A. Schulman Inc. DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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A. Schulman, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1) |
Title of each class of securities to which
transaction applies:
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(2) |
Aggregate number of securities to which
transaction applies:
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(3) |
Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) |
Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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(1) |
Amount Previously Paid:
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(2) |
Form, Schedule or Registration Statement No.:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders
of A. Schulman, Inc. (the Corporation) will be held
at The Hilton Inn West, 3180 West Market Street, Akron,
Ohio, on Thursday, December 8, 2005 at 10:00 A.M.,
local time, for the purpose of considering and acting upon:
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The election of three (3) Class I Directors for a
three-year term expiring in 2008; |
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The amendment of the Corporations Restated Certificate of
Incorporation, as amended, by deleting Article Seventeenth; |
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The ratification of the selection of PricewaterhouseCoopers LLP
as independent registered public accountants for the fiscal year
ending August 31, 2006; and |
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4. |
The transaction of any other business as may properly come
before the meeting and any adjournments thereof. |
Stockholders of record at the close of business on
October 19, 2005 are entitled to notice of and to vote at
the Annual Meeting and any adjournments thereof.
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By order of the Board of Directors |
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Gary J. Elek
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Secretary |
Akron, Ohio
November 9, 2005
Your vote is important. Stockholders are requested to
complete, date, sign and return the enclosed proxy in the
envelope provided, which requires no postage if mailed in the
United States.
IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER
DOCUMENTS
The Securities and Exchange Commission permits companies to send
a single set of annual disclosure documents to any household at
which two or more stockholders reside, unless contrary
instructions have been received, but only if the company
provides advance notice and follows certain procedures. In such
cases, such stockholders continue to receive a separate notice
of the meeting and proxy card. This householding
process reduces the volume of duplicate information and reduces
printing and mailing expenses. A. Schulman, Inc. (the
Corporation) has not instituted householding for
stockholders of record; however, a limited number of brokerage
firms may have instituted householding for beneficial owners of
the Corporations shares of common stock held through such
brokerage firms. If your family has multiple accounts holding
shares of common stock of the Corporation, you already may have
received householding notification from your broker. Please
contact your broker directly if you have any questions or
require additional copies of the annual disclosure documents.
The broker will arrange for delivery of a separate copy of this
Proxy Statement or the Corporations Annual Report promptly
upon your written or oral request. You may decide at any time to
revoke your decision to household, and thereby receive multiple
copies.
TABLE OF CONTENTS
3550 West Market Street
Akron, Ohio 44333
PROXY STATEMENT
November 9, 2005
The accompanying proxy is solicited by the Board of Directors of
A. Schulman, Inc. (the Corporation) for use at the
Annual Meeting of Stockholders to be held on December 8,
2005, and any adjournments thereof.
Stockholders of record at the close of business on
October 19, 2005 (the record date) will be entitled to vote
at the Annual Meeting. On that date the Corporation had issued
and outstanding 30,719,063 shares of Common Stock,
$1.00 par value. Each such share is entitled to one vote on
all matters properly coming before the Annual Meeting. At least
15,359,532 shares of Common Stock of the Corporation must
be represented at the meeting in person or by proxy in order to
constitute a quorum for the transaction of business.
This Proxy Statement and the accompanying form of proxy were
first mailed to stockholders on or about November 9, 2005.
PROPOSAL 1 ELECTION OF DIRECTORS
In accordance with the provisions of the By-Laws of the
Corporation and the Restated Certificate of Incorporation, as
amended, of the Corporation (the Certificate of
Incorporation), the Board of Directors has fixed the
number of Directors at twelve. The Board of Directors expanded
the number of Directors from ten to twelve in connection with an
agreement dated as of October 21, 2005 (the
Agreement) entered into by and among the Corporation
and a group of related investors (the Barington
Group), which resolved certain matters between the
Corporation and the Barington Group. For further information
relating to the Agreement and the Barington Group, see
Certain Relationships and Related Transactions herein and
the Form 8-K filed by the Corporation with the Securities
and Exchange Commission on October 24, 2005. The expansion
of the Board of Directors created two vacancies. Pursuant to the
Agreement, the Board of Directors appointed James A.
Mitarotonda, a member of the Barington Group, to fill one of the
vacancies, and the Board expects to appoint an additional
Director to the other vacancy as is further described below.
Although there is currently one vacancy on the Board of
Directors, proxies cannot be voted for a greater number of
persons than the number of nominees named in this Proxy
Statement.
The Directors of the Corporation are currently divided into
three classes. Classes I and II each consist of three
Directors and Class III consists of five Directors. At the
Annual Meeting, three Directors of Class I are to be
elected to serve for three-year terms expiring in 2008 and until
their respective successors are duly elected and qualified. As
contemplated in the Agreement, the Board of Directors expects to
appoint, no later than November 21, 2005, an additional
Director to Class I who is independent of and acceptable to
both the Corporation and the Barington Group. This appointed
Director will begin serving as a Director immediately following
the 2005 Annual Meeting for a term that expires at the 2008
annual meeting of stockholders. At the
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time of such appointment, a current member of Class III of
the Board of Directors (other than Mr. Mitarotonda) will be
designated, with such Directors consent, to serve as a
Class II Director so that there will then be four Directors
in each of Class I, II and III.
Unless a stockholder requests that voting of the proxy be
withheld for any one or more of the nominees for Director in
accordance with the instructions set forth on the proxy card, it
presently is intended that shares represented by proxies in the
enclosed form will be voted for the election as Directors of the
three Class I nominees named in the table on the following
page. The Nominating and Corporate Governance Committee has
recommended, and the Board of Directors has approved, the
nomination of these nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THESE NOMINEES.
All nominees have consented to being named in this Proxy
Statement and to serve if elected. Should any nominee
subsequently decline or be unable to accept such nomination to
serve as a Director, an event that the Board of Directors does
not now expect, the persons voting the shares represented by
proxies solicited hereby may vote such shares for a reduced
number of nominees. The election of the Director nominees
requires the favorable vote of a plurality of all votes cast by
the holders of the Corporations Common Stock at a meeting
at which a quorum is present. Broker non-votes and proxies
marked Withhold Authority will not be counted toward
the election of Directors or toward the election of individual
nominees specified in the form of proxy and, thus, will have no
effect.
The following information concerning each nominee and each
Director continuing in office is based in part on information
received from the respective nominees and Directors and in part
on the Corporations records.
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First | |
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Principal Occupation During Past Five Years |
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Became | |
Name of Nominee or Director |
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and Age as of October 19, 2005 |
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Director | |
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Nominees to Serve Until 2008 Annual Meeting of Stockholders
(Class I) |
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Willard R.
Holland(1)(2)(3)(4)
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Retired; formerly, Chairman of the Board of FirstEnergy Corp.
(electric utility), 1996-1999; President and Chief Executive
Officer, FirstEnergy Corp., 1993-1999; Chairman of the Board and
Chief Executive Officer of FirstEnergy Corp.s subsidiary,
Pennsylvania Power Company, 1993-1999; Chief Operating Officer,
Ohio Edison Company, 1991-1993; Senior Vice President, Detroit
Edison Company (electric utility), 1988-1991; age 69
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1995 |
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Dr. Peggy
Miller(3)(4)
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President, South Dakota State University since January, 1998;
formerly, Senior Fellow, National Center for Higher Education
1996-1998; President, The University of Akron 1992-1996; and
Chancellor and Chief Executive Officer, Indiana University
Northwest, 1984-1992; Age 68
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1994 |
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John B.
Yasinsky(2)(3)
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Retired; formerly, Chairman and Chief Executive Officer of
Omnova Solutions, Inc. (decorative and building products and
performance chemicals) 1999-2001; Chairman, President and Chief
Executive Officer, GenCorp., Inc. (aerospace, automotive,
chemical and plastics), 1995-1999; age 66
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2000 |
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Principal Occupation During Past Five Years |
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Name of Nominee or Director |
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and Age as of October 19, 2005 |
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Director | |
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Continuing Directors Serving Until 2006 Annual Meeting of
Stockholders (Class II) |
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James S.
Marlen(2)(3)
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Chairman of the Board of Ameron International Corporation
(construction and industrial manufacturing) since 1995;
President and Chief Executive Officer of Ameron International
Corporation since 1993; formerly, Vice President, GenCorp., Inc.
(aerospace, automotive, chemical and plastics) and President,
GenCorp. Polymer Products, a subsidiary of GenCorp., Inc.,
1988-1993; age 64
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1995 |
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Ernest J.
Novak, Jr.(2)
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Retired; formerly, Partner of Ernst & Young LLP (public
accounting), 1980-2003, including most recently, Managing
Partner of certain domestic offices, 1986-2003; age 60
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2003 |
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Robert A.
Stefanko(1)
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Chairman of the Board of the Corporation since 1991; Executive
Vice President Finance and Administration and Chief
Financial Officer of the Corporation since 1989; age 62
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1980 |
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Continuing Directors Serving Until 2007 Annual Meeting of
Stockholders (Class III) |
Terry L.
Haines(1)
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President and Chief Executive Officer of the Corporation since
1991; formerly, Chief Operating Officer of the Corporation,
1990-1991; age 59
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1990 |
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Dr. Paul Craig
Roberts(4)
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Columnist for The Washington Times since 1988 and for
Investors Business Daily since 1998; Chairman of
Institute for Political Economy since 1985; nationally
syndicated Columnist for Creators Syndicate since 1997;
formerly, Distinguished Fellow, Cato Institute, 1993-1996;
Columnist for Business Week, 1982-1998; William E. Simon
Chair in Political Economy at Center for Strategic and
International Studies, 1982-1993; and Assistant Secretary of
Treasury for Economic Policy, 1981-1982; age 66
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1992 |
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James A.
Karman(2)(4)
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Retired; formerly Vice Chairman, RPM International, Inc.
(coatings, sealants and specialty chemicals) 1999-2002; formerly
President of RPM International, Inc., 1978-1999; and Chief
Financial Officer of RPM International, Inc., 1982-1993;
age 68
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1995 |
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Principal Occupation During Past Five Years |
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and Age as of October 19, 2005 |
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Director | |
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Joseph M.
Gingo(3)(4)
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Executive Vice President, Quality Systems and Chief Technical
Officer of The Goodyear Tire & Rubber Company (tire and
rubber manufacturing) since 2003; formerly, Senior Vice
President for Technology and Global Products Planning of The
Goodyear Tire & Rubber Company, 1999-2003; Vice
President and General Manager of The Goodyear Tire &
Rubber Companys Engineered Products business unit,
1998-1999; and Vice President of The Goodyear Tire and Rubber
Companys Asia operations, 1995-1998; age 60
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2000 |
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James A
Mitarotonda(1)
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Chairman of the Board, President and Chief Executive Officer of
Barington Capital Group, L.P. (an investment firm) since 1991;
formerly, Chief Executive Officer of Dynabazaar, Inc., January
2004-December 2004, Co-Chief Executive Officer and Co-Chairman,
April 2003-May 2004, and sole Chief Executive Officer, May 2004-
October 2004, of LQ Corporation, Inc., and President, Chief
Executive Officer and a director of MM Companies, Inc. (now
known as George Foreman Enterprises, Inc.), 2001-2004;
age 51
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2005 |
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Member of Executive Committee |
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Member of Audit Committee |
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Member of Nominating and Corporate Governance Committee |
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Member of Compensation Committee |
Mr. Haines is a director of FirstMerit Corporation and
Ameron International Corporation. Mr. Holland is a director
of Davey Tree Expert Company. Mr. Karman is a director of
RPM International, Inc. Dr. Miller is a director of The
Lubrizol Corporation. Mr. Marlen is a director of Ameron
International Corporation and Parsons Corporation.
Mr. Novak is a director of BorgWarner Inc. and FirstEnergy
Corp. Dr. Roberts is a director of all 16 of the Value Line
Mutual Funds. Mr. Stefanko is a director of Davey Tree
Expert Company. Mr. Yasinsky is a director of CMS Energy
Corporation. Mr. Mitarotonda is a director of Dynabazaar,
Inc. and LQ Corporation, Inc.
