SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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| ¨ | Soliciting Material Pursuant to § 240.14a-12 |
Stoneridge, Inc.
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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STONERIDGE, INC.
9400 East Market Street
Warren, Ohio 44484
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
We will hold the 2011our 2014 Annual Meeting of Shareholders of Stoneridge, Inc. on Monday,Tuesday, May 9, 2011,6, 2014, at 11:00 a.m. Eastern Time, at the Sheraton Cleveland Airport Hotel, 5300 Riverside Drive,Marriott, 4277 West 150th Street, Cleveland, Ohio 44135.
The purpose of the Annual Meeting is to consider and vote on the following matters:
| 1. | Election of |
| 2. | Ratification of the appointment of Ernst & Young LLP; |
| 3. | An advisory vote on executive compensation; |
| Any other matters properly brought before the meeting. |
Only shareholders of record at the close of business on April 1, 2011,March 31, 2014, are entitled to notice of and to vote at the meeting or any adjournment thereof. Shareholders are urged to complete, sign and date the enclosed proxy and return it in the enclosed envelope or to vote by telephone or Internet.
| By order of the Board of Directors, | |
  | |
| ROBERT M. LOESCH, | |
| Secretary | |
Dated: April 12, 2011
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 9, 2011:
This Proxy Statement and the Company’s 20102013 Annual Report to Shareholders are also available atwww.edocumentview.com/sri.
YOUR VOTE IS IMPORTANT.
PLEASE SUBMIT YOUR PROXY BY COMPLETING AND MAILING THE ENCLOSED PROXY CARD
STONERIDGE, INC.
2014 Proxy Statement Summary
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. We are mailing this Proxy Statement to our shareholders on or about April 7, 2014, and it is also available online atwww.edocumentview.com/sri. The Board of Directors is soliciting proxies in connection with the 2014 Annual Meeting of Shareholders and encourages you to read this Proxy Statement and vote your shares online, by telephone or by mailing your proxy card or voting instruction form.
Stoneridge, Inc. 2014 Annual Meeting Information
| · | Date and Time: Tuesday, May 6, 2014, at 11:00 a.m. Eastern Time |
| · | Location: Cleveland Airport Marriott, 4277 West 150th Street, Cleveland, OH 44135 |
| · | Record Date: March 31, 2014 |
| · | Voting: Shareholders as of the record date are entitled to vote. Each share of common shares is entitled to one vote for each Director nominee and one vote for each of the other proposals to be voted on. |
Matters to be Considered:
| Management Proposals | Board Vote Recommendation | Page (for more information) | ||||
| 1. Elect eight directors named in this Proxy Statement | FOR ALL | 5 | ||||
| 2. Ratification of the appointment of Ernst & Young LLP | FOR | 8 | ||||
| 3. Advisory vote on executive compensation | FOR | 15 | ||||
Company Performance
(In thousands, except earnings per share and share price)
| 2013 | 2012 | Percent Change | ||||||||||
| Net Sales | $ | 947,830 | $ | 938,513 | 1.0 | % | ||||||
| Operating Income | 39,704 | 28,729 | 38.2 | % | ||||||||
| Net Income | 15,131 | 5,361 | 182.2 | % | ||||||||
| Earnings Per Share, Diluted | $ | 0.56 | $ | 0.20 | 180.0 | % | ||||||
| Share Price at 12/31 | $ | 12.75 | $ | 5.12 | 149.0 | % | ||||||
Net sales increased by $9.3 million and net income increased by $9.8 million in 2013 compared with 2012 and our closing share price at year end 2013 increased 149% from a year earlier. These improved results are worth noting, however, they were below our consolidated financial performance expectations for the year. Sales performance was below our growth targets and was negatively impacted by continuing weak trends in the commercial vehicle markets, market share loss by a significant customer and currency devaluation of the Brazilian real, which were partially offset by continued growth in the North American automotive markets and new program awards in Europe.
Profitability, while significantly above the prior year on a modest revenue increase, was below expectations for 2013 due to unfavorable volume, exchange rate fluctuations, operational performance in our Wiring segment, and changes in product mix in our PST segment all of which reduced marginal contributions. Partially offsetting these impacts were reductions in selling, general and administrative costs.
| i |
Director Nominees
Stoneridge’s Directors are elected for one-year terms by a majority of the votes cast. Below is a summary of the Director nominees. Additional information about each director nominee and his or her qualifications may be found beginning on page 5 of this Proxy Statement.
| Committee Memberships | ||||||||||||||
| Name | Age | Director Since | Primary Occupation | Independent | AC | CC | NCGC | |||||||
| John C. Corey | 66 | 2004 | President and CEO of Stoneridge, Inc. | |||||||||||
| Jeffrey P. Draime | 47 | 2005 | Self-employed business consultant | ü | ü | ü | ||||||||
| Douglas C. Jacobs | 74 | 2004 | Executive Vice President-Finance and CFO of Brooklyn NY Holdings, LLC | ü | C | ü | ||||||||
| Ira C. Kaplan | 60 | 2009 | Managing Partner of Benesch, Friedlander, Coplan & Arnoff LLP | ü | ü | ü | ||||||||
| Kim Korth | 59 | 2006 | President and CEO of Dickten Masch Plastics, LLC and TECHNIPLASTM | ü | C | ü | ||||||||
| William M. Lasky | 66 | 2004 | Former President and CEO of Accuride Corporation | L | ü | ü | C | |||||||
| George S. Mayes, Jr. | 55 | 2012 | Executive Vice President and COO of Diebold, Inc. | ü | ü | |||||||||
| Paul J. Schlather | 61 | 2009 | Self-employed business consultant | ü | ü | |||||||||
| AC | Audit Committee | C | Committee Chairperson | |||
| CC | Compensation Committee | L | Lead Independent Director | |||
| NCGC | Nominating & Corporate Governance Committee |
Ratification of the appointment of Ernst & Young LLP
As a matter of good governance, we are asking our shareholders to ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2014. Below is summary information with respect to the fees billed to us for services provided to us during the years ended December 31, 2013 and 2012. For more information, see page 8 of this Proxy Statement.
| 2013 | 2012 | |||||||
| Audit Fees | $ | 1,654,130 | $ | 1,454,846 | ||||
| Tax Fees | 380,200 | 463,896 | ||||||
| Total Fees | $ | 2,034,330 | $ | 1,918,742 | ||||
| ii |
Executive Compensation Highlights
Our executive compensation program is designed to attract, retain, motivate and reward talented executives who advance our strategic, operational and financial objectives and, thereby, enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:
| · | Attract and retain talented executive officers by providing a compensation package that is competitive with that offered by similarly situated companies; |
| · | Create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals; and |
| · | Align total compensation with the objectives and strategies of our business and shareholders. |
Key elements of our 2013 compensation program are as follows:
| · | Base Salary. Base salary has been targeted at the 50th percentile of our peer group. For 2013, Mr. Corey and Mr. Strickler did not receive increases to their base salaries. |
| · | Annual Incentive Plan (AIP). The 2013 AIP was comprised of consolidated and, where appropriate, divisional or functional financial performance metrics. The 2013 AIP target was set as a percentage of base salary. For 2013, the AIP target percentage for Mr. Corey and Mr. Strickler was increased by 5% in lieu of a base salary increase, putting more compensation at risk if performance is not achieved. Mr. Corey and Mr. Strickler did not receive AIP payouts for 2013 as their financial performance metrics were not achieved. |
| · | Long-Term Incentive Plans. Long-term incentives were awarded under our Long-Term Incentive Plan and our Long-Term Cash Incentive Plan for 2013 and generally targeted the 75th percentile of our peer group. These awards vest in three years and 20% were performance-based restricted common shares that vest based on our Total Shareholder Return compared to a group of peer companies, 20% were phantom shares that vest based on achievement of an annual earnings per share target and the remaining 60% were restricted shares that vest based on the passage of time. For 2013, there were no restricted phantom shares earned under the first tranche of the award as our earnings per share did not meet the threshold for achievement. |
Additionally, during 2013, we implemented a Share Ownership policy for our executive officers whereby the CEO, CFO and other executive officers must retain our common shares equal in market value to five, four and three times, respectively, their annual base salaries.
For more information related to our executive compensation program, see page 15 of this Proxy Statement.
| iii |
STONERIDGE, INC.
PROXY STATEMENT
The Board of Directors (the “Board”) of Stoneridge, Inc. (the “Company”) is sending you this Proxy Statement to ask for your vote as a Stoneridge shareholder on certain matters to be voted on at theour Annual Meeting of Shareholders to be held on Monday,Tuesday, May 9, 2011,6, 2014, at 11:00 a.m. Eastern Time, at the Sheraton Cleveland Airport Hotel, 5300 Riverside Drive,Marriott, 4277 West 150th Street, Cleveland, Ohio 44135. This Proxy Statement and the accompanying notice and proxy will be mailed to you on or about April 12, 2011.
Annual Report; Internet Availability
A copy of the Company’sour Annual Report to Shareholders for the fiscal year ended December 31, 2010,2013, is enclosed with this proxy statement.Proxy Statement. Additionally, this Proxy Statement and our Annual Report to Shareholders for the fiscal year ended December 31, 20102013 are available atwww.edocumentview.com/sri.
Solicitation of Proxies
The Board of Directors (“Board”) is making this solicitation of proxies and the Companywe will pay the cost of the solicitation. The Company hasWe have retained Georgeson Inc., at an estimated cost of $8,000, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals. In addition to the solicitation of proxies by mail by Georgeson Inc., the Company’sour employees may solicit proxies by telephone, facsimile or electronic mail.
Proxies; Revocation of Proxies
The common shares represented by your proxy will be voted in accordance with the instructions as indicated on your proxy. In the absence of any such instructions, they will be voted to (a) elect the director nominees set forth under “Election of Directors”; (b) ratify the appointment of Ernst & Young LLP as the Company’sour independent registered public accounting firm for 2011;2014; and (c) approve the compensation paid to the Company’sour Named Executive Officers; (d) approve “every three years” regarding the frequency of a shareholder vote on the compensation of the Named Executive Officers; and (e) approve the Amended Annual Incentive Plan.Officers. Your presence at the Annual Meeting of Shareholders, without more,further action, will not revoke your proxy. However, you may revoke your proxy at any time before it has been exercised by signing and delivering a later-dated proxy or by giving notice to the Company in writing at the Company’sour address indicated on the attached Notice of Annual Meeting of Shareholders or in the open meeting. If you hold your Company common shares in “street name”, in order to change or revoke your voting instructions you must follow the specific voting directions provided to you by your bank, broker or other holder of record.
