PROPOSAL 1 - ELECTION OF DIRECTORS
Current directors Susan S. Gayner, Jeffrey Kaczka and Amy J. Michtich each made the independent decision to not stand for re-election for the 2021-2022 Board term for personal and professional reasons. The Certificate of Incorporation of the Company provides that the Board of Directors shall consist of not less than three nor more than 15 individuals. Upon recommendation of the Corporate Governance Committee and discussion by the current Board of Directors, the Board of Directors has fixed the number of directors constituting the full Board at eightfour members and recommends that the eightfour nominees listed in the table whichthat follows be elected as directors to serve for a term of one year until the next Annual Meeting or until their successors are elected and qualified to serve. Each of the nominees has consented to be named in this Proxy Statement and to serve as a director if elected.
If cumulative voting is not requested, the proxy agents named in the Board of Directors’ form of proxy that accompanies this Proxy Statement will vote the proxies received by them "FOR" the election of the eightfour persons named as directors. If cumulative voting is requested, the proxy agents named in the Board of Directors’ form of proxy that accompanies this Proxy Statement intend to vote the proxies received by them cumulatively for some or all of the nominees in such manner as may be determined at the time by such proxy agents.
If, at the time of the Annual Meeting of Shareholders, or any adjournment(s) thereof, one or more of the nominees is not available to serve by reason of any unforeseen contingency, the proxy agents intend to vote for such substitute nominee(s) as the Board of Directors recommends, or the Board of Directors will reduce the number of directors.
Vote Required
Directors will be elected by a plurality of the votes cast. Votes that are withheld or shares that are not voted will have no effect on the outcome of the election of directors.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE EIGHTFOUR NOMINEES LISTED IN THE FOLLOWING TABLE AS DIRECTORS OF THE COMPANY.
The following table sets forth the names of nominees for director, their ages, the years in which they were first elected directors, if applicable, and a brief description of their principal occupations and business experience during the last five years. There are no family relationships among any of the directors and executive officers. |
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Name, Age, Principal Occupation, Other Directorships and Other Information | Director Since
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Craig C. Bram, age 60
Mr. Bram became President & Chief Executive Officer ("CEO") and a director of Synalloy on January 24, 2011. From 2004 until 2010, he served as a director of the Company. He was the founder and has been President of Horizon Capital Management, Inc., an investment advisory firm located in Richmond, VA since 1995.
| 2004 |
Anthony A. Callander, age 72
Mr. Callander is the Upstate Managing Director of The Hobbs Group, a certified public accounting ("CPA") firm in Columbia, SC. He retired from Ernst & Young, LLP in 2008 after 36 years in its Columbia, SC, Greenville, SC and Atlanta, GA offices. He served as a Partner in the firm's audit and assurance practice and in various other roles including Office Managing Partner of the Columbia and Greenville offices, and leading the Southeast manufacturing industry group.
| 2012 |
Susan S. Gayner, age 58
Ms. Gayner was named CEO and President of ParkLand Ventures, Inc., an owner-operator of multi-family housing communities in nine states, in May 2014. From October 2010, Ms. Gayner served as the Chief Operating Officer of ParkLand, and was Vice President from May 2009. Ms. Gayner is a chemical engineer and holds a MAI designation (currently inactive). Prior to ParkLand, she served as an independent MAI and held various manufacturing and quality assurance roles with DuPont Company and Hercules, Inc.
| 2016 |
Henry L. Guy, age 5051 Mr. Guy is the President & CEO of Modern Holdings Incorporated, ("Modern Holdings"), a diversified holding company located in Summit, NJ.He has served on a variety ofthe board of directors includingof Metro International S.A. (MTRO), Scribona AB (CATB), Pergo AB (PERG), Miltope Corporation (MILT) and Evermore Global Advisors (EVGBX). Mr. Guy joined Modern Holdings in 2002 and has ledmanaged investments in over 30 subsidiaries. | 2011 |
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Name, Age, Principal Occupation, Other DirectorshipsMr. Guy graduated from the United States Naval Academy with a Bachelor of Science degree in Economics and Other Information | Director
Since
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Jeffrey Kaczka, age 59
Mr. Kaczka has more than 25 years of experienceearned his M.B.A. with a concentration in financial management for both publicOperations and large private companies. From April 2011 to July 2015, he served as Executive Vice President and Chief Financial Officer for MSC Industrial Direct (NYSE: MSM), a large distributor of metalworking and maintenance, repair, and operations products. From 2008 to 2009, he was the Chief Financial Officer, International, of Genworth Financial, Inc., a financial services company. From 2001 to 2007, Mr. Kaczka served as Senior Vice President and Chief Financial Officer of Owens & Minor, Inc. (NYSE: OMI), a Fortune 500 company and leading distributor of medical and surgical supplies to the acute care market. Prior to joining Owens & Minor, Mr. Kaczka held chief financial officer positions at Allied Worldwide, Inc. and I-Net, Inc. Mr. Kaczka began his career at General Electric, where he spent 14 years, moving through its Financial Management Program, Corporate Audit Staff and financial positions in several GE operations.
| nominee |
Amy J. Michtich, age 50
Ms. Michtich has been employed by Molson Coors Brewing Company since 2015. Most recently she served as the Chief Supply Chain Officer of Molson Coors Canada, leading the supply network optimization strategy for Canada's oldest brewer. From 2007 to 2015, she was employed by MillerCoors as Vice President - Brewery Operations, located in Rockingham County, VA. Prior to 2007, Ms. Michtich held executive and operations leadership positions across various consumer package goods companies including PepsiCo, The Clorox Company and Unilever.
| 2014 |
James W. Terry, Jr., age 71
In March 2018, Mr. Terry was named Director of Strategic Investments for Hollingsworth Funds, Inc., a charitable foundation in Greenville, SC. From October 2009 to February 2018, he was the President of Hollingsworth Funds, Inc. Mr. Terry's career has been principally in the banking industry where he served as President of Carolina First Bank, Greenville, SCStrategy from 1991 to 2008. Prior to Mr Terry's service with Carolina First, he served as EVP Corporate Bank Services for First Union National Bank.Vanderbilt University.
| 2011 |
Murray H. WrightChristopher G. Hutter, age 7341
Mr. WrightHutter became interim President & Chief Executive Officer (CEO) of Synalloy on November 9, 2020. He also currently serves as Co-Founder and Manager of UPG Enterprises, LLC (f/k/a Union Partners, LLC), an operator of a diverse set of industrial companies focused on metals, manufacturing, distribution and logistics, since its founding in August 2014. At UPG Enterprises, Mr. Hutter oversees operations and growth initiatives at the holding company and portfolio company level, and has extensive experience in large scale acquisitions, transaction structuring and business operations and integration across a broad spectrum of industries. Mr. Hutter graduated cum laude from University of Illinois with a Bachelor of Science degree in Finance and earned his M.B.A.in Finance from Lewis University. | 2020 |
Benjamin Rosenzweig, age 35 Mr. Rosenzweig currently serves as a Partner at Privet Fund Management LLC, an investment firm focused on event-driven, value-oriented investments in small capitalization companies. Mr. Rosenzweig currently serves as a director of each of Potbelly Corporation (NASDAQ: PBPB), a restaurant chain (since April 2018), PFSweb, Inc. (NASDAQ: PFSW), a global commerce service provider (since May 2013), and Hardinge Inc. (formerly NASDAQ: HDNG), a global designer, manufacturer and distributor of machine tools (since October 2015). Mr. Rosenzweig graduated magna cum laude from Emory University with a Bachelor of Business Administration degree in Finance and a second major in Economics. | 2020 |
John P. Schauerman, age 64 Mr. Schauerman has been a Director of Primoris Services Corporation (“Primoris”) (NASDAQ: PRIM) since November 15, 2016. He previously served as Chairmanin numerous executive roles at Primoris, including Executive Vice President of Corporate Development, Chief Financial Officer.Mr. Schauerman previously served on the Board of Synalloy since 2014. Prior to his retirement, he was Senior Counsel at the Richmond, VA law firmDirectors of DurretteCrump, PLC in January 2013 to 2016.MYR Group (NASDAQ: MYRG); Harmony Merger Corp. (NASDAQ: HRMNU): Allegro Merger Corp (NASDAQ: ALGR); and Wedbush Securities, Inc. Mr. Wright's career has principally been in law and investment banking. From 1999 to 2012, he wasSchauerman is a founder and managing director of Avitas Capital, LLC, a closely held investment banking firm in Richmond, VA. In 1986, he founded the law firm of Wright, Robinson, Osthimer & Tatum in Richmond, VA. He served as Chief Executive Officermember of the law firmDean’s Executive Board of the UCLA School of Engineering. Mr. Schauerman holds an M.B.A. in Finance from 1986 to 2006.Columbia University, New York, and a B.S. in Electrical Engineering from the University of California, Los Angeles. | 20012020 |
The Corporate Governance Committee believes the combined business and professional experience of the Company’s directors, and their various areas of expertise make them a useful resource to management and qualify them for service on the Board. Messrs. Wright and Bram have served on the Board for a significant period of time. During their tenures, these directors have gained considerable institutional knowledge about the Company and its operations, which has made them effective board members. Because the Company’s operations are complex, continuity of service and development of institutional knowledge help make the Board more efficient and more effective at developing long-range plans than it would be if there were frequent turnover in Board membership. When a Board member decides not to run for re-election, the Corporate Governance Committee seeks replacement directors who it believes will make significant contributions to the Board for a variety of reasons, including among others, business and financial experience and expertise, business and government contacts, relationship skills, knowledge of the Company and diversity.
The Corporate Governance Committee believes the current Board members and nominee are highly qualified to serve and each member has unique qualifications and business expertise that benefit the Company. Mr. Wright’s career as a trial lawyer, founder and CEO of a law firm and his business and financial experience as managing director of a closely-held investment banking firm are considered to be valuable attributes to the Board. Mr. Bram has over 30 years of experience in business management, financial operations, logistics, management consulting, business start-ups and strategic planning for a variety of companies. Mr. Bram was employed by the Reynolds Metals Company, a global aluminum manufacturer, in its corporate Logistics and Sales and Marketing departments. He is an investor in multiple private businesses and real estate ventures and also serves on the boards of several private companies. Mr. Terry brings a wealth of experience in the banking industry where he spent more than 35 years including 17 years as President of a bank where he managed and directed an 85-branch statewide network growing the asset structure from approximately $300 million in 1991 to over $6 billion in 2008. In his current role at Hollingsworth Funds, Mr. Terry manages and administers a non-profit fund exceeding $100 million and is responsible for investment asset management, expense and accounting
functionality for all subsidiary operations with assets exceeding $400 million. We believe Mr. Terry's banking experience is valuable in helping the Company evaluate financing options as well as acquisitions. •Mr. Guy’s primary career focus has been in the area of private investments. His expertise and experience in this area are valuable tools as the Company focuses on growing through acquisitions.
•Mr. Callander spent his career in the auditHutter is a demonstrated business builder and assurance practiceorganizational leader with significantoperational know how and management capabilities across industrial segments, particularly steel and metals. His diverse experience in auditing,covers areas that include corporate strategy, operations management, mergers and acquisitions, initial public offeringslogistics and other financings, reorganizations, business process improvementwarehousing and business strategy development.supply chain optimization.
From 1998 to 2003, while with Ernst & Young, •Mr. Callander served as the audit partnerRosenzweig has corporate governance expertise based on the Company’s independent audits, giving him in-depth experience and knowledge about the Company. Mr. Callander, a CPA, also meets the criteria of a financial expert. Mr. Kaczka, a director nominee, has more than 25 years of experience in financial management of bothservice on numerous public and large private company boards of directors, including multiple manufacturing companies. HisHe has a background as Chief Financial Officer for multiple publicly traded companies brings significant experience in finance, financialleading and banking transactions,working on mergers and acquisitions, restructurings and audit matters. refinancing situations, and strategic board-level reviews.
•Mr. Kaczka also meets the criteria of aSchauerman has operational, financial, expert. Ms. Michtichcorporate development and strategic planning expertise gained from executive roles and directorships at construction and infrastructure companies. He has served in executive and operations leadership positions with several large union and non-union manufacturing businesses. She has significantcorporate governance experience in the areas of human resources, manufacturing operations, environmental compliance and safety. Ms. Gayner offers valuable experience in the chemical business. She has 10 years' experience working for two large chemical companies in the area of quality assurance and as a researchresult of service on several private and development engineer. In her current role as CEO and Presidentpublic company boards of Parkland Ventures, Inc., she has valuable experience in executive management and operations.directors across business-to-business sectors.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors currently has seven members: Susan S. Gayner, Henry L. Guy, Christopher G. Hutter, Jeffrey Kaczka, Amy J. Michtich, Benjamin Rosenzweig, and John P. Schauerman. Director Independence
The Board of Directors has determined that each of the following directors are independent as such term is defined by the applicable rules of the Nasdaq Stock Market LLC (the "Nasdaq Rules"): Anthony A. Callander, Susan S. Gayner, Henry L. Guy, Jeffrey Kaczka, Amy J. Michtich, James W. Terry, Jr.Benjamin Rosenzweig, and Murray H. Wright.John P. Schauerman. The Board has also determined that each of the current members of the Audit Committee, the Compensation & Long-Term Incentive Committee and the Corporate Governance Committee is independent within the meaning of the Nasdaq Rules, and each person who served on such committees at any time during 20182020 was independent under the Nasdaq Rules.
Board and Board Committee Meetings and Attendance at Shareholder Meetings
During fiscal year 2018,2020, the Board of Directors met fourtwenty-eight (28) times. In addition to regularly scheduled meetings, the Board held special meetings to discuss (i) the 2020 proxy contest initiated by Privet Fund Management, LLC and UPG Enterprises, LLC, (ii) the independent investigation referred to in the Company’s Form 12b-25 filing dated August 11, 2020, (iii) Mr. Bram’s retirement as CEO and the appointment of Mr. Hutter as interim CEO, (iv) the appointment of Ms. Cunningham as Senior Vice President and CFO, and (v) other strategic planning matters. All members of the Board attended 75% or more of the aggregate of the total number of meetings of the Board of Directors and of the committees of the Board on which they served. The Company encourages, but does not require, its directors to attend annual meetings of shareholders. All directors attended the 20182020 Annual Meeting.
