July 26, 2001
Dear Stockholders,
You are cordially invited to attend the Annual Meeting of Stockholders on
Monday, September 10, 2001 at 9 a.m., in the Meisnest Room at the Washington
Athletic Club in Seattle, Washington.
Whether or not you plan to attend the meeting in person, please complete, date
and sign the accompanying proxy card or voting instruction card (whichever is
enclosed) and return it promptly in the enclosed envelope to ensure that your
shares are represented and voted in accordance with your wishes. You may
revoke your proxy by following the procedures set forth in the accompanying
proxy statement. If you are a stockholder of record or if you hold a legal
proxy authorizing you to vote shares held in a nominee or street name account,
you may still vote in person at the meeting even though you previously
submitted your proxy.
Very truly yours,
Patrick W.E. Hodgson
Chairman of the Board
Todd Shipyards Corporation
1801 16th Avenue Southwest
Seattle, Washington 98134
July 26, 2001
- --------------------------------------------
NOTICE OF ANNUAL MEETING
The 2001 Annual Meeting of Stockholders (the "Meeting") of Todd Shipyards
Corporation, a Delaware corporation ("Todd" or the "Company"), will be held on
Monday, September 10, 2001, 9:00 a.m., local time, in The Meisnest Room of The
Washington Athletic Club at 1325 Sixth Avenue in Seattle, Washington, for the
following purposes:
1. To elect seven directors to serve until the 2002 Annual Meeting of
Stockholders and until their successors are duly elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as independent public
accountants;
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
The Board of Directors of the Company fixed the close of business on July 20,
2001 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Meeting. Only holders
of the Company's common stock, $.01 par value per share, at the close of
business on the Record Date are entitled to notice of, and to vote at, the
Meeting. A complete list of stockholders entitled to vote at the Meeting will
be available for examination during normal business hours by a Company
stockholder, for purposes related to the Meeting, for a period of ten days
prior to the meeting, at the Company's corporate offices located at 1801 16th
Avenue S.W., Seattle, Washington.
By order of the Board of Directors
Michael G. Marsh
Secretary
This Proxy Statement, the accompanying form of Proxy Card or Voting
Instruction Card and the 2001 Annual Report are being mailed beginning on or
about the 27th day of July, 2001 to stockholders entitled to vote.
TODD SHIPYARDS CORPORATION
1801 16th Avenue Southwest
Seattle, Washington 98134
- -----------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
September 10, 2001
GENERAL INFORMATION
This proxy statement and the accompanying proxy card or voting instruction
card (as the case may be) are being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors (the "Board
of Directors" or the "Board") of Todd Shipyards Corporation, a Delaware
corporation ("Todd" or the "Company"), to be used at the 2001 Annual Meeting
of Stockholders of the Company to be held on Monday, September 10, 2001 at
9:00 a.m. local time, in the Meisnest Room of The Washington Athletic Club,
1325 Sixth Avenue, Seattle, Washington, and at any adjournment or postponement
thereof (the "Meeting"). This proxy statement and the accompanying proxy card
or voting instruction card are first being mailed to the holders of the
Company's common stock, $.01 par value per share (the "Common Stock"), on or
about July 27, 2001.
Stockholders of the Company represented at the meeting in person or by proxy
will consider and vote upon (i) the election of seven directors to serve until
the 2002 Annual Meeting of Stockholders of the Company and until their
successors are duly elected and qualified, (ii) a proposal to ratify the
appointment of Ernst & Young LLP as independent public accountants, and (iii)
such other business as may properly come before the Meeting. The Company is
not aware of any other business to be presented for consideration at the
Meeting.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
At the Meeting, stockholders will elect seven directors, each of whom will
serve until the next annual meeting of stockholders or until his respective
successor shall have been elected and qualified or until his earlier
resignation or removal. The shares represented by proxy will be voted in
favor of the election of the persons named below unless authorization to do so
is withheld in the proxy. In the event that any of the nominees should be
unavailable to serve as a Director, which is not presently anticipated, it is
the intention of the persons named in the proxy card to select and cast their
votes for the election of such other person or persons as the Board of
Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF THE NOMINEES IDENTIFIED BELOW.
Information Concerning the Nominees
The following sets forth the name of each Nominee for election to the Board of
Directors, his age, his principal occupation for at least the past five years
and the period during which he has served as a Director of the Company. All
Nominees are currently Directors. Each Nominee was nominated by the Board of
Directors for election as Director.
Brent D. Baird (Age 62) - director since 1992
Since January 1992 to the present, Mr. Baird has been a private investor. Mr.
Baird was a general partner with Trubee, Collins & Co., a member firm of the
New York Stock Exchange, from April 1970 to December 1983. From January 1984
through December 1991, Mr. Baird was a limited partner with Trubee, Collins &
Co. Mr. Baird serves as a member of the board of directors of First Carolina
Investors, Inc., Merchant's Group, Inc., Exolon-ESK, Inc., M&T Bank
Corporation, Allied Healthcare Products, Inc., Ecology & Environment, Inc.,
and First Union Real Estate and Mortgage Investments R.E.I.T.
Steven A. Clifford (Age 58) - director since 1993
Mr. Clifford served as Chairman of National Mobile Television, Inc. from 1992
to 2000. From 1979-1992 he served as President and CEO (1987-1992) of King
Broadcasting Company, Inc. and as Vice President-Finance (1979-1987). Mr.
Clifford serves on the Board of Directors of Harbor Properties Inc., King FM,
and Mosaica Education, Inc.