Voting Eligibility
Only shareholders of record at the close of business on the record date, April 1, 2011,March 31, 2014, are entitled to receive notice of the Annual Meeting of Shareholders and to vote the common shares held on the record date at the meeting. On the record date, the Company’sour outstanding voting securities consisted of 25,598,61728,330,031 common shares, without par value, each of which is entitled to one vote on each matter properly brought before the meeting.
| 1 |
Voting Procedures
If you are a record holder:
| · | You may vote by mail: |
| · | You may vote by telephone: |
| · | You may vote by Internet: |
| · | You may vote in person at the meeting, however, you are encouraged to vote by |
If you are a “street name” holder:
| · | You must vote your common shares through the procedures established by your bank, broker, or other holder of record. Your bank, broker, or other holder of record has enclosed or otherwise provided a voting instruction card for you to use in directing the bank, broker, or other holder of record how to vote your common shares. |
| · | You may vote at the meeting, however, to do so you will first need to ask your bank, broker or other holder of record to furnish you with a legal proxy. You will need to bring the legal proxy with you to the meeting and hand it in with a signed ballot that you can request at the meeting. You will not be able to vote your common shares at the meeting without a legal proxy and signed ballot. |
| 2 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of the Company’sour common shares as of March 4, 2011,February 28, 2014, by: (a) the Company’sour directors and nominees for election as directors; (b) each other person who is known by the Companyus to own beneficially more than 5% of the Company’sour outstanding common shares; (c) the executive officers named in the Summary Compensation Table; and (d) the Company’sall of our executive officers and directors as a group.
| Number of | ||||||||
| Shares | Percent | |||||||
| Beneficially | of | |||||||
| Name of Beneficial Owner | Owned (1) | Class | ||||||
Wellington Management Company LLP (2) | 2,266,670 | 8.9 | % | |||||
BlackRock, Inc. (3) | 1,444,926 | 5.6 | ||||||
Dimensional Fund Advisors LP (4) | 1,321,647 | 5.2 | ||||||
FMR LLC (5) | 1,305,637 | 5.1 | ||||||
John C. Corey (6) | 833,188 | 3.3 | ||||||
Jeffrey P. Draime (7) | 421,694 | 1.6 | ||||||
George E. Strickler (8) | 259,551 | 1.0 | ||||||
Thomas A. Beaver (9) | 191,134 | * | ||||||
Mark J. Tervalon (10) | 170,399 | * | ||||||
William M. Lasky (11) | 81,180 | * | ||||||
Michael D. Sloan (12) | 72,798 | * | ||||||
Paul J. Schlather (13) | 51,317 | * | ||||||
Douglas C. Jacobs (14) | 43,700 | * | ||||||
Kim Korth (15) | 21,540 | * | ||||||
Ira C. Kaplan (16) | 15,892 | * | ||||||
| All Executive Officers and Directors as a Group (11 persons) | 2,162,393 | 8.5 | % | |||||
| Name of Beneficial Owner | Number of Shares Beneficially Owned(1) | Percent Of Class | ||||||
| Systematic Financial Management, LP(2) | 2,557,890 | 9.0 | % | |||||
| The Goldman Sachs Group, Inc. (3) | 2,005,111 | 7.1 | ||||||
| BlackRock, Inc.(4) | 1,858,860 | 6.6 | ||||||
| JPMorgan Chase & Co.(5) | 1,430,300 | 5.0 | ||||||
| John C. Corey(6) | 821,938 | 2.9 | ||||||
| Jeffrey P. Draime(7) | 403,514 | 1.4 | ||||||
| George E. Strickler(8) | 338,429 | 1.2 | ||||||
| Thomas A. Beaver(9) | 160,181 | * | ||||||
| William M. Lasky(10) | 110,880 | * | ||||||
| Michael D. Sloan(11) | 110,105 | * | ||||||
| Richard P. Adante(12) | 97,900 | * | ||||||
| Paul J. Schlather(13) | 89,877 | * | ||||||
| Ira C. Kaplan(14) | 39,952 | * | ||||||
| Douglas C. Jacobs(15) | 35,160 | * | ||||||
| Kim Korth(16) | 29,900 | * | ||||||
| George S. Mayes, Jr.(17) | 18,420 | * | ||||||
| All Executive Officers and Directors as a Group (15 persons) | 2,295,656 | 8.1 | % | |||||
_______________________
* Less than 1%.
| (1) | Unless otherwise indicated, the beneficial owner has sole voting and investment power over such common shares. |
| (2) | According to a Schedule 13G filed with the Securities and Exchange Commission (“SEC”) by |
| (3) | According to a Schedule 13G filed with the SEC by The Goldman Sachs Group, Inc., the filing reflects the securities beneficially owned by certain operating units (collectively the “Goldman Sachs Reporting Units”) of Goldman Sachs Group, Inc. and its subsidiaries and affiliates. The Goldman Sachs Reporting Units disclaims beneficial ownership of the securities beneficially owned by (i) any client accounts with respect to which the Goldman Sachs Reporting Units or their employees have voting or investment discretion or both, or with respect to which there are limits on their voting or investment authority or both and (ii) certain investment entities of which Goldman Sachs Reporting Units act as the general partner, managing general partner or other manager, to the extent interests in such entities are held by persons other than the Goldman Sachs Reporting Units. The address of The Goldman Sachs Group, Inc. is 200 West Street, New York, New York 10282. |
| (4) | According to a Schedule 13G filed with the SEC by BlackRock, Inc. The address of BlackRock, Inc. is 40 East 52nd Street, New York, New York 10022. |
| (5) | According to a Schedule 13G filed with the SEC by |
| (6) | Represents 10,000 common shares that Mr. Corey has the right to acquire upon the exercise of share options, |
| (7) | Represents |
| (8) | Represents |
| (9) | Represents |
| Represents 10,000 common shares that Mr. Lasky has the right to acquire upon the exercise of share options, |
| (11) | Represents |
| (12) | Represents |
| (13) | Represents 6,910 restricted common shares, which are subject to forfeiture, 47,500 common shares held in an investment retirement account for the benefit of Mr. Schlather, and |
| (14) | Represents |
| (15) | Represents |
| (16) | Represents 6,910 restricted common shares, which are subject to forfeiture, and 22,990 common shares owned by Ms. Korth directly. |
| (17) | Represents 6,910 restricted common shares, which are subject to forfeiture, and 11,510 common shares owned by Mr. Mayes directly. |
| 4 |
PROPOSAL ONE: ELECTION OF DIRECTORS
In accordance with the Company’s Amended and Restated Code of Regulations, the number of directors has been fixed at seven.eight. At the Annual Meeting of Shareholders, youshareholders will elect seveneight directors to hold office until the Company’sour next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board proposes that the nominees identified below be elected to the Board.Board. John C. Corey, the Company’s President and Chief Executive Officer, has an employment agreement with the Company, which provides that, during the term of the agreement, Mr. Corey shall be entitled to be nominated for election to the Board. At theour Annual Meeting of Shareholders, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the seveneight nominees hereinafter named.
The director nominees are identified below. If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board expects that proxies will be voted for the election of a substitute nominee designated by the Board. The following information is furnished with respect to each person nominated for election as a director.
The Board of Directors recommends that you vote FOR the following nominees.
Nominees to Serve for a One-Year Term Expiring in 2012
John C. Corey
| Mr. Corey, | |
Since 2004 Mr. Corey has served as a director and Chairman of the Board of Haynes International, Inc., a producer of metal alloys. Mr. Corey serves | ||
In addition to his professional experience described above, the Company believes that Mr. Corey should serve as a director because he has successfully guided companies through restructuring initiatives and executed performance and | ||
Jeffrey P. Draime
| ||
Mr. Draime, | ||
Mr. Draime |
| Douglas C. Jacobs | Mr. Jacobs, privately held investment advisory company established to manage the assets of a family and family | |
Mr. Jacobs has served as a director of Standard Pacific Corporation, a national residential home builder in southern California, since 1998 and serves as Chairman of the Audit Committee and a member of the Compensation, Executive and Nominating and Corporate Governance | ||
Mr. Jacobs qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Jacobs should serve as a director because he provides valuable business experience and judgment to the Board, which strengthens the Board’s collective qualifications, skills and experience. | ||
| ||
Ira C. Kaplan
| Mr. Kaplan, | |
Mr. Kaplan | ||
Kim Korth
| ||
Ms. Korth, | ||
Ms. Korth is a member of the boards of Shape Corporation, a manufacturer of automotive bumper and impact energy management systems, Burke E. Porter Machinery Company, a manufacturer of | ||
| industry. Ms. Korth has several decades of experience in corporate governance issues, organizational design, and development of strategies for growth and improved financial performance for automotive suppliers. In addition to the knowledge and experience described above, the Company believes that Ms. Korth should serve as a director because she provides insight to industry trends and expectations to the Board, which strengthens the Board’s collective qualifications, skills and experience. |
| 6 |
William M. Lasky
| Mr. Lasky, | |
Since 2011 Mr. Lasky | ||
| vehicles. In addition to his professional experience described above, the Company believes that Mr. Lasky should serve as a director because he provides in-depth industry knowledge, business acumen and leadership to the Board, which strengthens the Board’s collective qualifications, skills and experience. | ||
George S. Mayes, Jr.
| Mr. Mayes, 55, was elected to the Board in 2012. Mr. Mayes was appointed Executive Vice President and Chief Operating Officer of Diebold, Inc., a provider of integrated self-service delivery and security systems and services, in 2013. Prior to that, he served as Executive Vice President of Operations from 2008, as Senior Vice President, Supply Chain Management from 2006 to 2008, and as Vice President, Global Manufacturing upon joining Diebold, Inc. in 2005. Mr. Mayes has extensive experience in lean manufacturing and Six Sigma processes and has managed manufacturing facilities in Canada, Mexico, France, Hungary, Brazil, China, Poland, Italy and the United States. The Company believes that Mr. Mayes should serve as a director because he provides in depth knowledge of manufacturing theories and operations, business acumen and leadership to the Board, which strengthens the Board’s collective qualifications, skills and experience. | |
Paul J. Schlather
| Mr. Schlather, | |
Mr. Schlather qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Schlather should serve as a director because he provides financial analysis and business acumen to the Board, which strengthens the Board’s collective qualifications, skills and experience. |
PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
The Audit Committee of the Board currently anticipates appointingexpects to appoint Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the year ending December 31, 2011.2014. For 2010,2013, Ernst & Young was engaged by us to audit our annual financial statements and to perform audit-related and tax services. RepresentativesWe expect that representatives of Ernst & Young are expected towill be present at the Annual Meeting of Shareholders, will have an opportunity to make a statement if they so desire, and willare expected to be available to respond to appropriate questions.
The Board seeks an indication from our shareholders of their approval or disapproval of the Audit Committee’s anticipated appointment of Ernst & Young as the Company’sour independent registered public accounting firm for the 20112014 fiscal year. The submission of this matter for approval by shareholders is not legally required, however, the Board believes that the submission is an opportunity for the shareholders to provide feedback to the Board on an important issue of corporate governance. If theour shareholders do not approve the appointment of Ernst & Young, the appointment of the Company’sour independent registered public accounting firm will be re-evaluated by the Audit Committee but will not require the Audit Committee to appoint a different accounting firm. If theour shareholders do approve the appointment of Ernst & Young, the Audit Committee in its discretion may select 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 interest of the Company and its shareholders. Approval of thethis proposal to ratify the selection of Ernst & Young as our independent registered public accounting firm requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to be voted on the proposal at theour Annual Meeting of Shareholders. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on the proposal and will not have a positive or negative effect on the outcome of this proposal, however, there should be no broker non-votes on this proposal because brokers should have the discretion to vote uninstructed common shares on this proposal.
The Board of Directors recommends that you vote FOR Proposal Two.
Service Fees Paid to the Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees billed by and paid to Ernst & Young by fee category for the fiscal years ended December 31, 20102013 and 2009.2012. The Audit Committee has considered the scope and fee arrangements for all services provided by Ernst & Young, taking into account whether the provision of non-audit-related services is compatible with maintaining Ernst & Young’s independence.
| 2010 | 2009 | |||||||
| Audit Fees | $ | 1,606,726 | $ | 1,551,937 | ||||
| Tax Fees | 284,033 | 501,029 | ||||||
| All Other Fees | 11,760 | 10,167 | ||||||
| Total Fees | $ | 1,902,519 | $ | 2,063,133 | ||||
| 2013 | 2012 | |||||||
| Audit Fees | $ | 1,654,130 | $ | 1,454,846 | ||||
| Tax Fees | 380,200 | 463,896 | ||||||
| Total Fees | $ | 2,034,330 | $ | 1,918,742 | ||||
Audit Fees.
Audit fees include fees associated with the annual audit ofTax Fees.
Tax feesPre-Approval Policy
The Audit Committee’s policy is to approve in advance all audit and permitted non-audit services to be performed for the Company by its independent registered public accounting firm. Pre-approval is generally provided for up to one year, is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee also pre-approves particular services on a case-by-case basis. In accordance with this policy, the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee. The Chairman may pre-approve services and then inform the Audit Committee at the next scheduled meeting.
All services provided by Ernst & Young during fiscal year 2010,2013, as noted in the previous table, were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described previously.
Audit Committee Report
In accordance with its written charter, the Audit Committee assists the Board in fulfilling its responsibility relating to corporate accounting, our reporting practices, of the Company, and the quality and integrity of the financial reports and other financial information provided by the Companyus to any governmental body or to the public. Management is responsible for the financial statements and the financial reporting process, including the system of internal controls. The independent registered public accounting firm is responsible for expressing an opinionconducting audits and reviews on the conformity of theour audited financial statements in accordance with generally accepted accounting principles.principles and audits of our internal control over financial reporting. The Audit Committee is comprised of fourfive directors, each of whom is “independent” for audit committee purposes under the current listing standards of the New York Stock Exchange (“NYSE”).
In discharging its oversight responsibility as to the audit process, the Audit Committee reviewed and discussed theour audited financial statements of the Company for the year ended December 31, 2010,2013, with the Company’s management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The Audit Committee also discussed with the Company’sour independent registered public accounting firm, Ernst & Young, the matters required to be discussed by Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee has received the written disclosures and letter from Ernst & Young required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communication with the Audit Committee concerning independence. The Audit Committee discussed Ernst & Young’s independence with Ernst & Young. The Audit Committee also considered whether the provision of non-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence. Management has the responsibility for the preparation of the Company’sour financial statements and Ernst & Young has the responsibility for the examination of those statements.