The Board has established an Audit Committee, a Compensation & Long-Term Incentive Committee, and a Corporate Governance Committee, each of which is comprised entirely of directors who meet the applicable independence requirementrequirements of the NasdaqNASDAQ Rules. The committees keep the Board informed of their actions and provide assistance toassist the Board in fulfilling its oversight responsibility to shareholders. The table below provides current membership information as well as the meeting information for the last fiscal year.
| | Name | Audit Committee | Compensation & Long-Term Incentive Committee | Corporate Governance Committee | Name | Audit Committee | Compensation & Long-Term Incentive Committee | Corporate Governance Committee(1) |
Anthony A. Callander | X* | | X | |
Susan S. Gayner | | X | X* | Susan S. Gayner | X | | X* |
Henry L. Guy | X | X* | | Henry L. Guy | | X | |
Christopher G. Hutter | | Christopher G. Hutter | | X |
Jeffrey Kaczka | | Jeffrey Kaczka | X* | | X |
Amy J. Michtich | | X | X | Amy J. Michtich | | X* | X |
James W. Terry, Jr. | X | | |
Total Meetings in 2018 | 5 | 4 | 4 | |
Benjamin Rosenzweig | | Benjamin Rosenzweig | | X | |
John P. Schauerman | | John P. Schauerman | X | | |
Total | | Total | 3 | 3 |
* Committee Chair | (1) Mr. Hutter was appointed as Interim President and CEO on November 9, 2020. At that time, Mr. Hutter's service to the Governance Committee ended and Mr. Kaczka was appointed to the Governance Committee. | | (1) Mr. Hutter was appointed as Interim President and CEO on November 9, 2020. At that time, Mr. Hutter's service to the Governance Committee ended and Mr. Kaczka was appointed to the Governance Committee. |
Audit Committee
The Company has an Audit Committee is established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The Audit Committee1934 and acts pursuant to a written charter adopted by the Board of Directors, which is available on the Company’s website at www.synalloy.com. Each member of the Audit Committee is independent as defined in the NasdaqNASDAQ Rules and meets the independence requirements of Rule 10A-3 under the Securities Exchange Act of 1934. The Audit Committee selects and appoints the independent registered public accounting firm,auditor, pre-approves the fees onpaid to the independent registered public accounting firm,auditor, reviews and discusses with management and the independent auditorsauditor prior to filing with the SEC the audited financial statements included in the Company’s Annual Report on Form 10-K and the unaudited financial statements included in the Form 10-Q for each quarter, meets independently with the independent auditors,auditor, reviews the Audit Committee’s charter, and has oversight of the Company’s Code of Conduct and Internal Audit.
Susan S. Gayner, Jeffrey Kaczka, and John P. Schauerman served on the Audit Committee during 2020. The Board designated Mr. CallanderKaczka as the Audit Committee Financial Expert, as defined by the SEC rules.
Compensation & Long-Term Incentive Committee
All members of the Compensation & Long-Term Incentive Committee are independent directors as defined in the Nasdaq Rules.NASDAQ Rules, and none of them is a present or past employee or officer of the Company or its subsidiaries. This committeeCommittee acts pursuant to a written charter which is available on the Company’s website at www.synalloy.com. The committeeCommittee reviews and approves salaries, bonuses, incentive compensation and benefits for the Company’s executive officers, of the Company, and administers and makes recommendations with respect to the Company’s cash incentive and equity plans, including the granting of shares and options thereunder, and reviews the committee’s charter.
The committeeCommittee sets the compensation for the CEO and evaluates performance and it considers recommendations from the Company’s CEO in setting compensation for other senior executive officers. The Vice President, Corporate AdministrationDirector of Human Resources supports the committee in its duties, and the committeeCommittee may delegate authority to the Human Resources Department to fulfill administrative duties relating to the Company’s compensation programs. The committee has the authority under its charter to retain and terminate,engage and approve fees for compensation consultants and other advisors as it deems appropriate to assist it in the fulfillment of its duties.Since 2016, the committeeCommittee has retained Pearl Meyer (“PM”) as the Compensation & Long-Term Incentive Committee’s outsideits independent compensation consulting firm. The committeeCommittee has reviewed and confirmed the independence of PM as the committee's compensation consultant.Pearl Meyer. Neither PMPearl Meyer nor any of its affiliates provide any services to the Company except for the services related solely to the executive officer and director compensation.
Henry L. Guy, Amy J. Michtich and Ben Rosenzweig served on the Compensation & Long-Term Incentive Committee during 2020.
Corporate Governance Committee
All members of the Corporate Governance Committee are independent as defined in the NasdaqNASDAQ Rules. This committeeCommittee acts pursuant to a written charter which is available on the Company’s website at www.synalloy.com. This committeeCommittee is responsible for reviewing and recommending changes in the size and composition of the Board of Directors and evaluating and recommending candidates for election to the Company’s Board. This committeeThe Committee also reviews and oversees corporate governance issues and makes recommendations to the Board related to the adoption of policies pursuant to rules of the SEC, NasdaqNASDAQ and other governing authorities, and as required by the Sarbanes-Oxley Act of 2002.
Compensation Committee Interlocks and Insider Participation
Susan S. Gayner, Henry L. Guy,Christopher G. Hutter, Jeffrey Kaczka and Amy J. Michtich and James W. Terry, Jr. served on the Compensation & Long-Term IncentiveCorporate Governance Committee during 2018. All members of2020. Mr. Hutter’s service on this Committee ended upon his appointment as Interim CEO on November 9, 2020. At that time, Mr. Kaczka was appointed to the Compensation & Long-Term Incentive Committee are independent directors and none of them is a present or past employee or officer of the Company or its subsidiaries.Governance Committee.
Related Party Transactions
The Company requires that each executive officer, director and director nominee complete an annual questionnaire and report all transactions with the Company in which such persons (or their immediate family members) had or will have a direct or indirect material interest (except for salaries, directors’ fees and dividends on our stock). Management reviews responses to the questionnaires and, if any such transactions are disclosed, they are reviewed by the Board of Directors. The Company does not, however, have a formal written policy setting out these procedures. There were no such transactions during the fiscal year ended December 31, 2018.2020.
The Board of Directors has adopted a retirement policy with respect to the Company's directors.Under the policy, directors who attain the age of 75 prior to an annual meeting of the Company's shareholders are not eligible to be nominated for re-election to the Company's Board of Directors at the annual meeting.
CORPORATE GOVERNANCE
Board Leadership Structure and Board’s Role in Risk Oversight
The Board of Directors' roles and responsibilities are set forth in the Bylaws and Board Charter which provide for a Chairman elected by the Board from among its members. The business and affairs of the Company are managed under the direction of the Board of Directors, and that management control is subject to the authority of the Board of Directors to appoint and remove any of our officers at any time. Our Board does not have a specific policy as to whether the role of Chairman and CEO should be held by separate persons, but rather makes an assessment ofassesses the appropriate form of leadership structure on a case-by-case basis. The Board believes that this issue can beplays a part ofin the succession planning process and recognizes that there are various circumstances that weigh in favor of or against both combination and separation of these offices. Since 2002, the roles of Chairman and CEO have been held by separate persons. The Board believes it is appropriate, and in our Company’s best interests, for the two roles to continue to be separated at this time.
Board’s Role in Risk Oversight
Our Board is actively involved in the oversight of risks that could affect our Company. The Board receives regular reports from members of senior management on areas of material risk to us, including strategic, operational, financial, information technology (including cyber risk), legal and regulatory risks. These reports are reviewed by the full Board, or, where responsibility for a particular area of risk oversight is delegated to a committee of the Board, that committee reviews the report and then reports to the full Board. In addition, the Audit Committee’s charter requires the committee to inquire of management and the registered public accountantsindependent auditor about significant risks or exposures and assess the steps management has taken to manage such risks, and further requires the committee to discuss with the registered public accountantsindependent auditor the Company’s policies and procedures to assess, monitor, and manage business risk, and legal and ethical compliance programs.
Director Qualifications and Nomination Process
The Corporate Governance Committee has adopted Corporate Governance Guidelines that set forth factors in recommending and evaluating candidates, including personal characteristics, core competencies, commitment and independence. It also takes into consideration such factors as it deems appropriate based on the Company’s current needs. These factors may include diversity, age, skills such as understanding of appropriate technologies and general finance, decision-making ability, inter-personal skills, experience with businesses and other organizations of comparable size, and the interrelationship between the candidate’s experience and business background, and other Board members’ experience and business background. Although the Corporate Governance Committee does not have a specific policy with regard to the consideration of diversity in identifying director nominees, the committee considers racial and gender diversity, as well as diversity in business and educational experience, as part of the total mix of information it takes into account in identifyingapplied to identify nominees. Additionally, candidates for director shouldmust possess the highest personal and professional ethics and they should be committed to the long-term interests of the shareholders of the Company.
The Corporate Governance Committee does not have any specific process for identifying director candidates. Such candidates are routinely identified through personal and business relationships and contacts of the directors and executive officers.The Board Charter does require that any director nominee, whether a new nominee or a previous director, must be less than 75 years of age on the date of the Annual Meeting of Shareholders and Board of Director nominee vote.
The Corporate Governance Committee will consider as potential nominees persons recommended by shareholders if the following requirements are met. If a shareholder wishes to recommend a director candidate to the Corporate Governance Committee for consideration as a Board of Directors’ nominee, the shareholder must submit in writing to the Corporate Governance Committee the recommended candidate’s name, a brief resume setting forth the recommended candidate’s business and educational background and qualifications for service, the number of the Company’s shares beneficially owned by the person, and a notarized consent signed by the recommended candidate stating the recommended candidate’s willingness to be nominated and to serve. Additionally, the recommending shareholder must provide his or her name and address and the number of the Company’s shares beneficially owned by such person. This information must be delivered to the Corporate Secretary of the Company at the Company’s corporate headquarters at 4510 Cox Road, Suite 201, Richmond, VA 23060 for transmission to the Corporate Governance Committee, and must be received not less than 90 days nor more than 120 days prior to an annual meetingthe Annual Meeting of shareholders. The committee may request further information if it determines a potential candidate may be an appropriate nominee. Director candidates recommended by shareholders that comply with these requirements will receive the same consideration from the committee that other candidates receive.
Nominations for election as directors may also be made by shareholders from the floor at an annual meetingthe Annual Meeting of shareholders provided such nominations are received by the Company not less than 30 nor more than 60 days prior to the annual meeting,Annual Meeting, contain the information set forth above, and otherwise are made in accordance with the procedures set forth in the Company’s Bylaws.
Shareholder Communications with Directors
Any shareholder who wishes to send communications to the Board of Directors should mail them addressed to the intended recipient by name or position in care of: Corporate Secretary, Synalloy Corporation, 4510 Cox Road, Suite 201, Richmond, VA 23060. Upon receipt of any such communications, the Corporate Secretary will determine the identity of the intended recipient and whether the communication is an appropriate shareholder communication. The Corporate Secretary will send all appropriate shareholder communications to the intended recipient. An "appropriate shareholder communication" is a communication from a person claiming to be a shareholder in the communication the subject of which relates solely to the sender’s interest as a shareholder and not to any other personal or business interest.
In the case of communications addressed to the Board of Directors, the Corporate Secretary will send appropriate shareholder communications to the Chairman of the Board. In the case of communications addressed to the independent or outside directors, the Corporate Secretary will send appropriate shareholder communications to the Chairman of the Audit Committee. In the case of communications addressed to committees of the Board, the Corporate Secretary will send appropriate shareholder communications to the Chairman of such committee.
DIRECTOR COMPENSATION
For the 2017-2018 term year, non-employee directors were paid a total annual retainerCompensation of $95,000 in the form of cash and restricted stock.Non-Employee Directors were required to elect a minimum of $25,000 of the retainer fee to be paid in restricted stock and may elect up to 100% of the retainer to be paid in restricted stock.
For the 2018-20192020-2021 term year, non-employee directors were paid a total annual retainer of $102,000 in the form of cash and restricted stock. Directors must elect a minimum of $30,000 of the retainer fee to be paid in restricted stock and may elect up to 100% of the retainer to be paid in restricted stock. The number of restricted shares issued was determined by the average of the high and low Common Stock price on the day prior to the 20182020 Annual Meeting of Shareholders or, if later, the date prior to the director’s appointment to the Board. Non-employee directors elected by the shareholders for the 2018-20192020-2021 term year received an aggregate of 14,85750,652 shares of restricted stock in lieu of such cash retainer amount as follows: Anthony A. Callander - 2,153; Susan S. Gayner - 5,491;– 3,752; Henry L. Guy - 1,615;– 6,253; Christopher G. Hutter – 5,168; Jeffery Kaczka – 5,003; Amy J. Michtich - 1,722; James W. Terry, Jr. - 2,261;– 3,752; Benjamin Rosenzweig – 12,757; and Murray H. Wright - 1,615. John P. Schauerman – 6,378. Mr. Hutter’s Board compensation was for his Board service for the period prior to November 9, 2020, when he was appointed Interim CEO.
The annual retainer is inclusive of all director fees andfees; directors did not receive meeting fees or chair fees in addition to the retainer. Directors were reimbursed for travel and other expenses related to attendance at meetings. Directors who are employees did not receive extra compensation for service on the Board or any committee of the Board.
There will be no changes to non-employee director annual retainers for the 2019-20202021-2022 term year. Non-employee directors will be paid a total annual retainer of $102,000 in the form of cash and restricted stock. Directors must elect a minimum of $30,000 of the retainer fee to be paid in restricted stock and may elect up to 100% of the retainer to be paid in restricted stock.
The shares granted to the non-employee directors are not registered under the Securities Act of 1933 and are subject to forfeiture in whole or in part upon the occurrence of certain events.
For the 2017-2018 term year, our non-employee director annual retainer was $95,000 and for the 2018-2019 term year our non-employee director annual retainer was $102,000.
The following table sets forth information about compensation paid by the Company to non-employee directors during calendar year 20182020 and includes a portioncompensation from both the 2017-20182019-2020 and 2020-2021 term years, including compensation paid to three former directors, Anthony A. Callender, James W. Terry, Jr. and Murray H. Wright. Non-employee directors were paid $102,000 in both the 2018-2019 term years.and 2019-2020 Board terms.