Patrick W.E. Hodgson (Age 60) - director since 1992, Chairman since 1993
Mr. Hodgson has served as President of Cinnamon Investments, Ltd. (real estate
and other investments) since 1981. From 1964 to 1989 he was also president of
London Machinery Co. Ltd., a manufacturer of concrete and road machinery. Mr.
Hodgson serves as a member of the Board of Directors of M&T Bank Corporation,
Exolon-ESK, Inc. and First Carolina Investors, Inc.
Joseph D. Lehrer (Age 52) - director since 1992
Mr. Lehrer has been a stockholder and officer of Greensfelder, Hemker & Gale,
P.C. and a partner of its previous partnership (law firm) since 1980. He has
specialized in a corporate finance and mergers and acquisition practice
involving public and private corporations. Mr. Lehrer is an Adjunct Professor
of Law at Washington University Law School. Mr. Lehrer serves as a director
of several privately-held corporations.
Philip N. Robinson (Age 64) - director since 1992
Since May 1992, Mr. Robinson has been Vice President of Wells Fargo Van Kasper
(brokerage). From 1981 to 1987 and from 1988 to May 1992 Mr. Robinson was a
Senior Vice President with Seidler Amdec Securities. Mr. Robinson was a Vice-
President with Froley Revy & Co. from 1987 to 1988.
John D. Weil (Age 60) - director since 1993
Since 1973, Mr. Weil has been the President of Clayton Management Co., a
private investment management company. Mr. Weil is a member of the board of
directors of Oglebay Norton Company, Pico Holdings, Inc., Allied Healthcare
Products, Inc., and Baldwin & Lyons, Inc.
Stephen G. Welch (Age 44) - Officer Since 1994; director since 1998
Mr. Welch joined the Company in March 1994 as Vice President of the Company
and Chief Operating Officer of TSI Management, Inc., a wholly owned subsidiary
of the Company. Mr. Welch was elected Chief Executive Officer of Elettra
Broadcasting, Inc., another wholly owned subsidiary of the Company in May
1995. Mr. Welch was appointed Acting Chief Financial Officer in March 1995
and served in that capacity until July 1995. Mr. Welch was again appointed
Acting Chief Financial Officer and Treasurer in September 1996 and served in
that capacity until his appointment to Chief Financial Officer and Treasurer
in June 1997. In September 1997, Mr. Welch was elected to the positions of
Chief Executive Officer and President of the Company, and Chairman and Chief
Executive Officer of Todd Pacific Shipyards Corporation, the Company's wholly
owned subsidiary ("Todd Pacific"). In September 1998, Mr. Welch was elected
to Board of Directors of Todd Shipyards Corporation. Mr. Welch was also
President of San Francisco Radio, Inc. (from 1992 to 1997) and was President
of Portland Radio, Inc. (during 1992).
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held six (6) meetings during the Company's 2001 fiscal
year. Attendance at Board and committee meetings averaged 100 percent. Each
of the Directors attended 100 percent of the meetings of the Board and the
committees on which he served. The Board of Directors has established the
following standing committees:
Executive Audit Compensation
Patrick W.E. Hodgson(Chairman)Joseph D. Lehrer(Chairman)John D. Weil(Chairman)
Brent D. Baird Brent D. Baird Steven A. Clifford
John D. Weil Philip N. Robinson
Executive Committee. During intervals between meetings of the Board of
Directors, the Executive Committee exercises all the powers of the Board
(except those powers specifically reserved by Delaware law to the full Board
of Directors) in the management and direction of the Company's business and
conduct of the Company's affairs in all cases in which specific directions
have not been given by the Board. The Executive Committee did not meet during
the Company's 2001 fiscal year.
Audit Committee. The principal responsibilities of the Audit Committee are to
recommend an accounting firm to conduct an annual audit of the Company's
consolidated financial statements and to review with such firm the plan, scope
and results of such audit, and the fees for the services performed. The Audit
Committee is composed exclusively of directors who are not salaried employees
of the Company and who are, in the opinion of the Board of Directors, free
from any relationship which would interfere with the exercise of independent
judgment as a Committee member. The Audit Committee held one (1) meeting
during fiscal year 2001. A sub-committee of the Audit Committee met three (3)
times during fiscal year 2001 for the specific purposes of reviewing the
quarterly 10-Q filings.
Compensation Committee. The principal responsibilities of the Compensation
Committee are to establish and periodically review matters involving executive
compensation; to recommend changes in employee benefit programs; and to
provide counsel on key personnel selection, effective succession planning and
development programs for all corporate officers. The Compensation Committee
held four (4) meetings during fiscal year 2001.
Fees for Board and Committee Service
Directors who are compensated as full-time employees of the Company receive no
additional compensation for service on the Board of Directors or its
committees. Each Director who is not a full-time employee of the Company is
paid $12,000 per annum. Directors also receive an attendance fee of $1,000
for each meeting and are reimbursed expenses for attendance at Board and
committee meetings.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires directors, certain officers and greater-than-10%
shareholders ("Reporting Persons") of all publicly-held companies to file
certain reports ("Section 16 Reports") with respect to beneficial ownership
of such companies' equity securities.
Based solely on its review of the Section 16 Reports furnished to the Company
by its Reporting Persons and, where applicable, any written representation by
them that no Form 5 was required, all Section 16(a) filing requirements
applicable to the Company's Reporting Persons during and with respect to
fiscal year 2001 have been complied with on a timely basis except for the
following. Form 4s were filed on August 23, 2000 for options exercised and
disposed of by Michael G. Marsh and Scott H. Wiscomb on July 14, 2000. A Form
4 was filed on August 23, 2001 for options exercised by Stephen G. Welch on
July 14, 2000. Form 5s were filed by Michael G. Marsh and Scott H. Wiscomb on
June 7, 2001 for options granted on March 22, 2001. A Form 5 was filed by
Stephen G. Welch on June 7, 2001 for options granted on February 7, 2001.