Attendance at Meetings
The Board of Directors held nine meetings during the year ended
August 31, 2005. All incumbent Directors attended at least
75% of the meetings of the Board of Directors and any committees
thereof on which they served during the year. In accordance with
the Corporations Corporate Governance Guidelines for the
Board of Directors, Directors are expected to attend all
meetings of the Board of Directors (although it is understood
that, on occasion, a Director may not be able to attend a
meeting). Directors are encouraged to attend the Annual Meeting
of Stockholders. All of the members of the Board of Directors
attended the Annual Meeting of Stockholders on December 9,
2004 other than James M. Marlen. James A. Mitarotonda was not
then a member of the Board of Directors and did not attend the
Annual Meeting of Stockholders.
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Compensation of Directors
Each Director of the Corporation who is not an employee of the
Corporation receives an annual Directors fee of $29,000,
plus $1,500 for each Board or committee meeting attended.
Further, any Director serving as a Chairman of the Audit
Committee, the Compensation Committee or the Nominating and
Corporate Governance Committee receives an additional annual fee
of $8,500, $7,500 or $6,000, respectively. Each Director has the
option to defer payment of all or a specified portion of his or
her Directors fees and to receive, in lieu thereof, a
number of units equivalent to the amount to be paid, divided by
the closing price of the Corporations Common Stock on the
last business day of the prior year. At the end of a
Directors service to the Board of Directors, the units are
surrendered in exchange for a cash payment in an amount
determined by multiplying the number of units times the market
price of the Common Stock on the day before the surrender date.
Pursuant to the Corporations 2002 Equity Incentive Plan,
on February 1, 2005, each non-employee Director of the
Corporation received an award of 2,500 restricted shares of
Common Stock. The restricted stock grants vest on the fourth
anniversary after the date awarded, and the fair market value of
the restricted shares granted to each such non-employee Director
on the February 1, 2005 grant date was $45,950 (based upon
the $18.38 closing price of the Corporations Common Stock
on the date of grant).
PROPOSAL 2 AMENDMENT TO CERTIFICATE OF
INCORPORATION
On October 21, 2005 and in connection with the Agreement,
Directors in attendance at a meeting of the Board of Directors
unanimously approved an amendment to repeal
Article SEVENTEENTH in its entirety from the Certificate of
Incorporation (Article SEVENTEENTH). The
provisions of Article SEVENTEENTH are attached as
Appendix A to this Proxy Statement and incorporated herein
by reference.
Under Article SEVENTEENTH, with certain exceptions, the
affirmative vote of holders of not less than 80% of the
outstanding shares of voting stock is required to
approve a business combination of the Corporation
with any related person (as such terms are defined
in Article SEVENTEENTH). Under certain circumstances, it is
possible that the deletion of Article SEVENTEENTH may have
the effect, by reducing the stockholder vote required for
approval, of making it easier to accomplish a business
combination with a related person. Subject to certain
exceptions, a related person is a person who, together with
affiliates and associates, owns, or within three years did own,
20% or more of the Corporations voting stock.
During its deliberations with respect to the Agreement, the
Board of Directors considered the advantages and disadvantages
of the related party voting requirements in
Article SEVENTEENTH. This provision is generally intended
to encourage a person making an unsolicited bid for the
Corporation to negotiate with the Board of Directors to reach
terms that are fair and provide the best results for all
stockholders. After completing its review, and determining that
persons making an unsolicited bid for the Corporation would
still be encouraged to negotiate with the Board of Directors by
operation of Section 203 of the Delaware General
Corporation Law, the Directors in attendance at the meeting
unanimously approved the proposed amendment to repeal
Article SEVENTEENTH.
Whether or not the repeal of Article SEVENTEENTH is
approved by the stockholders, the Corporation will continue to
be subject to the business combination provisions of
Section 203 of the Delaware General Corporation Law. A
Delaware corporation may opt out of application of
Section 203 with an express provision in its certificate of
incorporation or by-laws. The Corporation has not opted
out of the provisions of Section 203. The provisions
of Section 203 could have the effect of prohibiting,
delaying or deferring the accomplishment of mergers or other
takeover or change-in-control attempts with respect to the
Corporation and, accordingly, may discourage attempts to acquire
the Corporation. To the extent that any of the provisions of
Article SEVENTEENTH currently conflict with the provisions
of Section 203, the provisions of Section 203 would
prevail.
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Subject to certain exceptions, Section 203 prohibits a
publicly-held Delaware corporation from engaging in a
business combination with an interested
stockholder for a period of three years after the date of
the transaction in which the person became an interested
stockholder unless:
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the transaction is approved by the board of directors prior to
the date the interested stockholder obtained interested
stockholder status; |
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upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the Corporations voting
stock outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned by (a) persons who are
directors and also officers and (b) employee stock plans in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or |
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on or subsequent to the date the interested stockholder obtained
interested stockholder status, the business combination is
approved by the board of directors and authorized at an annual
or special meeting of stockholders by the affirmative vote of at
least two-thirds of the outstanding voting stock that is not
owned by the interested stockholder. |
A business combination under Section 203
includes mergers, asset sales and other transactions resulting
in a financial benefit to the interested stockholder. An
interested stockholder under Section 203 means
any person who is the beneficial owner of 15% or more of the
outstanding shares of the Corporations Common Stock.
If approved by the stockholders, the Corporation will file an
amendment to the Certificate of Incorporation deleting
Article SEVENTEENTH and the proposed amendment to the
Certificate will become effective when filed with the Secretary
of State of the State of Delaware. The Corporation anticipates
that such filing will occur promptly after the proposed
amendment is authorized and approved by the stockholders.
Vote Required
The affirmative approval of a majority of the outstanding shares
of the Corporations Common Stock is required to approve
this Proposal to repeal Article SEVENTEENTH, since a
majority of Continuing Directors have approved the
Proposal. A Continuing Director means any Director
who either (a) was a member of the Board of Directors prior
to the time that any person became the beneficial owner of 20%
or more of the shares of the Corporations Common Stock, or
(b) is a successor of a Continuing Director who was
recommended to succeed a Continuing Director by a majority of
the Continuing Directors of the Board. Because no person is the
beneficial owner of more than 20% of the shares of the
Corporations Common Stock, all of the current members of
the Board of Directors are Continuing Directors. Nine of the ten
Directors then serving on the Board of Directors were present at
the meeting on October 21, 2005, and they unanimously
approved this Proposal 2. Broker non-votes and abstentions
will have the effect of a vote against Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 2.
CORPORATE GOVERNANCE
The Corporations Board of Directors has long followed,
both formally and informally, corporate governance principles
designed to assure that the Board, through its membership,
composition and committee structure, is able to provide
informed, competent and independent oversight of the
Corporation. In response to the enactment of the Sarbanes-Oxley
Act of 2002 (Sarbanes-Oxley) and other developments
in corporate governance, the Board of Directors reviewed during
2003 and 2004 the Corporations corporate governance
policies and committee charters to assure that the Board
continues to meet fully its responsibilities to the
Corporations stockholders and the investing public. The
measures taken to assure that this objective is met are
described below.
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Corporate Governance Guidelines
The Board of Directors reviewed and adopted the
Corporations Corporate Governance Guidelines in 2004.
These Corporate Governance Guidelines, which may be found on the
Corporations website at www.aschulman.com, are
intended to assure that the Corporations Director
qualifications, Committee structure and overall Board processes
provide good corporate governance and independent oversight of
the Corporations management.
Director Independence
Under the corporate governance listing standards of the NASDAQ
National Market (sometimes referred to as NASDAQ)
and the Corporate Governance Guidelines of the Corporation, a
majority of the members of the Corporations Board of
Directors must satisfy NASDAQs criteria for
independence. The Board has determined that all
Directors, other than Messrs. Haines and Stefanko, are
independent under the NASDAQ National Market standards. The
Board has not yet considered whether Mr. Mitarotonda
qualifies as an independent director but will undertake such
consideration at the next meeting of the Board of Directors.
Board Committees
The Board of Directors has established the following committees:
Executive Committee, Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee.
The Executive Committee is authorized to act on behalf of the
Board of Directors on all corporate actions for which applicable
law does not require participation by the full Board of
Directors. In practice, the Executive Committee acts in place of
the full Board of Directors only when emergency issues or
scheduling make it difficult or impracticable to assemble the
full Board of Directors. All actions taken by the Executive
Committee must be reported at the next Board meeting. The
Executive Committee held no formal meetings during the year
ended August 31, 2005, but took one action pursuant to a
written consent resolution.
The Audit Committee of the Board of Directors operates under a
written charter, adopted in 2004, that reflects the corporate
governance reforms embodied by the Securities and Exchange
Commission (the SEC) and the rules and listing
standards of NASDAQ. The primary purpose of the Audit Committee
is to assist the Board in fulfilling its responsibility to
oversee the accounting and financial reporting process of the
Corporation, including the quality and integrity of the
Corporations financial statements and other financial
information provided by the Corporation to any governmental or
regulatory body, the public or other users thereof; the
Corporations compliance with legal and regulatory
requirements; the qualifications, independence and performance
of, and the Corporations relationship with, its
independent auditor; the performance of the Corporations
systems of internal accounting and financial controls; the
performance of the Corporations systems of internal
auditing; and the annual independent audit of the
Corporations financial statements. The functions performed
by the Audit Committee of the Board of Directors include
(i) reviewing the financial statements with management and
the independent auditor before publication; (ii) reviewing
with management and the independent auditor significant
financial reporting issues and judgments made in connection with
the preparation of the Corporations financial statements;
(iii) reviewing with the Chief Executive Officer and the
Chief Financial Officer any issues pertaining to the
certifications required to accompany the filing of the
Corporations Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q, and any other information required to
be disclosed in connection therewith; (iv) overseeing the
Corporations internal accounting and financial controls;
(v) reviewing legal matters that may have a material impact
on the Corporations financial statements or the
Corporations compliance policies; (vi) establishing
procedures for the proper handling of complaints concerning
accounting or auditing matters; (vii) considering the
compatibility of the auditors non-audit services with the
auditors independence; (viii) reviewing and approving
in advance the annual audit plan and scope of work of the
independent auditor and reviewing with the
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independent auditor any audit-related concerns and
managements response; (ix) being directly responsible
for the appointment, compensation, retention and oversight of
the Corporations independent auditor; and
(x) pre-approving all auditing services and permitted
non-audit services to be performed for the Corporation by the
independent auditor. Additionally, the Audit Committee oversees
the Corporations program to comply with Section 404
of Sarbanes-Oxley, which requires the Corporation to establish,
maintain and assess adequate internal control structures and
procedures for financial reporting.
NASDAQ rules require each member of the Audit Committee to be
able to read and understand financial statements. The
Corporation believes that each member of the Audit Committee as
constituted satisfies this requirement. Members of the Committee
rely, without independent verification, on the information
provided to them and on the representations made by management
and the Corporations independent auditor, although each
member of the Audit Committee has the authority to engage and
determine funding for independent advisors as deemed necessary.
Furthermore, the Audit Committees considerations and
discussions do not assure that the audit of the
Corporations financial statements has been carried out in
accordance with generally accepted auditing standards, that the
financial statements are presented in accordance with generally
accepted accounting principles or that the Corporations
auditor is in fact independent. A more complete
description of these and other Audit Committee functions is
contained in the Audit Committees Charter, a copy of which
is available on the Corporations website at
www.aschulman.com.
The Audit Committee held six meetings during the year ended
August 31, 2005. In addition, the Audit Committee Chairman
reviewed with PricewaterhouseCoopers LLP and the
Corporations management the Corporations interim
financial results prior to the filing of each of the
Corporations Quarterly Reports on Form 10-Q. Each of
the members of the Audit Committee is independent as defined
under Rule 4200(a)(15) of the listing standards of NASDAQ.
The Board has also determined that Ernest J. Novak is an
audit committee financial expert as defined in
regulations adopted by the SEC.
The Compensation Committee operates under a written charter
adopted in 2004. The primary purpose of the Compensation
Committee is to supervise and, to the extent consistent with the
Corporate Governance Guidelines, exercise the powers of the
Board of Directors with respect to overseeing the use of
corporate assets in compensating executive officers. The
Compensation Committee has overall responsibility for executive
succession planning (except for the Chief Executive Officer,
which is the responsibility of the Nominating and Corporate
Governance Committee), management development and approving and
evaluating the incentive compensation plans, policies and
programs of the Corporation. As set forth in the Compensation
Committees charter, the functions to be performed by the
Compensation Committee include (i) setting the salary and
other compensation of the Chief Executive Officer and the other
executive officers of the Corporation; (ii) reviewing
incentive compensation pools for the Corporation prior to the
annual determination of individual cash and equity based
incentive awards; (iii) approving all employment or
change-in-control severance agreements, annuity contracts and
benefit or perquisite plans or programs (other than broad-based
employee plans or programs) proposed for executive officers and
certain managers; (iv) periodically reviewing the
Corporations compensation programs and policies to align
them with the Corporations annual and long-term goals and
the interests of the stockholders; and (v) administering,
implementing and interpreting the Corporations long term
incentive plans, including stock options, restricted stock,
stock appreciation rights, performance incentives, and similar
plans and arrangements. A more complete description of these and
other Compensation Committee functions is contained in the
Compensation Committees charter, which is available on the
Corporations website at www.aschulman.com.