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Name | | Fees Paid in Cash (1) | Stock Awards (2) | Total | Non Retainer Compensation(3) |
(a) | | (b) | (c) | (d) | |
Anthony A. Callander | | $36,000 | $11,178 | $47,178 | $30,000 |
Susan S. Gayner | | $36,000 | $66,000 | $102,000 | |
Henry L. Guy | | $62,000 | $40,000 | $102,000 | |
Christopher G. Hutter(4) | | | $41,318 | $41,318 | |
Jeffrey Kaczka | | $62,000 | $40,000 | $102,000 | |
Amy J. Michtich | | $72,000 | $30,000 | $102,000 | |
Benjamin Rosenzweig | | | $51,000 | $51,000 | |
John P. Schauerman | | $25,500 | $25,500 | $51,000 | |
James W. Terry, Jr. | | $35,000 | $11,923 | $46,923 | $30,000 |
Murray H. Wright | | $36,000 | $11,178 | $47,178 | $30,000 |
(1) Represents fees paid in cash during 2020. |
(2) Represents the grant date fair value, computed in accordance with FASB ASC Topic 718 as disclosed in the Stock Awards footnote to the Summary Compensation Table, of restricted shares granted to the directors on July 6, 2020 for 2020 service. For 2020, the directors received restricted shares in lieu of cash retainer as follows: Susan S. Gayner 3,752; Henry L. Guy - 6,253; Christopher G. Hutter - 5,168; Jeffrey Kaczka - 5,003; Amy J. Michtich - 3,752; Benjamin Rosenzweig - 12,757; and John P. Schauerman - 6,378. No director has been granted any stock options by the Company. |
(3) Upon retirement from the Board of Directors, Mr. Callander, Mr. Terry and Mr. Wright were each awarded $30,000 in non-retainer compensation related to their efforts during the 2020 Proxy Contest. |
(4) Mr. Hutter received Director Compensation from July 6, 2020 through November 9, 2020. On November 10, 2020 Mr Hutter assumed the role of Company Interim President & CEO and no longer received non-employee director compensation. |
SECURITIES OWNERSHIP
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| | | | |
Name | | Fees Paid in Cash (1) | Stock Awards (2) | Total |
(a) | | (b) | (c) | (h) |
Anthony A. Callander | | $57,875 | $40,000 | $97,875 |
Susan S. Gayner | | - | $102,000 | $102,000 |
Henry L. Guy | | $71,500 | $30,000 | $101,500 |
Amy J. Michtich | | $63,750 | $32,000 | $95,750 |
James W. Terry, Jr. | | $57,500 | $42,000 | $99,500 |
Murray H. Wright | | $71,500 | $30,000 | $101,500 |
(1) Represents fees paid in cash during 2018. |
(2) Represents the grant date fair value, computed in accordance with FASB ASC Topic 718 as disclosed in the Stock Awards footnote to the Summary Compensation Table, of restricted shares granted to the directors on May 17, 2018 for 2018 service. For 2018, the directors received restricted shares in lieu of cash retainer as follows: Anthony A. Callander - 2,153; Susan S. Gayner 5,491; Henry L. Guy - 1,615; Amy J. Michtich - 1,722; James W. Terry, Jr. - 2,261; and Murray H. Wright - 1,615. No director has been granted any stock options by the Company. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)The Board of Directors has established stock ownership levels for the Securities Exchange Actsenior management team and the Board of 1934 requires the Company’s directorsDirectors. Directors and executive officers and any persons who own more than 10% ofhave five years to achieve the Commontargeted ownership levels. Stock of the Company, to file with the SEC reports of beneficial ownership and changes in beneficial ownership of Common Stock. Officerslevels for NEOs and directors are required by SEC regulation to furnish the Company with copiesbased on dollars invested or cost basis, not market value. All named executive officers (NEOs) are currently in compliance.
Stock ownership requirements are as follows:
•Board of all Section 16(a) forms they file. Based solely on review of the copies of such reports furnished to the Company or written representations that no other reports were required, the Company believes that, during 2018, all filing requirements applicable to its officersDirectors - three times retainer
•CEO - four times base salary
•CFO and directors were met on a timely basis.
Segment Presidents - $250,000
Code of Conduct
Our Board has formally adopted a Code of Conduct that applies to all of our employees, officers and directors. We intend to satisfy the disclosure requirement regarding any amendment to, or waiver of, a provision of the Code of Conduct for the Company’s CEO, Chief Financial Officer ("CFO"), Chief Accounting Officer ("CAO")(CFO), Controller, or persons performing similar functions, by posting such information on the Company’s website.
There were no amendments to, or waivers of, any provision of the Code of Conduct for the Company’s CEO, CFO, CAO, Controller, or any persons performing similar functions during fiscal year 2018.2020. A copy of our Code of Conduct is available on our website at www.synalloy.com.
Anti-Hedging Policy
Our Board adopted an anti-hedging and anti-pledging policy within its Insider Trading Policy whereby Synalloy's directors and officers are prohibited from engaging in any speculative or hedging transactions in Company securities. Hedging transactions such as puts, calls, collars, swaps, forward sale contracts, and similar arrangements or instruments designed to hedge or offset decreases in the market value of Company securities are prohibited without the written permission of the Board of Directors.Additionally, directors and officers are prohibited from pledging Synalloy securities as collateral for a loan.
EXECUTIVE OFFICERS
The following table provides information about our current executive officers other than Christopher G. Hutter, the Company's Interim President and CEO. Information about Mr. Craig Bram, the Company’s CEO,Hutter is set forth above under "ElectionElection of Directors."
Directors. Our former CEO, Craig C. Bram, retired on November 9, 2020. Dennis M. Loughran, former Senior Vice President and Chief Financial Officer, terminated employment on June 30, 2020. |
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Name, Age, Principal Position and Five-Year Business Experience |
DennisSally M. LoughranCunningham, age 6146
Mr. LoughranMs. Cunningham joined the Company in JulyOctober 2015 as Vice President of Corporate Administration. In July 2020, she was named Senior Vice President ("SVP") and Chief Financial Officer ("CFO"). Most recently, heOfficer. Prior to Synalloy, Ms. Cunningham was the CFO of Citadel Plastics Holdings, Inc., a privately-owned company headquartered in Chicago, IL, which merged with A. Schulman, Inc. in June 2015. From 2006 to 2014, he served as the CFO for Rogers Corporation (NYSE: ROG), headquartered in Rogers, CT. Previous experience includes 19 years with Reynolds Metals Company in various financial and operations roles and six years as Vice President, Finance and Supply Chain with Alcoa Consumer Products. Mr. LoughranOperations at ICF International (NYSE: ICFI). Ms. Cunningham has a broad background in international business management, financial reporting, planning and analysis, profit improvement,operations, administration, mergers and acquisitions supply chain optimization, tax, treasury managementacross a number of industries. She received her B.B.A. in Accounting from the College of William and investor relations.
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J. Kyle Pennington, age 61
Mr. Pennington was named President, Synalloy Metals, Inc. ("Synalloy Metals"),Mary and her M.B.A from the University of Richmond. Ms. Cunningham is a subsidiary of the Company, effective January 1, 2013. He served as President, Bristol Metals, LLC, a subsidiary of the Company, from July 2011 until December 31, 2012. He was President, Bristol Metals, LLC’s BRISMET Pipe Division from September 2009 to July 2011; and Vice President, Manufacturing, Bristol Metals, LLC from December 2007 through September 2009. Prior to joining the Company, Mr. Pennington worked for 17 yearsCertified Public Accountant in the metals industry, including 12 years’ experience in executive management and service on the BoardCommonwealth of Directors of Texas & Northern Industries, a Lone Star Steel Company subsidiary.Virginia.
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J. Greg Gibson, age 4547 In April 2015, Mr. Gibson was named President of Synalloy Chemicals, with business unit responsibility for both Manufacturers Chemicals, LLC and CRI Tolling, LLC. He served as Executive Vice President, Sales and Administration for Manufacturers Chemicals, a wholly-owned subsidiary of the Company from July 2011 to April 2015. Mr. Gibson joined the Company in 2005 as a sales representative providing expertise in building client relationships, growing product market share, sales profitability and developing and executing sales strategies. Prior to joining the Company, he began his sales career in the pharmaceutical industry. Mr. Gibson graduated with a Bachelor of Science degree from the University of Tennessee and received his M.B.A. from the University of North Alabama.
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DISCUSSION OF EXECUTIVE COMPENSATION
Compensation and Long-Term Incentive Committee Report The Compensation and Long-Term Incentive Committee (Compensation Committee) is responsible for the oversight of the Company’s compensation programs and compensation of Synalloy’s executives. In preparation for filing this Proxy Statement, the Compensation Committee reviewed and discussed the following Compensation Discussion and Analysis (CD&A) with management. Based on this review and discussion, we recommended to the Board of Directors that the CD&A be included in this Proxy Statement and incorporated by reference into Synalloy’s Annual Report on Form 10-K for the year ended December 31, 2020. This report was prepared by the following independent directors who compose the Compensation Committee:
Henry L. Guy
Amy J. Michtich, Chair
Benjamin Rosenzweig
Compensation Discussion and Analysis
Executive Summary
Our executive compensation program supports our business goals by rewarding performance that serves our customers and creates shareholder value. This Compensation Discussion and Analysis ("CD&A")&A describes our compensation program for our interim Chief Executive Officer and policiesChief Financial Officer (CFO) and explains howour other most highly compensated executive officer serving at the Board’send of the year. It also describes provides compensation information related to our former Chief Executive Officer, Mr. Bram, who retired in November 2020, and our former Chief Financial Officer, Mr. Loughran, who voluntarily terminated employment in June 2020. Collectively, these officers are referred to as the named executive officers (NEOs).
The Company’s NEOs for 2020 were:
•Craig C. Bram, President & Chief Executive Officer, retired November 9, 2020
•Christopher G. Hutter, Interim President & Chief Executive Officer, commencing November 9, 2020
•Dennis M. Loughran, Senior Vice President & Chief Financial Officer, until June 30, 2020
•Sally M. Cunningham, Senior Vice President & Chief Financial Officer, commencing July 1, 2020
•J. Greg Gibson, President, Synalloy Chemicals
Say on Pay
Synalloy seeks to engage with our shareholders and obtain their perspectives. The Compensation & Long-Term Incentive Committee (the "Committee") established goals, reviewed performance measures, and decidedtakes into account the outcome of the advisory vote on our executive compensation program (also known as Say on Pay) when setting compensation for our Named Executive Officers ("NEOs") inNEOs and for fiscal year 2018. NEOs are listedother officers. Historically, our shareholders have approved our executive compensation program on an advisory basis by a vote in the table below:
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NEO | Title |
Craig C. Bram | President and Chief Executive Officer |
Dennis M. Loughran | Senior Vice President and Chief Financial Officer |
J. Kyle Pennington | President, Synalloy Metals |
J. Greg Gibson | President, Synalloy Chemicals |
range of 90%. At the 2020, Annual Meeting, the program was approved by a 58% vote. The Compensation Committee considered this decline in shareholder endorsement of our executive compensation program when making future compensation decisions including the compensation arrangement with Mr. Hutter, who was named Interim President & CEO on November 9, 2020. Shareholders will continue to have an opportunity annually to cast an advisory vote to approve our executive compensation program.
Executive Summary
Overview of Our Business and Results
Synalloy had an exceptionally goodDuring a challenging year, in 2018. Our financial performance was excellent, exceeding goalsour dedicated employees persevered through this unique time and in some cases toppling records that were over 20 years old. The 2018 Incentive Plan paid out above target accordingly.
The record sales of $201.1 million posted in 2017 did not hold up very long. In 2018, the Company reported net sales of $280.8 million, up $79.7 million or approximately 40% from 2017. Both adjusted EBITDAcontinued to deliver high-quality products and adjusted EBITDA per share established new records at $34.1 million and $3.85 respectively.
Our shareholders enjoyed the benefits of these strong financial results. The dividendservices to our shareholders was $0.25 per share, an increase of approximately 92% over 2017. Our share price appreciated by 24% andcustomers. Net sales were impacted during the year as our customers were affected by macro-economic conditions resulting from COVID-19, including the curtailment of our Palmer of Texas operation effective April 1, 2020.
Net sales were $256.0 million compared to $305.2 million in 2019. Excluding the curtailed Palmer operations from both periods, net sales for 2020 were $250.5 million compared to $276.5 million in 2019. Gross profit was $22.7 million or 8.8% of net sales, compared to $30.8 million or 10.1% of net sales in 2019. Net loss was $27.3 million or $3.00 diluted loss per share, price reachedcompared to a 10-year highnet loss of $24.55. For the first time$3.0 million or $0.34 diluted loss per share in 2019. The decline in net loss was driven by a non-cash goodwill impairment in the Company's history, our stock was addedCompany’s Metals segment of $16.2 million, $6.2 million of asset impairment charges related to Synalloy’s Palmer operations, along with $3.1 million in costs related to the Russell 2000 index.Company's proxy contest and election of directors at the 2020 Annual Meeting of Shareholders.
Adjusted EBITDA was $9.2 million compared to $13.5 million in 2019. Adjusted EBITDA as a percentage of net sales was 3.6% compared to 4.4% in the prior year.
The Company's business has two divisions: the Metals Segment and the Chemicals Segment.
Synalloy Metals
The Metals Segment operates as three reporting units including Welded Pipe & Tube Operations, a unit that includes Bristol Metals, LLC ("BRISMET") and American Stainless Tubing, LLC ("ASTI"), Palmer of Texas Tanks, Inc. ("Palmer"), and Specialty Pipe & Tube, Inc. ("Specialty"). BRISMETWelded Pipe & Tube Operations manufactures stainless steel, galvanized, ornamental stainless steel pipe and tube, and other alloy pipe and tube. Palmer manufactures liquid storage solutions and separation equipment, andequipment. Specialty is a master distributor of seamless carbon pipe and tube. The Metals Segment'sSegment serves markets includethrough the oilmaster distribution of pipe and gas,tube and customers in the appliance, architectural, automotive and commercial transportation, brewery, chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and waste waterwaste-water treatment, liquid natural gas brewery,("LNG"), food processing, petroleum, pharmaceutical, oil and gas and other heavy industries.
Synalloy Metals achieved record sales and adjusted EBITDA in 2018 and the 2018 Incentive Plan paid out above target for the segment. In 2018,2020, the Metals Segment reported net sales of $222.2$204.5 million, up $69.3a decrease of $46.5 million or approximately 45% from 20172019, and adjustedAdjusted EBITDA of $8.0 million, down from $15.3 million in 2019. The Adjusted EBITDA was $29.0 million, up $12.7 million from 2017. Synalloy Metals growth wasnegatively impacted by the additioncurtailment of our Palmer of Texas operation effective April 1, 2020, and market-wide demand compression from the BRISMET-Munhall galvanized acquisition in July 2018, the rebound in the oil and gas markets, and year over year improvements in volume, pricing and product mix.
macro-economic conditions resulting from COVID-19.
Synalloy Chemicals
The Specialty Chemicals Segment operates as one reporting unit which includes Manufacturers Chemicals, LLC ("MC") and CRI Tolling, LLC ("CRI Tolling"). The Specialty Chemicals Segment produces specialty chemicals for the chemical, pulp and paper, metals, mining, agricultural, fiber, paint,coatings, adhesives, sealants and elastomers (CASE), textile, automotive, petroleum, cosmetics, mattress, furniture, janitorialhousehold, industrial and institutional, water and waste-water treatment, construction, oil and gas and other industries.
