________________________________________________________________________________
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EMPIRE RESOURCES, INC.
------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
__________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
(5) Total fee paid:
__________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
__________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
__________________________________________________________________________
(3) Filing Party:
__________________________________________________________________________
(4) Date Filed:
__________________________________________________________________________
________________________________________________________________________________
EMPIRE RESOURCES, INC.
ONE PARKER PLAZA
FORT LEE, NEW JERSEY 07024
-------------------
NOTICE OF ANNUAL MEETING
-------------------
May 12, 2003
Dear Stockholder:
On Thursday, June 12, 2003, Empire Resources, Inc. will hold its Annual
Meeting of Stockholders at the offices of Madison Partners LLC, 477 Madison
Avenue, 14th floor, New York, NY.
The meeting will begin at 11:00 a.m. Only stockholders that own stock at the
close of business on April 30, 2003 can vote at this meeting. At the meeting we
will:
Elect a board of directors;
Ratify the appointment of our independent auditors for the
year ending December 31, 2003.
Attend to any other business properly brought before the
meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE TWO
PROPOSALS OUTLINED IN THIS PROXY STATEMENT.
By Order of the Board of Directors,
/s/ Sandra Kahn
---------------------------------------
SANDRA KAHN
Vice President, Chief Financial Officer
and Secretary and Treasurer
EMPIRE RESOURCES, INC.
ONE PARKER PLAZA
FORT LEE, NEW JERSEY 07024
--------------------------
PROXY STATEMENT
--------------------------
QUESTIONS AND ANSWERS
WHO IS SOLICITING MY VOTE?
This proxy solicitation is being made and paid for by Empire Resources, Inc.
WHEN WAS THIS PROXY STATEMENT MAILED TO STOCKHOLDERS?
This proxy statement was first mailed to stockholders on or about May 12, 2003.
WHAT MAY I VOTE ON?
The election of nominees to serve on our board of directors, and the
ratification of the appointment of our independent auditors for the year ending
December 31, 2003.
HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
The Board recommends a vote FOR each of the nominees and FOR the other proposal.
WHO IS ENTITLED TO VOTE?
Stockholders as of the close of business on April 30, 2003 (the Record Date) are
entitled to vote at the annual meeting.
HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the prepaid envelope.
If you return your signed proxy card but do not mark the boxes showing how you
wish to vote, your shares will be voted FOR each of the two proposals. You have
the right to revoke your proxy at any time before the meeting by:
notifying the Corporate Secretary, Sandra Kahn, at the
address shown above;
voting in person; or
returning a later-dated proxy card.
WHO WILL COUNT THE VOTE?
Representatives of our transfer agent, American Stock Transfer & Trust Co., will
count the votes.
IS MY VOTE CONFIDENTIAL?
Proxy cards, ballots and voting tabulations that identify individual
stockholders are mailed or returned directly to American Stock Transfer & Trust
Co., and handled in a manner that protects your voting privacy. Your vote will
not be disclosed except: (1) as needed to permit American Stock Transfer & Trust
Co. to tabulate and certify the vote; and (2) as required by law. Additionally,
all comments written on the proxy card or elsewhere will be forwarded to
management. Your identity will be kept confidential unless you ask that your
name be disclosed.
HOW MANY SHARES CAN VOTE?
As of April 30, 2003, 9,432,251 shares of Common Stock were issued and
outstanding. Every stockholder of Common Stock is entitled to one (1) vote for
each share held.
1
WHAT IS A 'QUORUM'?
A 'quorum' is a majority of the shares entitled to vote at the meeting (i.e.
4,716,126 shares). These shares must be present at the meeting either in person
or represented by proxy. If you submit a properly executed proxy card, even if
you abstain from voting, you will be considered part of the quorum. All 'broker
non-votes' will be counted in determining whether a quorum is present.
WHAT VOTE IS REQUIRED?
The affirmative vote of a majority of the shares represented and entitled to
vote at the meeting is required to elect each director (Proposal 1) and to
ratify Eisner LLP, as our independent accountants (Proposal 2).
WHO CAN ATTEND THE ANNUAL MEETING?
All stockholders as of the close of business on April 30, 2003 can attend.
Tickets are not required.
HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
We do not know of any business to be considered at the 2003 annual meeting other
than the proposals described in this proxy statement. If any other business is
presented at the annual meeting, your signed proxy card gives authority to
William Spier, our Chairman of the Board, and Nathan Kahn, our President and
Chief Executive Officer, to vote on such matters in their discretion.
WHO ARE THE LARGEST PRINCIPAL STOCKHOLDERS?
As of April 30, 2003, Nathan Kahn and Sandra Kahn beneficially owned 5,213,923
shares of Common Stock which represented 55.3% of the then outstanding Common
Stock.
WHEN ARE STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING DUE?
All stockholder proposals to be considered for inclusion in next year's proxy
statement must be submitted in writing to Sandra Kahn, Secretary, Empire
Resources, Inc., One Parker Plaza, Fort Lee, NJ 07024 prior to January 13, 2004.