EXECUTIVE OFFICERS
The following is a list of the Executive Officers of the Company:
Patrick W.E. Hodgson Chairman of the Board
Stephen G. Welch Chief Executive Officer and President
Scott H. Wiscomb Chief Financial Officer and Treasurer
Michael G. Marsh Secretary and General Counsel
Roland H. Webb Chief Operating Officer and President (Todd Pacific
Shipyards Corporation)
Biographical information with respect to executive officers who have been
employed by the Company for less than five years is presented below.
Scott H. Wiscomb (age 55) - Officer since 1997
Mr. Wiscomb has been in his current position as Chief Financial Officer of the
Company and Todd Pacific since November 1997. Prior to joining Todd, he
served as a consultant and then as Chief Financial Officer of Alaska Diesel
Electric, Inc., a Seattle-based manufacturer of marine propulsion engines and
generators. From 1991 to 1995, Mr. Wiscomb was Vice President, Finance and
Administration of ARCO Coal Australia, Inc., a Brisbane, Australia-based coal
mining and marketing division of Atlantic Richfield Company.
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth all compensation awarded to, earned by, or paid
to the Company's Chief Executive Officer and each of the Company's four most
highly compensated executive officers whose compensation exceeded $100,000:
Annual Long Term All Other
Compensation Compensation Compensation
NAME AND Stock Option
PRINCIPAL POSITION Year Salary Bonus Awards(Shares) Other
Patrick W.E. Hodgson 2001 $100,000 $ - - $ 14,819 (1)
Chairman of the 2000 103,846 - - 354
Board of Directors 1999 100,000 - - 450
Todd Shipyards
Michael G. Marsh 2001 138,596 55,600 95,000 34,919 (1)
Secretary and General 2000 134,712 40,500 - 122
Counsel 1999 127,272 - - 132
Todd Shipyards and
Todd Pacific
Roland H. Webb 2001 176,327 - - 25,173 (1)
President 2000 182,981 86,500 - 325
Todd Pacific 1999 147,550 - - 301
Stephen G. Welch 2001 272,500 200,000 240,000 50,872 (1)
Chief Executive Officer2000 263,923 260,000 - 314
Todd Shipyards and 1999 238,366 - - 372
Todd Pacific
Scott H. Wiscomb 2001 136,250 20,000 80,000 221
Chief Financial 2000 128,192 52,000 10,000 301
Officer and Treasurer 1999 120,000 - - 403
Todd Shipyards and
Todd Pacific
(1) Includes certain one-time payments of accrued benefits available to
eligible employees.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
% of Potential
Number of Total Realized Value at
Securities Options Assumed Annual
Underlying Granted to Exercise Rates of Stock Price
Options Employees or Base Appreciation
Granted in Fiscal Price Expiration for Option Term (4)
Name (#) Year ($/Sh) Date 5% 10%
M. Marsh 15,000 (1) 4% $7.94 07/13/05 $ 32,905 $ 72,712
M. Marsh 80,000 (2) 19% 6.85 03/22/06 151,402 334,559
S. Welch 240,000 (3) 58% 6.55 02/06/11 988,622 2,505,363
S. Wiscomb 80,000 (2) 19% 6.85 03/22/06 151,402 34,559
(1) The indicated option is for a term expiring on the fifth anniversary of
the date of grant or termination of employment, if earlier. All 15,000 shares
vested six months after grant date.
(2) Each of the indicated options is for a term expiring on the fifth
anniversary of the date of grant or termination of employment, if earlier.
Each option vests and becomes exercisable as to one-third of the shares on the
first anniversary of the date of the grant, an additional one third of the
shares on the second anniversary of the date of the grant, and as to all
shares on the third anniversary of the date of grant. Under terms of the
options and the Company's Incentive Stock Plan, vesting and the right to
exercise may be accelerated under certain circumstances.
(3) The indicated option is for a term expiring on the tenth anniversary of
the date of grant or termination of employment, if earlier. Each option vests
and becomes exercisable as to 80,000 shares on February 7, 2002, and as to the
remaining 160,000 shares in equal monthly installments over the then
succeeding two years. Under terms of the options and the Company's Incentive
Stock Plan, vesting and the right to exercise may be accelerated under certain
circumstances. See Employment Arrangements regarding certain put repurchase
rights granted in connection with these option rights.
(4) The dollar amounts illustrate value that might be realized upon the
exercise of options immediately prior to the expiration of their term,
covering the specific compounded rates of appreciation set by the Securities
and Exchange Commission (5% and 10%) and are not, therefore, intended to be
forecasts by the Company of possible future appreciation, if any, of the stock
price of the Company or the value to be realized by optionees.
The following table sets forth certain information regarding options exercised
by the named executives during the fiscal year ended April 1, 2001, the total
gain realized upon exercise, the number of stock options held at the end of
the year, and the realizable gain of the stock options that are in-the-money.
The value realized on exercise is determined by calculating the difference
between the price of the Company's Common Stock and the exercise price of the
options at the date of exercise, multiplied by the number of shares exercised.
In-the-money stock options are stock options with exercise prices that are
below the year-end stock price because the stock value increased from the
grant value.
Total Number of Value of Unexercised
Shares Value Unexercised In-The-Money
Acquired on Realized on Options at Fiscal Options at Fiscal
Exercise Exercise(1) year-end(#)(1) year-end($)(1)(2)
Exercisable/ Exercisable/
Unexercisable Unexercisable
P. Hodgson 0 $ 0 120,000 $ 295,000
0 0
M. Marsh 15,000 29,063 10,000 26,250
80,000 12,000
R. Webb(3) 0 0 60,000 128,125
0 0
S. Welch 20,000 36,200 0 0
240,000 348,000
S. Wiscomb 20,000 67,490 13,333 33,119
86,667 29,501
(1) The Company has no granted or outstanding Stock Appreciation Rights.