Synalloy Chemicals profits decreased slightlyNet sales in 2018 and2020 were $51.5 million compared to $54.1 million in 2019. Net income in 2020 increased 44% to $4.0 million compared to $2.8 million in the 2018 Incentive Plan paid out below target forprior year. Adjusted EBITDA in 2020 increased 29% to $5.8 million compared to $4.5 million in the segment. In 2018, the Chemicals Segment recordedprior year. As a percentage of segment net sales, of $58.6 million, up $10.4 million or 22% from 2017; however, adjustedAdjusted EBITDA improved 300 basis points to 11.3% compared to 8.3% in 2019. The improvement in profitability was $5.3 million, down $0.2 million or 3% from 2017. Synalloy Chemicals' 2018 results were negatively impacteddriven by operational efficiencies, cost containment measures and elevated margins related to hand sanitizer production during the loss of a single customer and also slower than anticipated ramp up of a customer at CRI Tolling.second quarter.
Summary of 2018 Key Compensation Decisions
At our 2018 Annual Meeting of Shareholders, 94% of the shares voted at the meeting were in favor of our 2017 NEO compensation package. Accordingly, we committed to using the same Incentive Plan in 2018 (the "2018 Incentive Plan") that was utilized in 2017 with the following changes:
Base Salary - The Committee reviewed a peer group analysis and, along with CEO recommendation for the remaining NEOs, approved an increase of each NEO's base salary.
Short-Term Cash Incentive - The Committee reviewed a peer group analysis and, along with CEO recommendations for the other NEOs, approved an increase in the percentage of each NEO's base salary used to calculate the Short-Term Cash Incentive.
Also, the Committee approved the calculation of the same performance metric that was utilized in the 2016 and 2017 Incentive Plans and is used to calculate certain components of both the short-term cash and long-term equity incentives. Consistent with the 2016 and 2017 Incentive Plans, the 2018 Incentive Plan defined the "Performance Metric" as adjusted EBITDA before incentives and excluding inventory gains and losses, metal price change gains and losses, inventory cost adjustments, aged inventory adjustments, and manufacturing variances.
Long-Term Equity Incentive - There were no changes to the long-term equity incentive in the 2018 Incentive Plan.
Compensation Philosophy, Objectives and Process
Our Compensation Philosophy, and Objectives
The Board of Directors and managementWe believe that the performance and contributions of our executive officersNEOs are critical to our overall success. To attract, retain and motivate the executivesWe apply pay-for-performance principles to accomplish our business strategy, the Committee establishes executive compensation policies and oversees the Company’s executive compensation practices.
The Company’s goal is to attract and retain highly motivated and talented executives and to ensureprovide a strong link between executive pay, Company performance, and shareholder value.
The major objectives of our executive compensation program are to: |
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Compensation Objective | How Objective is Achieved |
Pay for performance | The majority of the annual short-term cash and long-term equity components of the compensation program have Performance Metric target ranges for each business segment and the Company as a whole. Executives are rewarded with higher incentive pay when above target ranges are met, while lower incentives are paid when target ranges are not achieved. |
AttractingAttract, develop, and retainingretain an experienced management team, develop, retain and motivate an experienced and highly motivated and talented executivesqualified executive team
| The overall compensation program is designed to be competitive with positions at peer group companies to attract highly qualified candidates.Restricted stock awards have multi-year time vesting elements with forfeiture of unvested grants if an executive leaves the Company prior to vesting for any reason other than retirement, disability or death. |
AligningAlign the interests of executives with the interests of shareholders | A portion of each executive's pay is equity-based compensation, to align the executives' interestsexecutive officers with those of our shareholders.shareholders | We place a substantial portion at risk through performance goals that, if achieved, are expected to enhance shareholder value. |
The Company and the Committee believe that the most effective executive compensation program is one that is designed to reward the achievement of specific annual and long-term goals and functional operational initiatives of the Company as well as align the interest of executives with the interest of shareholders, ultimately improving shareholder value.Our pay for performance emphasis attracts executives who are willing to risk a larger share of their compensation on their own performance and the performance of the Company for the benefit of the longer-term shareholder value.
CompensationOur Process
The Compensation Committee looksis responsible for opportunities to improve upon thereviewing and approving NEO compensation and our overall executive compensation program andprogram. To assist the Committee in 2016this process, the CompanyCommittee has retained PM as the Committee’s outside independent compensation consulting firm. PM isPearl Meyer, a nationally recognized executive compensation consultant, andto advise the Committee has retained it to provide information concerningon executive compensation paidand director compensation matters. The Committee’s consultant attends meetings as requested by competitors and members of our peer group. In 2016, PM assisted the Committee, either in designingperson or virtually, to discuss NEO compensation, the Incentive Plan that was used for NEOs in both 2017appropriate relationship between pay and 2018.performance, and emerging trends.
In setting the base salary, total cash compensation (base salary plus short-term cash incentives) and total direct compensation (total cash compensation plus long-term incentive compensation), the Committee evaluates each NEO’s compensation against Compensation Peer Group data provided by Pearl Meyer and to assess the competitiveness of the compensation of our NEOs in 2018, the Committee worked with PM to review aggregated information from our peer group and, for the executives below chief executive officer level, received input and guidance from the CEO on the performance of these officers. The Committee additionally reviews the performance of the CEO and considers this information in making compensation decisions.NEOs.
The Committee identified 14 companies for its peer group, all manufacturing businesses, with many in either the Basic Materials- Metals/Mining or Materials-Specialty Chemicals industry classification. Others are manufacturers of machinery or component parts. The peer groupCompensation Peer Group information is focused on micro-cap companies with similar revenues and market capitalization to the Company's performance. Additionally, the Committee compares the Company's one-year and three-year average annual EBITDA to that of the peer group.
For 2018, our peer group consists of the following companies: Ampco-Pittsburgh, Eastern Company, Houston Wire and Cable, Hurco, Landec Corp., Lawson Products Inc., Northwest Pipe Co., Perma Pipe, UFP Technologies, Universal Stainless & Alloy Products as well as American Vanguard, Hawkins, Insteel and KMG Chemical.
The peer group information isalso used by the CompanyCommittee to benchmark the compensation for our CEO and CFO. The Committee sets base salary for our CEO near the median base salary for the peer group. The Committee sets the base salaries of the other NEOs to be market competitive as compared to the salaries of executives at similarly situated companies. However, the Committee believes that targeted total cash compensation, including short-term incentive pay, should provide the CEO and all other NEOs with the potential to earn in excess of the median total cash compensation of the peer group.
The Committee believes this methodology is appropriate because it directly aligns the CEO and other NEOs' pay with the Company's performance by putting more emphasis on at-risk components of cash compensation.
Compensation Peer Group
In the fall of each year with input and advice from its independent consultant, the Committee reviews and approves the Compensation Peer Group. In selecting the Compensation Peer Group, we identify companies in manufacturing business, primarily in either the Basic Materials - Metals/Mining or Materials-Specialty Chemicals industries, that compete for customers, executive talent and investment capital. The Compensation Peer Group is focused on micro-cap companies with similar revenues and market capitalization to the Company’s performance. The Committee also screens this group by comparing the Company’s one-year and three-year average annual EBIDTA to that of proposed peer group companies. No changes were made to the Compensation Peer Group for 2020.
Synalloy’s Compensation Peer Group for 2020 was comprised of the following companies:
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American Vanguard Corporation | Insteel Industries, Inc. |
Ampco-Pittsburgh Corporation | Landec Corporation |
CSW Industrials, Inc. | Lawson Products, Inc. |
Core Molding Technologies, Inc. | L.B. Foster Company |
The Eastern Company | Northwest Pipe Company |
Hawkins, Inc. | Perma-Pipe International Holdings, Inc. |
Haynes International, Inc. | UFP Technologies, Inc. |
Houston Wire & Cable Co. | Universal Stainless & Alloy Products, Inc. |
Hurco Companies, Inc. | |
Risk Considerations
The Committee has assessed the risks arising from the Company’s compensation policies and practices for all employees to determine whether such policies or practices are reasonably likely to have a material adverse effect on the Company.Based on its assessment, the Committee has determined that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
Our Compensation Elements 2018 Performance and Compensation
Our compensation program is relatively simple and straightforward and consistconsists of threefour main components: base salary, an annual short-term cash incentives andincentive plan, a long-term, stock-based incentives. Below is information on the main components ofincentive plan, and on certain decisions made regarding 2018 NEO compensation.benefits.
Base Salary
Base salaryCompetitive base pay is a toolnecessary to attract, motivate, and retain talent. We seek to provide our executives with a reasonable level of fixed income relative to the responsibility of the positions they hold. Base salaries are reviewed annually by the Compensation Committee and the CEO, and adjustments are considered at that time.Base salaries are adjusted from time to time to reflect changes in responsibility level, comparison of data obtained from peer groups, data from our compensation consultant and other external market comparative data. Base salaries are targeted at the median of Peer Group compensation, subject to individual and Company-wide considerations described above in our objectives. In addition, the Company considers the attributes of each individual executive, including but not limited to his/her longevity with the Company, his/her educational background and experience, the particular responsibilities of his/her position, the compensation of others with similar background, credentials and responsibilities, and his/her past level of performance.
For 2018,In June 2019, the Compensation Committee approved the following base salaries for the NEOs to be effective January 1, 2020: Mr. Bram: $495,000; Mr. Gibson: $280,000; and Mr. Loughran: $332,750. During 2020, the following base salary decisions were approved by the Committee:
•On March 25, 2020, the Committee reviewed peer group dataapproved Mr. Bram's salary increase to $625,000 retro-active back to January 1, 2020.
•On May 5, 2020, certain executives accepted a voluntary, temporary decrease in salary associated with the COVID-19 pandemic. Mr. Bram's temporary salary decrease was 25%. Mr. Loughran, Mr. Gibson and alongMs. Cunningham's temporary salary decrease was 15% each. The executives resumed full base salary effective October 3, 2020, with the exception of Mr. Loughran who resigned on June 30, 2020.
•Ms. Cunningham was promoted to the position of Senior Vice President and Chief Financial Officer June 30, 2020 following the departure of Mr. Loughran. The Committee approved a base salary of $320,000 for Ms. Cunningham in connection with her promotion, recognizing the significant increase in her responsibilities. Upon promotion, Ms. Cunningham's base salary was temporarily decreased 15% to $272,000 due to the COVID-19 pandemic through October 3, 2020.
•Upon Mr. Hutter's appointment to the serve as Interim President and CEO recommendation for the other NEOs, approved an increase of each NEO's base salary.
Base salary increases for 2018 are listed in the table below:
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NEO | Title | Base Salary at 12/31/2018 | Base Salary at 12/31/2017 | % Increase |
Craig C. Bram | President & CEO | $495,000 | $450,000 | 10.0 | % |
Dennis M. Loughran | SVP & CFO | $322,500 | $308,500 | 4.5 | % |
J. Kyle Pennington | President, Synalloy Metals | $295,000 | $276,000 | 6.9 | % |
J. Greg Gibson | President, Synalloy Chemicals | $272,000 | $260,000 | 4.6 | % |
2018 Incentive Plan
With assistance from our compensation consultant,following Mr. Bram’s retirement, the Committee established his compensation to be paid primarily in stock awards based on achievement of long-term performance goals. Additionally, the 2016Committee approved a base salary of $35,558 for Mr. Hutter.
Short-Term Incentive Plan and essentially carried the same
The short-term incentive plan forward for the 2018 Incentive Plan with the changes noted in the Summary of 2018 Key Compensation Decisions listed above. As with the prior Incentive Plans, the 2018 Incentive Plan consisted of two components: short-termis a cash-based program focused on near-term performance goals. The cash incentive compensation and long-term equity incentive compensation in the form of restricted stock awards to be issued under the 2015 Stock Award Plan (the "2015 Stock Plan"), which was approved by shareholders at the 2015 Annual Meeting.
Short-Term Cash Incentive
The short-term cash incentive in the 2018 Incentive Plan wasis calculated as a percentage of an executive's base salary depending on the executive’s position with the Company, and whatachievement of specified strategic goals were achieved. The two factors included infor the fiscal year.
For 2020, 70% of the short-term cash incentive were:
70%was tied to achievement of short-term cash incentive: Target Performance Metricthe Targeted Adjusted EBITDA (excluding inventory gains and losses, metal price change gains and losses, inventory cost adjustments, and aged inventory). This performance metric was originally established with an establishedPearl Meyer’s assistance in 2016 and has been consistently used since then. A Threshold Performance Metric and Maximum Performance Metric for the payment of cash incentives. The Threshold Performance Metric isAdjusted EBITDA was set at 75% of Target. Thethe target, and a Maximum Performance Metric isAdjusted EBIDTA was set at 125% of Target.the target.
The remaining 30% of the 2020 short-term cash incentive: Successfulincentive was tied to achievement of operational and strategic goals specific to each NEO’s area of responsibility, in each case designed to drive financial and operational performance. Goal achievement was tied to successful delivery of specified strategic goalsmeasures that drive stronger efficiencies across the Company for Messrs. Bram and Loughran and Ms. Cunningham, and across the Chemical segment for Messrs. Pennington andMr. Gibson.
While Mr. Hutter did not participate in the Performance Metric carried the heaviest weighting (70%) for the2020 short-term cash component, the Committee used qualitative measures related to strategic goals to increase executive focus beyond the annual Performance Metric to include those measures management and the Board believe will lead to sustained results on a longer-term basis. incentive plan.
The table below provides the total short-term cash incentive, as a percentage of base salary, for each NEO at the threshold, target and maximum levels.
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Total Short-Term Cash Incentive (as a percentage of base salary) |
| Threshold | Target | Maximum |
President & CEO | 50.0% | 85.0% | 120.0% |
SVP & CFO | 45.0% | 65.0% | 85.0% |
President, Synalloy Chemicals | 40.0% | 57.0% | 75.0% |
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Total Short-Term Cash Incentive (as a percentage of base salary) |
| Threshold | Target | Maximum |
President & CEO | 50.0% | 85.0% | 120.0% |
SVP & CFO | 45.0% | 65.0% | 85.0% |
President, Synalloy Metals | 45.0% | 65.0% | 85.0% |
President, Synalloy Chemicals | 40.0% | 57.0% | 75.0% |
For 2020, the Performance Metric achieved was below the Threshold level for the Company and was between the Threshold and Target performance level for the Chemicals segment. The table below details the 2020 Targeted Adjusted EBIDTA threshold, target, maximum, and the final results. Messrs. Bram and Loughran did not receive a payout under the 2020 short-term incentive plan because they were not employed for the entire calendar year.For the short-term cash incentive compensation component of the 2018 Incentive Plan, the | | | | | | | | | | | | | | |
| 2020 Performance Metric Component |
(dollars in millions) | Threshold | Target | Maximum | 2020 Actual |
SVP & CFO | $21.49 | $28.66 | $35.82 | $15.18 |
President, Synalloy Chemicals (1) | $5.52 | $7.37 | $9.21 | $6.80 |
(1) 2020 Performance Metric component is for the Chemicals Segment. |
The following table sets forth the Performance Metric component for each executive. Actual payout is based on a calculation using results for the year, and may vary between Threshold and Maximum values. The table below details the 2018 Performance Metric threshold, target, maximum and actual results.