All other stockholder proposals for consideration at the 2004 annual meeting
must be received by Ms. Kahn within the time period specified in our bylaws,
which generally is not less than 60 days and not more than 90 days prior to the
meeting. Because our bylaws are complex, any stockholder that wishes to make a
proposal should review our bylaws to determine when the proposal must be
received.
CAN A STOCKHOLDER NOMINATE SOMEONE TO BE A DIRECTOR OF THE COMPANY?
As a stockholder, you may recommend any person as a nominee for director by
writing to Sandra Kahn, Secretary, c/o Empire Resources, Inc., One Parker Plaza,
Fort Lee, NJ 07024. All recommendations must be received by Ms. Kahn within the
time period specified in our bylaws, which generally is not less than 60 days
and not more than 90 days prior to the meeting. Because our bylaws are complex,
any stockholder that wishes to make a recommendation should review our bylaws to
determine when the recommendation must be received. Each recommendation must be
accompanied by the name, age, residence and business address of the person being
nominated. They must include a representation that the stockholder is a record
holder of the stock or holds the stock through a broker. They must state the
number and class of shares held by the stockholder and by each person being
nominated by the stockholder. They must include information regarding each
nominee that would be required to be included in a proxy statement. They must
also include a description of any arrangement or understanding between and among
the stockholder and each and every nominee. Finally, the recommendations must
include the written consent of each nominee to serve as a director, if elected.
For further information, please see our bylaws.
2
PROPOSALS YOU MAY VOTE ON
PROPOSAL 1 -- ELECTION OF DIRECTORS
There are nine nominees for election this year. All of the nominees are
currently directors, and their biographical information appears below. All
directors are elected annually, and serve a one-year term until the next annual
meeting. If any director is unable to stand for re-election, the board of
directors may reduce its size or designate a substitute. If a substitute is
designated, proxies voting on the original director candidate will be cast for
the substituted candidate. The affirmative vote of the holders of a majority of
our common stock represented and entitled to vote at the meeting is required for
the election of each director.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THESE
DIRECTORS.
PROPOSAL 2 -- RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS INDEPENDENT
AUDITORS.
Our audit committee has recommended, and our board of directors has
approved, the appointment of Eisner LLP as our independent auditors for the year
ending December 31, 2003, subject to your approval. Shareholder ratification of
the selection of Eisner LLP as the Company's independent auditors is not
required by the Company's by-laws or otherwise. However, the Board of Directors
is submitting the selection of Eisner LLP to the shareholders for ratification
as a matter of good corporate practice. If the shareholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee in their discretion
may direct the appointment of different independent auditors at any time during
the year if they determine that such a change would be in the best interests of
the Company and its shareholders.
A representative of Eisner LLP is expected to attend the annual meeting. He
will have the opportunity to speak at the meeting if he wishes. He will also
respond to appropriate questions.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF EISNER LLP AS INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 2003.
NOMINEES FOR THE BOARD OF DIRECTORS
WILLIAM SPIER Director since October 1996
Age 68
Mr. Spier has been a director of the Company since October 1996 and was
Acting Chief Executive Officer from November 1997 until September 1999. Mr.
Spier presently serves as non-executive Chairman of the Board of the Company.
Mr. Spier has been a private investor since 1982. He also served as Chairman of
DeSoto, Inc., a manufacturer and distributor of cleaning products, from May 1991
through September 1996, and as Chief Executive Officer of DeSoto, Inc., from May
1991 to January 1994 and from September 1995 through September 1996. From 1980
to 1981, Mr. Spier was Vice Chairman of Phibro-Salomon Inc. Mr. Spier also
serves as a Director of Keystone Consolidated Industries, Inc.
NATHAN KAHN Director since September 1999
Age 48
Mr. Kahn has been the Chief Executive Officer, President and a director of
the Company since September 1999. Prior to the merger, Mr. Kahn was the
President and a director of Empire from the time of its formation in 1984. Mr.
Kahn has also been the President and a director of Empire-Pacific since its
formation in 1996.
SANDRA KAHN Director since September 1999
Age 45
Ms. Kahn has been a Vice President, the Chief Financial Officer and a
director of the Company since September 1999. Prior to the merger, Ms. Kahn was
the Secretary and Treasurer and a director of Empire from the time of its
formation in 1984. Ms. Kahn has also been the Secretary and Treasurer and a
director of Empire-Pacific since its formation in 1996.
3
HARVEY WRUBEL Director since September 2000
Age 49
Mr. Wrubel has been the Vice President of Sales/Director of Marketing of the
Company since September 1999. Prior to the merger, Mr. Wrubel was the Vice
President of Sales/Director of Marketing of Empire for more than the prior five
years. Mr. Wrubel has been a director of the Company since September 2000.
JACK BENDHEIM Director since September 1999
Age 56
Mr. Bendheim has been a director of the Company since September 1999. He has
also been the President, Chief Executive Officer, Chairman of the Board and a
director of Philipp Brothers Chemicals, Inc. for more than the prior five years.
