prec14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
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
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
þ Preliminary
Proxy Statement
o Confidential,
For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
o Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-12
MYERS INDUSTRIES, 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):
þ No
fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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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):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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PRELIMINARY
COPY SUBJECT TO COMPLETION
1293 South Main Street Akron, Ohio 44301
March ,
2011
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders to be held on Friday, April 29, 2011, at
9:00 A.M. at the Louis S. Myers Training Center, 1554 South
Main Street, Akron, Ohio 44301.
At the Annual Meeting you will be asked to elect the nine
director candidates nominated by our Board of Directors and to
ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm. You will also
cast a non-binding advisory vote on executive compensation
(say-on-pay)
and on the frequency for holding the non-binding advisory vote
on
say-on-pay
(every one, two, or three years). Enclosed with this letter is a
Notice of Annual Meeting together with a Proxy Statement which
contains information with respect to the nominees for director
and the other proposals.
The proposals discussed in the Proxy Statement are very
important to our shareholders and the Company, and we hope that
you will be able to personally attend the Annual Meeting.
Whether or not you expect to attend the Annual Meeting in
person, I urge you to complete and return the enclosed white
proxy card as soon as possible.
If you have any questions or need assistance in voting your
shares, please contact our proxy solicitor, Innisfree M&A
Incorporated, toll-free at
(888) 750-5834.
Banks and brokers may call collect at
(212) 750-5833.
Sincerely,
John C. Orr
President and Chief Executive Officer
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Shareholders to be held on
April 29, 2011: This Proxy Statement and the Companys
2010 Annual Report to Shareholders are available on Myers
website at
www.myersindustries.com/annualreports.html.
TABLE OF
CONTENTS
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PROXY
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1293 South Main Street Akron, Ohio 44301
To Be Held Friday,
April 29, 2011
The Annual Meeting of Shareholders of Myers Industries, Inc., an
Ohio corporation (Myers or the Company),
will be held at the Louis S. Myers Training Center, 1554 South
Main Street, Akron, Ohio 44301, on Friday, April 29, 2011
at 9:00 A.M. (local time), for the following purposes:
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1.
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To elect the nine candidates nominated by the Board of Directors
to serve as directors until the next Annual Meeting of
Shareholders;
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2.
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To ratify the appointment of Ernst & Young LLP as the
Companys independent registered public accounting firm for
fiscal 2011;
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3.
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To cast a non-binding advisory vote on executive compensation
(say-on-pay);
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4.
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To vote on the frequency for holding the non-binding advisory
vote on
say-on-pay
(every one, two, or three years); and
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5.
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To consider such other business as may be properly brought
before the meeting or any adjournments thereof.
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The Board of Directors has fixed the close of business on
March 7, 2011 as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual
Meeting. All shareholders are cordially invited to attend the
Annual Meeting in person. To be sure that your shares are
properly represented at the Annual Meeting, whether or not you
intend to attend the Annual Meeting in person, please complete
and return the enclosed white proxy card as soon as
possible.
If you have any questions or need assistance in voting your
shares, please contact our proxy solicitor, Innisfree M&A
Incorporated, toll-free at
(888) 750-5834.
Banks and brokers may call collect at
(212) 750-5833.
By Order of the Board of Directors,
Donald A. Merril
Chief Financial Officer, Senior Vice President
and Corporate Secretary
Akron, Ohio
March , 2011
THE 2010 ANNUAL
REPORT TO SHAREHOLDERS ACCOMPANIES THIS NOTICE
1
Matters Related to the Proxy Statement.
Meeting Time and Applicable Dates. This Proxy
Statement is furnished in connection with the solicitation by
the Board of Directors (the Board or Board of
Directors) of Myers Industries, Inc., an Ohio corporation,
of the accompanying proxy to be voted at the Annual Meeting of
Shareholders (Annual Meeting) to be held on Friday,
April 29, 2011, at 9:00 A.M. (local time), and at any
adjournment thereof. The close of business on March 7,
2011, has been fixed as the record date for the determination of
the shareholders entitled to notice of and to vote at the
meeting.
Participants in the Proxy Solicitation. This
Proxy Statement is furnished in connection with the solicitation
of proxies by the Company, the current directors and the
nominees for election as director to be used at the Annual
Meeting and any adjounment thereof.
Outstanding Shares and Quorum. On the record
date, Myers had outstanding 35,455,850 shares of common
stock, without par value (Common Stock). Each share
of Common Stock is entitled to one vote. For information
concerning our Principal Shareholders see the
section titled Security Ownership of Certain Beneficial
Owners and Management below. In accordance with the
Companys Amended and Restated Code of Regulations, the
holders of shares of Common Stock entitling them to exercise a
majority of the voting power of the Company, present in person
or by proxy, shall constitute a quorum for the Annual Meeting.
Shares of Common Stock represented by signed proxies will be
counted toward the establishment of a quorum on all matters even
though they represent broker non-votes or they are signed but
otherwise unmarked, or marked Abstain,
Against or Withhold Authority.
Votes Required. With respect to
Proposal No. 1, to elect the nine director candidates
nominated by the Board, if a quorum is present at the Annual
Meeting, the nominees for election as directors who receive the
greatest number of votes cast will be elected as directors.
Abstentions and broker non-votes will not affect the outcome of
the election of directors. Proposal No. 2, to ratify
the appointment of the independent registered public accounting
firm, is a non-binding proposal, but its approval requires the
affirmative vote of the holders of a majority of the Common
Stock represented in person or by proxy at the Annual Meeting.
Abstentions, broker non-votes, or a failure by those present in
person or by proxy to vote will act as a vote
Against Proposal No. 2. Even if the
selection is ratified, the Audit Committee and the Board, in
their discretion, may change the appointment at any time during
the year if we determine that such a change would be in the best
interests of the Company and our shareholders.
Proposal No. 3 is a non-binding advisory vote to
approve the Companys executive compensation, and its
approval requires the affirmative vote of the holders of a
majority of the Common Stock represented in person or by proxy
at the Annual Meeting. Abstentions, broker non-votes, or a
failure by those present in person or by proxy to vote will act
as a vote Against Proposal No. 3. The
outcome of Proposal No. 4, the non-binding advisory
vote on the frequency for holding the
say-on-pay
vote (every one, two, or three years), will be determined by
plurality vote, with the frequency option receiving the greatest
number of votes cast being the frequency option for holding the
say-on-pay
vote approved by the shareholders. Abstentions and broker
non-votes will not affect the outcome of
Proposal No. 4.
Proxy Instructions. All shares of Common Stock
represented by properly executed proxies which are returned and
not revoked will be voted in accordance with the instructions,
if any, given therein. If no instructions are provided in a
proxy, the shares of Common Stock represented by such proxy will
be voted For the Boards nominees for director,
For the ratification of the appointment of Ernst
& Young LLP , For the approval of the
Companys executive compensation, For the
approval of one year as the frequency of the
say-on-pay
advisory vote, and in accordance with the proxy-holders
best judgment as to any other matters, if any, which may be
properly raised at the Annual Meeting.
Proxy Voting. If your shares are registered
directly in your name with our transfer agent, then you are a
shareholder of record with respect to those shares and you may
either vote in person at the Annual Meeting or by using the
enclosed white proxy card to vote by telephone, by internet, or
by signing, dating and returning the white proxy card in the
envelope provided. Whether or not you plan to attend the Annual
Meeting in person, you should submit your white proxy card as
soon as possible. If your shares are held in street
name through a broker, bank or other nominee, then you
must instruct them to vote on your behalf, otherwise your shares
cannot be voted at the Annual Meeting. You should follow the
directions provided by
2
your broker, bank or other nominee regarding how to instruct
such party to vote. If you have any questions or need assistance
in voting your shares, please contact our proxy solicitor,
Innisfree M&A Incorporated, at the address and phone
numbers below.
INNISFREE M&A INCORPORATED
501 MADISON AVENUE,
20TH FLOOR
NEW YORK, NY 10022
SHAREHOLDERS CALL TOLL FREE:
(888) 750-5834
BANKS AND BROKERS MAY CALL COLLECT:
(212) 750-5833
Proxy Revocation and Voting in Person. A
shareholder who has given a proxy may revoke it at any time
prior to its exercise by: (1) giving written notice of such
revocation to the Corporate Secretary of the Company,
(2) executing and delivering to the Corporate Secretary of
the Company a later dated proxy reflecting contrary
instructions, or (3) appearing at the Annual Meeting and
taking appropriate steps to vote in person.
Voting Confidentiality. Proxies, ballots and
voting tabulations are handled on a confidential basis to
protect your voting privacy. This information will not be
disclosed except as required by law.
Inspector of Election. The inspector of
election for the Annual Meeting shall determine the number of
votes cast by holders of Common Stock for all matters. The Board
will appoint an inspector of election to serve at the Annual
Meeting. Preliminary voting results will be announced at the
Annual Meeting, if practicable. Final voting results will be
filed on a Current Report on
Form 8-K,
which will be filed with the Securities and Exchange Commission
(the SEC).
Address of Company. The mailing address of the
principal executive offices of the Company is 1293 South Main
Street, Akron, Ohio 44301.
Mailing Date. This Proxy Statement, together
with the related proxy card and our 2010 Annual Report to
Shareholders, is being mailed to our shareholders on or about
March , 2011.
Trademark. Myers Industries,
Inc.®
is a registered trademark of the Company.
Availability on the Internet. This Proxy
Statement and the Companys 2010 Annual Report to
Shareholders are available on Myers website at
www.myersindustries.com/annualreports.html.
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees. Set forth below
for each nominee for election as a director is a brief
statement, including the age, principal occupation and business
experience for at least the past five years, and any
directorships held with public companies.
The members of the Corporate Governance and Nominating Committee
of the Board (Governance Committee) have
recommended, and the independent members of the Board of
Directors have nominated, the persons listed below as nominees
for the Board of Directors, all of whom presently are directors
of the Company, with the exception of William A. Foley and
Robert B. Heisler, Jr. Members of the Board helped us to
identify Mr. Foley and Mr. Heisler as nominees.
The Governance Committee reviews and evaluates individuals for
nomination to stand for election as a director who are
recommended to the Governance Committee in writing by any of our
shareholders pursuant to the procedure outlined below in the
section titled Shareholder Nominations of Director
Candidates on the same basis as candidates who are
suggested by our current or past directors, executive officers,
or other sources, which may, from
time-to-time,
include professional search firms retained by the Governance
Committee. In March 2011, the Governance Committee adopted Board
Member Recruiting Guidelines that outline the process for the
Governance Committee to recruit and evaluate potential director
candidates. These guidelines are available on the
Corporate Governance page accessed from the
Investor Relations page of the Companys
website at www.myersind.com. In considering these
potential candidates for nomination to stand for election, the
Governance Committee will consider: (1) the current
composition of the Board and how it functions as a group;
(2) the talents, personalities, strengths, and weaknesses
of current directors; (3) the value of contributions made
by individual directors; (4) the need for a person with
specific skills, experiences or background to be added to the
Board; (5) any anticipated vacancies due to retirement or
other reasons; and (6) other factors which may enter into
the nomination decision. The Governance Committee endeavors to
select nominees that contribute unique skills and professional
experiences in order to advance the performance of the Board of
Directors and establish a well rounded Board with diverse views
that reflect the interests of our shareholders. The Governance
Committee considers diversity as one of a number of factors in
identifying nominees for directors, however, there is no formal
policy in this regard. The Governance Committee views diversity
broadly to include diversity of experience, skills and
viewpoint, in addition to traditional concepts of diversity such
as race and gender.
When considering an individual candidates suitability for
the Board, the Governance Committee will evaluate each
individual on a
case-by-case
basis. The Governance Committee does not prescribe minimum
qualifications or standards for directors, however, the
Governance Committee looks for directors who have personal
characteristics, educational backgrounds and relevant experience
that would be expected to help further the goals of both the
Board and the Company. In addition, the Governance Committee
will review the extent of the candidates demonstrated
excellence and success in his or her chosen business,
profession, or other career and the skills and talents that the
candidate would be expected to add to the Board. The Governance
Committee may choose, in individual cases, to conduct interviews
with the candidate
and/or
contact references, business associates, other members of boards
on which the candidate serves or other appropriate persons to
obtain additional information. The Governance Committee will
make its determinations on whether to nominate an individual
candidate based on the Boards then-current needs, the
merits of that candidate and the qualifications of other
available candidates. The Governance Committee believes that
each of the nominees possess certain key attributes that the
Governance Committee believes to be important for an effective
Board.
Each of the below nominees has consented (i) to serve as a
nominee, (ii) to being named as a nominee in this Proxy
Statement and (iii) to serve as a director if elected. If
any nominee should become unavailable for any reason, it is
intended that votes will be cast for a substitute nominee
designated by the Board. There is no reason to believe that the
nominees named will be unable to serve if elected. Proxies
cannot be voted for a greater number of nominees than the number
named in this Proxy Statement.
4
THE BOARD OF
DIRECTORS RECOMMENDS THE ELECTION OF THESE NOMINEES
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Name
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Age
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Principal Occupation for Past Five Years and Other
Information
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Vincent C. Byrd
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56
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President, U.S. Retail, Coffee, The J.M. Smucker Company
(J.M. Smucker) (NYSE), Orrville, Ohio, a
manufacturer and marketer of branded food products; Director of
J.M. Smucker; formerly Senior Vice President, Consumer Market,
of J.M. Smucker; former Director of Spangler Candy Company,
Bryan, Ohio, a manufacturer of confectionery products. Served
as Director of Myers since 2006.
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By virtue of his more than 34 years of work experience with
a Fortune 500 company in the consumer packaged goods
industry and over ten years of experience serving on the board
of directors of The J.M. Smucker Company, Mr. Byrd brings to the
Board key insights into the operational requirements of a public
company. In addition, Mr. Byrds international experience
and finance and accounting background provides valuable business
acumen and financial skills to the Board.
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Sarah R. Coffin
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Chief Executive Officer of Aspen Growth Strategies, LLC,
Wooster, Ohio, an investment company; former Director and Chair
of the Compensation Committee of SPX Corporation (NYSE),
Charlotte, North Carolina, a global industrial equipment and
manufacturing company; former Director of Huttenes-Albertus
International, Chicago, Illinois, an international manufacturer
of chemical products for the foundry industry; former Director
of Asia-Dekor, China, a manufacturer of flooring and related
products. Served as Director of Myers since 2010.
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As a former division leader in several companies, Ms. Coffin has
substantial senior level executive experience in marketing and
operations and adds a unique perspective to the Board. Her
background in the polymer industry, coupled with her knowledge
and insight from her prior service on the boards of other public
companies, allows Ms. Coffin to provide valuable contributions
to the Board.
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John B. Crowe
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64
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Chief Executive Officer and Chairman of Buckeye Technologies
Inc. (NYSE), Memphis, Tennessee, a producer of absorbent
products, chemical cellulose products and customized paper.
Formerly Senior Vice President, Wood Cellulose and Executive
Vice President and General Manager at Alabama River Pulp Co.,
Inc. and Alabama Pine Pulp Co., Inc. Served as Director of Myers
since 2009.
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As Chairman and Chief Executive Officer of Buckeye Technologies
Inc., Mr. Crowe brings valuable insight into the operational
requirements, investor relations and strategic planning
processes of a public company. In addition, Mr. Crowe draws on
his considerable leadership experience, including his service as
a United States Air Force Reserve Lt. Colonel and as a Vietnam
veteran, in his service to the Board.
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William A. Foley
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Chairman and Chief Executive Officer of Blonder Home Accents,
Cleveland, Ohio, a distributor of wallcoverings and home
accents; Director of Libbey Inc. (NYSE), Toledo, Ohio, a
producer of consumer and industrial glassware. Formerly
Chairman and Chief Executive Officer of Thinkwell Incorporated,
Cleveland, Ohio, President of Arhaus Incorporated, Cleveland,
Ohio, a private brand name furniture company, and President and
Chief Executive Officer of Lesco Incorporated, Cleveland, Ohio,
a manufacturer and reseller of golf course and lawn care
products.
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Name
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Age
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Principal Occupation for Past Five Years and Other
Information
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As a leader of numerous companies, Mr. Foley has over
30 years of management experience. With prior experience
on the board of directors of public companies, Mr. Foley is well
versed in the governance requirements for a public company. He
brings extensive experience in plastics manufacturing and in the
lawn and garden industry for consumer, industrial, and
distributor based businesses. It is anticipated that his
background in these industries will allow Mr. Foley to be a
valuable member of the Board.
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Robert B. Heisler, Jr.
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62
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Dean of the Kent State University Business School; Director of
FirstEnergy Corp. (NYSE). Formerly Chief Financial Officer of
Kent State University and Chairman and Chief Executive Officer
of KeyBank, N.A. (NYSE), Cleveland, Ohio, a national banking
association, and McDonald Financial Group; Former Director of
KeyBank, N.A. and McDonald Investments.