The Compensation Committee held two meetings during the fiscal
year ended August 31, 2005. The Board of Directors has
determined that each of the members of the Compensation
Committee is independent as defined under Rule 4200(a)(15)
of the NASDAQ listing standards.
8
|
|
|
Nominating and Corporate Governance Committee |
The Nominating and Corporate Governance Committee operates under
a written charter adopted in 2004. The primary purpose of the
Nominating and Corporate Governance Committee is to identify
individuals qualified to become Directors, recommend to the
Board the candidates for election by stockholders or appointment
by the Board to fill a vacancy, recommend to the Board the
composition and Chairs of Board committees, develop and
recommend to the Board guidelines for effective corporate
governance, and lead an annual review of the performance of the
Board and each of its committees. A more complete description of
these and other Nominating and Corporate Governance Committee
functions is contained in the Nominating and Corporate
Governance Committees charter, which is available on the
Corporations website at www.aschulman.com.
In its role as the nominating body for the Board, the Nominating
and Corporate Governance Committee reviews the credentials of
potential Director candidates (including potential candidates
recommended by stockholders), conducts interviews and makes
formal recommendations to the Board for the annual election or
interim appointment of Directors. In making its recommendations,
the Committee considers a variety of factors, including whether
the individuals have demonstrated achievements in business,
education or public service. In addition, the Committee
considers whether candidates for Director possess the requisite
intelligence, education and experience to make a significant
contribution to the membership of the Board of Directors, and
bring a range of skills, diverse perspectives and backgrounds to
the deliberations of the Board of Directors. The Committee also
considers whether the candidates possess the highest ethical
standards and a strong sense of professionalism, are prepared to
serve the interests of all the stockholders and are able to make
themselves available to the Board of Directors in the
fulfillment of their duties. For those Director candidates who
are also employees of the Corporation, they should be members of
the executive management of the Corporation who have or are in
the position to have a broad base of information about the
Corporation and its business. The Committee has in the past
engaged a professional search firm (to which it paid a fee) to
assist in identifying and evaluating potential nominees, and may
do so again in the future.
The Nominating and Corporate Governance Committee will consider
recommendations for nomination to stand for election as
directors those persons who are recommended to it in writing by
any stockholder. Any stockholder wishing to recommend an
individual to be considered by the Committee as a nominee for
election as a Director should send a signed letter of
recommendation to the following address: A. Schulman, Inc.,
3550 West Market Street, Akron, Ohio 44333, Attention:
Chairperson of the Nominating and Corporate Governance
Committee, c/o Corporate Secretary. Recommendation letters
must state the reasons for the recommendation and contain the
full name and address of each proposed nominee as well as a
brief biographical history setting forth past and present
directorships, employments, occupations and civic activities.
Any such recommendation should be accompanied by a written
statement from the proposed nominee consenting to be named as a
candidate and, if nominated and elected, consenting to serve as
a Director. The Corporation may also require a candidate to
furnish additional information regarding his or her eligibility
and qualifications. The Nominating and Corporate Governance
Committee does not intend to evaluate candidates proposed by
stockholders differently than it evaluates candidates that are
suggested by the Corporations Board members, executive
officers or other sources.
The Nominating and Corporate Governance Committee held three
meetings in fiscal 2005. The Board of Directors has determined
that each of the members of the Nominating and Corporate
Governance Committee is independent as defined under
Rule 4200(a)(15) of the NASDAQ listing standards.
Code of Conduct
The Board of Directors has adopted a Code of Conduct, available
on the Corporations website at www.aschulman.com,
for the Corporations employees, officers and directors. To
further assure compliance, the Corporation maintains a worldwide
hotline that allows employees to report confidentially any
detected violation of its Code of Conduct.
9
Executive Sessions
Executive sessions of non-management Directors (consisting of
all Directors other than Messrs. Haines and Stefanko) are
regularly scheduled and were held after each meeting of the
Board of Directors during the fiscal year ended August 31,
2005.
Stockholder Communications with the Board of Directors
Stockholders may send communications to the Board of Directors
by mail or courier delivery addressed as follows: A. Schulman,
Inc., c/o Corporate Secretary, 3550 West Market
Street, Akron, Ohio 44333. In general, the Corporate Secretary
will forward all such communications to the chairperson of the
Nominating and Corporate Governance Committee. The Committee
Chairperson in turn determines whether the communication should
be forwarded to other members of the Board and, if so, forwards
them accordingly. However, for communications addressed to a
particular member of the Board or the Chairman of a particular
Board Committee, the Corporate Secretary forwards those
communications directly to the Board member so addressed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the
Corporations previous or future filings under the
Securities Act of 1933 or the Securities Exchange Act of 1934
that might incorporate this Proxy Statement or future filings
with the SEC, in whole or in part, the following report shall
not be deemed to be incorporated by reference into any such
filing.
This report describes the Corporations executive
compensation programs and the basis on which fiscal year 2005
compensation determinations were made by the Corporations
Compensation Committee in respect of the executive officers of
the Corporation, including the Chief Executive Officer and the
other executive officers named in the compensation tables in
this Proxy Statement.
The Compensation Committee is comprised entirely of Directors
deemed independent under the NASDAQ listing standards. The
duties of the Compensation Committee include determining the
base salary level and bonus for the Chief Executive Officer and
for all other executive officers, and approving the design and
awards of all other elements of the executive pay program. The
Compensation Committee further evaluates executive performance
and addresses other matters related to executive compensation.
Compensation Policy and Overall Objectives
In determining the amount and composition of executive
compensation, the Compensation Committees goal is to
provide a compensation package that will enable the Corporation
to attract and retain talented executives, reward outstanding
performance and link the interests of the Corporations
executives to the interests of the Corporations
stockholders. In determining actual compensation levels, the
Compensation Committee considers all elements of the program in
total, but also evaluates whether the individual elements of the
compensation program target compensation levels at rates that
are reflective of current market practices. Offering
market-comparable pay opportunities allows the Corporation to
maintain a stable, successful management team.
The key elements of the Corporations executive
compensation are base salary, annual bonuses and long-term
incentives. These key elements are addressed separately below.
In determining compensation, the Compensation Committee
considers all elements of an executives total compensation
package.
Competitive market data is provided periodically by an
independent compensation consultant. The data provided compares
the Corporations compensation practices to those of a
group of comparison companies. The Corporations market
data for compensation comparison purposes is comprised of a
group of diversified manufacturing companies that have national
and international business operations. The Compensation
Committee reviews and approves the selection of companies used
for compensation comparison purposes.
10
In evaluating the comparison group data for compensation
purposes, the Compensation Committee neither bases its decisions
on quantitative relative weights of various factors, nor follows
mathematical formulae. Rather, the Compensation Committee
exercises its discretion and makes its judgment after
considering the factors it deems relevant.
Base Salaries
The Compensation Committee reviews each executives base
salary annually. Base salaries for executives initially are
determined by evaluating the executives respective levels
of responsibility, prior experience and breadth of knowledge,
internal equity issues and external pay practices. Determination
of increases to base salaries are driven by individual
performance and corporate profitability. Individual performance
is evaluated based on sustained levels of individual
contribution to the Corporation.
In determining Mr. Haines base salary in 2005, the
Compensation Committee considered the Corporations
financial performance for the prior year, Mr. Haines
individual performance and his long-term contributions to the
success of the Corporation. The Compensation Committee also
compared Mr. Haines base salary to the base salaries
of other chief executive officers within a peer group of
specialty chemical companies, including both similarly-sized
companies and other chemical and plastics manufacturers
recognized as broader competitors of the Corporation.
Mr. Haines base salary is reported in the Summary
Compensation Table below.
Annual Bonuses
The Corporations bonus program promotes the
Corporations pay-for-performance philosophy by providing
executives with direct financial incentives in the form of
annual cash bonuses based on individual and company performance.
Annual bonus opportunities allow the Corporation to communicate
specific goals that are of primary importance during the coming
year and motivate executives to achieve these goals.
Under the Corporations bonus program, the Corporation
established a total target award for each executive officer
approximately equal to the average award provided to persons
holding similar positions at comparable companies. The award was
measured by stated threshold, target and maximum percentages of
salary. The executive officers actual award was increased
or decreased for the total target award based upon both
Corporation financial results and individual performance.
Approximately one-half of the total target award potential was
determined by the financial performance of the Corporation,
measured by levels of operating income, net income or return on
assets. For Mr. Haines, the President and Chief Executive
Officer, and for Mr. Stefanko, the Chairman and Chief
Financial Officer, this financial performance portion of the
bonus was based upon the net income of the Corporation. For all
other executive officers, the financial performance portion of
the bonus was based on the Corporations operating income
in North America. The remaining one-half of the total target
award level was based upon each executive officers
individual performance. The Corporation did not meet its
financial performance goals as established under the bonus
program with respect to 2005 for either Messrs. Haines and
Stefanko or the other executive officers. The 2005 bonus awards
for Mr. Haines and the other executive officers based on
individual performances are reported in the Summary Compensation
Table below.
Long-Term Incentives
The Corporations 2002 Equity Incentive Plan provides
long-term incentives to its executives. In keeping with the
Corporations commitment to provide a total compensation
package that includes at-risk components of pay, the
Compensation Committee makes annual decisions regarding
appropriate stock-based grants for each executive. When
determining these awards, the Compensation Committee considers
the Corporations financial performance in the prior year,
the executives respective levels of responsibility, prior
experience, and historical award data and compensation practices
at the comparison companies.
11
Options
On October 22, 2004, options to purchase shares of the
Corporations Common Stock were granted to executive
officers, including options to purchase 130,000 shares
granted to Mr. Haines. These options, granted in fiscal
2005, were granted as compensation for performance in fiscal
2004 pursuant to the 2002 Equity Incentive Plan at an option
price equal to the fair market value ($19.85) of such shares
(which was determined under the 2002 Equity Incentive Plan as
the closing price of the Corporations Common Stock on the
date of grant). On October 21, 2005, stock options were
granted to executive officers of the Corporation, including
options to purchase 130,000 shares granted to
Mr. Haines. These options were granted in fiscal 2006 as
compensation for performance in fiscal 2005 under the 2002
Equity Incentive Plan at the fair market value ($19.20) of such
shares on the date of grant. Accordingly, stock options granted
have value only if the stock price appreciates following the
date the options were granted. This design focuses executive
officers on the creation of stockholder value over the long term
and encourages equity ownership of the Corporation. These stock
options become exercisable at the rate of 33% per year
commencing on the first anniversary of the date of grant of the
options, so long as the optionee remains employed by the
Corporation or a subsidiary, and expire on the tenth anniversary
of the date of grant.
In setting the October 21, 2005 stock option grant to
Mr. Haines, the Compensation Committee considered the
Corporations financial performance for the prior year,
Mr. Haines individual performance and his long-term
contributions to the success of the Corporation.
Restricted Stock
On October 22, 2004, restricted stock was awarded to the
Corporations executive officers, including an award of
15,000 shares of restricted stock made to Mr. Haines.
This restricted stock was awarded in fiscal 2005 as compensation
for performance in fiscal 2004 pursuant to the 2002 Equity
Incentive Plan. On October 21, 2005, restricted stock
awards were made to certain executive officers of the
Corporation. No restricted shares were awarded to
Mr. Haines or Mr. Stefanko. Such restricted stock was
awarded in fiscal 2006 as compensation for performance in fiscal
2005 under the 2002 Equity Incentive Plan. Dividends on
restricted stock are accrued until the restrictions lapse and
are paid out thereafter. The restricted stock awards vest on the
fourth anniversary of the date of the awards. Because of its
vesting requirements, restricted stock enhances the
Corporations ability to maintain a stable executive team
which is focused on the Corporations long-term success,
and restricted stock provides executives with an immediate link
to stockholder interests. In determining restricted stock
awards, the Compensation Committee considers the
Corporations financial performance for the prior year, the
executives individual performances and their respective
long-term contributions to the success of the Corporation.
