☐ | Preliminary Proxy Statement |
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☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
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Dear Fellow Stockholder: Over the course of the
Our key goals for the future continue to include improving the profitability of our core operations and efficiently deploying our working capital, while simultaneously executing long-term growth initiatives that advance our overall objective to build shareholder value.
Our Company’s mission, vision, and values, namely Integrity & Safety, Ownership, Service, Quality, and Inclusion, articulate the culture we want to |
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With
Sincerely, | |
Marec E. Edgar | |
President |
Date and Time and Location June 30, 2020, 10:00 a.m. C.D.T | Virtual meeting via webcast at ww.virtualshareholdermeeting.com/CTAM2020 |
1. | Election of director nominees; |
2. | Non-binding advisory vote to approve the Company’s executive |
3. | Ratification of the appointment of the Company’s independent registered public accounting |
4. | Approval of a charter amendment to increase the authorized shares of the Company’s Common Stock; and |
5. | Any other business that may properly come before the Annual Meeting. |
As of the close of business on For more information on the Annual Meeting and voting, see the “Additional Information on Annual Meeting and Voting” section beginning on page 36. |
Vote on the internet |
Vote online at www.proxyvote.com by 11:59 P.M. ET on |
Vote by telephone |
Call (800) 690-6903 and vote 24 hours a day, seven days a week by 11:59 P.M. E.T on |
Vote by mail |
Mark, sign, date and return the enclosed proxy card to the address listed on the proxy card by |
Vote |
If you plan to attend the |
Jeffrey A. Brodsky | Age: 61 Director since 2017 Independent Audit (Chair) and Governance Committees |
Background: | |
Mr. Brodsky is a co-founder and Managing Director of Quest Turnaround Advisors, LLC where he provides advisory and interim management services to boards of directors, senior management and creditors of companies. | |
Current Public Company Directorships: | None |
Other Public Company Directorships during Past Five Years: | Broadview Networks, Inc. (2012-2017) (publicly registered debt) |
Skills and Qualifications: | |
Mr. Brodsky’s individual qualifications and skills as a director include his extensive experience in financing, mergers, acquisitions, investments, strategic transactions, and turnaround/performance management. Mr. Brodsky holds a Bachelor of Science degree from New York University College of Business and Public Administration and a Master of Business Administration degree from New York University Graduate School of Business. He is also a Certified Public Accountant. |
Marec E. Edgar | Age: 44 Director since 2020 |
Background: | |
Mr. Edgar is the Chief Executive Officer (January 1, 2020 - Present) of the Company and President (since November, 2018). Mr. Edgar was previously Executive Vice President, General Counsel, Secretary & Chief Administrative Officer of the Company (2015-2018). Prior to joining the Company, he held positions of increasing responsibility with Gardner Denver, Inc. (2004-2014) including serving as Assistant General Counsel, Risk Manager & Chief Compliance Officer. | |
None | |
Other Public Company Directorships during Past Five Years: | None |
Skills and Qualifications: | |
Mr. Edgar’s individual qualifications and skills as a director include his extensive experience serving as an executive of two multinational industrial companies, his significant legal expertise (including experience advising Boards of Directors at two different multi-national public companies), and his significant experience in legal strategic transactions. He was also one of the primary leaders in the Company’s recent operational turnaround and financial restructuring. |
Jonathan B. Mellin | Age: 56 Director since 2014 Independent Governance (Chair) and Audit Committees |
Background: | |
Mr. Mellin is President and Chief Executive Officer of Simpson Estates, Inc., a | |
Current Public Company Directorships: | Angelo Gordon Energy Fund II (2017 – Present) (registered investment company) |
Other Public Company Directorships during Past Five Years: | None |
Skills and Qualifications: | |
Mr. Mellin’s |
Steven W. Scheinkman | Age: 66 Director since 2015 |
Background: | |
Mr. Scheinkman | |
Current Public Company Directorships: | None |
Other Public Company Directorships during Past Five Years: | None |
Skills and Qualifications: | |
Mr. Scheinkman’s individual qualifications and skills as a director include his extensive experience serving as an executive of various metal products companies, his significant financial expertise, and his significant experience in strategic transactions. He also successfully led the Company’s recent operational turnaround and financial restructuring. |
Jonathan Segal | Age: 38 Director since 2017 Lead Independent Director Human Resources (Chair) and Audit Committees |
Background: | |
Mr. Segal is managing director and portfolio manager of Highbridge Capital Management, LLC (2007 – Present), a leading global alternative investment firm. Before joining Highbridge, Mr. Segal previously worked as a Research Analyst at Sanford C. Bernstein & Co., LLC (2005 – 2007), an indirect wholly-owned subsidiary of AllianceBernstein L.P. | |
Current Public Company Directorships: | Hycroft Mining Corporation (2015 - Present) (OTCMKTS: HYCT) |
Other Public Company Directorships during Past Five Years: | Contura Energy (2016-2018) (OTCMKTS: CNTE) |
Skills and Qualifications: | |
Mr. Segal’s individual qualifications and skills as a director include his extensive capital markets, investment, and financial expertise; his significant experience in public and private debt restructuring; and his turnaround and performance improvement experience. He has served on a number of public and private company boards and received a Bachelor of Arts degree in Urban Studies from the University of Pennsylvania. |
Michael J. Sheehan | Age: 59 Director since 2017 Independent Board Chairperson Human Resources Committee |
Background: | |
Mr. Sheehan is the Managing Member of Whitecap Performance LLC (2013 – Present), a marketing consultancy, Whitecap Aviation (2013 – Present), an aircraft charter operation, and Managing Partner of Allied Sports a division of Allied Global Marketing (2018 – Present). Mr. Sheehan is a Partner of Vermont Donut Enterprises (2013 – Present), a privately-held holding company with related interests in various food purveying businesses. He also serves on the Board of South Shore Bank (2012 – Present), a full service mutual savings bank in Massachusetts. Mr. Sheehan is the former Chief Executive Officer of Boston Globe Media Partners (2014 – 2017), a leading media company. He previously served as Chairman, Chief Executive Officer, President, and Chief Creative Officer of Hill Holliday (2000 – 2014), a full-service marketing and communications agency; and as Executive Vice President and Executive Creative Director for DDB Chicago (1999 – 2000), a full-service advertising agency. He also serves on the Boards of Harvard University’s American Repertory Theater (2011 – Present), a professional not-for-profit theater; Catholic Charities of the Archdiocese of Boston (2006 – Present), part of the Catholic Charities network; and Newport Festivals (2017 – Present), a music festival foundation. | |
Current Public Company Directorships: | None |
Other Public Company Directorships during Past Five Years: | None |
Skills and Qualifications: | |
Mr. Sheehan’s individual qualifications and skills as a director include his extensive experience in managing large public and private companies and in sales and marketing leadership. He attended the United States Naval Academy and graduated from Saint Anselm College in 1982 with a Bachelor of Arts degree in English. Mr. Sheehan previously served as a director of the Company from July 27, 2016 to August 31, 2017. |
NO PHOTO AVAILABLE | |
Parker Tornell | Age: 32 Nominee |
Background: | |
Mr. Tornell is a Credit Analyst at Whitebox Advisors LLC (2015 – Present), an employee-owned hedge fund sponsor. Before joining Whitebox, Mr. Tornell worked as an Associate at Norwest Mezzanine Partners (2012-2015), and as an Investment Banking Analyst at Piper Sandler (2010-2012). | |
Current Public Company Directorships: | None |
Other Public Company Directorships during Past Five Years: | None |
Skills and Qualifications: | |
Mr. Tornell’s individual qualifications and skills as a director include his capital markets, investment, and financial expertise; his experience in public and private debt restructuring; and his turnaround and performance improvement experience. He received Bachelor of Arts degrees in Financial Management and Economics from the University of St. Thomas. |
The Company has historically separated the positions ofMr. Scheinkman’s role as Chief Executive Officer and Chairperson of the Board, allowing itsthe Company has historically separated these roles. Upon Mr. Scheinkman’s retirement as Chief Executive Officer and his resignation from the Chairperson role in January 2020, the Board again separated these roles and appointed Mr. Sheehan as Chairperson and Mr. Edgar as Chief Executive Officer. Doing so allows Mr. Edgar to focus on strategic business strategicand growth initiatives, while allowing the Chairperson to lead the Board in its fundamental role of providing advice to, and independent oversight of, management.