(2) The Value of Unexercised In-the-Money Options is based upon the closing
price of the Company's Common Stock on the New York Stock Exchange on April 1,
2001 of $7.00 per share except Mr. Welch's 240,000 shares which are subject,
at Mr. Welch's election under certain circumstances, to repurchase by the
Company at $8.00 per share. See "Employment Arrangements" regarding certain
put repurchase rights granted in connection with these option rights.
(3) Mr. Webb exercised 60,000 shares subsequent to fiscal year 2001 on June 5,
2001 realizing value of $170,125.
The Company did not have any Restricted Stock Awards or Long-Term Incentive
Payouts either granted or outstanding in fiscal year 2001. As a result of the
foregoing, the Company has not included such information in the above
presented tables since disclosure is not applicable.
TODD SHIPYARDS CORPORATION RETIREMENT SYSTEM
The Todd Shipyards Corporation Retirement System as amended as of July 1, 1991
(the "Retirement Plan") is a pension plan originally established by the
Company on August 1, 1940 to provide lifetime retirement benefits to eligible
employees. The Retirement Plan is a qualified defined benefit plan under the
Employee Retirement Income Security Act and covers all administrative (non-
represented) employees of the Company who have completed six months of
continuous service (as defined). The Retirement Plan is administered by a
committee (the "Retirement Board") of not less than three persons appointed by
the Board of Directors. On June 30, 1993 the Board of Directors approved an
amendment to the Retirement Plan to freeze membership in the Retirement Plan,
declining membership to any persons hired after July 1, 1993. However, in
fiscal year 2001, the Board of Directors authorized the reopening of the
Retirement System to current employees previously not eligible and to new
employees hired after June 30, 2000. Accordingly, Messrs. Hodgson, Welch,
Webb and Wiscomb currently participate in the Retirement System, as does Mr.
Marsh.
A participant is generally eligible for a benefit under the Retirement Plan on
his or her normal retirement date, which is age 65. The normal annual
retirement allowance payable upon retirement is equal to
1 3/4% of the participant's average final compensation (as defined) multiplied
by his years of credited service (as defined), reduced by the lesser of (i)
1/2% of the employee's covered compensation (as defined) for each year of
credited service not in excess of 35 years or (ii) 50% of the benefit that
would be provided if the benefit were limited to the employer-provided portion
based on the employee's covered compensation and had been determined without
regard to the reduction.
Benefits under the Retirement Plan are normally paid in an annuity form
beginning at age 65, with reductions for commencement of benefits prior to age
65. Participants demonstrating good health can elect a lump sum form of
payment.
PENSION PLAN TABLE
Years of Service
Average Final Compensation 15 20 25 30 35
$100,000 $23,771 $ 31,694 $39,618 $ 47,541 $ 55,465
150,000 36,896 49,194 61,493 73,791 86,090
200,000 50,021 66,694 83,368 100,041 116,715
Compensation covered by the Retirement Plan includes salary and any cash
bonuses as indicated in the Cash Compensation Table above. The preceding
Pension Plan Table indicates the annual pension benefits payable as a straight
life annuity upon retirement for individuals with specified compensation
levels and years of service. The benefits reflect an estimated deduction for
the offset described above. The estimated credited years of service for
Messrs. Hodgson, Marsh, Welch, Webb and Wiscomb at age 65 is 6 years, 37
years, 22 years, 16 years and 11 years, respectively.
TODD SHIPYARDS CORPORATION SAVINGS INVESTMENT PLAN
The Todd Shipyards Corporation Savings Investment Plan as amended and restated
as of April 1, 1989 (the "Savings Plan") is a profit sharing plan originally
established on July 1, 1984 to provide retirement benefits to participating
employees. The Savings Plan is intended to comply with Section 401(k) of the
Internal Revenue Code of 1986, as amended, and the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations thereunder.
The Savings Plan covers all full-time employees of the Company with at least
six months of service. Under the Savings Plan, a participant may elect to make
before-tax contributions by reducing eligible compensation (as defined) to an
amount equal to a percentage of such compensation from 1% up to and including
25%. Prior to March 31, 1989, participants were permitted to make after-tax
contributions to the Savings Plan; however, no such contributions have been
permitted since such date although such accounts continue to be credited with
investment earnings and losses. Each participant may direct the committee
which administers the Savings Plan to invest his or her before-tax
contributions among the available investment subfunds which include, at
present, a range of domestic and foreign equity and bond funds.
Under the terms of the Savings Plan, which were modified in fiscal year 2001
and became effective on January 1, 2001, the Company now contributes an amount
up to 2.4% of each participant's annual salary depending on the participant's
Savings Plan contributions. In fiscal year 2001, the Company contributed
$38,000 to the Savings Plan.
Each participant has a 100% vested, nonforfeitable right to all before-tax
contributions. Each participant has a vested, nonforfeitable right to any
employer matching contributions made to his or her account based on a two year
cliff-vesting schedule.
For employees hired on or after March 31, 1989, benefits under the Savings
Plan are payable only in the form of a lump sum payment payable upon request
at any time after termination of employment. Employees hired before March 31,
1989 will be paid in the form of annuities unless they elect a lump sum form
of payment.