Supplemental Executive Retirement Plan
The Corporations Supplemental Executive Retirement
Benefits Plan (the SERP) provides retirement
benefits to executive officers named as participants by the
Board. Messrs. Haines and Stefanko are currently the only
officers of the Corporation who are eligible to participate in
the SERP. Under the SERP, a participant will earn a pension
benefit that is equal to 30% of his or her final average plan
compensation, plus an additional one percent for each year of
service, up to a maximum of thirty such years. Thus, a
participant who retires with 30 or more years of service will
receive an annual benefit equal to 60% of the participants
final average plan compensation. The pension benefits payable
under the SERP are reduced by the actuarial value of certain
other plan and deferred compensation that is payable to the
participant.
12
The following table shows estimated annual benefits payable on
retirement at age 65 to SERP participants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of Service | |
Average | |
|
| |
Compensation | |
|
15 | |
|
20 | |
|
25 | |
|
30 | |
|
35 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$ |
200,000 |
|
|
$ |
90,000 |
|
|
$ |
100,000 |
|
|
$ |
110,000 |
|
|
$ |
120,000 |
|
|
$ |
120,000 |
|
$ |
300,000 |
|
|
$ |
135,000 |
|
|
$ |
150,000 |
|
|
$ |
165,000 |
|
|
$ |
180,000 |
|
|
$ |
180,000 |
|
$ |
400,000 |
|
|
$ |
180,000 |
|
|
$ |
200,000 |
|
|
$ |
220,000 |
|
|
$ |
240,000 |
|
|
$ |
240,000 |
|
$ |
500,000 |
|
|
$ |
225,000 |
|
|
$ |
250,000 |
|
|
$ |
275,000 |
|
|
$ |
300,000 |
|
|
$ |
300,000 |
|
$ |
600,000 |
|
|
$ |
270,000 |
|
|
$ |
300,000 |
|
|
$ |
330,000 |
|
|
$ |
360,000 |
|
|
$ |
360,000 |
|
$ |
700,000 |
|
|
$ |
315,000 |
|
|
$ |
350,000 |
|
|
$ |
385,000 |
|
|
$ |
420,000 |
|
|
$ |
420,000 |
|
$ |
800,000 |
|
|
$ |
360,000 |
|
|
$ |
400,000 |
|
|
$ |
440,000 |
|
|
$ |
480,000 |
|
|
$ |
480,000 |
|
$ |
900,000 |
|
|
$ |
405,000 |
|
|
$ |
450,000 |
|
|
$ |
495,000 |
|
|
$ |
540,000 |
|
|
$ |
540,000 |
|
$ |
1,000,000 |
|
|
$ |
450,000 |
|
|
$ |
500,000 |
|
|
$ |
550,000 |
|
|
$ |
600,000 |
|
|
$ |
600,000 |
|
$ |
1,100,000 |
|
|
$ |
495,000 |
|
|
$ |
550,000 |
|
|
$ |
605,000 |
|
|
$ |
660,000 |
|
|
$ |
660,000 |
|
For purposes of determining pension benefits payable under the
SERP, final average plan compensation is the participants
average annual compensation for the highest 36 month period
in the participants last 60 months of employment, and
takes into account the participants base salary and cash
bonuses.
The pension benefits payable under the SERP are reduced by the
actuarial equivalent of (1) the participants primary
social security benefits, (2) benefits payable to the
participant under each of the Corporations Profit Sharing
Plan and Non-Qualified Plan described below, and
(3) benefits payable to the participant under the deferred
compensation agreements described below (without regard to any
forfeiture of or other loss of benefits that may occur under
such arrangements on account of a termination for cause or any
other reason).
SERP benefits are payable as a monthly pension, generally
beginning at age 65 or after the participants
retirement, if later. If a participant retires at or after
age 55 with ten years of service, the Board may grant the
participant payment before age 65 in an actuarially reduced
amount. If a participant becomes totally and permanently
disabled and has ten years of service, the Board may grant the
participant payment before age 65 in an actuarially reduced
amount.
In general, SERP pension payments are payable to the participant
as a life annuity (i.e. for the lifetime of the participant).
Participants may elect to receive SERP pension payments in
various optional forms of payment that are the actuarial
equivalent of the participants life annuity. However, a
lump sum form of payment will only be made with the consent of
the Board of Directors of the Corporation.
The final average plan compensation of Messrs. Haines and
Stefanko was $844,578 and $597,878 respectively, as of
August 31, 2005. As of August 31, 2005,
Messrs. Haines and Stefanko have been credited with 39 and
33 years of service, respectively, for purposes of the SERP.
|
|
|
Deductibility of Executive Compensation |
The Committee has reviewed the qualifying compensation
regulations issued by the Internal Revenue Service under Code
Section 162(m), which provide that no deduction is allowed
for applicable employee remuneration paid by a publicly held
corporation to the chief executive officer or any of the other
four highest paid officers of the corporation to the extent that
the remuneration paid to the employee exceeds $1.0 million
for the applicable taxable year, unless certain conditions are
met. Compensation pursuant to certain stock option plans and
other performance based compensation may be excluded from the
$1.0 million limit. Currently, remuneration is not expected
to exceed the $1.0 million limit for any employee covered
by Section 162(m), although the uncertain value of stock at
future dates with respect to certain existing stock awards makes
it impossible for the Corporation to assure that such limit will
not be exceeded at some date in the future.
The Committee believes that stock options awarded under the 2002
Equity Incentive Plan will not count toward the
Section 162(m) limit. Stock options still outstanding under
earlier Corporation stock plans and
13
restricted stock awards and dividend units are not exempt from
the calculation. If compensation attributed to the exercise or
vesting of such options, restricted stock awards or dividend
units causes aggregate compensation to any employee covered by
Section 162(m) to exceed $1.0 million in any calendar
year, any amounts in excess of $1.0 million may not be
deductible to the Corporation.
|
|
|
The Compensation Committee: |
|
|
Willard R. Holland, Chairman |
|
Joseph M. Gingo |
|
James A. Karman |
|
Dr. Peggy Miller |
|
Dr. Paul Craig Roberts |
14
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid or to be
paid by the Corporation and its subsidiaries in respect of
services rendered during the Corporations last three
fiscal years to the Corporations Chief Executive Officer
and each of the other four most highly compensated executive
officers (as measured by salary and bonus) whose aggregate
salary and bonus during the fiscal year ended August 31,
2005 exceeded $100,000 (collectively, the Named Executive
Officers):
Summary Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term | |
|
|
|
|
|
|
|
|
|
|
Compensation | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Awards | |
|
|
|
|
|
|
Annual | |
|
| |
|
|
|
|
|
|
Compensation (1) | |
|
Restricted | |
|
|
|
|
|
|
Fiscal | |
|
| |
|
Stock | |
|
Options | |
|
All Other | |
Name and Principal Position |
|
Year | |
|
Salary | |
|
Bonus | |
|
Award(s) (2) | |
|
(#) | |
|
Compensation | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Terry L. Haines
|
|
|
2005 |
|
|
$ |
619,078 |
(3) |
|
$ |
165,000 |
|
|
$ |
0 |
|
|
|
130,000 |
(4) |
|
$ |
61,610 |
(5) |
|
President and Chief Executive |
|
|
2004 |
|
|
$ |
569,666 |
(3) |
|
$ |
165,000 |
|
|
$ |
297,750 |
|
|
|
130,000 |
|
|
$ |
56,089 |
(6) |
|
Officer |
|
|
2003 |
|
|
$ |
566,424 |
(3) |
|
$ |
165,000 |
|
|
$ |
234,260 |
|
|
|
130,000 |
|
|
$ |
56,110 |
(7) |
Robert A. Stefanko
|
|
|
2005 |
|
|
$ |
437,078 |
(3) |
|
$ |
118,500 |
|
|
$ |
0 |
|
|
|
90,000 |
(4) |
|
$ |
43,410 |
(5) |
|
Chairman of the Board of Directors, |
|
|
2004 |
|
|
$ |
414,666 |
(3) |
|
$ |
118,500 |
|
|
$ |
178,650 |
|
|
|
90,000 |
|
|
$ |
40,589 |
(6) |
|
Chief Financial Officer and Executive |
|
|
2003 |
|
|
$ |
411,424 |
(3) |
|
$ |
118,500 |
|
|
$ |
162,180 |
|
|
|
90,000 |
|
|
$ |
40,610 |
(7) |
|
Vice President Finance and Administration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry Rhodes
|
|
|
2005 |
|
|
$ |
188,500 |
|
|
$ |
75,000 |
|
|
$ |
153,600 |
|
|
|
22,000 |
(4) |
|
$ |
19,960 |
(5) |
|
Vice President North American |
|
|
2004 |
|
|
$ |
175,000 |
|
|
$ |
60,000 |
|
|
$ |
138,950 |
|
|
|
22,000 |
|
|
$ |
18,589 |
(6) |
|
Sales and Marketing |
|
|
2003 |
|
|
$ |
165,000 |
|
|
$ |
50,000 |
|
|
$ |
90,100 |
|
|
|
20,000 |
|
|
$ |
17,610 |
(7) |
Ronald G. Andres
|
|
|
2005 |
|
|
$ |
177,500 |
|
|
$ |
60,000 |
|
|
$ |
134,400 |
|
|
|
20,000 |
(4) |
|
$ |
18,860 |
(5) |
|
Vice President North |
|
|
2004 |
|
|
$ |
165,000 |
|
|
$ |
55,000 |
|
|
$ |
119,100 |
|
|
|
20,000 |
|
|
$ |
17,589 |
(6) |
|
American Manufacturing |
|
|
2003 |
|
|
$ |
165,000 |
|
|
$ |
50,000 |
|
|
$ |
90,100 |
|
|
|
17,000 |
|
|
$ |
17,610 |
(7) |
Gary J.
Elek(8)
|
|
|
2005 |
|
|
$ |
171,600 |
|
|
$ |
35,000 |
|
|
$ |
57,600 |
|
|
|
10,000 |
(4) |
|
$ |
18,270 |
(5) |
|
Vice President Corporate Controller |
|
|
2004 |
|
|
$ |
96,250 |
|
|
$ |
33,000 |
|
|
$ |
59,550 |
|
|
|
10,000 |
|
|
$ |
10,735 |
(6) |
|
and Secretary |
|
|
2003 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
|
(1) |
Includes amounts earned in fiscal year, whether or not deferred.
Perquisites provided to each of the Named Executive Officers did
not exceed the lesser of $50,000 or 10% of total annual salary
and bonus for any Named Executive Officer, and therefore are not
included in these totals. Perquisites include tax preparation
expenses, motor vehicle leases and country club memberships for
each Named Executive Officer. |
|
(2) |
No grants of restricted stock were made during fiscal 2005,
except for awards of shares of restricted stock made to the
Named Executive Officers on October 22, 2004 in respect of
fiscal 2004, which restricted stock awards were made under the
2002 Equity Incentive Plan and are reflected above as 2004
restricted stock awards, valued at the closing market price of
the Corporations Common Stock on the date of grant
($19.85). In fiscal 2006, awards of restricted stock were made
on October 21, 2005 to certain of the Named Executive
Officers in respect of fiscal 2005 under the 2002 Equity
Incentive Plan. The amount set forth in respect of each Named
Executive Officer represents these awards of restricted stock in
respect of fiscal 2005 valued at the closing market price of the
Corporations Common Stock on the date of grant ($19.20).