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Mr. Heisler has over 40 years of business experience. His
decades of experience have allowed him to be a valuable member
of the board of directors of other public companies and numerous
non-profit organizations. The Board believes that Mr. Heisler
brings vast leadership and financial management experience that
will permit him to be a successful contributor to the Board.
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Richard P. Johnston
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80
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A retired Certified Public Accountant; Chairman of the Board of
Royal Associates, Jackson, Wyoming; Chairman of the Board of
Dismal River Golf Club, Mullen, Nebraska; Managing Director of
Jackson Hole Capital Partners, Jackson Hole, Wyoming; Director
of Results Radio, Inc., Sonoma, California; formerly served as
Founder and Director of AGCO, Inc. (NYSE), Duluth, Georgia, a
manufacturer and distributor of agricultural equipment. Served
as Director of Myers since 1992 and is currently Chairman of the
Board of Myers.
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With his years of management experience and service on the board
of directors with a number of different public companies, Mr.
Johnston brings critical experiences and insight regarding best
practices for a public company. In addition, his more than
eighteen years of experience as a Director of Myers gives him a
deep understanding of the Company and its operations and makes
him particularly qualified to serve as Chairman of the Board.
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Edward W. Kissel
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69
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President and Managing Partner of Kissel Group Ltd., Akron,
Ohio, a holding company with interests in property, consulting
and mold manufacturing; Director of Smithers Scientific
Services, Inc., Akron, Ohio, a provider of testing services for
materials; formerly President, Chief Operating Officer and
Director of OM Group, Inc. (NYSE), Cleveland, Ohio, a specialty
chemical company; formerly Director of Weda Bay Minerals, Inc.
(Toronto Stock Exchange), Toronto, Canada, a mineral exploration
company; formerly Managing Director of Kane & Co., Los
Angeles, California, an investment banking firm. Served as
Director of Myers since 2000.
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Mr. Kissel has broad global experience in the manufacturing,
chemical and commodity industries. He has had executive
assignments in strategy, operations, sales and marketing, and
research and development, including both growth and turnaround
situations. His involvement with plant start-ups and major
expansions, as well as experience with mergers and acquisitions,
provides valuable insight to the Board.
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Name
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Age
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Principal Occupation for Past Five Years and Other
Information
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John C. Orr
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60
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President and Chief Executive Officer of Myers; formerly
President and Chief Operating Officer of Myers; formerly General
Manager of Buckhorn Inc., a subsidiary of Myers; formerly Vice
President of Manufacturing North American Tire
Division, The Goodyear Tire and Rubber Company (NYSE); Director
of Libbey Inc. (NYSE), Toledo, Ohio, a producer of consumer and
industrial glassware; Director of the Akron General Health
System, Akron, Ohio. Served as Director of Myers since 2005.
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Mr. Orrs extensive leadership experience in the
manufacturing industry in addition to his years of service to
Myers in management, position him well to serve on the Board.
His service as a director and in management for other public
companies provides Mr. Orr with a variety of perspectives that
he contributes to the Board.
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Robert A. Stefanko
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68
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Currently retired, formerly Chairman of the Board and Executive
Vice President of Finance & Administration of A. Schulman,
Inc. (NASDAQ), Akron, Ohio, an international supplier of plastic
compounds and resins; Director and member of Audit Committee of
OMNOVA Solutions, Inc. (NYSE), Fairlawn, Ohio, an innovator of
emulsion polymers, specialty chemicals and decorative and
functional surfaces; former director of The Davey Tree Expert
Company, Kent, Ohio, a tree, shrub and lawn care company. Served
as Director of Myers since 2007.
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As a former Chief Financial Officer and director of A. Schulman,
Inc. from 1979 through 2006 and as a director of other public
company boards, Mr. Stefanko has had extensive involvement in a
number of public company compensation matters. Mr. Stefanko
also serves as a Director of the Akron General Health System,
which employs over 6,000 people, where he heads the Finance
Committee and serves on the Executive Committee. In addition,
Mr. Stefankos experience with financial matters and
service on compensation and audit committees, gives him valuable
knowledge and insight that he brings to the Boards
committees.
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Each of the foregoing nominees was recommended by the Governance
Committee. There are, and during the past ten years there have
been, no legal proceedings material to an evaluation of the
ability of any director, nominee, or executive officer of Myers
to act in such capacity or concerning his integrity. There are
no family relationships among any of the directors and executive
officers.
Keith A. Brown and Jon H. Outcalt, who have been directors of
the Company since 1997 and 1984, respectively, have elected to
retire from the Board. We would like to thank Mr. Brown and
Mr. Outcalt for their many years of service to us.
The Board
recommends that you vote FOR each of the director
nominees listed above.
Notice of Other Possible
Nominees. On February 28, 2011, Gamco
Investors, Inc., a New York corporation (Gamco),
amended its Schedule 13D relating to the Company to
disclose that it had sent a letter to the Company recommending
two individuals, Jack Liebau and Robert S. Prather, Jr., for
nomination for election as directors of the Company at the
Annual Meeting (the Letter). Following our 2010
annual meeting and until the Letter, Mario Gabelli, a principal
of Gamco, and Gamco never articulated any specific concerns that
either had regarding the operations of the Company, except to
state that Gamco believes they will provide a change in
corporate stewardship to reflect the interests of the
owners/shareholders of the Company.
According to the information provided by Gamco in the Letter,
for which the Company disclaims any responsibility, it is the
beneficial owner of 3,419,155 shares of our Common Stock as
of February 28, 2011, however, according to Gamcos
most recent Schedule 13D/A filed with the SEC on
February 28, 2011, for which the Company disclaims any
responsibility, it is part of a group of stockholders that
together beneficially owned 5,271,204 shares of our Common
Stock as of February 28, 2011. In the Letter, Gamco
7
indicated that it intends to be present at the Annual Meeting in
person or by proxy to nominate these individuals to serve as
directors of the Company.
OUR BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF
VINCENT C. BYRD, SARAH R. COFFIN, JOHN B. CROWE, WILLIAM A.
FOLEY, ROBERT B. HEISLER, JR., RICHARD P. JOHNSTON, EDWARD
W. KISSEL, JOHN C. ORR, AND ROBERT A. STEFANKO BY EXECUTING AND
RETURNING THE WHITE PROXY CARD OR VOTING BY ONE OF THE OTHER
WAYS INDICATED THERON. PROXIES SOLICITED BY THE COMPANY, THE
CURRENT DIRECTORS, AND THE NOMINEES FOR ELECTION AS DIRECTOR
WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE.
Director Independence. The
Board has determined that each of the following current
directors and nominees are independent and that each
of these nominees has no material relationship with us that
would impact their independence: Keith A. Brown, Vincent C.
Byrd, Sarah R. Coffin, John B. Crowe, William A. Foley, Robert
B. Heisler, Jr., Richard P. Johnston, Edward W. Kissel, Jon
H. Outcalt, and Robert A. Stefanko. The determination of whether
a director is independent is based upon the
Boards review of the relationships between each director
and the Company, if any, under the Companys Board of
Directors Independence Criteria policy adopted by the
Board on April 20, 2004, as amended, and the corporate
governance listing standards of the New York Stock Exchange
(NYSE). In connection with the Boards
determination regarding the independence of each non-management
director the Board considered any transactions, relationships
and arrangements as required by our independence guidelines. In
particular, the Board considered the following relationships:
(1) the relationship between A. Schulman, Inc. (A.
Schulman) and the Company in connection with its
independence determination of Robert A. Stefanko and concluded
Mr. Stefanko met the independence requirement; and
(2) the relationship between FirstEnergy Corp.
(FirstEnergy) and the Company in connection with its
independence determination of Robert B. Heisler, Jr. and
concluded Mr. Heisler met the independence requirement.
Mr. Stefanko is a stockholder of A. Schulman, holding less
than 1% of A. Schulmans shares of stock. In fiscal 2010,
we purchased $426,869 of materials from A. Schulman during the
ordinary course of operations, which is less than 1% of the
annual revenues of both companies. Mr. Heisler is a
shareholder and director of FirstEnergy, holding less than 1% of
FirstEnergys shares of stock. In fiscal 2010, we purchased
$2,039,141 of materials from FirstEnergy during the ordinary
course of operations, which is less than 1% of the annual
revenues of both companies. All members of the Audit Committee,
the Compensation Committee, and the Governance Committee were
determined to be independent, and in addition, the Board
determined that the members of the Audit Committee are also
independent as defined in the SEC regulations.
Committees of the Board. The
Board has three standing committees, the Audit Committee, the
Compensation Committee, and the Governance Committee, whose
members were appointed in April 2010 (unless otherwise noted)
following the Annual Meeting.
Audit Committee. The Audit Committee is
currently comprised of four independent directors, Robert A.
Stefanko (Chairman and Presiding Director), Edward W. Kissel,
Vincent C. Byrd and Jon H. Outcalt. The functions of the Audit
Committee, which met eight times in 2010, are to:
(1) engage the independent registered public accounting
firm, (2) approve all audit and related engagements (audit
and non-audit), (3) review the results of the audit and
interim reviews, (4) evaluate the independence of the
independent registered public accounting firm, (5) review
with the independent registered public accounting firm the
financial results of the Company prior to their public release
and filing of reports with the SEC, (6) direct and
supervise special investigations and (7) oversee our
accounting, internal accounting controls and auditing matters
reporting hotline (discussed below), and our corporate
compliance program. The Audit Committee also has oversight of
our system of internal auditing functions and controls, as well
as our internal control procedures. None of our Audit Committee
members serve on more than two other public company audit
committees.
The Board has identified Robert A. Stefanko as the Audit
Committee financial expert.
8
Compensation Committee. The Compensation
Committee establishes and administers the Companys
policies, programs, and procedures for compensating its
executive officers and directors. The Compensation Committee has
the authority to retain outside consultants regarding executive
compensation and other matters. The Compensation Committee,
which met five times in 2010, is currently comprised of five
independent directors, Jon H. Outcalt (Chairman and Presiding
Director), Robert A. Stefanko, John B. Crowe, Keith A. Brown,
and Vincent C. Byrd (who was appointed in December 2010).
Corporate Governance and Nominating
Committee. The Governance Committee is
responsible for, among other things, evaluating new director
candidates and incumbent directors, and recommending nominees to
serve on the Board as well as members of the Boards
committees to the independent directors of the Board. The
Governance Committee is also responsible for recommending and
monitoring participation in continuing education programs by the
members of the Board. The Governance Committee, which met nine
times in 2010, is currently comprised of four independent
directors, Edward W. Kissel (Chairman and Presiding Director),
Keith A. Brown, John B. Crowe, and Sarah R. Coffin.
Committee Charters and
Policies. The Board has adopted written
charters for the Audit Committee, the Compensation Committee,
and the Governance Committee. Each Committee reviews and
evaluates the adequacy of its charter at least annually and
recommends any proposed changes to the Board for approval. Each
of the written charters and policies of the Committees of the
Board are available on the Corporate Governance page
accessed from the Investor Relations page of the
Companys website at
www.myersind.com.
Board Role in Risk
Oversight. The Board annually reviews the
Companys strategic plan, which addresses, among other
things, the risks and opportunities facing the Company. The
Board also has overall responsibility for executive officer
succession planning and reviews succession plans each year.
Certain areas of oversight are delegated to the relevant
Committees of the Board and the Committees regularly report back
on their deliberations. This oversight is enabled by reporting
processes that are designed to provide visibility to the Board
about the identification, assessment, monitoring and management
of enterprise-wide risks. In December 2010, management conducted
its most recent enterprise-wide risk assessment of the Company
and each of its business segments and presented the assessment
results to the Board for review. The focus of this assessment
included a review of strategic, financial, operational,
compliance and technology objectives and risks for the Company.
In addition, on an ongoing basis: (a) the Audit Committee
maintains primary responsibility for oversight of risks and
exposures pertaining to the accounting, auditing and financial
reporting processes of the Company; (b) the Compensation
Committee maintains primary responsibility for risks and
exposures associated with oversight of the administration and
implementation of our compensation policies; and (c) the
Governance Committee maintains primary responsibility for risks
and exposures associated with corporate governance and
succession planning.
Board Attendance. There were
a total of seven regularly scheduled and special meetings of the
Board of Directors in 2010. During 2010, all directors attended
at least 75% of the aggregate total number of the meetings of
the Board and Committees on which they served. In 2010, all of
our directors attended our Annual Meeting. Although we do not
have a formal policy requiring directors to attend the Annual
Meeting, our directors are encouraged to attend.
Written Communication. Interested parties may
send such communications by mail or courier delivery addressed
as follows: Board of Directors (or Committee Chairman, Board
Member or Non-Management Directors, as the case may be),
c/o Donald
A. Merril, Corporate Secretary, Myers Industries, Inc., 1293
South Main Street, Akron, Ohio 44301. All communications
directed to the Board of Directors or to the
Non-Management Directors will be forwarded unopened
to the Chairman of the Governance Committee. The Chairman of the
Governance Committee in turn determines whether the
communications should be forwarded to the appropriate members of
the Board and, if so, forwards them accordingly. For
9
communications addressed to a particular director or the
Chairman of a particular Committee of the Board, however, the
Corporate Secretary will forward those communications, unopened,
directly to the person or Committee Chairman in question.
Toll Free Hotline. In 2003 the Audit Committee
established a hotline for receiving, retaining and
treating complaints from any interested party regarding
accounting, internal accounting controls and auditing matters,
and procedures for the anonymous submission of these concerns.
The hotline is maintained by a company which is independent of
Myers. Interested parties may also use this hotline to
communicate with the Board. Any interested party may contact a
director, a Committee of the Board, the non-management
directors, or the Board through the toll free hotline at
(877) 285-4145.
The hotline is available worldwide, 24 hours a day, seven
days a week. Note that all reports made through the hotline are
directed to the Chairman of the Audit Committee and the
Corporate Secretary. We do not permit any retaliation of any
kind against any person who submits a complaint or concern under
these procedures.
Shareholder
Nominations of Director Candidates.
Shareholder Recommendation Policy. The
Governance Committee will consider individuals for nomination to
stand for election as a director who are recommended to it in
writing by any of our shareholders that strictly follow the
procedures outlined in the next paragraph below and that send a
signed letter of recommendation to the following address:
Corporate Governance and Nominating Committee,
c/o Mr. Donald
A. Merril, Chief Financial Officer, Senior Vice President and
Corporate Secretary, Myers Industries, Inc., 1293 South Main
Street, Akron, Ohio 44301.
Recommendation letters must certify that the person making the
recommendation is a shareholder of the Company (including the
number of shares held as of the date of the recommendation), and
further state the reasons for the recommendation, the full name
and address of the proposed nominee as well as a biographical
history setting forth past and present directorships,
employment, occupations and civic activities for at least the
past five years. Any such recommendation should be accompanied
by a signed written statement from the proposed nominee
consenting to be named as a candidate and, if nominated and
elected, consenting to serve as a director. The letter must also
include a signed written statement that the nominating
shareholder and the candidate will make available to the
Governance Committee all information reasonably requested in
furtherance of the Governance Committees evaluation. The
letter must be received before the close of business on or
before November 15th of the year prior to our next
annual meeting of shareholders.
The Governance Committee reviews and evaluates individuals for
nomination to stand for election as a director who are
recommended to the Governance Committee in writing by any of our
shareholders pursuant to the procedures outlined in the
paragraph above on the same basis as candidates who are
suggested by our current or past directors, executive officers,
or other sources, which may, from
time-to-time,
include professional search firms retained by the Governance
Committee. In considering individuals for nomination to stand
for election, the Governance Committee will consider:
(1) the current composition of the Board of Directors and
how it functions as a group; (2) the talents,
personalities, strengths, and weaknesses of current directors;
(3) the value of contributions made by individual
directors; (4) the need for a person with specific skills,
experiences or background to be added to the Board; (5) any
anticipated vacancies due to retirement or other reasons; and
(6) other factors which may enter into the nomination
decision.
When considering an individual candidates suitability for
the Board, the Governance Committee will evaluate each
individual on a
case-by-case
basis. The Governance Committee does not prescribe minimum
qualifications or standards for directors, however, the
Governance Committee looks for directors who have personal
characteristics, educational backgrounds and relevant experience
that would be expected to help further the goals of both the
Board and the Company. In addition, the Governance Committee
will review the extent of the candidates demonstrated
excellence and success in his or her chosen business,
profession, or other career and the skills and talents that the
candidate would be expected to add to the Board. The Governance
Committee may choose, in individual cases, to conduct
10
interviews with the candidate
and/or
contact references, business associates, other members of boards
on which the candidate serves or other appropriate persons to
obtain additional information. The Governance Committee will
make its determinations on whether to nominate an individual
candidate based on the Boards then-current needs, the
merits of that candidate and the qualifications of other
available candidates.
