SC 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Exchange Act of 1934 (Amendment No. ___)
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WSI Industries, Inc.
(Name of Registrant as Specified In Its Charter)
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TABLE OF CONTENTS
[WSI LOGO]
WSI INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 4, 2012
Notice is hereby given that the Annual Meeting of Shareholders of WSI Industries, Inc. will be
held at its offices at 213 Chelsea Road, Monticello, Minnesota, 55362, on Wednesday, January 4,
2012, at 1:00 p.m., local time, for the following purposes:
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To elect five directors to hold office until the next Annual Meeting of
Shareholders or until their successors are elected. |
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To ratify the appointment of Schechter Dokken Kanter Andrews & Selcer Ltd. as
independent public accountants for the fiscal year ending August 26, 2012. |
The Board of Directors has fixed the close of business on November 7, 2011, as the record date
for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting.
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By Order of the Board of Directors |
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Michael J. Pudil, |
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Chairman and Chief Executive Officer |
Minneapolis, Minnesota
December 1, 2011
YOUR VOTE IS IMPORTANT!
REGARDLESS OF WHETHER YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE VOTE YOUR
SHARES IN ONE OF THE WAYS DESCRIBED IN THE PROXY STATEMENT AS PROMPTLY AS POSSIBLE. SHAREHOLDERS
WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.
IMPORTANT NOTICE REGARDING AVAILABILITY
OF PROXY MATERIALS FOR THE
2012 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JANUARY 4, 2012
WSI Industries, Inc. is providing access to its proxy materials both by sending you this full set
of proxy materials and by notifying you of the availability of its proxy materials on the Internet.
You may access the following proxy materials as of the date they are first mailed to our
shareholders at www.wsiindustries.com by following the link for Investor Relations and then
Annual Meeting Materials:
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Notice of 2012 Annual Meeting of Shareholders to be held on Wednesday, January 4, 2012; |
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Proxy Statement for 2012 Annual Meeting of Shareholders to be held on Wednesday,
January 4, 2012; and |
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Annual Report on Form 10-K for the fiscal year ended August 28, 2011. |
These proxy materials are available free of charge and will remain available through the conclusion
of the Annual Meeting. Additionally, we will not collect information, such as cookies, that
would allow us to identify visitors to the site.
[WSI LOGO]
WSI INDUSTRIES, INC.
213 Chelsea Road
Monticello, MN 55362
PROXY STATEMENT
Solicitation of Proxies
This proxy statement is furnished to the shareholders of WSI Industries, Inc. (we or us or
WSI Industries) in connection with the solicitation of proxies by our Board of Directors to be
voted at the Annual Meeting of Shareholders to be held on January 4, 2012, or any adjournment(s) or
postponement(s) thereof. Our offices are located at 213 Chelsea Road, Monticello, Minnesota 55362
and our telephone number is (763) 295-9202. The mailing of this proxy statement to our
shareholders commenced on or about December 1, 2011.
Cost and Method of Solicitation
The cost of this solicitation will be borne by WSI Industries. In addition to solicitation by
mail, our officers, directors and employees may solicit proxies by telephone, facsimile or in
person. We may also request banks and brokers to solicit their customers who have a beneficial
interest in our common stock registered in the names of nominees and will reimburse such banks and
brokers for their reasonable out-of-pocket expenses.
Quorum and Voting
We currently have only one class of securities, common stock, of which 2,895,664 shares were
issued and outstanding and entitled to vote at the close of business on November 7, 2011. Only
shareholders of record at the close of business on November 7, 2011 will be entitled to vote at the
Annual Meeting.
Each share is entitled to one vote and shareholders have cumulative voting rights in
connection with the election of directors in the event any shareholder gives written notice of
intent to cumulate votes to any officer of WSI Industries before the Annual Meeting or to the
presiding officer at the Annual Meeting. A shareholder may cumulate votes for the election of
directors by multiplying the number of votes to which the shareholder may be entitled by five (the
number of directors to be elected) and casting all such votes for one nominee or distributing them
among any two or more nominees. In the event that there is cumulative voting, the proxies shall
have the authority and discretion to vote the shares cumulatively for any nominee or nominees for
whom authority to vote has not been withheld and to cast the votes in their discretion among any
nominee(s) for whom authority to vote has not been withheld.
1
All shareholders are cordially invited to attend the Annual Meeting in person. Whether or not
you expect to attend the Annual Meeting, please grant a proxy to vote as promptly as possible in
order to ensure your representation at the meeting. To grant your proxy, you may complete, date,
sign and return the enclosed proxy by mail or follow the enclosed instructions to grant a proxy to
vote by means of telephone or the Internet.
Even if you have given your proxy, you may still vote in person if you attend the Annual
Meeting. Please note, however, that if your shares are held of record by a broker, bank or other
nominee and you wish to vote at the Annual Meeting, you must bring to the meeting a letter from the
broker, bank or other nominee confirming your beneficial ownership of the shares. Additionally, in
order to vote at the Annual Meeting, you must obtain from the record holder a proxy issued in your
name.
If you sign and return the proxy card on time, the individuals named on the proxy card will
vote your shares as you have directed. If you just sign and submit your proxy card without voting
instructions, your shares will be voted FOR each director nominee and FOR each of the other
proposals. If you are a street name holder and you do not return your voting form to your broker,
no votes will be cast on your behalf for Proposal 1, the election of directors. This is sometimes
called a broker non-vote. Your broker will be entitled to vote in its discretion on Proposal 2,
the ratification of Schechter Dokken Kanter Andrews & Selcer Ltd. as our independent registered
public accounting firm for fiscal year 2012. Shareholders of WSI Industries who own shares of
common stock through a bank or brokerage are sometimes called street name holders. Street name
holders should review the additional information below under Casting Your Vote as a Street Name
Holder.
Quorum and Vote Requirements
Under Minnesota law, a quorum, consisting of a majority of the shares of common stock entitled
to vote at this 2012 Annual Meeting of Shareholders, must be present in person or by proxy before
action may be taken at the Annual Meeting. Votes cast by proxy or in person at this Annual Meeting
will determine whether or not a quorum is present.
Broker non-votes, or shares held by brokers who do not have discretionary authority to vote
on a particular matter and who have not received voting instructions from their customers, are not
counted or deemed to be present or represented for the purpose of determining whether shareholders
have approved that matter, but they are counted as present for the purposes of determining the
existence of a quorum at the Annual Meeting of Shareholders. Abstentions will be treated as shares
that are present and entitled to vote for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of the matter submitted to the shareholders for a
vote.
A director nominee will be elected if approved by the affirmative vote of the holders of a
plurality of the voting power of the shares present, in person or by proxy, and entitled to vote
for the election of directors. You may either vote FOR or WITHHOLD authority to vote for each
nominee for the Board of Directors, which is Proposal 1. If you withhold authority to vote for the
election of one of the directors, it has the same effect as a vote against that director. You may
vote FOR, AGAINST or ABSTAIN on any other proposal. If you vote ABSTAIN on any proposal,
it has the same effect as a vote against the proposal.
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Proposal 2: Appointment of Independent Auditors generally must be approved by the affirmative
vote of the holders of a greater of: (a) a majority of the voting power of the shares present, in
person or by proxy, and entitled to vote on that item of business or (b) a majority of the voting
power of the minimum number of shares that would constitute a quorum.
So far as our management is aware, no matters other than those described in this proxy
statement will be acted upon at the Annual Meeting. In the event that any other matters properly
come before the Annual Meeting calling for a vote of shareholders, the persons named as proxies in
the enclosed form of proxy will vote in accordance with their best judgment on such other matters.
Casting Your Vote as a Street Name Holder
If you hold your shares through a broker (that is, in street name) and do not provide voting
instructions to your broker, your shares will not be voted on any proposal on which your broker
does not have discretionary authority to vote.
As of January 1, 2010, brokers no longer have discretionary authority to vote their customers
shares in an election of directors unless those customers give the brokers instructions on how to
vote. As a result, if you hold your shares in street name and do not provide voting instructions
to your broker, no votes will be cast on your behalf in the election of directors of WSI
Industries. Because of this change in broker voting rules, all street name holders are urged to
provide instructions to their brokers on how to vote their shares in the election of directors at
the Annual Meeting.
Make your vote count! Instruct your broker how to cast your vote!
If you hold your shares in street name, your broker will continue to have discretion to vote
any uninstructed shares on Proposal 2: Ratification of the Appointment of Independent Auditors.
Revoking a Proxy
You may change your vote and revoke your proxy at any time before it is voted by:
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Sending a written statement to that effect to the Secretary of WSI Industries; |
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Submitting a properly signed proxy card with a later date; |
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If you voted by telephone or through the Internet, by voting again either by
telephone or through the Internet prior to the close of the voting facility; or |
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Voting in person at the Annual Meeting. |
All shares represented by valid, unrevoked proxies will be voted at the Annual Meeting and any
adjournment(s) or postponement(s) thereof. Our principal offices are located at 213 Chelsea Road,
Monticello, Minnesota 55362, and our telephone number is (763) 295-9202.