The total number of restricted shares held, including restricted
shares granted on October 21, 2005 in respect of fiscal
2005, and the aggregate market value (based upon the closing
market price at August 31, 2005 of $18.21) in respect of
each Named Executive Officer are as follows: Mr. Haines
held 56,000 shares valued at $1,019,760; Mr. Stefanko
held 36,000 shares valued at $655,560; Mr. Andres held
23,200 shares valued at $422,472; Mr. Rhodes held
25,000 shares valued at $455,250; and Mr. Elek held
6,000 shares valued at $54,630. Dividends accrue but are
not paid on the restricted shares until the restrictions thereon
lapse. |
(Footnotes continued on next page)
15
|
|
(3) |
Includes Directors fees received from the
Corporations Belgian subsidiary in the following amounts
for the years 2005, 2004 and 2003: $14,078, $19,666, $16,424. |
|
(4) |
As described below under the heading, Compensation of
Executive Officers Stock Options, these
options were granted in fiscal 2006 in respect of fiscal 2005
under the 2002 Equity Incentive Plan. |
|
(5) |
Amounts shown include the following: Corporation contributions
to Profit Sharing Plan $20,500 for each of
Messrs. Haines and Stefanko, $17,750 for Mr. Andres,
$18,850 for Mr. Rhodes and $17,160 for Mr. Elek;
amounts accrued by the Corporation for the fiscal year ended
August 31, 2004 under non-qualified profit sharing
plan $40,000 for Mr. Haines and $21,800 for
Mr. Stefanko; and Corporation payments of term life
insurance premiums $1,110 for each Named Executive
Officer. |
|
(6) |
Amounts shown include the following: Corporation contributions
to Profit Sharing Plan $20,000 for each of
Messrs. Haines and Stefanko, $16,500 for Mr. Andres,
$17,500 for Mr. Rhodes and $9,625 for Mr. Elek;
amounts accrued by the Corporation for the fiscal year ended
August 31, 2004 under non-qualified profit sharing
plan $35,000 for Mr. Haines and $19,500 for
Mr. Stefanko; and Corporation payments of term life
insurance premiums $1,089 for each Named Executive
Officer. |
|
(7) |
Amounts shown include the following: Corporation contributions
to Profit Sharing Plan $20,000 for each of
Messrs. Haines and Stefanko and $16,500 for each of
Messrs. Andres and Rhodes; amounts accrued by the
Corporation for the fiscal year ended August 31, 2003 under
non-qualified profit sharing plan $35,000 for
Mr. Haines and $19,500 for Mr. Stefanko; and
Corporation payments of term life insurance premiums
$1,110 for each Named Executive Officer (other than
Mr. Elek). |
|
(8) |
Mr. Elek commenced employment with the Corporation on
February 1, 2004. |
Stock Options
No stock options were granted to the Named Executive Officers
during fiscal 2005 except for options to purchase shares granted
to the Named Executive Officers on October 22, 2004 in
respect of fiscal 2004, which option awards were made under the
2002 Equity Incentive Plan. However, stock options were granted
in fiscal 2006 (on October 21, 2005) to the Named Executive
Officers in respect of fiscal 2005 pursuant to the 2002 Equity
Incentive Plan. The following table contains information
concerning the grant of stock options in respect of fiscal 2005
to the Named Executive Officers. The amounts shown for each of
the Named Executive Officers as potential realizable values are
based on arbitrarily assumed annualized rates of stock
appreciation of five percent and ten percent over the full
ten-year term of the options, which would result in stock prices
of approximately $31.27 and $49.80, respectively. No gain to the
optionees is possible without an increase in stock price, which
will benefit all stockholders proportionately. Actual gains, if
any, on an option exercise are dependent upon future performance
of the Corporations Common Stock and overall market
conditions. There can be no assurance that the potential
realizable values shown in this table will be achieved.
OPTION/ SAR GRANTS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants in Respect of Fiscal 2005 | |
|
|
|
|
| |
|
Potential Realizable Value | |
|
|
|
|
Percent of Total | |
|
|
|
at Assumed Annual Rates of | |
|
|
Number of | |
|
Options/SARs | |
|
|
|
Stock Price Appreciation for | |
|
|
Total | |
|
Granted to | |
|
Exercise | |
|
|
|
10-Year Option Term | |
|
|
Options/SARs | |
|
Employees in | |
|
or Base | |
|
Expiration | |
|
| |
Name |
|
Granted (1) | |
|
Fiscal Year (2) | |
|
Price (3) | |
|
Date | |
|
5%($) (4) | |
|
10%($) (4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Terry L. Haines
|
|
|
130,000 |
|
|
|
25.35 |
% |
|
$ |
19.20 |
|
|
|
10/21/2015 |
|
|
$ |
1,569,721 |
|
|
$ |
3,977,981 |
|
Robert A. Stefanko
|
|
|
90,000 |
|
|
|
17.55 |
% |
|
$ |
19.20 |
|
|
|
10/21/2015 |
|
|
$ |
1,086,730 |
|
|
$ |
2,753,987 |
|
Barry A. Rhodes
|
|
|
22,000 |
|
|
|
4.39 |
% |
|
$ |
19.20 |
|
|
|
10/21/2015 |
|
|
$ |
265,645 |
|
|
$ |
673,197 |
|
Ronald G. Andres
|
|
|
20,000 |
|
|
|
3.90 |
% |
|
$ |
19.20 |
|
|
|
10/21/2015 |
|
|
$ |
241,496 |
|
|
$ |
611,997 |
|
Gary J. Elek
|
|
|
10,000 |
|
|
|
1.95 |
% |
|
$ |
19.20 |
|
|
|
10/21/2015 |
|
|
$ |
120,748 |
|
|
$ |
305,999 |
|
(Footnotes on next page)
16
|
|
(1) |
All options for shares of Common Stock were granted pursuant to
the 2002 Equity Incentive Plan. Such options become exercisable
at the rate of 33% per year commencing on the first
anniversary of the date of grant of the option, so long as the
optionee remains employed by the Corporation or a subsidiary. |
|
(2) |
Based on 512,750 options granted to all employees. |
|
(3) |
Fair market value on the date of grant on October 21, 2005. |
|
(4) |
The share price represents the price of the Common Stock if the
assumed annual rates of stock price appreciation are achieved. |
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised In-the- | |
|
|
Shares | |
|
|
|
Underlying Unexercised | |
|
Money Options at Fiscal Year- | |
|
|
Acquired on | |
|
Value | |
|
Options at Fiscal Year-End | |
|
End Exercisable/Unexercisable | |
Name |
|
Exercise | |
|
Realized (1) | |
|
Exercisable/Unexercisable (2) | |
|
(2)(3) | |
|
|
| |
|
| |
|
| |
|
| |
Terry L. Haines
|
|
|
18,750 |
|
|
$ |
114,844 |
|
|
|
129,166/ 265,001 |
|
|
$ |
414,249/ $233,486 |
|
Robert A. Stefanko
|
|
|
60,000 |
|
|
$ |
420,395 |
|
|
|
45,000/ 180,000 |
|
|
$ |
81,300/ $138,000 |
|
Barry A. Rhodes
|
|
|
10,667 |
|
|
$ |
86,283 |
|
|
|
9,166/ 40,001 |
|
|
$ |
13,867/ $22,228 |
|
Ronald G. Andres
|
|
|
3,000 |
|
|
$ |
20,175 |
|
|
|
26,999/ 36,001 |
|
|
$ |
100,942/ $21,849 |
|
Gary J. Elek
|
|
|
0 |
|
|
$ |
0 |
|
|
|
0/ 10,000 |
|
|
$ |
0/ $0 |
|
|
|
(1) |
Amounts shown reflect the difference between the exercise price
paid by the executive officer for Common Stock acquired upon the
exercise of options and the fair market value of the Common
Stock on the date of exercise. |
|
(2) |
Does not include options granted in fiscal 2006 in respect of
fiscal 2005. |
|
(3) |
The value of unexercised stock options is based on the
difference between the exercise price of the options and the
closing price per share of Common Stock on August 31, 2005
of $18.21. |
Employment Contracts and Change-In-Control Arrangements
The Corporation has employment agreements with
Messrs. Haines, Stefanko, Andres, Rhodes and certain other
senior personnel. The employment agreements of
Messrs. Haines, Stefanko, Andres and Rhodes have initial
three-year terms. Such agreements automatically are extended at
the end of each month for an additional month unless prior
notice of termination is given, to constitute at all times a
three-year agreement; provided, however, that no such monthly
extension shall occur after August 31, 2008,
January 31, 2005, December 31, 2011 or August 31,
2022, respectively. The employment agreements provide that in
the event employment is terminated following a merger,
consolidation, liquidation, or other change in control
(collectively, Change in Control) of the Corporation
for any reason except for termination by the Corporation for
cause, termination for death or disability or termination by the
employee without good reason, the employee shall be paid a lump
sum amount equal to a multiple (equal to the initial term of
such agreement) of the sum of (i) the higher of his annual
salary payable prior to the event causing the termination or
salary payable prior to the Change in Control, plus (ii) an
amount equal to the higher of his bonus earned in the preceding
fiscal year or the average bonus earned in the most recent three
fiscal years. In addition, upon such a termination of employment
following a Change in Control, each of the employment agreements
provides that the employee also will continue to receive certain
insurance benefits not provided to the employee by another
source after termination, for a period of time equal to the
original term of such employees employment agreement, and
the employee will be paid a lump sum amount equal to the sum of
(i) any unpaid annual incentive compensation previously
awarded to the employee, the payment of which was contingent
only upon continued employment, and (ii) a pro rata portion
of his bonus for the fiscal year in which the termination
occurred. Additionally, during the one-month period beginning
with the first day of the month immediately following the first
anniversary of a Change in Control, the employment agreements of
Messrs. Haines and Stefanko provide that they may terminate
their employment for any reason and will still be entitled to
the Change-in-Control
17
payments described above. If the Corporation terminates an
employees employment without cause prior to the expiration
of the term of the employment agreement and prior to a Change in
Control, the employee shall receive his salary for the remaining
term of his employment agreement, plus a bonus each year for the
remaining term of his agreement in an amount equal to fifty
percent of his average annual bonus during the most recent five
calendar years of employment. If the employees employment
is terminated by reason of death, the Corporation shall pay a
lump sum amount equal to sixty percent of the employees
salary for twenty-four months. In addition, the amounts
described above payable under the employment agreements for
Messrs. Haines and Stefanko shall be grossed up
to cover certain taxes payable by the employee on certain of the
amounts paid to such employee in respect of a Change in Control
of the Corporation. Notwithstanding the foregoing, in respect of
the employment agreements of Messrs. Andres and Rhodes, the
Corporation is not obligated to pay any amount that is in excess
of the maximum amount that it can deduct for federal income tax
purposes. These employment agreements may tend to discourage a
takeover attempt of the Corporation inasmuch as a Change in
Control of the Corporation could result in increased
compensation expense.
The Corporation has a qualified Profit Sharing Plan (the
Profit Sharing Plan) that provides that in any year
the Corporations Board of Directors, in its discretion,
may authorize the payment of contributions to the
Corporations Profit-Sharing Trust, which contributions are
allocated among participants. The maximum amount that may be
allocated to a participant generally is limited to the lesser of
(i) $40,000 or (ii) one hundred percent of the
participants compensation. Participation in the Profit
Sharing Plan is available to all salaried employees of the
Corporation (and participating subsidiaries) who are employed on
the last day of the Profit Sharing Plan year. Benefits under the
Profit Sharing Plan vest in accordance with a specified formula
that provides for partial vesting starting after three years of
employment with the Corporation and full vesting after seven
years of employment with the Corporation. The assets of the
Profit-Sharing Trust are invested, and each participants
account reflects the aggregate investment performance of the
Trust assets. For the fiscal year ended August 31, 2005,
the amounts contributed to the Profit Sharing Plan accounts of
the persons listed in the Summary Compensation Table were:
$20,500 for each of Messrs. Haines and Stefanko, $17,750
for Mr. Andres, $18,850 for Mr. Rhodes and $17,160 for
Mr. Elek.
The Corporation also has a non-qualified Profit Sharing Plan
(the Non-Qualified Plan) pursuant to which the
Corporation may accrue certain amounts for the benefit of the
Non-Qualified Plans participants, in order to restore to
such participants amounts not available to them under the Profit
Sharing Plan due to certain limitations thereunder. Benefits
under the Non-Qualified Plan vest in accordance with a specified
formula that provides for partial vesting starting after three
years of employment with the Corporation and full vesting after
seven years of employment with the Corporation. In addition,
upon a Change in Control of the Corporation, benefits become
fully vested. Amounts accrued by the Corporation under the
Non-Qualified Plan for the benefit of each participant reflect
the investment performance that would have been realized had a
corresponding amount been invested for the benefit of such
participant during such year in the Profit Sharing Trust
pursuant to the Profit Sharing Plan. For the fiscal year ended
August 31, 2005, the amounts accrued (excluding the assumed
investment based performance earnings thereon) by the
Corporation pursuant to the Non-Qualified Plan for the benefit
of the persons listed in the Summary Compensation Table were:
Mr. Haines, $40,000, and Mr. Stefanko, $21,800.