Due to Mr. Scheinkman’s familiarity with the Company’s business and his knowledge of the Company’s industry, the Board believes that continuing to combine the roles of Chief Executive Officer and Chairperson of the Board uniquely positions Mr. Scheinkman to identify strategic priorities and to lead the Board in discussions regarding strategy, business planning, and operations. This structure also allows for efficient decision-making and provides a unified strategic vision and clear leadership for the Company.
Audit Committee | The Company’s Audit Committee reviews the Company’s audited financial statements with management; reviews the qualifications, performance and independence of the Company’s independent registered public accountants; approves audit fees and fees for the preparation of the Company’s tax returns; reviews the Company’s accounting policies and internal control procedures; and considers and appoints the Company’s independent registered public accountants. The Audit Committee has the authority to engage the services of independent outside experts and advisors as it deems necessary or appropriate to carry out its duties and responsibilities. |
The Audit Committee oversees the annual risk management assessments, monitors reports received on the Company’s incident reporting hotline, oversees the Company’s compliance program, including an annual review of the Company’s Code of Conduct, and prepares the “Report of the Audit Committee” for its stockholders on page The membership of the Audit Committee as of May 8, 2020 includes: • Jeffrey Brodsky, Chair and Committee Member since October 2017 • Jonathan Mellin, Committee Member since October 2017 • Jonathan Segal, Committee Member since October 2017 | |
Governance Committee | The Company’s Governance Committee oversees all corporate governance matters, including acting as an independent committee evaluating transactions between the Company and directors and officers of the Company; reviewing governance policies and practices; reviewing governance-related legal and regulatory matters that could impact the Company; reviewing and making recommendations on the overall size and composition of the Board and its committees; overseeing Board recruitment, including identification of potential director candidates, evaluating candidates, and recommending nominees for membership to the full Board; and leading the annual self-evaluation of the Board and its committees. The Governance Committee has the authority to engage the services of outside consultants and advisors as it deems necessary or appropriate to carry out its duties and responsibilities. The membership of the Governance Committee as of May 8, 2020 includes: • Jonathan Mellin, Chair and Committee Member since July 2016 • Jeffrey Brodsky, Committee Member since October 2017 • Jacob Mercer, Committee Member since October 2017 |
Human Resources Committee | The Company’s Human Resources Committee assists the Board in the discharge of its responsibilities with respect to employee and non-employee director compensation, including the adoption, periodic review and oversight of the Company’s compensation strategy, policies and plans. The Human Resources Committee approves and administers the incentive compensation and equity-based plans of the Company. The Human Resources Committee has the authority to engage the services of independent outside experts and advisors as it deems necessary or appropriate to carry out its duties and responsibilities. |
The membership of the Human Resources Committee as of May 8, 2020 includes: • Jonathan Segal, Chair and Committee Member since October 2017 • Jacob Mercer, Committee Member since October 2017 • Michael Sheehan, Committee Member since October 2017 | |
2019. 2020. As noted below, in addition to certain members of management, certain stockholders and (including stockholders with whom members of the Board of Directors are affiliated) received and held Second Lien Notes. aggregate, held in excess of 96% of the Second Lien Notes, and who had agreed, among other things, to tender their Second Lien Notes in the Exchange Offer and to consent to the Proposed Amendments, subject to certain conditions. The Exchange Offer closed with greater than 97% of the aggregate principal amount of the Second Lien Notes having been tendered and exchanged. March 30, 2020. Furthermore, on March 27, 2020, in connection with the Exchange Offer, Highbridge Furthermore, on March 27, 2020, in connection with the Exchange Offer, Whitebox and/or one or more of its affiliates tendered $57.7 million in aggregate principal amount and accrued PIK interest of the Second Lien Notes in exchange for $28.4 million in aggregate principal amount of New Notes and 20,945,875 shares of the Company’s common stock. Furthermore, on March 27, 2020, in connection with the Exchange Offer, Corre and/or one or more of its affiliates tendered $28.8 million in aggregate principal amount and accrued PIK interest of the Second Lien Notes in exchange for $14.2 million in aggregate principal amount of New Notes and 10,469,092 shares of the Company’s common stock. Furthermore, on March 27, 2020, in connection with the Exchange Offer, WFF and/or one or more of its affiliates tendered $10.1 million in aggregate principal amount and accrued PIK interest of the Second Lien Notes in exchange for $5.0 million in aggregate principal amount of New Notes and 3,686,240 shares of the Company’s common stock. measures, as well as individual performance. Metrics and targets under the STIP are evaluated each year for alignment with business strategy. at approximately 50% of target, subject to discretionary adjustments. disability coverage (standard benefits available to most of its employees). In 2018 and 2019, Mr. Scheinkman, who President, was subsequently amended and restated on January 7, 2020 in connection with his appointment to the office of President and CEO effective as of January 1, 2020. Mr. Anderson’s Employment Agreement was entered into on May 15, 2017. protections pursuant to the terms of their Employment Agreements. The clawback policy provides that overpayments of compensation should be recovered within twelve months after an applicable restatement of financial results. December 31, 2019. Market value has been computed by multiplying the closing price of the Company’s common stock on December 31, June 29, 2020. broker, bank or other nominee and wish to hear the telephonic audio broadcast, you should follow the instructions on the voting instruction form or the Notice you receive from your bank, broker or other nominee. .Mr.Messers. Scheinkman and Edgar, is “independent” within the definitions contained in the current NASDAQ listing standards and the standards set by the Board in the Company’s Corporate Governance Guidelines. The Board has determined that all members of the Company’s Human Resources Committee meet the compensation committee independence requirements of the NASDAQ listing standards. Furthermore, the Board has determined that all members of the Company’s Audit Committee meet the financial sophistication requirements of the NASDAQ listing standards. The Board has determined that Mr. Brodsky qualifies as an “audit committee financial expert” for purposes of the SEC rules.92018,2019, the Board held eightsixteen meetings. The Board’s non-employeenon‑employee directors met in regularly scheduled executive sessions to evaluate the performance of the Chief Executive Officer and to discuss other corporate matters. Mr. Steven Scheinkman, presided as the Chairperson of the Board at all of the eightsixteen meetings of the Board. Additionally, during 2018,2019, there were four meetings of the Audit Committee, fivefour meetings of the Governance Committee, and fivethree meetings of the Human Resources Committee. Each of the directors attended 75% or more of all the meetings of the Board and the Committees on which he served.We strongly encourage, but do not require, directors20182019 Annual Meeting of Stockholders attended that meeting.Role Annual Retainers* $60,000 $40,000 $10,000 $5,000 $7,500 *Retainers are paid in quarterly installments. The2018 consisted of restricted stock granted pursuant to the Company’s 2017 Management Incentive Plan. Messrs. Mercer and Segal waived their equity-based compensation for 2018.In 2018, each director, with the exception of Messrs. Mercer and Segal, received a restricted stock award in an amount valued at $90,000, based upon the 60-day trailing average stock price on the date of grant.10non-employeenon‑employee directors for 2018.2019. Any employee of the Company who serves as a director receive no additional compensation for service as a director.Name Fees