Shareholder Nomination Policy. In accordance
with our Amended and Restated Code of Regulations, a shareholder
may directly nominate a candidate for election as a director of
the Company only if written notice of such intention is received
by the Corporate Secretary not less than sixty (60) days
nor more than ninety (90) days prior to the date of such
annual meeting of shareholders or special meeting of
shareholders for the election of directors. In the event that
the date of such meeting to elect directors is not publicly
disclosed at least seventy (70) days prior to the date of
such meeting, written notice of such shareholders intent
to nominate a candidate must be received by the Corporate
Secretary not later than the close of business on the tenth
(10th) day following the date on which notice of such meeting is
first provided to the shareholders. A shareholder wishing to
directly nominate an individual to serve as a director must
follow the procedure outlined in Article I, Section 12
of our Amended and Restated Code of Regulations, titled
Advance Notice of Director Nomination and then send
a signed letter of nomination to the following address:
Corporate Governance and Nominating Committee,
c/o Mr. Donald
A. Merril, Corporate Secretary, Myers Industries, Inc., 1293
South Main Street, Akron, Ohio 44301.
On February 28, 2011, Gamco amended its Schedule 13D
relating to the Company disclosing that it had sent a letter to
the Company recommending two individuals, Jack Liebau and Robert
S. Prather, Jr., for nomination for election as directors of the
Company at the Annual Meeting. Gamco indicated that it intends
to be present in person or by proxy at the Annual Meeting to
nominate these individuals.
Corporate
Governance
Policies.
Implementation. The Board of Directors has
implemented the corporate governance initiatives required by the
NYSE rules and the Sarbanes-Oxley Act of 2002. These initiatives
include, among others, Corporate Governance
Guidelines, a Code of Business Conduct and
Ethics for the Companys directors, officers and
employees, as well as a Code of Ethical Conduct for the
Finance Officers and Finance Department Personnel. These
corporate governance policies and procedures are discussed in
various places within this Proxy Statement. In March 2011, the
Board incorporated a director resignation policy into its
Corporate Governance Guidelines. Pursuant to this director
resignation policy, in an uncontested election, any incumbent
director who receives a greater number of votes
Withheld or Against his or her election
than votes For his or her election (and with respect
to such incumbent directors election at least 25% of the
Companys shares outstanding and entitled to vote thereon
were Withheld or voted Against the
election of such director) shall submit an offer of resignation
to the Board of Directors. The Governance Committee will then
recommend to the Board whether to accept or reject any tendered
resignations, and the Board will decide whether to accept or
reject such tendered resignations. The Boards decision
will be publicly disclosed in a Current Report on
Form 8-K
filed with the SEC. If an incumbent directors tendered
resignation is rejected, then he or she will continue to serve
until his or her successor is elected, or until his or her
earlier resignation, removal from office, or death. If an
incumbent directors tendered resignation is accepted, then
the Board will have the sole discretion to fill any resulting
vacancy to the extent permitted by the Companys Amended
and Restated Code of Regulations.
Availability of Corporate Governance
Policies. Each of our corporate governance
policies is available on the Corporate Governance
page accessed from the Investor Relations page of
our website at www.myersind.com.
Code of Ethics. We have a Code of
Business Conduct and Ethics and a Code of Ethical
Conduct for the Finance Officers and Finance Department
Personnel, which embody our commitment to ethical and
legal business practices, as well as satisfies the NYSE
requirements to implement and maintain such policies. The Board
expects all of our officers, directors and other members of our
workforce to act ethically
11
at all times. Both of these policies are available on our
website at www.myersind.com on the Corporate
Governance page accessed from the Investor
Relations page.
Stock Ownership Guidelines. Effective
October 22, 2010, we implemented Stock Ownership Guidelines
whereby our executive officers and non-employee directors are
expected to hold a specified amount of our Common Stock. The
Chief Executive Officer is expected to hold an investment
position in our Common Stock equal to three times his annual
base salary. The Chief Operating Officer and Chief Financial
Officer are both expected to hold an investment position equal
to two times their respective annual base salaries. The
non-employee Directors are expected to hold two times their
annual cash Board retainer in our Common Stock. The executive
officers and non-employee directors have five years from the
effective date of the guidelines to attain the ownership
requirement. These stock ownership guidelines are available on
the Corporate Governance page accessed from the
Investor Relations page of the Companys
website at www.myersind.com.
Board Member Recruiting Guidelines. In March
2011, the Governance Committee adopted Board Member Recruiting
Guidelines that outline the process for existing Board members
to nominate potential director candidates to the Governance
Committee. These recruiting guidelines are available on the
Corporate Governance page accessed from the
Investor Relations page of the Companys
website at www.myersind.com.
Executive Sessions of the Board. Effective in
December 2002, the Board adopted a policy requiring the
non-management directors, both as to the Board and in their
respective Committees, to meet regularly in executive session
without any management personnel or employee directors present.
During 2010, the Board and each Committee met regularly in
executive session as follows: Board, six times; Audit Committee,
eight times; Compensation Committee, four times; and the
Governance Committee, three times.
Independent Chairman. Effective in October
2009, the Board appointed Richard P. Johnston independent
Chairman of the Board. The Company believes this leadership
structure is appropriate for the Company as it further aligns
the interests of the Company and our shareholders by ensuring
independent leadership of the Board. The independent Chairman
serves as a liaison between our directors and our management and
helps to maintain open communication and discussion by the
Board. Duties of the Chairman are specified in the Charter of
the Chairman of the Board of Directors, adopted October 28,
2009, and include serving in a presiding capacity, coordinating
the activities of the Board, and such other duties and
responsibilities as the Board may determine from
time-to-time.
This charter is available on our website at www.myersind.com
on the Corporate Governance page accessed from
the Investor Relations page.
Presiding Directors. The independent directors
reported that in 2010 they selected Presiding Directors to
preside during executive sessions. The Chairman of the
Governance Committee acts as the Presiding Director for the
executive sessions of the Board, and the Chairman of each
Committee was selected as the Presiding Director for the
executive sessions of the applicable Committee of the Board.
Anonymous Reporting. The Audit Committee
maintains procedures, including a worldwide telephone
hotline, which allows employees and interested
parties to report any financial or other concerns anonymously as
further detailed under Interested Parties Communications
with the Board of Directors above.
Annual Board and Committee
Self-Assessments. In 2004, the Board, through the
Governance Committee, instituted annual self-assessments of the
Board, as well as of the Audit Committee, the Compensation
Committee, and the Governance Committee, to assist in
determining whether the Board and its Committees are functioning
effectively. In early 2011, the Board and each of its Committees
conducted the most recent self-evaluations and discussed the
results at subsequent meetings.
NYSE and SEC Certifications. In 2010, we
submitted to the NYSE an unqualified Section 12(a)
certification by our Chief Executive Officer. Further, each
applicable filing with the SEC contained the Section 302
and 906 Certifications of both our Chief Executive Officer and
Chief Financial Officer.
12
Director Compensation. The
annual retainer for non-employee directors is $35,000. In
addition, Committee members receive $10,000 per year per
Committee of the Board. The Chairman of the Audit Committee
receives an additional $8,000 per year. The Chairman of the
Compensation Committee receives an additional $5,000 per year.
The Chairman of the Governance Committee receives an additional
$4,000 per year. The Chairman of the Board receives an
additional annual retainer of $20,000. Directors who are
employees of the Company do not receive the annual retainer.
Under our 2008 Incentive Stock Plan each non-employee director
who holds such position on the date of the annual meeting of the
shareholders and has been a director for the entire period since
the annual meeting of shareholders of Myers that was held in the
immediately preceding calendar year will be awarded annually, on
the date of the annual meeting of shareholders,
3,000 shares of Common Stock (previously 1,000 shares of
Common Stock was awarded, however, the Board approved an
increase to 3,000 shares of Common Stock in early 2010).
Our Amended and Restated Code of Regulations provides that we
will indemnify, to the fullest extent then permitted by law, any
of our directors or former directors who was or is a party or is
threatened to be made a party to any matter, whether civil or
criminal, by reason of the fact that the individual is or was a
director of the Company, or serving at our request as a director
of another entity. We have entered into indemnity agreements
with each of our directors contractually obligating us to
provide such protection. We also currently have in effect
director and officer insurance coverage.
The following table shows the compensation paid to each of the
non-employee directors during fiscal 2010. Mr. Orr, who is
our President and Chief Executive Officer, does not receive any
additional compensation for his services as a director.
NON-EMPLOYEE
DIRECTOR COMPENSATION TABLE
FOR FISCAL 2010
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Change in
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Pension Value
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and Nonqualified
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Fees Earned
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Non-Equity
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Deferred
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or Paid
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Option
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Incentive Plan
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Compensation
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All Other
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in Cash
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Stock Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name
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($)
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($)(6)
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($)(7)
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($)
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($)
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($)
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($)
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Keith A. Brown
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57,750
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11,400
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69,150
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Vincent C. Byrd
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48,750
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11,400
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60,150
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Sarah R.
Coffin(1)
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33,750
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0
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33,750
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John B. Crowe
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59,250
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11,400
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70,650
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Richard P. Johnston
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86,250
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11,400
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25,549
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(9)
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123,199
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Edward W.
Kissel(2)
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69,750
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11,400
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81,150
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Stephen E.
Myers(5)
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7,500
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0
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(23,585
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)(8)
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7,646
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(10)
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(8,439
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)
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Jon H.
Outcalt(3)
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67,500
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11,400
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78,900
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Robert A.
Stefanko(4)
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70,250
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11,400
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81,650
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(1) |
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Ms. Coffin became a member of
the Board effective as of the annual meeting held April 30,
2010.
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(2) |
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Mr. Kissel served as the
Chairman and Presiding Director of the Governance Committee.
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(3) |
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Mr. Outcalt served as the
Chairman and Presiding Director of the Compensation Committee.
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(4) |
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Mr. Stefanko served as the
Chairman and Presiding Director of the Audit Committee.
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(5) |
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Mr. Myers resigned from the
Board as of March 10, 2010.
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(6) |
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Stock Award amounts shown in this
Non-Employee Director Compensation Table do not reflect
compensation actually received by the directors. The amounts
shown reflect the fair market value of 1,000 shares of
common stock awarded to the following directors on
April 30, 2010: Mr. Brown, Mr. Byrd,
Mr. Johnston, Mr. Kissel, Mr. Crowe,
Mr. Outcalt, and Mr. Stefanko.
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(7) |
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No stock option awards were
provided to the non-employee directors in 2010. The number of
stock options held by the directors at December 31, 2010
was as follows: Mr. Brown (8,850), Mr. Byrd (0),
Ms. Coffin (0), Mr. Crowe (0), Mr. Johnston
(8,850), Mr. Kissel (8,850), Mr. Myers (5,000),
Mr. Outcalt (8,850), and Mr. Stefanko (0).
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(8) |
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Mr. Myers began receiving
payments under our Supplemental Executive Retirement Plan as of
May 1, 2009. The amount reported reflects the change in net
present value of the accrued Supplemental Executive Retirement
Plan benefit from January 1, 2010 to December 31, 2010.
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(9) |
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The amount of $25,549 for
Mr. Johnston reflects an annual pension benefit that he is
entitled to under the terms of an employment agreement with our
subsidiary Buckhorn Inc. He resigned as an employee in 1990. The
pension benefits commenced under the employment agreement
following his resignation.
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(10) |
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On May 1, 2005, Mr. Myers
entered into a retirement and separation agreement. The
agreement provided coverage under the Companys health care
plan until May 1, 2009. After May 1, 2009,
Mr. Myers began receiving payments under the Companys
Supplemental Executive Retirement Plan (see footnote 8 above).
Until he reaches the age of 75, Mr. Myers will be
reimbursed for private supplemental health care coverage that he
obtains up to a maximum of the then current cost of COBRA
coverage under the Companys health care plan. COBRA
reimbursements of $7,646 were made to Mr. Myers in 2010.
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Risk Assessment
of Compensation
Practices.
In establishing compensation policies and practices for all of
our employees, we utilize a balanced mix of salary, bonus and,
in some cases, equity-based compensation that supports the
enhancement of revenue, earnings and cash performance of the
Company for our shareholders without creating undue risk. Under
our long term incentive program adopted in 2010 (2010
LTIP), we utilize a blend of stock options, service-based
awards and performance-based awards with a greater emphasis on
performance-based awards than service-based awards that we
believe will further align the interests of our employees with
those of our shareholders. Our risk oversight and overall
compensation structure has features that guard against excessive
risk taking, including:
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Our Boards and its Committees role in risk
oversight, including internal control over financial reporting
and other strategic, financial, operational, compliance and
technology policies and practices (see the section titled
Boards Role in Risk Oversight above for a
complete description);
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Diversified nature of our business segments with respect to
industries and markets served, products and services sold, and
geographic footprint;
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Establishment and annual review of base salaries to be
consistent with an employees responsibilities;
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Determination and award of incentive awards based on a review of
a variety of indicators of performance that diversifies the
risks associated with any single indicator of performance;
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A mixture of fixed and variable, annual and long-term, and cash
and equity compensation are provided to our employees to
encourage strategy and actions that are in the long-term
interests of the Company and our shareholders; and
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Awards of incentive compensation with performance vesting
criteria to reward employees for driving sustainable, profitable
growth for shareholders.
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EXECUTIVE
COMPENSATION AND RELATED INFORMATION
Compensation
Discussion and Analysis.
Executive Summary:
Our executive pay program is managed by the Compensation
Committee. The role of the Compensation Committee is to oversee
our executive pay plans and policies, administer our stock plans
and annually review and make recommendations to the Board for
all pay decisions relating to our executives, including the
Named Executive Officers (NEOs):
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John C. Orr, President and Chief Executive Officer;
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David B. Knowles, Executive Vice President and Chief Operating
Officer; and
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Donald A. Merril, Chief Financial Officer, Senior Vice President
and Corporate Secretary.
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Messrs. Orr, Knowles, and Merril are our only NEOs. Our
NEOs are compensated according to the terms of their respective
employment agreements, which are described below under the
section titled Employment Agreements Including Change in
Control.
14
As shareholders consider the effectiveness of our executive pay
program for our NEOs in the most recent year and their support
of our executive pay program, they should take into account the
following:
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The Companys financial position remains solid, with a
strong balance sheet and financial liquidity to pursue strategic
goals to enhance shareholder value.
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Base salaries for the Chief Operating Officer and Chief
Financial Officer were increased 5% and 3.9%, respectively, and
maintained at the 2009 level for the Chief Executive Officer.
Bonuses for the year were below target levels and below those
paid in 2009 reflecting the fact that the Company did not
achieve target objectives. As a result, our actual cash
compensation levels (salary and bonus) are below competitive
norms.
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Long-term incentives increased (because no grants were made in
2009) as we completed work on implementing the 2010 LTIP to
provide greater reward balance, more effectively managed share
dilution and offered us greater flexibility to provide rewards
for long-term results.
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We have several pay practices and policies that are in the best
interests of our shareholders, including modest perquisites,
limited executive retirement benefits, stock ownership
guidelines, and a commitment to eliminate our Chief Executive
Officers employment contract (including the excise tax
gross-up
associated with an excess parachute payment associated with a
change in control).
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A review of our pay programs concluded they do not encourage
excessive or unnecessary risk taking.
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Finally, we believe the pay actually earned by our NEOs has been
aligned with the Companys performance. For the most recent
five-year period, our return to shareholders ranked at the
40th percentile of our peers. In comparison, the actual pay
our Chief Executive Officer and Chief Financial Officer earned
(salary, actual bonuses and actual value of restricted shares at
the time they vest) or could have earned (unrealized gains on
options granted during the period) was at the peers
38th and
45th
percentiles of its peers, respectively.
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The remainder of this report provides details of each of these
conclusions and examines our pay philosophy and objectives, the
process used to set pay for 2010, the elements of pay awarded
and other policies affecting our executive pay program.
Pay Philosophy
and Objectives.
Our success depends largely on the contributions of motivated,
focused and energized executives all working to achieve our
strategic objectives. The Compensation Committee and senior
management develop pay programs for our executives that are
intended to provide a total compensation package that:
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Attracts and retains talented and experienced executives and
other key employees;
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Reflects competitive practices of other companies of similar
size and operating complexity;
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Rewards executives whose knowledge, skills and performance are
crucial to our success;
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Motivates our executive officers to achieve short-term and
long-term Company goals that will increase shareholder value;
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Ensures that the actual compensation paid to our executive
officers is aligned and correlated with financial performance
and changes in shareholder value; and
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Encourages stock ownership by NEOs and other executives to
foster an ownership culture.
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Process Used to
Set Pay for 2010.