Mr. Bendheim is also a director of The Berkshire Bank, CDG Technologies, and
Penick Corporation.
BARRY L. EISENBERG Director since September 1990
Age 56
Mr. Eisenberg has been a director of the Company since 1990 and was
Secretary and Treasurer of the Company from 1993 until September 1999. Since
1995, Mr. Eisenberg has been an active investor and director of private
companies in Israel. Prior thereto, Mr. Eisenberg was, for a period of more than
five years, a partner in the Roseland, New Jersey law firm of Lasser, Hochman,
Marcus, Guryan & Kuskin.
PETER G. HOWARD Director since September 1999
Age 67
Mr. Howard has been a director of the Company since September 1999. He has
also been the Managing Director of Empire-Pacific since 1996. From 1961 to 1995,
Mr. Howard held various positions within the aluminum industry, the most recent
of which was Divisional General Manager of Comalco Rolled Products, a unit of
Comalco Aluminum Ltd., an aluminum producer.
NATHAN MAZUREK Director since September 1999
Age 40
Mr. Mazurek has been the President of Provident Industries, a diversified
manufacturer of electrical systems and components for more than the prior five
years. Mr. Mazurek has been a director of the Company since September 1999.
MORRIS J. SMITH Director since January 1994
Age 45
Mr. Smith has been a director of the Company since January 1994. Since 1993,
Mr. Smith has been a private investor and investment consultant. Prior thereto,
Mr. Smith was employed for a period of more than five years by Fidelity
Investments as a portfolio manager.
FAMILY RELATIONSHIPS
Nathan Kahn and Sandra Kahn are husband and wife. Barry L. Eisenberg and
Jack Bendheim are brothers-in-law.
EXECUTIVE OFFICERS
Our executive officers and their ages as of April 30, 2003 are as follows:
<Table>
Nathan Kahn.................. 48 Chief Executive Officer, President and Director
Sandra Kahn.................. 45 Vice President, CFO and Director
Harvey Wrubel................ 49 Vice President of Sales and Director
</Table>
Biographical information with respect to Ms. Kahn and Messrs. Kahn and
Wrubel is set forth above in 'Nominees for the Board of Directors.'
4
STATEMENT OF CORPORATE GOVERNANCE
Our business is managed under the direction of the board of directors. The
directors delegate the conduct of business to our senior management team.
Our directors meet three or four times a year in regularly scheduled meeting
as is deemed necessary. The directors held three meetings during 2002. The
Chairman of our board of directors in consultation with the CEO usually
determines the agenda for the meetings. Each of our directors receives the
agenda and supporting information in advance of the meetings. Any of our
directors may raise other matters at the meetings. The CEO, CFO and other
members of senior management make presentations to our directors at the meetings
and a substantial portion of the meeting time is devoted to directors'
discussion of these presentations. Significant matters that require directors'
approval are voted on at the meetings.
Our directors have complete access to senior management. They may also seek
independent, outside advice.
Committee Structure. The board of directors considers all major decisions.
The board of directors has established three standing committees so that certain
areas can be addressed in more depth than may be possible at a full meeting of
the board of directors. Each committee is chaired by an independent, outside
director.
Audit Committee. This committee assures the credibility of our financial
reporting by providing oversight of our financial reporting process and our
internal controls. The audit committee has adopted a charter pursuant to which
it conducts its activities. The audit committee reports on its activities to the
board of directors. During 2002 the audit committee held three meetings and took
further action by written consent. The audit committee is comprised of William
Spier, Jack Bendheim and Nathan Mazurek.
Compensation Committee. This committee advises and guides the board of
directors in determining the compensation of executive officers and senior
management, and reviews our general employee compensation and benefits policies
and practices. During 2002, the compensation committee held one meeting. The
compensation committee is comprised of William Spier, Nathan Kahn and Jack
Bendheim.
Stock Options Committee. This committee consults with management regarding
the administration of our stock option plan and approves grants of options to
directors, executive officers and other employees. The committee did not meet in
2002. The stock options committee is comprised of William Spier, Jack Bendheim
and Nathan Mazurek.
We do not have a standing nominating committee.
Audit Committee Report
The following report is not deemed to be part of a document filed with the
SEC pursuant to the Securities Act of 1933, as amended (the 'Securities Act'),
or the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and is
not to be deemed incorporated by reference in any documents filed under the
Securities Act or Exchange Act, without the express consent of the persons named
below.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States and expressing an opinion on the conformity of those audited
financial statements in accordance with accounting principles generally accepted
in the United States. The Audit Committee's responsibility is to monitor and
oversee these processes. The Audit Committee is also directly responsible for
the appointment, compensation and oversight of the Company's independent
auditors. The responsibilities of the Audit Committee are set forth in its
written charter, as adopted by the board of directors.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and rely, without independent verification,
on the information provided to them and on the representations made to them by
management and the independent accountants. Each of the members
5
of the Audit Committee was considered independent for the year ended December
31, 2002, as such term is defined under the listing standards of the American
Stock Exchange. In addition, at the direction of the Board of Directors, the
Audit Committee has determined that Mr. Bendheim meets the criteria for an
'audit committee financial expert' as that term has been defined by the SEC.