The Audit Committee discussed with the Company’sour internal auditor and Ernst & Young the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditoraudit director and Ernst & Young, with and without management present, to discuss the results of their examinations, their evaluations of the Company’sour internal controls, and the overall quality of the Company’s financial reporting.
Based on the above-referenced review and discussions with management, the internal auditoraudit director and Ernst & Young, the Audit Committee recommended to the Board, and the Board approved, that the Company’s audited consolidated financial statements for fiscal 2013 be included in itsthe Company’s Annual Report on Form 10-K for the year ended December 31, 2010, for filingfiled with the SEC.
| The Audit Committee | |
| Douglas C. Jacobs, Chairman | |
| Ira C. Kaplan | |
| William M. Lasky | |
| George S. Mayes, Jr. | |
| Paul J. Schlather |
PROPOSAL THREE: SAY ON PAY
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enablesCompany provides our shareholders with the opportunity to cast an annual advisory non-binding vote to approve on an advisory (non-binding) basis, the compensation of ourits Named Executive Officers as disclosed in this Proxy Statement. Pursuantpursuant to Section 14Athe SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables) (a “say-on-pay proposal”). We believe that it is appropriate to seek the views of shareholders on the design and effectiveness of the Securities Exchange Act, we are includingCompany’s executive compensation program.
At the Company’s 2013 Annual Meeting of Shareholders, 74% of the votes cast supported the Company’s 2013 say-on-pay proposal. The Compensation Committee believes this affirmed shareholders’ support of the Company’s approach to executive compensation.
Our goal for the executive compensation program is to attract, motivate, and retain a talented, entrepreneurial and creative team of executives to provide operational and strategic leadership for the Company’s success in these proxy materialscompetitive markets. We seek to accomplish this goal in a non-binding shareholder vote onway that rewards performance and is aligned with our executive compensation. As described below in the “Compensation Discussion and Analysis” section of this Proxy Statement, beginning on page 19,shareholders’ long-term interests. We believe that our executive compensation program, which emphasizes performance-based compensation and long-term equity awards, satisfies this goal and is designed to attract and retain high quality executives and to align the interest of managementstrongly aligned with the interestlong-term interests of shareholders by rewarding both short- and long-term performance and is based on a pay-for-performance philosophy.
Base compensation is aligned to be competitive in the industry in which we operate. IncentivePerformance-based compensation (cash and equity) generally represents 65-75%60-80% of each executive officer’s target compensation opportunity, with long-term incentives representing the majority of compensation. Targets for incentive compensation are based on clear financial goalsperformance targets and increasing shareholder value. The Compensation Committee retains the services of an independent compensation consultant to advise on competitive compensation and compensation practices.
The Board recommends that shareholders vote forFOR the following resolution:
“RESOLVED that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee. The Board and the Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote when considering future executive compensation arrangements.
The affirmative vote of a majority of the shares of Company common shares present or represented by proxy and voting at the annual meeting will constitute approval of this non-binding resolution. If you own common shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your common shares so that your vote can be counted on this proposal. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on this proposal and will not have a positive or negative effect on the outcome of this proposal.
The Board of Directors recommends that you vote FOR Proposal Three.
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CORPORATE GOVERNANCE
Corporate Governance Documents and Committee Charters
The Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and the charters of the Board of Directors’ Audit, Compensation, and Nominating and Corporate Governance committees are posted on our website atwww.stoneridge.com. Written copies of these documents will beare available without charge to any shareholder upon request. Requests should be directed to Investor Relations at the Company’sour address listed on the Notice of Annual Meeting of Shareholders.
Corporate Ethics Hotline
We established a corporate ethics hotline as part of the Company’sour Whistleblower Policy and Procedures to allow persons to lodge complaints about accounting, auditing and internal control matters, and to allow an employee to lodge a concern, confidentially and anonymously, about any accounting and auditing matter. Information about lodging such complaints or making such concerns known is contained in the Company’sour Whistleblower Policy and Procedures, which is posted on our website atwww.stoneridge.com.
Director Independence
The NYSE rules require listed companies to have a Board of Directors comprised of at least a majority of independent directors. Under the NYSE rules, a director qualifies as “independent” upon the affirmative determination by the Board of Directors that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board has not adopted categorical standards of independence. The Board has determined that the following directors and nominees for election of director are independent:
| Jeffrey P. Draime | Kim Korth | George S. Mayes, Jr. |
| Douglas C. Jacobs | William M. Lasky | Paul J. Schlather |
| Ira C. Kaplan |
The Board of Directors’ Role in Risk Oversight
It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has oversight responsibility of the processes established to report and monitor systems for material risks applicable to the Company.us. The Audit Committee regularly reviews enterprise-wide risk management, which includes treasury risks (commodity pricing, foreign exchange rates, and credit and debt exposures), financial and accounting risks, legal and compliance risks, and other risk management functions. The Compensation Committee considers risks related to the attraction and retention of talent and related to the design of compensation programs and arrangements. The full Board considers strategic risks and opportunities and regularly receives reports from management on risk and from the committees regarding risk oversight in their areas of responsibility.
Compensation Policies and Risk
Our policies and overall compensation practices for all employees do not create risks that are reasonably likely to have a material adverse affect on the Company. Generally speaking, theThe compensation policies are generally consistent for all of our business units of the Company.
In addition, incentives are not designed, and do not create, risks that are reasonably likely to have a material adverse affecteffect on the Company as all incentives reward growth and profitability. The Company’sOur various incentive programs are based on our consistent growth and continued profitability, of the Company, relying, for example, on the total return on investment, operating profit and total shareholder return. As such, they do not encourage employees to take risks to the detriment or benefit of our results in order to receive incentive compensation, nor are they reasonably likely to have a material adverse effect on the Company.
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The Board of Directors
In 2010,2013, the Board held 19 meetings and took action by unanimous written consent on two occasions. In 2010, eacheight meetings. Each Board member, except Mr. Mayes, attended at least 75% of the meetings of the Board and of the committees on which he or she serves. The Company’sOur policy is that directors are to attend the Annual Meeting of Shareholders. All of our current directors attended the 20102013 Annual Meeting of Shareholders. Mr. Lasky has been appointed as the lead independent director by the independent directors to preside at the executive sessions of the independent directors. It is the Board’s practice to have the independent directors meet regularly in executive session. All directors, except Mr. Corey, the Company’s President and Chief Executive Officer (“CEO”), are independent.
Leadership of the Board
The Board does not have a formal policy regarding the separation of the roles of CEO and Chairman of the Board as the Board believes it is in the best interestsinterest of the Company and our shareholders to make that determination based on the position and direction of the Company and the membership of the Board. At this time, the Board has determined that having an independent director serve as Chairman is in the best interest of the Company’sCompany and our shareholders. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits the Company’sour President and CEO to devote more time to focus on the strategic direction and management of the Company’sour day-to-day operations.
Committees of the Board
The Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities. These committees are the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. Each member of the Audit, Compensation, and Nominating and Corporate Governance Committees is independent as defined under the listing standards of the NYSE. The table below shows the composition of the Board’s committees:
Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | |||
| Douglas C. | * | Jeffrey P. Draime | Jeffrey P. Draime | ||
| Ira C. Kaplan | Douglas C. Jacobs | Ira C. Kaplan | |||
| William M. Lasky | Kim | * | Kim Korth | ||
| William M. Lasky | William M. | * | |||
| Paul J. Schlather | |||||
| __________________________ | |||||
| * Committee Chairperson |
Audit Committee
.This committee held eight meetings during 2010.in 2013. Information regarding the functions performed by the Audit Committee is set forth in the “Audit Committee Report,” included in this Proxy Statement. The Board has determined that each Audit Committee member is financially literate under the current listing standards of the NYSE. The Board also determined that Mr. Jacobs and Mr. Schlather each qualify as an “audit committee financial expert” as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002. In addition, under the Sarbanes-Oxley Act of 2002 and the NYSE rules mandated by the SEC, members of the audit committee must have no affiliation with the issuer, other than their Board seat, and receive no compensation in any capacity other than as a director or committee member. Each member of the Audit Committee meets this additional independence standard applicable to audit committee members of NYSE listed companies.
Compensation Committee.
This committee held fivefour meetings during 2010.in 2013. Each member of our Compensation Committee meets the independence requirements of the NYSE, including the enhanced independence requirements applicable to Compensation Committee members under NYSE rules effective July 1, 2013, is a non-employee director under Rule 16b-3 of the Securities Exchange Act of 1934 and is an outside director under Section 162(m) of the Internal Revenue Code. The Compensation Committee is responsible for establishing and reviewing our compensation philosophy and programs with respect to our executive officers; approving executive officer compensation and benefits; recommending to the Board the approval, amendment and termination of incentive compensation and equity-based plans; and certain other compensation matters, including director compensation. Recommendations regarding compensation of other officers are made to the Compensation Committee by our CEO. The Compensation Committee can exercise its discretion in modifying any amount presented by our CEO. The Compensation Committee regularly reviews tally sheets that detail the total compensation obligations to each of our executive officers. During 2010,2013, the Compensation Committee retained Total Rewards Strategies LLC to provide compensation related consulting services. Specifically, the compensation consultantsconsultant provided relevant market data, current trends in executive and director compensation and advice on program design. In accordance with its charter, the Compensation Committee may delegate power and authority as it deems appropriate for any purpose to a subcommittee of not fewer than two members.
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Nominating and Corporate Governance Committee
.This committee held two meetings in 2010.2013. The purpose of the Nominating and Corporate Governance Committee is to evaluate the qualifications of director nominees, to recommend candidates for election as directors, to make recommendations concerning the size and composition of the Board, to develop and implement the Company’sour corporate governance policies and to assess the effectiveness of the Board.
Nominations and Nomination Process
It is the policy of the Nominating and Corporate Governance Committee to consider individuals recommended by shareholders for membership on the Board. If a shareholder desires to recommend an individual for membership on the Board, then that shareholder must provide a written notice (the “Recommendation Notice”) to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484, on or before January 15 for consideration by the committee for that year’s election of directors at the Annual Meeting of Shareholders.
In order for a recommendation to be considered by the Nominating and Corporate Governance Committee, the Recommendation Notice must contain, at a minimum, the following:
| · | the name and address, as they appear on the Company’s books, and telephone number of the shareholder making the recommendation, including information on the number of common shares owned and date(s) acquired, and if such person is not a shareholder of record or if such common shares are owned by an entity, reasonable evidence of such person’s ownership of such shares or such person’s authority to act on behalf of such entity; |
| · | the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience, and qualifications of that individual; |
| · | a written acknowledgment by the individual being recommended that he or she has consented to the recommendation and consents to the Company undertaking an investigation into that individual’s background, experience, and qualifications in the event that the Nominating and Corporate Governance Committee desires to do so; |
| · | any information not already provided about the person’s background, experience and qualifications necessary for |
| · | the disclosure of any relationship of the individual being recommended with |
| · | the disclosure of any relation of the individual being recommended with the shareholder, whether direct or indirect, and, if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at |
The Nominating and Corporate Governance Committee determines, and periodically reviews with the Board, the desired skills and characteristics for directors as well as the composition of the Board as a whole. This assessment considers the directors’ qualifications and independence, as well as diversity, age, skill, and experience in the context of the needs of the Board. At a minimum, directorsDirectors should share theour values of the Company and should possess the following characteristics: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; and the time available to devote to Board activities and the willingness to do so. The Nominating and Corporate Governance Committee does not have a formal policy specifically focusing on the consideration of diversity; however, diversity is one of the many factors that the Nominating and Corporate Governance Committee considers when identifying candidates and making its recommendations to the Board. In addition to the foregoing considerations, generally with respect to nominees recommended by shareholders, the Nominating and Corporate Governance Committee will evaluate such recommended nominees considering the additional information regarding them contained in the Recommendation Notices. When seeking candidates for the Board, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management and third-party search firms. Ultimately, the Nominating and Corporate Governance Committee will recommend to the Board prospective nominees who the Nominating and Corporate Governance Committee believes will be effective, in conjunction with the other members of the Board, in collectively serving the long-term interests of the Company’sour shareholders.