3
Annual Meeting and Special Meetings; Bylaw Amendments
This 2012 Annual Meeting of Shareholders is a regular meeting of our shareholders and has been
called by our Board of Directors in accordance with our bylaws. Under our bylaws, special meetings
of our shareholders may be held at any time and for any purpose and may be called by our secretary,
by a majority of the Board or by shareholders as provided by law. Minnesota law permits a
shareholder or shareholders holding 10% or more of the voting power of all shares entitled to vote
on the matters to be presented to the meeting to call a special meeting, except that a special
meeting for the purpose of considering any action to directly or indirectly facilitate or affect a
business combination, including any action to change or otherwise affect the composition of the
Board of Directors for that purpose, must be called by 25% or more of the voting power of all
shares entitled to vote. The business transacted at a special meeting is limited to the purposes
as stated in the notice of the meeting. For business to be properly brought before a regular
meeting of shareholders, a written notice containing the required information must be timely
submitted. For more information, please review our bylaws and the section of this proxy statement
entitled Shareholder Proposals and Shareholder Nominees for 2012 Annual Meeting.
Our bylaws may be amended or altered by a vote of the majority of the whole Board at any
meeting. The authority of the Board is subject to the power of our shareholders, exercisable in
the manner provided by Minnesota law, to adopt, amend, or repeal bylaws adopted, amended, or
repealed by the Board. Additionally, the Board may not make or alter any bylaws fixing a quorum
for meetings of shareholders, prescribing procedures for removing directors or filling vacancies in
the Board of Directors, or fixing the number of directors or their classifications, qualifications,
or terms of office, except that the Board may adopt or amend any bylaw to increase their number.
4
OWNERSHIP OF VOTING SECURITIES BY PRINCIPAL HOLDERS AND MANAGEMENT
The following table includes information as of November 7, 2011, concerning the beneficial
ownership of our common stock by (i) shareholders known to us to hold more than five percent of our
common stock, (ii) each of our directors and director nominees, (iii) each Named Executive Officer
and (iv) all of our current executive officers and directors as a group. Unless otherwise
indicated, all beneficial owners have sole voting and investment power over the shares held. The
business address of each person is 213 Chelsea Road, Monticello, Minnesota 55362.
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Name and Address |
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of Beneficial Owner |
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Amount (1) |
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Of Class (2) |
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Thomas C. Bender (3)(4) |
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8,000 |
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* |
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James D. Hartman (3)( 4) |
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3,000 |
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* |
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Burton F. Myers II (3)(4) |
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8,000 |
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* |
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Michael J. Pudil (3)(4)(5) |
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120,485 |
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4.1 |
% |
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Benjamin T. Rashleger (3)(4)(5) |
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34,827 |
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1.2 |
% |
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Paul D. Sheely (5) |
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49,212 |
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1.7 |
% |
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All Current Officers and Directors
as a Group (6 persons) |
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223,524 |
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7.4 |
% |
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Less than one percent. |
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Includes the following number of shares that may be purchased within sixty days of November
7, 2011 pursuant to outstanding stock options: Mr. Bender, 8,000 shares; Mr. Hartman, 2,000
shares; Mr. Myers, 8,000 shares; Mr. Pudil, 60,001 shares; Mr. Rashleger, 13,335 shares; Mr.
Sheely, 32,500 shares; and all current officers and directors as a group, 123,836 shares. |
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Shares of common stock subject to options that are currently exercisable or exercisable
within 60 days are deemed to be beneficially owned by the person holding the options for
computing such persons percentage, but are not treated as outstanding for computing the
percentage of any other person. |
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Serves as a director of WSI Industries. |
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Nominee for election to the Board of Directors. |
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Named Executive Officer. |
5
PROPOSAL 1:
ELECTION OF DIRECTORS
Five directors will be elected at the 2012 Annual Meeting to serve until the next Annual
Meeting of Shareholders or until their respective successors are elected. Proxies cannot be voted
for a greater number of persons than the number of nominees named. The Governance/Nominating
Committee has nominated, and the Board of Directors has ratified the nomination of, the five
persons named below. All nominees are currently directors of WSI Industries.
It is intended that proxies will be voted for the nominees named below, and the Board of
Directors has no reason to believe any nominee will not be able to serve as a director if elected.
In the event that any nominee named below is unable to serve as a director, the persons named in
the proxies have advised that they will vote for the election of such substitute or additional
nominees as the Board of Directors may propose.
Information Regarding Nominees
Set forth below are the biographies of the nominees, as well as a discussion of the specific
experience, qualifications, attributes and skills that led to the conclusion that the nominee
should serve as a director of WSI Industries at this time. All nominees meet the criteria
applicable to Board nominees that are set out in our Governance Guidelines and summarized under
Corporate Governance Director Nominees Criteria for Nomination to the Board; Diversity
Considerations.
Thomas C. Bender, age 65, has served as our director since 2008. From 1997 to 2008, Mr.
Bender was the President and Chief Executive Officer of Cretex Companies, Inc., a diversified
manufacturing holding company. He retired from Cretex Companies in 2008. From 1984 to 1997, Mr.
Bender was employed in roles of increasing responsibility within Cretex Companies, Inc.
Mr. Bender brings to the Board a strong background in executive management through his service
for more than a decade as the Chief Executive Officer of a manufacturing holding company. This
executive management expertise qualifies Mr. Bender to serve as a director of WSI Industries.
James D. Hartman, age 65, has served as our director since October 19, 2010. From 2003 until
it was acquired in 2007, Mr. Hartman was the Chairman of Enpath Medical, Inc., a publicly traded
medical device company. From 1991 until 2007, Mr. Hartman held a variety of executive leadership
positions with Enpath Medical, Inc. and its predecessor company, including serving as Chief
Executive Officer of Enpath from February 1996 to his retirement from that position in January
2006. Mr. Hartman has served as a director of NVE Corporation (Nasdaq: NVEC) since August 2006.
Mr. Hartmans nearly twenty years experience as a director and executive officer of a publicly
traded company qualify him to serve as a director for WSI Industries. In addition, Mr. Hartman
qualifies as an audit committee financial expert.
Burton F. Myers II, age 57, has served as our director since 2008. Mr. Myers is President of
Franklin Partners, Inc., a company providing advisory services in connection with acquisition and
divestiture transactions, which he founded in 1993. In 1994, Mr. Myers served as President of Craft
Industries, Inc. From 1984 to 1994, he was a principal and President of Franklin Investments, Inc.,
which acquired privately-held companies.
6
Mr. Myers is qualified to serve as a director of WSI Industries because of his extensive
experience in merger and acquisition transactions and corporate development, as well as executive
leadership for both public and private companies.
Michael J. Pudil, age 63, has served as our director since 1993 and is the Chairman of the
Board of Directors. Mr. Pudil has also served as our Chief Executive Officer since 1993 and from
1993 to October 2009, also held the title of President. Prior to joining WSI Industries, Mr. Pudil
was Vice President and General Manager of Remmele Engineering, Inc., a privately-held contract
machining company located in St. Paul, Minnesota.
Mr. Pudil is qualified to serve on the WSI Industries Board of Directors because he brings to
the Board a keen understanding of our business and industry developed through his tenure as our
Chief Executive Officer and in his previous position in management of another contract machining
company.
Benjamin T. Rashleger, age 36, was elected as a director on October 20, 2011. Mr. Rashleger
has served as our President and Chief Operating Officer since October 12, 2009. Prior to joining
WSI, Mr. Rashleger was the President and Chief Financial Officer of Milltronics Manufacturing
Company, a privately held machine tool manufacturer in Waconia, Minnesota from 2006 until June
2007. As President and Chief Financial Officer, Mr. Rashleger was responsible for all aspects of
operations and finance matters for Milltronics. From 2002 to 2006, Mr. Rashleger served
Milltronics Manufacturing as Vice President, where he was responsible for all financial,
procurement, information systems and customer service related activities. In June 2007,
Milltronics Manufacturing Company was acquired by Liberty Diversified Industries and Mr. Rashleger
continued on as the Director of Operations of Milltronics Manufacturing as a Liberty Diversified
Industries company from June 2007 until December 2008. As the Director of Operations, Mr.
Rashleger continued to be responsible for the operations of the Milltronics Manufacturing business
of Liberty Diversities Industries. From January 2009 until his appointment as our President and
Chief Operating Officer, Mr. Rashleger was on sabbatical and exploring opportunities. Mr. Rashleger
earned a Bachelor of Science degree in Business from the Carlson School of Management at the
University of Minnesota.
Mr. Rashleger was appointed to the Board of Directors as part of the transition plan by which
Mr. Rashleger will be appointed as our Chief Executive Officer effective January 1, 2012. Mr.
Rashleger is qualified to serve on the WSI Industries Board because of his deep understanding of
our industry and operations, as well as the channel of communication he will provide to the Board
as a member of management.
Vote Required
Under Minnesota law and our bylaws, directors are elected by a plurality of the votes cast at
the meeting by holders of common stock voting for the election of directors. This means that since
shareholders will be electing five directors, the five nominees receiving the highest number of
votes will be elected.
The Board of Directors Recommends a Vote FOR
Each of the Nominees for Director.
7
CORPORATE GOVERNANCE
Board and Nominee Independence
The Board of Directors undertook a review of director independence in October 2011 as to all
of the five directors then serving. As part of that process, the Board reviewed all transactions
and relationships between each director (or any member of his or her immediate family) and WSI
Industries, our executive officers and our auditors, and other matters bearing on the independence
of directors. As a result of this review, the Board affirmatively determined that all of the
directors, except Mr. Pudil and Mr. Rashleger, are independent as defined by the Nasdaq Listing
Rules. Mr. Pudil and Mr. Rashleger are not independent under the Nasdaq Listing Rules because each
is employed by WSI Industries and each serves as an executive officer.