Employment Arrangements
As of February 7, 2001, the Company renewed and extended its employment of
Stephen G. Welch as President and Chief Executive Officer of the Company for a
three year term expiring on February 6, 2004. The terms of the renewal
include significant cash and equity incentives intended to retain Mr. Welch's
services. In addition to base compensation of $275,000 per year, the
compensation and incentive arrangements for Mr. Welch include:
Cash bonuses aggregating $750,000 of which $200,000 was paid upon execution of
the agreement; $250,000 of which will vest and be payable on February 7, 2002
and $300,000 of which will vest and be payable on February 7, 2003. The
vesting of such bonuses is subject to acceleration in the event of a change of
control (as defined) of the Company or in certain other events. The non-
vested portion of the bonuses are held in a so-called "Rabbi trust" pending
distribution such that although these assets remain subject to claims by the
Company's creditors they are beyond control of Todd's management or directors.
Options to purchase up to an aggregate of 240,000 shares of the Company's
Common Stock at a price of $6.55 per share, expiring on February 6, 2011.
Such options vest and become exercisable as to 80,000 shares on February 7,
2002, and as to the remaining 160,000 shares in equal monthly installments
over the then succeeding two years. The vesting of such options will
accelerate in the event a change of control of the Company. Generally such
options are non-transferable and exercisable solely by Mr. Welch while
employed by the Company.
In connection with the foregoing options, the Company has also granted Mr.
Welch certain limited rights to require the Company to repurchase shares
acquired upon exercise of the options at a price of $8.00 per share. These
"put" rights expire on February 6, 2006, if not theretofore exercised and
may be exercised, in whole or in part, only one time. The put rights are
applicable solely to shares acquired pursuant to vested option rights under
the options granted to Mr. Welch on February 7, 2001, and will expire prior to
February 6, 2006 in the event the Company terminates his employment prior to
that date.
Executive Officer Loan Arrangements
During fiscal year 2000 Messrs. Welch and Marsh entered into loan agreements
in the amounts of $337,500 and $45,000 respectively with the Company to
facilitate their execution of expiring options under the Company's Incentive
Stock Compensation Plan ("Stock Plan"). The loans were made in accordance
with the terms and conditions of the Stock Plan. The terms of each loan
provides for interest to be paid to the Company at the rate of 5.42% per annum
and for the loan to be fully paid by both executives within two years of its
September 28, 1999 execution date. Complete copies of both loan agreements
and accompanying promissory notes have been filed with the Company's fiscal
year 2000 Form 10-K Annual Report.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
None of the members of the Company's Compensation Committee (i) were, during
the fiscal year, an officer or employee of the Company; (ii) were formerly an
officer or employee of the Company; or, (iii) had any relationship requiring
disclosure by the Company as Certain Relationships and Related Transactions.
None of the executive officers of the Company served as a member of a
compensation committee of any entity whose executive officers or directors
served on the Compensation Committee of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Board of Directors
establishes the general compensation policies of the Company, administers the
Company's Incentive Stock Compensation Plan and establishes the cash
compensation of executive officers. The Committee is currently composed of
two independent, non-employee directors who have no interlocking relationships
as defined by the SEC.
During fiscal year 2001, the Committee performed a review of the compensation
plan of the Chief Executive Officer, Stephen G. Welch. The Committee, with
final Board of Directors approval, renewed Mr. Welch's employment contract
(details set forth above).
The Committee believes that executive officer compensation, including that of
the Chief Executive Officer should be heavily influenced by Company
performance and achievement of goals. Annually, the Committee establishes
each executive officer's cash and incentive compensation based on the Board of
Directors' evaluation of the Chief Executive Officer, and the evaluation by
the Board of Directors and Chief Executive Officer of the other executive
officers, including in such evaluation their past performance and relative
impact on the success of the Company and the achievement of its goals.
The Committee has developed a compensation strategy for the Company's
executive officers which provides incentives for (i) short and long-term
strategic management, (ii) enhancement of stockholder value, (iii) improving
the Company's annual and long-term performance, (iv) individual performance,
and (v) other criteria designed to further align the interests of the
Company's officers with those of its stockholders. The Committee and the
Board of Directors believe that management's ownership of an equity interest
in the Company is an incentive in building shareholder value and aligning the
long term interests of management and stockholders. A grant of 240,000 stock
options was approved for Mr. Welch during fiscal year 2001 as part of his
employment contract renewal. Additionally, grants of 80,000 stock options
each were approved for Messrs. Marsh and Wiscomb during fiscal year 2001.
Steven A. Clifford
John D. Weil
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee (the "Committee") oversees the Company's financial
reporting process on behalf of the Board of Directors (see Appendix regarding
Audit Committee Charter). Management has the primary responsibility for the
consolidated financial statements and the reporting process including the
system of internal controls. In fulfilling its oversight responsibilities,
the Committee reviewed the audited consolidated financial statements in the
Annual Report with 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 consolidated
financial statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited consolidated
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Committee under generally accepted auditing standards. In addition,
the Committee has discussed with the independent auditors the auditors'
independence from management and the Company including the matters in the
written disclosures required by the Independence Standards Board and
considered the compatibility of nonaudit services with the auditors'
independence.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their respective audits. The Committee meets with the
independent auditors and management to discuss the results of their
examinations, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting. The Committee held one
(1) meeting during fiscal year 2001. A sub-committee of the Audit Committee
met three (3) times during fiscal year 2001 for the specific purposes of
reviewing the quarterly 10-Q filings.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited consolidated financial statements be included in the Annual Report on
Form 10-K for the year ended April 1, 2001 for filing with the Securities and
Exchange Commission. The Committee and the Board have also recommended,
subject to stockholder approval, the selection of the Company's independent
auditors.
