warren G. Lichtenstein is the manager of
Partners LLC and the managing member of Steel GP LLC. By virtue of his
positions with Steel GP LLC and Partners LLC, Mr. Lichtenstein has the
power to vote and dispose of the 1,608,550 shares of the Common Stock owned
by Steel Partners II. In such filing Mr. Kassan reports that he
beneficially owns no shares of Common Stock and Mr. Henderson reports that
he beneficially owns the right to acquire 20,824 shares at any time upon
exercise of stock options.
11
(5) Based upon a Schedule 13D/A Amendment No. 17 filed jointly on December 31,
2007 with the SEC by Mr. Lichtenstein, Mr. Kassan and Mr. Henderson and
Steel Partners II, Mr. Lichtenstein owns 10,300 shares of the Common Stock.
By virtue of his positions with Steel GP LLC and Partners LLC, Mr.
Lichtenstein also has the power to vote and dispose of the 1,608,550 shares
of the Common Stock owned by Steel Partners II.
(6) Includes 217,350 shares that Mr. Schwarz has the power to vote and dispose,
by virtue of his position as Managing Member of Newcastle Capital Group,
L.L.C., which is the general partner of Newcastle Capital Management, L.P.,
which is the general partner of Newcastle Partners, L.P. Also includes
26,123 shares that Mr. Schwarz has the right to acquire at any time upon
exercise of stock options.
(7) Includes 51,846 shares owned by Mr. Baumgardner and 55,749 shares that Mr.
Baumgardner has the right to acquire at any time upon exercise of stock
options.
(8) Includes 4,500 shares owned by Mr. Nuzzo, 6,338 shares beneficially owned
by Mr. Nuzzo as a participant in the Company sponsored 401(k) plan, and
37,000 shares that Mr. Nuzzo has the right to acquire at any time upon
exercise of stock options.
(9) Includes 12,300 shares owned directly by Mr. Taylor, 100 shares owned
indirectly by Mr. Taylor through a family member, 2,310 shares beneficially
owned by Mr. Taylor as a participant in the Company sponsored 401(k) plan,
and 47,000 shares that Mr. Taylor has the right to acquire at any time upon
exercise of stock options.
(10) Includes 3,500 shares held by Mr. Gray's Individual Retirement Account,
13,400 shares held by 1993 GF Limited Partnership, in which the general
partner is a corporation owned solely by Mr. Gray, and 6,800 shares held by
AVG Limited Partnership, in which Mr. Gray is a general partner. Also
includes 2,500 shares held by JYG Limited Partnership, in which Mr. Gray's
spouse is a general partner, and 13,378 shares that Mr. Gray has the right
to acquire at any time upon exercise of stock options. Except for the
shares held in his Individual Retirement Account and by JYG Limited
Partnership, Mr. Gray disclaims beneficial ownership of these shares.
(11) Includes 200,074 shares that directors and executive officers have the
right to acquire, at any time, upon the exercise of nonqualified and
incentive stock options granted by the Company.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
OVERVIEW
This compensation discussion and analysis describes the material elements
of compensation awarded to, earned by or paid to each of the Company's named
executive officers who served during the fiscal year ended December 31, 2007.
This compensation discussion primarily focuses on the information contained in
the following tables and related footnotes and narrative for the last completed
fiscal year, but also describes compensation actions taken before or after the
last completed fiscal year to the extent that it enhances the understanding of
the executive compensation disclosure. The Compensation Committee currently
oversees the design and administration of the Company's executive compensation
program.
12
The Company's current executive compensation program includes the following
principal components: (i) base salary, (ii) cash bonus incentive provided
through a short-term incentive plan ("STIP"), and a long-term incentive plan
("LTIP"), and (iii) perquisites and other compensation. In addition, certain of
the Company's named executive officers still have unexercised options to
purchase shares of Common Stock that were granted under the 1991 Long Term
Incentive Plan, which plan terminated pursuant to its terms in 2001, although
options granted under the plan remain outstanding pursuant to their terms. These
outstanding options are detailed below in the "Outstanding Equity Awards at
Fiscal Year- End Table."
EXECUTIVE COMPENSATION OBJECTIVES
The Company's compensation philosophy aims to balance short-term
performance of executives with the achievement of long-range strategic goals
resulting in continuously improving shareholder value and to engender and
preserve a sense of fairness and equity among employees, shareholders, and
customers. In keeping with that philosophy, the objective of the Company's
executive compensation program is to:
- link a significant portion of annual compensation directly to
operating performance;
- promote achievement of the Company's long-term strategic goals and
objectives;
- align the interest of Company employees with long-term shareholder
interest; and
- attract, retain, and motivate executives critical to the Company's
long-term success.
To achieve these objectives, compensation programs have been designed to
create a correlation between the financial success of the executive and the
shareholders by providing compensation that will support the achievement of the
Company's financial goals while attracting and retaining talented executives and
rewarding superior performance. The compensation program provides both long and
short-term incentives that the Compensation Committee believes align the
interests of executives and shareholders and reward executives for value
delivered to shareholders and for building value within the Company.
DETERMINATION OF COMPENSATION AWARDS
The Compensation Committee has the primary authority to oversee general
compensation policies for the Company's employees and is charged with reviewing
and approving compensation packages annually for the Company's named executive
officers. In performing this function, the Compensation Committee reviews (a)
executive compensation surveys and compensation levels of executive officers of
companies in competing businesses and in the Company's geographic markets and
(b) the recommendations of Mr. Taylor, the Company's Chief Executive Officer and
President. From time to time, the Committee engages independent compensation
consultants and others regarding compensation matters.
No specific weight or relative importance was assigned to the various
qualitative factors and compensation information considered by the Compensation
Committee. Accordingly, the Company's compensation policies and practices may be
deemed subjective, within an overall published framework based on both the
financial and non-financial factors.
TIMING OF COMPENSATION
Compensation, including salary base adjustments, incentive plan
eligibility, incentive plan goal specifications and incentive plan payments, for
the Company's named executive officers are reviewed annually, usually in the
first quarter.
13
ELEMENTS OF COMPENSATION
The principal elements of the Company's executive compensation are:
- base salary;
- performance-based incentives;
i. short-term incentives
ii. long-term incentives
- perquisites and other compensation.
BASE SALARIES
Base salary is used to recognize the experience, skills, knowledge and
responsibilities required of all the Company's employees, including its named
executive officers. When establishing base salaries for 2007, the Compensation
Committee considered a number of factors, including the seniority of the
individual, the functional role of the position, the level of the individual's
responsibility, the ability to replace the individual, the base salary of the
individual at his/her prior employment and the number of well qualified
candidates to assume the individual's role. Generally, the Compensation
Committee believes that executive base salaries should be targeted near the
median of the range of salaries for executives in similar positions at
comparable companies. Base salary levels of executive officers are reviewed
annually by the Compensation Committee.
PERFORMANCE-BASED INCENTIVES
2007 Bonus Plan
The 2007 Bonus Plan provides incentives to officers and members of
management of the Company and its subsidiaries, including certain of the
Company's executive officers, in the form of cash bonus payments for achieving
certain performance goals established for them. Participants in the 2007 Bonus
Plan who are named executive officers of the Company include James C. Taylor,
President and Chief Executive Officer of the Company, and David R. Nuzzo, the
Vice President and Chief Financial Officer of the Company.
The Compensation Committee established two components for the 2007 Bonus
Plan. The first component is a short-term incentive plan and the second
component is a long-term incentive plan. The structure of the 2007 Bonus Plan
was designed to provide short-term incentives to participants for achieving
annual targets, while also motivating and rewarding eligible participants for
achieving longer-term growth goals.
a. 2007 Short-Term Incentive Plan Awards
The short-term incentive plan component of the 2007 Bonus Plan (the "2007
STIP") consists of two components. The first component is based on the
achievement of return on invested capital ("ROIC") objectives and the second
component is based on the achievement of pre-determined individual objectives.
Based on the determination of the objectives under the two components, the
maximum percentage of base salary that may be earned by a participant ranges
from 20% to 45% of his or her base salary, but may exceed such range in the
event that ROIC exceeds the Company's targets. Bonuses earned under the 2007
STIP are paid in the first fiscal quarter of 2008. No bonuses are paid under the
2007 STIP if either component is below a predetermined threshold.
14
For the fiscal year ended December 31, 2007, under the 2007 STIP, Mr.