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| 2018 Performance Metric Component |
(dollars in millions) | Threshold | Target | Maximum | 2018 Actual |
President & CEO | $18.30 | $24.40 | $30.50 | $31.72 |
SVP & CFO | $18.30 | $24.40 | $30.50 | $31.72 |
President, Synalloy Metals (1) | $15.70 | $20.93 | $26.16 | $31.32 |
President, Synalloy Chemicals (2) | $5.28 | $7.04 | $8.80 | $5.60 |
(1) 2018 Performance Metric component is for the Metals Segment. |
(2) 2018 Performance Metric component is for the Chemicals Segment. |
For 2018, the Performance Metric achieved was above the Maximum level for the Company as a whole as well as for the Metals Segment. The Performance Metric achieved for the Chemicals Segment in 2018 was above the Threshold level and below the Target level.
For the short-term cash incentive compensation component of the 2018 Incentive Plan, the following table sets forth the2020 strategic goal component for each executive. Actual payout is based on a calculation using results for the yearMs. Cunningham and may vary between ThresholdMr. Gibson and Maximum values. The table below details the 20182020 strategic goals threshold, target, maximum and actualfinal results.
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| 20182020 Strategic Goals Component |
| Threshold | Target | Maximum | 20182020 Actual |
President & CEO (1)
| 3 out of 5 | 4 out of 5 | 5 out of 5 | 4.5 out of 5 |
SVP & CFO (2)(1) | 3 out of 5 | 4 out of 5 | 5 out of 5 | 4.5 out of 5 |
President, Synalloy Metals (3) | 3 out of 6 | 4 out of 6 | 6 out of 6 | 5.0 out of 6 |
President, Synalloy Chemicals (4)(2)
| 3 out of 5 | 4 out of 5 | 5 out of 5 | 4.52 out of 5 |
(1) The 2018 strategic goals for the President & CEO related to financial, growth, and personnel initiatives. |
(2) The 20182020 strategic goals for the SVP & CFO related to financial and net debt targets, achievement of cost reduction targets, and process and personnel initiatives.
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(3) (2) The 2018 strategic goals for the President, Synalloy Metals related to facility safety, sales and marketing, growth and facility specific initiatives.
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(4) The 20182020 strategic goals for the President, Synalloy Chemicals related to facility safety,revenue and cost reduction targets, new sales products and marketing, growthcustomer targets, and facility specific initiatives.operational efficiency targets.
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For 2018, all NEOsMs. Cunningham exceeded Target level of performance for the strategic goals component. The strategic goalsgoal component of the short-term cash incentive are operational andplan. Mr. Gibson was below Threshold level of performance for the strategic goals specific to each named executive officer's areagoal component of responsibility, in each case designed to drive overall Company financial and operational performance.
the short-term cash incentive plan. Total short-term cash incentives were earned by Ms. Cunningham and Mr. Gibson for fiscal year 20182020 were as follows:
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| | | | | | | | | | |
| | 2018 Performance Metric Component | 2018 Strategic Goals Component | Total 2018 Short-Term Cash Incentive Payments |
Name | Position | $ | % of Base Salary | $ | % of Base Salary | $ | % of Base Salary |
Craig C. Bram | President & CEO | $415,800 | 84.0 | % | $152,212 | 30.7 | % | $568,012 | 114.7 | % |
Dennis M. Loughran | SVP & CFO | $191,888 | 59.5 | % | $72,562 | 22.5 | % | $264,450 | 82.0 | % |
J. Kyle Pennington | President, Synalloy Metals | $175,525 | 59.5 | % | $66,375 | 22.5 | % | $241,900 | 82.0 | % |
J. Greg Gibson | President, Synalloy Chemicals | $82,103 | 30.2 | % | $53,856 | 19.8 | % | $135,959 | 50.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 2020 Performance Metric Component | 2020 Strategic Goals Component | Total 2020 Short-Term Cash Incentive Payments |
Name | Position | $ | % of Base Salary | $ | % of Base Salary | $ | % of Base Salary |
Sally M. Cunningham | SVP & CFO | $0 | —% | $78,000 | 24.4% | $78,000 | 24.4% |
J. Greg Gibson | President, Synalloy Chemicals | $100,203 | 35.8% | $0 | —% | $100,203 | 35.8% |
20182020 Long-Term Equity Incentive Plan
Our goal in awarding long-term equity incentive compensation is to emphasize to our executives the importance of increasing shareholder value by tying a portion of executive compensation to both financial performance and growth in the Company’s stock price. To help align the interests of our executives with the interest of our shareholders, one hundred percent (100%) of long-term incentive compensation for NEOs is in the form of equity instruments. Over the past ten years, the Company has used both stock options that vest over five years and restricted stock awards that vestvests over either threea three-year period. Vesting will accelerate upon an executive’s termination of employment at retirement or five years.
The long-term stock-based incentives are delivered in the formevent of death or disability. The restricted stock awards. is issued pursuant to the terms of the Company’s 2015 Stock Awards Plan.
Stock-based compensation is established at a percentage of each executive’s base salary at the time of grant.In order to attract and retain executive talent, 50% of the long-term incentive istime-vests over a time-vesting retention award. In order to closely tie total compensation to long-term shareholder value, thethree-year period. The other 50% of the long-term incentive compensation for the NEOs is earned based on achievement of a three-year cumulative Performance Metric threshold, target and maximum.
For the long-term equity incentive component of the 2018 Incentive Plan, the CEO was awarded restricted stock with a value at the time of grant equal to 32.5% of his base salary in the form of a time-vesting award and the other NEOs were awarded restricted stock with a value at the time of grant equal to 22.5% of their base salary in the form of time-vesting awards.
The NEOs are also eligible for performance-vesting restricted stock awards which, at maximum earn-out levels, would equal 48.75% of base salary for the CEO and 33.75% of base salary for the other NEOs. This performance-vesting restricted stock award is based on achievement of a three-year cumulativeAdjusted EBITDA Performance Metric target and will be earned, if at all, for performance during the three-year period ending December 31, 2020.2022.
Total long-term equity incentives awarded for fiscal year 20182020 were as follows: | | Name | Position | 2018 Time-Vesting Stock Award (1) | 2018 Performance-Vesting Stock Award (2) | Total 2018 Long-Term Equity Awards | Name | Position | 2020 Time-Vesting Stock Award (1) | 2020 Performance-Vesting Stock Award (2) | Total 2020 Long-Term Equity Awards |
Craig C. Bram | President & CEO | $146,250 | $146,250 | $292,500 | Craig C. Bram | President & CEO | $210,375 | $420,750 |
Dennis M. Loughran | SVP & CFO | $69,413 | $69,413 | $138,826 | Dennis M. Loughran | SVP & CFO | $108,144 | $216,288 |
J. Kyle Pennington | President, Synalloy Metals | $62,100 | $62,100 | $124,200 | |
Sally M. Cunningham | | Sally M. Cunningham | VP, Corporate Administration | $71,250 | $142,500 |
J. Greg Gibson | President, Synalloy Chemicals | $58,500 | $58,500 | $117,000 | J. Greg Gibson | President, Synalloy Chemicals | $79,800 | $159,600 |
(1) Time-vesting restricted stock award vests at 33% per year over a three-year period. | (1) Time-vesting restricted stock award vests at 33% per year over a three-year period. | (1) Time-vesting restricted stock award vests at 33% per year over a three-year period. |
(2) Performance-vesting restricted stock award is based on achievement of a three-year cumulative Performance Metric target and will be earned, if at all, for performance during the three-year period ending December 31, 2020. | |
(2) Performance-vesting restricted stock award is based on achievement of a three-year cumulative Performance Metric target and will be earned, if at all, for performance during the three-year period ending December 31, 2022. | | (2) Performance-vesting restricted stock award is based on achievement of a three-year cumulative Performance Metric target and will be earned, if at all, for performance during the three-year period ending December 31, 2022. |
The employment agreements provide that the executive will be entitled to severance payments in the case of death or disability, termination without cause or following a change in control in the form of (1) salary continuation, (2) average cash bonus, (3) health insurance and (4) restricted stock and options vesting.The base salary may be paid in installments or in a lump sum, at the election of the Company.In order to receive the severance, the executive or his beneficiary or estate, mustwill be required to execute a release satisfactory to the Company. Please see the following table for more information on the above described severance payments.
Compensation of Executive Officers
20182020 Summary Compensation Table
The following table sets forth summary compensation information for our NEOs for the years indicated:
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| | | | | | | | |
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (i) | (j) |
Craig C. Bram | 2018 | $495,000 | — | $292,500 | — | $568,012 | $10,800 | $1,366,312 |
President & CEO | 2017 | $450,000 | — | $255,997 | — | $277,172 | $10,800 | $993,969 |
| 2016 | $380,000 | — | $199,875 | — | $123,000 | $10,600 | $713,475 |
| | | | | | | | |
Dennis M. Loughran | 2018 | $322,500 | — | $138,825 | — | $264,450 | $10,800 | $736,575 |
SVP & CFO | 2017 | $308,500 | — | $121,508 | — | $192,355 | $10,800 | $633,163 |
| 2016 | $295,000 | — | $99,563 | — | $75,225 | $4,921 | $474,709 |
| | | | | | | | |
J. Kyle Pennington | 2018 | $295,000 | — | $124,200 | — | $241,900 | $10,800 | $671,900 |
President, Synalloy Metals | 2017 | $276,000 | — | $108,701 | — | $202,163 | $10,800 | $597,664 |
| 2016 | $255,000 | — | $86,063 | — | $65,025 | $10,600 | $416,688 |
| | | | | | | | |
J. Greg Gibson | 2018 | $272,000 | — | $117,000 | — | $135,689 | $19,500 | $544,189 |
President, Synalloy Chemicals | 2017 | $260,000 | — | $87,764 | — | $41,730 | $19,500 | $408,994 |
| 2016 | $248,000 | — | $83,700 | — | $138,637 | $19,300 | $489,637 |
Stock Awards - The amount in this column represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of equity awards made during the year. See Note 9 to the Company’s consolidated financial statements for the year ended December 31, 2018, which are included in the Company’s 2018 Annual Report on Form 10-K, for additional disclosure of all assumptions made with respect to the valuation of stock awards.
Non-Equity Incentive Compensation - The amounts reported in Non-Equity Incentive Plan Compensation were paid under the Incentive Plan for the respective year, as more fully described in the CD&A. Amounts reported in this column were earned in the indicated year.
All Other Compensation - The amounts shown in this column represent the Company’s contributions pursuant to the 401(k)/ESOP Plan for the named executives. In addition, Mr. Gibson receives a monthly car allowance. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (i) | (j) |
Christopher G. Hutter | 2020 | $4,970 | — | $791,000 | — | — | — | $795,970 |
Interim President & CEO | | | | | | | | |
| | | | | | | | |
Sally M. Cunningham | 2020 | $266,750 | $35,000 | $142,500 | $229,239 | $78,000 | $8,345 | $759,834 |
SVP & CFO | | | | | | | | |
| | | | | | | | |
J. Greg Gibson | 2020 | $262,500 | $20,000 | $159,600 | $155,940 | $100,203 | $19,071 | $717,314 |
President, Synalloy Chemicals | 2019 | $272,000 | — | $155,040 | — | $124,092 | $19,900 | $571,032 |
| 2018 | $272,000 | — | $117,000 | — | $135,689 | $19,500 | $544,189 |
| | | | | | | | |
Craig C. Bram | 2020 | $481,771 | $329,250 | $420,750 | $324,875 | — | $1,027,015 | $2,583,661 |
President & CEO (former) | 2019 | $495,000 | — | $420,750 | — | $176,700 | $11,200 | $1,103,650 |
| 2018 | $495,000 | — | $292,500 | — | $568,012 | $10,800 | $1,366,312 |
| | | | | | | | |
Dennis M. Loughran | 2020 | $158,294 | $50,000 | $216,613 | $240,408 | — | $11,400 | $676,715 |
SVP & CFO (former) | 2019 | $322,500 | — | $209,625 | — | $81,238 | $11,200 | $624,563 |
| 2018 | $322,500 | — | $138,825 | — | $264,450 | $10,800 | $736,575 |
| | | | | | | | |
(1) Mr. Bram retired November 9, 2020. |
(2) Mr. Hutter was named Interim President and CEO on November 10, 2020. |
(3) Mr. Loughran resigned as SVP & CFO on June 30, 2020. Mr. Loughran's unvested Stock Awards and Stock Options were forfeited in connection with his termination of employment |
(4) Ms. Cunningham was appointed SVP & CFO effective July 1, 2020. Her 2020 compensation includes the entire calendar year. |
(5) Salary - On May 5, 2020, certain executives accepted a voluntary, temporary decrease in salary associated with the COVID-19 pandemic. Mr. Bram's temporary salary decrease was 25%. Mr. Loughran, Mr. Gibson and Ms. Cunningham's temporary decrease was 15% each. The executives resumed full base salary effective October 3, 2020. |
(6) Bonus - The Committee awarded Mssrs. Bram, Loughran and Gibson and Ms. Cunningham were awarded a retention bonus related to their efforts with the proxy contest. Additionally, Mr. Bram received cash in lieu of stock for a portion of his long-term incentive. See the CD&A for further discussion. |
(7) All Other Compensation - The amounts shown in this column represent the Company's contributions pursuant to the 401(k)/ESOP Plan for the named executives. Mr. Bram's amount also includes severance associated with his retirement effective November 9, 2020. Mr. Gibson's amount also includes a monthly car allowance. |
CEO Pay Ratio - For 2018,2020, the annual total compensation for the median employee identified during 20172020 was $57,162;$53,538; Mr. Bram's 2018Hutter's 2020 annual total annualized compensation was $1,366,312$826,568 and the ratio of these two amounts was 1:24.15.44.
SEC rules permit companies to identify the median paid employee once every three years as long as there has been no change in the company’s employee population or compensation arrangements that significantly impacts the pay ratio disclosure. As we have had no material changes in our organization from 2017, we are employing the same methodology used last year, as described below.