Committees of the Board of Directors and Committee Independence
The Board of Directors has established a Governance/Nominating Committee, a Compensation
Committee and an Audit Committee. The composition and function of these committees are set forth
below.
Compensation Committee. The Compensation Committee reviews and approves the compensation and
other terms of employment of our Chief Executive Officer and other executive officers and senior
management of WSI Industries. Among its other duties, the Compensation Committee oversees our
stock-based compensation plans for executive officers, recommends Board compensation, and reviews
and makes recommendations on succession plans for the Chief Executive Officer. The Compensation
Committee annually reviews the Chief Executive Officers compensation and evaluates the Chief
Executive Officers performance. The current members of the Compensation Committee are Messrs.
Thomas C. Bender (chair), James D. Hartman and Burton F. Myers II. During fiscal year 2011, the
Compensation Committee met two times.
The charter of the Compensation Committee requires that the Committee consist of no fewer than
two members, each of whom must be independent according to the Nasdaq Listing Rules and a
non-employee director under Rule 16b-3 of the Securities Exchange Act of 1934 (the 1934 Act).
Each member of our Compensation Committee meets these requirements. The charter of the
Compensation Committee is available by following the link to the Investor Relations section of
our website at www.wsiindustries.com.
Governance/Nominating Committee. The Governance/Nominating Committee is charged with the
responsibility of identifying, evaluating and approving qualified candidates to serve as directors,
ensuring that our Board and governance policies are appropriately structured, reviewing and
recommending changes to our governance guidelines, and overseeing Board and Committee evaluations.
The current members of the Governance/Nominating Committee are Messrs. Burton F. Myers II (lead
director), Thomas C. Bender and James D. Hartman. During fiscal year 2011, the
Governance/Nominating Committee met one time.
The charter of the Governance/Nominating Committee requires that this committee consist of no
fewer than two Board members who satisfy the independence requirements of the Nasdaq Listing
Rules. Each member of the Governance/Nominating Committee meets these requirements. The charter of
the Governance/Nominating Committee is available by following the link to the Investor Relations
section of our website at www.wsiindustries.com.
8
Audit Committee. The Audit Committee assists the Board by reviewing the integrity of our
financial reporting processes and controls; the qualifications, independence and performance of the
independent auditors; and compliance by us with certain legal and regulatory requirements. The
Audit Committee has the sole authority to retain, compensate, oversee and terminate the independent
auditors. The Audit Committee reviews our annual audited financial statements, quarterly financial
statements and filings with the Securities and Exchange Commission. The Audit Committee reviews
reports on various matters, including our critical accounting policies, significant changes in our
selection or application of accounting principles and our internal control processes. The Audit
Committee also pre-approves all audit and non-audit services performed by the independent auditor.
The Audit Committee operates under a written charter adopted by the Board of Directors, a copy
of which is available by following the link to the Investor Relations section of our website at
www.wsiindustries.com. The Audit Committee presently consists of Messrs. James D. Hartman (chair),
Thomas C. Bender and Burton F. Myers II. During fiscal year 2011, the Audit Committee met four
times.
The charter of the Audit Committee requires that all members of the Audit Committee must be
independent directors under the Nasdaq Listing Rules and meet the independence requirements of
the rules of the Securities and Exchange Commission. The members of the Audit Committee must
also meet the experience and sophistication requirements of the Nasdaq Listing Rules. The
composition of the Audit Committee meets these requirements. The Board of Directors has reviewed
the education, experience and other qualifications of each of the members of its Audit Committee.
After such review, upon the recommendation of the Governance/Nominating Committee, the Board of
Directors has determined that Mr. Hartman meets the Securities and Exchange Commission definition
of an audit committee financial expert.
Board Leadership Structure
Mr. Pudil, our Chief Executive Officer, also serves as the chairman of the Board. Effective
January 1, 2012, Mr. Pudil will retire as our Chief Executive Officer and Mr. Rashleger, our
President and Chief Operating Officer and also a director, will be promoted to Chief Executive
Officer. We expect that Mr. Pudil will remain chairman of the Board following his retirement as
our Chief Executive Officer. Effective January 5, 2011, the Board of Directors appointed Burton F.
Myers II to serve as lead director, with responsibility for, among other things, presiding at
executive sessions of the Board.
The Board of Directors does not have a policy as to whether the chairman should be an
independent director, an affiliated director, or a member of management. We also have three
standing committees that are each led by a chair. All members of each committee are independent
directors under the Nasdaq Listing Rules and meet the other similar independence requirements
applicable to that committee. No executive officer serves on any committee.
Our Board believes its current leadership structure is appropriate because it effectively
allocates responsibility, authority and oversight between management and our Board and the
committees of our Board. It does this by giving primary responsibility for the operational
leadership to our Chief Executive Officer and giving primary responsibility for strategic direction
to our Board, where the Chief Executive Officer is able to provide critical and meaningful insight
into the interaction between strategic direction and the operational level execution of our
strategies because he is also a board member. The lead director serves as an independent leader
among all Board members and provides leadership to the independent directors.
The Governance/Nominating Committee also believes that the existing committee structure
facilitates oversight of management by promoting communication by management relating to key audit,
compensation and governance matters, and independent consideration of these matters by
committees that are comprised exclusively of independent directors.
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Boards Role in Risk Oversight
In our business, we face a number of risks. Management is responsible for the day-to-day
management of risks we face, while the Board has responsibility for the oversight of risk
management.
The Board of Directors exercises direct oversight of strategic risks to our company, as well
as certain business and operational risks. Our Audit Committee exercises oversight, on behalf of
the Board of Directors, relating to accounting, financial controls, financial reporting and related
risks. The Compensation Committee supports the Boards role in risk oversight by overseeing risks
relating to compensation programs and policies. In each case, management periodically reports to
our Board or relevant committee regarding risks and managements process to assess and mitigate
those risks. Each committee charged with areas of risk oversight also reports to our Board on those
matters. Because of the relatively small size of our Board and the fact that directors typically
serve on more than one committee, from time to time the Board also exercises direct risk oversight
relating to the areas within the risk oversight authority of the committees.
Director Nominations
The Governance/Nominating Committee will consider candidates for Board membership suggested by
its members, other Board members, as well as management and shareholders. Shareholders who wish to
recommend a prospective nominee should follow the procedures set forth in Article II, Section 5 of
our Amended and Restated Bylaws as described in the section of this proxy statement entitled
Shareholder Proposals for Nominees.
Criteria for Nomination to the Board; Diversity Considerations. The Governance/Nominating
Committee is responsible for identifying, evaluating and approving qualified candidates for
nomination as directors. The Governance/Nominating Committee has not adopted minimum
qualifications that nominees must meet in order for the committee to recommend them to the Board of
Directors, as the Governance/Nominating Committee believes that each nominee should be evaluated
based on his or her merits as an individual, taking into account the needs of WSI Industries and
the Board of Directors.
The Governance/Nominating Committee evaluates each prospective nominee against the following
standards and qualifications:
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Background, including high personal and professional ethics and integrity; and the
ability to exercise good business judgment and enhance the Boards ability to manage
and direct our affairs and business; |
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Commitment, including the willingness to devote adequate time to the work of the
Board and its committees, and the ability to represent the interests of all
shareholders and not a particular interest group; |
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Board skills needs, in the context of the existing makeup of the Board, and the
candidates qualification as independent and qualification to serve on Board
committees; |
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Business experience, which should reflect a broad experience at the policy-making
level in business, government and/or education; and |
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Diversity, in terms of knowledge, experience, skills, expertise, and other
demographics which contribute to the Boards diversity. |
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The Committee also considers such other relevant factors as it deems appropriate. The
Governance/Nominating Committee will consider persons recommended by the shareholders in the same
manner as other nominees.
The Governance/Nominating Committee does not have a formal policy with respect to diversity.
However, as part of the nominee selection process for this Annual Meeting, the
Governance/Nominating Committee reviewed the knowledge, experience, skills, expertise, and other
characteristics of each director nominee. Based upon that review, the Governance/Nominating
Committee believes that each director contributes to the Boards diversity in terms of knowledge,
experience, skills, expertise, and other demographics that particular director brings to the Board.
Process for Identifying and Evaluating Nominees. The process for identifying and evaluating
nominees to the Board of Directors is initiated by identifying a slate of candidates who meet the
criteria for selection as a nominee and have the specific qualities or skills being sought based on
input from members of the Board and, if the Governance/Nominating Committee deems appropriate, a
third-party search firm. The Governance/Nominating Committee evaluates these candidates by
reviewing the candidates biographical information and qualifications and checking the candidates
references. One or more Governance/Nominating Committee members will interview the prospective
nominees in person or by telephone. After completing the evaluation, the Governance/Nominating
Committee makes a recommendation to the full Board of the nominees to be presented for the approval
of the shareholders or for election to fill a vacancy.
Board Nominees for the 2012 Annual Meeting. The Governance/Nominating Committee selected the
nominees for this 2012 Annual Meeting in October 2011. Except for Mr. Rashleger, all of the
nominees for election at this 2012 Annual Meeting served as directors during fiscal year 2011 and
were elected by shareholders at the 2011 Annual Meeting. Mr. Rashleger was elected to our Board of
Directors on October 20, 2011. He was originally identified to the Governance/Nominating Committee
as a Board candidate through his role as our President and Chief Operating Officer. We have not
engaged a third-party search firm to assist us in identifying potential director candidates, but
the Governance/Nominating Committee may choose to do so in the future.