Taylor earned a bonus payment of $151,819 and Mr. Nuzzo earned a bonus payment
of $80,871, which payments were made in March 2008. These bonus payments are
reflected in the "Non-Equity Incentive Plan Compensation" of the Summary
Compensation Table.
b. 2007 Long-Term Incentive Plan Awards
The Company maintains a long term incentive plan based on the achievement
of certain sales targets and ROIC targets over a three year time period. An
employee must be employed on the date the Compensation Committee approves
bonuses for the last year of the three year period in order to be eligible to
receive a payment under a long term incentive plan, unless otherwise determined
at the absolute discretion of the Compensation Committee. The long-term
incentive plan component of the 2007 Bonus Plan (the "2007 LTIP") is based on a
combination of the achievement of certain sales targets and ROIC targets over
the three-year period ending on December 31, 2009. Based on the determination of
these objectives, the maximum percentage of base salary that may be earned by
the participants range from 10% to 55% of his or her base salary, but may exceed
such range in the event that ROIC exceeds the Company's targets. Bonuses earned
under the 2007 long term incentive plan will be paid following the conclusion of
the 2009 fiscal year. A bonus payout under the 2007 LTIP will not occur if
either the ROIC or sales component is below 80% of the respective target. The
2007 LTIP is similar to, and runs concurrently with the 2006 long term incentive
plan (the "2006 LTIP"), which covers the three-year period ending on December
31, 2008, but with different targets.
For the fiscal year ended December 31, 2007, under the 2005 long term
incentive plan ("2005 LTIP"), Mr. Taylor earned a bonus payment of $171,373 and
Mr. Nuzzo earned a bonus payment of $58,284, which payments were made in March
2008. For the fiscal year ended December 31, 2007, the Company did not make any
bonus payment to any of its executive officers under the 2006 LTIP or the 2007
LTIP.
SEVERANCE AND CHANGE IN CONTROL BENEFITS
The Company provides the opportunity for Mr. Taylor to be protected under
the severance and change in control provisions contained in a Change in Control
Agreement dated as of May 1, 2001. The Company provides this protection in order
to attract and retain an appropriate caliber of talent for his position. The
severance and change in control provisions that apply for Mr. Taylor are
summarized below in "Potential Payments upon Termination or Change-in-Control."
The Compensation Committee believes that the use of such severance and change in
control protections are an essential element of executive compensation and
assist the Company in recruiting and retaining talented executives. No other
named executive officers are protected by such provisions.
PERQUISITES AND OTHER COMPENSATION
The Company provides the opportunity for its named executive officers and
other executives to receive certain perquisites and general health and welfare
benefits. For the last completed fiscal year, the Company provided the following
personal benefits and perquisites to certain of its named executives officers:
health insurance, life and disability insurance, 401(k) plan, and car expense
reimbursement.
OTHER PAYMENTS
Options
In the past, the Compensation Committee has provided long term incentive
compensation in the form of stock options, where appropriate, as compensation
for its executive officers, including the named executive officers. These
options were granted pursuant to our 1991 Long Term Incentive Plan, which
15
plan expired in 2001 in accordance with its terms, although options granted
under the plan remain outstanding pursuant to their terms. Each option granted
under the 1991 Long Term Incentive Plan expires no later than ten (10) years
from the date the option was granted. At the present time, the Company does not
have any option plans in effect. The Company did not grant options to the named
executive officers during the fiscal years ended December 31, 2007 and December
31, 2006.
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, paid to or
earned by the following type of executive officers for the fiscal year ended
December 31, 2007: (i) individuals who served as, or acted in the capacity of,
the Company's principal executive officer for the fiscal year ended December 31,
2007; (ii) individuals who served as, or acted in the capacity of, the Company's
principal financial officer for the fiscal year ended December 31, 2007; (iii)
the Company's three most highly compensated executive officers, other than the
chief executive and chief financial officer, who were serving as executive
officers at the end of the fiscal year ended December 31, 2007 (of which there
were none); and (iv) up to two additional individuals for whom disclosure would
have been provided but for the fact that the individual was not serving as an
executive officer of the Company at the end of the fiscal year ended December
31, 2007 (of which there were none). We refer to these individuals collectively
as our named executive officers.
(g)
(a) Non-Equity (i)
Name and (c) (e) Incentive Plan All Other (j)
Principal (b) Salary Stock Awards Compensation Compensation Total
Position Year ($) ($) ($) ($) ($)
--------- ----- -------- ------------ -------------- ------------ ----------
James C. Taylor 2007 $336,000 $ 6,200(1) $151,819(2) $1,111,911(3)(4) $1,605,930
Chief Executive
Officer and 2006 $302,769 $10,765(1) $115,439(2) $ 62,251(3)(4) $ 491,224
President
David R. Nuzzo 2007 $216,000 $ 6,762(1) $ 80,871(5) $ 19,537(3)(6) $ 323,170
Vice President
and Chief 2006 $201,846 $ 6,080(1) $ 43,619(5) $ 26,690(3)(6) $ 278,235
Financial
Officer,
Treasurer and
Secretary
(1) This amount reflects the value of common stock contributed by the Company
through the Company sponsored 401(k) plan. The value of the common stock
contribution is the product of the number of shares contributed by the
Company and the weighted average price of those shares.
(2) The amount for 2007 reflects amounts paid pursuant to the short-term
incentive plan component of the 2007 Bonus Plan, but excludes a bonus
payment of $171,373, paid in March 2008 pursuant to the LTIP component of
the 2005 Bonus Plan, which was previously reported as part of Mr. Taylor's
2005 bonus. The amount for 2006 reflects amounts paid pursuant to the
short-term incentive plan component of the 2006 Bonus Plan, but excludes a
bonus payment of $24,547, paid in March 2007 pursuant to the LTIP component
of the 2004 Bonus Plan, which was previously reported as part of Mr.
Taylor's 2004 bonus.
16
(3) Includes the Company's profit sharing cash contributions and matching
401(k) contributions for each of Messrs. Taylor and Nuzzo to the Company
sponsored 401(k) plan.
(4) Includes car expense reimbursement payments in the amount of $10,439 and
premiums paid for group term life insurance for Mr. Taylor for 2007 and a
bonus in the amount of $992,272 (the "Taylor Bonus") paid to Mr. Taylor
pursuant to an agreement dated as of August 5, 2002 (the "Bonus
Agreement"). Pursuant to the terms of the Bonus Agreement, the Taylor Bonus
was equal to the product of (i) 100,000 and (ii) the amount by which the
Common Stock price exceeds $5.45. The right to receive two-thirds of the
Taylor Bonus was triggered on December 21, 2007, on which day the closing
stock price of the Common Stock was $20.334 per share. Based on this
closing price, the Taylor Bonus was equal to $992,272. One-third of the
Taylor Bonus (the product of 33,334 and the amount by which the Common
Stock price exceeds $5.45) remains unexercised. The Taylor Bonus is
reflected in the "Other Compensation" column, less amounts totaling $20,000
reported as compensation in connection with the Taylor Bonus in prior
years.
Also included in amount reported as "other compensation" is the amount by
which potential bonus payments under Mr. Taylor's Long Term Bonus
Agreement, which is detailed below in "Employment and Other Agreements,"
has increased during the fiscal year ended December 31, 2007. The amount by
which this potential bonus payment has increased is $124,800.
The amount reflected for 2006 includes $16,339 for car expense
reimbursement payments and premiums paid for group term life insurance for
Mr. Taylor for 2006. Also included is the amount by which one potential
bonus payment under the Long Term Bonus Agreement, which is detailed below
in "Employment and Other Agreements," has increased during the fiscal year
ended December 31, 2006. The amount by which this potential bonus payment
has increased is $34,300.
(5) The amount reflected for 2007 reflect amounts paid pursuant to the
short-term incentive plan component of the 2007 Bonus Plan, but excludes a
bonus payment of $58,284, paid in March 2008 pursuant to the LTIP component
of the 2005 Bonus Plan, which was previously reported as part of Mr.
Nuzzo's 2005 bonus. The amount reflected for 2006 reflect amounts paid
pursuant to the short-term incentive plan component of the 2006 Bonus Plan,
but excludes a bonus payment of $8,403, paid in March 2007 pursuant to the
LTIP component of the 2004 Bonus Plan, which was previously reported as
part of Mr. Nuzzo's 2004 bonus.
(6) The amount reflected for 2007 includes $15,179 for car expense
reimbursement payments and premiums paid for group term life insurance for
Mr. Nuzzo for 2007. The amount reflected for 2006 includes car expense
reimbursement payments in the amount of $15,078 and premiums paid for group
term life insurance for Mr. Nuzzo for 2006.
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE
The compensation paid to the named executive officers includes salary,
non-equity incentive compensation and certain other compensation detailed above.
The non-equity incentive compensation column does not included any payments
under the 2006 LTIP or 2007 LTIP because these amounts are not deemed earned
until the conclusion of the last fiscal year covered by such plans.
In 2007, salaries and bonuses accounted for approximately 98% of total
compensation for our principal executive officer and approximately 92% for the
other named executive officer.