Joseph D. Lehrer, Audit Committee Chair
Brent D. Baird, Audit Committee Member
Philip N. Robinson, Audit Committee Member
PERFORMANCE GRAPH
The following graph compares the Company's Common Stock performance (Company-
Index) to that of the Dow Jones Industrial Average (DOW-Index) and the Dow
Jones Transportation Equipment Average (DJTE-Index). The Dow Jones Industrial
Average and the Dow Jones Transportation Equipment Average assume the
reinvestment of dividends. No such assumption was used in computing the
Company Index as the Company has not paid any dividends for the last five
years and therefore the values presented represent only the stock prices.
(Graph deleted in version of Proxy filed with EDGAR.)
The following table outlines the points used in the performance graph.
Company = Todd Shipyards Corporation; DJTE = Dow Jones Industrial Average-
Transportation Equipment; DOW = Dow Jones Industrial Average.
Dates Company Index DJTE Index DOW Index
March 31, 1996 100.00 100.00 100.00
March 30, 1997 74.58 107.76 116.80
March 29, 1998 77.97 162.72 172.45
March 28, 1999 54.24 121.52 197.80
April 2, 2000 105.08 128.69 242.78
April 1, 2001 94.92 113.37 184.86
The information presented in the performance graph indicates that $100
invested in the Company's Common Stock on March 31, 1996 would be worth $94.92
on April 1, 2001 which represents a compounded loss of approximately 1.1%.
The same amount hypothetically invested in the Dow Jones Transportation
Equipment and Dow Jones Industrial Averages would be worth $113.37 and
$184.86, respectively, which represent a compounded rate of return of
approximately 2.5% and 13.1%, respectively.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, after consideration of the recommendation of the Audit
Committee, appointed Ernst & Young LLP to serve as independent public
accountants for the fiscal year ending March 31, 2002 and at the Meeting, the
Board will recommend that stockholders ratify such appointment.
Representatives of Ernst & Young LLP are expected to be present at the Meeting
with the opportunity to make a statement if they so desire and be available at
that time to respond to appropriate questions. Amounts paid to Ernst & Young
during the past fiscal year include annual audit fees of $161,000, other audit
related fees of $30,000, non-audit related fees of $201,000 and information
system consulting fees of $0.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR 2002
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to shares of the
Common Stock which are held by (i) persons known to the Company to be the
beneficial owners of more than 5% of said stock, (ii) each current Director,
(iii) each Nominee, (iv) all current executive officers and Directors as a
group, and (v) all Nominees as a group. For purposes of this proxy statement,
beneficial ownership of securities is defined in accordance with the rules of
the SEC and more generally as the power to vote or dispose of securities
regardless of any economic interest therein. Unless otherwise indicated, the
stockholders have sole voting and investment power with respect to the shares
indicated. All information set forth on the following table is as of April 1,
2001, except as otherwise noted, and is taken from or based upon ownership
filings made by such persons with the SEC or upon information provided by such
persons to the Company.
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class (2)
Brent D. Baird 1,371,800(3) 14.7%
1350 One M&T Plaza
Buffalo, NY 14203
Steven A. Clifford 8,000 ---
Patrick W.E. Hodgson 165,000(4) 1.7%
Joseph D. Lehrer 2,000 ---
Philip N. Robinson 103,500(5) 1.1%
John D. Weil 1,020,600(6) 10.9%
200 North Broadway, Ste. 825
St. Louis, MO 63102-2573
Stephen G. Welch 103,877 1.1%
Peter Cundill & Associates 676,100 7.1%
c/o John P. Walsh, Esq.
101 South Hanley Road, Suite 1600
St. Louis, MO 63105
Dimension Fund Advisors, Inc. 668,200 7.0%
c/o Henry Gray
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
All Current Directors, Nominees,
and Executive Officers as a
Group(10 persons) 2,841,315(7) 29.8%
All Nominees as a Group
(7 persons) 2,776,410(8) 29.2%
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is given for holdings less than one percent of the
outstanding Common Stock.
(3) Brent Baird owns directly 60,000 shares, including 25,000 shares held in
self-directed pension and retirement plans for his benefit. Mr. Baird also
holds indirectly 40,000 shares in a personal holding company and may be deemed
to have indirect ownership of 20,000 shares held by his wife. The figure in
the table also includes shares held by persons and organizations who may be
deemed to be Mr. Baird's associates, as defined in Rule 14a-1(a) under the
Securities Exchange Act of 1934, as amended. Mr. Baird may be deemed to have
shared voting power and/or dispositive power over such shares. However, Mr.
Baird disclaims shared voting power, shared dispositive power and/or
beneficial ownership of all such shares.
(4) Includes 45,000 shares directly beneficially owned by Cinnamon Investments
Limited and options for 120,000 shares granted to Mr. Hodgson and currently
exercisable. Mr. Hodgson owns 100% of Cinnamon Investments Limited and has
sole voting and investment control over such shares.
(5) Philip N. Robinson owns directly 8,500 shares. The figure in the table
includes shares held by persons and organizations who may be deemed to be Mr.
Robinson's associates, as defined in Rule 14a-1(a) under the Securities
Exchange Act of 1934, as amended. Individual members and organizations in the
Robinson Family beneficially own shares of stock as follows: Robinson
Investment, a general partnership of Mr. Robinson's four children, directly
beneficially owns 95,000 shares. Mr. Robinson may be deemed to share voting
and investment power over all such shares, and therefore may be deemed to have
beneficial ownership of an aggregate of 95,000 shares; Mr. Robinson disclaims
beneficial ownership of all such shares.