Shareholder Proposals for Nominees. The Governance/Nominating Committee will consider written
proposals from shareholders for nominees for director. Any such nominations should be submitted to
the Governance/Nominating Committee c/o the Secretary of WSI Industries and should include the
following information: (a) all information relating to such nominee that is required to be
disclosed pursuant to Regulation 14A under the 1934 Act (including such persons written consent to
being named in the proxy statement as a nominee and to serving as a director if elected); (b) the
name and record address of the shareholder and of the beneficial owner, if any, on whose behalf the
nomination will be made, and (c) the class and number of shares of the corporation owned by the
shareholder and beneficially owned by the beneficial owner, if any, on whose behalf the nomination
will be made. As to each person the shareholder proposes to nominate, the written notice must also
state: (a) the name, age, business address and residence address of the person, (b) the principal
occupation or employment of the person and (c) the class and number of shares of the corporations
capital stock beneficially owned by the person. To be considered, the written notice must be
submitted in the time frames described in our Amended and Restated Bylaws and under the caption
Shareholder Proposals and Shareholder Nominees for 2012 Annual Meeting below.
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Board Attendance at Meetings
The Board of Directors met four times during fiscal year 2011. Each nominee who served as a
director in fiscal year 2011 attended at least 75% or more of the meetings of the Board of
Directors and any committee on which he served.
We do not have a formal policy on attendance at meetings of our shareholders. However, we
encourage all Board members to attend shareholder meetings that are held in conjunction with a
meeting of the Board of Directors. Four members of the Board of Directors then serving attended
the 2010 Annual Meeting of Shareholders.
Communications with Directors
Shareholders may communicate with the Board as a group, the chair of any committee of the
Board of Directors or any individual director by sending an e-mail to
lead.director@wsci.com or by directing the communication in care of lead director, at the
address set forth on the front page of this proxy statement.
Code of Ethics
On October 29, 2003, we adopted a Code of Ethics & Business Conduct that applies to all
directors and employees, including our principal executive officer and principal financial officer,
or persons performing similar functions. The Code of Ethics & Business Conduct is an exhibit to
our Annual Report on Form 10-K for the year ended August 28, 2004 filed with the Securities and
Exchange Commission and available at www.sec.gov.
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REPORT OF AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors is currently comprised of Messrs. Hartman,
Bender and Myers. In accordance with its Charter, the Audit Committee reviewed and discussed the
audited financial statements with management and Schechter Dokken Kanter Andrews & Selcer Ltd., our
independent accountants. The discussions with Schechter Dokken Kanter Andrews & Selcer Ltd. also
included the matters required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountants communications with the audit committee concerning
independence.
Schechter Dokken Kanter Andrews & Selcer Ltd provided to the Audit Committee the written
disclosures and the letter regarding its independence as required by the Public Company Accounting
Oversight Board. This information was discussed with Schechter Dokken Kanter Andrews & Selcer Ltd.
Based on the discussions with management and Schechter Dokken Kanter Andrews & Selcer Ltd.,
the Audit Committees review of the representations of management and the report of Schechter
Dokken Kanter Andrews & Selcer Ltd., the Audit Committee recommended to the Board that the audited
consolidated financial statements be included in our Annual Report on Form 10-K for the year ended
August 28, 2011 filed with the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS:
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James D. Hartman
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Thomas C. Bender
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Burton F. Myers II |
(Chair) |
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The preceding report shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the Securities Act of 1933,
as amended (the 1933 Act), or the Securities Exchange Act of 1934, as amended (the 1934 Act),
except to the extent we specifically incorporate this information by reference, and shall not
otherwise be deemed filed under the 1933 Act or the 1934 Act.
EXECUTIVE OFFICERS
Set forth below is biographical and other information on our current executive officers.
Information about Michael J. Pudil, our Chief Executive Officer, and Benjamin T. Rashleger, our
President and Chief Operating Officer, may be found under the heading Nominees for Election to the
Board of Directors at Proposal 1: Election of Directors.
Paul D. Sheely, age 52, has served as our Chief Financial Officer and Vice President of
Finance, as well as our Treasurer and Secretary, since September 1998. From 1996 to 1998 he served
as Chief Financial Officer of Graseby Medical, Inc., a medical device manufacturer of volumetric
infusion pumps.
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DIRECTOR AND EXECUTIVE COMPENSATION
Explanation of Compensation
The following discussion and analysis describes our compensation objectives and policies as
applied to the persons serving as our executive officers during our fiscal year 2011.
During fiscal year 2011, Michael J. Pudil served as our Chief Executive Officer, Benjamin T.
Rashleger served as our President and Chief Operating Officer, and Paul D. Sheely served as our
Chief Financial Officer. Messrs. Pudil, Sheely and Rashleger are referred to in this proxy
statement as the Named Executive Officers.
This explanation section is intended to provide a framework for understanding the actual
compensation awarded to or earned by each Named Executive Officer during fiscal year 2011, as
reported in the compensation tables and accompanying narrative sections of this proxy statement.
For the Named Executive Officers, annual compensation consists of base salary, a cash bonus
based on achievement of goals determined by the Compensation Committee, performance based equity
compensation, and long-term equity compensation.
Overview of the Compensation Process
The responsibility of the Compensation Committee is to review and approve the compensation and
other terms of employment of our Chief Executive Officer and our other executive officers. Among
its other duties, the Compensation Committee oversees all significant aspects of our compensation
plans and benefit programs, including succession plans for executive officers other than the Chief
Executive Officer. The Board of Directors is responsible for, and regularly reviews, the
succession plan for our Chief Executive Officer. The Compensation Committee annually reviews and
approves corporate goals and objectives for the Chief Executive Officers compensation and
evaluates the Chief Executive Officers performance in light of those goals and objectives. The
Compensation Committee also recommends to the Board the compensation and benefits for directors.
The Compensation Committee has also been appointed by the Board of Directors to administer our 2005
Stock Plan (the 2005 Plan).
In carrying out its duties, the Compensation Committee participates in the design and
implementation and ultimately reviews and approves specific compensation programs. On October 19,
2010, the Compensation Committee adopted and the Board of Directors approved the 2011 Executive
Bonus Program (the 2011 Executive Bonus Program) for executive officers and other members of
management. The Compensation Committee also approved the bonus that may be earned by executive
officers under the 2011 Executive Bonus Program, as a percentage of the executive officers salary,
at the threshold, target and maximum levels. On October 22, 2010, the Compensation Committee also
approved grants of performance based restricted stock under the 2011 Executive Bonus Program as
part of the design of that program.
Use of Compensation Consultant and Role of Management
Under the Compensation Committees charter, the Compensation Committee has the authority to
retain, at our expense, such independent counsel or other advisers as it deems necessary to carry
out its responsibilities. The Compensation Committee did not engage a compensation consultant to
assist it in determining executive compensation for fiscal year 2011. However, with respect to
fiscal year 2011 compensation, the Compensation Committee reviewed director and executive officer
compensation information prepared by a compensation consultant for fiscal year 2008, as well as
reviewed surveys,
reports and other market data against which it measured the competitiveness of our
compensation programs for fiscal year 2011.
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In determining compensation for Named Executive Officers other than the Chief Executive
Officer, the Compensation Committee solicits input from the Chief Executive Officer regarding the
duties, responsibilities and performance of the other executive officer and the results of
performance reviews. The Chief Executive Officer also recommends to the Compensation Committee the
base salary for all Named Executive Officers, the awards under the cash incentive compensation
program, and the awards under the long-term equity program. The Chief Executive Officer also
recommended to the Compensation Committee the financial performance goals under the 2011 Executive
Bonus Program. From time to time, the Named Executive Officers are invited to attend meetings of
the Compensation Committee. No Named Executive Officer attends any executive session of the
Compensation Committee or is present during deliberations or determination of such Named Executive
Officers compensation.
2011 Compensation for Named Executive Officers
Base Salaries
On October 19, 2010, Compensation Committee set the annual base salaries for the Named
Executive Officers effective October 18, 2010. Mr. Rashlegers annual base salary was increased to
$180,000 from $150,000, which was set at the time he was hired on October 12, 2009. The
Compensation Committee increased Mr. Rashlegers base salary in order to ensure that Mr.
Rashlegers base salary more closely approximated the base salary of the Chief Executive Officer
position, which Mr. Rashleger will assume effective January 1, 2012. Mr. Sheelys base salary was
increased to $136,806 from $130,293. Mr. Sheelys base salary was last adjusted in March 2009,
when his then current base salary was decreased by 5%. Mr. Pudils annual base salary of $100,000
was not adjusted and will continue as set by his employment agreement dated October 7, 2009 with
us.
In determining base salaries for fiscal year 2011, the Compensation Committee reviewed and
discussed our historical and projected financial performance, and the impact of economic conditions
on our business. The Compensation Committee also reviewed historical salary data for the executive
officer positions, the total cash compensation the Named Executive Officers may earn from the
executive bonus program, and information regarding salary practices at other companies based on
surveys, reports and other market data.
Design of 2011 Executive Bonus Programs
For fiscal year 2011, cash and equity incentive compensation was available to the Named
Executive Officers through the 2011 Executive Bonus Program. On October 19, 2010, the Compensation
Committee recommended, and the Board of Directors approved the 2011 Executive Bonus Program. Of
the Named Executive Officers, only Messrs. Rashleger and Sheely participated in the 2011 Executive
Bonus Program.