17
GRANTS OF PLAN-BASED AWARDS
The Company made no grants of plan-based awards to any of its named
executive officers in 2007 and 2006 other than the grant of shares of common
stock contributed by the Company to the Company sponsored 401(k) plan in the
respective amounts of 397.9 shares and 435.76 shares for Messrs. Taylor and
Nuzzo in 2007 and 647.57 shares and 378.5 shares for Messrs. Taylor and Nuzzo in
2006.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS
---------------------------------------------
(B)
NUMBER OF SECURITIES (E) (F)
UNDERLYING OPTION OPTION
(A) UNEXERCISED OPTIONS EXERCISE EXPIRATION
NAME (#) EXERCISABLE PRICE ($) DATE
---- -------------------- --------- ----------
James C. Taylor
25,000 $11.1250 1/10/2010
5,000 $12.0000 8/1/2010
7,000 $12.1750 5/18/2011
10,000 $ 5.7500 9/25/2011
David R. Nuzzo
7,500 $11.1250 9/11/2008
12,500 $13.5000 9/24/2009
7,000 $12.1750 5/18/2011
10,000 $ 5.7500 9/25/2011
EMPLOYMENT AND OTHER AGREEMENTS
None of the Company's named executive officers are party to employment
agreements.
Pursuant to a Long Term Bonus Agreement dated September 1, 2005 (the "Long
Term Bonus Agreement"), Mr. Taylor will be paid a bonus (the "Bonus") upon the
first to occur of (i) the occurrence of a change in control; or (ii) the
delivery of a notice by Mr. Taylor requesting the payment of the Bonus. The
Bonus will be an amount equal to the product of (i) 50,000 and (ii) the amount
by which the Common Stock price exceeds $15.02. The Bonus will vest as follows:
20% on each of September 1, 2005, 2006, 2007, 2008 and 2009.
Upon his termination of employment with the Company for any reason, Mr.
Taylor will be entitled to receive the Bonus upon delivery of a notice for a
period of thirty (30) days following the date of termination, after which time
he will have no further right to receive the Bonus.
Assuming that payment of the Bonus was to be calculated using the closing
market price on the last day of trading in the fiscal year ended December 31,
2007, which was $20.00 per share of the Common Stock, the vested portion of the
Bonus would equal $149,400. During fiscal year ended December 31, 2007 the value
of the vested portion of the Bonus increased by $124,800. This change in the
value of the Bonus is reflected in the "Other Compensation" column in the
Summary Compensation Table.
18
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
James C. Taylor, the Company's Chief Executive Officer and President, is
party to a change in control agreement dated as of May 1, 2001 (the "Change in
Control Agreement") by and between him and the Company. Pursuant to the Change
in Control Agreement, Mr. Taylor will receive a payment equal to two times his
annual salary in the event he is terminated as Chief Executive Officer and
President without cause or he terminates such employment for good reason within
one year of a change in control of the Company or the execution of a definitive
agreement contemplating a change in control of the Company. As of December 31,
2007, this amount was equal to $672,000.
Please see the discussion of the Long Term Bonus Agreement with Mr. Taylor
detailed above.
DIRECTOR COMPENSATION
The following table summarizes compensation that the Company's directors
earned during 2007 for services as members of the Board of Directors.
(B) (H)
(A) FEES EARNED OR PAID IN CASH(1) (D) TOTAL
NAME ($) OPTION AWARDS(3) ($)
---- ------------------------------ ---------------- ------
Warren G. Lichtenstein
Chairman of the Board (2) -- (2)
Glen M. Kassan
Vice Chairman (2) -- (2)
J. Dwane Baumgardner 26,750 -- 26,750
James R. Henderson 23,000 -- 23,000
Mark E. Schwarz 28,750 -- 27,250
Avrum Gray 32,500 -- 32,500
James A. Risher 32,500 -- 32,500
(1) In fiscal 2007, directors other than the Chairman received the following
fees:
- $5,000 quarterly retainer fee for each director;
- $1,250 quarterly retainer fee for the chairman of each committee;
- $1,000 for each Board meeting attended; and
- $750 for each committee meeting attended.
(2) Neither Mr. Lichtenstein nor Mr. Kassan received direct compensation from
the Company. Mr. Lichtenstein's services as Chairman of the Board and Mr.
Kassan's Services as Vice Chairman were provided to the Company in
accordance with the provisions of a management agreement with SPL. The fee
paid to SPL by the Company was $475,000 for the 2007 fiscal year. In
addition to this fee, the Compensation Committee also approved the payment
of a bonus to SPL for the 2007 fiscal year in the amount of $500,000.
Additional detail regarding this bonus is set forth in "Certain
Relationships and Related Transactions" presented below.
(3) No option awards were granted the fiscal year ended December 31, 2007 and
the Company did not recognize, under the provisions of SFAS 123(R), any
stock-based compensation expense related to stock options previously
awarded to directors for the 2007 fiscal year. At December 31, 2007, the
aggregate number of outstanding stock option awards held by each
non-employee director, all of which are fully
19
vested, was: Mr. Lichtenstein - 0 shares; Mr. Kassan - 0 shares; Mr.
Baumgardner - 55,749 shares; Mr. Henderson - 20,824 shares; Mr. Schwarz -
26,123 shares; Mr. Gray - 13,378 shares; and Mr. Risher - 0 shares. Option
grants are discussed in Note 1 to the Company's consolidated financial
statements in its annual report on Form 10-K filed on March 28, 2008.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Risher, Schwarz and Gray served on the Compensation Committee
during the fiscal year ended December 31, 2007. None of the committee members
have ever been officers or employees of the Company, or ever had any
relationship requiring disclosure below under the caption "Certain Relationships
and Related Transactions."
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
The Company's Bylaws and Articles of Incorporation provide for
indemnification of its directors and officers to the fullest extent permitted by
Delaware law.
DIRECTORS' AND OFFICERS' INSURANCE
The Company currently maintains a directors' and officers' liability
insurance policy that provides its directors and officers with liability
coverage relating to certain potential liabilities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of certain services being provided to the Company by SPL, a
company controlled by the Chairman of the Board of the Company, Warren G.
Lichtenstein, the Compensation Committee engaged an independent firm to provide
a report and advice regarding the amount of management fees that should be
payable to SPL. These fees, other than the payment of a possible bonus, are the
only consideration for the services of the Chairman of the Board, Warren G.
Lichtenstein, the Company's Vice Chairman, Glen M. Kassan, and other assistance
from SPL.
The services provided include management and advisory services with respect
to operations, strategic planning, finance and accounting, merger, sale and
acquisition activities and other aspects of the businesses of the Company. In
consideration for such services, the fee paid to SPL by the Company was $475,000
for the 2007 fiscal year. The Compensation Committee also approved the payment
to SPL of a bonus in the amount of $500,000, in recognition of SPL's significant
contributions to the Company's success, including providing advisory and
investment banking services, the improvement in operating performance, the
reduction of indebtedness and working capital, as well as the improvement in the
Company's stock price, among other things.
Although not in writing, the Board engages in discussions regarding related
party transactions reflecting its understanding of policies and procedures,
which gives the Board the power to approve or disapprove potential related party
transactions of directors and executive officers, their immediate family members
and entities where they hold a 5% or greater beneficial ownership interest. The
Board is charged with reviewing all relevant facts and circumstances of a
related party transaction, including if the transaction is on terms comparable
to those that could be obtained in arm's length dealings with an unrelated third
party and the extent of the related party's interest in the transaction.
20
COMPENSATION COMMITTEE REPORT*
We have reviewed and discussed with management certain Executive
Compensation and Compensation Discussion and Analysis provisions to be included
in the Company's 2008 Shareholder Meeting Schedule 14A Proxy Statement (the
"Proxy Statement") filed pursuant to Section 14(a) of the Exchange Act. Based on
the reviews and discussions referred to above, we recommend to the Board of
Directors that the Executive Compensation and Compensation Discussion and
Analysis provisions referred to above be included in the Proxy Statement.
Submitted by the Compensation Committee of the Board of Directors
James A. Risher
Mark E. Schwarz
Avrum Gray
* This Compensation Committee Report is not deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement
into any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be
deemed filed under either such Acts.
21
REPORT OF THE AUDIT COMMITTEE
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. Each member of the Audit Committee meets the
criteria for being "independent" set forth under AMEX Rule P. 10,021, Sec. 121.
During the fiscal year ended December 31, 2007, the Committee met five times and
acted by written consent on one other occasion.
In discharging its responsibility for oversight of the audit process, the
Audit Committee obtained from the independent auditors, Grant Thornton LLP, a
formal written statement describing any relationships between the auditors and
the Company that might bear on the auditors' independence consistent with the
Independent Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and discussed with the auditors any relationships that might impact
the auditors' objectivity and independence and satisfied itself as to the
auditors' independence.
The Committee discussed and reviewed with the independent auditors the
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and discussed and reviewed the results of
the independent auditors' examination of the financial statements for the fiscal
year ended December 31, 2007.
The Committee reviewed the audited financial statements of the Company as
of and for the fiscal year ended December 31, 2007, with management and the
independent auditors. Management has the responsibility for preparation of the
Company's financial statements and the independent auditors have the
responsibility for examination of those statements.