Earned
or
Paid in
Cash
($) Stock
Awards
($)(1) Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) All
Other
Compensation
($) Total
($)Jeffrey A. Brodsky(2) 70,000 99,658 — — 169,658 Jonathan Mellin 65,000 99,658 — — 164,658 Jacob Mercer(3) 60,000 — — — 60,000 Jonathan Segal(4) 67,500 — — — 67,500 Michael Sheehan 60,000 99,658 — — 159,658 Name 70,000 - - - – – 70,000 62,500 - - - – – 62,500 60,000 – – – – – 60,000 67,500 – – – – – 67,500 Michael Sheehan 60,000 - - - – – 60,000 (1) Stock Awards. On April 25, 2018, Messrs. Brodsky, Mellin and Sheehan received an annual restricted stock award of 22,910 shares of the Company’s common stock. The amounts shown reflect the grant date fair value computed in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (ASC Topic 718). (2)(2) (3) Jacob Mercer elected to have his cash compensation paid to various funds related to Whitebox Advisors LLC.(4) Board of Directors Audit Committee Governance Committee Human Resources Committee Oversees risk related to the Company’s financial statements, financial reporting process and accounting and legal matters; internal audit function; the Company’s compliance program and the Company’s cyber security action plan.; Also reviews outcome of the Company’s periodic Enterprise Risk Assessment, which identifies and evaluates potential material risks that could affect the Company and identifies appropriate mitigation measures Oversees governance-related risk, including development of the Company’s policies and practices, and Board succession planning Oversees risks associated with the Company’s compensation programs; reviews and approves compensation features that mitigate risk and align pay to performance with the interests of its executives and its stockholders; and oversees the Company’s succession-planning process for key executive and managerial roles 2018,2019, filed with the SEC on March 19, 2020, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 15, 2019.11•Directors;•Director nominees;•Executive officers;•5% stockholders;•Immediate family members of the above persons; and•Entities in which the above persons have a direct or indirect material interest.highest ranking member of the Company’s Legal Department. If the highest ranking member of the Company’s Legal Department determines that the proposed transaction is a related-party transaction for such purposes, the proposed transaction is then submitted to the Governance Committee for review.•whether the proposed transaction is on terms that are fair to the Company and no less favorable to the Company than terms that could have been reached with an unrelated third party;•the purpose of, and the potential benefits to, the Company of entering into the proposed transaction;•the impact on a director’s independence, in the event such person is an outside director; and•whether the proposed transaction would present an improper conflict of interest. (the “Petition Date”), the Company and four of its subsidiaries (together with the Company, the “Debtors”) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) with the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware (the “Bankruptcy Court”). Also on June 18, 2017, the Debtors filed their Prepackaged Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court and on July 25, 2017, the Debtors filed their Amended Prepackaged Joint Chapter 11 Plan of Reorganization (the “Plan”) with the Bankruptcy Court. On August 2, 2017, the Bankruptcy Court entered an order confirming the Plan. On August 31, 2017 (the “Effective Date”), the Plan became effective pursuant to its terms and the Debtors emerged from their Chapter 11 cases. On February 6, 2018, the Bankruptcy Court entered a final order closing the Chapter 11 cases of the Debtors.PIKPaid-in-Kind ("PIK") Toggle Notes due 2022 (the “Second(“Second Lien Notes”). subsidiaries, secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries, and certain of its foreign subsidiaries. The Second Lien Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $3.77 per share, which rate is subject to adjustment as set forth in the indenture governing the Second Lien Notes Indenture.Notes. Interest on the Second Lien Notes accrues at the rate of 5.00%, except that per annum if paid in cash or 7.00% per annum if paid in kind, payable quarterly.may,announced the successful completion of an exchange offer (the “Exchange Offer”), which launched on February 27, 2020, to issue a combination of the Company’s new 3.00%/5.00% Convertible Senior Paid-in-Kind ("PIK") Toggle Notes due 2024 (the “New Notes”) and shares of its common stock in exchange for its outstanding Second Lien Notes. Approximately $190,200,285 in aggregate principal amount of the Second Lien Notes were tendered and accepted in the Exchange Offer. Pursuant to the terms of the Exchange Offer, the Company issued approximately $95,134,866 in aggregate principal amount of its New Notes and 70,260,676 shares of its common stock. Holders of the Second Lien Notes who did not tender into this Exchange Offer retained their Second Lien Notes. Approximately $ 3,692,717 in aggregate principal amount of Second Lien Notes remain outstanding after the Exchange Offer.circumstances, payof its subsidiaries. The New Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $0.46 per share, which rate is subject to adjustment as set forth in the indenture governing the New Notes. The restrictive covenants in the indenture governing the New Notes are substantially similar to the covenants in the indenture governing the Second Lien Notes prior to completion of the Exchange Offer. The New Notes bear interest at a rate of 7.00%3.00% per annum if paid in kind.All outstanding indebtednesscash or 5.00% if paid in kind per annum, payable quarterly.DebtorsSecond Lien Notes for certain amendments to the indenture governing the Second Lien Notes to eliminate or amend substantially all of the restrictive covenants, release all collateral securing the Company’s obligations under the Company’s 12.75% Senior Secured Notes due 2018 andindenture governing the Indenture dated February 8, 2016, by and between the Company, as issuer, its guarantors, and U.S. Bank National Association, as trustee, and all outstanding indebtedness of the Debtors under the Company’s 5.25% Convertible Senior Secured Notes due 2019 and the Indenture dated May 19, 2016, by and between the Company, as issuer, its guarantors, and U.S. Bank National Association, as trustee, was discharged and canceled in exchange for Second Lien Notes, and new common stockmodify certain of the events of default and various other provisions, contained in such indenture (the “Proposed Amendments”). The indenture governing the Second Lien Notes was so amended effective as of the closing of the Exchange Offer.Company.8-A8‑A filed with the SEC on August 31, 2017.Registration Statement on Form 8-A8‑K filed with the SEC on August 31, 2017.Furthermore, onOn the Effective Date, in connection with the transactions described above,Plan, Highbridge and/or one or more of its affiliates received approximately $49.7 million in aggregate principal amount of the Second Lien Notes, 509,105 shares of the Company’s new common stock and a cash payment of $4.0 million.hastendered $62.0 million in aggregate principal amount and accrued PIK interest of the Second Lien Notes in exchange for $30.5 million in aggregate principal amount of New Notes and 22,519,746 shares of the Company’s common stock.$3,773,825$4.1 million (in 2019), $3.8 million (in 2018) and 1,163,787,$1.2 million (in 2017) with respect to its Second Lien Notes, in each case commensurate with other holders thereof.Furthermore, onOn the Effective Date, in connection with the transactions described above,Plan, Whitebox and/or one or more of its affiliates received approximately $46.0 million in aggregate principal amount of Second Lien Notes, 400,876400,872 shares of the Company’s new common stock and a cash payment of $3.6 million.$3,507,348$3.8 million (in 2019), $3.5 million (in 2018) and $1,078,876, in 2017$1.1 million (in 2017) with respect to its Second Lien Notes, in each case commensurate with other holders thereof.Estates.Estates, Inc., an affiliate of SGF. Pursuant to the Plan and the Stockholders Agreement, Simpson EstatesSGF and/or its affiliates have the right to designate one member of the Board. Simpson EstatesSGF selected Mr. Mellin. Furthermore, onOn the Effective Date, in connection with the transactions described above, Simpson EstatesPlan, SGF and/or one or more of its affiliates received approximately $24.9 million in aggregate principal amount of the Second Lien Notes, 206,557 shares of the Company’s new common stock and a cash payment of $2.0 million.