Under the 2011 Executive Bonus Program, Mr. Rashleger and Sheely were eligible for a cash
bonus depending upon our fiscal year 2011 performance against goals established by the Compensation
Committee relating to return on assets. Return on assets (ROA) is defined as pretax income
before incentive compensation divided by average tangible assets. The Compensation Committee set
threshold, target and maximum goals for fiscal year 2011 relating to ROA. If the threshold level
was not met, the executive officers would not earn any bonus under the 2011 Executive Bonus
Program.
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Under the Program, Messrs. Rashleger and Sheely are each eligible for a bonus of 10%, 50% and
70% of his respective base salary at the threshold, target and maximum levels of return on assets,
respectively. If we achieved a level of ROA that fell between the levels established by the
Compensation Committee, the executive officers bonus would be prorated.
All bonuses at the threshold and target levels and between the threshold and target levels
will be paid out in cash. If we achieved ROA in excess of the target level and up to the maximum
level, the executive officers bonus will be paid out in cash up to the target level amount and for
the bonus in excess of the target level amount, the bonus will be paid by lapse of restrictions on
shares of performance based restricted stock granted by the Compensation Committee on October 22,
2010.
Grants of performance based restricted stock under the 2011 Executive Bonus Program
represented the maximum number of shares that could be earned under the 2011 Executive Bonus
Program. The number of shares of performance based restricted stock granted to Messrs. Rashleger
and Sheely was 5,279 and 4,012 shares, respectively. The shares of performance based restricted
stock may not be transferred unless and until the restrictions lapse upon achievement of ROA in
excess of the target level and up to the maximum level. The holder of the performance based
restricted stock is entitled to vote and receive dividends and exercise all other rights with
respect to the shares. The number of shares as to which restrictions would lapse would be based on
the cash equivalent of bonus earned by the executive officer divided by the per share price of our
common stock on the date of grant of the performance based restricted stock, which was $6.82 per
share. Any shares of performance based restricted stock as to which restrictions do not lapse will
be forfeited.
The Compensation Committee maintained the same structure for the cash bonus program in fiscal
year 2011 as it did in fiscal year 2010 with the bonus amounts based on ROA for the fiscal year.
For fiscal year 2011, the minimum ROA goal was 8%, the target ROA goal was 15%, and the maximum ROA
goal was 22%. The Compensation Committee intended these goals to be challenging, but reasonable
under the circumstances and reflective of the budget developed for fiscal year 2011.
On October 20, 2011, the Compensation Committee determined the achievement and payout to
executive officers under the 2011 Executive Bonus Program. Our ROA for fiscal year 2011 was 12.48%,
which exceeded the threshold amount, but was less than the target amount. Accordingly, under the
2011 Executive Bonus Program, we paid Mr. Rashleger and Mr. Sheely a cash bonus of $62,437 and
$48,346, respectively, or approximately 35.6% of the respective annual base salaries earned during
fiscal 2011. Because ROA did not meet or exceed the target level amount, all shares of performance
based restricted stock granted in connection with the 2011 Executive Bonus Program were forfeited
as of October 20, 2011. Accordingly, Messrs. Rashleger and Sheely forfeited 5,438 and 4,133 shares
of performance based restricted stock, respectively, originally granted on October 22, 2010,
including dividends paid in additional shares.
Long-Term Equity Compensation
The Compensation Committee provides long-term equity compensation to the Named Executive
Officers through annual, discretionary grants under our 2005 Stock Plan, as amended (the 2005
Plan).
On October 22, 2010, the Board of Directors approved recommendations of the Compensation
Committee to grant under the 2005 Plan 10,000 non-qualified stock options with tandem stock
appreciation rights and 5,000 restricted stock awards to Mr. Rashleger in respect of fiscal year
2010 performance.
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On January 10, 2011, the Board of Directors approved recommendations of the Compensation
Committee with respect to the grant of non-qualified stock options with tandem stock appreciation
rights and restricted stock awards to the Named Executive Officers. Mr. Pudil was granted 3,000
shares of restricted stock and an option with stock appreciation rights to purchase 10,000 shares
of stock. Mr. Sheely was granted 2,000 shares of restricted stock and an option with stock
appreciation rights to purchase 5,000 shares of stock. Mr. Rashleger was granted 3,000 shares of
restricted stock and an option with stock appreciation rights to purchase 10,000 shares of stock.
The awards made in January 2011 were made under the 2005 Plan. Long-term equity awards are
typically granted in January of each year.
The shares of restricted stock are restricted for a period of three years and during such
restriction period, the shares of restricted stock may not be sold, assigned, transferred,
exchanged, pledged, hypothecated or otherwise encumbered or disposed of and also are subject to the
risk of forfeiture. The restrictions and risk of forfeiture will lapse as to one-third of the
restricted shares on each of the first three anniversaries of the date of grant. Cash dividends
paid prior to a lapse of restrictions on the restricted stock will be reinvested in additional
shares of restricted stock except that all restrictions on such reinvested shares of restricted
stock will lapse on the first date after such reinvested restricted shares are issued that
restrictions on any restricted shares lapse.
The stock options have an exercise price of the fair market value of our common stock on the
date of grant, vest on the 6 month, 18 month, and 30 month anniversaries of the date of grant, have
a term of ten years and in other respects are subject to the terms and conditions of the 2005 Plan.
The stock appreciation rights were granted for an identical number of shares in tandem with the
options such that the stock appreciation rights will expire on exercise of the option and visa
versa. The stock appreciation rights, if exercised, will be settled in shares of our common stock.
In determining the number of shares of restricted stock and shares underlying stock options,
the Compensation Committee considered the overall value of the awards, as well as the allocation of
the value between the two types of awards.
The Compensation Committee has historically granted stock options to executive officers and,
since fiscal year 2007, has also granted restricted stock to executive officers based upon the
Compensation Committee belief that awards of restricted stock result in less dilution to existing
shareholders. For the same reason, the Compensation Committee has granted stock appreciation
rights with options since February 2007.
Employment Agreements and Post-Termination Compensation
As of the end of fiscal year 2011, we were parties to the following agreements with each of
the Named Executive Officers relating to his employment and post-termination compensation.
Agreements with Mr. Pudil
On October 7, 2009, in connection with the hiring of Mr. Rashleger, we entered into an
employment agreement with Michael J. Pudil. The employment agreement has a term beginning on
October 7, 2009 and ending December 31, 2011. Pursuant to the employment agreement, Mr. Pudil will
be employed as our Chief Executive Officer at a base salary of $222,120, which would be reduced to
$100,000 during any period of the term of the employment agreement after December 31, 2009 in which
Mr. Pudils successor continues to serve as President. Mr. Pudil will be entitled to insurance,
vacation, profit sharing, and other benefits we make available. In the event of termination of Mr.
Pudils employment by us without Cause or by Mr. Pudil for Good Reason or if Mr. Pudil dies or
becomes Disabled or if Mr. Pudil continues to be employed by us until the Pudil Agreement
terminates on December 31, 2011,
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we will pay all obligations accrued through such date of termination and
will also make a lump sum severance payment to Mr. Pudil equal to $335,000 on a date that is six
months and one day after the effective date of termination of employment (except in death or
Disability, payments shall be made no later than 30 days after the date of death or determination
of Disability). Additionally, except in the case of death, we will continue to be responsible for
the employer portion of monthly premiums for group health, dental, life insurance and special
medical insurance for an eighteen month period following the termination. Further, all outstanding
stock options will fully vest and Mr. Pudil will have the right to exercise all such vested stock
options for an eighteen month period following the termination, except that no stock option will be
exercisable after its original expiration date. All restrictions on outstanding restricted stock
awards will also lapse on the last day of employment. In the event of termination of Mr. Pudils
employment by us with Cause or by Mr. Pudil without Good Reason, our only obligation to Mr. Pudil
is to pay any base salary earned but not yet paid, reimburse Mr. Pudil for expenses incurred and
pay or provide any benefits that are vested or that Mr. Pudil is otherwise entitled to receive
under our existing programs. Capitalized terms used in this paragraph have the meaning ascribed to
them in the employment agreement with Mr. Pudil.
On October 7, 2009, Mr. Pudil also entered into the form of restrictive covenant agreement
governing non-disclosure of confidential information, non-competition and non-solicitation.
Agreements with Mr. Rashleger
Benjamin T. Rashleger was appointed as our President and Chief Operating Officer as of October
12, 2009. In connection with that appointment, we entered into an employment offer letter, an
employment (change in control) agreement and a standard form of restrictive covenant agreement with
Mr. Rashleger governing non-disclosure of confidential information, non-competition and
non-solicitation.
Under the terms of the offer letter, Mr. Rashleger received an annual base salary of $150,000,
payable according to our regular payroll practices. Mr. Rashleger will also participate in our
incentive program for executive officers and will be entitled to bonus of 70% of his base salary
based upon achievement of goals relating to new business and profitability for the fiscal year to
be jointly determined and subject to approval by the Board. Also pursuant to the offer letter, Mr.
Rashleger was granted a non-qualified stock option on October 12, 2009 to purchase 10,000 shares of
our common stock under the 2005 Plan. The option has an exercise price equal to the fair market
value of our common stock as of the grant date, as determined under the plan. The option vests
with respect to one-third of the shares underlying the option on each of the 6 month, 18 month and
30 month anniversaries of the date of grant and has a term of ten years.