Review with Management
The Audit Committee has reviewed the audited financial statements and met
and held discussions with management regarding the audited financial statements.
Management has represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States.
Review and Discussion with Independent Auditors
The Audit Committee has discussed with Eisner LLP, the Company's independent
auditors, matters required to be discussed by Statement of Auditing Standards
No. 61 (Communication with Audit Committees). The Audit Committee received and
reviewed the written disclosures and the letter from the independent auditors
required by Independence Standard No. 1, Independence Discussions with Audit
Committees, as amended by the Independence Standards Board, and has discussed
with the auditors the auditors' independence. The Audit Committee has also
considered the compatibility of non-audit services with the auditors'
independence.
Audit Fees
The aggregate fees billed by Eisner LLP for professional services rendered
for the audit of our annual financial statements for the two most recent fiscal
years ended December 31, 2002 and 2001 and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for the same fiscal
years were $103,500 for 2002 and $103,500 for 2001.
Audit-Related Fees
Eisner LLP has not rendered any audit related services during the years 2002
and 2001.
Tax Fees
The aggregate fees billed by Eisner LLP for services rendered to us for tax
compliance, tax advice and tax planning for our two most recent fiscal years
ended December 31, 2002 and 2001 were $31,350 for 2002 and $24,650 for 2001. In
2002, the fees related to preparation of income tax returns and services related
to audits. In 2001, the fees related to income tax returns preparation.
All Other Fees
The above categories (Audit Fees and Tax Fees) encompass all of the fees for
our two most recent fiscal years ended December 31, 2002 and 2001 billed by
Eisner LLP for services rendered to us.
The Audit Committee has determined that the provision of non-audit services
by Eisner LLP is compatible with maintaining the independent auditor's
independence.
Fee Pre-Approval Policy
The Audit Committee has approved the engagement of Eisner LLP and has
approved a budget for audit, audit related and tax related fees for services to
be rendered for our 2003 fiscal year. The Audit Committee, or a member of the
committee, must pre-approve any non-audit service provided to us by the
company's independent auditor. The Audit Committee also approved the engagement
of Eisner LLP for the audit performed for our fiscal years ended December 31,
2002 and 2001.
6
Conclusion
Based on the Audit Committee's discussion with management and the
independent auditors, the Audit Committee's review of the audited financial
statements, the representations of management and the report of the independent
auditors to the Audit Committee, the Audit Committee recommends that the Board
of Directors include the audited consolidated financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002 for
filing with the Securities and Exchange Commission. The Audit Committee also
appoints Eisner LLP to serve as independent auditors for the year ended December
31, 2003, subject to ratification of such appointment by the shareholders of the
Company.
AUDIT COMMITTEE:
Jack Bendheim
Nathan Mazurek
William Spier
DIRECTORS' COMPENSATION
The non-executive Chairman of the Board is paid $25,000 per annum as
consideration for his services. Each other director is paid $500 for attendance
(in person or by telephone) at meetings of the board of directors, and all
directors are reimbursed for out-of-pocket expenses incurred in connection with
attendance at meetings. In addition, pursuant to the Company's 1996 stock option
plan, the Company granted the following options to its directors.
<Table>
<Caption>
NUMBER OF
SHARES EXERCISE
UNDERLYING PRICE PER
NAME OPTION SHARE
---- ------ -----
Jack Bendheim............................................... 2,000 $1.13
Barry Eisenberg............................................. 2,000 $1.13
Peter Howard................................................ 2,000 $1.13
Nathan Kahn................................................. 2,000 $1.13
Sandra Kahn................................................. 2,000 $1.13
Nathan Mazurek.............................................. 2,000 $1.13
Morris Smith................................................ 2,000 $1.13
William Spier............................................... 2,000 $1.13
Harvey Wrubel............................................... 2,000 $1.13
</Table>
7
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth for the periods indicated information
concerning the compensation earned by the Company's Chief Executive Officer and
each of the Company's most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<Table>
<Caption>
LONG-TERM
COMPENSATION AWARDS
-------------------------
SECURITIES
UNDERLYING ALL OTHER
OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (#) ($)
--------------------------- ---- --------- -------- --- ---
Nathan Kahn................................ 2002 $450,000 -- 2,000 $ 1,000(1)
Chief Executive Officer and President 2001 $350,000 $ 75,000 2,000 $ 2,000(1)
2000 $300,000 $ 50,000 2,000 $ 2,000(1)
Sandra Kahn................................ 2002 $175,000 -- 2,000 $ 1,000(1)
Vice President, Chief Financial 2001 $150,000 $ 25,000 2,000 $ 2,000(1)
Officer,
Treasurer and Secretary 2000 $100,000 -- 2,000 $ 2,000(1)
Harvey Wrubel.............................. 2002 $219,890 $298,000 2,000 $125,173(2)
Vice President of Sales 2001 $214,316 $300,000 2,000 $117,218(3)
2000 $207,872 $277,000 2,000 $139,142(4)
</Table>
- ---------
(1) Represents directors' fees.