Furthermore, on March 27, 2020, in connection with the Exchange Offer, SGF and/or one or more of its affiliates tendered $28.9 million in aggregate principal amount and accrued PIK interest of the Second Lien Notes in exchange for $14.6 million in aggregate principal amount of New Notes and 10,815,730 shares of the Company’s common stock.13Simpson$524,018$2.0 million (in 2019), $1.8 million (in 2018) and $166,985$0.6 million (in 2017) with respect to its Second Lien Notes, in each case commensurate with other holders thereof.transactions described abovePlan, Corre and/or one or more of its affiliates received approximately $24.2 million in aggregate principal amount of the Second Lien Notes, 234,554 shares of the Company’s new common stock and a cash payment of $3.1 million.$1,772,614$1.9 million (in 2019), $1.8 million (in 2018) and $565,620$0.6 million (in 2017) with respect to its Second Lien Notes, in each case commensurate with other holders thereof.transactions described above,Plan, WFF and/or one or more of its affiliates received approximately $8.5 million in aggregate principal amount of the Second Lien Notes, 70,905 shares of the Company’s new common stock and a cash payment of $.7 million.$623,429$0.7 million (in 2019), $0.6 million (in 2018) and $198,664$0.2 million (in 2017) with respect to its Second Lien Notes, in each case commensurate with other holders thereof.As previously disclosed, onwill bearaccrues interest at 12.0% per annum and which will be paid-in-kind unless the Company elects to pay such interest in cash and the Revolving B payment conditions specified in the Expanded Credit Facility are satisfied. Borrowings under both the existing Revolving B credit facility will mature on February 28, 2022. The Expanded Credit Facility continues to be secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors.14March 1, 2019,May 8, 2020, by each of the Company’s directors and director nominees, and each current member of Executive Management, including those set forth in the Summary Compensation Table in Proposal 2 hereof, and by all directors, director nominees and executive management as a group, with each person having sole voting and dispositive power except as indicated:Beneficial Owner Shares of
Common Stock
Beneficially Owned(1) Percentage of
Common Stock(2)Additional
Information Directors and Director Nominees Jeffrey A. Brodsky 22,910 * Jonathan Mellin 24,806 * (3) Jacob Mercer 0 * Jonathan Segal 0 * Michael Sheehan 24,576 * Management Steven Scheinkman, Chief Executive Officer 607,127 16.7% (4) Patrick Anderson, Executive Vice President, Finance & Administration 321,090 8.8% (5) Marec Edgar, President 321,016 8.8% (5) All directors, director nominees and executive officers as a group (8 persons) 1,321,525 36.4% (6) * Percentage of shares owned equals less than 1%.Beneficial Owner Directors and Director Nominees Jeffrey A. Brodsky 22,910 * Jonathan Mellin 24,806 Jacob Mercer 0 0.0% Steven Scheinkman(3) 971,976 Jonathan Segal 0 * Michael Sheehan 24,576 * Parker Tornell 0 0.0% Management Marec Edgar, Director, President & Chief Executive Officer(3) 513,864 Patrick Anderson, Executive Vice President, Finance & Administration 513,938 2,072,070 * Percentage of shares owned equals less than 1%. (1) Excludes a total of 506,413Based on 73,910,334 shares of common stock ownedissued and outstanding as of May 8, 2020.(2) executive management,Mr. Mellin individually. Excludes 10,950,420 shares Mr. Mellin may be deemed to beneficially own in his capacity as trustee, officer or general partner of certain trusts and other entities established for the benefit of members of the Simpson Estate / SGF. See Note (4) under the “Principal Stockholders” table below. Also excludes 32,130,135 shares of common stock, which may be acquired upon conversion of the Company’s Second LienNew Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond his control.(3) Mr. Scheinkman served as Chief Executive Officer and Chairperson of the Board until his retirement effective as of January 1, 2020, at which time Mr. Edgar was appointed President & Chief Executive Officer. Following his retirement as Chief Executive Officer, Mr. Scheinkman remained a director of the Company. (4) Excludes 1,083,851 shares of common stock that may be acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond his control. (5) Excludes 572,890 shares of common stock that may be acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond his control. (6) Excludes 2,229,630 shares of common stock that may be acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and each beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond such beneficial owner’s control. (2)Based on 3,634,658 shares of common stock issued and outstanding as of March 1, 2019.(3)Represents 24,806 shares held by Mr. Mellin individually. Excludes 325,521 shares Mr. Mellin may be deemed to beneficially own in his capacity as trustee, officer or general partner of certain trusts and other entities established for the benefit of members of the Simpson family. See Note (5) under the “Principal Stockholders” table below. Also excludes 6,608,760 shares of common stock, which may be acquired upon conversion of the Company’s Second Lien Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond his control.(4)Excludes 246,173 shares of common stock which may be acquired upon conversion of the Company’s Second Lien Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond his control.(5)Excludes 130,120 shares of common stock which may be acquired upon conversion of the Company’s Second Lien Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond his control.(6)Excludes 506,413 shares of common stock which may be acquired upon conversion of the Company’s Second Lien Notes, because the mode of payment is determined in the sole discretion of the Company and each beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond such beneficial owner’s control. Ronald Knopp, previously the Company’s Executive Vice President, Operations & IT, passed away on February 3, 2019, and is not included in this table.15March 1, 2019,May 8, 2020, are set forth below, with each person having sole voting and dispositive power except as indicated:Name and Address of Beneficial Owner Shares of
Common
Stock Beneficially
Owned Percentage of
Common Stock (1)Highbridge Capital Management, LLC/1992 MSF International Ltd.
40 West 57th Street, 32nd Floor
New York, New York 10019 509,105 (2)(6) 14% Whitebox Advisors LLC/Whitebox General Partner LLC
3033 Excelsior Boulevard, Suite 300
Minneapolis, Minnesota 55416 400,870 (3)(6) 11% Corre Partners Advisors, LLC/Corre Partners Management, LLC/
John Barrett/Eric Soderlund
1370 Avenue of the Americas, 29th Floor
New York, New York 10019 233,472 (4)(6) 6.4% W.B. & Co
FOM Corporation
SGF, LLC
The Northern Trust Company
Jonathan B. Mellin
Reuben S. Donnelley
30 North LaSalle Street, Suite 1232
Chicago, Illinois 60602-2504 370,993 (5)(6) 10.2% Name and Address of Beneficial Owner 31.2% 28.9% 15.1% 14.5% 5.1% (1) Based on 3,634,65873,910,334 shares of common stock issued and outstanding as of March 1, 2019.May 8, 2020.(2) Based on information provided by Highbridge Capital Management, LLC (“HCM”) , on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) HCM, the trading manager of Highbridge MSF International Ltd. (formerly known as 1992 MSF International Ltd.) and 1992 Tactical Credit Master Fund, L.P. (together, the “1992 Funds”), may be deemed to be the beneficial owner of, and has shared voting and dispositive power with respect to, the 23,028,848 shares held by the 1992 Funds; and (ii) Highbridge MSF International Ltd. may be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 18,715,636 of the shares beneficially owned by the 1992 Funds.(3) 1992 Funds. The 1992 Funds disclaim any beneficial ownership of these shares except to the extent of their pecuniary interest therein. The business address of HCM is 40 West 57th Street, 32nd Floor, New York, New York 10019 and the business address of the 1992 Funds is c/o HedgeServ (Cayman) Ltd., Willow House, Cricket Square Floor 3, George Town, Grand Cayman KY1-1104, Cayman Islands.(3)Private Funds; (iii) Whitebox Advisors LLC and/or Whitebox General Partner LLCMulti-Strategy Partners, L.P. (“WMP”) may be deemed to be the beneficial owner of, 400,870and has shared voting and dispositive power with respect to, the 10,613,180 shares held by WMP; and (iv) Whitebox Asymmetric Partners, LP (“WAP”) may be deemed the beneficial owner of, common stock, constituting 11% ofand has shared voting and dispositive power with respect to, the Company’s outstanding5,859,882 shares of common stock. These sharesheld by WAP. Shares are directly owned by WMP, WAP, Pandora Select Partners, L.P., Whitebox Asymmetric Partners, L.P., Whitebox Credit Partners, L.P., Whitebox GT Fund, LP, Whitebox Institutional Partners, L.P., Whitebox Multi-Strategy Partners, L.P. and Whitebox Term CreditCaja Blanca Fund, I, L.P. (together, the “Private Funds”) and.