On October 12, 2009, we also entered into a employment (change in control) agreement with Mr.
Rashleger. This employment (change in control) agreement automatically renew for successive
one-year periods unless we provide at least 60 days prior notice. However, if a Change of Control
occurs, the employment (change in control) agreement will remain in effect for a period of twelve
months from the date of the Change of Control. Under these agreements, if a Change in Control
occurs and Mr. Rashlegers employment is terminated by us other than for Cause or Disability or by
him for Good Reason, we will pay Mr. Rashleger a severance payment in cash in a single sum within
sixty days of the date of termination equal to 2.99 times the average of the annual compensation
paid to him by us for the five calendar years (or such lesser number of complete calendar years or
portions thereof calculated on an annualized basis) in the case of an Unapproved Change in Control
and, in the case of an Approved Change in Control, 1.0 times the annual compensation for such
period. Mr. Rashleger will also be entitled to participate in life, disability, accident and
health insurance benefits for a period of twelve months following the Termination Date in the event
of an Approved
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Change of Control and for thirty-six months following the Termination Date in the event of an Unapproved Change in Control, or we
will reimburse Mr. Rashleger for the cost of comparable coverage. The severance payment is subject
to reduction such that no portion of the payment, together with other benefits received in a change
of control, would constitute a parachute payment or would be non-deductible solely by reason of
Section 280G of the Internal Revenue Code of 1986, as amended. Capitalized terms used in this
paragraph have the meaning ascribed to them in the employment (change in control) agreement.
Except with respect to this agreement and a severance letter agreement with Mr. Rashleger dated
October 20, 2011, Mr. Rashlegers employment with us is at will.
Agreements with Mr. Sheely
On October 7, 2009, we entered into a severance letter agreement with Paul D. Sheely. Under
the severance letter agreement, if Mr. Sheelys employment is terminated without Cause, we will
continue to pay Mr. Sheely his base salary in accordance with our regular payroll practices for a
period of twelve months or until he has secured other employment, whichever occurs first, and we
will pay a portion of the COBRA premium until the earlier of twelve months or the date COBRA
coverage otherwise terminates. If Mr. Sheelys employment terminates because of his resignation,
if we terminate his employment for Cause or if Mr. Sheelys employment terminates as a result of
his death or disability, our only obligation to Mr. Sheely is to pay any base salary earned but not
yet paid. Payments under the severance letter agreement that constitute nonqualified deferred
compensation may be delayed, provided that the amount of the first payment shall be increased for
interest earned on the delayed payment based upon interest. Capitalized terms used in this
paragraph have the meaning ascribed to them in the severance letter agreement. On October 7, 2009,
Mr. Sheely also entered into the form of restrictive covenant agreement governing non-disclosure of
confidential information, non-competition and non-solicitation.
We also have entered into a employment (change of control) agreement with Mr. Sheely that is
dated January 11, 2001 and that was amended on November 1, 2002 and on December 29, 2008. This
employment (change of control) agreement with Mr. Sheely is the same as the employment (change of
control) agreement between us and Mr. Rashleger explained above. Except with respect to this
agreement and the severance agreement described above, Mr. Sheelys employment with us is at
will.
Payments Upon a Change of Control
In general, a Change of Control would include a change resulting from the acquisition of 50%
or more of our outstanding voting stock by any person, a change in the current members of the Board
of Directors or their successors elected or nominated by such members whereby they cease to be a
majority of the Board of Directors, or WSI Industries disposing of 75% or more of its assets, other
than to an entity owned 50% or greater by WSI Industries or any of its subsidiaries.
If a change of control which was not approved by the Board of Directors had occurred at the
end of fiscal year 2011 and the executives employment was terminated without cause or by the
executive for good reason, the executive officers would have received the approximate payment
indicated pursuant to the employment agreements: Mr. Pudil, $766,983, Mr. Rashleger, $660,593 and
Mr. Sheely, $559,816.
The calculation above also does not reflect the value of acceleration of vesting of stock
options, lapse of restrictions on restricted stock, or lapse of restrictions on performance based
restricted stock that would be received by a Named Executive Officer if a change of control had
occurred at the end of fiscal year 2011. Under the 2005 Plan, unless the stock option agreement
provides otherwise, any stock option granted under the 2005 Plan will be exercisable in full,
without regard to any installment exercise provisions, for a period specified us, but not to exceed
60 days, prior to the occurrence of any of the following events: (i) dissolution or liquidation of
WSI Industries, other than in conjunction with a
bankruptcy or any similar occurrence; (ii) any merger, consolidation, acquisition, separation,
reorganization or similar occurrence where we will not be the surviving entity; or (iii) the
transfer of substantially all of our assets, or 75% or more of the outstanding our stock.
Additionally, the form of agreement evidencing the restricted stock and performance based
restricted stock granted under the 2005 Plan provides that all restrictions with respect to any
restricted shares will lapse on the date determined by the Compensation Committee prior to, but in
no event more 60 days prior to, the occurrence of any of these same events.
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Summary Compensation Table
The following table shows information concerning compensation earned for services in all
capacities during the fiscal year for (i) Michael J. Pudil, who served as our Chief Executive
Officer in fiscal year 2011; (ii) Paul D. Sheely, who served as our Chief Financial Officer in
fiscal year 2011; and (iii) Benjamin T. Rashleger who served as our President and Chief Operating
Officer during fiscal year 2011 (together referred to as our Named Executive Officers). Other
than the Named Executive Officers, no other person served as an executive officer during fiscal
year 2011.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
All |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Compen- |
|
|
Compen- |
|
|
|
|
|
|
|
|
|
|
Salary |
|
|
Awards |
|
|
Awards |
|
|
sation |
|
|
sation |
|
|
|
|
Name and Position |
|
Year |
|
|
($) |
|
|
($)(1) |
|
|
($)(1) |
|
|
($)(2) |
|
|
($)(3) |
|
|
Total ($) |
|
Michael J. Pudil |
|
|
2011 |
|
|
$ |
100,000 |
|
|
$ |
14,790 |
|
|
$ |
28,059 |
|
|
$ |
|
|
|
$ |
3,500 |
|
|
$ |
146,349 |
|
Chief Executive Officer |
|
|
2010 |
|
|
$ |
144,621 |
|
|
$ |
10,650 |
|
|
$ |
16,633 |
|
|
$ |
|
|
|
$ |
5,062 |
|
|
$ |
176,966 |
|
Paul D. Sheely |
|
|
2011 |
|
|
$ |
135,804 |
|
|
$ |
9,860 |
|
|
$ |
14,029 |
|
|
$ |
48,346 |
|
|
$ |
5,238 |
|
|
$ |
213,277 |
|
Chief Financial Officer |
|
|
2010 |
|
|
$ |
130,293 |
|
|
$ |
5,325 |
|
|
$ |
8,316 |
|
|
$ |
13,848 |
|
|
$ |
4,560 |
|
|
$ |
162,342 |
|
Benjamin T. Rashleger |
|
|
2011 |
|
|
$ |
175,385 |
|
|
$ |
48,890 |
|
|
$ |
70,407 |
|
|
$ |
62,437 |
|
|
$ |
6,621 |
|
|
$ |
363,740 |
|
President and Chief Operating Officer (4) |
|
|
2010 |
|
|
$ |
129,808 |
|
|
$ |
5,325 |
|
|
$ |
23,183 |
|
|
$ |
13,797 |
|
|
$ |
3,029 |
|
|
$ |
175,142 |
|
|
|
|
(1) |
|
Represents the aggregate grant date fair value of stock option awards in the
respective fiscal year, each as computed in accordance with FASB ASC Topic 718,
Compensation Stock Compensation. The fair value of each stock option award is estimated
on the date of grant using the Black-Scholes option valuation model using the assumptions
discussed in Note 5, Stock Based Compensation, in the notes to financial statements
included in our Annual Report on Form 10-K for the year ended August 28, 2011 and in our
Annual Report on Form 10-K for the year ended August 29, 2010. The amounts reported do not
match the amounts reported in last years proxy statement due to new reporting
requirements adopted by the SEC, which require us to restate the amounts for these years
applying the new grant date fair value methodology. |
|
(2) |
|
Represents bonuses paid to the named Executive Officers under the Executive Bonus
Program in effect for the fiscal year indicated, which are reported for the year in which
the related services were performed. |
|
(3) |
|
Represents matching contributions by WSI Industries under our 401(k) Plan. |
|
(4) |
|
Mr. Rashleger began serving as our President and Chief Operating Officer on October 12,
2009 and therefore, amounts for fiscal year 2010 reflect a partial year of service. |
20
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information concerning equity awards outstanding to the
Named Executive Officers at August 28, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
Market or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Payout |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Value of |
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Unearned |
|
|
Unearned |
|
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Value of |
|
|
Shares, |
|
|
Shares, |
|
|
|
Number of |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
Shares or |
|
|
Units or |
|
|
Units or |
|
|
|
Securities |
|
|
Unexer- |
|
|
|
|
|
|
|
|
|
|
Units of |
|
|
Units of |
|
|
Other |
|
|
Other |
|
|
|
Underlying |
|
|
cised |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Stock |
|
|
Rights |
|
|
Rights |
|
|
|
Unexer- |
|
|
Options (#) |
|
|
Option |
|
|
|
|
|
|
That Have |
|
|
That Have |
|
|
That Have |
|
|
That Have |
|
|
|
cised |
|
|
Unexer- |
|
|
Exercise |
|
|
Option |
|
|
Not |
|
|
Not |
|
|
Not |
|
|
Not |
|
|
|
Options (#) |
|
|
cisable |
|
|
Price |
|
|
Expiration |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
Name |
|
Exercisable |
|
|
(1) |
|
|
($) |
|
|
Date |
|
|
(#)(1) |
|
|
($)(1) |
|
|
(#)(1)(2) |
|
|
($)(1)(2) |
|
Michael J. Pudil |
|
|
10,000 |
|
|
|
|
|
|
$ |
3.44 |
|
|
|
1/03/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
10,000 |
|
|
|
|
|
|
$ |
3.47 |
|
|
|
2/22/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
15,000 |
|
|
|
|
|
|
$ |
5.39 |
|
|
|
1/08/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
15,000 |
|
|
|
|
|
|
$ |
3.46 |
|
|
|
1/07/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
6,667 |
|
|
|
3,333 |
|
|
$ |
2.13 |
|
|
|
1/05/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
3,334 |
|
|
|
6,666 |
|
|
$ |
4.93 |
|
|
|
1/09/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,092 |
|
|
$ |
21,892 |
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,410 |
|
|
$ |
18,244 |
|
|
|
|
|
|
|
|
|
Michael J. Pudil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,069 |
|
|
$ |
16,419 |
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
5,000 |
|
|
|
|
|
|
$ |
3.44 |
|
|
|
1/03/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
7,500 |
|
|
|
|
|
|
$ |
3.47 |
|
|
|
2/22/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
7,500 |
|
|
|
|
|
|
$ |
5.39 |
|
|
|
1/08/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
7,500 |
|
|
|
|
|
|
$ |
3.46 |
|
|
|
1/07/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
3,333 |
|
|
|
1,667 |
|
|
$ |
2.13 |
|
|
|
1/05/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
1,667 |
|
|
|
3,333 |
|
|
$ |
4.93 |
|
|
|
1/09/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
853 |
|
|
$ |
4,564 |
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,705 |
|
|
$ |
9,122 |
|
|
|
|
|
|
|
|
|
Paul D. Sheely |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.133 |
|
|
$ |
22,112 |
|
Paul D. Sheely |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,046 |
|
|
$ |
10,946 |
|
|
|
|
|
|
|
|
|
Benjamin T.