(2) Of this amount $1,000 represents director fees and $124,173
represents non-cash taxable compensation charged to Mr.
Wrubel upon the vesting of non-contingent restricted shares
as discussed in Item 7, Management Discussion and Analysis
of Financial Condition and Results of
Operations -- Accounting Treatment of Restricted Stock
Agreement.
(3) Of this amount, $2,000 represents director fees and $115,218
represents non-cash taxable compensation charged to Mr.
Wrubel upon the vesting of non-contingent restricted shares,
as discussed in Item 7, Management's Discussion and Analysis
of Financial Condition and Results of
Operations -- Accounting Treatment of Restricted Stock
Agreement.
(4) Of this amount, $1,000 represents director fees and $138,142
represents non-cash taxable compensation charged to Mr.
Wrubel upon the vesting of non-contingent restricted shares,
as discussed in Item 7, Management's Discussion and Analysis
of Financial Condition and Results of
Operations -- Accounting Treatment of Restricted Stock
Agreement.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the officers and employees named in the Summary Compensation
Table during 2002. No stock appreciation rights were granted to these
individuals during such year.
(INDIVIDUAL GRANTS) (1)
<Table>
<Caption>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE
GRANTED IN FISCAL ($/SH) EXPIRATION
NAME (#) YEAR (2) DATE
---- --- ---- --- ----
Nathan Kahn................. 2,000 11.1% $1.13 06/18/12
Sandra Kahn................. 2,000 11.1% $1.13 06/18/12
Harvey Wrubel............... 2,000 11.1% $1.13 06/18/12
<Caption>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION FOR
OPTION TERM
-------------------------------------------------------
5% 10%
NAME ($) ($)
---- --- ---
Nathan Kahn................. 1,421 3,602
Sandra Kahn................. 1,421 3,602
Harvey Wrubel............... 1,421 3,602
</Table>
(footnotes on next page)
8
(footnotes from previous page)
(1) All options granted to the named officers and employees are
non-statutory under federal tax laws and were granted on
June 18, 2002. Pursuant to the option agreement underlying
these options, the options became exercisable immediately
upon grant.
(2) The exercise price may be paid in cash or, under certain
circumstances, in shares of the Company's common stock.
YEAR-END OPTION VALUES
The following table provides certain information concerning the options held
by the officers and employees named in the Summary Compensation Table, above, as
of December 31, 2002.
OPTIONS AS OF DECEMBER 31, 2002
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END AT YEAR END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Nathan Kahn................................... 8,000 $ 1,804
Sandra Kahn................................... 8,000 $ 1,804
Harvey Wrubel................................. 206,000 $ 1,804
</Table>
- ---------
* The closing price of the Company's common stock on December 31, 2002, the last
day of trading in 2002, was $1.40.
EMPLOYMENT AGREEMENTS
On September 17, 1999, the Company entered into employment agreements with
each of Nathan Kahn and Sandra Kahn. Certain information regarding these
agreements is set forth below. The forms of these agreements are incorporated by
reference to this report as exhibits.
Term. The initial term of each agreement was three years. Each agreement
provided that the term will be extended automatically for successive two-year
periods unless either party gives written notice of termination at least 180
days prior to the end of the initial term or the then additional term, as the
case may be. Each agreement provides that the Company may terminate the
agreement upon the Disability of the executive or for Cause (as such terms are
defined the agreement). Nathan Kahn's contract was extended for an additional
two years by an amendment in July 2002. Sandra Kahn's contract was extended
automatically for an additional two year period pursuant to the terms of her
agreement.
Base Salary. The Company has agreed to pay Nathan Kahn a base salary of
$450,000 per annum and Sandra Kahn a base salary of $175,000 per annum. These
amounts may be increased, but not decreased, by the Board of Directors. The base
salary provided for by each agreement is subject to possible upward annual
adjustments based upon changes in a designated cost of living index.
Non-Compete. Each agreement provides that during the Specified Period (as
defined below) the employee will not, among other things, directly or
indirectly, be engaged as a principal in any other business activity or conduct
which competes with the business of the Company or be an employee, consultant,
director, principal, stockholder, advisor of, or otherwise be affiliated with,
any such business, activity or conduct. The 'Specified Period' means the
employee's period of employment and the four year period thereafter, provided
that if the employee's employment is terminated for Disability or without Cause
(or the employee voluntarily terminates his employment following a breach by the
Company), the Specified Period will terminate two years after the employee's
employment terminates.
9
EMPLOYMENT AGREEMENT WITH HARVEY WRUBEL
On September 17, 1999, the Company entered into an employment agreement with
Harvey Wrubel. Certain information regarding this agreement is set forth below.