(4) Based on information provided by SGF, LLC (“SGF”) on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) SGF may be deemed the beneficial owner of, and has sole voting and dispositive power with respect to, the 11,022,296 shares held by SGF; (ii) W.B. & Co. may be beneficially owned by (a) Whitebox Advisors LLC by virtuedeemed the beneficial owner of, its role as the investment managerand has shared voting power (and no dispositive power) with respect to, 107,888 of the Private Funds and/or (b) Whitebox General Partner LLCshares held by virtuethe Simpson Estate Members (as defined below); (iii) Mr. Mellin, acting in various capacities with respect to, and deputized by, certain of its rolethe Simpson Estate Members, may be deemed the beneficial owner of 10,975,226 of the shares held by the Simpson Estate Members, of which he holds sole voting power with respect to 10,840,584 shares, shared voting power with respect to 118,554 shares, sole dispositive power with respect to 40,933 shares and shared dispositive power with respect to 10,826,443 shares; and (iv) Mr. Donnelly, as thea general partner in certain Simpson Estate Members, may be deemed the beneficial owner of 108,443 of the Private Funds. The addressshares held by the Simpson Estate Members, of Whitebox Advisors LLCwhich he holds sole voting and Whitebox General Partner LLC is 3033 Excelsior Blvd, Suite 300, Minneapolis, MN 55416. Each of the private fundsdispositive power with respect to 412 shares, shared voting power with respect to 107,931 shares, and shared dispositive power with respect to 181 shares (he disclaims beneficial ownership of thesethe 181 shares except to the extent of their pecuniary interest therein.(4)Corre Partners Advisors, LLC (the “General Partner”) serves as the general partner of Corre Opportunities Fund, LP, Corre Opportunities Qualified Master Fund, LPheld by an immediate family member who shares Mr. Donnelley’s household); and Corre Opportunities II Master Fund, LP (together, the “Corre Funds”), which directly own the shares of common stock. The General Partner has delegated investment authority over the assets of the Funds to Corre Partners Management, LLC (the “Investment Advisor”). Each of Mr. John Barrett and Mr. Eric Soderlund serve as a managing member of the General Partner. The address for each of the General Partner, the Investment Advisor, Mr. Barrett, Mr. Soderlund and the Corre Funds is 12 East 49th Street, Suite 4003, New York, NY 10017. As a result of the relationships described in this footnote (4), each of the General Partner, the Investment Advisor, Mr. Barrett and Mr. Soderlund(v) FOM Corporation may be deemed to be the beneficial owner of 233,472 shares122,730 of common stock, constituting 6.4% of the Company’s outstanding shares of common stock. Each of the foregoing persons disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.(5)Includes: (i) shares held by W.B & Co.the Simpson Estate Members, of which he holds sole voting power with respect to 23,516 shares, shared voting and dispositive power with respect to 7,052 shares and shared dispositive power with respect to 115,678 shares. Shares are held by SGF and other entities on behalf of certain members of an extended family group and various trusts, estates and estate planning vehicles established by certain deceased and surviving family members (together, the “Simpson Estate Members”);.(5) Based on information provided by Corre Partners Management, LLC (the “Corre Investment Advisor”) on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) Corre Opportunities Qualified Master Fund, LP (“Qualified Master Fund”), (ii) Corre Partners Advisors, LLC (the “Corre GP”) as the general partner of Qualified Master Fund, (iii) Corre Investment Advisor with delegated investment authority over fund assets, (iv) Mr. Barrett as a managing member of Corre GP, and (v) Mr. Soderlund as a managing member of Corre GP, may each be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 10,702,564 shares held by SGF;Qualified Master Fund.(6) Based on information provided by Wolverine Asset Management, LLC (“WAM”) on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) Wolverine Flagship Fund Trade Limited (“Flagship”), (ii) WAM as the investment manager of Flagship, (iii) Wolverine Holdings, L.P. (“WH”) as the sole member and manager of WAM, (iv) Wolverine Trading Partners, Inc. (“WTP”) as the sole general partner of WH, (v) Mr. Gust as a controlling shareholder of WTP, and (vi) Mr. Bellick as a controlling shareholder of WTP, may each be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 3,757,145 shares held by Mr. Donnelley individually, shares held by a member of his household, and shares beneficially owned by Mr. Donnelley in his capacity as general partner of a Simpson Estate member; (iv) shares held byFlagship.16Mr. Mellin individually and shares beneficially owned by Mr. Mellin in his capacity as trustee, officer or general partner of certain Simpson Estate Members; (v) shares held by FOM Corporation (“FOM”) on behalf of certain Simpson Estate Members and shares beneficially owned by FOM Corporation in its capacity as trustee , trust administrator or custodian of certain Simpson Estate Members; and (vi) shares held by The Northern Trust Company in its capacity as trustee of certain Simpson Estate Members. SGF, FOM, W.B. & Co., Mr. Mellin, Mr. Donnelley and The Northern Trust Company may be deemed to constitute a group pursuant to Rule 13d-5(b) of the Securities Exchange Act of 1934, as amended. Each beneficial owner disclaims beneficial ownership of any shares held by any other beneficial owner, except to the extent of any pecuniary interest it may have.(6)(7)Excludes shares of common stock which may be acquired upon conversion of the Second LienNew Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond its control. The beneficial owner disclaims beneficial ownership of any shares of common stock that they might receive upon conversion of the Second Lien Notes. Because of the relationship between the beneficial owner and the other stockholders of the Company party to the Stockholders Agreement, the beneficial owner may be deemed, pursuant to Rule 13d-3 under the Securities Act, to beneficially own a total of 2,988,79972,340,487 shares of common stock, which represents the aggregate number of shares of common stock beneficially owned by the parties to the Stockholders Agreement. The beneficial owner disclaims beneficial ownership of any shares of common stock held by any other party to the Stockholders Agreement, except to the extent of any pecuniary interest it may have.2018.
2019.1720182019 Annual Meeting of Stockholders, the stockholders expressed continued support of the executive compensation program with 99%more than 98% of the stockholders casting votes supportingcast in support of the proposal.ü✔Our Board unanimously recommends that you vote FOR Proposal No. 2, the182018,2019, for its Chief Executive Officer, the principal executive officer (“PEO”), and its two most highly compensated executive officers (other than the PEO) serving as executive officers at the end of 2018, other than the PEO,2019 whose total compensation was in excess of $100,000. The Company refers to all individuals whose executive compensation is disclosed in this proxy statementsection as its Named Executive Officers (collectively, the “Named Executive Officers”).during the fiscal year ended December 31, 2018, to periodically consult regarding executive officer and director compensation.Most recently in March 2018, the•Reviews the Company’s executive compensation program designs and levels, including the mix of total compensation elements, compared to industry peer groups and broader market practices.•Provides information on emerging trends and legislative developments in executive compensation and implications for the Company.•Reviews the Company’s executive stock ownership guidelines, compared to industry peer groups and broader market practices.•Reviews the Company’s director compensation program compared to industry peer groups and broader market practices.2018,2019, and 2017.2018.Name and
Principal
Position Year Salary
($) Bonus
($)(1) Stock
Awards
($)(2) Option
Award Non-Equity
Incentive
Plan
Compensation
($)(3) Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(4) All
Other
Compensation
($)(5) Total
($)Steven Scheinkman,
Chief Executive
Officer 2018 650,000 ― ― ― 646,263 ― 238,347 1,534,610 2017 650,000 476,775 1,906,090 ― 513,744 ― 968,977 4,515,586 Marec Edgar,
President 2018 431,923 ― ― ― 377,815 ― 74,969 884,707 2017 404,404 311,738 1,007,504 ― 201,546 ― 505,213 2,430,405 Patrick Anderson,
EVP, Finance &
Administration 2018 312,000 ― ― ― 196,862 (550) 67,800 576,112 2017 300,000 270,050 1,007,504 ― 142,268 1,049 484,864 2,205,735 Year 2019 475,000 ― ― ― 516,701 ― 92,371 1,084,072 2018 431,923 ― ― ― 377,815 ― 74,969 884,707 2019 650,000 ― ― ― 225,000 ― 258,128 1,133,128 2018 650,000 ― ― ― 646,263 ― 238,347 1,534,610 2019 330,000 ― ― ― 222,757 ― 76,078 628,835 2018 312,000 ― ― ― 196,861 ― 67,800 576,111 (1) The amounts in this column for 2017 reflect Restructuring Awards paid to the Named Executive Officers upon the successful completion of the Company’s chapter 11 restructuring in August 2017.(2)The amounts in this column for 2017 reflect the aggregate grant date fair value of stock-based awards (other than stock options) granted in the year pursuant to the Company’s 2017 MIP, computed in accordance with FASB ASC Topic 718. These amounts are not paid or realized by the officer. Additional information about these values is included in Note 9 to the Company’s audited consolidated financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2017.(3)Reflects the cash awards under the Company’s 2019 and 2018 STIP (amounts earned during the applicable fiscal year but paid after the end of that fiscal year) . and a one-time discretionary supplemental cash short-term incentive award related to 2018 and 2019 performance that was paid in 2019.19(4)Reflects the actuarial change in the present value of the Named Executive Officer’s benefits under the Salaried Pension Plan determined using assumptions consistent with those used in the Company’s financial statements. Pension accruals ceased for all Named Executive Officers in 2008, and Named Executive Officers hired after that date are not eligible for coverage under any pension plan. Accordingly, the amounts reported for the Named Executive Officers do not reflect additional accruals but reflect the fact that each of them is one year closer to “normal retirement age” as defined under the terms of the Salaried Pension Plan as well as changes to other actuarial assumptions. For 2018, there was an actuarial decrease in the present value of the benefits under the Salaried Pension Plan for Mr. Anderson in the amount of $550.(5)(2)The amounts shown are detailed in the supplemental “All Other Compensation Table – Fiscal Year 2018”2019” below.(3) Mr. Edgar was appointed President and Chief Executive Officer effective January 1, 2020 upon Mr. Scheinkman’s retirement. Name Note