The Nominating and Corporate Governance Committee recommended to the Board each of the nominees identified in "Election of Directors" starting on page 5.
Compensation Committee Interlocks and Insider Participation
None of the members of the Board’s Compensation Committee have served as one of our officersan officer at any time or as an employee during 2010.2013. Additionally, no Compensation Committee interlocks existed during 2010.
Communications with the Board of Directors
The Board believes that it is important for interested parties to have a processthe ability to send communications to the Board. Accordingly, personsPersons who wish to communicate with the Board may do so by sending a letter to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board or certain specified individual directors (such as the lead independent director or non-management directors as a group). The Secretary will make copies of all such letters and circulate them to the appropriate director or directors. The directors are not spokespeople for the Company and responses or replies to any communication should not be expected.
Transactions with Related Persons
There were no reportable transactions involving related persons in 2010.
Review and Approval of Transactions with Related Persons
The Board has adopted a written statement of policy with respect to related party transactions. Under the policy, a related party transaction is a transaction required to be disclosed pursuant to Item 404 of Regulation S-K or any other similar transaction involving the Company or the Company’s subsidiaries and any Company employee, officer, director, 5% shareholder or an immediate family member of any of the foregoing if the dollar amount of the transaction or series of transactions exceeds $25,000. A related party transaction will not be prohibited merely because it is required to be disclosed or because it involves related parties. Pursuant to the policy, such transactions are presented to the Nominating and Corporate Governance Committee for evaluation and approval by the committee, or if the committee elects, by the full Board. If the transaction is determined to involve a related party, the Nominating and Corporate Governance Committee will either approve or disapprove the proposed transaction. Under the policy, in order to be approved, the proposed transaction must be on terms that are fair to the Company and are comparable to market rates, where applicable.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
2013 Overview
During 2013, the actions of the Compensation Committee (the “Committee”) and our pay-for-performance philosophy functioned such that compensation actually earned by our executives was aligned with our financial performance. Highlights from our 2013 performance are as follows:
| · | Net sales increased modestly from the prior year, which was below our expectations, due to weakness in the commercial vehicle market, market share loss of a significant customer and an unfavorable foreign currency devaluation; |
| · | Operating income for 2013 was significantly improved over the prior year; however, due to higher labor costs incurred in response to customer forecasted sales which did not transpire, premium freight, and weakness in the Brazilian economy, 2013 operating income was below our expectations; |
| · | Our Control Devices and Electronics segments posted strong results due to higher sales, a favorable change in mix of products and, for Control Devices, lower component costs; |
| · | Our PST segment faced weakness in the Brazilian economy and was impacted by an unfavorable change in foreign currency translation; |
| · | Our Wiring segment continued to face inefficiencies due to significant variability in our customers’ demand schedules which resulted in increased labor costs and premium freight; |
| · | Cash flows from operating activities was $43.7 million which was lower than the prior year and our expectations due to higher working capital levels; and |
| · | We increased our cash and cash equivalents balance to $62.8 million at 12/31/2013 from $44.6 million at 12/31/12 and had no borrowings outstanding on our credit facility at year end. |
As a result:
| · | Achievement under the annual incentive award was limited to the consolidated excluding PST free cash flow metric, as actual performance did not meet expectations for the year. As a result, Mr. Corey and Mr. Strickler did not receive a payout under the AIP. Additionally, at the Committee’s discretion, Mr. Adante did not receive a payout due to the underperformance of our Wiring segment. See “Annual Incentive Awards” below; and |
| · | Our 2013 earnings per share did not meet or exceed the long-term incentive plan established threshold for 2013, therefore, no amounts were earned for the 2013 performance period of the long-term incentive awards granted in 2011, 2012 or 2013. These awards typically have a three year vesting period with annual performance targets. See “Long-Term Incentive Awards” below. |
Compensation Philosophy and Objectives
Our Company’s compensation programs for executive officers are designed to attract, retain, motivate, and reward talented executives who will advance our strategic, operational and financial objectives and thereby enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:
| · | attract and retain talented executive officers by providing a compensation package that is competitive with that offered by similarly situated companies; |
| · | create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals; and |
| · | align total compensation with the objectives and strategies of our business and shareholders. |
We have a commitment to formulate the components of our compensation program under a pay-for-performance ideology. To this end, aphilosophy. A substantial portion of our executive officers’ annual and long-term compensation is tied to quantifiable measures of the Company’s financial performance and therefore maywill not be earned if targeted performance is not achieved.achieved, as demonstrated in the 2013 Overview, above.
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We established the various components of our 20102013 compensation payments and awards to meet our objectives as follows:
| Objective Addressed | ||||||||||||
Type of Compensation | Competitive Compensation | Performance Objective | Retention | |||||||||
| Base salary | ü | |||||||||||
| Annual incentive plan awards | ü | |||||||||||
| ü | ||||||||||||
| ü | ü | ü | ||||||||||
| Benefits and perquisites | ü | |||||||||||
Mix of Compensation
Our executive compensation is based on our pay-for-performance philosophy, which emphasizes executive performance measures that correlate closely with the achievement of both shorter-term performance objectives and longer-term shareholder value. To this end, a substantial portionA large part of our executive officers’ annual and long-term compensation is at-risk. The portion of compensation at-risk increases with the executive officer’s position level. This provides more upside potential and downside risk for more senior positions because these roles have greater influence on theour performance of the Company as a whole.
Total Target Compensation
Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the annual and long-term incentive compensation payout levels based upon the applicable performance achievement and, for long-term awards, the price of our common shares. The following charts show the weighting of each element of total target compensation for the CEO and the other Named Executive Officers (“NEOs”NEO”), excluding the one-time retention awards paid in 2010.. These charts illustratedemonstrate our pay-for-performance philosophy, as annual and long-term incentive compensation comprises the majority of total target compensation.
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Determination of Compensation
Based on the foregoing objectives, we have structured the Company’sour executive officers’ compensation to provide adequate competitive compensation to attract and retain executive officers, to motivate them to achieve our strategic goals and to reward the executive officers for achieving such goals. The Compensation Committee (the “Committee”) has retained the services ofhistorically retains an independent compensation consultant to assist the Committee to fulfill various aspects of its charter. During 2010,Committee. For 2013, the Committee retained Total Rewards Strategies LLC (“TRS”) to assist the Committee with the following: keeping it appraised about relevant trends and technical developments during its meetings; providing consulting advice regarding long-term incentive and change in control arrangements; providing peer group analysis; and providing market data for the CEO position and other executive officers. Additionally, recommendations and evaluations from the CEO are considered by the Committee when setting the compensation of the other executive officers. The annual evaluation of the CEO by the Board is considered by the Committee when establishing the compensation of the CEO.
Our executive officers are eligible to receive two forms of annual cash compensation – base salary and an annual incentive awardsaward – which together constitute an executive officer’s total annual cash compensation; however, in 2010, our NEO’s also received one-time cash payments in connection with retention awards made in 2009.compensation. Please note that “total annual cash compensation,” as discussed in this Compensation Discussion and Analysis, differs from the “Total Compensation” column of the Summary Compensation Table on page 26,23, which includes long-term incentive, perquisites and other forms of compensation valued on a basis consistent with financial statement reporting requirements. The levels of base salary and the annual incentive awardsaward for our executive officers are established annually under a program intended to maintain parity with the competitive market for executive officers in comparable positions. Typically, ourOur executive compensation levels are designed to be generally aligned with the 50th - 75thpercentile of competitive market levels (using our peer group) for each position.
There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviews competitive market paycompensation information provided by our compensation consultant and considers the Company’s historical compensation practices in determining the appropriate level and mix of incentive compensation for each executive position.
Compensation Benchmarking and Comparator Group
The comparator group is comprised of some of our direct competitors and a broader group of companies in the electronic and motor vehicle parts manufacturing industries that the Committee believes is representative of the labor market from which we recruit executive talent. Factors used to select the comparator group of companies include industry segment, revenue, profitability, number of employees and market capitalization. The Committee reviews and approves the comparator group annually.
| Accuride | Drew Industries | Modine Manufacturing | ||
| Altra Holdings | Encore Wire | Richardson Electronics | ||
| American Axle | EnPro Industries | Spartan Motors | ||
| AMETEK | Esterline Technologies | |||
| Standard Motor Products | ||||
| Gentex | Superior Industries International | |||
| Graco | ||||
| Commercial Vehicle Group | Kaydon | |||
| CTS | KEMET | |||
| Dana | Littelfuse | Wabash National | ||
| Dorman Products | Meritor |
In 2009,2012, the median sales revenue for the comparator group was $579$949 million while our revenue was $475$939 million.
TRS provides the Committee with the 50thand 75th percentiles of the comparator group for base salary, cash bonus, long-term incentives and total overall compensation. The Committee uses the 50th percentile as a primary reference point the 50th percentile when determining compensationbase salary and annual incentive targets forand the 75th percentile when determining long-term incentive targets; each element of pay and adjusts each element of payis adjusted to reflect competitive market conditions. The objectivegoal of the executive compensation program is to provide overall compensation between the 50th and 75th percentiles of pay practices of the comparator group of companies. Actual target pay for an individual may be more or less than the 50th percentilereferenced percentiles based on the Committee’s evaluation of the individual’s performance and potential. Consistent with the Committee’s philosophy of pay-for-performance, incentive payments can exceed target levels only if overall Company financial targets are exceeded and will fall below target levels if overall financial goals are not achieved.
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Consideration of Shareholder Advisory Vote on Executive Compensation
At our 2013 Annual Meeting of Shareholders, our shareholders approved our compensation advisory resolution with 74% of the votes cast approving the 2012 executive compensation described in our 2013 Proxy Statement. The Committee believes the shareholders vote affirms the Company’s approach to executive compensation and decided not to materially alter our compensation policies and programs for 2013.
Elements of Compensation
The principal elements of compensation of our executive officers for 20102013 were the following:
| · | Base salary; |
| · | Annual cash incentive |
| · | Long-term equity-based incentive awards; and |
| · | Benefits and |
Although all executive officers are eligible to participate in the same compensation and benefit programs, only Mr. Corey has compensation that is governed by an employment agreement. The terms of Mr. Corey’s employment agreement are described under “Employment Agreements.”
Base Salaries
We use base salary as the foundation of our compensation program for our executive officers. The annual cash incentive compensation awards and long-term incentive awards are based on a percentage of base compensation. The base salary is set at competitive market levels to attract and retain our executive officers. Base salary levels for our executive officers are set on the basis of the executive’s responsibilities, the current general industry and competitive market data, as discussed above. In each case, due consideration is given to personal factors, such as the individual’s experience, competencies, performance and contributions, and to external factors, such as salaries paid to similarly situated executive officers by like-sized companies. The Committee considers the evaluation and recommendation of the CEO in determining the base salary of the other executive officers. The Committee generally approves all executive officer base salaries for the next calendar year at its December meeting, which become effective January 1.1 of the following year. Executive officers base salaries remain fixed throughout the year unless a promotion or other change in responsibilities occurs. For 2010, to continue to manage costs in an uncertain economic environment, the Company delayed salary increases for employees for three months. The NEOs’ salary increases were delayed in line with this policy and became effective on April 1. The “Salary” column of the Summary Compensation Table lists the NEO’s base salary for 2010.