The form of this agreement is incorporated by reference as an exhibit to this
report.
Term. The initial term of this agreement was until December 31, 2002. The
agreement provides that the term will be extended automatically for successive
two-year periods unless either party gives written notice of termination at
least 90 days prior to the end of the original term or the then additional term,
as the case may be. The agreement provides that the Company may terminate the
agreement any time with or without Cause (as such term is defined in the
agreement). However, if the Company terminates the agreement without Cause, the
employee is entitled to continue receiving his base salary until the scheduled
end of the term. Mr. Wrubel's contract extended automatically for an additional
two year period pursuant to the terms of his agreement.
Base Salary. The agreement provided for an initial base salary to be paid at
a rate of $203,000 per annum. This amount may be increased, but not decreased,
by the Board of Directors. The base salary is subject to possible upward annual
adjustments based upon changes in a designated cost of living index. Mr.
Wrubel's current base salary is $219,890.
Performance-Based Compensation. In addition to base salary, the agreement
provides that the Company shall pay the employee performance-based compensation
in accordance with a formula provided for in the agreement.
Non-Compete. The agreement provides that, during the employment term and for
12 months thereafter, the employee will not, among other things, be engaged in,
or be, an employee, director, partner, principal, stockholder or advisor of any
business, activity or conduct which competes with the business of the Company.
During any period following termination of the employee's employment the
foregoing will only apply to competition with regard to aluminum and such other
commodities as were being sold by the Company within six months prior to such
termination.
COMPENSATION COMMITTEE REPORT
The following report is not deemed to be part of a document filed with the
SEC pursuant to Securities Act or the Exchange Act, and is not to be deemed
incorporated by reference in any documents filed under the Securities Act or
Exchange Act, without the express consent of the persons named below.
General. The Compensation Committee (the 'Committee') reviews and approves
compensation levels for the Company's executive officers. In evaluating the
performance of members of senior management, the Committee has access to, and in
its discretion may meet with, any officer or other employee of Empire or its
subsidiaries. The Committee held one meeting during the fiscal year ended
December 31, 2002.
Compensation Philosophy. Empire must offer competitive salaries and other
benefits to be able to attract, retain and motivate highly-qualified and
experienced executives; cash compensation for executives in excess of base
salaries should be tied to Empire's performance, individual performance or both;
and the financial interests of Empire's executives should be aligned with the
financial interests of the stockholders, primarily through equity incentive
plans. Empire benchmarks its total compensation levels by comparing itself to
other comparable companies, in order to make Empire's compensation opportunities
competitive with what other leading organizations are providing.
Base Salary. The Committee establishes the base salaries of executive
officers at levels it determines are appropriate in light of the duties and
scope of responsibilities of each officer's position. The Committee reviews
executive officer salaries regularly, usually at least once every 12 months, and
makes adjustments as warranted to reflect continued individual contributions,
sustained performance and competitive market factors. The Committee measures
individual contributions and performance against total annual compensation,
including incentive awards, rather than against base salary alone.
Equity-Based Incentive Compensation. The 1996 Stock Option Plan (the '1996
Plan') authorizes the Committee to make grants and awards of stock options,
stock appreciation rights, restricted stock and other stock-based awards. Stock
options are granted under the 1996 Plan with an exercise price
10
equal to the market price of Empire's common stock on the date of grant and
generally vest semi-annually over three years. This approach is designed to
motivate management to increase stockholder value over the long-term because the
full benefit of the compensation package cannot be realized unless stock price
appreciation occurs over a number of years. In determining the number of options
awarded, the Committee considers competitive practices, the duties and scope of
responsibilities of each executive's position and the amount and terms of
options already held by management. Based on this review, there were no stock
options granted to senior executives, other than the 2,000 options granted to
each member of our board of directors.
Compensation of the Chief Executive Officer. The CEO, Nathan Kahn, is
compensated based on an employment agreement entered into in September 1999,
which established the terms and conditions of his employment with Empire,
including a minimum base salary, minimum levels of participation in incentive
plans, the minimum benefits to which he was entitled under the compensation
plans available to Empire's executive officers and payments or benefits to which
he would be entitled upon termination of his employment. See 'Employment
Agreements' below. The Committee typically reviews the base salary of the Chief
Executive Officer at least every 12 months pursuant to the same policies the
Committee uses to evaluate the base salaries of the other executive officers.
Mr. Kahn's compensation was reviewed by the Committee during the year 2002 and
was increased by $65,000 to $450,000, based upon an assessment of the
competitiveness of his total compensation package and the existing economic
environment. The CEO's compensation reflects a higher degree of policy and
decision-making authority and a higher level of responsibility with respect to
strategic direction of the Company and its financial and operating results. It
also reflects the CEO's long term commitment and contributions to the success of
the Company.