Interactions between three parties established our executive pay
program for 2010:
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Compensation Committee;
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senior management; and
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outside advisors.
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Role of Compensation Committee:
Our Compensation Committee, which is currently comprised of five
independent directors, is responsible for establishing and
administering our compensation policies. In dispensing its
duties, the Compensation Committee may request information from
senior management regarding the Companys performance, pay
and programs to assist it in its actions. Moreover, the
Compensation Committee retains the right to hire outside
advisors as needed to assist it in reviewing the Companys
programs, revising them and providing competitive pay levels.
The Compensation Committee annually reviews and establishes the
goals used for our incentive plans. In addition, it annually
assesses the performance of the Company and the Chief Executive
Officer. Based on this evaluation, the Compensation Committee
then recommends the Chief Executive Officers compensation
for the next year to the Board for its consideration and
approval. In addition, the Compensation Committee reviews the
Chief Executive Officers compensation recommendations for
Messrs. Knowles and Merril, providing appropriate input and
approving final awards. Finally, the Compensation Committee
provides guidance and final approval to the Chief Executive
Officer with regard to the determination of the compensation of
other key executives.
Role of Senior Management:
The Companys management serves in an advisory or support
capacity as the Compensation Committee carries out its charter.
Typically, the Companys Chief Executive Officer
participates in meetings of the Compensation Committee. The
Companys other NEOs may participate as necessary or at the
Compensation Committees request. The NEOs normally provide
the Compensation Committee with information regarding the
Companys performance as well as that of executives who
participate in the Companys various plans. Such data is
usually focused on the executives historical pay and
benefit levels, plan costs, context for how programs have
changed over time and input regarding particular management
issues that need to be addressed. In addition, management
normally furnishes similar information to the Compensation
Committees outside advisors.
Management provides input regarding the recommendations made by
outside advisors or the Compensation Committee. They also
present alternatives for the Compensation Committees
consideration. Finally, management implements, communicates and
administers the programs approved by the Compensation Committee,
reporting back to it any questions, concerns or issues.
The Chief Executive Officer annually evaluates the performance
of the Company and its other NEOs. Based on his evaluation, he
provides the Compensation Committee with his recommendations
regarding the pay for the Chief Operating Officer and Chief
Financial Officer for its consideration, input and approval. The
Compensation Committee, in turn, authorizes the Chief Executive
Officer to establish the pay for the Companys other
executives based on terms consistent with those used to
establish the pay of the NEOs. Members of management present at
meetings when pay is discussed excuse themselves from such
discussions when the Compensation Committee focuses on their
individual pay.
Role of Outside Advisors:
In 2010, the Compensation Committee engaged Towers Watson
(created by the merger of Towers Perrin and Watson Wyatt) to
assist it. The Compensation Committee has the authority to
retain Towers Watson or to engage other independent advisors and
compensation consultants to assist in carrying out its
responsibilities. Towers Watsons lead consultant reports
directly to the Compensation Committee Chairman, who approves
his work, and interacts with management as needed to complete
the work requested by the Compensation Committee. Towers Watson
did not provide other services to the Company during 2010 and
received no compensation other than with respect to the services
provided to the Compensation Committee.
16
To support the Compensation Committee in this effort, Towers
Watson provided information regarding how other companies in the
plastics, packaging/container and distribution industries
compensate its senior executives. Companies selected for this
analysis were proposed by Towers Watson, reviewed by management
and the Compensation Committee, and ultimately approved by the
Compensation Committee. Companies included in the analysis were
located across the country and had median revenues of
approximately $877 million, indicative of our competitive
market for executive talent. The peer group used for 2010
included the following companies:
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A. Schulman, Inc.
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Milacron Inc.
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AEP Industries Inc.
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Multi-Color Corporation
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American Biltrite Inc.
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NN, Inc.
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AptarGroup, Inc.
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OMNOVA Solutions Inc.
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Associated Materials LLC
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Park-Ohio Holdings Corp.
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Boise Inc.
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Spartech Corporation
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BWAY Holding Company
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Tredegar Corporation
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Caraustar Industries, Inc.
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Trex Company, Inc.
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Crocs, Inc.
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Tupperware Brands Corporation
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Dorman Products, Inc.
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West Pharmaceutical Services, Inc.
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In addition, Towers Watson provided the Compensation Committee
with data from compensation surveys that included hundreds of
companies in a broader range of industries with revenues that
are comparable to ours to support the information developed for
the peer companies.
Based on this information, Towers Watson offered its
recommendations for the NEOs pay program for 2010 and
presented them in meetings and conference calls with the
Compensation Committee. Towers Watson also reviewed the
Companys proxy statement.
Myers believes this approach is consistent with the practices
for other companies of its size, reflects best practices
regarding the governance of executive pay programs and reflects
the executive pay programs objectives of delivering
reasonable and appropriate pay aligned with our
shareholders interests.
Elements of Pay
for 2010.
The basic elements of our compensation package include:
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Base salary;
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Annual bonus opportunities;
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Long-term incentives in the form of cash and stock;
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Retirement and other benefits generally available to all of our
other employees; and
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Executive perquisites.
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Consistent with the objectives of our executive pay philosophy,
we target total compensation to be within an acceptable range of
the 50th percentile (or median) for executives in similar roles
at companies of similar size and complexity. We believe
targeting median pay levels is appropriate as it is sufficient
to attract and retain key executives, but does not position our
compensation costs out of line with other companies of similar
size. Pay can vary from target levels to the degree the
Companys performance or stock price increases or
decreases, affecting the value our executives realize from
Myerss annual bonus and long-term incentive awards.
While we do not have a prescribed mix of pay, only 25% to 35% of
the NEOs target pay in 2010 was based on salary, roughly
65% to 75% of their target pay was based on incentives, of which
35% to 50% of their target pay was based on long-term incentives.
17
Base Salaries:
Base salaries are the guaranteed part of our executives
pay. We pay base salaries to recognize the skills, competencies,
experience, and individual performance an executive brings to
his or her role. As a result, changes in base salary result
primarily from changes in the executives responsibilities,
an assessment of their annual performance, and our financial
ability to pay base salaries and provide increases to them.
Salaries for our executives are based on the scope of their
responsibilities and their relevant background, training and
experience. Data on compensation practices of companies similar
to ours is also considered in setting base salaries. The
Compensation Committee targets base salaries around the
50th percentile, but also considers an individuals
experience, performance, external market conditions, and the
terms of each NEOs employment agreement. Under the terms
of their respective employment agreements, Mr. Orrs
and Mr. Merrils respective base salaries may not be
decreased.
Based on external market conditions, continued economic
uncertainty, senior managements recommendations and the
counsel of Towers Watson, the Compensation Committee decided to
increase the base salaries for the Chief Operating Officer and
Chief Financial Officer by 5% and 3.9%, respectively, and to
maintain the base salary of the Chief Executive Officer at the
2009 level. This positioned the base salaries slightly above the
50th percentile of the peer group for Mr. Orr and at that
level for Messrs. Knowles and Merril, respectively.
Annual Bonuses:
In keeping with our policy of rewarding our executive officers
for performance, executives, including our NEOs, were eligible
to earn annual incentives under our annual incentive plan.
Bonuses under the plan increase each executives focus on
specific short-term corporate operational goals. As a result, it
balances the objectives of our other pay programs, which
concentrate on individual performance (base salaries), long-term
financial results, and stock price growth. Finally, annual
bonuses allow us to manage fixed compensation costs, while still
providing executives with competitive cash compensation
consisting of salaries and bonuses.
Each year, the Compensation Committee approves a target bonus
opportunity for each NEO. We intend for our target bonuses to be
slightly above median levels to place more emphasis on achieving
annual operating results and to support more demanding annual
performance objectives. For 2010, our target bonuses were 100%
of salary for Mr. Orr and 75% of salary for
Messrs. Knowles and Merril, respectively. Target bonus
opportunities for 2010 were unchanged from those in 2009 and
were slightly above medians for executives in similar roles at
companies of similar size to us, consistent with our historical
approach. Actual bonuses can range from 0% to 200% of target
depending on actual performance. In this manner, we can reward
our executives with higher levels of cash compensation for
results that substantially exceed target results. Conversely, we
pay relatively lower levels of cash compensation for results
that fail to meet minimally acceptable standards.
Annual bonuses are based on results in two areas:
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Earnings before interest, taxes, depreciation and amortization
(EBITDA), as adjusted for special income and
expenses approved by the Compensation Committee. EBITDA results
determine 50% of an executives annual bonus.
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Cash flow before capital expenditures, which determines the
remaining 50% of an individuals award.
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The use of EBITDA as a bonus metric focuses on our core
operating profitability and is not influenced by accounting
policies, significant non-operating results or other
extraordinary items that can obscure our operating results. We
believe consistent improvements in our operating results over
time should produce value for our shareholders over the
long-term. Cash flow balances the profitability focus of EBITDA
by measuring our executives ability to manage our working
capital. Moreover, it focuses our management on generating
discretionary cash that can be used to invest in assets, make
acquisitions, retire debt, pay dividends and re-purchase our
Common Stock without disrupting operations. Cash flow is
measured
18
before capital expenditures so as to balance sound decisions on
long-term capital investments with achievement of cash flow
goals. Both measures are weighted equally in order to balance
near-term profitability with long-term growth.
Each year, the Compensation Committee approves annual
performance targets for EBITDA and cash flow. These targets are
based on the annual budget developed by our senior management
through vigorous
bottoms-up
planning, evaluation of business expectations for each business
segment, customer reviews, raw material availability and pricing
evaluations, SG&A considerations and general economic
conditions. The annual budget is vetted and approved by the
Board. Targets are established based upon a reasonable level of
expected return given our performance against the annual budget.
Once targets are established, the Compensation Committee sets
minimum and maximum goals to appropriately reward for results
that exceed or fall short of target expectations.
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Bonus %
(1)
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Performance
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Target
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EBITDA
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Cash Flow
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Objective
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Award
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($ Millions)
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($ Millions)
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Minimum
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0%
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$61.02
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$49.30
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Target
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100%
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$76.28
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$61.63
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Maximum
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200%
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$95.35
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$77.04
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(1) Bonuses
for results in between performance objectives are interpolated
For 2010, the Company achieved an EBITDA and cash flow under the
plan that corresponded to a 27.4% payout for the EBITDA
component under the plan and 97.8% payout for the cash flow
component under the plan, which resulted in an averaged payout
of 62.6% (the 2010 Percentage Payout). Based on
this payout percentage and the executives target bonus
opportunity, the Companys NEOs received the following
bonuses for 2010:
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Mr. Orr: $454,160 = 2010 Payout
Percentage x 100% target bonus opportunity x $725,000 salary;
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Mr. Knowles: $197,325 = 2010 Payout
Percentage x 75% target bonus opportunity x $420,000 salary; and
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Mr. Merril: $161,031 = 2010 Payout
Percentage x 75% target bonus opportunity x $342,750 salary.
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Each of these cash bonuses was paid early in 2011. Bonuses
earned by our NEOs for 2010 produced cash compensation levels
that were below target levels as well as below the 50th
percentile levels for executives in similar roles at similar
size companies, reflecting our failure to achieve target
objectives.
Long-Term Incentives:
The 2008 Incentive Stock Plan provides us with flexibility to
grant stock options, stock appreciation rights, performance
awards, restricted stock, and other forms of equity-based
awards. These awards are consistent with our goal of motivating
and rewarding our executive officers for increasing shareholder
value and promote our long-term interests by aiding the
retention of high-quality executives. Our use of long-term
incentives reflects the belief that a significant component of
executive compensation should be at risk where the amount earned
depends on achieving Company performance objectives designed to
enhance shareholder value. Finally, long-term incentives in the
form of stock help build executive stock ownership, consistent
with our stock ownership objectives more fully described in the
section titled Stock Ownership Guidelines and
strengthen the alignment with our shareholders interests.
We customarily have awarded long-term equity incentives in the
form of stock options to our NEOs and other executives. These
grants were normally made during September or October of each
fiscal year. Beginning in 2010, the Compensation Committee
decided to move the timing of option and other long-term
incentive grants to the first quarter of each fiscal year. This
change allowed the Compensation Committee to have greater
visibility into the fiscal year-end results at the time it made
its determination of the equity and long-term incentive awards
it granted. Moreover, it enabled the Compensation Committee and
management to take a holistic approach to making pay decisions
on incentive pay. In other words, decisions regarding an
executives incentive pay bonus payouts,
changes in target bonuses and long-
19
term incentive awards could be made at the same time
and reviewed within the context of an individuals total
compensation.
In 2010 under the 2010 LTIP, the Board awarded a blend of stock
options, service-based restricted stock awards and
performance-based long-term cash incentives. Unlike the
Companys prior approach, the new program provided greater
reward balance with each element designed to meet specific
reward objectives:
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Stock options align our executives interests with those of
our shareholders because options only produce rewards to our
executives if our stock price increases after options are
granted. In addition, options help build executive ownership.
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Service-based restricted stock grants help in attracting and
retaining our key executives, which is especially helpful given
the cyclical nature of some of our business segments. Restricted
stock also ties our executives to the total returns earned by
our shareholders through dividends as well as stock
price appreciation.
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Long-term cash incentives reward our executives for achieving
financial goals over a multi-year period. Moreover, the use of
cash helps us to more effectively manage the shares available
for use under our 2008 Incentive Stock Plan, reduces dilution of
our shareholders interests and provides our executives
competitive long-term incentive opportunities. In addition, the
use of cash provides our executives a means to pay for taxes
associated with their long-term awards, helping them retain more
of the shares received as options and restricted shares.
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To strengthen the awards long-term ties to performance as
well as to help retain our executives, long-term incentives vest
or are earned over several years. For example, stock options
vest ratably on the first three anniversaries of the grant and
are exercisable within ten years following their grant,
consistent with our historical terms for option grants.
Service-based restricted stock grants are subject to three-year
cliff vesting, which is generally more demanding than our
peers practices for similar awards, is tied to continued
service, and provides a strong device for retaining our
executives. Finally, long-term cash incentives are based on the
achievement of pre-established objectives over a three-year
period.
Long-term cash incentives are based on our average return on
invested capital (ROIC) for the three-year period
beginning in 2010 and ending in 2012. ROIC equals our earnings
before interest and taxes (EBIT) divided by our
total invested capital (total debt and total equity). In our
view, ROIC holds our management accountable for all capital
invested in the Company. Moreover, it represents an appropriate
measure for a capital intense business like ours. It also
balances the measures used in our annual bonus plan. Finally, we
believe that consistently high levels of ROIC should produce
gains in stock price for our shareholders.
Target performance represented a reasonable objective as it
approximated the median three-year ROIC results of our peers and
other S&P Small Cap 600 Companies (S&P Small
Caps). Moreover, we only exceeded this level of
performance in four of the past eight three-year cycles. Maximum
results reflected a reasonable stretch that approximated the
75th percentile of our peers and S&P Small Caps and were
results we had not achieved in the past eight three-year cycles.
The minimum ROIC goal was comparable to the 25th percentiles of
our peers and S&P Small Caps and comparable to our
performance for the three-year period ending in 2009.
Normally, our long-term incentives target
50th
percentile values for executives in similar roles at companies
of similar size. In 2010, the Compensation Committee approved
awards that were slightly higher than that level. This
recognized no grants were made in 2009 as we completed the
design of the 2010 LTIP and shifted the granting of awards from
the fourth quarter of the fiscal year (e.g., October
2009) to the first quarter of the fiscal year (e.g.,
March 2010). Long-term incentive values for 2011 are intended to
return to targeting market median levels. Once target values
were developed, awards for each long-term element were based on
an individuals position, organizational level, scope of
responsibilities, their ties to long-term results, and any
special attraction and retention needs. For the NEOs, the
Compensation Committee aimed to strike a balance between the
three elements while emphasizing
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performance-based elements (options and long-term cash
incentives) over service-based ones (restricted stock).
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For Messrs. Knowles and Merril, 35% of their target value
was delivered in the form of stock options, 35% in the form of
target long-term cash incentives, and 30% as service-based
restricted stock.
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For Mr. Orr, his initial award mix was slightly different:
20% in the form of options, 45% as long-term cash incentives,
and 35% as service-based restricted stock. The difference in
Mr. Orrs mix was the result of a strong desire by the
Compensation Committee to hold him accountable for significantly
improving our ROIC, which is the basis for determining the
long-term cash incentives actually earned. Moreover, the change
in mix helped more effectively manage the dilution associated
with his awards.
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Retirement and Other Benefits:
We also maintain qualified and nonqualified retirement programs
to provide our executives and other employees basic life and
income security needs and recognize individual contributions
during their career with Myers. The NEOs participate in our
qualified retirement plan (a tax-qualified 401(k) Plan, pursuant
to which all participants are eligible to receive matching
contributions from the Company) on the same terms as all of our
other employees.