The median employee was identified utilizing 20172020 total cash compensation consisting of earnings, bonuses, and allowances and annualized for all employees as of December 31, 2017.2020. This pay ratio is a reasonable estimate calculated in a manner consistent with the SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
2018
Grants of Plan-Based Awards
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Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards |
| | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
Christopher G. Hutter | | | | | | | | | | | |
10/26/2020 | | | | | | | 50,000 (4) | | | $282,500 |
10/26/2020 | | | | | | | 90,000 (5) | | | $62,000 |
Craig C. Bram | | | | | | | | | | | |
02/05/2020 | $94,669 | $420,750 | $525,938 | | | | | | | |
02/05/2020 | | | | $105,188 | $210,375 | $315,563 | 16,188 | | | $420,750 |
02/05/2020 | | | | | | | | 25,000 | $12.995 | $324,875 |
Dennis M. Loughran | | | | | | | | | | | |
02/05/2020 | $48,738 | $216,613 | $270,766 | | | | | | | |
02/05/2020 | | | | $54,072 | $108,144 | $162,216 | 8,321 | | | $216,613 |
02/05/2020 | | | | | | | | 18,500 | $12.995 | $240,408 |
Sally M. Cunningham | | | | | | | | | | | |
02/05/2020 | $32,063 | $142,500 | $178,125 | | | | | | | |
02/05/2020 | | | | $68,000 | $136,000 | $204,000 | 5,482 | | | $142,500 |
02/05/2020 | | | | | | | | 12,000 | $12.995 | $155,940 |
06/30/2020 | | | | | | | | 10,200 | $7.330 | $73,299 |
J. Greg Gibson | | | | | | | | | | | |
02/05/2020 | $35,910 | $159,600 | $199,500 | | | | | | | |
02/05/2020 | | | | $39,900 | $79,800 | $119,700 | 6,140 | | | $159,600 |
02/05/2020 | | | | | | | | 12,000 | $12.995 | $155,940 |
(1) These awards were made pursuant to our 2020 Incentive Plan and were earned upon the achievement of certain performance goals established by the Committee for the fiscal year ended December 31, 2020. For a discussion of these performance goals, see our CD&A section included in this proxy statement. The Committee targeted a payout equal to 85% of base salary for Mr. Bram, 65% of base salary for Mr. Loughran, and 57% of base salary for Ms. Cunningham and Mr. Gibson, which would be achieved if 100% of the Performance Metric goal and 80% of the strategic goals were met. Consequently, the target amounts in this column assume that Mr. Bram earned 85%, Mr. Loughran earned 65%, and Mr. Gibson and Ms. Cunningham earned 57% of the maximum potential awards that they could have earned using these annual incentive opportunities. The threshold amounts assume that the NEOs earned the minimum cash incentive awards required to trigger any level of payout. If Company performance fell below performance goals required to earn the threshold amount, they would not have been entitled to any non-equity incentive plan awards. Ms. Cunningham 55% of Target and Mr. Gibson earned 63% of Target of these non-equity incentive plan awards based on our performance during 2020. These annual incentive amounts are also included under “Non-Equity Incentive Compensation” in the Summary Compensation Table. |
(2) These amounts represent grants of performance-vesting restricted stock made pursuant to our 2020 Incentive Plan. These restricted shares will be earned over the performance cycle ending December 31, 2022. For a discussion of the other material terms of these awards, see our CD&A section. The Committee targeted payout of restricted shares equivalent to 42.5% of base salary for Mr. Bram, 32.5% of base salary for Mr. Loughran and 28.5% of base salary for Ms. Cunningham and Mr. Gibson. |
(3) These amounts represent grants of time based restricted shares made under the 2020 Incentive Plan. For a discussion of the material terms of these awards, see our CD&A section. |
(4) These awards are time-vesting, with two-thirds of the award vesting on October 26, 2021 and the remaining one-third vesting on April 26, 2022. |
(5) These performance stock units or “PSUs” that will vest provided the 30-day volume weighted average price (VWAP) of a share of Company stock equals a specified target level. Fifty thousand (50,000) PSUs will vest if the 30-day VWAP per share equals eight dollars ($8.00) or more on or before October 26, 2023 (Tranche I), and the remaining forty thousand (40,000) will vest if the VWAP per share equals eleven dollars ($11.00) or more on or before October 26, 2023 (Tranche II). The 50,000 Tranche I PSUs vested on January 29, 2021 and will be settled in stock following the 2021 Annual Meeting of Shareholders provided shareholders approve Proposal 3 to increase the number of shares of Company stock reserved for issuance under the 2015 Stock Awards Plan. |
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Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | Grant Date Fair Value of Stock and Option Awards (4) |
| | Threshold | Target | Maximum | Threshold | Target | Maximum | | |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (k) | (l) |
Craig C. Bram | | | | | | | | | |
02/07/2018 | $74,250 | $420,750 | $594,000 | | | | | |
02/07/2018 | | | | $73,125 | $146,250 | $219,375 | 11,731 | $292,500 |
Dennis M. Loughran | | | | | | | | | |
02/07/2018 | $43,538 | $209,625 | $274,125 | |
|
| | |
02/07/2018 | | | | $34,706 | $69,413 | $104,119 | 5,568 | $138,825 |
J. Kyle Pennington | | | | | | | | | |
02/07/2018 | $39,825 | $191,750 | $250,750 | |
|
| | |
02/07/2018 | |
| | $31,050 | $62,100 | $93,150 | 4,981 | $124,200 |
J. Greg Gibson | | | | | | | | | |
02/07/2018 | $32,640 | $155,040 | $204,000 | |
|
| | |
02/07/2018 | | | | $29,250 | $58,500 | $87,750 | 4,692 | $117,000 |
| | | | | | | | | |
(1) These awards were made pursuant to our 2018 Incentive Plan and were earned upon the achievement of certain performance goals established by the Committee for the fiscal year ended December 31, 2018. For a discussion of these performance goals, see our CD&A section included in this proxy statement. The Committee targeted a payout equal to 85% of base salary for Mr. Bram, 65% of base salary for Mr. Loughran and Mr. Pennington, and 57% of base salary for Mr. Gibson, which would be achieved if 100% of the Performance Metric goal and 80% of the strategic goals were met.
Consequently, the target amounts in this column assume that Mr. Bram earned 85%, Mr. Loughran and Mr. Pennington earned 65%, and Mr. Gibson earned 57% of the maximum potential awards that they could have earned using these annual incentive opportunities.
The threshold amounts assume that the NEOs earned the minimum cash incentive awards required to trigger any level of payout. If Company performance fell below performance goals required to earn the threshold amount, they would not have been entitled to any non-equity incentive plan awards.
Mr. Bram earned 114.7%, Mr. Loughran earned 82.0%, Mr. Pennington earned 82.0%, and Mr. Gibson earned 49.9% of these non-equity incentive plan awards based on our performance during 2018. These annual incentive amounts are also included under “Non-Equity Incentive Compensation” in the Summary Compensation Table. |
(2) These amounts represent grants of performance-vesting restricted stock made pursuant to our 2018 Incentive Plan. These restricted shares will be earned over the performance cycle ending December 31, 2020. For a discussion of the other material terms of these awards, see our CD&A section. The Committee targeted payout of restricted shares equivalent to 32.5% of base salary for Mr. Bram and 22.5% of base salary for the other NEOs. |
(3) These amounts represent grants of time based restricted shares made under the 2018 Incentive Plan. For a discussion of the material terms of these awards, see our CD&A section. |
(4) Full grant date fair value of equity awards computed in accordance with FASB ASC Topic 718. |
Outstanding Equity Awards at Fiscal Year End 20172020
The following table sets forth information about stock options and restricted stock awards outstanding at the end of 20182020 for each of our NEOs. No other stock awards were outstanding at December 31, 2018.2020.
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| Option Awards | Stock Awards |
Name | Number of Securities Underlying Unexercised Options (#)/ Exercisable (1) | Number of Securities Underlying Unexercised Options (#)/ Unexercisable (1) | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (2) | Market Value of Shares or Units of Stock That Have Not Vested (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (4) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
Christopher G. Hutter | — | — | — | — | 140,000 | $1,092,000 | — | — |
| | | | | | | | |
Sally M. Cunningham | — | 12,000 | $12.995 | 2/5/2030 | 10,575 | $82,485 | 12,176 | $94,973 |
| — | 10,000 | $7.330 | 6/30/2030 | | | | |
| | | | | | | | |
J. Greg Gibson | — | 12,000 | $12.995 | 2/5/2030 | 13,074 | $101,977 | 15,764 | $122,959 |
| 2,092 | — | $16.010 | 2/10/2025 | | | | |
| 3,398 | — | $14.760 | 2/20/2024 | | | | |
(1) Includes stock options granted on February 5, 2020 and June 30, 2020, all of which vest in 33% increments annually, beginning one year after date of grant. Additionally, includes stock options granted February 20, 2014 and February 10, 2015, all of which vest in 20% increments annually, beginning one year after date of grant. |
(2) For Mr. Hutter, this includes restricted stock awards granted on November 10, 2020 which vest 66% after 12 months and 33% after 18 months, as well as variable weight average performance shares that vest when the 30-day weighted average of the Company stock reaches $8.00 and $11.00.
For Ms Cunningham and Mr. Gibson, this includes restricted stock awards granted on February 19, 2016 and vests in 20% increments annually, beginning one year after date of grant. It also includes grants on February 7, 2018, February 6, 2019 and February 5, 2020 which vest in 33.3% increments annually, beginning one year after date of grant. Stock awards are subject to the recipients continuing to be employed by the Company and other conditions described under "Equity Plans - Stock Awards Plan." |
(3) These represent the performance based restricted shares granted in 2018, 2019 and 2020 the earn out of which is based on achievement of a three-year Performance Metric target. Shares will be earned, if at all, for the period ending December 31, 2020, December 31, 2021 and December 31, 2022. In accordance with SEC rules, the number of shares included in this table is based on a threshold level of payout. |
(4) Based on the December 31, 2020 closing stock price of $7.80 per share. |
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| Option Awards | Stock Awards |
Name | Number of Securities Underlying Unexercised Options (#)/ Exercisable (1) | Number of Securities Underlying Unexercised Options (#)/ Unexercisable (1) | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (2) | Market Value of Shares or Units of Stock That Have Not Vested (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (4) |
(a) | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) |
Craig C. Bram | — |
| 2,030 |
| $16.010 | 2/10/2025 |
| 56,636 |
| $939,591 | 19,557 |
| $324,451 |
| | | | | | | | |
Dennis M. Loughran | — |
| — |
| — |
| — |
| 20,870 |
| $346,233 | 9,604 |
| $159,330 |
| | | | | | | | |
J. Kyle Pennington | 1,573 |
| 1,050 |
| $16.010 | 2/10/2025 |
| 18,593 |
| $308,458 | 8,385 |
| $139,107 |
| 4,051 |
| — |
| $13.700 | 2/7/2023 |
| | | | |
| 3,914 |
| — |
| $11.345 | 2/9/2022 |
| | | | |
| | | | | | | | |
J. Greg Gibson | 1,255 |
| 837 |
| $16.010 | 2/10/2025 |
| 16,458 |
| $273,038 | 8,079 |
| $134,031 |
| 2,719 |
| 679 |
| $14.760 | 2/20/2024 |
| | | | |
|
(1) Includes stock options granted on February 9, 2012, February 20, 2014 and February 10, 2015, all of which vest in 20% increments annually, beginning one year after date of grant. |
(2) Includes restricted stock awards granted on February 16, 2016 which vest in 20% increments annually, beginning one year after date of grant and restricted stock awards granted on May 5, 2017, February 8, 2017 and February 7, 2018 which vest in 33.3% increments annually, beginning one year after date of grant. Stock awards are subject to the recipients continuing to be employed by the Company and other conditions described under "Equity Plans - Stock Awards Plan." |
(3) These represent the performance based restricted shares granted in 2016, 2017 and 2018, the earn out of which is based on achievement of a three-year Performance Metric target. Shares will be earned, if at all, for the period ending December 31, 2018, December 31, 2019 and December 31, 2020. In accordance with SEC rules, the number of shares included in this table is based on a threshold level of payout. |
(4) Based on the December 31, 2018 closing stock price of $16.59 per share. |
20182020 Option Exercises and Stock Vested
The following table sets forth information about options exercised and restricted stock awards that vested in 2018.2020.
| | | | | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
Name | | Number of shares acquired on exercise | Value realized on exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) |
(a) | | (b) | (c) | (d) | (e) |
Craig C. Bram | | — | — | 53,317 | $434,236 |
Dennis M. Loughran | | — | — | 9,690 | $122,985 |
Sally M. Cunningham | | — | — | 4,726 | $60,181 |
J. Greg Gibson | | — | — | 7,559 | $95,863 |
(1) Based on the market value of the shares on the exercise or vesting date. |
|
| | | | | | | | |
| | Option Awards | Stock Awards |
Name | | Number of shares acquired on exercise | Value realized on exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) |
(a) | | (b) | (c) | (d) | (e) |
Craig C. Bram | | 74,862 |
| $752,343 | 19,469 |
| $325,194 |
Dennis M. Loughran | | — |
| — |
| 6,966 |
| $105,531 |
J. Kyle Pennington | | — |
| — |
| 6,108 |
| $92,380 |
J. Greg Gibson | | — |
| — |
| 5,878 |
| $89,008 |
(1) Based on the market value of the shares on the exercise or vesting date. |
Equity Plans
Stock Option Plan
The Company currently has one stock option plan, the 2011 Long-Term Incentive Stock Option Plan (the "2011 Option Plan"), approved at the 2011 Annual Meeting of Shareholders. Options may be exercised beginning one year after the date granted at the rate of 20% annually on a cumulative basis; however, in no event shall an option be exercisable more than ten years after the date of grant. In the event that (a) all or substantially all of the assets or Common Stock of the Company (or a subsidiary or division of the Company in which employee is employed) are sold to an entity not affiliated with the Company, (b) a merger or share exchange with an unaffiliated party occurs in which the Company is not the surviving entity, or (c) a similar sale or exchange transaction occurs, which in the Committee’s sole discretion justifies an exercise right, an option holder may exercise, in addition to the above, 100% of the options not otherwise exercisable because of the holding period requirement, subject to the limitation that in no event shall incentive stock options under this and all other option plans of the Company having an aggregate fair market value in excess of $100,000 at the dates of grant become exercisable by an optionee for the first time during a calendar year. The exercise price for options granted under the 2011 Option Plan is equal to 100% of the fair market value on the date the option is granted. The option grant price is determined by averaging the high and low sales prices for the Company’s Common Stock for the day prior to the option grant date as reported by the Nasdaq Global Market. If one of the events described in (a), (b) or (c) above had occurred as of December 31, 2018, all of the stock options shown in the "Number of Securities Underlying Unexercised Options/Unexercisable" column of the Outstanding Equity Awards at Fiscal Year End 2018 table would have vested immediately.