The Corporation also has deferred compensation agreements with
Messrs. Haines and Stefanko, providing for the payment of
benefits for ten years following retirement, disability or death
in the annual amount of $100,000 for Mr. Haines and
$100,000 (under two agreements for $50,000 each) for
Mr. Stefanko. The effective dates of Mr. Haines
Agreement is 1991 and of Mr. Stefankos two agreements
are 1985 and 1991. No additional benefits are payable under the
agreements upon a Change in Control of the Corporation; however,
payment of all of the benefits of Messrs. Haines and
Stefanko will be accelerated in the event of a termination of
employment following certain Changes in Control. The Corporation
owns and is the beneficiary of life insurance policies upon the
lives of Messrs. Haines and Stefanko, in the amount of
$1,000,000 each.
18
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth information as of
October 19, 2005 (except as otherwise indicated by
footnote) in respect of beneficial ownership of shares of the
Corporations Common Stock by each Director, by each Named
Executive Officer, by all Directors and executive officers as a
group, and by each person known to the Corporation to own five
percent or more of its Common Stock. Unless otherwise indicated,
each beneficial owner has sole power to vote and dispose of the
number of shares set forth in the table:
|
|
|
|
|
|
|
|
|
|
|
|
Total Beneficial | |
|
Percent of | |
Name |
|
Ownership | |
|
Outstanding | |
|
|
| |
|
| |
Directors and Executive Officers
|
|
|
|
|
|
|
|
|
Terry L.
Haines(1)(2)
|
|
|
424,666 |
|
|
|
1.37 |
% |
Robert A.
Stefanko(1)(2)(3)
|
|
|
252,662 |
|
|
|
* |
|
Ronald G.
Andres(1)(2)(4)
|
|
|
76,099 |
|
|
|
* |
|
Barry A.
Rhodes(1)(2)
|
|
|
48,034 |
|
|
|
* |
|
Gary J.
Elek(1)(2)
|
|
|
6,333 |
|
|
|
* |
|
Dr. Peggy
Miller(1)(2)
|
|
|
12,333 |
|
|
|
* |
|
James S.
Marlen(1)(2)
|
|
|
13,833 |
|
|
|
* |
|
Dr. Paul Craig
Roberts(1)(2)
|
|
|
10,138 |
|
|
|
* |
|
Willard R.
Holland(1)(2)
|
|
|
14,333 |
|
|
|
* |
|
James A.
Karman(1)(2)
|
|
|
15,333 |
|
|
|
* |
|
Joseph M.
Gingo(1)(2)
|
|
|
11,333 |
|
|
|
* |
|
John B.
Yasinsky(1)(2)
|
|
|
12,333 |
|
|
|
* |
|
Ernest J.
Novak, Jr.(1)(2)
|
|
|
7,700 |
|
|
|
* |
|
James A.
Mitarotonda(5)(7)
|
|
|
1,193,002 |
|
|
|
3.88 |
% |
All Directors and Executive Officers as a group (15
persons)(1)(2)(3)(4)(5)
|
|
|
3,867,668 |
|
|
|
12.37 |
% |
|
5% or Greater Stockholders
|
|
|
|
|
|
|
|
|
|
Royce & Associates
LLC(6)
|
|
|
3,296,804 |
|
|
|
10.73 |
% |
|
1414 Avenue of Americas
|
|
|
|
|
|
|
|
|
|
New York, NY 10019
|
|
|
|
|
|
|
|
|
Barington Companies Equity Partners, L.P., Barington Companies
Offshore Fund, Ltd. (BVI), Barington Companies Advisors, LLC,
Starboard Value & Opportunity Fund, LLC, Parche, LLC,
Millenco, L.P., RJG Capital Partners, L.P., D.B. Zwirn Special
Opportunities Fund, L.P., D.B. Zwirn Special Opportunities Fund
(TE), L.P., D.B. Zwirn Special Opportunities Fund, Ltd. and HCM/
Z Special Opportunities
LLC(7)
|
|
|
2,684,495 |
|
|
|
8.74 |
% |
Barclays Global Investors, N.A. and Barclays Global
Fund Advisors(8)
|
|
|
2,102,458 |
|
|
|
6.84 |
% |
|
45 Fremont Street
|
|
|
|
|
|
|
|
|
|
San Francisco, California 94105
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors
Inc.(9)
|
|
|
2,040,432 |
|
|
|
6.64 |
% |
|
1299 Ocean Avenue,
11th Floor
|
|
|
|
|
|
|
|
|
|
Santa Monica, CA 90401
|
|
|
|
|
|
|
|
|
Snyder Capital Management, L.P./ Snyder Capital Management,
Inc.(10)
|
|
|
1,766,276 |
|
|
|
5.75 |
% |
|
350 California Street, Suite 1460
|
|
|
|
|
|
|
|
|
|
San Francisco, CA 94104
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Less than 1% of the shares outstanding |
(Footnotes on next page)
19
|
|
|
|
(1) |
Includes the following number of shares that are not owned, but
can be purchased within sixty days upon the exercise of options
granted under the Corporations 1991 Stock Incentive Plan,
1992 Non-Employee Directors Stock Option Plan and/or 2002
Equity Incentive Plan: 264,166 by Terry L. Haines; 135,000 by
Robert A. Stefanko; 43,999 by Ronald G. Andres; 27,833 by Barry
A. Rhodes; 3,333 by Gary J. Elek; 4,833 by each of
Dr. Peggy Miller, James A. Karman, Willard R. Holland, John
B. Yasinsky and Joseph M. Gingo; 3,333 by each of Dr. Paul
Craig Roberts and James S. Marlen; and 557,078 by all Directors
and executive officers as a group. |
|
|
(2) |
Includes the following number of restricted shares of Common
Stock awarded under the Corporations 1991 Stock Incentive
Plan, 1992 Non-Employee Directors Stock Option Plan and/or
2002 Equity Incentive Plan: 56,000 for Terry L. Haines; 36,000
for Robert A. Stefanko; 16,200 for Ronald G. Andres; 17,000 for
Barry A. Rhodes; 3,000 for Gary J. Elek; 6,500 for each of
Dr. Paul Craig Roberts, Dr. Peggy Miller, Willard R.
Holland, James A. Karman, James S. Marlen, John B. Yasinsky and
Joseph M. Gingo; 4,500 for Mr. Novak; and 195,000 for all
Directors and executive officers as a group. |
|
|
(3) |
The Trust for Barbara J. Stefanko, Barbara J. Stefanko Trustee,
holds 30,166 shares. Barbara Stefanko is the spouse of
Robert A. Stefanko. |
|
|
(4) |
Mr. Andres owns 5,300 shares jointly with his spouse,
and he has shared voting and dispositive power with respect to
such shares. |
|
|
(5) |
Includes 495,893 shares of Common Stock held by Barington
Companies Equity Partners, L.P. (Barington), 336,188
shares held by Barington Companies Offshore Fund, Ltd. (BVI)
(Barington Fund) and 360,921 shares beneficially
owned by Barington Companies Advisors, LLC (Barington
Advisors) held in a managed account that Barington
Advisors manages on behalf of Millenco, L.P
(Millenco) as further described in footnote 7 below.
James Mitarotonda (Mitarotonda) is the President and
Chief Executive Officer of Barington Companies Investors, LLC
(Barington Investors), which is the general partner
of Barington and, accordingly, Mr. Mitarotonda may be
deemed to have sole power to vote and dispose of the shares
owned by Barington. Mr. Mitarotonda is the sole stockholder
and director of LNA Capital Corp. (LNA), which is
the general partner of Barington Capital Group, L.P.
(Barington Capital), which is the managing member of
Barington Advisors, which is the investment advisor of the
Barington Fund and the investment account managed on behalf of
Millenco, and, accordingly, Mr. Mitarotonda may be deemed
to have sole power to vote and dispose of the shares owned by
the Barington Fund and shared power to vote and dispose of the
shares beneficially owned by Barington Advisors. Barington
Capital is also the majority member of Barington Investors so
through this relationship, Mr. Mitarotonda may also be
deemed to beneficially own the shares held by Barington.
Mr. Mitarotonda disclaims beneficial ownership of any such
shares except to the extent of his pecuniary interest therein. |
|
|
(6) |
As reported in a Schedule 13G/ A dated and filed with the
SEC on March 8, 2005. |
|
|
(7) |
On October 25, 2005, Barington, Barington Investors,
Barington Fund, Barington Advisors, Barington Capital, LNA,
Mr. Mitarotonda, Starboard Value & Opportunity Fund,
LLC (Starboard), Parche, LLC (Parche),
Admiral Advisors, LLC (Admiral), Ramius Capital
Group, LLC (Ramius), C4S & Co., LLC
(C4S), Mr. Peter Cohen (Cohen),
Mr. Morgan Stark (Stark), Mr. Jeffrey
Solomon (Solomon), Mr. Thomas Strauss
(Strauss), Millenco, Millennium Management, L.L.C.
(Millennium), Mr. Israel Englander
(Englander), RJG Capital Partners, L.P. (RJG
Partners), RJG Capital Management, LLC (RJG
Management), Mr. Ronald Gross (Gross),
D.B. Zwirn Special Opportunities Fund, L.P.(Zwirn
Fund L.P.), D.B. Zwirn Special Opportunities Fund
(TE), L.P. (Zwirn Fund (TE) L.P.), D.B. Zwirn
Special Opportunities Fund, Ltd. (Zwirn
Fund Ltd.), HCM/ Z Special Opportunities LLC
(HCM/ Z), D.B. Zwirn & Co., L.P.(Zwirn
& Co.), DBZ GP, LLC (DBZ), Zwirn Holdings,
LLC (Zwirn Holdings) and Mr. Daniel B. Zwirn
(Zwirn) jointly filed an amendment to
Schedule 13D with the Securities and Exchange Commission
reporting |
(Footnotes on next page)
20
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|
their respective beneficial ownership of, in the aggregate,
2,684,495 shares of Common Stock. As disclosed in the
Schedule 13D, as amended, Barington beneficially owns
495,893 shares, Barington Fund beneficially owns 336,188 shares,
Barington Advisors beneficially owns 360,921 shares which are
held in a managed account that Barington Advisors manages on
behalf of Millenco, Starboard beneficially owns 970,372 shares,
Parche beneficially owns 184,826 shares, Millenco beneficially
owns 400,789 shares (of which 360,921 shares are held in a
managed account described below), RJG Partners beneficially owns
12,500 shares, Zwirn Fund L.P. beneficially owns 28,393
shares, Zwirn Fund (TE) L.P. beneficially owns 28,397
shares, Zwirn Fund Ltd. beneficially owns 170,354 shares
and HCM/ Z beneficially owns 56,783 shares. Mr. Mitarotonda
is the President and Chief Executive Officer of Barington
Investors, which is the general partner of Barington and,
accordingly, Mr. Mitarotonda and Barington Investors may be
deemed to have the power to vote and dispose of the shares owned
by Barington. Mr. Mitarotonda is the sole stockholder and
director of LNA, which is the general partner of Barington
Capital, which is the managing member of Barington Advisors,
which is the investment advisor of the Barington Fund and the
investment account managed on behalf of Millenco, and,
accordingly, Mr. Mitarotonda, LNA, Barington Capital and
Barington Advisors each may be deemed to have the power to vote
and dispose of the shares owned by the Barington Fund and held
in the investment account on behalf of Millenco. Barington
Capital is also the majority member of Barington Investors so
through this relationship, Mr. Mitarotonda, LNA and
Barington Capital may also be deemed to beneficially own the
shares held by Barington. Mr. Mitarotonda disclaims
beneficial ownership of any such shares except to the extent of
his pecuniary interest therein. C4S is the managing member of
Ramius, which is the sole member of Admiral, which is the
managing member of each of Starboard and Parche, and,
accordingly, C4S, Ramius and Admiral each may be deemed to have
the power to vote and dispose of the shares owned by Starboard
and Parche. Messrs. Cohen, Stark, Solomon and Strauss are
the managing members of C4S, and, accordingly, each may be
deemed to share the power to vote and dispose of the shares
owned by Starboard and Parche. Messrs. Cohen, Stark,
Solomon and Strauss disclaim beneficial ownership of such
shares. Pursuant to an account management agreement between
Millennium Operations, LLC and Barington Advisors, Barington
Advisors manages an investment account on behalf of Millenco
with respect to 360,921 shares of Common Stock purchased in that
managed account on behalf of Millenco. Barington Advisors may be
deemed to have shared voting and dispositive power over such
shares and believes it would be viewed as the sole beneficial
owner of those shares. Mr. Englander is the Managing Member
of Millennium, which is the general partner of Millenco, and,
accordingly, Mr. Englander and Millennium each may be
deemed to have the sole power to vote and dispose of the 39,868
shares beneficially owned by Millenco and the shared power to
vote and dispose of the 360,921 shares held in the managed
account. Mr. Englander disclaims beneficial ownership of
any such shares except to the extent of his pecuniary interest
therein. Mr. Gross is the managing member of RJG
Management, which in turn is the general partner of RJG
Partners, and, accordingly, Mr. Gross and RJG Management
each may be deemed to have the power to vote and dispose of the
shares owned by RJG Partners. Mr. Gross disclaims
beneficial ownership of such shares except to the extent of his
pecuniary interest therein. Mr. Zwirn is the managing
member of Zwirn Holdings, which is the managing member of DBZ,
which is the general partner of Zwirn & Co., which is the
manager of each of Zwirn Fund L.P., Zwirn Fund
(TE) L.P., Zwirn Fund Ltd., HCM/ Z, and, accordingly,
Mr. Zwirn, Zwirn Holdings, DBZ, Zwirn & Co. each may be
deemed to have the power to vote and dispose of the shares owned
by Zwirn Fund L.P., Zwirn Fund (TE) L.P., Zwirn
Fund Ltd. and HCM/ Z. Mr. Zwirn disclaims beneficial
ownership of such shares except to the extent of his pecuniary
interest therein. The principal business address for each of
Barington and Barington Advisors is 888 Seventh Avenue, 17th
Floor, New York, NY 10019. Barington Funds principal
business address is c/o Bison Financial Services LTD, Bison
Court Road Town, Tortola, British Virgin Islands.