COMPENSATION COMMITTEE:
Mr. Jack Bendheim
Mr. William Spier
Mr. Nathan Kahn
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2002, the Compensation Committee consisted of William Spier, Nathan
Kahn and Jack Bendheim. In addition to being a member of the Compensation
Committee, Mr. Kahn is also our Chief Executive Officer and President. None of
the other members of the Compensation Committee serve, or previously served as
officers or employees of the Company. Mr. Kahn recused himself from discussions
on his own compensation.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 30, 2003 certain information with
respect to beneficial ownership (as defined in Rule 13d-3 of the Securities and
Exchange Act of 1934) of our common stock by (i) each person that is a director,
(ii) each person named in the Summary Compensation Table, below, (iii) all such
persons as a group and (iv) each person known to us to be the owner of more than
5% of our common stock.
<Table>
<Caption>
PERCENT OF
NUMBER OF SHARES COMMON STOCK
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) OWNED
------------------- --------------------- -----
DIRECTORS AND OFFICERS:
William Spier....................................... 257,669(3) 2.7%
Nathan Kahn and Sandra Kahn......................... 5,217,923(4) 55.3%
Harvey Wrubel....................................... 584,327(5) 6.2%
Jack Bendheim....................................... 28,000(6) *
Barry L. Eisenberg.................................. 371,706(7) 3.9%
Peter G. Howard..................................... 8,000(8) *
Nathan Mazurek...................................... 8,000(9) *
Morris J. Smith..................................... 81,467(10) *
All officers and directors as a group (9 persons)... 6,557,092(11) 66%
</Table>
- ---------
* Less than 1%
** Unless otherwise indicated, the address of each person
listed above is c/o Empire Resources, Inc., One Parker
Plaza, Fort Lee, NJ 07024.
(1) Unless otherwise indicated, each person has sole investment
and voting power with respect to the shares indicated. For
purposes of this table, a person or group of persons is
deemed to have 'beneficial ownership' of any shares as of a
given date which such person has the right to acquire within
60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person or
group of persons named above on a given date, any security
which such person or persons has the right to acquire within
60 days after such date is deemed to be outstanding for the
purpose of computing the percentage ownership of such person
or persons, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other
person.
The information in this table was prepared by the Company in
reliance on filings made with the Securities and Exchange
Commission on Schedule 13D and Forms 4 or 5.
(2) Consists of (i) 104,669 currently outstanding shares held by
Mr. Spier and (ii) 151,000 shares underlying currently
exercisable options held by Mr. Spier.
(3) Consists (i) of 5,201,923 currently outstanding and (ii)
12,000 shares underlying currently exercisable options held
by Nathan and Sandra Kahn.
(4) Consists of (i) 358,327 shares transferred from Nathan and
Sandra Kahn to Mr. Wrubel, (ii) 20,000 currently outstanding
shares held by Mr. Wrubel, and (iii) 204,000 shares
underlying currently exercisable options held by
Mr. Wrubel.
(5) Consists of (i) 20,000 outstanding shares held by the
Bendheim Foundation, an affiliate of Mr. Bendheim, and (ii)
6,000 shares underlying currently exercisable options held
by Mr. Bendheim.
(6) Consists of (i) 700 currently outstanding shares held by
Mr. Eisenberg, (ii) 82,667 shares underlying currently
exercisable options held by Mr. Eisenberg, (iii) 500 shares
owned by Mr. Eisenberg's wife and (iv) 284,839 currently
outstanding shares held by 241 Associates LLC, a limited
liability company. Noam Eisenberg is the sole manager of 241
Associates LLC and as such has voting and investment power
with respect to the shares held by 241 Associates LLC. Noam
Eisenberg is the son of Barry L. Eisenberg. A majority of
the ownership interest of 241 Associates LLC is owned by
Mr. Eisenberg and his wife and, as a result of such
ownership interests,
(footnotes continued on next page)
12
(footnotes continued from previous page)
Mr. Eisenberg may influence the voting and disposition of
the shares of common stock held by 241 Associates LLC.
Mr. Eisenberg disclaims beneficial ownership of such shares
and of the shares owned by his wife.
(7) Consists of 6,000 shares underlying currently exercisable
options held by Mr. Howard.
(8) Consists of 6,000 shares underlying currently exercisable
options held by Mr. Mazurek.
(9) Consists of (i) 15,800 currently outstanding shares held by
Mr. Smith and (ii) 63,667 shares underlying currently
exercisable options held by Mr. Smith. The Brook Road
Nominee Trust, nominee for the Morris Smith Family Trust, is
the owner of 163,653 outstanding shares of Common Stock.
Esther Smith, the mother of Morris J. Smith, is the sole
trustee of the Morris Smith Family Trust and as such has
voting and investment power with respect to such shares. The
Morris Smith Family Trust is a discretionary trust, the
potential beneficiaries of which are Mr. Smith and members
of his family. Mr. Smith disclaims any beneficial ownership
of any and all shares owned by the Brook Road Nominee Trust.