On February 10, 2015, the Board amended the 2011 Option Plan to allow former employees who cease to be employees of the Company as a result of normal retirement, early retirement or disability retirement, to exercise any outstanding options at any time after the date on which he or she ceased to be an employee, but not later than the end of the fixed term of the option and no earlier than one year from the date the option was granted. In the case of death, the option may be exercised by the holder's estate, a person who acquired the right to exercise the option by bequest or inheritance, or his or her attorney-in-fact, as appropriate, at any time after the holder's death, but not later than the end of the fixed term of the option. Otherwise, options can only be exercised by an employee who has been in the continuous employment of the Company since the date the option was granted. Options granted under the 2011 Option Plan to an employee shall not be transferable except by will or the laws of descent and distribution.
At March 20, 2019, there were a total of 59,096 shares underlying outstanding options and 48,759 shares underlying exercisable options under the 2011 Option Plan. There were 152,028 shares available for grant under the 2011 Option Plan as of March 20, 2019.
Stock Awards Plans
The 2015 Stock Plan, approved by shareholders at the 2015 Annual Meeting of Shareholders and amended by the Board of Directors and the shareholders at the 2018 Annual Meeting of Shareholders, authorizes the issuance of up to 500,000 shares which can be awarded for a period of ten years from the effective date of the plan. On February 16, 2017, the Board of Directors amended the 2015 Stock Plan to enable the Compensation & Long-Term Incentive Committee to establish vesting schedules as it administers the plan, generally over three or five years. In order for the awards to vest, the employee must be in the continuous employment of the Company or a subsidiary since the date of the awards, except as the result of an employee's retirement (minimum age of 62), death or permanent disability, upon which event any portion of a stock award that has not vested with the Company will become 100% vested. Otherwise, any portion of a stock award that has not vested prior to the termination of an employee's employment with the Company for any other reason shall be automatically cancelled. Vesting of the total number of unvested shares will occur in the event that there is either (i) the acquisition of more than 50% of the outstanding voting securities of the Company or a subsidiary or division of the Company in which the employee is employed (calculated on a fully diluted basis) by any person during any consecutive 12-month period of time; or (ii) the sale of more than 50% in value of the assets of the Company over any consecutive 12-month period of time. At March 20, 2019, awards for 293,895 shares have been granted under the 2015 Stock Plan.
The 2005 Stock Awards Plan ("2005 Stock Plan), approved by shareholders at the 2005 Annual Meeting of Shareholders, and amended by the Board of Directors effective at its February 2008 and November 2014 meetings, authorized the issuance of up to 300,000 shares which could be awarded for a period of ten years from the effective date of the plan. The 2005 Stock Plan expired on February 3, 2015 at which time no further grants could be awarded. There are outstanding awards under the 2005 Stock Plan that will vest over the next year. Stock awards vest in 20% increments annually, beginning one year after the date of grant. In order for the awards to vest, the employee must be in the continuous employment of the Company or a subsidiary since the date of the awards, except as the result of an employee's retirement (minimum age of 62), death or permanent disability, in which case any portion of a stock award that has not vested with the Company will become 100% vested. Otherwise, any portion of a stock
award that has not vested prior to the termination of an employee's employment with the Company for any other reason shall be automatically cancelled. Vesting of up to 100% of the total number of unvested shares will occur in the event that there is either (i) the acquisition of more than 50% of the outstanding voting securities of the Company or a subsidiary or division of the Company in which the employee is employed (calculated on a fully diluted basis) by any person during any consecutive 12-month period of time; or (ii) the sale of more than 50% in value of the assets of the Company over any consecutive 12-month period of time. The Company may also terminate any portion of an award that has not vested upon an employee’s failure to comply with all conditions of the award or the plan. If one of the events described in (i) or (ii) above had occurred as of December 31, 2018, 100% of the restricted shares shown in the "Number of Shares or Units of Stock That Have Not Vested" column of the Outstanding Equity Awards at Fiscal Year End 2018 table would have vested immediately.
Shares relating to awards that have not yet vested are reserved for issuance by the Company and an employee is not entitled to any voting or dividend rights with respect to any such shares. Share awards that have not vested are not transferable.
Retirement Plans
401(k)/ESOP Plan
The Company sponsors a 401(k) Employee Stock Ownership Plan (the "401(k)/ESOP Plan"). All employees (except those employees who are entitled to participate in union-sponsored plans) who are 21 years or older are automatically enrolled at a pre-determined percentage following 60 days of full-time employment with the Company or any subsidiary. Employees may choose to opt out or elect to change the default deferral rate. Employees are eligible to receive a matching contribution in the month following their one-year anniversary.
Employees are permitted to contribute up to 100% of earnings not to exceed a dollar amount set by the Internal Revenue Service through payroll deduction on a pre-tax basis or after-tax basis through a Roth 401(k). Employees are permitted to change the election daily and can revoke the election at any time. Employee contributions are 100% vested at all times. An employee can invest his contribution in any of the investment funds offered; however, employee contributions cannot be invested in the Company's Common Stock.
Prior to January 1, 2016, all Company contributions were invested in Company stock. Effective January 1, 2016, Company contributions are invested in accordance with employee elections for individual contributions, and the ESOP portion of the 401(k)/ESOP Plan is frozen. For each plan year, the Company contributes on behalf of each eligible participant a discretionary matching contribution equal to a percentage determined annually by the Board of Directors.
For 2018 and 2017, the maximum matching contribution was 4%. The matching contribution is allocated within 15 days of each pay period. In addition to the matching contribution, the Company may make a discretionary contribution which shall be distributed to all eligible participants regardless of whether they contribute to the 401(k)/ESOP Plan. No discretionary contributions have been made to the 401(k)/ESOP Plan.
Distributions are not permitted before age 59 1/2 except in the event of death, disability, termination of employment or reason of proved financial hardship as defined according to Internal Revenue Service guidelines. The 401(k)/ESOP Plan provides for payment of the participant’s account balance upon death, disability or retirement in the form of cash or shares of the Company's Common Stock or both. If employment terminates for reasons other than retirement, disability or death (e.g. resignation or termination by the Company), any discretionary portion of a participant’s account balance will vest as follows: less than three years’ service - 0% vested; three or more years - 100% vested.
Unvested amounts are forfeited and allocated to participants eligible to participate for a plan year. The 401(k)/ESOP Plan permits rollovers from qualified plans at the discretion of the Company. The 401(k)/ESOP Plan is permitted to borrow money to purchase shares of the Company's Common Stock. All shares of the Company's Common Stock acquired by the 401(k)/ESOP Plan with the proceeds of a loan are maintained in a suspense account and are withdrawn and shares are allocated to participant’s accounts as the loan is paid. As a participant in the 401(k)/ESOP Plan, any employee may direct the trustee to vote shares allocated to his or her account in accordance with the employee's wishes.
All 401(k)/ESOP Plan assets are held by an independent trustee. The trustee invests all assets and makes payment of 401(k)/ESOP Plan benefits. The 401(k)/ESOP Plan is managed and administered by an independent administrator and a Pension Committee comprised of the corporate officers of the Company. Expenses incurred for the administration of the 401(k)/ESOP Plan are paid by the Company. The 401(k)/ESOP Plan reserves to the Board of Directors of the Company the right to amend the 401(k)/ESOP Plan in any manner or terminate the 401(k)/ESOP Plan at any time. The 401(k)/ESOP Plan may be amended to preserve the qualification of the 401(k)/ESOP Plan under the applicable provisions of the Internal Revenue Code of 1986, as amended from time to time. For 2018, the Company’s total matching contribution was $694,795.
COMPENSATION COMMITTEE REPORT
The Compensation & Long-Term Incentive Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Further, the Compensation & Long-Term Incentive Committee considered and took into account the 2018 shareholder vote on executive compensation. Based on such review, discussion and consideration of the 2018 shareholder vote, the Compensation & Long-Term Incentive Committee recommended to our Board of Directors that the "Compensation Discussion and Analysis" be included in our 2018 Annual Report on Form 10-K and in this Proxy Statement.
The Compensation & Long-Term Incentive Committee
Henry L. Guy, Chair
Susan S. Gayner
Amy J. Michtich
James W. Terry, Jr.
PROPOSAL 2 - ADVISORY (NON-BINDING) VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Our Board is committed to a compensation philosophy and program that promotes our ability to attract, retain and motivate individuals who can achieve superior financial results. As part of that commitment, and in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") and Section 14A of the Securities Exchange Act of 1934, shareholders are being asked to approve, in an advisory non-binding resolution, the compensation of our NEOs as disclosed in this Proxy Statement. This proposal is our "say-on-pay" proposal. It gives you the opportunity to let us know how you view the overall compensation of our NEOs, and the policies and practices described in this Proxy Statement. It is not intended to address any specific item of compensation. In considering how to vote on this proposal, we encourage you to review all the relevant information in this Proxy Statement - our CD&A (including its executive summary), the compensation tables, and the rest of the narrative disclosures regarding our executive compensation program. Your vote will not directly affect or otherwise limit any existing compensation or award arrangement of any of the NEOs.
Because your vote is advisory, it is non-binding on our Board; however, our Board will take into account the outcome of the vote on the say-on-pay proposal when considering future compensation arrangements. We invite shareholders who wish to communicate with our Board on executive compensation or any other matters to contact us as provided under "Corporate Governance - Shareholder Communications with Directors."
Accordingly, in compliance with the Dodd-Frank Act, we ask you to approve the following resolution:
"RESOLVED, that the shareholders of Synalloy Corporation approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion in the Company’s 20192020 Proxy Statement."
Vote Required
A majority of the votes cast at the Annual Meeting of Shareholders must vote "FOR" Proposal 2 to approve on anthe advisory non-binding basis,vote on the compensation of our named executive officers. The enclosed form of proxy provides a means for you to vote "For," "Against" or to "Abstain" on this proposal. Each properly executed proxy received in time for the Annual Meeting will be voted as specified therein. Abstentions and broker non-votes will have no effect on the outcome of the vote on this proposal.
Board Recommendation
OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL ON ANOF THE ADVISORY BASIS, OFVOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
Fees PaidPROPOSAL 3 - PROPOSAL TO APPROVE THE INCREASE IN SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THE COMPANY'S 2015 STOCK AWARDS PLAN
The Company’s 2015 Stock Awards Plan (2015 Stock Plan or Plan), was adopted by the Board of Directors effective as of February 10, 2015, and was approved by shareholders at the 2015 Annual Meeting of Shareholders. An amendment and restatement of the Plan was adopted and approved by shareholders at the 2018 Annual Meeting of Shareholders. The Plan is intended to Independent Registered Public Accounting Firmprovide key executive employees of the Company and its subsidiaries with the opportunity to participate in the Company’s future prosperity and growth by awarding them shares of the Company’s Common Stock. The Plan has a ten (10) year term and will terminate On February 10, 2025.
The Company’s shareholders have approved the issuance of up to 500,000 shares of Common Stock for awards under the 2015 Stock Plan. At March 1, 2021, there were no shares available for future grants under the Plan. In February 2021, the Board of Directors approved an amendment to the 2015 Stock Plan to increase the maximum number of shares of Common Stock reserved for issuance under the 2015 Stock Plan by an additional 1,000,000 shares, which would result in a total authorization of 1,500,000 shares under the 2015 Stock Plan, as amended. The amendment is subject to approval by the Company's shareholders. If approved, 918,002 shares will be available for future grants of awards. A copy of the Amended and Restated 2015 Stock Awards Plan is included with this Proxy Statement as Appendix A and incorporated herein by reference.
In determining the number of shares to include in the Amended 2015 Stock Awards Plan, the Compensation & Long-Term Incentive Committee, in consultation with Pearl Meyer, the Committee’s independent executive compensation consultant, considered anticipated equity usage over the next three to five years. The Compensation & Long-Term Incentive Committee also considered annual equity burn rate and total equity overhang as compared to Synalloy’s compensation peer group. Synalloy’s three-year average burn rate was below the peer group median, and the requested share authorization will position Synalloy’s total equity overhang between the median and 75th percentile of the peer group. The Committee believes the requested share authorization will be sufficient to provide competitive equity grants to eligible employees over the next few years and will not be perceived by most shareholders as overly dilutive.
The following is a summary of the 2015 Stock Plan as amended and is qualified in its entirety by reference to the Plan. This summary does not create any rights separate from the Plan.
The purpose of the 2015 Stock Plan is to further the long-term stability and financial success of the Company by attracting and retaining senior management and key employees through the use of stock incentives. The Company believes that ownership of its Common Stock will stimulate the efforts of those persons upon whose judgment, interest and efforts the Company is and will be largely dependent for the successful conduct of its business and will further the identification of those persons' interests with the interest of the Company's shareholders. The 2015 Stock Plan is administered by the Compensation & Long-Term Incentive Committee of the Board of Directors.
The Compensation & Long-Term Incentive Committee sets the vesting schedule for individual awards under the 2015 Stock Plan, generally in 33% increments, beginning one year after the grant date. A Plan participant must remain employed with the Company or a subsidiary until the award vesting dates to become entitled to shares of Company stock granted pursuant to the award unless the participant’s termination of employment with the Company is due to retirement on or after age 62, death or disability, in which event the participant shall become 100% vested. Any portion of a stock award that has not vested prior to the termination of an eligible employee's employment with the Company shall be automatically forfeited and cancelled. Vesting of awards will also accelerate to 100% in the event of a change in control. For this purpose, a change in control will occur upon either (i) the acquisition of more than fifty percent (50%) of the outstanding voting securities of the Company or a subsidiary in which the participant is employed (calculated on a fully diluted basis) by any person during any consecutive 12-month period of time; or (ii) the sale of more than fifty percent (50%) in value of the assets of the Company over any consecutive 12-month period of time. In the event of a reorganization, merger, consolidation, reclassification, recapitalization, combination or exchange of shares, stock split, stock dividend, rights offering or other event affecting shares of the Company, the number of shares subject to unvested stock awards and the number of shares reserved for issuance under the 2015 Stock Plan will be equitably adjusted by the Committee to reflect the change.
The 2015 Stock Plan may be amended or terminated by the Board of Directors at any time. However, to the extent shareholder approval is required by applicable law or applicable requirements of any securities exchange or quotation system on which the Company's Common Stock is listed or quoted, no such action by the Board will be effective unless approved by a majority of the outstanding shares of the Company.