Based upon the above-mentioned review and discussions with management and
the independent auditors, the Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended December 31, 2007, for filing with the SEC.
AUDIT COMMITTEE
Avrum Gray
J. Dwane Baumgardner
James A. Risher
22
ITEM 2: APPROVAL OF THE COMPANY'S 2008 INCENTIVE STOCK PLAN
As of March 31, 2008, the Board unanimously adopted a resolution declaring
it advisable to approve the adoption of the Company's 2008 Incentive Stock Plan
(the "2008 Plan"), which contains 315,000 shares of the Company's Common Stock
available for grant thereunder, subject to stockholder approval. The 2008 Plan
is intended as an incentive to retain and to attract new directors, officers,
consultants, advisors and employees, as well as to encourage a sense of
proprietorship and stimulate the active interest of such persons in the
development and financial success of the Company and its subsidiaries. A copy of
the 2008 Plan is attached hereto as Exhibit A. As of the date of this Proxy
Statement, no options to purchase shares of Common Stock or other rights have
been granted to any person under the 2008 Plan.
The benefits and amounts to be derived under the 2008 Plan are not
determinable.
DESCRIPTION OF THE 2008 PLAN
The following is a brief summary of certain provisions of the 2008 Plan,
which summary is qualified in its entirety by the actual text of the 2008 Plan
attached hereto as Exhibit A.
The Purpose of the 2008 Plan.
The purpose of the 2008 Plan is to provide additional incentive to the
directors, officers, consultants, advisors and employees of the Company who are
primarily responsible for the management and growth of the Company.
The Company intends that the 2008 Plan meet the requirements of Rule 16b-3
("Rule 16b-3") promulgated under the Exchange Act and that transactions of the
type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers
and directors of the Company pursuant to the 2008 Plan will be exempt from the
operation of Section 16(b) of the Exchange Act. Further, the 2008 Plan is
intended to satisfy the performance-based compensation exception to the
limitation on the Company's tax deductions imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") with respect to those
options for which qualification for such exception is intended.
Administration of the 2008 Plan.
The 2008 Plan is to be administered by a committee consisting of two or
more directors appointed by the Board (the "Committee"). The Committee will be
comprised solely of "non-employee directors" within the meaning of Rule 16b-3
and, "outside directors" within the meaning of Section 162(m) of the Code, which
individuals will serve at the pleasure of the Board. In the event that for any
reason the Committee is unable to act or if the Committee at the time of any
grant, award or other acquisition under the 2008 Plan does not consist of two or
more "non-employee directors," or if there is no such Committee, then the 2008
Plan will be administered by the Board, provided that grants to the Company's
Chief Executive Officer or to any of the Company's other four most highly
compensated officers that are intended to qualify as performance-based
compensation under Section 162(m) of the Code may only be granted by the
Committee so comprised of outside directors.
Subject to the other provisions of the 2008 Plan, the Committee will have
the authority, in its discretion: (i) to designate recipients of options
("Options"), stock appreciation rights ("Stock Appreciation Rights"), restricted
stock ("Restricted Stock") and other equity incentives or stock or stock based
awards ("Equity Incentives"), all of which are referred to collectively as
"Rights"; (ii) to determine the terms and conditions of each Right granted
(which need not be identical); (iii) to interpret the 2008 Plan and all Rights
granted thereunder; and (iv) to make all other determinations necessary or
advisable for the administration of the 2008 Plan.
23
Eligibility.
The persons eligible for participation in the 2008 Plan as recipients of
Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives
include directors, officers and employees of, and consultants and advisors to,
the Company or any subsidiary; provided that incentive stock options may only be
granted to employees of the Company and the subsidiaries. There are
approximately 1,750 Company and subsidiary employees all of whom are currently
eligible to participate in the 2008 Plan. In selecting participants, and
determining the number of shares covered by each Right, the Committee may
consider any factors that it deems relevant.
Shares Subject to the 2008 Plan.
Subject to the conditions outlined below, the total number of shares of the
Common Stock which may be issued pursuant to Rights granted under the 2008 Plan
may not exceed 315,000 shares.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or similar type of corporate
restructuring affecting the shares of the Common Stock, the Committee will make
an appropriate and equitable adjustment in the number and kind of shares
reserved for issuance under the 2008 Plan and in the number and exercise price
of shares subject to outstanding Options granted under the 2008 Plan, to the end
that after such event each optionee's proportionate interest will be maintained
as immediately before the occurrence of such event. The Committee will, to the
extent feasible, make such other adjustments as may be required under the tax
laws so that any incentive stock options previously granted will not be deemed
modified within the meaning of Section 424(h) of the Code. Appropriate
adjustments will also be made in the case of outstanding Stock Appreciation
Rights and Restricted Stock granted under the 2008 Plan.
Options.
An Option granted under the 2008 Plan is designated at the time of grant as
either an incentive stock option (an "ISO") or as a non-qualified stock option
(a "NQSO"). Upon the grant of an Option to purchase shares of the Common Stock,
the Committee will fix the number of shares of the Common Stock that the
optionee may purchase upon exercise of such Option and the price at which the
shares may be purchased. The purchase price of each share of the Common Stock
purchasable under an Option will be determined by the Committee at the time of
grant, but may not be less than 100% of the fair market value of such share of
the Common Stock on the date the Option is granted; provided, however, that with
respect to an optionee who, at the time an ISO is granted, owns more than 10% of
the total combined voting power of all classes of stock of the Company or of any
subsidiary, the purchase price per share under an ISO must be at least 110% of
the fair market value per share of the Common Stock on the date of grant.
Stock Appreciation Rights.
Stock Appreciation Rights will be exercisable at such time or times and
subject to such terms and conditions as determined by the Committee. Unless
otherwise provided, Stock Appreciation Rights will become immediately
exercisable and remain exercisable until expiration, cancellation or termination
of the award. Such rights may be exercised in whole or in part by giving written
notice to the Company.
Restricted Stock.
Restricted Stock may be granted under the 2008 Plan aside from, or in
association with, any other award and will be subject to certain conditions and
contain such additional terms and conditions, not inconsistent with the terms of
the 2008 Plan, as the Committee deems desirable. A grantee will have no rights
to an award of Restricted Stock unless and until such grantee accepts the award
within the period prescribed by the Committee and, if the Committee deems
desirable, makes payment to the Company in
24
cash, or by check or such other instrument as may be acceptable to the
Committee. Shares of Restricted Stock are forfeitable until the terms of the
Restricted Stock grant have been satisfied.
Other Equity Incentives or Stock Based Awards.
Subject to the provisions of the 2008 Plan, the Committee may grant Equity
Incentives (including the grant of unrestricted shares) to such key persons, in
such amounts and subject to such terms and conditions, as the Committee in its
discretion determines. Such awards may entail the transfer of actual shares of
the Common Stock to 2008 Plan participants, or payment in cash or otherwise of
amounts based on the value of shares of the Common Stock.
Term of the Rights.
The Committee, in its sole discretion, will fix the term of each Right,
provided that the maximum term of an Option will be ten years. ISOs granted to a
10% stockholder will expire not more than five years after the date of grant.
The 2008 Plan provides for the earlier expiration of Rights in the event of
certain terminations of employment of the holder.
Restrictions on Transferability.
Options and Stock Appreciation Rights granted hereunder are not
transferable and may be exercised solely by the optionee or grantee during his
lifetime or after his death by the person or persons entitled thereto under his
will or the laws of descent and distribution. The Committee, in its sole
discretion, may permit a transfer of a NQSO to (i) a trust for the benefit of
the optionee or (ii) a member of the optionee's immediate family (or a trust for
his or her benefit). Any attempt to transfer, assign, pledge or otherwise
dispose of, or to subject to execution, attachment or similar process, any
Option or Stock Appreciation Right contrary to the provisions hereof will be
void and ineffective and will give no right to the purported transferee. Shares
of Restricted Stock are not transferable until the date on which the Committee
has specified such restrictions have lapsed.
Termination of the 2008 Plan.
No Right may be granted pursuant to the 2008 Plan following May 14, 2018.
Amendments to the 2008 Plan.
The Board may at any time amend, suspend or terminate the 2008 Plan, except
that no amendment may be made that would impair the rights of any optionee or
grantee under any Right previously granted without the optionee's or grantee's
consent, and except that no amendment may be made which, without the approval of
the Company stockholders would (i) materially increase the number of shares that
may be issued under the 2008 Plan, except as permitted under the 2008 Plan; (ii)
materially increase the benefits accruing to the optionees or grantees under the
2008 Plan; (iii) materially modify the requirements as to eligibility for
participation in the 2008 Plan; (iv) decrease the exercise price of an ISO to
less than 100% of the fair market value on the date of grant thereof or the
exercise price of a NQSO to less than 100% of the fair market value on the date
of grant thereof; or (v) extend the term of any Option beyond that permitted in
the 2008 Plan.