Award
(1) 401(k) Plan
Company
Matching
Contributions
($) Deferred Plan
Company
Matching
Contributions
($) Housing
Reimbursement
($) Miscellaneous
($)(2) Total All Other
Compensation
($) Steven Scheinkman 61,776 11,000 34,550 117,727 13,294 238,347 Patrick Anderson 32,653 5,076 13,094 ― 16,977 67,800 Marec Edgar 32,653 11,000 14,339 ― 16,977 74,969 Name 35,000 11,200 29,563 ― 16,608 92,371 66,215 9,219 54,007 116,763 11,924 258,128 35,000 5,007 19,463 ― 16,608 76,078 (1) The amounts reported in this column reflect the aggregate grant date fair value of Second Lien Notes granted under the 2017 MIP computed in accordance with ASC Topic 718. Additional information about these values is included in Note 9 to the Company’s audited consolidated financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2018, and theRepresents amounts paid in PIK interest pursuant to the terms of the Second Lien Notes during 2018.2019.(2) Includes the cost, including insurance, fuel and lease payments, of a Company-provided automobile or vehicle stipend, a cellular telephone allowance, and personal excess liability insurance premiums paid by the Company. 2018 Total Compensation Pay Mix(1) (1)Reflects target annual total direct compensation (e.g., excludes special one-time awards and equity grants such as promotional/hire on grants or the restructuring awards received in 2017). Only tranche A of the 2017 MIP, over its three year life, was included in this analysis. Any awards that may be made in the future from tranche B have not been included. For more information on the MIP see below section titled “2017 Management Incentive Plan”.The Company continues to make enhancements to its compensation program to further align leadership performance by focusing on future stock price appreciation to increase value to the Company’s stockholders.20PayElementDescriptionand PurposeActions and RecentEnhancementsLink to Business andTalent RetentionBase Salary·Fixed compensation recognizes individual performance, seniority, scope of responsibilities, leadership skills, experience, and succession planning considerations.·Reviewed annually.·Mr. Anderson’s salary increased in July 2018 to recognize superior performance and enhanced role and responsibilities.·Mr. Edgar’s salary increased in connection with his appointment as President of the Company to reflect his enhanced role and responsibilities.·Competitive base salaries help attract and retain executive talent.·Increases are not automatic or guaranteed.AnnualIncentives·Variable compensation based on performance against annually established targets and individual performance.·Designed to reward executives for annual performance on key operational and financial measures, as well as individual performance.·Focused programs on branch, function, and whole-Company profitability as well as individual employee performance; for 2018, the Company’s main goals were to focus on continued growth, while ensuring strong EBITDA and inventory performance.·Metrics and targets are evaluated each year for alignment with business strategy.·Consistent with strategy to focus on growth, incentive was based on the executive management team’s individual efforts in generative revenue while simultaneously driving EBITDA and inventory performance.Long-TermIncentives·Variable equity compensation; payable in the form of equity or other securities of the Company.·Designed to drive sustainable performance that delivers long-term value to stockholders and directly ties the interests of executive to those of stockholders.·The Human Resources Committee reviews the equity metrics annually.·For 2018, the equity as provided is in the Management Incentive Plan, generally a mix of restricted stock and other securities of the Company.·The Company’s long-term incentive program is designed to focus on stock price appreciation.2018.2019. In each case, the Human Resources Committee took into account the CEO’s recommendation, as well as experience, internal equity, the performance of each Named Executive Officer during the year, and external competitive compensation data, among other factors. Fixed compensation recognizes individual performance, seniority, scope of responsibilities, leadership skills, experience, and succession planning considerations.212018 However, basedBased on the Company’s overall performance in 2018, the Human Resources Committee and full Board previously exercised their discretion, in accordance with the STIP plan, to adjust the 2018 STIP payouts downward.adjust the 2018award 2019 STIP payouts downward.•Salaried Pension Plan. The Company maintains the Salaried Employees Pension Plan (the “Salaried Pension Plan”), a qualified, noncontributory defined benefit pension plan covering eligible salaried employees who meet certain age and service requirements. As of June 30, 2008, the benefits under the Salaried Pension Plan were frozen. There are no enhanced pension formulas or benefits available to the Named Executive Officers. Of the current Named Executive Officers, only Mr. Anderson is eligible to receive benefits under the Salaried Pension Plan.•401(k) Savings and Retirement Plan. The Company maintains the 401(k) Savings and Retirement Plan (the “401(k) Plan”), a qualified defined contribution plan, for its employees in the United States who work full-time. There are no enhanced 401(k) benefits available to the Named Executive Officers. Refer to the All Other Compensation Table above for the Company’s contributions to each Named Executive Officer under the 401(k) Plan.All“All Other Compensation TableTable” above for the Company’s contributions to each participating Named Executive Officer under the Supplemental 401(k) Plan.iswas required to maintain a residence in Chicago as CEO of the Company, was provided a monthly living allowance towards living expenses.Messrs. Scheinkman and Anderson’sMr. Scheinkman’s Employment Agreements areAgreement had been dated as of May 15, 2017, but terminated upon Mr. Scheinkman’s retirement as CEO effective as of January 1, 2020 pursuant to the terms of the Retirement Agreement and Release, dated January 7, 2020, between the Company and Mr. Scheinkman. Mr. Edgar’s Employment Agreement, ispreviously dated as of December 14, 2018 and was entered into in connection with his appointment to the office of President.Company’sCompany's overall Compensation Philosophy and Strategy. Pay for performance is an essential element of the Company’sCompany's executive compensation philosophy. The Company’s executive compensation programs are designed so that a significant portion of an executive’s compensation is dependent upon the performance of the Company. Measures of financial performance for short-term and long-term incentive programs, and the use of equity, are intended to align compensation with the creation of stockholder value. Target and maximum performance goals under incentive programs are selected so as to generate target or maximum payouts, commensurate with performance, respectively.In 2018, based on Company performance, and corresponding incentive plan achievement, the actual total cash compensation and actual total direct compensation of the Named Executive Officers was consistent with this market median evaluation. Other factors considered by the Human Resources Committee in setting each Named Executive Officer’s opportunity are experience, internal equity (rational linkage between job responsibilities and total compensation opportunities across all jobs within the Company), individual executive performance, and the alignment between Company performance and executive pay.CEO’sCEO's prior year performance, and to identify tentative goals for the upcoming year.CEO’sCEO's goals and objectives for the upcoming year. The independent members of the Board then meet with the CEO.23CEO’sCEO's performance review of the executive officers addresses each executive’sexecutive's performance relative to established financial and personal objectives and specific project assignments, and includes a review of the following leadership competencies:•Strategic leadership;•Driving execution;•Cross-functional alignment and collaboration;•Decision making;•Talent management;•Engaging and influencing others; and•Business, financial, and other relevant subject matter acumen.ForIn 2019 and 2018, the Human Resources Committee’s executive compensation consultant assembled market pay data from published executive compensation surveys including Willis Towers Watson 2017 CBD Executive Compensation Survey, Willis Towers Watson 2017 CSR Executive Compensation Survey and Mercer 2017 MBD Executive Compensation Survey. The survey data was scoped to reflect practices of organizations in the manufacturing industry and were regressed to reflect the Company’s annual revenue.24Stock Ownership GuidelinesThe Company maintains an executive stock ownership guideline for ownership of the Company’s stock by the Named Executive Officers. The program is designed to further strengthen alignment between the interests of executive management and those of the Company’s stockholders. The guidelines currently provide the following:•Named Executive Officers must reach stock ownership levels (provided in table below) within five years of their appointment as an officer.