Rashleger |
|
|
6,667 |
|
|
|
3,333 |
|
|
$ |
3.00 |
|
|
|
10/11/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin T.
Rashleger |
|
|
3,334 |
|
|
|
6,666 |
|
|
$ |
6.82 |
|
|
|
10/21/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin T.
Rashleger |
|
|
3,334 |
|
|
|
6,666 |
|
|
$ |
4.93 |
|
|
|
1/09/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin T.
Rashleger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,151 |
|
|
$ |
27,558 |
|
|
|
|
|
|
|
|
|
Benjamin T.
Rashleger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,705 |
|
|
$ |
9,122 |
|
|
|
|
|
|
|
|
|
Benjamin T.
Rashleger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,069 |
|
|
$ |
16,419 |
|
|
|
|
|
|
|
|
|
Benjamin T.
Rashleger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,438 |
|
|
$ |
29,093 |
|
|
|
|
(1) |
|
Includes shares distributed as a dividend with respect to the restricted stock. |
|
(2) |
|
Includes 5,438 shares of performance based restricted stock held by Mr. Sheely and
4,133 shares of performance based restricted stock held by Mr. Rashleger that were
outstanding at August 28, 2011 but that were forfeited on October 20, 2011 pursuant to the
terms of the agreement covering these awards. |
21
All options referred to above vest as to one-third of the shares six months from the date of
grant, one-third of the shares eighteen months from date of grant and one-third of the shares
thirty months from the date of grant. The expiration date of each option is the ten-year
anniversary of the date of grant of such option. On February 23, 2007, the Board of Directors
granted stock appreciation rights for an identical number of shares in tandem with all outstanding
stock options. The stock appreciation rights will expire on exercise of the stock option and vice
versa. The stock appreciation rights, if exercised, will be settled in shares of our common stock.
The shares of restricted stock are restricted for a period of three years and during such
restriction period, the shares of restricted stock may not be sold, assigned, transferred,
exchanged, pledged, hypothecated or otherwise encumbered or disposed of and also are subject to the
risk of forfeiture. The restrictions and risk of forfeiture will lapse as to one-third of the
restricted shares on each of the first three anniversaries of the date of grant. Cash dividends
paid prior to a lapse of restrictions on the restricted stock will be reinvested in additional
shares of restricted stock except that all restrictions on such reinvested shares of restricted
stock will lapse on the first date after such reinvested restricted shares are issued that
restrictions on any restricted shares lapse.
Grants of performance based restricted stock were made to the Named Executive Officers under
the 2011 Executive Bonus Program and represented the maximum number of shares that could be earned
under the 2011 Executive Bonus Program. The shares of performance based restricted stock may not
be transferred unless and until the restrictions lapse upon achievement of ROA in excess of the
target level and up to the maximum level. The holder of the performance based restricted stock is
entitled to vote and receive dividends and exercise all other rights with respect to the shares.
The number of shares as to which restrictions would lapse would be based on the cash equivalent of
bonus earned by the executive officer divided by the per share price of our common stock on the
date of grant of the performance based restricted stock, which was $6.82 per share. Any shares of
performance based restricted stock as to which restrictions do not lapse will be forfeited.
DIRECTOR COMPENSATION
Directors who are not employees of WSI Industries earned an annual retainer of $10,000 for
service in fiscal year 2011. Each non-employee director is paid a fee of $500 for each meeting of
the Board of Directors or any committee attended, except for committee meetings that immediately
precede or follow a Board meeting. The chairs of the Compensation Committee and Audit Committee
receive an additional $1,000 annual retainer. Effective January 5, 2011, the Board of Directors
appointed Burton F. Myers II to serve as lead director and in connection with that service, Mr.
Myers received an additional $1,000 annual retainer.
Under the 2005 Stock Plan, each non-employee director will receive at the time of election or
re-election to the Board by the shareholders an option to purchase 2,000 shares of our common stock
at a purchase price equal to the fair market value of our common stock on the date of such election
or reelection. The term of each director option will be five years, unless the director ceases
serving on the Board, in which event the option expires within 30 days of termination of service.
Each director option will be exercisable in installments of 25% beginning six months after the date
of grant, and 25% on each of the three subsequent anniversaries of the date of grant. In
connection with the election of James D.
Hartman to our Board of Directors, the Compensation Committee granted Mr. Hartman on October
22, 2010 an option to purchase 2,000 shares of our common stock. This option has the same terms as
the options automatically granted to non-employee directors under the 2005 Stock Plan.
22
We established a retirement program in 1982 for directors not covered by any of our other
retirement plans that provides for the payment of an annual benefit equal to the annual retainer
paid to directors during the full fiscal year preceding retirement. The retirement benefit, which
is payable to directors who have served five years or more, commences at the time the director
retires if age 65 or older, or at age 65 if the director ceases to serve as a director prior to age
65. The retirement benefit is subject to proportionate reduction if the director has served us
less than 15 years. Benefits are payable during the lifetime of the retired director, but not
exceeding 10 years. On January 9, 2008, we eliminated the director retirement program for all
board members elected on or after January 9, 2008 (other than those serving as a board member prior
to January 9, 2008). No director serving in fiscal year 2011 received any benefits from the
director retirement program in fiscal year 2011 and three former directors received benefits under
this program in fiscal year 2011.
The following table shows for fiscal year 2011, the cash and other compensation paid to each
of our Board members. Mr. Pudil, our Chief Executive Officer and also a director, receives no
compensation for Board service.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned/Paid |
|
|
Option Awards |
|
|
Total |
|
Name of Director |
|
In Cash ($)(1) |
|
|
($) (2) |
|
|
Compensation |
|
Thomas C. Bender |
|
$ |
12,500 |
|
|
$ |
6,259 |
|
|
$ |
18,759 |
|
James D. Hartman |
|
$ |
10,000 |
|
|
$ |
13,577 |
|
|
$ |
23,577 |
|
Burton F. Myers II |
|
$ |
12,500 |
|
|
$ |
6,259 |
|
|
$ |
18,759 |
|
Paul Baszucki(3) |
|
$ |
6,000 |
|
|
|
|
|
|
$ |
6,000 |
|
Eugene J. Mora (3) |
|
$ |
6,000 |
|
|
|
|
|
|
$ |
6,000 |
|
|
|
|
(1) |
|
Represents cash retainer and meeting fees paid in fiscal year 2011 as
described above. |
|
(2) |
|
Represents the aggregate grant date fair value of stock option awards in fiscal
year 2011, as computed in accordance with FASB ASC Topic 718, Compensation Stock
Compensation. The fair value of each stock option award is estimated on the date of
grant using the Black-Scholes option valuation model using the assumptions discussed in
Note 5, Stock Based Compensation, in the notes to financial statements included in
our Annual Report on Form 10-K for the year ended August 28, 2011. |
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Messrs. Baszucki and Mora did not stand for reelection at the 2011 Annual
Meeting of Shareholders and accordingly ceased serving as our directors January 5,
2011. |
The aggregate number of stock options outstanding at August 28, 2011 held by directors
then serving was: Mr. Bender, 10,000 shares; Mr. Hartman, 4,000 shares; Mr. Myers,
10,000 shares; and Mr. Pudil, 70,000 shares.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Since the beginning of fiscal year 2011, we have not entered into any transaction and there
are no currently proposed transactions, in which we were or are to be a participant and the amount
involved exceeds lesser of $120,000 or one percent of the average of our total assets at year-end
for the last three completed fiscal years and in which any related person had or will have a direct
or indirect material interest.