25
FEDERAL INCOME TAX CONSEQUENCES
Incentive Options
Options that are granted under the 2008 Plan and that are intended to
qualify as ISOs must comply with the requirements of Section 422 of the Code. An
option holder is not taxed upon the grant or exercise of an ISO; however, the
difference between the fair market value of the shares on the exercise date will
be an item of adjustment for purposes of the alternative minimum tax. If an
option holder holds the shares acquired upon the exercise of an ISO for at least
two years following the date of the grant of the option and at least one year
following the exercise of the option, the option holder's gain, if any, upon a
subsequent disposition of such shares will be treated as long-term capital gain
for federal income tax purposes. The measure of the gain is the difference
between the proceeds received on disposition and the option holder's basis in
the shares (which generally would equal the exercise price). If the option
holder disposes of shares acquired pursuant to exercise of an ISO before
satisfying the one-and-two year holding periods described above, the option
holder may recognize both ordinary income and capital gain in the year of
disposition. The amount of the ordinary income will be the lesser of (i) the
amount realized on disposition less the option holder's adjusted basis in the
shares (generally the option exercise price); or (ii) the difference between the
fair market value of the shares on the exercise date and the option price. The
balance of the consideration received on such disposition will be long-term
capital gain if the shares had been held for at least one year following
exercise of the ISO.
The Company is not entitled to an income tax deduction on the grant or the
exercise of an ISO or on the option holder's disposition of the shares after
satisfying the holding period requirement described above. If the holding
periods are not satisfied, the Company will generally be entitled to an income
tax deduction in the year the option holder disposes of the shares, in an amount
equal to the ordinary income recognized by the option holder.
Nonqualified Options
In the case of a NQSO, an option holder is not taxed on the grant of such
option. Upon exercise, however, the participant recognizes ordinary income equal
to the difference between the option price and the fair market value of the
shares on the date of the exercise. The Company is generally entitled to an
income tax deduction in the year of exercise in the amount of the ordinary
income recognized by the option holder. Any gain on subsequent disposition of
the shares is long-term capital gain if the shares are held for at least one
year following the exercise. The Company does not receive an income tax
deduction for this gain.
Restricted Stock
A recipient of Restricted Stock will not have taxable income upon grant,
but will have ordinary income at the time of vesting equal to the fair market
value on the vesting date of the shares (or cash) received minus any amount paid
for the shares. A recipient of Restricted Stock may instead, however, elect to
be taxed at the time of grant.
Stock Option Appreciation Rights
No taxable income will be recognized by an option holder upon receipt of a
Stock Appreciation Right and the Company will not be entitled to a tax deduction
upon the grant of such right.
Upon the exercise of a Stock Appreciation Right, the holder will include in
taxable income, for federal income tax purposes, the fair market value of the
cash and other property received with respect to the Stock Appreciation Right
and the Company will generally be entitled to a corresponding tax deduction.
26
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE ADOPTION OF
THE COMPANY'S 2008 INCENTIVE STOCK PLAN.
ITEM 3: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board has selected Grant Thornton LLP to serve as the Company's
independent auditors. Grant Thornton LLP has served as the Company's independent
auditors since July 2002. While it is not required to do so, the Board is
submitting to shareholders for ratification the selection of Grant Thornton LLP
as the Company's independent auditors for the year ending December 31, 2008.
Such ratification of the selection of Grant Thornton LLP will require the
affirmative vote of the holders of a majority of the shares of the Common Stock
entitled to vote thereon and represented at the Meeting. The Board will
reconsider its selection should the shareholder votes evidence disapproval.
Audit Fees
The aggregate fees billed by Grant Thornton LLP for professional fees
rendered in connection with the audit of the Company's annual financial
statements and the reviews of the Company's financial statements included in the
Company's quarterly reports on Form 10-Q, including services related thereto,
were $558,689 for the year ended December 31, 2007 and $591,390 for the year
ended December 31, 2006.
Audit-Related Fees
The aggregate fees billed by Grant Thornton LLP for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company's financial statements and are not reported as "Audit Fees,"
including review of the Company's annual report on Form 10-K in connection with
the acquisition of certain businesses, planning efforts related to the review of
the Company's internal controls over financial reporting pursuant to Section 404
of the Sarbanes-Oxley Act of 2002 and consultations concerning financial
accounting and reporting matters not classified as audit, were $31,107 for the
year ended December 31, 2007, and $62,683 for the year ended December 31, 2006.
Tax Fees
The aggregate fees billed by Grant Thornton LLP for professional services
rendered for tax compliance, tax advice and tax planning were $5,706 for the
year ended December 31, 2007, and $7,870 for the year ended December 31, 2006.
The services comprising the fees reported as "Tax Fees" included tax return
preparation in various foreign jurisdictions, consultation regarding various tax
issues and support provided to management in connection with income and other
tax audits.
All Other Fees
There were no other fees billed by Grant Thornton LLP for the years ended
December 31, 2007 and December 31, 2006 for products and services, other than
those described.
Pre-approval Policies and Procedures
All audit and non-audit services to be performed by the Company's
independent accountant must be approved in advance by the Audit Committee.
Consistent with applicable law, limited amounts of services, other than audit,
review or attest services, may be approved by the Chairman of the Audit
27
Committee pursuant to authority delegated by the Audit Committee, provided each
such approved service is reported to the full Audit Committee at its next
meeting.
All of the engagements and fees for the year ended December 31, 2007 were
approved by the Audit Committee. Of the total number of hours expended on Grant
Thornton LLP's engagement to audit the Company's financial statements for the
year ended December 31, 2007, none of the hours were attributed to work
performed by persons other than permanent, full-time employees of Grant Thornton
LLP in the United States and of a member firm of Grant Thornton International in
China.
The Audit Committee considered whether the provision of non-audit services
by Grant Thornton LLP was compatible with its ability to maintain independence
from an audit standpoint and concluded that Grant Thornton LLP's independence
was not compromised.
Representatives of Grant Thornton LLP are expected to be present at the
Meeting and available to respond to appropriate questions. Such representatives
will have the opportunity to make a statement if they desire to do so.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE SELECTION
OF GRANT THORNTON LLP.
28
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next annual meeting of shareholders of the
Company, shareholder proposals for such meeting must be submitted to the Company
no later than December 15, 2008. Shareholders wishing to nominate directors or
bring a proposal before the 2009 annual meeting of shareholders (but not include
it in the Company's proxy material) must provide written notice of such
nomination or proposal to the attention of the corporate secretary, no later
than the close of business on the 60th calendar day prior to the date of the
2009 annual meeting.
Under the SEC's proxy rules, proxies solicited by the Board for the 2009
Annual Meeting may be voted at the discretion of the persons named in such
proxies (or their substitutes). Any shareholder proposal may not be included in
the Company's proxy statement if the Company does not receive notice of such
proposal on or before the deadline set forth in the preceding paragraph.
To be in proper form, a shareholders notice must include the specified
information concerning the proposal or nominee as described in the Company's
Bylaws. The Company will not consider any proposal or nomination that does not
meet the requirements of its Bylaws and the SEC for submitting a proposal or
nomination.
OTHER MATTERS
So far as now known, there is no business other than that described above
to be presented for action by the shareholders at the Meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the Meeting or any adjournment thereof, in
accordance with the discretion of the persons named therein.
ANNUAL REPORT
The Company is concurrently sending all of its shareholders of record, as
of March 28, 2008, a copy of its Annual Report for the year ended December 31,
2007. Such report contains the Company's certified consolidated financial
statements for the year ended December 31, 2007, including that of the Company's
subsidiaries.
Whether or not you intend to be present at this Meeting you are urged to
sign and return your proxy promptly.
By order of the Board of Directors,
Glen M. Kassan
Vice Chairman
Mount Laurel, New Jersey
April 14, 2008
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND ANY AMENDMENTS THERETO
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS PROVIDED WITH CERTAIN OTHER
SHAREHOLDER INFORMATION IN THE MATERIALS ACCOMPANYING THIS PROXY STATEMENT. TO
OBTAIN ADDITIONAL COPIES WITHOUT CHARGE, PLEASE WRITE TO: DAVID R. NUZZO,
SECRETARY, SL INDUSTRIES, INC., 520 FELLOWSHIP ROAD, SUITE A-114, MOUNT LAUREL,
NEW JERSEY 08054.
29
EXHIBIT A
SL INDUSTRIES, INC.
2008 INCENTIVE STOCK PLAN
1. PURPOSE OF THE PLAN.
This 2008 Incentive Stock Plan (the "Plan") is intended as an
incentive, to retain in the employ of and as directors, officers, consultants,
advisors and employees to SL Industries, Inc., a New Jersey corporation (the
"Company") and any Subsidiary of the Company, within the meaning of Section
424(f) of the United States Internal Revenue Code of 1986, as amended (the
"Code"), persons of training, experience and ability, to attract new directors,
officers, consultants, advisors and employees whose services are considered
valuable, to encourage the sense of proprietorship and to stimulate the active
interest of such persons in the development and financial success of the Company
and its Subsidiaries.