Annual Incentive Awards
Our executive officers participate in theour Annual Incentive Plan (“AIP”) which provides for annual cash payments based on the achievement of specific financial goals. We believeAs described above, the Company believes that a substantial portion of each executive’s overall compensation should be tied to quantifiable measures of financial performance. In January 2010,February 2013, the Committee approved the Company’s 20102013 AIP targets and metrics. The AIP targets are expressed as a percentage of the executive officer’s base salary. Per
For 2013, the structure of our competitive compensation review, it was determined that our existing percentages fell within competitive market targets; therefore, no changes to the AIP percentages were implemented for 2010.
| Weight | Target Metric | Achievement | ||||||||||
| Operating profit | 35 | % | $ | 13.4 million | 200 | % | ||||||
| Return on invested capital | 20 | % | 4.02 | % | 200 | % | ||||||
| Free cash flow | 20 | % | $ | (26.3) million | 200 | % | ||||||
| Sales growth | 25 | % | $ | 150.0 million | 200 | % | ||||||
| Weight | Target Metric | Achievement | ||||||||
| For Mr. Corey & Mr. Strickler: | ||||||||||
| Consolidated Metrics including PST: | ||||||||||
| Operating profit | 60 | % | $50.1 million | 0 | % | |||||
| Free cash flow | 40 | % | $26.1 million | 0 | % | |||||
| For Mr. Adante & Mr. Beaver: | ||||||||||
| Consolidated Metrics excluding PST: | ||||||||||
| Operating profit | 60 | % | $41.6 million | 0 | % | |||||
| Free cash flow | 40 | % | $20.2 million | 102 | % | |||||
| For Mr. Sloan: | ||||||||||
| Consolidated Metrics excluding PST: | ||||||||||
| Operating profit | 18 | % | $41.6 million | 0 | % | |||||
| Free cash flow | 12 | % | $20.2 million | 102 | % | |||||
| Divisional Metrics: | ||||||||||
| Operating income | 42 | % | $31.7 million | 103 | % | |||||
| Free cash flow | 28 | % | $19.0 million | 133 | % | |||||
The consolidated and divisional financial performance target metrics were based on the Company’s 2010our 2013 business plan and were intended to be aggressive but achievable based on industry conditions known at the time they were established. Under the 20102013 AIP, the minimum level for achievement for each metricthe consolidated and divisional financial metrics was based on 80% of target while the maximum level was based on 130% of target. The following table provides the 20102013 AIP target as a percent of base salary, as a dollar amount and the dollar achievement for theour NEOs:
Target (Percent of Base Salary) | Target | Achieved | ||||||||||
| John C. Corey | 80 | % | $ | 528,000 | $ | 1,056,000 | ||||||
| George E. Strickler | 55 | % | 189,200 | 378,400 | ||||||||
| Mark J. Tervalon | 45 | % | 135,315 | 270,630 | ||||||||
| Thomas A. Beaver | 45 | % | 126,585 | 253,170 | ||||||||
| Michael D. Sloan | 45 | % | 101,250 | 202,500 | ||||||||
| Target Percent of Base Salary | Target | Achieved | ||||||||||
| John C. Corey | 95 | % | $ | 665,000 | $ | - | ||||||
| George E. Strickler | 70 | % | 250,250 | - | ||||||||
| Thomas A. Beaver | 50 | % | 150,000 | 61,200 | ||||||||
| Richard P. Adante | 50 | % | 118,125 | - | ||||||||
| Michael D. Sloan | 55 | % | 133,870 | 124,151 | ||||||||
For each performance metric, specific levels of achievement for minimum, target, and maximum were set as described above. At target, 100% payout is achieved for each element of the plan; at maximum, 200% payout is achieved; and at minimum, 50% payout is achieved. Below the minimum target, no incentive compensation is earned. The AIP prorates incentive compensation earned between the minimum and maximum levels. At its discretion due to the underperformance of our Wiring segment, the Compensation Committee determined that no AIP would be paid to Mr. Adante. The payment of compensation under the 20102013 plan was subject to our overall performance and is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
Long-Term Incentive Awards
Under theour Long-Term Incentive Plan (“LTIP”), all executive officers may be granted share options, restricted common shares and other equity-based awards. Under theour Long-Term Cash Incentive Plan (“LTCIP”), all executive officers may be granted awards payable in cash. We believe that long-term incentive awards are a valuable motivation and retention tool and provide a long-term performance incentive to management. The long-term award isawards are calculated based on the fair value of the shares, shares equivalent or cash at the time of grant as a percentage of base salary. grant. In 2013, all long-term awards were granted under the LTIP.
The percentages are typically representative of the competitive market data obtained during the annual compensation review process described above. For 2010,2013, the Committee determinedreaffirmed that in order to remain competitive in the overall compensation packages, the long-term incentive awards should approximate the 75th percentile of market.comparative market data. The expected awards are subject to adjustment based on differences in the scope of the executive officer’s responsibilities, performance and ability.
Long-term equity-based incentives asare an important tool for retaining executive talent. For 2010,2013, we granted to our executive officers time-based restricted common shares under the LTIP equal to the equivalent of 50%60% of the fair value calculation discussed above.based on the 75th percentile of comparative market data. If the executive officer remains an employee at the end of the three year vesting period, the time-based restricted common shares will vest and no longer be subject to forfeiture on that date. The grant date fair value of the time-based restricted common shares is included in the “Stock Awards” column of the Summary Compensation Table. The time-based restricted common shares awarded in 20102013 are included in the “All Other Stock Awards” column of the Grants of Plan-Based Awards table.
Long-term equity-based incentives are also views long-term performance-based incentives as key to linking our executive officers’ overall compensation to shareholder return. For 2010,2013, we granted performance-based restricted common share awards under the LTIP to our executive officers targeting approximately 25%20% of the long-term incentive fair value calculation discussed above.based on the 75th percentile of comparative market data. The awards are subject to forfeiture based on our total shareholder return (“TSR”) over a three year period, when compared to TSR for a Peer Group of companies over the same period. If the Company’sour TSR is equal to the 50th percentile of the Peer Group TSR performance, the target number of common shares will vest and no longer be subject to forfeiture. If the Company’sour TSR is less than the 25th percentile (minimum) of the Peer Group TSR performance, all common shares will be forfeited and if the Company’sour TSR is equal to the 75th percentile (maximum) or greater of the Peer Group TSR performance, all common shares will vest and no longer be subject to forfeiture. Provided the executive officer remains employed, and depending on TSR performance, the number of common shares no longer subject to forfeiture prorates between the 25th and 75th percentile. The 20102013 Peer Group for TSR is comprised of a subset of companies from the executive compensation comparator group and is comprised of the following companies:
| Esterline Technologies | Modine Manufacturing | |
| American Axle & Manufacturing | Gentex | |
| Commercial Vehicle Group | ||
| Superior Industries International | ||
| Littelfuse | Titan International | |
| EnPro Industries | Meritor, Inc. |
In 2013 we also granted performance-based awards under theour LTCIP to our executive officers targeting approximately 25%20% of the long-term incentive fair value calculation discussed above.based on the 75th percentile of comparative market data. The awards are payable in cash equivalent to the number of shares earned at the fair market value of our common shares on the date of vesting (“Phantom Shares”). The awards are subject to forfeiture based on our actual annual earnings per share (“EPS”) over three annual performance over a three year period,periods, when compared to minimum, target and maximum annual EPS amounts over the same period. For the 20102013 grants, the annual performance period target EPS was or will be set using the Companyour Board approved annual budget.budget at the first regular meeting of each year in the performance period. Minimum EPS was or will beis generally established at 50%70% of target and maximum EPS was or will beis generally established at 150%130% of target for each annual performance period. The annual EPS targetmetric for the 20102013 performance period was established at a target of $(0.25).$0.94. The metrics are intended to be aggressive but achievable based on industry conditions known at the time they are set.established. Provided the executive officer remains employed, and depending on annual EPS performance, the number of Phantom Shares no longer subject to forfeiture prorates between minimum and maximum amounts. Actual EPS performance below the minimum level results in no earned sharesPhantom Shares for the annual performance period. The amount of cash paid out at the end of the service and performance period will equal the number of Phantom Shares earned times the current fair value of the Company common shares at the date of vesting. For the 20102013 annual performance period, achievement was atbelow the maximumminimum level. The performance–based phantomperformance-based restricted common shares and Phantom Shares awarded in 20102013 are included in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the Grants of Plan-Based Awards table.
The Committee’s practice has been to approve the long-term incentive awards under the LTIP and LTCIP at the first regular meeting of the calendar year. Awards in 20102013 were granted at the March 2010February 2013 meeting, the first regularly scheduled meeting. As a general practice, awards under the LTIP and LTCIPlong-term incentive plans are approved once a year unless a situation arises whereby a compensation package is approved for a newly hired or promoted executive officer and equity-based compensation is a component.
Perquisites
We provide executive officers with perquisites the Companywe and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Companyus to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites provided to executive officers.
Perquisites that are provided to executive officers are different by individual and could include an auto allowance, fully paid premiums for healthcare coverage, and country club dues. The incremental costs of the perquisites listed above for the NEOs are included in the “All Other Compensation” column of the Summary Compensation Table.
| 20 |
Employment Agreements
In early 2006, the Companywe entered into a negotiated employment agreement with Mr. Corey that provided for a minimum base salary of $525,000, participation in the annual incentive plan at a minimum target of 70% of base salary; a monthly car allowance; reimbursement of country club dues and a one-time initiation fee; reimbursement of Mr. Corey’s premium on his life insurance policy; participation in the Company’s customary benefit plans and reimbursement of out-of-pocket healthcare expenses not to exceed $5,000 per covered family member on an annual basis. In addition, if Mr. Corey is terminated by the Company without cause, the Company will be obligated to provide as severance the same compensation and benefits described below under “Potential Change in Control and Other Post-Employment Payments.”
The Company has not entered into an employment agreementsagreement with any other NEO.
Severance Plan
We adopted the Officers’ and Key Employees’ Severance Plan (the “Severance Plan”) in October 2009. The NEOs covered under the Severance Plan include Messrs.Mr. Strickler, Tervalon,Mr. Beaver, Mr. Sloan and Sloan.Mr. Adante. If a covered executive is terminated by the Companyus without cause, the Companywe will be obligated under the Severance Plan to pay the executive’s salary for 12 months (18 months in the case of the Chief Financial Officer, Mr. Strickler) and continue health and welfare benefits coverage over the same period of time. Mr. Corey’s severance protection is provided in his employment agreement as described below under “Potential Change in Control and Other Post-Employment Payments.”
Termination and Change in Control Payments
We have entered into change in control agreements with our NEOsMr. Corey, Mr. Strickler, Mr. Beaver, Mr. Sloan, Mr. Adante and certain other senior management employees. These agreements are designed to promote stability and continuity of senior management, both of which are in the best interest of Stoneridge and our shareholders. Our termination and change in control provisions for the NEOs are summarized below under “Potential Change in Control and Other Post-Employment Payments.”
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation in excess of $1.0 million that is paid to a company’s CEO and the other NEOs. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met.
The Committee believes that it is generally in the Company’sour best interest to attempt to structure performance-based compensation, including performance share award grants and annual incentive awards, to NEOs whose compensation may be subject to Section 162(m) of the Code in a manner that satisfies the statute’s requirements. Currently, all annualperformance-based compensation is designed to be deductible under Section 162(m); of the Code; however, in the future, the Committee may determine that it is appropriate to pay performance-based compensation, which is not deductible.
Accounting Treatment of Compensation
As one of many factors, the Committee considers the financial impact in determining the amount of and allocation of the different pay elements, including FASB ASC Topic 718 implicationsStock Compensation.
Share Ownership Guidelines
In February 2013, the Committee approved share ownership guidelines for our executive officers to enhance the linkage between the interests of our executive officers and those of our shareholders. These guidelines provide that the long-term incentives.
Compensation Committee Report
We have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on that review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
| The Compensation Committee | |
| Kim Korth, Chairwoman | |
| Jeffrey P. Draime | |
| Douglas C. Jacobs | |
| William M. Lasky |
| 22 |
Summary Compensation Table
The following table provides information regarding the compensation of our Chief Executive Officer, our Chief Financial Officer, and our three most highly compensated executive officers for 2010.