NEOs also participate in our Supplemental Executive Retirement
Plan (SERP). The SERP was adopted to replace
retirement benefits lost because of regulatory limits associated
with qualified plans, provide retirement benefits for our NEOs
comparable to that of other employees who are not constrained by
regulatory limits, offer more competitive benefits to newly
appointed senior executives, and enhance the retention and
recruitment of high-quality executives. The SERP provides
additional pension benefits to a select group of management. The
annual supplemental pension benefit is payable for ten years
commencing at retirement or age 65. Credit for years of
service under the SERP may also be awarded to a participant at
the discretion of the Compensation Committee. As part of their
respective employment agreements, Messrs. Orr, Knowles and
Merril were provided with an annual SERP benefit equal to
$275,000, $75,000, and $50,000, respectively, payable for ten
years commencing at the later of retirement or age 65, as
well as a Years of Service credit. On March 4,
2011, the Board of Directors approved an amendment to the SERP
between the Company and Mr. Orr dated as of March 1,
2011. The full text of the amendment to the SERP is attached as
Exhibit 10.2 to the Current Report on
Form 8-K
filed with the SEC on March 7, 2011. The amendment to the
SERP is effective as of June 1, 2011 and increases the
minimum supplemental pension benefit for Mr. Orr to
$325,000.
NEOs also participate in broad-based benefit plans that are
available to all employees, including health insurance and life
and disability insurance. Executives benefits are not tied
to individual or Company performance, which is the same approach
used for other employees. Moreover, changes to executives
benefits reflect the changes to the benefits of other employees.
Executive Perquisites:
The Companys executive perquisites are modest relative to
the general practices of other companies. These rewards are not
tied to individual or Company performance. We believe these
benefits are modest, are highly valued by recipients, have
limited cost, are part of a competitive reward program, and help
in attracting and retaining the best executives.
In 2010, all of our NEOs received either a car allowance
(Mr. Knowles) or Company provided car plus reimbursement
for related expenses (Messrs. Orr and Merril). NEOs also
are able to use the Companys country club membership, but
at their own expense. In addition, in 2010 Mr. Knowles was
reimbursed for temporary living expenses associated with his
relocation to the Akron, Ohio area upon joining the Company.
NEOs are also eligible for an annual physical examination.
Other Policies
and Practices.
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Timing of Equity Grants and Grant
Price. Option grants and other equity incentives
are generally awarded during the first Compensation Committee
meeting of the fiscal year, normally in early March.
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21
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This meeting is normally set more than a year in advance,
limiting our ability to time the market for equity awards. The
value of any such grants is determined by the closing price of
our stock on the NYSE on the date that the Compensation
Committee approves such grants. In addition, from
time-to-time
during the year, the Compensation Committee may make grants to a
new employee or, in rare circumstances, to a current employee.
In such cases, the value of the grants is based on the closing
price of our stock on the NYSE on the date of such grants.
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Stock Ownership Guidelines: A key objective of
our executive pay program in general and our long-term incentive
awards in particular is to encourage and build stock ownership.
As a result, we adopted stock ownership guidelines that are
common at other companies. These guidelines were adopted in the
fall of 2010 and require Mr. Orr to own shares that are
equal to three times his base salary. Messrs. Knowles and
Merril are required to own shares equal to two times their
respective base salaries. NEOs have five years from the date the
guidelines were adopted to achieve these ownership targets. In
determining stock ownership, we count shares owned outright,
including shares owned jointly with a spouse or separately by a
spouse
and/or
children that share the NEOs household, vested and
unvested restricted stock units, and vested stock options.
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Accounting and Tax Considerations: In
designing our compensation programs, we take into consideration
the accounting and tax effect that the components will have or
may have on our executive officers and the Company. However, in
light of the fact that only Mr. Orrs compensation may
be impacted by Sec. 162(m) of Internal Revenue Code of 1986, as
amended (the IRC), and the impact of the potential
lost deduction is de minimis, the Compensation Committee has
decided to retain flexibility in compensating our executive
officers.
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Pay Decisions for
2011.
In March 2011, the Compensation Committee met to approve the
Companys executive pay program for NEOs for 2011. Overall,
the pay program continues to reflect the approach used in 2010:
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Base salaries were maintained at 2010 levels;
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Target bonus opportunities were unchanged;
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Bonuses remained tied to achieving budgeted EBITDA and cash flow;
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Equity award values were down from those in 2010, but reflect
50th percentile values;
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NEOs continued to receive a mix of options, service-based
restricted stock and long-term cash incentives;
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Long-term cash incentives remained tied to three-year
ROIC; and
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Terms and conditions of other equity awards also remained the
same as they were in 2010.
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The only substantive change to the Companys pay program
was in the mix of the Chief Executive Officers long-term
incentives. His mix was changed to 35% options, 35% long-term
cash incentives, and 30% service-based restricted stock to align
his rewards with the other NEOs and reinforce the concept of a
single management team.
Compensation
Committee Interlocks and Insider Participation.
During fiscal 2010, the following directors were members of the
Compensation Committee: Jon H. Outcalt, Robert A. Stefanko,
Richard P. Johnston (until April 30, 2010), Keith A. Brown,
John B. Crowe (after April 30, 2010), and Vincent C. Byrd
(after December 2010). None of the Compensation Committees
members have at any time been an officer or employee of the
Company. None of our NEOs serve, or in the past fiscal year has
served as a member of the board of directors or compensation
committee of any entity that has one or more NEOs serving on the
Companys Board or Compensation Committee.
22
Compensation
Committee Report on Executive Compensation.
The information contained in this report shall not be deemed
to be soliciting material or filed with
the SEC or subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended (the Exchange
Act), except to the extent that we specifically
incorporate it by reference into a document filed under the
Securities Act of 1933, as amended (the Securities
Act) or the Exchange Act.
The Compensation Committee, which is currently composed of five
independent directors, operates under a written charter adopted
by the Compensation Committee and ratified by the Board. A copy
of the charter is available on our website www.myersind.com
on the Corporate Governance page under the
Investor Relations section. The Compensation
Committee is responsible for, among other duties, establishing
and administering the policies which govern executive
compensation.
The executive compensation program for the executive officers of
the Company is administered by the Compensation Committee. The
Compensation Committees function is to review the
performance of the Chief Executive Officer and the other
executive officers in determining the amount and type of
compensation to be paid and awarded, as well as approve
compensation adjustments and to make awards of cash bonuses and
long-term incentive grants, if deemed appropriate. Historically,
the Compensation Committee primarily based its decisions on
qualitative factors, exercising its discretion and using its
judgment after considering those factors it deemed relevant. The
Compensation Committee continues to place increased emphasis on
quantitative factors pursuant to the executive cash bonus
compensation plan.
The Compensation Committee, in the performance of its duties and
responsibilities, has reviewed and discussed with management the
information provided under the section titled Compensation
Discussion and Analysis. Based on discussions with
management and our review of the Compensation Discussion
and Analysis disclosure, we have recommended to the Board
that the Compensation Discussion and Analysis be
included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010.
The foregoing report has been furnished by the current members
of the Compensation Committee, being:
Jon H. Outcalt, Chairman and Presiding Director, Robert A.
Stefanko, Keith A. Brown, John B. Crowe, and Vincent C. Byrd
Summary of Cash
and Certain Other Compensation.
The following table contains certain information regarding the
compensation earned, paid or payable during 2010, for services
rendered to the Company and its subsidiaries during fiscal 2010,
to the NEOs.
SUMMARY
COMPENSATION TABLE
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Change in
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Pension
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Value and
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Non-Equity
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Nonqualified
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Stock
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Option
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Incentive Plan
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Deferred
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All Other
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Name and
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Compensation
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Compensation
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Principal Position
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Year
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($)
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($)(1)
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($)(2)(3)
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($)(2)(3)
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($)
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Earnings ($)
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($)(4)
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Total ($)
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John C. Orr,
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2010
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725,000
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454,160
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563,305
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254,280
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161,014
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52,768
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2,210,527
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President & Chief
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2009
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725,000
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725,000
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81,166
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38,134
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1,569,300
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Executive Officer
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2008
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725,000
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276,100
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1,877,501
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888,272
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41,587
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3,808,460
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David B. Knowles,
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2010
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420,000
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197,325
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190,427
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118,422
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41,303
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967,477
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Executive Vice
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2009
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200,000
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161,096
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86,100
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18,021
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465,217
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President & Chief
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2008
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Operating Officer
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Donald A. Merril,
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2010
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342,750
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161,031
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100,697
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62,730
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24,167
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691,375
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Senior Vice
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2009
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330,750
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248,063
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15,107
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9,322
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603,242
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President & Chief
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2008
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330,750
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87,850
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229,447
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5,786
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653,833
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Financial Officer
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(1) |
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The amounts set forth in this
column were earned during the respective fiscal year and paid
early in the following year.
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(2) |
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Amounts shown do not reflect
compensation actually received by the executive officers.
Instead the amounts shown are reported at grant date fair value
in accordance with Financial Accounting Standards Board
(FASB) Accounting Standard Codification
Topic 718, Compensation Stock Compensation
(referred to herein as FASB ASC Topic 718). The
assumptions used for this calculation are fully described in the
footnote titled Stock Compensation of the Notes to
our Consolidated Financial Statements under Item 8 of our
Annual Report on
Form 10-K
for the year ended December 31, 2010 filed with the SEC.
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(3) |
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Information regarding the shares of
restricted stock and stock options granted to our NEOs during
2008, 2009 and 2010 are set forth in the Grants of Plan Based
Awards Table for each respective year. The Grants of Plan Based
Awards Table also sets forth the grant date fair value in
accordance with FASB ASC Topic 718. The assumptions used
for this calculation are fully described in the footnote titled
Stock Compensation of the Notes to our Consolidated
Financial Statements under Item 8 of our Annual Report on
Form 10-K
for the year ended December 31, 2010 filed with the SEC.
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(4) |
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The amounts set forth in this
column include: (a) Company contributions under our 401(k)
Plan and profit sharing plan earned during the respective fiscal
year, but paid early in the following year; (b) tax
reimbursement payments; (c) perquisites and other personal
benefits. The amounts are listed in the following table:
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2010
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2009
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2008
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Mr. Orr
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Contributions
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5,303
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1,347
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Tax Reimbursement
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12,250
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Perquisites
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47,735
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38,134
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27,990
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Total
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52,768
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38,134
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41,587
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Mr. Knowles
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Contributions
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5,303
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Tax Reimbursement
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Perquisites
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36,000
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18,021
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Total
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41,303
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18,021
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Mr. Merril
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Contributions
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4,078
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Tax Reimbursement
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Perquisites
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20,089
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9,322
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5,786
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Total
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24,167
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9,322
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5,786
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The perquisites and other personal benefits for Mr. Orr
during fiscal 2010 included: (i) an automobile and related
expenses and (ii) payment of insurance premiums. The
perquisites and other personal benefits for Mr. Knowles
during fiscal 2010 included: (i) an automobile allowance
and (ii) temporary living expenses. The perquisites and
other personal benefits for Mr. Merril during fiscal 2010
included an automobile and payment of insurance premiums. These
benefits are valued based on the incremental costs to us.
Employment
Agreements Including Change in Control.
John C. Orr, President and Chief Executive Officer, was
appointed to his current position on May 1, 2005. On
June 20, 2008, the Board of Directors, upon the
recommendation of the Compensation Committee, approved an
amended employment agreement between the Company and
Mr. Orr, for Mr. Orr to continue serving the Company
as the President and Chief Executive Officer. The amended
employment agreement was effective as of June 1, 2008 and
has a three year term. Mr. Orrs amended employment
agreement provided a base salary of $725,000 and certain
benefits, with an annual bonus opportunity each year during his
employment term that is based on metrics established by the
Compensation Committee, but with a target of not less than 100%
of Mr. Orrs base salary for the particular year. The
benefits provided under Mr. Orrs amended employment
agreement included, but were not limited to:
(i) participation in our profit sharing plan,
(ii) benefits under the supplemental executive retirement
plan, (iii) short-term and long-term disability insurance,
(iv) life insurance, (v) medical and dental insurance,
(vi) vacation, (vii) incentive stock options under the
2008 Incentive Stock Plan, (viii) an automobile and
reimbursement of insurance and other expenses related to the
automobile, (ix) annual grant of stock options with a value
on the date of grant of at least $1,000,000 determined on the
basis of a Black-Scholes valuation or other measure utilized
24
by the Compensation Committee, provided such other measure is in
general use at the time of such grant by other public companies,
(x) a one-time special option to purchase shares of Common
Stock with a value on the date of grant of at least $750,000,
and (xi) reimbursement of any excise taxes.
In fiscal 2009, Mr. Orr agreed to defer receipt of the
option grants provided in his employment agreement pending
stabilization of the economic environment, the financial
performance of the Company and the adoption by the Compensation
Committee of the 2010 LTIP. Mr. Orr, the senior management
team and the Compensation Committee worked with Towers Watson in
fiscal 2009 to design the 2010 LTIP to provide more emphasis on
performance based awards in long-term incentive compensation and
to reduce potential dilution resulting from the issuance of
stock options alone to senior management. The Compensation
Committee and Mr. Orr agreed that it was more advantageous
to the Company to have Mr. Orr participate in the same
long-term incentive plan, with the same incentives and
motivations, as the rest of the senior management team, rather
than continuing to receive the guaranteed option grants provided
for in his employment agreement. Consequently, in March, 2010,
Mr. Orr and the Company further amended his employment
agreement to eliminate the guaranteed options grant in exchange
for Mr. Orrs participation in the 2010 LTIP along
with the other members of our senior management, and
Mr. Orrs receipt of awards thereunder as approved by
the Compensation Committee.
Mr. Orrs amended employment agreement also provides
that if Mr. Orr is terminated other than for cause or if he
terminates for good reason, or if there is a change in control,
then he is entitled to: (1) three times Mr. Orrs
annual base salary as in effect on the date of his termination
in a lump sum within thirty (30) days after such
termination; (2) an amount equal to the sum of
(A) three times his annual bonus at the highest rate in
effect during the prior three year period plus (B) a
pro-rata portion of the target annual bonus within thirty
(30) days after such termination; (3) COBRA health
coverage at the Companys expense for the applicable period
under Section 4980B of the IRC, followed by coverage under
the Companys health care plans for the remainder of the
employment term; (4) continuation of the automobile
allowance for the remainder of the employment term;
(5) long term disability protection for the remainder of
the employment term; (6) life insurance protection for the
remainder of the employment term; and (7) outplacement
services for one year and is provided with IRC Section 280G
protection in the form of an excise tax
gross-up
payment. In addition, upon Mr. Orrs termination
following a change of control, all of Mr. Orrs
outstanding stock options and restricted stock awards will
become vested, to the extent not previously forfeited or
terminated. Mr. Orr is also subject to a three year
non-compete agreement.
In the event that Mr. Orrs employment is terminated
by us other than for cause or by him for good reason, or if
there is a change of control of the Company, then Mr. Orr
would receive the following benefits under the terms of his
employment agreement if such event occurred as of
December 31, 2010: (i) a lump sum payment of
$4,350,000 consisting of a combination of a payment of three
times his most recent salary and three times the highest annual
bonus awarded during the prior three year period plus the pro
rata share of the current year target annual bonus;
(ii) continuation of medical, dental, long and short-term
disability protection and any life insurance coverage for a
period of three years with an estimated value of $145,000;
(iii) acceleration of the vesting of stock options or other
vesting provisions related to restricted stock or other stock
awards having a value of $1,734,248 and (iv) other benefits
valued at $65,000, including payments for automobile allowances.
If Mr. Orr is terminated by us for cause or he resigns
other than for good reason, then Mr. Orr is only entitled
to compensation earned prior to the date of termination that has
not yet been paid.
As a result of discussions between Mr. Orr and the Compensation
Committee, on March 4, 2011, the Board of Directors approved a
severance agreement between the Company and Mr. Orr dated
as of March 1, 2011. The full text of the severance
agreement is attached as Exhibit 10.1 to the Current Report
on
Form 8-K
filed with the SEC on March 7, 2011. The severance
agreement is effective as of June 1, 2011 following the
expiration of the amended employment agreement described above.
On June 1, 2011, Mr. Orrs employment by the
Company will be
employment-at-will.
Mr. Orrs severance agreement also provides that if
Mr. Orr is terminated other than for cause or if he
terminates for good reason, including following a change in
control, any time prior to June 1, 2014, then he is
entitled to: (1) three times Mr. Orrs annual
base salary as in effect on the date of his termination in a
lump sum within thirty (30) days after such
25
termination; (2) an amount equal to the sum of
(A) three times his annual bonus at the highest rate in
effect during the prior three year period plus (B) a
pro-rata portion of the current year target annual bonus within
thirty (30) days after such termination; (3) health
coverage for three years; (4) an automobile allowance for
three years; (5) long term disability protection for three
years; (6) life insurance protection for three years; and
(7) outplacement services for one year.