•Until the Named Executive Officer meets the stock ownership requirement, the Named Executive Officer must retain 100% of the after-tax shares of vested restricted stock and 100% of the net after-tax shares of an option exercise.•After the Named Executive Officer meets the stock ownership requirement, the Named Executive Officer must retain at least 50% of the after-tax shares of vested restricted stock and 100% of the net after-tax shares of an option exercise for a period of six months.•Compliance reports are presented to the Human Resources Committee on an annual basis.•Shares owned outright and beneficially, shares held in nonqualified retirement plans, performance-based shares earned but not yet paid, time-based restricted stock and restricted stock units, and vested stock options count toward satisfaction of the ownership guidelines. Unexercised, vested stock options are valued at the amount recognized by the Company for financial statement reporting purposes.•Unvested stock options and unearned performance shares do not help satisfy ownership requirements.The table below describes the ownership guidelines for each Named Executive Officer actively employed as of December 31, 2018.Name Ownership
Requirement as a
% of Base Salary Number of
Shares
Required(1) Number of
Shares
Owned Date to Meet
RequirementsSteven Scheinkman 500% 865,322 607,127 04/16/2020 Marec Edgar 400% 505,880 321,016 11/05/2023 Patrick Anderson 300% 263,590 321,090 09/26/2019 (1)The ownership value will be calculated based on the executive’s base salary and the “fair market value” of the stock at the time that the ownership value is measured, rather than at the time of the initial acquisition of the stock. For purposes of this valuation, “fair market value” of the stock shall equal the average stock price of the Company’s common stock for the 200-day period prior to the measurement date, and in the case of vested unexercised stock options the “fair market value” shall equal the dollar value of those awards recognized by the Company for financial statement reporting purposes.the opportunity to be protected under severance and change in control agreements.25its directors, and executive officers and employees are prohibited from (i) hedging the economic interest in the Company’s securities, and (ii) purchasing securities on margin, holding Company securities in a margin account, or pledging Company securities as collateral for a loan.Code (the “Code”), places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to each of the Named Executive Officers, with the exception of its Chief Financial Officer for the tax years commencing before the 2018 fiscal year. There is an exception to the $1,000,000 limitation for performance-based compensation for the tax years commencing before the 2018 fiscal year that meets certain requirements. To the extent deemed necessary and appropriate by the Human Resources Committee, the Company’s short- and long-term incentive plan awards may be designed to be performance-based to meet the requirements of Section 162(m) of the Code, so that such amounts may be excluded from the $1,000,000 cap on compensation for deductibility purposes. The following types of compensation generally do not meet the requirements of performance-based compensation under Section 162(m) of the Code:•Base salary;•Discretionary bonuses; and•Restricted stock awards.In December 2017, the Tax Cuts and Jobs Act (“Tax Act”) eliminates the exemption from Section 162(m)’s deduction limit for performance based compensation, effective for tax years beginning after December 31, 2017, unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. In addition, the Tax Act broadened the list of persons who may be covered by the deduction limit under Section 162(m) to include the principal financial officer and other current and former executive officers. As result of the Tax Act, beginning with the Company’s 2018 tax year, compensation paid to any of its named executive officers, including performance-based compensation in excess of $1 million generally will not be deductible, with the exception of certain compensation payment arrangements in place as of November 2, 2017.While the Company’s shareholder approved incentive plans were previously structured to provide that certain awards could be made in a manner intended to qualify for the performance-based compensation exemption, that exemption is no longer be available for 2018 and future tax years (other than with respect to certain “grandfathered” arrangements as noted above). In addition, while the Human Resources Committee intended that certain incentive awards granted to our named executive officers on or prior to November 2, 2017 be deductible as “performance-based compensation” and has assessed the possibility that certain awards will be grandfathered from the changes made by the Tax Cuts and Jobs Act, it cannot guarantee that result. The Human Resources Committee has taken the potential impact of the Tax Cuts and Jobs Act into consideration when approving payout amounts for performance periods ending on December 31, 2018.All of the Company’s incentive awards and individual incentive awards are subject to Federal income, FICA, and other tax withholding as required by applicable law. The Human Resources Committee has the discretion to adjust STIP and MIP award payments, subject to the terms of those plans and any individual employment or other relevant agreements with the affected executive(s). In doing so, the Human Resources Committee historically considers the requirements of Section 162(m) of the Code.Officers. While the Human Resources Committee generally intends to provide incentive compensation opportunities to the Company’s executives in as tax-efficient a manner as possible, the Company recognizes that at times it may be in the best interests of stockholders to provide non-deductible incentive compensation, and the Company specifically reserves the right to do so and considers this potential cost in determining compensation payments. The Company accounts for stock-based payments, including stock options, restricted stock and the performance share awards in accordance with the requirements of ASC Topic 718.26the end of 2018. Option Awards Stock Awards Name Number of
Securities
Underlying
Un-exercised
Options (#)
ExercisableNumber of
Securities
Underlying
Un-exercised
Options (#)
UnexercisableOption
Exercise
Price
($)Option
Expiration
DateNumber
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#) (1)Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($) (2)Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#) (3)(4)Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($) (5)Steven Scheinkman ― ― ― 607,035 1,723,979 244,556 694,539 Patrick Anderson ― ― ― 320,861 911,245 129,265 367,113 Marec Edgar ― ― ― 320,861 911,245 129,265 367,113 Option Awards Name ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― Stock Awards Name 320,861 529,421 138,502 228,528 607,035 1,001,608 262,031 432,351 320,861 529,421 138,502 228,528 (1) The vesting schedule for theMr. Scheinkman owns 607,035 shares included in this column forof restricted stock that will vest on August 31, 2020. Messrs. Edgar and Anderson each own 320,861 shares of the Named Executive Officers is as follows:•Mr. Scheinkman:○607,035restricted stock that will vest on August 31, 2020.•Mr. Anderson:○320,861 will vest on August 31, 2020.•Mr. Edgar:○320,861 will vest on August 31, 2020.(2) Market value has been computed by multiplying the closing price of the Company’s common stock on December 31, 2018, $2.84,2019, $ 1.65, by the number of shares of restricted stock.(3) Represents shares of the Company’s common stock whichthat may be acquired upon conversion of restricted Second Lien Notes issued pursuant to the MIP as described in the above section entitled, “Grant of 2017 MIP,” and the amounts paid in PIK interest pursuant to the terms of the Second Lien Notes during 2018.(4)as of December 31, 2019. The vesting schedule for the shares included in this column for each of the Named Executive Officers is as follows:•Mr. Scheinkman:○244,556 shares convertible fromrestricted Second Lien Notes (and accompanying PIK interest paid pursuant to their terms)owned by Messrs. Scheinkman, Edgar and Anderson will vest on August 31, 2020.•Mr. Anderson:○129,265 shares convertible from Second Lien Note (and accompanying PIK interest paid pursuant to their terms) will vest on August 31, 2020.•Mr. Edgar:○129,265 shares convertible from The Second Lien Notes (and accompanying PIK interest paidwere exchanged for New Notes on March 27, 2020 pursuant to their terms) will vest on August 31, 2020.the terms of the Exchange Offer.(4) (5)2018, $2.84,2019, $1.65, by the number of shares convertible notes.from restricted Second Lien Notes (and accompanying PIK interest paid pursuant to their terms as of December 31, 2019). The Second Lien Notes were exchanged for New Notes on March 27, 2020 pursuant to the terms of the Exchange Offer. 2018.2019.Plan Category (a)