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||
| John C. Corey | 2010 | $ | 655,000 | $ | 1,296,116 | $ | 1,056,000 | $ | 707,557 | $ | 3,714,673 | |||||||||||
| President & Chief | 2009 | 615,439 | 304,372 | 204,800 | 71,799 | 1,196,410 | ||||||||||||||||
| Executive Officer | 2008 | 640,000 | 1,310,709 | 480,768 | 85,679 | 2,517,156 | ||||||||||||||||
| George E. Strickler | 2010 | 340,688 | 432,500 | 378,400 | 353,335 | 1,504,923 | ||||||||||||||||
| Executive Vice President, | 2009 | 324,430 | 87,907 | 72,765 | 27,290 | 512,392 | ||||||||||||||||
| Chief Financial Officer & Treasurer | 2008 | 330,750 | 379,104 | 194,359 | 35,325 | 939,538 | ||||||||||||||||
| Mark J. Tervalon | 2010 | 298,525 | 289,948 | 270,630 | 153,199 | 1,012,302 | ||||||||||||||||
| Vice President & President | 2009 | 283,987 | 53,091 | 52,560 | 21,995 | 411,633 | ||||||||||||||||
| of the Stoneridge Electronics Division | 2008 | 292,000 | 228,324 | 157,943 | 22,368 | 700,635 | ||||||||||||||||
| Thomas A. Beaver | 2010 | 279,600 | 238,740 | 253,170 | 154,508 | 926,018 | ||||||||||||||||
| Vice President of Global | 2009 | 269,221 | 42,244 | 49,410 | 20,985 | 381,860 | ||||||||||||||||
| Sales & Systems Engineering | 2008 | 274,500 | 182,013 | 151,565 | 30,902 | 638,980 | ||||||||||||||||
| Michael D. Sloan | 2010 | 219,790 | 166,080 | 202,500 | 105,312 | 693,682 | ||||||||||||||||
| Vice President & President | 2009 | 203,500 | 22,769 | 36,630 | 3,291 | 266,190 | ||||||||||||||||
| of the Stoneridge Control Devices Division | 2008 | 202,972 | 51,101 | 61,813 | 11,558 | 327,444 | ||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||
| John C. Corey | 2013 | $ | 700,000 | $ | 2,119,624 | $ | - | $ | 114,247 | $ | 2,933,871 | |||||||||||||
| President & Chief Executive | 2012 | 700,000 | 1,615,216 | 156,757 | 90,164 | 2,562,137 | ||||||||||||||||||
| Officer | 2011 | 700,000 | 2,088,904 | - | 74,949 | 2,863,853 | ||||||||||||||||||
| George E. Strickler | 2013 | 357,500 | 663,366 | - | 37,710 | 1,058,576 | ||||||||||||||||||
| Executive Vice President, | 2012 | 357,500 | 497,982 | 57,820 | 32,260 | 945,562 | ||||||||||||||||||
| Chief Financial Officer & Treasurer | 2011 | 357,500 | 774,916 | - | 31,801 | 1,164,217 | ||||||||||||||||||
| Thomas A. Beaver | 2013 | 300,000 | 402,490 | 61,200 | 29,299 | 792,989 | ||||||||||||||||||
| Vice President & President | 2012 | 287,000 | 359,094 | 111,094 | 27,287 | 784,475 | ||||||||||||||||||
| of Global Sales | 2011 | 287,000 | 343,764 | 77,490 | 25,314 | 733,568 | ||||||||||||||||||
| Michael D. Sloan | 2013 | 243,400 | 285,660 | 124,151 | 9,210 | 662,421 | ||||||||||||||||||
| Vice President & President | 2012 | 234,000 | 257,200 | 20,378 | 11,469 | 523,047 | ||||||||||||||||||
| of the Control Devices Division | 2011 | 234,000 | 277,959 | - | 10,219 | 522,178 | ||||||||||||||||||
| Richard P. Adante(4) | 2013 | 236,250 | 412,012 | - | 13,589 | 661,851 | ||||||||||||||||||
| Vice President of Operations | 2012 | 225,000 | 334,360 | 41,176 | 8,909 | 609,445 | ||||||||||||||||||
| 2011 | 140,788 | - | - | 2,655 | 143,443 | |||||||||||||||||||
| (1) | The amounts included in the “Stock Awards” column represent the grant date fair value of restricted common share and phantom share awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see |
Time Based | Target Performance Based | Maximum Performance Based | ||||||||||
| Mr. Corey | $ | 628,968 | $ | 681,741 | $ | 1,022,612 | ||||||
| Mr. Strickler | 182,013 | 197,091 | 295,637 | |||||||||
| Mr. Tervalon | 109,854 | 118,470 | 177,705 | |||||||||
| Mr. Beaver | 87,237 | 94,776 | 142,164 | |||||||||
| Mr. Sloan | 47,388 | 50,619 | 75,929 | |||||||||
| (2) | The amount shown for each NEO in the “Non-Equity Incentive Plan Compensation” column is attributable to an annual incentive award earned under the AIP in the fiscal year listed. |
| (3) | The amounts shown for |
Auto Allowance | Life Insurance | Gross-Up on Life Insurance | Healthcare Costs | Gross-Up on Healthcare Costs | Group Term Life Insurance | Club Dues | Retention Award | Health Insurance Premium | Total | |||||||||||||||||||||||||||||||
| Mr. Corey | $ | 14,400 | $ | 14,056 | $ | 9,900 | $ | 7,917 | $ | 5,576 | $ | 7,524 | $ | 5,174 | $ | 640,000 | $ | 3,010 | $ | 707,557 | ||||||||||||||||||||
| Mr. Strickler | 9,000 | - | - | - | - | 4,847 | 5,000 | 330,750 | 3,738 | 353,335 | ||||||||||||||||||||||||||||||
| Mr. Tervalon | - | - | - | - | - | 240 | 1,374 | 146,000 | 5,585 | 153,199 | ||||||||||||||||||||||||||||||
| Mr. Beaver | 14,400 | - | - | - | - | 1,032 | - | 137,250 | 1,826 | 154,508 | ||||||||||||||||||||||||||||||
| Mr. Sloan | - | - | - | - | - | 552 | - | 101,750 | 3,010 | 105,312 | ||||||||||||||||||||||||||||||
| Auto Allowance | 401(k) Match | Group Term Life Insurance | Club Dues | Health Insurance Premium | Life Insurance Including Gross-up | Healthcare Costs Including Gross-up | Relocation Including Gross-up | Total | ||||||||||||||||||||||||||||
| Mr. Corey | $ | 14,400 | $ | 7,650 | $ | 14,478 | $ | - | $ | 2,120 | $ | 22,436 | $ | 13,617 | $ | 39,546 | $ | 114,247 | ||||||||||||||||||
| Mr. Strickler | 9,000 | 7,650 | 10,135 | 5,000 | 5,925 | - | - | - | 37,710 | |||||||||||||||||||||||||||
| Mr. Beaver | 14,400 | 7,650 | 4,356 | - | 2,893 | - | - | - | 29,299 | |||||||||||||||||||||||||||
| Mr. Sloan | - | 5,458 | 1,632 | - | 2,120 | - | - | - | 9,210 | |||||||||||||||||||||||||||
| Mr. Adante | - | 7,142 | 6,447 | - | - | - | - | - | 13,589 | |||||||||||||||||||||||||||
| (4) | Mr. Adante joined our Company in May 2011. His annual salary for 2011 was $225,000. |
Grants of Plan-Based Awards for 2010
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of | Grant Date Fair Value of | |||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Shares of Stock or Units (#)(3) | Stock and Option Awards ($)(4) | |||||||||||||||||||||||||
| John C. Corey | $ | 264,000 | $ | 528,000 | $ | 1,056,000 | ||||||||||||||||||||||||||||
| 2/14/2010 | 32,850 | 65,700 | 98,550 | 121,600 | $ | 1,296,116 | ||||||||||||||||||||||||||||
| 27,950 | 55,900 | 83,850 | 386,828 | |||||||||||||||||||||||||||||||
| George E. Strickler | 94,600 | 189,200 | 378,400 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 10,950 | 21,900 | 32,850 | 40,600 | 432,500 | |||||||||||||||||||||||||||||
| 9,350 | 18,700 | 28,050 | 129,404 | |||||||||||||||||||||||||||||||
| Mark J. Tervalon | 67,658 | 135,315 | 270,630 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 7,350 | 14,700 | 22,050 | 27,200 | 289,948 | |||||||||||||||||||||||||||||
| 6,250 | 12,500 | 18,750 | 86,500 | |||||||||||||||||||||||||||||||
| Thomas A. Beaver | 63,293 | 126,585 | 253,170 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 6,050 | 12,100 | 18,150 | 22,400 | 238,740 | |||||||||||||||||||||||||||||
| 5,150 | 10,300 | 15,450 | 71,276 | |||||||||||||||||||||||||||||||
| Michael D. Sloan | 50,625 | 101,250 | 202,500 | |||||||||||||||||||||||||||||||
| 2/14/2010 | 4,200 | 8,400 | 12,600 | 15,600 | 166,080 | |||||||||||||||||||||||||||||
| 3,600 | 7,200 | 10,800 | 49,824 | |||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) (3) | All Other Stock Awards: Number of Shares of | Grant Date Fair Value of Stock and Option | |||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Stock or Units(#)(4) | Awards ($)(5) | |||||||||||||||||||||||||
| John C. Corey | $ | 332,500 | $ | 665,000 | $ | 1,330,000 | ||||||||||||||||||||||||||||
| 2/4/13 | 33,400 | 66,800 | 100,200 | 200,300 | $ | 1,713,480 | ||||||||||||||||||||||||||||
| 2/4/13 | 33,400 | 66,800 | 100,200 | 406,144 | ||||||||||||||||||||||||||||||
| George E. Strickler | 125,125 | 250,250 | 500,500 | |||||||||||||||||||||||||||||||
| 2/4/13 | 10,450 | 20,900 | 31,350 | 62,700 | 536,294 | |||||||||||||||||||||||||||||
| 2/4/13 | 10,450 | 20,900 | 31,350 | 127,072 | ||||||||||||||||||||||||||||||
| Thomas A. Beaver | 75,000 | 150,000 | 300,000 | |||||||||||||||||||||||||||||||
| 2/4/13 | 6,350 | 12,700 | 19,050 | 38,000 | 325,274 | |||||||||||||||||||||||||||||
| 2/4/13 | 6,350 | 12,700 | 19,050 | 77,216 | ||||||||||||||||||||||||||||||
| Michael D. Sloan | 66,935 | 133,870 | 267,740 | |||||||||||||||||||||||||||||||
| 2/4/13 | 4,500 | 9,000 | 13,500 | 27,000 | 230,940 | |||||||||||||||||||||||||||||
| 2/4/13 | 4,500 | 9,000 | 13,500 | 54,720 | ||||||||||||||||||||||||||||||
| Richard P. Adante | 59,063 | 118,125 | 236,250 | |||||||||||||||||||||||||||||||
| 2/4/13 | 6,500 | 13,000 | 19,500 | 38,900 | 332,972 | |||||||||||||||||||||||||||||
| 2/4/13 | 6,500 | 13,000 | 19,500 | 79,040 | ||||||||||||||||||||||||||||||
___________________
| (1) | The amounts shown reflect awards granted under |
| (2) | The amounts shown reflect grants |
| (3) | The amounts shown reflect grants of performance-based phantom shares |
| The amounts shown reflect grants of time-based restricted common shares |
| The amounts included in “Fair Value of Awards” column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see |
| 24 |
Outstanding Equity Awards at Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||
| John C. Corey | 10,000 | $ | 15.725 | 5/10/2014 | 58,400 | (2) | $ | 922,136 | 94,950 | (5) | $ | 1,499,261 | ||||||||||||||||
| 170,040 | (3) | 2,684,932 | 98,550 | (6) | 1,556,105 | |||||||||||||||||||||||
| 121,600 | (4) | 1,920,064 | 83,850 | (7) | 1,323,992 | |||||||||||||||||||||||
| George E. Strickler | - | - | - | 16,900 | (2) | 266,851 | 27,450 | (5) | 433,436 | |||||||||||||||||||
| 49,110 | (3) | 775,447 | 32,850 | (6) | 518,702 | |||||||||||||||||||||||
| 40,600 | (4) | 641,074 | 28,050 | (7) | 442,910 | |||||||||||||||||||||||
| Mark J. Tervalon | 4,000 | 10.385 | 2/4/2013 | 10,200 | (2) | 161,058 | 16,500 | (5) | 260,535 | |||||||||||||||||||
| 29,660 | (3) | 468,331 | 22,050 | (6) | 348,170 | |||||||||||||||||||||||
| 27,200 | (4) | 429,488 | 18,750 | (7) | 296,063 | |||||||||||||||||||||||
| Thomas A. Beaver | 20,000 | 10.385 | 2/4/2013 | 8,100 | (2) | 127,899 | 13,200 | (5) | 208,428 | |||||||||||||||||||
| 23,600 | (3) | 372,644 | 18,150 | (6) | 286,589 | |||||||||||||||||||||||