Mr. Orrs severance agreement provides that if
Mr. Orr is terminated other than for cause or if he
terminates for good reason, including following a change in
control, any time during the period from June 1, 2014 until
June 1, 2015, then he is entitled to: (1) two times
Mr. Orrs annual base salary as in effect on the date
of his termination in a lump sum within thirty (30) days
after such termination; (2) an amount equal to the sum of
(A) two times his annual bonus at the highest rate in
effect during the prior two year period plus (B) a pro-rata
portion of the current year target annual bonus within thirty
(30) days after such termination; (3) health coverage
for two years; (4) an automobile allowance for two years;
(5) long term disability protection for two years;
(6) life insurance protection for two years; and
(7) outplacement services for one year.
Mr. Orrs severance agreement provides that if
Mr. Orr is terminated other than for cause or if he
terminates for good reason, including following a change in
control, any time during the period from June 1, 2015 until
June 1, 2016, then he is entitled to: (1) one times
Mr. Orrs annual base salary as in effect on the date
of his termination in a lump sum within thirty (30) days
after such termination; (2) an amount equal to the sum of
(A) one times his annual bonus at the highest rate in
effect during the prior one year period plus (B) a pro-rata
portion of the current year target annual bonus within thirty
(30) days after such termination; (3) health coverage
for the applicable period under Section 4980B of the IRC;
(4) an automobile allowance for one year; (5) long
term disability protection for one year; (6) life insurance
protection for one year; and (7) outplacement services for
one year.
In addition, Mr. Orrs severance agreement provides
that upon Mr. Orrs termination by the Company other
than for cause or if he terminates for good reason, including
following a change in control, all of Mr. Orrs
outstanding stock options and restricted stock awards will
become vested, to the extent not previously forfeited or
terminated. Mr. Orr is also subject to a three year
non-compete agreement. The severance agreement does not provide
IRC Section 280G protection or excise tax
gross-up
payments. If Mr. Orr is terminated by us for cause or
resigns other than for good reason, then Mr. Orr is only
entitled to compensation earned prior to the date of termination
that has not yet been paid.
David B. Knowles, Executive Vice President and Chief Operating
Officer, was appointed to his current position effective
June 19, 2009, for a two year term with automatic renewals
for successive one year terms thereafter until an event of
termination. Under the terms of his employment agreement,
Mr. Knowles will receive a base salary of $400,000 per
year, subject to annual review by the Compensation Committee.
For 2010, Mr. Knowles received a bonus of $197,325 pursuant
to the executive cash bonus compensation plan. Any future or
additional bonus will be determined by the Compensation
Committee pursuant to metrics established by the Compensation
Committee, with a target annual bonus opportunity for each year
that is not less than 75% of Mr. Knowles base salary
for the particular year. In connection with the employment
agreement, Mr. Knowles was granted stock options to acquire
30,000 shares of the Companys common stock. The
benefits provided under Mr. Knowles employment
agreement include, but are not limited to:
(i) participation in our profit sharing plan,
(ii) benefits under the supplemental executive retirement
plan, (iii) short-term and long-term disability insurance,
(iv) group term life insurance, (v) medical and dental
insurance, (vi) vacation (vii) a monthly automobile
allowance; and (viii) reimbursement of moving expenses and
a one time payment for closing costs and other expenses relating
to the sale of his current home
and/or
purchase of a new home in the Akron, Ohio area. The Compensation
Committee increased the annual base salary payable to Mr.
Knowles under his employment agreement to $420,000 for fiscal
year 2010.
In the event that Mr. Knowles employment is
terminated by the Company other than for cause or is terminated
by Mr. Knowles for good reason, then the Company will
provide to Mr. Knowles in addition to any base salary and
annual bonus accrued and unpaid as of the date of termination:
(1) continuation of Mr. Knowles annual base
salary as in effect on the date of his termination for a period
of one year after such termination; (2) an amount equal to
his annual bonus at the highest rate in effect during the prior
three
26
year period plus the pro rata share of the current year target
annual bonus payable in a lump sum within ninety (90) days
after such termination; (3) COBRA health coverage at the
Companys expense for a period of one year;
(4) continuation of the automobile allowance for a period
of one year; (5) long term disability protection for a
period of one year; (6) life insurance protection for a
period of one year; and (7) outplacement services for one
year. In the event that Mr. Knowles is terminated due to
his death or disability, then Mr. Knowles or his spouse
will be entitled to receive: (1) any base salary and annual
bonus accrued and unpaid; (2) any amounts payable under any
Company employee benefit plan; and (3) COBRA coverage at
the Companys expense for the longer of (A) the
applicable period under IRC Section 4980B; or
(B) thirty-six (36) months. If Mr. Knowles
employment is terminated by the Company with cause or by
Mr. Knowles without good reason, then no further
compensation is payable to Mr. Knowles other than
compensation earned prior to the termination but unpaid at the
time of termination. In the event Mr. Knowles is terminated
in connection with, or within thirty (30) days following,
the occurrence of a specified change in control event,
Mr. Knowles will be provided with the following benefits in
addition to any base salary and annual bonus accrued and unpaid
as of the date of termination: (1) an amount equal to the
sum of (A) one and one half (1 1/2) times his annual base
salary as in effect on the date of his termination, plus
(B) one and a half
(11/2)
times his annual bonus at the highest rate in effect during the
prior three year period, payable within thirty (30) days
after such termination; and (2) full vesting of all
outstanding stock options, restricted stock or similar awards
and any option shall become fully exercisable within
90 days of such termination date. Mr. Knowles is
subject to a three year non-compete agreement.
In the event that Mr. Knowles employment is
terminated by us other than for cause or by him for good reason
then Mr. Knowles would receive the following benefits if
such event occurred as of December 31, 2010: (i) a
payment of $617,325 consisting of a combination of continuation
of payment of his then base salary for one year and a lump sum
payment of the highest annual bonus awarded during the prior
three year period; (ii) continuation of medical, dental,
long and short-term disability protection and any life insurance
coverage for a period of one year with an estimated value of
$20,000; (iii) acceleration of the vesting of stock options
or other vesting provisions related to restricted stock or other
stock awards having a value of $366,249 and (iv) other
benefits valued at $43,000, including payments for automobile
allowances and executive outplacement service fees. In the event
Mr. Knowles is terminated in connection with, or within
thirty (30) days following, the occurrence of a specified
change in control event other than for cause or by him for good
reason, then Mr. Knowles would receive the following
benefits if such event occurred as of December 31, 2010:
(i) a payment of $925,988 consisting of a combination of a
payment of one and a half times his most recent salary and one
and a half times the highest annual bonus awarded during the
prior three year period; (ii) continuation of medical,
dental, long and short-term disability protection and any life
insurance coverage for a period of one year with an estimated
value of $20,000; (iii) acceleration of the vesting of
stock options or other vesting provisions related to restricted
stock or other stock awards having a value of $366,249 and
(iv) other benefits valued at $44,000, including payments
for automobile allowances and executive outplacement service
fees. If Mr. Knowles is terminated by us for cause or
resigns other than for good reason, then Mr. Knowles is
only entitled to compensation earned prior to the date of
termination that has not yet been paid.
Donald A. Merril, Senior Vice President, Chief Financial Officer
and Corporate Secretary, was appointed to his current position
effective April 25, 2006. On January 24, 2006, the
Compensation Committee approved an employment agreement with
Mr. Merril for a term that continues indefinitely until an
event of termination. The employment agreement provides him with
a base salary and certain benefits with any bonus to be
determined by the Compensation Committee pursuant to metrics
established by the Compensation Committee, with a target annual
bonus opportunity for each year that is not less than 75% of
Mr. Merrils base salary for the particular year. The
benefits provided under Mr. Merrils employment
agreement include, but are not limited to:
(i) participation in our profit sharing plan,
(ii) benefits under the supplemental executive retirement
plan, (iii) short-term and long-term disability insurance,
(iv) group term life insurance, (v) medical and dental
insurance, (vi) vacation, (vii) incentive stock
options under the 2008 Incentive Stock Plan, and (viii) an
automobile and reimbursement of related expenses. The
Compensation Committee increased the annual base salary payable
to Mr. Merril under his employment agreement to $342,750
for fiscal year 2010. His employment agreement also provides
that if Mr. Merril is terminated
27
other than for cause or if he terminates for good reason, he is
entitled to one year of compensation and benefits. If there is a
change in control and Mr. Merril is terminated,
Mr. Merril is entitled to 18 months compensation and
benefits and is provided with IRC Section 280G protection
in the form of an excise tax
gross-up
payment, if applicable. Mr. Merril is subject to a three
year non-compete agreement, except in a change in control
situation, and then for 18 months.
In the event that Mr. Merrils employment is
terminated by us other than for cause or by him for good reason
then Mr. Merril would receive the following benefits if
such event occurred as of December 31, 2010: (i) a
lump sum payment of $590,813 consisting of a combination of a
payment of his most recent base salary and the highest annual
bonus awarded during the prior three year period;
(ii) continuation of medical, dental, long and short-term
disability protection and any life insurance coverage for a
period of one year with an estimated value of $20,000;
(iii) acceleration of the vesting of stock options or other
vesting provisions related to restricted stock or other stock
awards having a value of $331,354 and (iv) other benefits
valued at $44,000, including payments for automobile allowances
and executive outplacement service fees. In the event of a
change of control, Mr. Merril has the right to extend his
employment under the terms of this employment agreement for a
period of 18 months. Further upon a change of control and
termination of Mr. Merrils employment by us other
than for cause or by him for good reason then Mr. Merril
would receive the following benefits if such event occurred as
of December 31, 2010: (i) a lump sum payment of
$886,219 consisting of a combination of a payment of one and a
half times his most recent salary and one and a half times the
highest annual bonus awarded during the prior three year period;
(ii) continuation of medical, dental, long and short-term
disability protection and any life insurance coverage for a
period of eighteen months with an estimated value of $30,000;
(iii) acceleration of the vesting of stock options or
other vesting provisions related to restricted stock or other
stock awards having a value of $331,354 and (iv) other
benefits valued at $44,000, including payments for automobile
allowances and executive outplacement service fees. If
Mr. Merril is terminated by us for cause or resigns other
than for good reason, then Mr. Merril is only entitled to
compensation earned prior to the date of termination that has
not yet been paid.
For purposes of Mr. Orrs, Mr. Knowles and
Mr. Merrils employment agreements, a change in
control is defined generally as: (1) the acquisition by any
person of 20% or more of the voting power of the outstanding
securities of the Company, (2) a change in the majority of
directors during a one year period, (3) a merger or
consolidation of the Company where the Company is not the
surviving entity, (4) the complete liquidation of the
Company, or (5) the sale or disposition of more than 50% of
the Companys assets.
The Companys Amended and Restated Code of Regulations
provide that the Company will indemnify, to the fullest extent
then permitted by law, any officer or former officer of the
Company who was or is a party or is threatened to be made a
party to any matter, whether civil or criminal, by reason of the
fact that the individual is or was an officer of the Company, or
serving at the request of the Company as an officer of another
entity. The Company has entered into indemnity agreements with
its executive officers contractually obligating the Company to
provide such protection. The Company also currently has in
effect officer and director insurance coverage.
Grants of Plan
Based Awards.
The following table contains information concerning the grant of
plan based awards to the NEOs under the 2008 Incentive Stock
Plan. The actual value and gains, if any, on an option exercise
are dependent upon the future performance of our Common Stock
and overall market conditions. The option awards and unvested
portion of stock awards identified in the table below are also
reported in the Outstanding Equity Awards at Fiscal
2010 Year-End table below.
28
Grants of Plan
Based Awards
During Fiscal 2010
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All Other
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All Other
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Stock
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Option
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Awards:
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Awards:
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Exercise
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Estimated Future
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Estimated Future
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Number
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Number of
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or Base
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Grant Date
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Payouts Under Non-Equity
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Payouts Under Equity
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of Shares
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Securities
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Price of
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Fair Value
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Incentive Plan Awards
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Incentive Plan Awards
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of Stock
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Underlying
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Option
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of Stock
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Grant
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Threshold
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Target
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Maximum
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Threshold
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Target
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Maximum
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or Units
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Options
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Awards
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and Option
|
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Name:
|
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Date
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($)
|
|
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($)
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|
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($)
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|
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($)
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|
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($)
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($)
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(#)
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(#)
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($/Sh)
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Award ($)
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John C. Orr
|
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3/4/10
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|
|
|
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56,500
|
|
|
|
|
|
|
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|
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563,305
|
|
|
|
|
3/4/10
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81,500
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12.46
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254,280
|
|
|
|
|
3/4/10
|
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357,500(1
|
)
|
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715,000(1
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)
|
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1,430,000
|
(1)
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David B. Knowles
|
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3/4/10
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|
|
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19,100
|
|
|
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|
|
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|
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190,427
|
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3/4/10
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|
|
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38,700
|
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9.97
|
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118,422
|
|
|
|
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3/4/10
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110,000
|
(1)
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220,000
|
(1)
|
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440,000
|
(1)
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Donald A. Merril
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3/4/10
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10,100
|
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100,697
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3/4/10
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20,500
|
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9.97
|
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62,730
|
|
|
|
|
3/4/10
|
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|
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57,500
|
(1)
|
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|
115,000
|
(1)
|
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|
230,000
|
(1)
|
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(1) |
|
Represents estimated future payout
for performance-based cash awards. The payouts are based on
return on invested capital for 2010, 2011, 2012. The payouts are
based on the following return on invested capital targets:
thresold-5%, target-10%, and maximum-15%.
|
Outstanding Equity Awards at Fiscal Year
End. The following table shows all
outstanding equity awards held by the NEOs at the end of fiscal
2010 that have not been exercised or that have not vested.
Certain of the awards identified in the table below are also
reported in the Grants of Plan Based Awards During Fiscal 2010
table above.
Outstanding
Equity Awards at Fiscal 2010 Year-End
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Option Awards
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Stock Awards
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Equity
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Equity
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Incentive Plan
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Incentive Plan
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Awards:
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Equity Incentive
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Awards:
|
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Market or
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Plan Awards:
|
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|
|
Number of
|
|
|
Payout Value
|
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|
Number of
|
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Number of
|
|
|
Number of
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
of Unearned
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
Shares, Units
|
|
|
Shares, Units
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares or
|
|
|
or Other
|
|
|
or Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Units of Stock
|
|
|
Units of Stock
|
|
|
Rights That
|
|
|
Rights That
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
That Have
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(5)
|
|
|
(#)
|
|
|
($)
|
|
|
John C. Orr
|
|
|
3,300
|
(1)
|
|
|
|
|
|
|
0
|
|
|
|
8.00
|
|
|
|
3/12/13
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
25,000
|
(1)
|
|
|
|
|
|
|
0
|
|
|
|
11.15
|
|
|
|
5/31/15
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
6,868
|
(1)
|
|
|
|
|
|
|
0
|
|
|
|
17.02
|
|
|
|
9/16/16
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
45,132
|
(2)
|
|
|
|
|
|
|
0
|
|
|
|
17.02
|
|
|
|
9/19/16
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
842
|
(1)
|
|
|
421
|
(1)
|
|
|
0
|
|
|
|
12.55
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
37,158
|
(2)
|
|
|
18,579
|
(2)
|
|
|
0
|
|
|
|
12.55
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
22,000
|
(3)
|
|
|
214,280
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
167,947
|
(2)
|
|
|
83,973
|
(2)
|
|
|
0
|
|
|
|
9.00
|
|
|
|
6/20/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
8,673
|
(1)
|
|
|
8,673
|
(1)
|
|
|
0
|
|
|
|
10.92
|
|
|
|
10/3/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
145,173
|
(2)
|
|
|
68,250
|
(2)
|
|
|
0
|
|
|
|
10.92
|
|
|
|
10/3/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
81,500
|
(2)
|
|
|
0
|
|
|
|
12.46
|
|
|
|
3/4/20
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
56,500
|
(4)
|
|
|
550,310
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Knowles
|
|
|
10,000
|
(1)
|
|
|
20,000
|
(1)
|
|
|
0
|
|
|
|
8.19
|
|
|
|
6/29/19
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
38,700
|
(2)
|
|
|
0
|
|
|
|
9.97
|
|
|
|
3/4/20
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
19,100
|
(4)
|
|
|
186,034
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald A. Merril
|
|
|
15,000
|
(1)
|
|
|
|
|
|
|
0
|
|
|
|
15.11
|
|
|
|
1/24/16
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
9,636
|
(1)
|
|
|
|
|
|
|
0
|
|
|
|
17.02
|
|
|
|
9/19/16
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
8,364
|
(2)
|
|
|
|
|
|
|
0
|
|
|
|
17.02
|
|
|
|
9/19/16
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
(4)
|
|
|
68,180
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
13,333
|
(2)
|
|
|
6,667
|
(2)
|
|
|
0
|
|
|
|
12.55
|
|
|
|
4/23/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
5,006
|
(1)
|
|
|
9,157
|
(1)
|
|
|
0
|
|
|
|
10.92
|
|
|
|
10/3/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
20,394
|
(2)
|
|
|
3,543
|
(2)
|
|
|
0
|
|
|
|
10.92
|
|
|
|
10/3/18
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
20,500
|
(2)
|
|
|
0
|
|
|
|
9.97
|
|
|
|
3/4/20
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
10,100
|
(4)
|
|
|
98,374
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents grants of incentive
stock options.
|
|
(2) |
|
Represents grants of non-qualified
stock options.
|
29
|
|
|
(3) |
|
The forfeiture provisions with
respect to all of these restricted stock awards lapse on
September 20, 2012 if the executive is still employed on
such date and certain stock performance goals are met.
|
|
(4) |
|
The forfeiture provisions with
respect to all of these restricted stock awards lapse on
September 20, 2013 if the executive is still employed on
such date.
|
|
(5) |
|
Based on the NYSE closing price of
$9.74 per share as of December 31, 2010.
|
Option Exercises
and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
Exercise (#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
John C. Orr
|
|
|
|
|
|
|
|
|
|
|
179,897
|
|
|
|
640,566
|
|
David B. Knowles
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
28,700
|
|
Donald A. Merril
|
|
|
|
|
|
|
|
|
|
|
19,367
|
|
|
|
80,081
|
|
Pension Benefits. The
following table shows all pension benefits held by the NEOs at
the end of fiscal 2010 other than pursuant to our 401(k) Plan.