(6) John D. Weil may be deemed to have sole voting and dispositive power with
respect to 988,600 shares which include 976,600 shares held by a family
partnership of which Clayton Management Co. is the general partner. Mr. Weil
is the President and sole shareholder of Clayton Management Co. The remaining
32,000 shares represent shares held by persons and organizations who may be
deemed to be Mr. Weil's associates, as defined in Rule 14a-1(a) under the
Securities Exchange Act of 1934, as amended, and Mr. Weil may be deemed to
have indirect shared beneficial ownership with respect to such shares.
(7) Includes an aggregate of 161,666 shares subject to options exercisable at
July 1, 2001 (or becoming exercisable within 60 days thereafter) and an
aggregate of 22,419 shares held through the Savings Plan. Does not include
172,000 shares of Common Stock held by the Retirement System, of which Mr.
Hodgson is a co-trustee. All four co-trustees participate equally in voting
securities, including the Common Stock, held by the Retirement System. Mr.
Hodgson disclaims beneficial ownership of the 172,000 shares held by the
Retirement System.
(8) Includes an aggregate of 120,000 shares subject to options exercisable at
July 1, 2001 (or becoming exercisable within 60 days thereafter) and an
aggregate of 10,510 shares held through the Savings Plan.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company has retained the law firm of Greensfelder, Hemker & Gale, P.C., of
which Mr. Lehrer is a stockholder and officer, relating to various corporate
issues.
Messrs. Hodgson and Baird are members of the Board of Directors of M&T Bank
Corporation whose wholly owned subsidiary, M&T Bank, serves as the Company's
principal depository. The Company pays to M&T Bank usual and customary fees
for its banking services.
Mr. Robinson is Vice President of Wells Fargo Van Kasper who has served as
broker in certain purchases by the Company of its Common Shares on the open
market. For its services, Wells Fargo Van Kasper received the usual and
customary commissions for like or similar transactions.
VOTING AND SOLICITATION OF PROXIES
Only holders of record of the Common Stock at the close of business on July
20, 2001 (the "Record Date") will be entitled to notice of and to vote at the
Meeting. As of the date of filing this proxy statement, there were 9,362,680
outstanding shares of Common Stock.
Each stockholder is entitled to one vote for each share held of record on that
date on all matters which may come before the Meeting. The presence, in
person or by proxy, of the holders of a majority of the shares of Common Stock
entitled to vote at the Meeting is necessary to constitute a quorum for the
conduct of business at the Meeting. At the Meeting, Directors of the Company
will be elected by a plurality of the votes of the shares present in person or
represented by proxy and entitled to vote on the election of Directors. Thus,
the candidates, up to the number of Directors to be elected, receiving the
highest number of votes will be elected. The election of the nominees for
Director and the ratification of the appointment of independent public
accountants will require the affirmative vote of the holders of a majority of
the Common Stock present at the meeting in person or represented by proxy and
entitled to vote thereon.
Any proxy given pursuant to this solicitation is revocable by the
communication of such revocation in writing to the Secretary of the Company at
any time prior to the exercise thereof, and any person executing a proxy who
attends the Meeting may vote in person by ballot instead of by proxy, thereby
revoking any previously executed proxy. All shares represented by properly
executed proxies will, unless such proxies have been previously revoked, be
voted at the Meeting in accordance with the directions on the proxies. If no
direction is indicated, the shares will be voted in favor of the nominees for
the Board of Directors listed in this proxy statement (Proposal No. 1) and in
favor of the ratification of the appointment of Ernst & Young LLP as
independent public accountants (Proposal No. 2). The persons named in the
proxies will have discretionary authority to vote all proxies with respect to
additional matters that are properly presented for action at the Meeting.
The Company will bear the entire cost of preparing, assembling, printing and
mailing this proxy statement and the enclosed form of proxy or voting
instruction form (as the case may be), and of soliciting proxies. The Company
will request banks and brokers to solicit their customers who beneficially own
shares listed of record in names of nominees, and will reimburse those banks
and brokers for their reasonable out-of-pocket expenses in connection with
such solicitation. The initial solicitation of proxies by mail may be
supplemented by telephone, telegram and in-person solicitation by Directors,
nominees for Director, officers and other regular employees of the Company,
but no additional compensation will be paid to such individuals.
The Company has retained W.F. Doring and Company to solicit proxies from
individuals, brokers, bank nominees and other institutional holders. W.F.
Doring and Company will be paid fees of approximately $2,000, and will be
reimbursed for their reasonable expenses in connection with this solicitation.
Except as described in this proxy statement, to the best of the Company's
knowledge, no person who has been a Director or executive officer of the
Company since the beginning of its last fiscal year, no Nominee, nor any
associate of the foregoing, has any substantial interest, direct or indirect,
by security holdings or otherwise, in any matter to be acted upon, other than
elections to office.
Individuals, brokers, banks and other institutional holders should direct
questions concerning this solicitation or the procedure to be followed to
execute and deliver a proxy to W.F. Doring and Company at (201) 420-6262.
STOCKHOLDER NOMINATIONS
Nominations of persons for election to the Board of Directors of the Company
may be made at a meeting of stockholders by any stockholder of the Company
entitled to vote for the election of directors at such meeting who complies
with the following procedures. Nominations to be made by a stockholder shall
be made pursuant to a written notice received by the Secretary of the Company
not less than 90 days prior to such meeting. Such stockholder's notice to the
Secretary must set forth (a) the name, age and address, as they appear on the
Company's books, of the stockholder who intends to make the nomination, (b)
the name, age, occupation, business and residence addresses, if known, and the
principal occupation of each person whom the stockholder intends to nominate,
(c) a representation that the stockholder is a holder of record of the
Company's stock entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice, (d) a description of all arrangements and understandings
between the stockholder and each person the stockholder intends to nominate
and each other person or persons if any (naming such person or persons and
stating the beneficial ownership of securities of the Company or each such
person), (e) such additional information with respect to each nominee proposed
by the stockholder as would have been required to be included in a proxy
statement pursuant to the then effective proxy rules of the SEC had each such
proposed nominee been nominated by the Board of Directors of the Company, and
(f) a consent to be nominated and to serve as a director, if elected, signed
by each such proposed nominee.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders desiring to exercise their rights under the SEC's proxy rules to
submit proposals for consideration by the stockholders at the 2002 Annual
Meeting are advised that their proposals must be received by the Company no
later than April 2, 2002 in order to be eligible for inclusion in the
Company's proxy statement and form of proxy relating to that meeting.