| 22,400 | (4) | 353,696 | 15,450 | (7) | 243,956 | |||||||||||||||||||||||
| Michael D. Sloan | - | - | - | 4,400 | (2) | 69,476 | 7,050 | (5) | 111,320 | |||||||||||||||||||
| 12,720 | (3) | 200,849 | 12,600 | (6) | 198,954 | |||||||||||||||||||||||
| 15,600 | (4) | 246,324 | 10,800 | (7) | 170,532 | |||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||
| Incentive | Equity | |||||||||||||||||||||||||||
| Plan | Incentive | |||||||||||||||||||||||||||
| Awards: | Plan Awards: | |||||||||||||||||||||||||||
| Number of | Market or | |||||||||||||||||||||||||||
| Number | Market | Unearned | Payout Value | |||||||||||||||||||||||||
| Number of | of Shares | Value of | Shares, | of Unearned | ||||||||||||||||||||||||
| Securities | or Units | Shares or | Units | Shares, Units | ||||||||||||||||||||||||
| Underlying | of Stock | Units of | or Other | or Other | ||||||||||||||||||||||||
| Unexercised | Option | Option | That | Stock That | Rights That | Rights That | ||||||||||||||||||||||
| Options | Exercise | Expiration | Have Not | Have Not | Have Not | Have Not | ||||||||||||||||||||||
| Name | Exercisable (#) | Price ($) | Date | Vested (#) | Vested ($)(1) | Vested (#) | Vested ($)(1) | |||||||||||||||||||||
| John C. Corey | 10,000 | $ | 15.725 | 5/10/2014 | 74,400 | (2) | $ | 948,600 | 74,400 | (5) | $ | 948,600 | ||||||||||||||||
| 94,200 | (3) | 1,201,050 | 94,200 | (6) | 1,201,050 | |||||||||||||||||||||||
| 200,300 | (4) | 2,553,825 | 100,200 | (7) | 1,277,550 | |||||||||||||||||||||||
| 100,200 | (8) | 1,277,550 | ||||||||||||||||||||||||||
| George E. Strickler | - | - | - | 27,600 | (2) | 351,900 | 27,600 | (5) | 351,900 | |||||||||||||||||||
| 29,000 | (3) | 369,750 | 29,100 | (6) | 371,025 | |||||||||||||||||||||||
| 62,700 | (4) | 799,425 | 31,350 | (7) | 399,713 | |||||||||||||||||||||||
| 31,350 | (8) | 399,713 | ||||||||||||||||||||||||||
| Thomas A. Beaver | - | - | - | 12,200 | (2) | 155,550 | 12,300 | (5) | 156,825 | |||||||||||||||||||
| 20,900 | (3) | 266,475 | 21,000 | (6) | 267,750 | |||||||||||||||||||||||
| 38,000 | (4) | 484,500 | 19,050 | (7) | 242,888 | |||||||||||||||||||||||
| 19,050 | (8) | 242,888 | ||||||||||||||||||||||||||
| Michael D. Sloan | - | - | - | 9,900 | (2) | 126,225 | 9,900 | (5) | 126,225 | |||||||||||||||||||
| 15,000 | (3) | 191,250 | 15,000 | (6) | 191,250 | |||||||||||||||||||||||
| 27,000 | (4) | 344,250 | 13,500 | (7) | 172,125 | |||||||||||||||||||||||
| 13,500 | (8) | 172,125 | ||||||||||||||||||||||||||
| Richard P. Adante | - | - | - | 19,500 | (3) | 248,625 | 19,500 | (6) | 248,625 | |||||||||||||||||||
| 38,900 | (4) | 495,975 | 19,500 | (7) | 248,625 | |||||||||||||||||||||||
| 19,500 | (8) | 248,625 | ||||||||||||||||||||||||||
___________________
| (1) | Based on the closing price of |
| (2) | These time-based restricted common shares vested on |
| (3) | These time-based restricted common shares vest on |
| (4) | These time-based restricted common shares vest on February |
| (5) | These performance-based restricted common shares were scheduled to vest on |
| (6) | These performance-based restricted common shares are scheduled to vest on February |
| (7) | These |
| (8) | These performance-based phantom shares are scheduled to vest on February 4, 2016 subject to achievement of specified financial performance metrics. |
Option Exercises and Stock Vested for 2010
| Stock Awards | ||||||||
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
| John C. Corey | 52,400 | $ | 420,510 | |||||
| George E. Strickler | 16,500 | 134,850 | ||||||
| Mark J. Tervalon | 9,500 | 76,238 | ||||||
| Thomas A. Beaver | 7,750 | 62,194 | ||||||
| Michael D. Sloan | 5,000 | 40,125 | ||||||
| Name | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||
| John C. Corey | $ | 22,115 | $ | 535,678 | $ | - | ||||||
| George E. Strickler | - | - | - | |||||||||
| Mark J. Tervalon | 473 | 11,469 | - | |||||||||
| Thomas A. Beaver | - | - | - | |||||||||
| Michael D. Sloan | - | - | - | |||||||||
| Stock Awards(1) | ||||||||
| Number of Shares | Value Realized | |||||||
| Name | Acquired on Vesting (#) | on Vesting ($) | ||||||
| John C. Corey | 121,600 | $ | 784,928 | |||||
| George E. Strickler | 40,600 | 262,073 | ||||||
| Thomas A. Beaver | 22,400 | 144,592 | ||||||
| Michael D. Sloan | 15,600 | 100,698 | ||||||
| Richard P. Adante | - | - | ||||||
___________________
| (1) | The number of shares includes time-based restricted common shares from the 2010 restricted share grant that vested and were no longer subject to forfeiture on February 14, 2013. The value realized on vesting was based on the average of the high and low market values as recorded on the date of vesting, February 14, 2013. |
Potential Change in Control and Other Post-Employment Payments
In July 2007,December 2011, we entered into ana 2011 Amended and Restated Change in Control Agreement (the “CIC Agreement”), eliminating the excise tax gross-up payment, with each NEOcertain NEOs and certain other senior management employees. Our change in control agreements were designed to provide for continuity of management in the event of change in control of the Company. We think it is important for our executives to be able to react neutrally to a potential change in control and not be influenced by personal financial concerns. We believe our arrangements are consistent with market practice. For our NEOs covered under a CIC Agreement we set the level of benefits, at two times base salary and average incentive award (described in detail below)as described below, to remain competitive with our select peer group. Finally, allAll payments under the CIC Agreement are conditioned on a non-compete, non-solicitation and non-disparagement agreement. The CIC Agreements replaced and superseded change in control agreements we previously entered into with these employees. The Committee determined that amending and restating prior agreements was necessary to comply with recently adopted final regulation under Section 409A of the Code, to add a non-competition clause for our protection, to address ambiguity in the prior agreements and to add a conditional gross up of any excise tax imposed under Section 280G of the Internal Revenue Code. In December 2008, we amended the CIC Agreement to comply with the requirements of Revenue Ruling 2008-13, which requires that all payments to an executive be based on actual results for performance-based payments.
We believe that the CIC Agreements should compensate executives displaced by a change in control and not serve as an incentive to increase personal wealth. Therefore, our CIC Agreements are “double trigger” arrangements. In order for the executives to receive the payments and benefits set forth in the agreement, both of the following must occur:
| · | a change in control of the Company; and |
| · | a triggering event: |
| · | the Company separates NEO from service, other than in the case of a termination for cause, within two years of the change in control; or |
| · | NEO separates from service for good reason (defined as material reduction in NEO’s title, responsibilities, power or authority, or assignment of duties that are materially inconsistent to previous duties, or material reduction in NEO’s compensation and benefits, or require NEO to work from any location more than 100 miles from previous location) within two years of the change in control. |
If the events listed above occur and the executive delivers a release to the Company, the Companywe will be obligated to provide the following to the executive:
| · | three times the greater of the CEO or CFO’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control; |
| · | three times the greater of the CEO or CFO’s maximum annual incentive compensation he would have been entitled to at the time of a triggering event or at the occurrence of a change in control, in each case based upon the assumption that personal and company targets or performance goals were achieved in that year at the maximum level; |
| · | an amount equal to the pro rata amount of annual incentive compensation the CEO or CFO would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and |
| · | continued life and health insurance benefits for twenty-four months following termination. |
If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to Mr. Beaver, Mr. Sloan and Mr. Adante:
| · | two times the greater of the NEO’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control; |
| · | two times the greater of the NEO’s average annual incentive award over the last three completed fiscal years or the last five completed fiscal years; |
| · | an amount equal to the pro rata amount of annual incentive compensation the NEO would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and |
| · | continued life and health insurance benefits for twenty-four months following |
Upon a change in control as defined in theour LTIP, the restricted common shares included on the “Outstanding Equity Awards at Year-End” table that are not performance-based vest and are no longer subject to forfeiture; the performance-based restricted common shares and phantom shares included on the “Outstanding Equity Awards at Year End” table vest and are no longer subject to forfeiture based on target achievement levels.
In October 2009, the Companywe adopted the Officers’ and Key Employees’ Severance Plan (the “Severance Plan”). The named executive officersNEOs covered under the Severance Plan include Messrs.Mr. Strickler, Tervalon,Mr. Beaver, Mr. Sloan and Sloan.Mr. Adante. If we terminate a covered executive is terminated by the Company without cause, the Companywe will be obligated under the Severance Plan to pay the executive’s salary for 12 months (18 months in the case of the Chief Financial Officer, Mr. Strickler) and continue health and welfare benefits coverage over the same period of time. Mr. Corey’s severance protection is provided in his employment agreement as described above.
No severance is payable if the NEO’s employment is terminated for “cause,” if they resign, or upon death.