Starboards and Parches principal business address is
666 Third Avenue, 26th Floor, New York, NY 10017.
Millencos principal business address is 666 Fifth Avenue,
New York, New York 10103. RJG Partners principal business
address is 11517 West Hill Drive, North Bethesda, Maryland
20852. Zwirn Fund L.P.s and Zwirn Fund
(TE) L.Ps principal business address is 745 Fifth
Avenue, 18th Floor, New York, New |
(Footnotes continued on next page)
21
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York 10151. Zwirn Fund Ltd.s principal business
address is c/o Goldman Sachs (Cayman) Trust, Limited, P.O. Box
896 GT, George Town, Harbour Centre, 2nd Floor, Grand Cayman,
Cayman Island, British West Indies. HCM/ Zs principal
business address is c/o Highbridge Capital Corporation,
Corporate Centre, 4th Floor, 27 Hospital Road, Grand Cayman,
Cayman Islands, British West Indies. |
|
|
(8) |
As reported in a Schedule 13G dated and filed with the SEC
on February 14, 2005 by Barclays Global Investors, N.A.
Barclays Global Fund Advisors and a group of other
affiliated entities. The Schedule 13G states that
(a) Barclays Global Investors, N.A., beneficially owns and
has the sole power to dispose of an aggregate of
1,282,595 shares of the Corporations Common Stock and
the sole power to vote an aggregate of 1,097,793 shares of
the Corporations Common Stock and (b) Barclays Global
Fund Advisors beneficially owns and has the sole power to
dispose of an aggregate of 819,461 shares of the
Corporations Common Stock and the sole power to vote an
aggregate of 818,665 shares of the Corporations
Common Stock. According to the Schedule 13G, these shares
are held in trust accounts for the economic benefit of the
beneficiaries of those accounts. |
|
|
(9) |
As reported in a Schedule 13G dated and filed with the SEC
on February 9, 2005, Dimensional Fund Advisors Inc. is
the beneficial owner of and has the sole power to vote or direct
the voting of, and the sole power to dispose or direct the
disposition of, an aggregate of 2,040,432 shares of the
Corporations Common Stock. According to the
Schedule 13G, Dimensional Fund Advisors Inc. is an
investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, furnishes investment advice to
four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain
other commingled group trusts and separate accounts (the
Funds). As reported in the Schedule 13G,
Dimensional Fund Advisors Inc. possesses investment and/or
voting power over the Corporations Common Stock owned by
the Funds, and may be deemed to be the beneficial owner of such
shares. However, all such shares are owned by the Funds, and
Dimensional disclaims beneficial ownership of such shares in the
Schedule 13G/ A. |
|
|
(10) |
As reported in a Schedule 13G/ A dated and filed with the
SEC on February 10, 2005, by Snyder Capital Management,
L.P. (SCMLP) and Snyder Capital Management, Inc.
(SCMI). The Schedule 13G/ A states that SCMI is
a wholly owned subsidiary of IXIS Asset Management North
America, L.P. (formerly known as CDC IXIS Asset Management North
America, L.P.). IXIS Asset Management North America is
ultimately owned principally by three affiliated French
financial services firms: the Caisse des Dépôts et
Consignations (CDC); the Caisse National des Caisses
dEpargne (CNCE), a financial institution owned
by the CDC and the French regional savings banks known as the
Caisses dEpargne; and CNP Assurances, a French life
insurance company. According to the Schedule 13G/ A, SCMI
and IXIS Asset Management North America operate under an
understanding that all investment and voting decisions regarding
managed accounts are to be made by SCMI and SCMLP and not by
IXIS Asset Management North America or any entity controlling
it. Accordingly, SCMI and SCMLP do not consider IXIS Asset
Management North America or any entity controlling it to have
any direct or indirect control over the securities held in
managed accounts. As reported in the Schedule 13G/ A, each
of SCMLP and SCMI have shared voting power over
1,602,600 shares of the Corporations Common Stock and
have shared dispositive power over 1,766,276 shares of the
Corporations Common Stock. |
22
PERFORMANCE GRAPH
The following graph compares total stockholder returns in
respect of shares of the Corporations Common Stock over
the last five fiscal years (i.e. the cumulative changes over the
past five-year period of $100 invested at August 31, 2000)
to the Standard & Poors 500 Stock Index
(S&P 500) and the Standard &
Poors 500 Specialty Chemicals Index (S&P
Specialty Chemicals). Total return values for shares of
the Corporations Common Stock, S&P 500 and S&P
Specialty Chemicals were calculated based upon market weighting
at the beginning of the period and include reinvestment of
dividends on a quarterly basis. The stockholder returns shown on
the graph below are not necessarily indicative of future
performance.
The following graph shall not be deemed incorporated by
reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934, except to the
extent the Corporation specifically incorporates this
information by reference and otherwise shall not be deemed filed
under such Acts.
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8/00 | |
|
8/01 | |
|
8/02 | |
|
8/03 | |
|
8/04 | |
|
8/05 | |
A. Schulman, Inc.
|
|
$ |
100.00 |
|
|
$ |
119.29 |
|
|
$ |
188.42 |
|
|
$ |
147.68 |
|
|
$ |
190.08 |
|
|
$ |
177.99 |
|
S & P 500
|
|
$ |
100.00 |
|
|
$ |
75.65 |
|
|
$ |
62.04 |
|
|
$ |
69.49 |
|
|
$ |
77.44 |
|
|
$ |
87.14 |
|
S & P 500 Specialty Chemicals
|
|
$ |
100.00 |
|
|
$ |
126.70 |
|
|
$ |
139.35 |
|
|
$ |
145.92 |
|
|
$ |
168.20 |
|
|
$ |
183.95 |
|
23
AUDIT COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the
Corporations previous or future filings under the
Securities Act of 1933 or the Securities Exchange Act of 1934
that might incorporate this Proxy Statement or future filings
with the SEC, in whole or in part, the following report shall
not be deemed to be incorporated by reference into any such
filing.
The Audit Committee consists of the following members of the
Corporations Board of Directors: Willard R. Holland, James
A. Karman, James S. Marlen, Ernest J. Novak, Jr. and John
B. Yasinsky.
The Audit Committee has met, reviewed and discussed the audited
consolidated financial statements of the Corporation for the
fiscal year ended August 31, 2005, with the
Corporations management, who represented to the Audit
Committee that the financial statements were prepared in
accordance with accounting principles generally accepted in the
United States. The Audit Committee has discussed with
PricewaterhouseCoopers LLP, the Corporations independent
registered public accountants, the matters required to be
discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Audit Committee also has received the written disclosures
and the letter from PricewaterhouseCoopers LLP required by
Independence Standards Board Standard No. 1 (Independence
Discussion with Audit Committee), and the Audit Committee has
discussed the independence of PricewaterhouseCoopers LLP with
that firm.
Based upon the Audit Committees review and discussions
noted above, the Audit Committee recommended that the
Corporations audited financial statements be included in
the Corporations Annual Report on Form 10-K for the
fiscal year ended August 31, 2005 for filing with the SEC.
|
|
|
The Audit Committee: |
|
|
Ernest J. Novak, Jr., Chairman |
|
Willard R. Holland |
|
James A. Karman |
|
James S. Marlen |
|
John B. Yasinsky |
24
PROPOSAL 3 RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of the Corporation
has selected PricewaterhouseCoopers LLP as independent
registered public accountants to examine the books, records and
accounts of the Corporation and its subsidiaries for the fiscal
year ending August 31, 2006. This selection is being
presented to stockholders for ratification or rejection at this
Annual Meeting. The Audit Committee and the Board of
Directors each recommends that such selection be ratified.
PricewaterhouseCoopers LLP was the independent registered public
accountants of the Corporation for the fiscal year ended
August 31, 2005, and is considered by the Audit Committee
and the Board of Directors to be well qualified. Representatives
of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to make a statement if they desire to do so and will be
available to respond to appropriate questions.
For ratification, this proposal will require the affirmative
vote of the holders of a majority of the shares of Common Stock
represented at the Annual Meeting in person or by proxy. Votes
on the ratification of PricewaterhouseCoopers LLP marked
abstain and broker non-votes will not be counted as
votes cast, but will count toward the determination of the
presence of a quorum and have the same effect as votes cast
against the proposal. If the resolution is rejected, or if
PricewaterhouseCoopers LLP declines to act or becomes incapable
of acting as the independent registered public accountants of
the Corporation, or if its employment is discontinued, the Audit
Committee will appoint another public auditor, continued
employment of whom after the 2006 Annual Meeting of Stockholders
will be subject to ratification by stockholders.
Fees Billed by Independent Registered Public Accountants
Set forth below are the aggregate fees billed for professional
services rendered to the Corporation by PricewaterhouseCoopers
LLP, its independent registered public accountants for fiscal
2005 and fiscal 2004.
|
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Fiscal 2005 | |
|
Fiscal 2004 | |
|
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| |
|
| |
Audit
Fees(1)
|
|
$ |
3,152,300 |
|
|
$ |
1,010,600 |
|
Audit-Related
Fees(2)
|
|
$ |
48,000 |
|
|
$ |
490,600 |
|
Tax
Fees(3)
|
|
$ |
1,048,000 |
|
|
$ |
757,079 |
|
All Other Fees
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
(1) |
Comprised of the aggregate fees for professional services
rendered by PricewaterhouseCoopers LLP in connection with its
audit of the Corporations consolidated financial
statements and its limited reviews of the Corporations
unaudited consolidated interim financial statements included in
the Corporations Quarterly Reports on Form 10-Q, as
well as statutory audits of the Corporations subsidiaries
and consents to SEC filings. For fiscal 2005, audit fees include
fees for professional services rendered by
PricewaterhouseCoopers LLP in connection with assessment of
internal controls pursuant to Section 404 of Sarbanes-Oxley. |
|
(2) |
Comprised of professional services rendered by
PricewaterhouseCoopers LLP for Sarbanes-Oxley Section 404
advisory services, reporting and employee benefit plan audits
and other professional services. |
|
(3) |
Comprised of professional services rendered by
PricewaterhouseCoopers LLP for tax planning and advice and
domestic and foreign tax compliance and tax return preparation. |
Pre-Approval of Fees
The Audit Committee pre-approves the audit and non-audit
services performed by the independent registered public
accountants to assure that the provision of the services does
not impair the registered public accountants independence.