ANNUAL REPORT TO STOCKHOLDERS
The 2001 Annual Report of the Company, which includes financial statements for
the fiscal periods ended April 1, 2001 is being mailed to the stockholders
with this proxy statement. The Annual Report is not to be considered part of
the soliciting material.
OTHER MATTERS
The Board of Directors is not aware of any business to be presented at the
Meeting except the matters set forth in the Notice of Annual Meeting and
described in this proxy statement. If any other matters properly come before
the Meeting, the persons designated as agents in the enclosed form of proxy
will vote on such matters in accordance with their best judgment.
COPIES OF THE COMPANY'S REPORT ON FORM 10-K TO THE SEC CAN BE OBTAINED WITHOUT
CHARGE BY STOCKHOLDERS (INCLUDING BENEFICIAL OWNERS OF THE COMPANY'S COMMON
STOCK).
SHAREHOLDER RELATIONS DEPARTMENT
TODD SHIPYARDS CORPORATION
1801-16TH AVENUE SW
SEATTLE, WASHINGTON 98134
Michael G. Marsh
Secretary and General Counsel
July 26, 2001
APPENDIX
CHARTER OF THE AUDIT COMMITTEE
The Audit Committee of Todd Shipyards Corporation is a standing committee of
the Board of Directors of the corporation established by action of the Board
permitted under the By-Laws of the corporation and the Delaware General
Corporation Law. The primary objective and role of the Audit Committee is to
assist the Board in fulfilling the Board's responsibilities by reviewing (i)
the financial information provided by the corporation to shareholders and
others, (ii) the accounting practices and principles followed by the
corporation, and (iii) the process by which financial information is generated
and audited. It is intended that such review shall address the
appropriateness and quality of the corporation's financial reporting as well
as its adequacy and accuracy.
This Charter has been adopted by the Members of the Audit Committee and
confirmed by the Board of Directors of the corporation. No amendment to the
Charter or action of the Board of Directors which would limit or restrict the
duties, responsibilities, powers and rights of the Audit Committee or which
would alter the qualifications for membership on the Audit Committee shall be
effective without the consent of a majority of the members of the Audit
Committee.
The Audit Committee shall consist of at least three members of the Board of
Directors appointed annually by the full Board of Directors following its
first meeting subsequent to its election at the Annual Meeting of Shareholders
of the corporation. Each person appointed to membership on the Audit
Committee shall be independent of management of the corporation in accordance
with criteria established by the principal market for the corporation's Common
Stock. Each person appointed to membership on the Audit Committee shall be
financially literate and at least one member shall have accounting or related
financial management expertise. The Audit Committee may select from its
members a Chairman.
The Audit Committee shall exercise an oversight function with respect to the
corporation's preparation and dissemination of financial information and shall
report on such topics to the Board of Directors. This review function to be
performed by the Audit Committee is not intended to relieve the corporation's
financial management executives from responsibility for maintaining and
presenting financial information nor to relieve the independent auditors
engaged by the corporation from their responsibilities. The goal of the Audit
Committee's activities is to maintain free and open means of communications
among the corporation's directors, independent auditors, and internal
financial management and accounting staffs as a means of achieving full and
fair financial disclosure.
Although it is expected that the Audit Committee will adopt flexible policies
and procedures in order to address changing conditions and concerns, it is
expected that the following tasks will be performed by the Audit Committee on
a recurring basis:
- - The Audit Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately accountable
to the Board and the Audit Committee, as representatives of the Company's
shareholders. The Audit Committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, replace the independent
auditors. The Audit Committee shall discuss with the auditors their
independence from management and the Company and the matters included in the
written disclosures required by the Independence Standards Board. Annually,
the Audit Committee shall review and recommend to the board the selection of
the Company's independent auditors.
- - The Audit Committee shall discuss with management and the independent
auditors the overall scope and plans for the audit including the adequacy of
staffing and compensation. The Audit Committee shall discuss with management
and the independent auditors the adequacy and effectiveness of the accounting
and financial controls, including the Company's system for monitoring and
managing business risk, and legal and ethical compliance programs. The Audit
Committee shall meet separately with the independent auditors and with
internal accounting personnel, with and without management present, to discuss
the results of their examinations.
- - The Audit Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the Company's
Quarterly Report on Form 10-Q. The Audit Committee shall discuss the results
of the quarterly review and any other matters required to be communicated to
the Committee by the independent auditors under generally accepted auditing
standards. The chairman of the Audit Committee may represent the entire
Committee for the purposes of such reviews.
- - The Audit Committee shall review with management and the independent
auditors the financial statements to be included in the Company's Annual
Report on Form 10-K (or the annual report to shareholders if distributed prior
to the filing of Form 10-K), including their judgment about the quality, not
just the acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the financial
statements. The Audit Committee shall discuss the results of the annual audit
and any other matters required to be communicated to the Committee by the
independent auditors under generally accepted auditing standards.