The following table sets forth aggregated information as of March 22, 2021 about all of the aggregate fees billed by KPMG, LLP Company's equity compensation plans.
| | | | | | | | | | | | | | | | | | | | |
Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted average exercise price of outstanding options, warrants, and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (1) (c) |
Equity compensation plans approved by security holders | | 179,531 | | | $ | 12.74 | | | — | |
Equity compensation plans not approved by security holders | | — | | | — | | | — | |
Total | | 179,531 | | | 12.74 | | | — | |
Vote Required
A majority of the votes cast at the Annual Meeting of Shareholders must vote "FOR" Proposal 4 to approve the increase in shares of common stock issuable under the Company's 2015 Stock Plan. The enclosed form of proxy provides a means for audit services renderedyou to vote "For," "Against" or to "Abstain" on this proposal. Each properly executed proxy received in connection with the consolidated financial statements and reportstime for the fiscal years ended December 31, 2018 (referred toAnnual Meeting will be voted as "Fiscal 2018")specified therein. Abstentions and December 31, 2017 ("referred to as "Fiscal 2017") and for other services rendered during fiscal years 2018 and 2017,broker non-votes will have no effect on behalfthe outcome of the Company and its subsidiaries, which have been billed or will be billed to the Company.
|
| | | | | | | | |
Fee Category | | Fiscal 2018 | % of Total | Fiscal 2017 | % of Total |
Audit Fees | $1,099,790 | 95.3% | $847,500 | 99.5% |
| | | | | | |
Audit Related Fees | $54,200 | 4.7% | $4,200 | 0.5% |
| | | | | | |
Tax Fees | — |
| —% | — |
| —% |
| | | | | | |
All Other Fees | — |
| —% | — |
| —% |
| | | | | | |
Total Fees | $1,153,990 | 100.0% | $851,700 | 100.0% |
Audit Fees: Audit fees include fees and out-of-pocket expenses billed for professional services rendered for the audit of the Company’s consolidated financial statements and review of the interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by the Company’s independent auditor in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation. Audit Fees also include fees for the audit of the Company’s internal controls related to Sarbanes-Oxley Section 404 compliance basedvote on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.this proposal.
Audit Related Fees: In Fiscal 2018, audit related fees include costs associated with Company acquisitions and costs associated with environmental compliance. In Fiscal 2017, the audit related fees include costs associated with environmental compliance.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE INCREASE IN SHARES OF COMMON STOCK ISSUABLE UNDER THE COMPANY'S AMENDED AND RESTATED 2015 STOCK AWARDS PLAN.
Tax Fees: The Company did not incur tax fees from KPMG, LLP in 2018 or 2017.
In making its decision to appoint KPMG, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019, the Audit Committee considered whether services other than audit and audit-related services provided by that firm are compatible with maintaining the independence of KPMG, LLP.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee pre-approves all audit and permitted non-audit services (including the fees and terms thereof) provided by the independent registered public accounting firm, subject to limited exceptions for non-audit services described in Section 10A of the Securities Exchange Act of 1934, which are approved by the Audit Committee prior to completion of the audit. The committee may delegate to one or more designated members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full committee at its next scheduled meeting. During Fiscal 2018, all audit and permitted non-audit services were pre-approved by the Audit Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has reviewed and discussed with management the Company’s audited consolidated financial statements for the year ended December 31, 2018.2020. The Audit Committee has discussed with the Company’s independent auditors, KPMG LLP, the matters required to be discussed by the standards of the Public Company Accounting Oversight Board ("PCAOB"), including PCAOB Standard 1301, Communicating with Audit Committees. The Audit Committee has also received the written disclosures and the letter from KPMG LLP required by the applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with KPMG LLP, its independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20182020 for filing with the SEC.
The Audit Committee
Anthony A. Callander,Jeffrey Kaczka, Chair
Henry L. GuySusan S. Gayner
James W. Terry, Jr.John P. Schauerman
Fees Paid to Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees billed by KPMG LLP for audit services rendered in connection with the consolidated financial statements and reports for the fiscal years ended December 31, 2020 (referred to as "Fiscal 2020") and December 31, 2019 ("referred to as "Fiscal 2019") and for other services rendered during fiscal years 2020 and 2019, on behalf of the Company and its subsidiaries, which have been billed or will be billed to the Company.
| | | | | | | | | | | | | | | | | | | | |
Fee Category | | Fiscal 2020 | % of Total | Fiscal 2019 | % of Total |
Audit Fees | $1,223,546 | 99.4% | $1,636,379 | 99.4% |
| | | | | | |
Audit Related Fees | $7,000 | 0.6% | $9,200 | 0.6% |
| | | | | | |
Tax Fees | — | —% | — | —% |
| | | | | | |
All Other Fees(1) | — | —% | — | —% |
| | | | | | |
Total Fees | $1,230,546 | 100.0% | $1,645,579 | 100.0% |
Audit Fees: Audit fees include fees and out-of-pocket expenses billed for professional services rendered for the audit of the Company’s consolidated financial statements and review of the interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by the Company’s independent auditor in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation. Audit Fees also include fees for the audit of the Company’s internal controls related to Sarbanes-Oxley Section 404 compliance based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Audit Related Fees: In Fiscal 2020 and Fiscal 2019, audit related fees include costs associated with environmental compliance.
Tax Fees: The Company did not incur tax fees from KPMG LLP in 2020 or 2019.
In making its decision to appoint KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020, the Audit Committee considered whether services other than audit and audit-related services provided by that firm are compatible with maintaining the independence of KPMG LLP.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor
The Audit Committee pre-approves all audit and permitted non-audit services (including the fees and terms thereof) provided by the independent registered public accounting firm, subject to limited exceptions for non-audit services described in Section 10A of the Securities Exchange Act of 1934, which are approved by the Audit Committee prior to completion of the audit. The committee may delegate to one or more designated members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full committee at its next scheduled meeting. During Fiscal 2020, all audit and permitted non-audit services were pre-approved by the Audit Committee.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee conducted a competitive process to determine the Company’s independent registered public accounting firm for the year ending December 31, 2021 and the related interim periods. The Audit Committee invited several independent registered public accounting firms to participate in this process, including KPMG LLP, which audited the Company’s consolidated financial statements for the years ended December 31, 2020 and 2019. Following the competitive process, on March 12, 2021, the Audit Committee dismissed KPMG LLP as the Company’s independent registered public accounting firm. On March 12, 2021, the Audit Committee selected BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm for the year ended December 31, 2021 and the related interim periods. BDO completed its standard client acceptance procedures on March 17, 2021.
KPMG LLP’s reports on the Company’s consolidated financial statements as of and for the years ended December 31, 2020 and 2019 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, except as follows:
a.“As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases effective January 1, 2019, due to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 842, Leases.”
During the Company’s two fiscal years ended December 31, 2020 and 2019, and the subsequent interim period through March 12, 2021, there were no: (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) between the Company and KPMG LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures that, if not resolved to the satisfaction of KPMG LLP, would have caused KPMG LLP to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events, except that KPMG LLP concurred with the Company’s assessment of a material weakness related to the Company’s control environment.
In its Management’s Report on Internal Control Over Financial Reporting as set forth in item 4 “Controls and Procedures” of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, the Company reported a material weakness over internal controls, which constitutes a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K). The Audit Committee discussed the subject matter of the reportable events with KPMG LLP. Subsequently, the Audit Committee and management developed a remediation plan detailed in its Management’s Report on Internal Control Over Financial Reporting as set forth in item 4 “Controls and Procedures” of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. The Company has authorized KPMG LLP to respond fully to BDO’s inquiries concerning the subject matter of such reportable event.
During the years ended December 31, 2020 and 2019, and the subsequent interim period through March 12, 2021, neither the Company nor anyone on the Company’s behalf consulted BDO regarding any of the matters referred to in Item 304(a)(2)(i) or (ii) of Regulation S-K.
PROPOSAL 34 - RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMAUDITOR
Although Delaware law and SEC rules do not require shareholder ratification to proceed with the appointment, our Audit Committee and our Board are requesting that our shareholders ratify the appointment of KPMG,BDO USA, LLP as our independent registered public accounting firm for fiscal year 2019.2021. Our Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal. However, if our shareholders do not ratify the appointment, our Audit Committee may investigate the reasons for shareholder rejection and may consider whether to retain KPMG,BDO USA, LLP or to appoint another independent registered public accounting firm. Furthermore, even if the appointment is ratified, our Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our shareholders or the Company. Representatives of KPMG,BDO USA, LLP are expected to be present at the Annual Meeting with an opportunity to make a statement, if they so desire, and to respond to appropriate questions with respect to that firm’s audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2018.2020.
Vote Required
A majority of the votes cast at the Annual Meeting of Shareholders must vote "FOR" Proposal 34 to ratify our Audit Committee’s appointment of KPMG,BDO USA, LLP as our independent registered public accounting firmauditor for the fiscal year ended December 31, 2019.2021. The enclosed form of proxy provides a means for you to vote "For," "Against" or to "Abstain" on this proposal. Each properly executed proxy received in time for the Annual Meeting will be voted as specified therein. Abstentions and broker non-votes will have no effect on the outcome of the vote on this proposal.
Board Recommendation
OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF KPMG,BDO USA, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMAUDITOR FOR FISCAL YEAR 2019.
2021.
SHAREHOLDER PROPOSALS FOR THE 20202022 ANNUAL MEETING OF SHAREHOLDERS
Any shareholder proposal to be included in the proxy materials for the 20202022 Annual Meeting of Shareholders must be submitted in accordance with applicable regulations of the SEC and received by the Company at its principal executive offices, 4510 Cox Road, Suite 201, Richmond, VA 23060, no later than December 2, 2019.1, 2021. In order for a shareholder to bring any business or nominations before the 20202021 Annual Meeting of Shareholders, certain conditions set forth in the Company’s Bylaws must be complied with, including but not limited to, the delivery of a notice to the Corporate Secretary of the Company not less than 30 nor more than 60 days in advance of the 20192022 Annual Meeting which is tentatively scheduled on May 15, 2020.19, 2022. With respect to any shareholder proposal not received by the Company by February17, 2020,February 18, 2022, the designated proxy agents will vote on the proposal in their discretion.
REFERENCES TO OUR WEBSITE ADDRESS
References to our website address throughout this Proxy Statement and the accompanying materials are for informational purposes only, or to fulfill specific disclosure requirements of the SEC’s rules or the Nasdaq Rules. These references are not intended to, and do not, incorporate the contents of our website by reference into this Proxy Statement or the accompanying materials.
INCORPORATION BY REFERENCE
The "Audit Committee Report" is not deemed to be filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such information by reference.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any other matters which may come before the meeting. However, if any other matters do properly come before the meeting, it is the intention of the persons named as proxies to vote upon them in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Sally M. CunninghamRobert A Peay, Corporate Secretary
SYNALLOY CORPORATION
4510 COX ROAD, SUITE 201
RICHMOND, VA 23060
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. ESTEastern Time the day before the meeting date or the plan cut-off date for the 401(k)/ESOP Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSDuring The Meeting - Go to www.virtualshareholdermeeting.com/SYNL2021
If you would like to reduce
You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallyMeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the Meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. ESTEastern Time the day before the meeting date or the plan cut-off date for the 401(k)/ESOP Plan. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1. Election of Directors
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The Board of Directors recommends you vote FOR the following:
1. Election of Directors | For All
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| Withhold All
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| For All Except
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| To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. |
Nominees |
01) Craig C. Bram 02) Anthony A. Callander 03) Susan S. Gayner 04) Henry L. Guy 05) Jeffrey Kaczka 06) Amy J. Michtich 07) James W. Terry, Jr. 08) Murray H. Wright
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If you request cumulative voting, the proxy agents will vote cumulatively for some or all of the nominees in such manner as may be determined at the time by such proxy agents. Check this box to request cumulative voting ___ 02) Christopher G. Hutter 03) Benjamin Rosenzweig 04) John P. Schauerman
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The Board of Directors recommends you vote FOR proposals 2, 3 and 3.4. |
2. Advisory vote on the compensation of our named executive officers. | For ___
☐ | Against ___
☐ | Abstain ___
☐ |
3.Approval of an increase in the number of shares of Company stock reserved for issuance under the Company's 2015 Stock Plan. | For
☐ | Against
☐ | Abstain
☐ |
4.The ratification of the appointment of KPMG,BDO USA, LLP as our independent registered public accounting firm for 2019. | For
___2021.
| Against
___ For
☐ | Against
☐ | Abstain ___
☐ |
NOTE: And in the discretion of such proxy agents, upon such other business as may properly come before the meeting or any adjournment thereof, and matters incidental to the conduct of the meeting.
If you request cumulative voting, the proxy agents will vote this proxy cumulatively for some or all of the nominees in such manner as may be determined at the time by such proxy agents. Check this box to request cumulative voting. ☐
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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____________________________________________________ | _______________ | ____________________________________________________ | _______________ |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement and Annual Report are available at www.proxyvote.com
SYNALLOY CORPORATION
Annual Meeting of Shareholders
May 16, 2019 10:19, 2021 9:00 AM
This proxy is solicited by the Board of Directors
The undersigned hereby appoints Sally M. Cunningham and Dennis M. Loughran,Robert A. Peay or either of them, each with power of substitution, as lawful proxy, to vote all the shares of Common Stock of Synalloy Corporation which the undersigned would be entitled to vote if personally present at the Annual Shareholders' Meeting of Synalloy Corporation to be held as a virtual meeting at www.virtualshareholdermeeting.com/SYNL2019,SYNL2021, on Thursday, Wednesday, May 16, 201919, 2020 at 10:9:00 a.m. EST,Eastern Time, and at any adjournment thereof, upon such business as may properly come before the meeting.
The proxies will vote on the items set forth in the Notice of Annual Meeting and Proxy Statement (receipt of which is hereby acknowledged) as specified on this card and are authorized to vote in their discretion when a vote is not specified. If no specification is made, it is the intention of said proxies to vote the shares represented by the proxy in favor of the proposal.
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this Proxy will be voted FOR the election of all the director nominees in Proposal 1; FOR Proposal 2 - approval, on a non-bindingan advisory basis, of the compensation of our named executive officers; FOR Proposal 3 – approval of an increase in the number of shares of the Company stock reserved for issuance under the Company's 2015 Stock Plan; and FOR Proposal 34 - the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm.firm for 2021.
Cumulative ____________________________________________________________________________________________________________________________
(If you noted cumulative voting instructions above, please check the corresponding box on the reverse side.)
Continued and to be signed on reverse side