Certain options granted pursuant to the Plan may constitute incentive
stock options within the meaning of Section 422 of the Code (the "Incentive
Options") while certain other options granted pursuant to the Plan may be
nonqualified stock options (the "Nonqualified Options"). Incentive Options and
Nonqualified Options are hereinafter referred to collectively as "Options."
The Company intends that the Plan meet the requirements of Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. Further, the Plan may satisfy the performance-based
compensation exception to the limitation on the Company's tax deductions imposed
by Section 162(m) of the Code with respect to those Options for which
qualification for such exception is intended. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee") consisting
of two or more directors who are "Non-Employee Directors" (as such term is
defined in Rule 16b-3) and "Outside Directors" (as such term is defined in
Section 162(m) of the Code), which shall serve at the pleasure of the Board. The
Committee, subject to Sections 3 and 5 hereof, shall have full power and
authority to designate recipients of Options, stock appreciation rights ("Stock
Appreciation Rights"), restricted stock ("Restricted Stock") and other equity
incentives or stock or stock based awards ("Equity Incentives") and to determine
the terms and conditions of respective Option, Stock Appreciation Rights,
Restricted Stock and Equity Incentives agreements (which need not be identical)
and to interpret the provisions and supervise the administration of the Plan.
The Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options. To the extent any Option does not qualify as an Incentive
Option, it shall constitute a separate Nonqualified Option.
30
Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all Options, Stock Appreciation Rights, Restricted Stock and Equity
Incentives granted under the Plan, shall make such rules as it deems necessary
for the proper administration of the Plan, shall make all other determinations
necessary or advisable for the administration of the Plan and shall correct any
defects or supply any omission or reconcile any inconsistency in the Plan or in
any Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives
granted under the Plan in the manner and to the extent that the Committee deems
desirable to carry into effect the Plan or any Options, Stock Appreciation
Rights, Restricted Stock or Equity Incentives. The act or determination of a
majority of the Committee shall be the act or determination of the Committee and
any decision reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority at a
meeting duly held. Subject to the provisions of the Plan, any action taken or
determination made by the Committee pursuant to this and the other Sections of
the Plan shall be conclusive on all parties.
In the event that for any reason the Committee is unable to act or if
the Committee at the time of any grant, award or other acquisition under the
Plan does not consist of two or more Non-Employee Directors, or if there shall
be no such Committee, then the Plan shall be administered by the Board, and
references herein to the Committee (except in the proviso to this sentence)
shall be deemed to be references to the Board, and any such grant, award or
other acquisition may be approved or ratified in any other manner contemplated
by subparagraph (d) of Rule 16b-3; provided, however, that grants to the
Company's Chief Executive Officer or to any of the Company's other four most
highly compensated officers that are intended to qualify as performance-based
compensation under Section 162(m) of the Code may only be granted by the
Committee.
3. DESIGNATION OF OPTIONEES AND GRANTEES.
The persons eligible for participation in the Plan as recipients of
Options (the "Optionees"), Stock Appreciation Rights, Restricted Stock or Equity
Incentives (respectively, the "Grantees") shall include directors, officers and
employees of, and consultants and advisors to, the Company or any Subsidiary;
provided that Incentive Options may only be granted to employees of the Company
and the Subsidiaries. In selecting Optionees and Grantees, and in determining
the number of shares to be covered by each Option, Stock Appreciation Right,
Restricted Stock or Equity Incentive granted to Optionees or Grantees, the
Committee may consider any factors it deems relevant, including without
limitation, the office or position held by the Optionee or Grantee or the
Optionee or Grantee's relationship to the Company, the Optionee or Grantee's
degree of responsibility for and contribution to the growth and success of the
Company or any Subsidiary, the Optionee or Grantee's length of service,
promotions and potential. An Optionee or Grantee who has been granted an Option,
Stock Appreciation Right, Restricted Stock or Equity Incentive hereunder may be
granted an additional Option or Options, Stock Appreciation Right(s), Restricted
Stock or Equity Incentive(s) if the Committee shall so determine.
4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 10 hereof, a total of
315,000 shares of the Company's Common Stock, $0.20 par value per share (the
"Stock"), shall be subject to the Plan. The maximum number of shares of Stock
that may be subject to Options and Stock Appreciation Rights granted under the
Plan to any individual in any calendar year shall not exceed 315,000 and the
method of counting such shares shall conform to any requirements applicable to
performance-based compensation under Section 162(m) of the Code, if
qualification as performance-based compensation under Section 162(m) of the Code
is intended. The shares of Stock subject to the
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Plan shall consist of unissued shares, treasury shares or previously issued
shares held by any Subsidiary of the Company, and such amount of shares of Stock
shall be and is hereby reserved for such purpose. Any of such shares of Stock
that may remain unsold and that are not subject to outstanding Options at the
termination of the Plan shall cease to be reserved for the purposes of the Plan,
but until termination of the Plan the Company shall at all times reserve a
sufficient number of shares of Stock to meet the requirements of the Plan.
Should any Option, Stock Appreciation Right, Restricted Stock, or Equity
Incentives expire or be canceled prior to its exercise or vesting in full or
should the number of shares of Stock to be delivered upon the exercise or
vesting in full of an Option, Stock Appreciation Right, Restricted Stock, or
Equity Incentives be reduced for any reason, the shares of Stock theretofore
subject to such Option, Stock Appreciation Right, Restricted Stock, or Equity
Incentives may be subject to future Options under the Plan, except in the case
of an Option or Stock Appreciation Right where such reissuance is inconsistent
with the provisions of Section 162(m) of the Code where qualification as
performance-based compensation under Section 162(m) of the Code is intended.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The purchase price of each share of Stock
purchasable under an Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; provided,
however, that with respect to an Optionee who, at the time an Incentive Option
is granted, owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
of any Subsidiary, the purchase price per share of Stock under an Incentive
Option shall be at least 110% of the Fair Market Value per share of Stock on the
date of grant. The exercise price for each Option shall be subject to adjustment
as provided in Section 10 below. "Fair Market Value" means the closing price of
publicly traded shares of Stock on the business day immediately prior to the
grant on the principal securities exchange on which shares of Stock are listed
(if the shares of Stock are so listed), or on the NASDAQ Stock Market (if the
shares of Stock are regularly quoted on the NASDAQ Stock Market), or, if not so
listed or regularly quoted, the mean between the closing bid and asked prices of
publicly traded shares of Stock in the over-the-counter market, or, if such bid
and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code. Anything in
this Section 5(a) to the contrary notwithstanding, in no event shall the
purchase price of a share of Stock be less than the minimum price permitted
under the rules and policies of any national securities exchange on which the
shares of Stock are listed.
(b) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years after the date
such Option is granted and in the case of an Incentive Option granted to an
Optionee who, at the time such Incentive Option is granted, owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary, no
such Incentive Option shall be exercisable more than five years after the date
such Incentive Option is granted.
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(c) Exercisability. Subject to Section 5(e) hereof, Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee.
Upon the occurrence of a "Change in Control" (as hereinafter
defined), the Committee may accelerate the vesting and exercisability of
outstanding Options, in whole or in part, as determined by the Committee in its
sole discretion. In its sole discretion, the Committee may also determine that,
upon the occurrence of a Change in Control, each outstanding Option shall
terminate within a specified number of days after notice to the Optionee
thereunder, and each such Optionee shall receive, with respect to each share of
Company Stock subject to such Option, an amount equal to the excess of the Fair
Market Value of such shares immediately prior to such Change in Control over the
exercise price per share of such Option; such amount shall be payable in cash,
in one or more kinds of property (including the property, if any, payable in the
transaction) or a combination thereof, as the Committee shall determine in its
sole discretion.
For purposes of the Plan, a Change in Control shall be deemed to
have occurred if:
(i) a tender offer (or series of related offers) shall be made
and consummated for the ownership of 50% or more of the outstanding
voting securities of the Company, unless as a result of such tender
offer more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by
the stockholders of the Company (as of the time immediately prior to
the commencement of such offer), any employee benefit plan of the
Company or its Subsidiaries, and their affiliates;
(ii) the Company shall be merged or consolidated with another
corporation, unless as a result of such merger or consolidation more
than 50% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the
stockholders of the Company (as of the time immediately prior to such
transaction), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates;
(iii) the Company shall sell substantially all of its assets to
another corporation that is not wholly owned by the Company, unless as
a result of such sale more than 50% of such assets shall be owned in
the aggregate by the stockholders of the Company (as of the time
immediately prior to such transaction), any employee benefit plan of
the Company or its Subsidiaries and their affiliates; or
(iv) a Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by
the stockholders of the Company (as of the time immediately prior to
the first acquisition of such securities by such Person), any employee
benefit plan of the Company or its Subsidiaries, and their affiliates.
33
For purposes of this Section 5(c), ownership of voting securities
shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under
the Exchange Act. In addition, for such purposes, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall not include (A) the
Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an
offering of such securities; or (D) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company.