(10) Consists of 6,006,758 currently outstanding shares and
531,334 shares underlying currently exercisable options and
warrants. Does not include 163,653 shares that Mr. Smith
disclaims beneficial ownership of as described in footnote 9
above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2003, the Company has not engaged in any transaction, or
series of similar transactions, in which the amount involved exceed $60,000 and
in which any of its directors, executive officers or securityholders who
beneficially own in excess of 5% of the Company's outstanding common stock (or
any of their immediate family members) had a direct or indirect material
interest. In addition, none of the Company's directors have any, direct or
indirect, business relationships with the Company.
STOCK PERFORMANCE GRAPH
The stock price performance graph depicted below is not deemed to be part of
a document filed with the SEC pursuant to the Securities Act or the Exchange Act
and is not to be deemed incorporated by reference in any documents filed under
the Securities Act or the Exchange Act without the express consent of the
Company.
The following graph compares the yearly percentage change in the cumulative
total shareholder return (i.e. stock price growth plus dividends) on our common
stock, based on the market price of our common stock, with the total return of
U.S. companies listed on the AMEX Stock Market and the AMEX companies included
within our industry grouping (SIC 5050 -- 5059 U.S. Companies, Metals and
Minerals, Except Petroleum). This graph was prepared by the Center for Research
in Security Prices at the University of Chicago Graduate School of Business. The
calculation of total cumulative return assumes a $100 investment in our common
stock, the U.S. companies listed AMEX Stock Market and in the AMEX companies
included within our industry grouping (SIC 5050 -- 5059 U.S. Companies, Metals
and Minerals, Except Petroleum) on December 31, 1997, and that all dividends
were reinvested.
13
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Empire Resources, Inc.
[Performance Graph]
- --------------------------------------------------------------------------------
Legend
<Table>
<Caption>
Symbol CRSP Total Returns Index for: 12/1997 12/1998 12/1999 12/2000 12/2001 12/2002
- ------ ----------------------------- ------- ------- ------- ------- ------- -------
Empire Resources, Inc. 100.0 104.2 108.3 58.3 60.0 93.3
AMEX Stock Market (US Companies) 100.0 107.3 141.6 131.4 122.3 99.9
AMEX Stocks (SIC 505-5059 US 100.0 70.2 57.6 42.5 37.1 23.0
Companies) Metals and Minerals,
Except Petroleum
</Table>
- --------------------------------------------------------------------------------
Notes:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/1997.
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than ten percent of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten-percent stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) reports that they file.
Based solely upon review of the copies of such reports furnished to us and
written representations from certain of our executive officers and directors
that no other such reports were required, we believe that during the period from
January 1, 2002 through December 31, 2002 all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with on a timely basis.
OTHER MATTERS
The board of directors does not know of any matters other than those
described above to be presented to the meeting. If any other matters do come
before the meeting, the persons named in the proxy will exercise their
discretion in voting thereon.
ANNUAL REPORT
An annual report to shareholders, including consolidated financial
statements of the Company and its subsidiaries prepared in conformity with
generally accepted accounting principles, is being distributed to all
shareholders of record with this proxy statement. ADDITIONAL COPIES OF OUR
ANNUAL REPORT MAY BE OBTAINED WITHOUT CHARGE UPON REQUEST TO SANDRA KAHN,
SECRETARY, EMPIRE RESOURCES, INC., ONE PARKER PLAZA, FORT LEE, NJ, 07024.
By Order of the Board of Directors,
/s/ Sandra Kahn
----------------------------------------
SANDRA KAHN
Vice President, Chief Financial Officer,
Treasurer and Secretary
Fort Lee, New Jersey
May 12, 2003
15
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Appendix 1
EMPIRE RESOURCES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints William Spier and Nathan Kahn or any of them
with full power of substitution, proxies to represent the undersigned
stockholder and to vote at the annual meeting of Stockholders of Empire
Resources, Inc. (the "Company") to be held on June 12, 2003 at 11:00 a.m.
E.S.T., and at any adjournment or adjournments thereof, hereby revoking any
proxies heretofore given, all shares of Common Stock of the Company that the
undersigned would be entitled to vote as directed below, and in their discretion
upon such other matters as may come before the meeting.
(Continued, and to be dated and signed on reverse side)
Please detach and mail in the envelope provided
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
EMPIRE RESOURCES, INC.
June 12, 2003
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PROPOSAL, THIS PROXY
WILL BE VOTED FOR SUCH PROPOSAL.
[X] Please mark your votes as in this example.
1. Election of Directors For Withheld Nominees:
[ ] [ ] William Spier
Nathan Kahn
Sandra Kahn
Harvey Wrubel
Jack Bendheim
Barry L. Eisenberg
Peter G. Howard
Nathan Mazurek
Morris J. Smith
(Instruction: To withhold authority to vote for individual nominees, write the
nominees' names on the line provided below.)
- ----------------------------------------------
2. Ratification of appointment of EISNER LLP, For Against Abstain
independent auditors [ ] [ ] [ ]
The undersigned hereby authorizes the proxies, in their discretion, to vote on
any other business as may properly be brought before the meeting or any
adjournment thereof.
SIGNATURE(S) DATE
- -------------------------------- --------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.