Value of Payment Presuming Hypothetical December 31, 20102013 Termination Date
Upon resignation, no payments are due to any NEO in the table below. Assuming the events described in the table below occurred on December 31, 2010,2013, each NEO would be eligible for the following payments and benefits:
| Change in | ||||||||||||||||||||
| Control and | ||||||||||||||||||||
| NEO Resigns | ||||||||||||||||||||
| Non- | for Good | |||||||||||||||||||
| Termination | Reason or is | |||||||||||||||||||
| Termination | Change in | Terminated | ||||||||||||||||||
| Without Cause | Control | Without Cause | Disability | Death | ||||||||||||||||
| John C. Corey | ||||||||||||||||||||
| Base Salary | $ | 1,400,000 | $ | - | $ | 2,100,000 | $ | 175,000 | $ | - | ||||||||||
| Annual Incentive Award | - | - | 3,990,000 | - | - | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 2,440,057 | 4,703,475 | 4,703,475 | 2,440,057 | 2,440,057 | |||||||||||||||
| Unvested and Accelerated Performance Restricted Common and Phantom Shares | 1,626,952 | 3,136,500 | 3,136,500 | 1,073,717 | 1,073,717 | |||||||||||||||
| Health & Welfare Benefits | 66,835 | - | 66,835 | - | - | |||||||||||||||
| Total | $ | 5,533,844 | $ | 7,839,975 | $ | 13,996,810 | $ | 3,688,774 | $ | 3,513,774 | ||||||||||
| George E. Strickler | ||||||||||||||||||||
| Base Salary | $ | 536,250 | $ | - | $ | 1,072,500 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 1,501,500 | - | - | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 812,596 | 1,521,075 | 1,521,075 | 812,596 | 812,596 | |||||||||||||||
| Unvested and Accelerated Performance Restricted Common and Phantom Shares | 542,233 | 1,014,900 | 1,014,900 | 352,539 | 352,539 | |||||||||||||||
| Health & Welfare Benefits | 24,288 | - | 32,384 | - | - | |||||||||||||||
| Total | $ | 1,915,367 | $ | 2,535,975 | $ | 5,142,359 | $ | 1,165,135 | $ | 1,165,135 | ||||||||||
| Thomas A. Beaver | ||||||||||||||||||||
| Base Salary | $ | 300,000 | $ | - | $ | 600,000 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 220,946 | - | - | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 463,641 | 906,525 | 906,525 | 463,641 | 463,641 | |||||||||||||||
| Unvested and Accelerated Performance Restricted Common and Phantom Shares | 310,699 | 606,900 | 606,900 | 204,823 | 204,823 | |||||||||||||||
| Health & Welfare Benefits | 8,403 | - | 16,805 | - | - | |||||||||||||||
| Total | $ | 1,082,743 | $ | 1,513,425 | $ | 2,351,176 | $ | 668,464 | $ | 668,464 | ||||||||||
| Michael D. Sloan | ||||||||||||||||||||
| Base Salary | $ | 243,400 | $ | - | $ | 486,800 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 153,464 | - | - | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 345,678 | 661,725 | 661,725 | 345,678 | 345,678 | |||||||||||||||
| Unvested and Accelerated Performance Restricted Common and Phantom Shares | 230,444 | 441,150 | 441,150 | 150,284 | 150,284 | |||||||||||||||
| Health & Welfare Benefits | 18,351 | - | 35,745 | - | - | |||||||||||||||
| Total | $ | 837,873 | $ | 1,102,875 | $ | 1,778,884 | $ | 495,962 | $ | 495,962 | ||||||||||
| Richard P. Adante | ||||||||||||||||||||
| Base Salary | $ | 236,250 | $ | - | $ | 274,500 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 82,352 | - | - | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 306,931 | 744,600 | 744,600 | 306,931 | 306,931 | |||||||||||||||
| Unvested and Accelerated Performance Restricted Common and Phantom Shares | 204,870 | 497,250 | 497,250 | 153,079 | 153,079 | |||||||||||||||
| Health & Welfare Benefits | 1,065 | - | 2,221 | - | - | |||||||||||||||
| Total | $ | 749,116 | $ | 1,241,850 | $ | 1,600,923 | $ | 460,010 | $ | 460,010 | ||||||||||
| 28 |
Termination Without Cause | Non-Termination Change in Control | Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause | Disability | Death | ||||||||||||||||
| John C. Corey | ||||||||||||||||||||
| Base Salary | $ | 1,320,000 | $ | - | $ | 1,320,000 | $ | 165,000 | $ | - | ||||||||||
| Annual Incentive Award | 1,161,045 | - | 1,161,045 | - | - | |||||||||||||||
| Long-term Incentive Award | 478,884 | 783,628 | 783,628 | 478,884 | 478,884 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 3,071,692 | 5,527,132 | 5,527,132 | 1,482,155 | 1,482,155 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 560,011 | 2,919,571 | 2,919,571 | 1,503,998 | 1,503,998 | |||||||||||||||
| Health & Welfare Benefits | 55,937 | - | 55,937 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 1,626,114 | - | - | |||||||||||||||
| Total | $ | 6,647,569 | $ | 9,230,331 | $ | 13,393,427 | $ | 3,630,037 | $ | 3,465,037 | ||||||||||
| George E. Strickler | ||||||||||||||||||||
| Base Salary | $ | 516,000 | $ | - | $ | 688,000 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 430,349 | - | - | |||||||||||||||
| Long-term Incentive Award | 138,298 | 226,306 | 226,306 | 138,298 | 138,298 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 912,867 | 1,683,372 | 1,683,372 | 453,831 | 453,831 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 186,972 | 930,031 | 930,031 | 459,884 | 459,884 | |||||||||||||||
| Health & Welfare Benefits | 17,953 | - | 23,938 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 465,827 | - | - | |||||||||||||||
| Total | $ | 1,772,090 | $ | 2,839,709 | $ | 4,447,823 | $ | 1,052,013 | $ | 1,052,013 | ||||||||||
| Mark J. Tervalon | ||||||||||||||||||||
| Base Salary | $ | 300,700 | $ | - | $ | 601,400 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 320,755 | - | - | |||||||||||||||
| Long-term Incentive Award | 83,544 | 136,709 | 136,709 | 83,544 | 83,544 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 563,561 | 1,058,877 | 1,058,877 | 590,546 | 590,546 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 125,259 | 603,178 | 603,178 | 289,308 | 289,308 | |||||||||||||||
| Health & Welfare Benefits | 17,094 | - | 34,189 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 280,702 | - | - | |||||||||||||||
| Total | $ | 1,090,158 | $ | 1,798,764 | $ | 3,035,810 | $ | 963,398 | $ | 963,398 | ||||||||||
| Thomas A. Beaver | ||||||||||||||||||||
| Base Salary | $ | 281,300 | $ | - | $ | 562,600 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 302,763 | - | - | |||||||||||||||
| Long-term Incentive Award | 66,447 | 108,731 | 108,731 | 66,447 | 66,447 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 451,673 | 854,239 | 854,239 | 481,595 | 481,595 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 103,159 | 492,648 | 492,648 | 234,394 | 234,394 | |||||||||||||||
| Health & Welfare Benefits | 6,293 | - | 12,586 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | - | - | - | |||||||||||||||
| Total | $ | 908,872 | $ | 1,455,618 | $ | 2,333,567 | $ | 782,436 | $ | 782,436 | ||||||||||
| Michael D. Sloan | ||||||||||||||||||||
| Base Salary | $ | 225,000 | $ | - | $ | 450,000 | $ | - | $ | - | ||||||||||
| Annual Incentive Award | - | - | 200,629 | - | - | |||||||||||||||
| Long-term Incentive Award | 35,830 | 58,631 | 58,631 | 35,830 | 35,830 | |||||||||||||||
| Unvested and Accelerated Restricted Common Shares | 260,188 | 516,649 | 516,649 | 315,800 | 315,800 | |||||||||||||||
| Unvested and Accelerated Performance Common Shares | 71,845 | 320,537 | 320,537 | 141,935 | 141,935 | |||||||||||||||
| Health & Welfare Benefits | 12,830 | - | 25,660 | - | - | |||||||||||||||
| Tax Gross-Up | - | - | 138,711 | - | - | |||||||||||||||
| Total | $ | 605,693 | $ | 895,817 | $ | 1,710,817 | $ | 493,565 | $ | 493,565 | ||||||||||
DIRECTORS’ COMPENSATION
Cash Compensation
For 2013, the Board approved that each non-employee director of the Company receives areceive an annual retainer of $35,000 per year$70,000 for serving as aour director of the Company, $1,500 forand attending each meeting of the Board and $750 for participating in each telephonic meeting of the Board.Committee meetings. The non-executive Chairman receives twice the annual retainer and Board meeting fees thanof the other directors. Committee members receive $1,000 for attending such meetings and $500 for participating in telephonic meetings. The Audit Committee, chairman receives additional compensation of $10,000 per year and the Compensation Committee, and Nominating and Corporate Governance Committee chairperson each receives additional compensation of $10,000, $7,500, and $5,000, respectively, per year. Beginning in 2009, directors were paid an additional cash award granted to supplement the fair value of the annual grant of restricted common shares due to the depressed market value of our common shares and the number of shares available under the Directors’ Restricted Shares Plan at the date of grant. The final payment of this award occurred in 2010. Additionally in 2010, two members of a Board received additional compensation of $70,000 each in connection with their work on a special project. Directors who are also employees of the Company are not paid additional compensation for serving as a director. The Company reimbursesWe reimburse out-of-pocket expenses incurred by all directors in connection with attending Board and committeeCommittee meetings.
Equity Compensation
Pursuant to the Directors’ Restricted Shares Plan,non-employee directors are eligible to receive awards of restricted common shares. In 2010, Mr. Lasky was granted 15,880 restricted common shares and2013 all other directors were granted 7,94011,510 restricted common shares. The restrictions for those common shares lapsed on February 14, 2011.
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | |||||||||
| Jeffrey P. Draime | $ | 69,361 | $ | 54,945 | $ | 124,306 | ||||||
| Douglas C. Jacobs | 83,361 | 54,945 | 138,306 | |||||||||
| Ira C. Kaplan | 67,233 | 54,945 | 122,178 | |||||||||
| Kim Korth | 143,611 | 54,945 | 198,556 | |||||||||
| William M. Lasky | 143,222 | 109,890 | 253,112 | |||||||||
| Paul J. Schlather | 136,483 | 54,945 | 191,428 | |||||||||
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
| Jeffrey P. Draime | $ | 70,000 | $ | 69,981 | $ | 139,981 | ||||||
| Douglas C. Jacobs | 80,000 | 69,981 | 149,981 | |||||||||
| Ira C. Kaplan | 70,000 | 69,981 | 139,981 | |||||||||
| Kim Korth | 77,500 | 69,981 | 147,481 | |||||||||
| William M. Lasky | 145,000 | 69,981 | 214,981 | |||||||||
| George S. Mayes, Jr. | 70,000 | 69,981 | 139,981 | |||||||||
| Paul J. Schlather | 70,000 | 69,981 | 139,981 | |||||||||
___________________
| (1) | The amounts included in the “Stock Awards” column represent fair value at grant date of restricted common share awards to directors, computed in accordance with FASB ASC Topic 718. For a discussion of the valuation assumptions, see Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, |
Share Ownership Guidelines
In December 2013, the Board approved share ownership guidelines for all non-employee directors. These guidelines provide that each director should own Company common shares equal in market value to four times the cash portion of the Board’s annual retainer. The Directors have a five year accumulation period from implementation of the guideline or appointment to the Board to achieve compliance and are restricted from selling any common shares earned under a Company equity-based compensation plan until their ownership guideline has been reached.
| 29 |
OTHER INFORMATION
Shareholder’s Proposals for 20122015 Annual Meeting of Shareholders
Proposals of shareholders intended to be presented, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), at the Company’s 2012our 2015 Annual Meeting of Shareholders must be received by the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484, on or before December 14, 2011,8, 2014, for inclusion in the Company’sour proxy statement and form of proxy relating to the 20122015 Annual Meeting of Shareholders. In order for a shareholder’s proposal outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) of the Exchange Act, such proposal must be received by the Company at the address listed in the immediately preceding sentence not later than February 24, 2012.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’sour directors and executive officers, and owners of more than 10% of the Company’sour common shares, to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of the Company’sour common shares and other equity securities. Executive officers, directors and owners of more than 10% of the common shares are required by SEC regulations to furnish the Companyus with copies of all forms they file pursuant to Section 16(a).
To the Company’sour knowledge, based solely on the Company’sour review of the copies of such reports furnished to the Companyus and written representations that no other reports were required during the fiscal year ended December 31, 2010,2013, all Section 16(a) filing requirements applicable to the Company’sour executive officers, directors and more than 10% beneficial owners were complied with, except Mr. CoreyJacobs filed late five Form 4s related to separate transactions and Mr. TervalonAdante, Mr. Beaver, Mr. Corey, Mr. Kruk, Mr. Sloan and Mr. Strickler each filed late one Form 4 related to one transaction.
Other Matters
If the enclosed proxy is executed and returned to us via mail, telephone or Internet, the persons named in it will vote the common shares represented by that proxy at the meeting. The form of proxy permits specification of a vote for the election of directors as set forth under “Election of Directors” above, the withholding of authority to vote in the election of directors, or the withholding of authority to vote for one or more specified nominees. When a choice has been specified in the proxy, the common shares represented will be voted in accordance with that specification. If no specification is made, those common shares will be voted at the meeting to elect directors as set forth under “Election of Directors” above, to elect three years with respect to the advisory vote on conducting future advisory votes on executive compensation, and FOR the proposals to (i) to ratify the appointment of Ernst & Young as the Company’sour independent auditors for the year ending December 31, 2011;2013; and (ii) to approve of the advisory resolution on executive compensation; and (iii) to approve the Amended AIP.
Director nominees who receive the greatest number of affirmative votes will be elected directors and the choice selected by the most shareholders will be deemed the shareholders’ choice on the frequency of the Company’s executive compensation advisory vote.directors. Broker non-votes and abstaining votes will be counted as “present” for purposes of determining whether a quorum has been achieved at the meeting, but will not be counted in favor of or against any nominee. The voting standards for each of the other known matters to be considered at the meeting are set forth within the above proposals. All other matters to be considered at the meeting require for approval the favorable vote of a majority of the shares entitled to vote and represented at the meeting in person or by proxy.
The holders of shares of a majority of the common shares outstanding on the record date, present in person or by proxy, shall constitute a quorum for the transaction of business to be considered at the Annual Meeting of Shareholders.
If any other matter properly comes before the meeting, the persons named in the proxy will vote thereon in accordance with their judgment. The Company doesWe do not know of any other matter that may be presented for action at the meeting and the Company haswe have not received any timely notice that any of the Company’sour shareholders intend to present a proposal at the meeting.
| By order of the Board of Directors, | |
| |
| ROBERT M. LOESCH, | |
| Secretary |
Dated: April 12, 2011
| 01 | 02 | 03 | 04 | 05 | 06 | 07 | ||
| o | For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. | ¨ | ¨ | ¨ | ¨ | ¨ | ¨ | ¨ |
| For | Against | Abstain | For | Against | Abstain | ||||||||
| 2. | Ratification of Ernst & Young LLP: | ¨ | ¨ | ¨ | 3. | Advisory resolution on executive compensation: | ¨ | ¨ | ¨ | ||||
| 4. | Advisory vote on the frequency of the advisory vote on executive compensation: | 1 Yr o | 2 Yrs o | 3 Yrs o | Abstain o | 5. | Approval of Amended Annual Incentive Plan: | o | o | o | |||
| 6. | On such other business as may properly come before the meeting. |