(d) Method of Exercise. Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, or by
check or such other instrument as may be acceptable to the Committee. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may be made at the election of the Optionee (i) in the form
of Stock owned by the Optionee (based on the Fair Market Value of the Stock on
the trading day before the Option is exercised) which is not the subject of any
pledge or security interest, (ii) in the form of shares of Stock withheld by the
Company from the shares of Stock otherwise to be received with such withheld
shares of Stock having a Fair Market Value on the date of exercise equal to the
exercise price of the Option, or (iii) by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any shares surrendered to the Company is at least equal to such
exercise price and except with respect to (ii) above, such method of payment
will not cause a disqualifying disposition of all or a portion of the Stock
received upon exercise of an Incentive Option. An Optionee shall have the right
to dividends and other rights of a stockholder with respect to shares of Stock
purchased upon exercise of an Option at such time as the Optionee (i) has given
written notice of exercise and has paid in full for such shares and (ii) has
satisfied such conditions that may be imposed by the Company with respect to the
withholding of taxes.
(e) Limit on Value of Incentive Option. The aggregate Fair Market
Value, determined as of the date the Incentive Option is granted, of Stock for
which Incentive Options are exercisable for the first time by any Optionee
during any calendar year under the Plan (and/or any other stock option plans of
the Company or any Subsidiary) shall not exceed $100,000.
(f) Incentive Option Shares. A grant of an Incentive Option under this
Plan shall provide that (a) the Optionee shall be required as a condition of the
exercise to furnish to the Company any payroll (employment) tax required to be
withheld, and (b) if the Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any share
or shares of Stock issued to him upon exercise of an Incentive Option granted
under the Plan within the two-year period commencing on the day after the date
of the grant of such Incentive Option or within a one-year period commencing on
the day after the date of transfer of the share or shares to him pursuant to the
exercise of such Incentive Option, he shall, within 10 days after such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of United States federal, state and local income tax withholding
required by law.
34
6. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights shall granted with an exercise price that is
not less than 100% of the Fair Market Value (as defined in Section 5(a) herein)
of a share of Common Stock on the date the Stock Appreciation Right is granted
and shall be exercisable at such time or times and subject to such other terms
and conditions as shall be determined by the Committee. Unless otherwise
provided, Stock Appreciation Rights shall become immediately exercisable and
shall remain exercisable until expiration, cancellation or termination of the
award. Such rights may be exercised in whole or in part by giving written notice
to the Company. Stock Appreciation Rights to the extent then exercisable may be
exercised for payment in cash, shares of Common Stock or a combination of both,
as the Committee shall deem desirable, equal to: (i) the excess of the Fair
Market Value as defined in Section 5(a) herein of a share of Common Stock on the
date of exercise over (ii) the exercise price of such Stock Appreciation Right.
7. TERMS AND CONDITIONS OF RESTRICTED STOCK.
Restricted Stock may be granted under this Plan aside from, or in
association with, any other award and shall be subject to the following
conditions and shall contain such additional terms and conditions (including
provisions relating to the acceleration of vesting of Restricted Stock upon a
Change of Control), not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
(a) Grantee rights. A Grantee shall have no rights to an award of
Restricted Stock unless and until Grantee accepts the award within the period
prescribed by the Committee and, if the Committee shall deem desirable, makes
payment to the Company in cash, or by check or such other instrument as may be
acceptable to the Committee. After acceptance and issuance of a certificate or
certificates, as provided for below, the Grantee shall have the rights of a
stockholder with respect to Restricted Stock subject to the non-transferability
and forfeiture restrictions described in section 7(d) below.
(b) Issuance of certificates. The Company shall issue in the Grantee's
name a certificate or certificates for the shares of Common Stock associated
with the award promptly after the Grantee accepts such award.
(c) Delivery of certificates. Unless otherwise provided, any
certificate or certificates issued evidencing shares of Restricted Stock shall
not be delivered to the Grantee until such shares are free of any restrictions
specified by the Committee at the time of grant.
(d) Forfeitability, Non-transferability of Restricted Stock. Shares of
Restricted Stock are forfeitable until the terms of the Restricted Stock grant
have been satisfied. Shares of Restricted Stock are not transferable until the
date on which the Committee has specified such restrictions has lapsed. Unless
otherwise provided, distributions of additional shares or property in the form
of dividends or otherwise in respect of shares of Restricted Stock shall be
subject to the same restrictions as such shares of Restricted Stock.
(e) Change of Control. Upon the occurrence of a Change in Control, the
Committee may accelerate the vesting of outstanding Restricted Stock, in whole
or in part, as determined by the Committee in its sole discretion.
35
8. OTHER EQUITY INCENTIVES OR STOCK BASED AWARDS.
The Committee may grant Equity Incentives (including the grant of
unrestricted shares) to such key persons, in such amounts and subject to such
terms and conditions, as the Committee shall in its discretion determine,
subject to the provisions of the Plan. Such awards may entail the transfer of
actual shares of Common Stock to Plan participants, or payment in cash or
otherwise of amounts based on the value of shares of Common Stock.
9. TERM OF PLAN.
No Option, Stock Appreciation Rights, Restricted Stock or Equity
Incentives shall be granted pursuant to the Plan on the date which is ten years
from the effective date of the Plan, but Options, Stock Appreciation Rights or
Equity Incentives theretofore granted may extend beyond that date.
10. CAPITAL CHANGE OF THE COMPANY.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or similar type of corporate restructuring
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event. The Committee shall, to the extent feasible, make such other
adjustments as may be required under the tax laws so that any Incentive Options
previously granted shall not be deemed modified within the meaning of Section
424(h) of the Code. Appropriate adjustments shall also be made in the case of
outstanding Stock Appreciation Rights and Restricted Stock granted under the
Plan.
11. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Company has determined that such registration is unnecessary, each person
exercising or receiving Options, Stock Appreciation Rights, Restricted Stock or
Equity Incentives under the Plan may be required by the Company to give a
representation in writing that he is acquiring the securities (if issued) for
his own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.
12. TAXES.
(a) The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options, Stock
Appreciation Rights, Restricted Stock or Equity Incentives granted under the
Plan with respect to the withholding of any taxes (including income or
employment taxes) or any other tax matters.
(b) If any Grantee, in connection with the acquisition of Restricted
Stock, makes the election permitted under section 83(b) of the Code (that is, an
election to include in gross income in the year of transfer the amounts
specified in section 83(b)), such Grantee shall notify the Company of the
election with the Internal Revenue Service pursuant to regulations issued under
the authority of Code section 83(b).
36
(c) If any Grantee shall make any disposition of shares of Stock
issued pursuant to the exercise of an Incentive Option under the circumstances
described in section 421(b) of the Code (relating to certain disqualifying
dispositions), such Grantee shall notify the Company of such disposition within
10 days hereof.
13. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on May 14, 2008; provided, however, that
if, and only if, certain options are intended to qualify as Incentive Stock
Options, the Plan must subsequently be approved by majority vote of the
Company's stockholders no later than March 31, 2009, and further, that in the
event certain Option grants hereunder are intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code,
the requirements as to shareholder approval set forth in Section 162(m) of the
Code are satisfied.
14. AMENDMENT AND TERMINATION, SECTION 409A OF THE CODE.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee or Grantee
under any Option, Stock Appreciation Right, Restricted Stock or Equity Incentive
theretofore granted without the Optionee or Grantee's consent, and except that
no amendment shall be made which, without the approval of the stockholders of
the Company would:
(a) materially increase the number of shares that may be issued under
the Plan, except as is provided in Section 10;
(b) materially increase the benefits accruing to the Optionees or
Grantees under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less than
100% of the Fair Market Value per share of Stock on the date of grant thereof or
the exercise price of a Nonqualified Option to less than 100% of the Fair Market
Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in Section
5(b).
(f) The Committee may amend the terms of any Option, Stock
Appreciation Right, Restricted Stock or Equity Incentive theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee or Grantee without the Optionee or Grantee's consent. The Committee
may also substitute new Options, Stock Appreciation Rights or Restricted Stock
for previously granted Options, Stock Appreciation Rights or Restricted Stock
including options granted under other plans applicable to the participant and
previously granted Options having higher option prices, upon such terms as the
Committee may deem appropriate.
It is the intention of the Board that the Plan comply strictly
with the provisions of Section 409A of the Code and Treasury Regulations and
other Internal Revenue Service guidance promulgated thereunder (the "Section
409A Rules) and the Committee shall exercise its discretion in granting Options,
Stock Appreciation Rights or Restricted Stock hereunder (and the terms of such
grants), accordingly. The Plan and any grant of an Option, Stock Appreciation
right or Restricted Stock hereunder may be amended from time to time (without,
in
37
the case of an Award, the consent of the Participant) as may be necessary or
appropriate to comply with the Section 409A Rules.
15. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options, Stock Appreciation
Rights, Restricted Stock and Equity Incentives hereunder, and the obligation of
the Company to sell and deliver shares under such Options, Stock Appreciation
Rights, Restricted Stock and Equity Incentives shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies, national securities exchanges and interdealer quotation
systems as may be required.
16. GENERAL PROVISIONS.
(a) Certificates. All certificates for shares of Stock delivered under
the Plan shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, or other securities
commission having jurisdiction, any applicable Federal or state securities law,
any stock exchange or interdealer quotation system upon which the Stock is then
listed or traded and the Committee may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions.
(b) Employment Matters. The adoption of the Plan shall not confer upon
any Optionee or Grantee of the Company or any Subsidiary any right to continued
employment or, in the case of an Optionee or Grantee who is a director,
continued service as a director, with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or any
Subsidiary to terminate the employment of any of its employees, the service of
any of its directors or the retention of any of its consultants or advisors at
any time.
(c) Limitation of Liability. No member of the Board or the Committee,
or any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) Registration of Stock. Notwithstanding any other provision in the
Plan, no Option may be exercised unless and until the Stock to be issued upon
the exercise thereof has been registered under the Securities Act and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration in the United States. The Company shall not be under any
obligation to register under applicable federal or state securities laws any
Stock to be issued upon the exercise of an Option granted hereunder in order to
permit the exercise of an Option and the issuance and sale of the Stock subject
to such Option, although the Company may in its sole discretion register such
Stock at such time as the Company shall determine. If the Company chooses to
comply with such an exemption from registration, the Stock issued under the Plan
may, at the direction of the Committee, bear an appropriate restrictive legend
restricting the transfer or pledge of the Stock represented thereby, and the
Committee may also give appropriate stop transfer instructions with respect to
such Stock to the Company's transfer agent.
38
(e) Non-transferability. Options and Stock Appreciation Rights granted
hereunder are not transferable and may be exercised solely by the Optionee or
Grantee during his lifetime or after his death by the person or persons entitled
thereto under his will or the laws of descent and distribution. The Committee,
in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a
trust for the benefit of the Optionee or (ii) a member of the Optionee's
immediate family (or a trust for his or her benefit). Any attempt to transfer,
assign, pledge or otherwise dispose of, or to subject to execution, attachment
or similar process, any Option or Stock Appreciation Right contrary to the
provisions hereof shall be void and ineffective and shall give no right to the
purported transferee.
(f) No rights as a Stockholder. No Optionee or Grantee (or other
person having the right to exercise such award) shall have any of the rights of
a stockholder of the Company with respect to shares subject to such award until
the issuance of a stock certificate to such person for such shares. Except as
otherwise provided herein, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued.
(g) Termination by Death. Unless otherwise determined by the
Committee, if any Optionee or Grantee's employment with or service to the
Company or any Subsidiary terminates by reason of death, the Option or Stock
Appreciation Right may thereafter be exercised, to the extent then exercisable
(or on such accelerated basis as the Committee shall determine at or after
grant), by the legal representative of the estate or by the legatee of the
Optionee or Grantee under the will of the Optionee or Grantee, for a period of
one year after the date of such death or until the expiration of the stated term
of such Option or Stock Appreciation Right as provided under the Plan, whichever
period is shorter.
(h) Termination by Reason of Disability. Unless otherwise determined
by the Committee, if any Optionee or Grantee's employment with or service to the
Company or any Subsidiary terminates by reason of total and permanent
disability, any Option or Stock Appreciation Right held by such Optionee or
Grantee may thereafter be exercised, to the extent it was exercisable at the
time of termination due to Disability (or on such accelerated basis as the
Committee shall determine at or after grant), but may not be exercised after 60
days after the date of such termination of employment or service or the
expiration of the stated term of such Option or Stock Appreciation Right,
whichever period is shorter; provided, however, that, if the Optionee or Grantee
dies within such 60-day period, any unexercised Option or Stock Appreciation
Right held by such Optionee or Grantee shall thereafter be exercisable to the
extent to which it was exercisable at the time of death for a period of one year
after the date of such death or for the stated term of such Option or Stock
Appreciation Right, whichever period is shorter.
(i) Termination by Reason of Retirement. Unless otherwise determined
by the Committee, if any Optionee or Grantee's employment with or service to the
Company or any Subsidiary terminates by reason of Normal or Early Retirement (as
such terms are defined below), any Option or Stock Appreciation Right held by
such Optionee or Grantee may thereafter be exercised to the extent it was
exercisable at the time of such Retirement (or on such accelerated basis as the
Committee shall determine at or after grant), but may not be exercised after 60
days after the date of such termination of employment or service or the
expiration of the stated term of such Option or Stock Appreciation Right,
whichever period is shorter; provided, however, that, if the Optionee or Grantee
dies within such 60-day period, any unexercised Option or Stock Appreciation
Right held by such Optionee or Grantee shall thereafter be exercisable, to the
extent to
39
which it was exercisable at the time of death, for a period of one year after
the date of such death or for the stated term of such Option or Stock
Appreciation Right, whichever period is shorter.
For purposes of this paragraph (i), "Normal Retirement" shall
mean retirement from active employment with the Company or any Subsidiary on or
after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65, and "Early
Retirement" shall mean retirement from active employment with the Company or any
Subsidiary pursuant to the early retirement provisions of the applicable Company
or Subsidiary pension plan or if no such pension plan, age 55.
(j) Other Termination. Unless otherwise determined by the Committee,
if any Optionee or Grantee's employment with or service to the Company or any
Subsidiary terminates for any reason other than death, Disability or Normal or
Early Retirement, the Option or Stock Appreciation Right shall thereupon
terminate, except that the portion of any Option or Stock Appreciation Right
that was exercisable on the date of such termination of employment or service
may be exercised for the lesser of 30 days after the date of termination or the
balance of such Option or Stock Appreciation Right's term if the Optionee or
Grantee's employment or service with the Company or any Subsidiary is terminated
by the Company or such Subsidiary without cause or for good reason by the
Optionee or Grantee (the determination as to whether termination was for cause
or for good reason to be made by the Committee). The transfer of an Optionee or
Grantee from the employ of or service to the Company to the employ of or service
to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be
deemed to constitute a termination of employment or service for purposes of the
Plan.
SL INDUSTRIES, INC.
March 31, 2008
40
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SL INDUSTRIES, INC.
Proxy -- Annual Meeting of Shareholders
May 14, 2008
The undersigned, a shareholder of SL Industries, Inc., a New Jersey
corporation (the "Company"), does hereby appoint Glen M. Kassan (with full power
to act alone), the true and lawful attorney and proxy with full power of
substitution, for and in the name, place and stead of the undersigned, to vote
all of the shares of Common Stock of the Company that the undersigned would be
entitled to vote if personally present at the 2008 Annual Meeting of
Stockholders of the Company to be held at Olshan Grundman Frome Rosenzweig &
Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, New York 10022
May 14, 2008, at 1:00 P.M., Eastern Time, or at any adjournment or postponements
thereof.
The undersigned hereby revokes any proxy or proxies heretofore given
and acknowledges receipt of a copy of the Notice of Annual Meeting and Proxy
Statement, both dated April 14, 2008, and a copy of the Company's Annual Report
for the year ended December 31, 2007.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREIN GIVEN. UNLESS
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE DIRECTORS, TO APPROVE
THE 2008 INCENTIVE STOCK PLAN AND TO RATIFY THE APPOINTMENT OF GRANT THORNTON
LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
CONTINUED TO BE COMPLETED, SIGNED
AND DATED ON THE REVERSE SIDE
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 1, 2 AND 3
1. ELECTION OF DIRECTOR NOMINEES
GLEN M. KASSAN MARK E. SCHWARZ
J. DWANE BAUMGARDNER AVRUM GRAY
JAMES R. HENDERSON JAMES A. RISHER
JOHN H. MCNAMARA, JR.
[ ] For the election as directors for the ensuing year of all nominees
listed above. (TO WITHHOLD AUTHORITY TO VOTE FOR ANY SPECIFIC
NOMINEES, CHECK THE FORGOING BOX AND CLEARLY STRIKE OUT OR LINE
THROUGH WITH DARK INK SUCH NOMINEE'S NAME IN THE LIST ABOVE.)
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE.
2. [ ] APPROVAL OF 2008 INCENTIVE STOCK PLAN
3. RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
2008.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. DISCRETIONARY AUTHORITY: To vote with discretionary authority with respect
to all other matters that may come before the Meeting and any adjournment
of postponement thereof.
NOTE: Your signature should appear the same as your name appears hereon. In
signing as attorney, executor, administrator, trustee or guardian, please
indicate the capacity in which signing. When signing as joint tenants, all
parties in the joint tenancy must sign. When a proxy is given by a corporation,
it should be signed by an authorized officer and the corporate seal affixed. No
postage is required if mailed in the United States.
Signature: Date
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Signature: Date
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