Unless a type of service to be provided by the independent
registered public accountants has received general pre-approval,
it requires specific pre-approval by the Committee. In addition,
any proposed services exceeding pre-approved cost levels require
specific Audit Committee pre-approval. The Audit Committee has
delegated pre-approval authority to its Chairman, provided that
the pre-approval is to be reviewed with the Audit Committee at
its next regular meeting. The Audit Committee also reviews,
25
generally on a quarterly basis, reports summarizing the services
provided by the independent registered public accountants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 21, 2005, the Corporation and Barington
Companies Equity Partners, L.P., Barington Companies Investors,
LLC, Barington Companies Offshore Fund, Ltd. (BVI), Barington
Companies Advisors, LLC, Barington Capital Group, L.P., LNA
Capital Corp., James Mitarotonda, Parche, LLC, Starboard
Value & Opportunity Fund, LLC, Admiral Advisors, LLC,
Ramius Capital Group, LLC, C4S & Co., LLC, Peter A.
Cohen, Morgan B. Stark, Jeffrey M. Solomon, Thomas W. Strauss,
Millenco, L.P., Millennium Management, L.L.C., Israel A.
Englander, RJG Capital Partners, L.P., RJG Capital Management,
LLC, Ronald Gross, D.B. Zwirn Special Opportunities Fund, L.P.,
D.B. Zwirn Special Opportunities Fund (TE), L.P., D.B. Zwirn
Special Opportunities Fund, Ltd., HCM/ Z Special Opportunities
LLC, D.B. Zwirn & Co., L.P., DBZ GP, LLC, Zwirn
Holdings, LLC and Daniel B. Zwirn (collectively, the
Barington Group) entered into the Agreement. Among
other things, the Agreement provides that:
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the Barington Group withdraw its notice of intent to nominate
persons for election as directors at the Corporations 2005
Annual Meeting and agreed to abide by certain standstill
provisions until the Corporations 2007 Annual Meeting; |
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|
the Corporation would work together with representatives of the
Barington Group to create a plan to improve the
Corporations operations and profitability; |
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|
the Corporation would implement a number of corporate governance
improvements, including (i) establishing a lead independent
Director; (ii) implementing a regular evaluation of the
Corporations rights agreement by the Boards
independent directors; and (iii) submitting Proposal 2
for approval by the Corporations stockholders; |
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|
the Corporation would reimburse the Barington Group, up to an
aggregate maximum of $150,000, for the expenses incurred by the
Barington Group in connection with the Agreement and all related
activities and matters; and |
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|
the Board of Directors would appoint James A. Mitarotonda and
another person independent of the Corporation and the Barington
Group as Directors. |
Mr. Mitarotonda is affiliated with several members of the
Barington Group and is also a party to the Agreement in his
individual capacity. For more information relating to the
Barington Group, see Security Ownership of Management and
Certain Beneficial Owners herein, the most recent
Schedule 13D/ A filed by the Barington Group with the SEC
on October 25, 2005, and the Form 8-K filed by the
Corporation with the SEC on October 24, 2005.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporations officers and Directors, and
persons who own more than ten percent of the Corporations
Common Stock, to file reports of ownership and changes in
ownership with the SEC. To the Corporations knowledge,
based solely on its review of the copies of such forms received
by the Corporation, all such persons timely filed their
respective reports during the year ended August 31, 2005,
except that Mr. Holland reported an acquisition of
phantom stock in lieu of Directors fees one
day late in April 2005, and Mr. Rhodes reported the
exercise of an option to acquire 1,000 shares of the
Corporations Common Stock one day late in November 2004.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for
action at the Annual Meeting other than those described in this
Proxy Statement. The Corporations By-Laws describe
procedures, including minimum notice provisions, for stockholder
nomination of Directors and submission of other stockholder
business to be
26
transacted at the Annual Meeting. A copy of the pertinent By-Law
provisions is available on request to the Corporate Secretary at
A. Schulman, Inc., 3550 West Market Street, Akron, Ohio
44333. If any such stockholder proposals or other business to be
transacted properly come before the Annual Meeting, it is
intended that shares represented by proxies solicited hereby
will be voted in respect thereof in accordance with the best
judgment of the proxy holders.
GENERAL INFORMATION
Voting of Proxies
Shares represented by properly executed proxies will be voted at
the meeting, and if a stockholder has specified how the shares
represented thereby are to be voted, they will be voted in
accordance with such specification. It is intended that shares
represented by proxies on which no specification has been made
will be voted (i) for the election of Directors,
(ii) for the amendment of the Certificate of Incorporation
and (iii) for the ratification of the selection of the
independent registered public accountants.
Stockholder Proposals
Any stockholder who intends to present a proposal at the annual
meeting in the year 2006 must deliver the proposal to the
Corporate Secretary at A. Schulman, Inc., 3550 West Market
Street, Akron, Ohio 44333:
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Not later than July 12, 2006, if the proposal is submitted
for inclusion in the Corporations proxy materials for that
meeting pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934; or |
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|
Not earlier than September 10, 2006 and not later than
October 10, 2006, if the proposal is submitted pursuant to
the Corporations By-Laws. The Corporation reserves the
right to exercise discretionary voting authority on such
proposal if a stockholder has failed to submit the proposal
within such September 10, 2006 through October 10,
2006 time period. |
A copy of the Corporations By-Laws is available on request
to the Corporate Secretary at A. Schulman, Inc., 3550 West
Market Street, Akron, Ohio 44333.
Revocation of Proxies
A proxy may be revoked at any time before a vote is taken or the
authority granted is otherwise exercised. Revocation may be
accomplished by the execution of a later dated proxy with regard
to the same shares or by giving notice in writing or in open
meeting.
Solicitation of Proxies
The cost of soliciting the accompanying proxies will be borne by
the Corporation. The Corporation may reimburse brokers,
nominees, fiduciaries and custodians their reasonable expenses
for sending proxy material to principals and obtaining their
instructions. In addition to solicitation by mail, proxies may
be solicited in person, by telephone or telegraph or by
officers, Directors and regular employees of the Corporation.
Further, the Corporation has retained Georgeson Shareholder to
perform solicitation services in connection with this Proxy
Statement. For such services, the Corporation will pay Georgeson
Shareholder a fee of approximately $7,000 and will be reimbursed
for certain out-of-pocket expenses and indemnified against
certain liabilities incurred in connection with this proxy
solicitation.
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By order of the Board of Directors |
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|
Gary J. Elek
|
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Secretary |
November 9, 2005
27
Appendix A to Proxy Statement
ARTICLE SEVENTEENTH OF THE
RESTATED CERTIFICATE OF INCORPORATION OF A. SCHULMAN, INC.
SEVENTEENTH
(A) The affirmative vote of the holders of not less than
80 percent of the outstanding shares of Voting Stock (as
hereinafter defined), voting together as a single class, shall
be required for the approval or authorization of any Business
Combination (as hereinafter defined) of the Corporation with any
Related Person (as hereinafter defined); provided, however, that
these requirements shall not be applicable if:
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(1) The Business Combination has been expressly approved by
a vote of a majority of the Continuing Directors of the
Corporation (as hereinafter defined); or |
|
|
(2) The consideration to be received per share by holders
of common stock of the Corporation in the Business Combination
is cash in an amount not less than the higher of (i) the
highest per share price, including commissions, paid by the
Related Person for the common stock of the Corporation during
the two years preceding the last purchase by the Related Person
or (ii) the highest sales price per share at which the
common stock of the Corporation was traded on any stock exchange
or in any over-the-counter market during the two years preceding
the last purchase thereof by the Related Person. |
(B) For the purposes of this Article SEVENTEENTH:
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(1) Business Combination means: |
|
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|
(a) |
any merger or consolidation of the Corporation or a subsidiary
of the Corporation with (i) any Related Person or
(ii) any other corporation (whether or not itself a Related
Person) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of a Related Person; |
|
|
(b) |
any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, of all or any Substantial Part (as hereinafter
defined) of the assets of either the Corporation (including
without limitation any voting securities of a subsidiary) or of
a subsidiary of the Corporation, to a Related Person; |
|
|
(c) |
any sale, lease, exchange, transfer or other disposition of all
or any Substantial Part of the assets of a Related Person to the
Corporation or a subsidiary of the Corporation; |
|
|
(d) |
the issuance of any securities of the Corporation or a
subsidiary of the Corporation to a Related Person; |
|
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(e) |
any recapitalization or reclassification that would have the
effect of increasing the proportionate share of the outstanding
shares of any class of equity securities of the [C]orporation or
any subsidiary of the Corporation which is owned by any Related
Person; |
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(f) |
the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of a
Related Person; or |
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any agreement, contract, or other arrangement providing for any
of the transactions described in this definition of Business
Combination. |
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(2) Related Person means and includes any
individual, corporation, partnership or other person or entity
which, together with its Affiliates and Associates (both as
hereinafter defined) is the Beneficial Owner (as hereinafter
defined) in the aggregate of 20 percent or more of the
outstanding Voting Stock, and any Affiliate or Associate of any
such individual, corporation, partnership or other person or
entity. |
A-1
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(3) Affiliate and Associate have
the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on
December 1, 1983. |
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(4) Beneficial Owner has the meaning ascribed
to such term in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in
effect on December 1, 1983. |
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(5) Substantial Part means more than
20 percent of the fair market value of the total assets of
the entity in question, as of the end of its most recent fiscal
year ending prior to the time the determination is being made. |
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(6) Voting Stock shall mean all outstanding
shares of capital stock of the Corporation entitled to vote
generally in the election of Directors, and each reference to a
proportion of Voting Stock shall refer to such proportion of the
votes entitled to be cast by such shares. |
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(7) Continuing Director means a Director who
either (a) was a member of the Board of Directors prior to
the time that any Related Person became a Related Person or
(b) any successor of a Continuing Director who was
recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board. |
(C) The affirmative vote of the holders of not less than
80 percent of the outstanding voting shares of common stock
of the Corporation entitled to vote generally in the election of
Directors shall be required to alter, amend or repeal this
Article SEVENTEENTH, provided, however, that this paragraph
shall not apply to, and such 80 percent vote shall not be
required for, any alteration, amendment or repeal recommended by
the affirmative vote of at least two-thirds of the Continuing
Directors of the Corporation.
A-2
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual
Meeting of Stockholders, you can be sure your shares
are represented at the meeting by promptly returning
your proxy in the enclosed envelope.
Please fold and detach card at the perforation before mailing
A. SCHULMAN, INC.
This Proxy is Solicited on Behalf of the Board of Directors of
A. Schulman, Inc. for the Annual Meeting of Stockholders
to be Held on December 8, 2005
The undersigned hereby appoints TERRY L. HAINES, ROBERT A. STEFANKO, and GARY J. ELEK and each of
them as Proxies, each with the full power to appoint his substitute, and hereby authorizes them to
represent and to vote all of the shares of Common Stock of A. Schulman, Inc. the undersigned is
entitled to vote at the Annual Meeting of Stockholders of A. Schulman, Inc. to be held on December
8, 2005 and at any adjournments or postponements thereof, in the manner specified on this proxy
card and as fully as the undersigned could do if personally present at the meeting. Receipt of a
separate Notice of Annual Meeting and Proxy Statement is acknowledged by return of the Card.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but
you need not mark any boxes if you wish to vote in accordance with the Board of Directors
recommendations. The Proxies cannot vote your shares unless you sign and return this Card.
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Dated:
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, 2005 |
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Signature
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Signature (if held jointly)
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NOTE: Please sign exactly as your name appears
hereon. When shares are held by joint tenants,
both should sign. When signing as attorney,
executor, trustee, administrator or guardian,
please give title as such. If stockholder is a
corporation, please sign in full corporate
name by president or other authorized officer.
If a partnership, please sign in partnership
name by authorized person. |
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
Please fold and detach card at perforation before mailing.
This proxy is solicited on behalf of the Board of Directors of A. Schulman, Inc. This proxy will be
voted as directed, but if no instructions are specified, this proxy will be voted FOR Proposals 1,
2 and 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. Election of Class I Directors:
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Nominees:
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Willard R. Holland
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Dr. Peggy Miller
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John B. Yasinsky |
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o FOR all nominees listed above
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o WITHHOLD Authority
to vote for all nominees listed above
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o FOR all nominees listed above
except as marked to the contrary below |
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To withhold authority to vote for any individual nominee, mark FOR all nominees listed above
except as marked to the contrary and write that nominees name on the line below. |
2. To approve the amendment of the Corporations Restated Certificate of Incorporation, as amended, by deleting Article SEVENTEENTH.
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o FOR
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o AGAINST
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o ABSTAIN |
3. To ratify the selection of PricewaterhouseCoopers LLP as independent registered public accountants for the fiscal year ending
August 31, 2006.
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o FOR
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o AGAINST
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o ABSTAIN |
4. The Proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein.
(Please sign and date the proxy card on the reverse side)