The Company has adopted a Supplemental Executive Retirement Plan
(the SERP) which provides certain pension benefits
to a select group of management employees. The annual
supplemental pension benefit is payable for ten years commencing
at the later of retirement or age 65. Under their
respective employment agreements with the Company,
Messrs. Orr, Knowles and Merril are guaranteed a minimum
annual supplemental pension benefit of $275,000, $75,000 and
$50,000, respectively. On March 4, 2011, the Board approved
an amendment to the SERP between the Company and Mr. Orr
dated as of March 1, 2011. The full text of the amendment
to the SERP is attached as Exhibit 10.2 to the Current
Report on
Form 8-K
filed with the SEC on March 7, 2011. The amendment to the
SERP is effective as of June 1, 2011 and increases the
minimum supplemental pension benefit for Mr. Orr to
$325,000.
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
Present Value of
|
|
|
Payments During
|
|
|
|
|
|
Credited Service
|
|
Accumulated Benefit
|
|
|
Last Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
|
($)
|
|
|
John C. Orr
|
|
Myers Industries, Inc. Executive Supplemental Retirement Plan
|
|
Fully Vested
|
|
|
1,653,769
|
|
|
|
0
|
|
David B. Knowles
|
|
Myers Industries, Inc. Executive Supplemental Retirement Plan
|
|
1
|
|
|
27,038
|
|
|
|
0
|
|
Donald A. Merril
|
|
Myers Industries, Inc. Executive Supplemental Retirement Plan
|
|
6
|
|
|
88,136
|
|
|
|
0
|
|
Policies and Procedures with Respect to Related
Party Transactions. The Board is committed to
upholding the highest legal and ethical conduct in fulfilling
its responsibilities and recognizes that related party
transactions can present a heightened risk of potential or
actual conflicts of interest. Accordingly, it is our preference,
as a general rule, to avoid related party transactions. No
related party transaction occurred during fiscal 2010.
Our Governance Committee reviews all relationships and
transactions in which we and our directors, nominees for
director and executive officers or their immediate family
members are participants to determine whether such persons have
a direct or indirect material interest. In addition our Audit
Committee is responsible for reviewing and investigating any
matters pertaining to our ethical codes of conduct, including
conflicts of interest.
30
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee appointed KPMG LLP as the Companys
independent registered public accounting firm to audit the
Companys consolidated financial statements for the year
ended December 31, 2010. Additional information regarding
the services provided to the Company by KPMG LLP during 2010 is
set forth below, under the section titled Matters Relating
to the Independent Registered Public Accounting Firm.
Representatives of KPMG LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement
if they wish and to respond to appropriate shareholder questions.
On March 3, 2011, the Audit Committee received proposals
from independent registered public accounting firms for the
Companys 2011 audit. On March 8, 2011, subsequent to
the filing of the Companys
Form 10-K
for the year ended December 31, 2010, KPMG LLP completed
all of its work for the Company and ceased serving as the
Companys independent registered public accounting firm.
Subsequent to the filing of the Companys Form 10-K,
effective on March 9, 2011, Ernst & Young LLP accepted
the Audit Committees appointment as the Companys
independent registered public accounting firm. Representatives
of Ernst & Young LLP are expected to be available at the
Annual Meeting to respond to appropriate questions and will be
given the opportunity to make a statement if they desire to do
so.
Although shareholder ratification is not required under the laws
of the State of Ohio, the appointment of Ernst & Young LLP
is being submitted to our shareholders for ratification at the
Annual Meeting in order to provide a means by which our
shareholders may communicate their opinion to the Audit
Committee. If our shareholders do not ratify the appointment of
Ernst & Young LLP, the Audit Committee will reconsider the
appointment, but is not obligated to change the appointment and
may for other reasons be unable to make another appointment.
The Board of
Directors recommends that you vote FOR
Proposal 2
relating to the ratification of the appointment of Ernst &
Young LLP
Matters Relating
to the Independent Registered Public Accounting Firm.
The firm of KPMG LLP audited the books and records of the
Company for each of the years ended December 31, 2010,
2009, and 2008. Representatives of KPMG LLP are expected to be
available at the Annual Meeting to respond to appropriate
questions and will be given the opportunity to make a statement
if they desire to do so.
A description of the fees billed to the Company by KPMG LLP for
each of the years ended December 31, 2010 and 2009 is set
forth in the table below.
KPMG LLP was first retained by the Audit Committee in 2005. The
Audit Committee (see, Report of Audit Committee)
reviewed the non-audit services provided by KPMG LLP during the
year ended December 31, 2010, and determined that the
provision of such non-audit services was compatible with
maintaining the accountants independence.
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
Audit
Fees(1)
|
|
$
|
1,012,500
|
|
|
$
|
1,142,500
|
|
Audit Related
Fees(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
Tax
Fees(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
All Other
Fees(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1) |
|
Professional fees for the audit of
the annual financial statements and the review of the quarterly
financial statements. Includes $17,500 of additional fees paid
after last years proxy statement was filed with the SEC
related to services provided in connection with the
Companys sale of substantially all of the assets of its
Michigan Rubber Products, Inc. and Buckhorn Rubber Products Inc.
businesses and the reporting of Discontinued
Operations.
|
|
(2) |
|
Fees for assurance and related
services reasonably related to audits and reviews of benefit
plans.
|
|
(3) |
|
Professional fees for tax
compliance, tax advice, and tax planning.
|
|
(4) |
|
Fees for all other products and
services.
|
31
The Audit Committees Pre-Approval Policy requires the
pre-approval of all audit and permissible non-audit services
provided by the independent registered public accounting firm.
These services may include audit services, audit-related
services, tax services and other services. Pre-approval is
provided for up to one year and any pre-approval is detailed as
to the particular service or category of services and is
generally subject to a specific range or budget. The independent
registered public accounting firm and management are required to
periodically report to the Audit Committee regarding the extent
of services provided by the independent registered public
accounting firm in accordance with this policy, and the fees for
the services performed to date. During 2010, all services were
pre-approved by the Audit Committee in accordance with the
policy. The Pre-Approval Policy is available on the
Corporate Governance page accessed from the
Investor Relations page of our website at
www.myersind.com.
Change of
Independent Registered Public Accounting Firm March
2011.
On March 8, 2011, subsequent to filing its Form 10-K
for the year ended December 31, 2010, the Board of
Directors dismissed KPMG LLP as its independent registered
public accounting firm. On March 9, 2011, Ernst &
Young LLP accepted the appointment as the Companys
independent registered public accounting firm for the fiscal
year ending 2011, after completing its due diligence. The Audit
Committee approved the change in independent registered public
accounting firms.
KPMG LLPs reports on the Companys consolidated
financial statements for each of the years ended
December 31, 2010 and 2009 did not contain an adverse
opinion or a disclaimer opinion and were not qualified or
modified as to uncertainty, audit scope, or accounting
principles.
During the years ended December 31, 2010 and 2009,
respectively, and through March 7, 2011, neither the
Company, nor anyone acting on its behalf, consulted Ernst &
Young LLP with respect to the application of accounting
principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on
the Companys financial statements, or any other matters or
reportable events listed in Items 304(a)(2)(i) and
(ii) of
Regulation S-K.
During the prior two fiscal years and through March 8,
2011, there were no disagreements with KPMG LLP on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. During the prior two
fiscal years and through March 8, 2011, there were no
reportable events, as listed in Item 301(a)(1)(v) of
Regulation S-K.
Audit Committee
Report.
The information contained in this report shall not be deemed
to be soliciting material or filed with
the SEC or subject to the liabilities of Section 18 of the
Exchange Act, except to the extent that we specifically
incorporate it by reference into a document filed under the
Securities Act or Exchange Act.
The Audit Committee, which is composed of four independent
directors, is responsible for assisting the Board in fulfilling
its oversight responsibilities pertaining to the accounting,
auditing and financial reporting processes of the Company. The
duties and responsibilities of the Audit Committee are set forth
in our Audit Committee Charter, which is published on our
website (www.myersind.com) on the Corporate
Governance page under the Investor Relations
section. Management is responsible for establishing and
maintaining the Companys internal control over financial
reporting and for preparing financial statements in accordance
with accounting principles generally accepted in the United
States of America. The Audit Committee is directly responsible
for the appointment, oversight, compensation and retention of
KPMG LLP, the independent registered public accounting firm for
the Company. KPMG LLP is responsible for performing an
independent audit of the Companys annual financial
statements and expressing an opinion on (i) the conformity,
in all material respects, of the Companys financial
statements with accounting principles generally accepted in the
United States of America and (ii) the effectiveness of
internal control over financial reporting.
32
Each member of the Audit Committee is financially literate and
independent as defined under the Board of Directors Independence
Criteria policy and the independence standards set by the New
York Stock Exchange. The Board has identified Robert A. Stefanko
as the audit committee financial expert.
Mr. Stefanko is independent, as independence for audit
committee members is defined in the applicable listing standards
of the New York Stock Exchange.
The Audit Committees responsibility is one of oversight.
Members of the Audit Committee rely on the information provided
and the representations made to them by: management, which has
primary responsibility for establishing and maintaining
appropriate internal control over financial reporting, and for
the Companys financial statements and reports; and by the
independent registered public accounting firm, which is
responsible for performing an audit in accordance with Standards
of the Public Company Accounting Oversight Board
United States (PCAOB) and expressing an opinion on
(i) the conformity, in all material respects, of the
Companys financial statements with accounting principles
generally accepted in the United States of America and
(ii) the effectiveness of internal control over financial
reporting.
In the performance of our duties we have:
|
|
|
|
|
reviewed and discussed with management the Companys
audited financial statements as of and for the year ended
December 31, 2010;
|
|
|
|
discussed with KPMG LLP, the independent registered public
accounting firm for the Company, the matters required to be
discussed by Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU
Section 380) as adopted by PCAOB in
Rule 3200T; and
|
|
|
|
received the written disclosures and the letter from KPMG LLP
required by applicable requirements of the Public Company
Accounting Oversight Board regarding KPMG LLPs
communications with the Audit Committee concerning independence,
and has discussed KPMG LLPs independence with KPMG LLP.
|
Based on the reviews and discussions referred to above, and
exercising our business judgment, we recommended to the Board
that the financial statements referred to above be included in
the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010 for filing with the
SEC. We have selected Ernst & Young LLP as the
Companys independent registered public accounting firm for
fiscal 2011, and have approved submitting the selection of the
independent registered public accounting firm for ratification
by the shareholders.
The foregoing report has been furnished by the current members
of the Audit Committee, being:
Robert A. Stefanko, Chair and Presiding Director, Vincent C.
Byrd, Jon H. Outcalt, and Edward W. Kissel
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Section 951 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act requires that the Company seek a
non-binding advisory vote from its shareholders to approve the
compensation as disclosed in the Compensation
Discussion & Analysis (CD&A) and
tabular disclosures of this Proxy Statement. Since the required
vote is advisory, the result of the vote is not binding upon the
Board.
As discussed in the CD&A section of this Proxy Statement,
our executive compensation program is designed to motivate our
executive officers to achieve short-term and long-term Company
goals that will increase shareholder value; ensure that the
actual compensation paid to our executive officers is aligned
and correlated with financial performance and changes in
shareholder value; motivate and reward executives whose
knowledge, skills and performance are crucial to our success;
and attract and retain talented and experienced executives and
other key employees.
To meet our objectives, the Compensation Committee implemented
the following policies:
|
|
|
|
|
Provide compensation packages that are within a range that is
reasonably competitive in the market;
|
|
|
|
Provide short-term performance incentives by establishing goals
for our executives through a bonus plan focused on operating
performance and cash flow; and
|
33
|
|
|
|
|
Provide long-term performance incentives and reward executive
management for achievement of long-term strategic initiatives
through the use of restricted stock awards, option grants and
other equity-based awards under our 2008 Incentive Stock Plan.
|
Our executive compensation program is designed to be consistent
with the objectives set forth above. The basic elements of our
compensation package include (i) base salary,
(ii) annual bonus opportunities, (iii) long-term
incentives, such as equity awards, (iv) retirement
benefits, and (v) generally available health, welfare and
other benefit programs and executive perquisites. Under our
executive compensation program, we target total compensation to
be within the median range of compensation paid to similarly
situated executive officers at peer public companies and
companies in our industry. We also monitor and assess the
competitive retention and recruiting pressures for executive
talent in our industries and our markets.
We are presenting the following proposal, which gives you as a
shareholder the opportunity to endorse or not endorse our
compensation program for our NEOs by voting for or against the
following resolution. Because the vote on this proposal is
advisory in nature, it will not affect any compensation already
paid or awarded to any NEO and will not be binding on or
overrule any decisions by the Board. The Compensation Committee
will take into account the outcome of the vote when considering
future compensation arrangements for our NEOs.
RESOLVED, that the compensation paid to the Companys
named executive officers, as disclosed pursuant to Item 402
of
Regulation S-K,
including the Compensation Discussion & Analysis,
compensation tables, and narrative discussion is hereby
APPROVED.
The Board of
Directors recommends that you vote FOR
Proposal 3
relating to the approval of the Companys executive
compensation
PROPOSAL NO. 4
ADVISORY VOTE ON THE FREQUENCY FOR HOLDING
THE NON-BINDING ADVISORY VOTE ON
SAY-ON-PAY
Pursuant to Section 951 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, at least once every six
years the Company is required to submit for shareholder vote a
non-binding resolution to determine whether the advisory
shareholder vote on executive compensation shall occur every
one, two, or three years.
After careful consideration, the Board believes that submitting
the advisory vote on executive compensation to our shareholders
on an annual basis is the most appropriate alternative for the
Company and our shareholders at this time.
The proxy card provides shareholders with four choices (every
one, two, or three years, or Abstain). Because the
vote on this proposal is advisory in nature, it will not be
binding on or overrule any decisions by the Board. The
Compensation Committee will take into account the outcome of the
vote when deciding when to present compensation arrangements for
our NEOs to our shareholders for approval.
The Board of
Directors recommends that you vote For a frequency
option of ONE YEAR
relating to the frequency for holding the non-binding advisory
vote on
say-on-pay
Executive
Officers of the Company.
Disclosure regarding the executive officers of the Company is
set forth in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010 filed with the SEC
under the heading Executive Officers of the
Registrant, which is incorporated into this Proxy
Statement by reference. This Annual Report will be delivered to
our shareholders with the Proxy Statement. Copies of our filings
with the SEC, including the Annual Report, are available to any
shareholder through the SECs internet website at
http://www.sec.gov
or in person at the SECs Public Reference Room at
100 F Street, N.E., Room 1580, Washington, DC
20549. Information regarding operations of the Public Reference
Room may also be obtained by calling the SEC at
1-800-SEC-0330.
Shareholders may also access our SEC filings free of
34
charge on our own internet website at www.myersind.com.
The content of our website is available for informational
purposes only, and is not incorporated by reference into this
Proxy Statement.
Security
Ownership of Certain Beneficial Owners and Management.