Number of Securities
to be issued upon
exercise of
outstanding options,
warrants and rights (b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights ($) (c)
Number of securities remaining
available for future issuances under
equity compensation plans
(excluding securities reflected in
column (a))Equity compensation plans approved by security holders 698,731 (1) 3.77 (2) 3,253,364 Equity compensation plans not approved by security holders N/A N/A N/A Plan Category 1,886,910 N/A N/A N/A (1) This number represents the gross number of underlying shares of common stock associated with the Second Lien Notes issued under the Company’s the 2017 MIP, and the amounts paid in PIK interest pursuant to the termsas of the Second Lien Notes during 2017.December 31, 2019. This does not include 1,803,1151,428,308 shares of non-vestedunvested restricted stock issued under the 2017 MIP and outstanding as of December 31, 2018.2019. The Second Lien Notes were exchanged for New Notes on March 27, 2020 pursuant to the terms of the Exchange Offer.(2) Based on an initial conversion rate of 0.2654 shares of common stock per $1.00 principal amount of the Company’s the Second Lien Notes. The conversion rate is subject to adjustment from time to time pursuant to the terms of the indenture governing the Second Lien Notes. Because the conversion price of the Second Lien Notes is subject to downward adjustment, the Second Lien Notes may be convertible, including in connection with a Fundamental Change (as defined in the indenture governing the Second Lien Notes), into a greater number of shares in the future. In addition, the Company may, in certain circumstances, pay interest on the Second Lien Notes in kind, which would result in additional Second Lien Notes outstanding and available for conversion. 282019.2020. Although the Audit Committee has the sole authority to appoint the independent auditors, as a matter of good corporate governance, the Board submits its selection of the independent auditors to the Company’s stockholders for ratification. If the stockholders should not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment.2019.2020. If the appointment of Deloitte as auditor for 20192020 is not approved by the Company’s stockholders, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during 20192020 if it determines that such a change would be in the best interests of the Company and its stockholders.ü✔ Our Board unanimously recommends that you vote FOR Proposal No. 3, the
Deloitte & Touche LLP as independent auditors.29auditors.Non-AuditNon‑Audit Fees2018,2019, and 2017,2018, on the Company’s behalf:Fee Category 2018 2017 Audit Fees $864,497 $1,677,253 Audit-Related Fees 47,390 99,700 Tax Fees 108,038 362,746 All Other Fees ― ― Total Fees 1,019,925 $2,139,699 Fee Category 2019 2018 Audit Fees 821,885 $864,497 Audit-Related Fees 3,790 47,390 Tax Fees 76,401 108,038 All Other Fees -- ― Total Fees 902,076 1,019,925 Audit-Related2018,2019, the Audit Committee pre-approved all audit and non-audit services provided to the Company in accordance with the Audit Committee pre-approval policy.302018•Held private meetings following its regularly scheduled meeting with the company’s management team, internal audit lead, and Deloitte, during which candid discussions regarding financial management, legal, accounting, auditing, and internal control issues took place.•Met with the General Counsel to discuss the effectiveness of the Company’s compliance program and regularly received status reports on compliance and incident hotline reporting matters.•Received regular updates from internal audit regarding the process to assess the adequacy of the Company’s internal control over financial reporting, the framework used to make the assessment, and management’s conclusions of the effectiveness of the internal controls over financial reporting.•Reviewed and discussed with management and Deloitte, the Company’s audited financial statements, earnings releases and quarterly and annual reports on Form 10-Q and Form 10-K prior to filing with the SEC.•Reviewed the internal audit function performance and upcoming year’s plan.•Reviewed with management, internal audit, and Deloitte, the overall audit scope and plans, the results of internal and external audit examinations, evaluations by management and Deloitte, and the Company’s internal controls over financial reporting and the quality of the Company’s financial reporting.•Reviewed with management and internal audit the significant risks and exposures identified by internal audit, the overall adequacy and effectiveness of the Company’s compliance programs, the Company’s code of conduct, and cyber security initiatives.•Discussed with Deloitte matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees.2018,2019, for filing with the SEC.Jeffrey Brodsky, Chairman Jonathan Mellin Jonathan Segal 31 and, the ratification of the appointment of Deloitte & Touche LLP (Proposal No. 3) and the approval of the charter amendment to increase the number of authorized shares of common stock (Proposal No. 4) each require the affirmative vote of a majority of shares present or represented by proxy and entitled to vote at the Annual Meeting.February 28, 2019,May 8, 2020, the record date established for determining the stockholders entitled to notice of and to vote at the Annual Meeting, there were 3,634,65873,910,334 outstanding shares of the Company’s common stock. Each share of common stock outstanding on the record date is entitled to one vote on all matters submitted at the Annual Meeting.April 26, 2019.32 and the advisory approval of the Company’s executive Compensationcompensation and the approval of the charter amendment are nondiscretionary items and may not be voted on by brokers, banks or other nominees who have not received specific voting instructions from beneficial owners. This is called a “broker non-vote.”provide proof that you own sharesfollow the instructions posted at www.virtualshareholdermeeting.com/CTAM2020, and will need to enter the 16-digit control number included in your Notice, your proxy card or voter instruction form. Broadridge Financial Services, Inc. is hosting our virtual Annual Meeting and, on the date of the Company asvirtual Annual Meeting, will be available by telephone at the technical support number that will be posted on the login page for our virtual Annual Meeting to answer your questions regarding how to attend and participate in the virtual Annual Meeting. If you do not own your shares directly, but instead are the beneficial owner of February 28, 2019. Attendance is limitedshares held in “street name” by a broker, bank or other nominee and wish to stockholders of record as of February 28, 2019.vote or submit a question during the virtual Annual Meeting, you should follow the instructions on the voting instruction form or the Notice you receive from your bank, broker or other nominee.cameras, sound or video recording equipment, cellular telephones, or similar electronic devices, large bags, briefcases or packageslistening to the audio broadcast will not be alloweddeemed attending the virtual Annual Meeting, and you cannot vote or participate in the meeting room.You will need to bring your legal proxy and hand it in with a signed ballot that will be provided tovirtual Annual Meeting from such audio broadcast. If you at the meeting. You willdo not be able to voteown your shares atdirectly, but instead are the meeting withoutbeneficial owner of shares held in “street name” by a legal proxy.33ConvercentConvercent” which also can be accessed from the Company’s website. The system provides for electronic communication, either anonymously or identified, for employees, vendors, and other interested parties to communicate concerns, including concerns with respect to the Company’s accounting, internal controls or financial reporting, to the Audit Committee. Concerns may be reported via telephone at 1-800-461-9330 or via the link to ConvercentConvercentwhich can be found on the “Corporate Governance” section of the Company’s website at: https://castlemetals.com/investors/corporate-governance.corporate-governance2019.2020. Officers, directors, and employees of the Company may solicit proxies from certain stockholders; however, no additional compensation will be paid to those individuals for these activities.2018,2019, are available without charge to stockholders upon written request to the Company at 1420 Kensington Road, Suite 220, Oak Brook, Illinois 60523, Attention: Corporate Secretary.20202021 Annual Meeting of Stockholders, Maryland Law, the Company’s Bylaws, SEC rules and NASDAQ rules require that any stockholder proposals must be received no later than November 20, 2019.January 29, 2021 and must otherwise comply with SEC rules regarding form and content. In addition, the Company’s Bylaws require a stockholder who wishes to propose a nominee for election as a director or any other business matter for consideration at the 20202021 Annual Meeting of Stockholders to give advance written notice to the Company between JanuaryMarch 2, 2019,2021, and FebruaryApril 1, 2021.ATTEST: A. M. CASTLE & CO. By: Name: Jeremy T. Steele Name: Marec E. Edgar Title: Secretary Title: President & Chief Executive Officer