The following table shows the number of shares of our common
stock beneficially owned as of December 31, 2010 (unless
otherwise indicated) by:
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each person, who, to our knowledge, beneficially owns more than
5% of our common stock;
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each of our Directors;
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the Chief Executive Officer and the other NEOs; and
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all individuals who served as Directors or NEOs, as a group.
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A beneficial owner of stock is a person who has sole or shared
voting power, meaning the power to control voting decisions, or
sole or shared investment power, meaning the power to cause the
sale of the stock. All individuals listed in the table have sole
voting and investment power over the shares unless otherwise
noted. The Company had no preferred stock issued or outstanding.
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Shares
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Percent of
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Beneficially
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Shares
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Owned
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Outstanding
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Greater Than 5%
Owners(2,3)
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Gamco Investors, Inc.
One Corporate Center
Rye, NY
10580-1422
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5,152,522
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14
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.59%
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T. Rowe Price Associates,
Inc.(4)
100 East Pratt Street
Baltimore, Maryland 21202
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3,309,430
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9
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.37%
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BlackRock Inc.
40 East 52nd Street
New York, New York 10022
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2,965,301
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8
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.40%
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Stephen E.
Myers(8)(6)
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2,772,277
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7
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.85%
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Rutabaga Capital Management
64 Broad Street
Boston, Massachusetts 02109
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2,294,051
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6
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.50%
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Dimensional Fund Advisors LP
Palisades West, Building One
6300 Bee Cave Road
Austin, Texas 78746
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2,283,872
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6
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.47%
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Directors, Nominees, and Named Executive Officers
(1,2,5,6)
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Keith A. Brown
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88,478
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Richard P. Johnston
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31,043
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Edward W. Kissel
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17,256
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John C.
Orr(7)
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578,364
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1
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.63%
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Vincent C. Byrd
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4,750
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Sarah R. Coffin
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0
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John B. Crowe
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3,000
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David B.
Knowles(7)
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29,100
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Jon H. Outcalt
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41,946
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Robert A. Stefanko
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3,300
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Donald A.
Merril(7)
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88,833
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Stephen E.
Myers(8)
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2,772,277
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7
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.85%
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William A. Foley
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0
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Robert B. Heisler, Jr.
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0
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All Directors, Nominees and Named Executive Officers as a
group (14 persons)
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3,658,347
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10
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.36%
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35
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(1) |
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Unless otherwise indicated, none of
the persons listed beneficially owns one percent or more of the
outstanding shares of Common Stock.
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(2) |
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Unless otherwise noted, the
beneficial owner uses the same address as the address of the
principal office of the Company.
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(3) |
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According to filings made with the
SEC, this party or an affiliate has dispositive and/or voting
power over the shares. Number of shares of Common Stock
beneficially owned is the amount reflected in the most recent
Schedule 13D or Schedule 13G filed by such party with
the SEC.
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(4) |
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These securities are owned by
various individual and institutional investors (including T.
Rowe Price Small-Cap Value Fund, Inc., which owns
2,000,000 shares representing 5.66% of Myers
outstanding shares) that T. Rowe Price Associates, Inc.
(Price Associates) serves as investment adviser with
power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the
Securities and Exchange Act of 1934, as amended, Price
Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that
it is, in fact the beneficial owner of such securities.
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(5) |
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Includes shares which the
non-employee director has a right to acquire by exercising
options granted under the Amended and Restated 1999 Incentive
Stock Plan and the 2008 Incentive Stock Plan.
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(6) |
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The amounts shown represent the
total shares of Common Stock owned by such individuals, together
with shares which are issuable under currently exercisable stock
options: Mr. Orr, 440,093, Mr. Merril, 71,733,
Mr. Knowles, 10,000, Mr. Outcalt, 8,850,
Mr. Johnston, 8,850, Mr. Kissel, 8,850,
Mr. Brown, 8,850, and Mr. Myers, 5,000.
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(7) |
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Includes restricted stock:
Mr. Orr, 78,500, Mr. Merril, 17,100, and
Mr. Knowles, 19,100.
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(8) |
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Includes 16,775 shares of
Common Stock held by Mr. Myers spouse, for which
Mr. Myers disclaims beneficial ownership and
253,021 shares held by the Louis S. Myers & Mary
S. Myers Foundation for which he may be deemed beneficial owner.
Also includes 479,801 shares held by MSM &
Associates LP and 25,500 shares held by Semantic
Foundation, both of which Mr. Myers is a trustee and may be
deemed the beneficial owner of such shares. Mr. Myers
disclaims beneficial ownership in such shares to the extent he
does not hold a pecuniary interest. Mr. Myers resigned from
the Board as of March 10, 2010.
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Recent Nominee Transactions in Our Common
Stock. The following table sets forth all
purchases or sales of Common Stock of the Company effected
during the past two years by the nominees for election as
director set forth in Proposal No. 1 above and
recommended by your Board. The Common Stock acquired in these
transactions was for the benefit of the individual purchasers
and no part of the purchase price or market value of such Common
Stock was represented by funds borrowed or otherwise obtained
for the purpose of acquiring or holding such Common Stock.
Messrs. Byrd, Foley, Heisler, Jr., Kissel, Orr, and
Stefanko and Ms. Coffin had no purchases or sales of Common
Stock of the Company during this period.
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Nominee
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Trade Date
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Amount Acquired (Sold)
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Price per Share ($)
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John B. Crowe
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1/29/09
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1,000
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$6.4988
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3/13/09
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900
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$3.75
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3/13/09
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100
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$3.74
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Richard P. Johnston
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11/16/09
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5,000
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$8.82
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11/17/09
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5,000
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$8.79
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Section 16(a) Beneficial Ownership
Reporting Compliance. Section 16(a) of
the Exchange Act requires Myers directors, officers and
persons who own more than ten percent of its Common Stock
(Section 16 Filers) to file reports of
ownership and changes in ownership with the SEC and to furnish
Myers with copies of all such forms they file. These reports can
be viewed on the SECs website at
www.sec.gov. Myers
understands from the information provided to it by the
Section 16 Filers for 2010 that they have adhered to all
filing requirements applicable to the Section 16 Filers.
Based solely on: (a) the Schedule 13D/A filed on
March 9, 2010, by Gabelli Funds, LLC, GAMCO Asset
Management Inc., MJG Associates, Inc., Gabelli Securities, Inc.,
Teton Advisors, Inc., GGCP, Inc., GAMCO Investors, Inc., and
Mario J. Gabelli (collectively, the Gamco Group),
for which the Company disclaims any responsibility, the Gamco
Group beneficially owned 3,654,175 shares of our Common
Stock as of March 9, 2010, representing 10.36% of our
outstanding Common Stock on that date; and (b) the
Schedule 13D/A filed on February 28, 2011, by the
Gamco Group, for which the Company disclaims any responsibility,
the Gamco Group beneficially owned 5,271,204 shares of our
Common Stock as of February 28, 2011, representing
36
14.93% of our outstanding Common Stock, and Myers is unable to
determine if the Gamco Group has a Section 16(a) beneficial
ownership reporting obligation with which it has failed to
comply.
Shareholder Proposal for Inclusion in Proxy
Statement. Any proposals to be considered for
inclusion in the Companys proxy statement to be provided
to our shareholders for our next annual meeting to be held in
April 2012 may be made only by a qualified shareholder and
must be received by Myers no later than
November , 2011.
Since no shareholder proposals were made by February 6,
2011, the enclosed white proxy card grants the proxy holders
discretionary authority to vote on any matter raised at the
Annual Meeting. If a shareholder intends to submit a proposal at
our 2011 annual meeting of shareholders to be held in 2012 that
is not eligible for inclusion in the Companys Proxy
Statement relating to the meeting, and the shareholder fails to
give us notice in accordance with the requirements set forth in
the Exchange Act no later than February , 2012,
then the proxy holders will be allowed to use their
discretionary authority if a proposal is properly raised at our
annual meeting to be held in 2012.
In accordance with our Amended and Restated Code of Regulations,
a shareholder may submit notice of a shareholder proposal that
it intends to raise at our annual meeting (and not desiring to
be included in the Companys proxy statement) only if
advance written notice of such intention is received by the
Corporate Secretary not less than sixty (60) days nor more
than ninety (90) days prior to the date of such annual
meeting of shareholders. In the event that the date of such
meeting is not publicly disclosed at least seventy
(70) days prior to the date of such meeting, written notice
of such shareholders intent to submit a proposal must be
received by the Corporate Secretary not later than the close of
business on the tenth (10th) day following the date on which
notice of such meeting is first provided to the shareholders. A
shareholder wishing to submit a shareholder proposal must follow
the procedure outlined in Article I, Section 11 of our
Amended and Restated Code of Regulations, titled Advance
Notice of Shareholder Proposals and then send a signed
letter of proposal to the following address: Corporate
Governance and Nominating Committee,
c/o Mr. Donald
A. Merril, Corporate Secretary, Myers Industries, Inc., 1293
South Main Street, Akron, Ohio 44301. The Company disclosed the
date of the 2010 annual meeting on February 8, 2011, and
received no proposals satisfying this requirement prior to the
February 28, 2011 deadline for this years Annual
Meeting.
The submission of such a notice does not ensure that a proposal
can be raised at our Annual Meeting.
No Incorporation by
Reference. The Compensation Committee Report
and the Audit Committee Report (including reference to the
independence of the Audit Committee members) are not deemed
filed with the SEC or subject to the liabilities of
Section 18 of the Exchange Act, and shall not be deemed
incorporated by reference into any prior or future filings made
by us under the Securities Act, or the Exchange Act, except to
the extent that we specifically incorporate such information by
reference. The section of this proxy entitled Compensation
Discussion and Analysis is specifically incorporated by
reference in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010.
Cost of Proxy
Solicitation. The accompanying proxy is
solicited by and on behalf of the Board, whose notice of meeting
is attached to this Proxy Statement, and the entire cost of such
solicitation will be borne by Myers. In addition to the use of
the mail, proxies may be solicited by personal interview,
telephone and telegram by directors, officers and employees of
Myers. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of
record by such persons, and Myers will reimburse them for
reasonable
out-of-pocket
expenses incurred by them in connection therewith. Myers has
also retained Innisfree M&A Incorporated to assist in the
distribution of proxy materials and the solicitation of proxies
at an estimated cost of $ plus
reimbursement for customary costs and expenses. Myers has also
agreed to indemnify Innisfree M&A Incorporated and certain
related persons against certain liabilities arising out of or in
connection with the engagement. Myers estimates that the total
expenditures relating to its proxy solicitation (other than
salaries or wages of officers and employees, but including the
cost of mailing, related legal and advisory fees and any
litigation related to the solicitation) will be approximately
$ of which approximately
$ has been spent to date.
37
Copy of the
Form 10-K. We
will mail without charge, upon written request, a copy of our
Annual report on
Form 10-K
for the year ended December 31, 2010, including the
consolidated financial statements, schedules and list of
exhibits, and any particular exhibit specifically requested.
Requests should be sent to: Myers Industries, Inc., 1293 South
Main Street, Akron, Ohio 44301, Attn: Investor Relations. The
Annual Report on
Form 10-K
is also available at
www.myersind.com and at the
SECs website at
www.sec.gov.
Notice Regarding Delivery of Security Holder
Documents. The SEC now permits companies to
send a single set of annual disclosure documents to any
household at which two or more shareholders reside, unless
contrary instructions have been received, but only if the
Company provides advance notice and follows certain procedures.
In such cases, such shareholders continue to receive a separate
notice of the meeting and proxy card. This
householding process reduces the volume of duplicate
information and reduces printing and mailing expenses. We have
not instituted householding for shareholders of record; however,
a number of brokerage firms may have instituted householding for
beneficial owners of the Companys shares of Common Stock
held through such brokerage firms. If your family has multiple
accounts holding shares of Common Stock of the Company, you
already may have received householding notification from your
broker. Please contact your broker directly if you have any
questions or require additional copies of the annual disclosure
documents. The broker will arrange for delivery of a separate
copy of this Proxy Statement or our Annual Report promptly upon
your written or oral request. You may decide at any time to
revoke your decision to household, and thereby receive multiple
copies.
38
PRELIMINARY COPY SUBJECT TO COMPLETION
YOUR VOTE IS IMPORTANT
Please take a moment now to vote your shares of Myers Industries, Inc.
Common Stock for the upcoming Annual Meeting of Shareholders.
PLEASE REVIEW THE PROXY STATEMENT AND VOTE TODAY IN ONE OF THREE WAYS:
1. |
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Vote by Telephone Please call toll-free in the
U.S. or Canada at 1-866-580-7646, on a
touch-tone phone. If outside the U.S. or Canada, call 1-215-521-1351. Please follow the simple
instructions. You will be required to provide the unique control number printed below. |
OR
2. |
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Vote by Internet Please access https://www.proxyvotenow.com/mye, and follow the simple
instructions. Please note you must type an s after http. You will be required to provide the
unique control number printed below. |
You may vote by telephone or Internet 24 hours a day, 7 days a week. Your telephone or Internet
vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned a proxy card.
OR
3. |
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Vote by Mail If you do not wish to vote by telephone or over the Internet, please
complete, sign, date and return the proxy card in the envelope provided, or mail to: Myers
Industries, Inc., c/o Innisfree M&A Incorporated, FDR Station, P.O. Box 5155, New York, NY
10150-5155. |
6 TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE, AND SIGN, DATE AND RETURN IN THE ENVELOPE PROVIDED 6
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Please mark your vote as in this example |
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The Board of Directors recommends that you vote FOR all the nominees listed in Proposal 1, FOR
Proposals 2-3 and FOR one year relating to the frequency for holding the non-binding advisory vote on say-on-pay.
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1. |
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To elect the nine candidates nominated by the Board of Directors to serve as
directors until the next Annual Meeting of Shareholders: |
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01. VINCENT C. BYRD |
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04. WILLIAM A. FOLEY |
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07. EDWARD W. KISSEL |
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02. SARAH R. COFFIN |
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05. ROBERT B. HEISLER |
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08. JOHN C. ORR |
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03. JOHN B. CROWE |
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06. RICHARD P. JOHNSTON |
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09. ROBERT A. STEFANKO |
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FOR ALL NOMINEES |
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WITHHOLD AUTHORITY |
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FOR ALL EXCEPT |
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(Instruction: To withhold authority to vote for any individual nominee write that nominees name on the line above.) |
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FOR |
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AGAINST |
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ABSTAIN |
2. |
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To ratify the appointment of Ernst & Young LLP as the Company s independent registered public accounting firm for fiscal 2011. |
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3. |
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To cast a non-binding advisory vote on executive compensation (say-on-pay). |
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4. |
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To vote on the frequency for holding the non-binding advisory vote on say-on-pay (every one, two, or three years). |
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1 YEAR |
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2 YEARS |
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3 YEARS |
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ABSTAIN |
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5. |
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Such other business as may properly come before the meeting or any adjournments or postponements thereof, all in accordance with
the notice of this meeting and the accompanying proxy statement, receipt of which is acknowledged. |
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Please sign exactly as indicated, date, and return promptly in the enclosed envelope. |
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The undersigned acknowledges receipt of the Notice of said Annual Meeting and of the accompanying Proxy Statement attached thereto. |
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Date:
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, 2011 |
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Signature |
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Signature Signature (if held jointly) |
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Title |
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Please sign exactly as name appears hereon. When signing as attorney, executor, administrator, trustee, guardian, etc.,
give full title as such. Corporations should provide full name of corporation and title of authorized officer signing the proxy. |
PRELIMINARY COPY SUBJECT TO COMPLETION
PLEASE VOTE TODAY!
SEE REVERSE SIDE
FOR THREE EASY WAYS TO VOTE.
6 TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE, AND SIGN, DATE AND RETURN IN THE ENVELOPE PROVIDED 6
MYERS INDUSTRIES, INC.
Proxy Solicited by the Board of Directors for the Annual Meeting
to be held on April 29, 2011
DONALD A. MERRIL, SALVATORE INCANNO, or either of them, with full power of substitution, are
hereby authorized to represent the undersigned and to vote all shares of Common Stock of the
undersigned in MYERS INDUSTRIES, INC. (Company) at the Annual Meeting of Shareholders of said
Company to be held on April 29, 2011, and any adjournment(s) or postponement(s) thereof with
respect to the following matters.
THIS PROXY WILL BE VOTED FOR THE DIRECTOR NOMINEES LISTED ON THE REVERSE SIDE OF THIS PROXY CARD,
FOR PROPOSALS 2-3 AND FOR ONE YEAR RELATING TO THE FREQUENCY FOR HOLDING THE NON-BINDING ADVISORY
VOTE ON SAY-ON-PAY UNLESS A CONTRARY VOTE IS INDICATED, IN WHICH CASE THE PROXY WILL BE VOTED AS
DIRECTED.
PLEASE SIGN AND DATE ON REVERSE SIDE OF THIS CARD.