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PROPOSAL 2:
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee has reappointed Schechter Dokken Kanter Andrews & Selcer Ltd. (SDK) as
our independent registered public accountants for fiscal year ended August 26, 2012. While the
Audit Committee retains the sole authority to retain, compensate, oversee and terminate the
independent registered public accounting firm, the Audit Committee is submitting the reappointment
of SDK as our independent registered public accountants for ratification. In the event the
shareholders do not ratify the reappointment of SDK, the Audit Committee will reconsider the
selection.
Approval of Proposal 2: Ratification of the appointment of SDK requires the affirmative vote
of the holders of a greater of: (a) a majority of the voting power of the shares present, in person
or by proxy, and entitled to vote on Proposal 2 or (b) a majority of the voting power of the
minimum number of shares that would constitute a quorum.
The Board of Directors Recommends a Vote FOR
Ratification of the Appointment of Schechter Dokken Kanter Andrews & Selcer Ltd.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Schechter Dokken Kanter Andrews & Selcer Ltd., independent registered public accountants,
served as our independent registered public accountants for the fiscal year ended August 28, 2011.
Our Audit Committee has selected SDK to serve as our auditors for the fiscal year ended August 26,
2012 and is asking our shareholders to ratify such appointment at this Annual Meeting.
Representatives of SDK are expected to be in attendance at the Annual Meeting of Shareholders
and will have the opportunity to make a statement if they desire to do so. In addition,
representatives will be available to respond to appropriate questions.
Accountant Fees and Services
The following is an explanation of the fees billed to us by SDK for professional services
rendered for the fiscal years ended August 28, 2011 and August 29, 2010, which totaled $67,475 and
$63,350, respectively.
Audit Fees. The aggregate fees billed to us for professional services related to the audit of
our annual financial statements, review of financial statements included in our Forms 10-QSB, or
other services normally provided by SDK in connection with statutory and regulatory filings or
engagements for the fiscal years ended August 28, 2011 and August 29, 2010 totaled $59,925 and
$56,800, respectively.
Tax Fees. The aggregate fees billed to us by SDK for professional services related to tax
compliance, tax advice, and tax planning, including federal, state and local income tax matters,
for the fiscal years ended August 28, 2011 and August 29, 2010 totaled $7,550 and $6,550,
respectively.
All Other Fees. Other than those described above, there were no fees billed to us by SDK for
professional services for fiscal years ended August 28, 2011 or August 29, 2010.
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Audit Committee Pre-Approval Procedures
We have adopted pre-approval policies and procedures for the Audit Committee that require the
Audit Committee to pre-approve all audit and all permitted non-audit engagements and services
(including the fees and terms thereof) by the independent auditors, except that the Audit Committee
may delegate the authority to pre-approve any engagement or service less than $5,000 to one of its
members, but requires that the member report such pre-approval at the next full Audit Committee
meeting. The Audit Committee may not delegate its pre-approval authority for any services rendered
by our independent auditors relating to internal controls. These pre-approval policies and
procedures prohibit delegation of the Audit Committees responsibilities to our management. Under
the policies and procedures, the Audit Committee may pre-approve specifically described categories
of services which are expected to be conducted over the subsequent twelve months on its own
volition, or upon application by management or the independent auditor.
All of the services described above for fiscal year 2011 were pre-approved by the Audit
Committee or a member of the committee before SDK was engaged to render the services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires our directors and executive officers, and persons who
own more than 10% of a registered class of our equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in ownership of our common
stock and other equity securities. These insiders are required by Securities and Exchange
Commission regulations to furnish us with copies of all Section 16(a) forms they file, including
Forms 3, 4 and 5.
To our knowledge, based solely on review of the copies of such reports furnished to us and
written representations that no other reports were required, during the fiscal year ended August
28, 2011 all Section 16(a) filing requirements applicable to its insiders were complied with.
SHAREHOLDER PROPOSALS AND SHAREHOLDER NOMINEES
FOR 2013 ANNUAL MEETING
The proxy rules of the Securities and Exchange Commission permit shareholders of a company,
after timely notice to the company, to present proposals for shareholder action in our proxy
statement where such proposals are consistent with applicable law, pertain to matters appropriate
for shareholder action and are not properly omitted by company action in accordance with the proxy
rules. The WSI Industries, Inc. 2012 Annual Meeting of Shareholders is expected to be held on or
about January 2, 2013 and proxy materials in connection with that meeting are expected to be mailed
on or about November 30, 2012. Shareholder proposals prepared in accordance with the Commissions
proxy rules must be received at our corporate office on or before August 3, 2012, in order to be
considered for inclusion in the Board of Directors proxy statement and proxy card for the 2013
Annual Meeting of Shareholders. Any such proposals must be in writing and signed by the
shareholder.
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Pursuant to our Amended and Restated Bylaws, in order for any other proposal to be properly
brought before the next annual meeting by a shareholder, including a nominee for director to be
considered at such annual meeting, the shareholder must give written notice of such shareholders
intent to bring a matter before the annual meeting, or nominate the director, in a timely manner.
To be timely under our Amended and Restated Bylaws, the notice must be given by such shareholder to
the Secretary of WSI Industries not less than 45 days nor more than 75 days prior to a meeting date
corresponding to the previous years annual meeting. Each such notice must set forth certain
information with respect to the shareholder who intends to bring such matter before the meeting and
the business desired to be
conducted, as set forth in greater detail above under Corporate Governance Director
Nominations and in our Amended and Restated Bylaws. In addition, if we receive notice of a
shareholder proposal less than 45 days before the date on which we first mailed our materials for
the prior years annual meeting, such proposal also will be considered untimely pursuant to Rules
14a-4 and 14a-5(e) and the persons named in proxies solicited by the Board of Directors for our
2012 Annual Meeting of Shareholders may exercise discretionary voting power with respect to such
proposal.
OTHER BUSINESS
The WSI Industries Board of Directors knows of no matters other than the foregoing to be
brought before the Annual Meeting. However, the enclosed proxy gives discretionary authority in
the event that any additional matters should be presented.
Our Annual Report to Shareholders for the fiscal year ended August 28, 2011 is being mailed to
shareholders with this proxy statement. Shareholders may receive without charge a copy of our
Annual Report on Form 10-K, including financial statements and schedules thereto, as filed with the
Securities and Exchange Commission, by writing to: WSI Industries, Inc., 213 Chelsea Road,
Monticello, MN 55362, Attention: Paul D. Sheely, or by calling us at (763) 295-9202.
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By Order of the Board of Directors, |
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Michael J. Pudil,
Chairman and Chief Executive Officer |
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Shareowner ServicesSM
P.O. Box 64945
St. Paul, MN 55164-0945 |
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Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week |
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Your phone or Internet vote authorizes the named
proxies to vote your shares in the same manner
as if you marked, signed and returned your
proxy card. |
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INTERNET www.eproxy.com/wsci Use the Internet to vote your proxy until 12:00 p.m. (CT)
on January 3, 2012. |
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PHONE 1-800-560-1965 Use a touch-tone telephone to vote your proxy until
12:00 p.m. (CT) on January 3, 2012. |
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MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope provided. |
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If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card. |
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
The Board of Directors Recommends a Vote FOR
Each Nominee named in Proposal 1 and for Proposal 2.
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1.
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Election of
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01 Thomas C. Bender
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04 Michael J. Pudil
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Vote FOR all nominees
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Vote WITHHELD |
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directors:
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02 James D. Hartman
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05 Benjamin T. Rashleger
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(except as marked)
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from all nominees |
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03 Burton F. Myers II |
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(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
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2.
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A proposal to ratify and approve the appointment of Schechter Dokken Kanter
Andrews & Selcer Ltd. as the independent registered public accounting firm
for WSI Industries, Inc. for the fiscal year ending August 26, 2012.
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For
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Against
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THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR EACH NOMINEE NAMED IN PROPOSAL 1 AND FOR
PROPOSAL 2. PLEASE SIGN, DATE AND RETURN THIS PROXY FORM USING THE ENCLOSED ENVELOPE.
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Address Change? Mark box, |
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Date |
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sign, and indicate changes below: |
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I plan to attend the meeting
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Signature(s) in Box |
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Please sign exactly as your name(s)
appears on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority.
Corporations should provide full name
of corporation and title of authorized
officer signing the Proxy.
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WSI INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, January 4, 2012
1:00 p.m. Local Time
213 Chelsea Road
Monticello, Minnesota 55362
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WSI Industries, Inc.
213 Chelsea Road
Monticello, Minnesota 55362
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proxy |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Michael J. Pudil as proxy (with full power to act alone and with
the power of substitution and revocation) to represent the undersigned at the WSI Industries, Inc.
Annual Meeting of Shareholders to be held at 1:00 p.m., local time, at the Companys offices at 213
Chelsea Road, Monticello, Minnesota, 55362 on January 4, 2012, and at any adjournment(s) or
postponement(s) thereof, and to vote, as designated below, all shares of common stock of WSI
Industries, Inc. of record in the name of the undersigned at the close of business on November 7,
2011, hereby revoking all former proxies.
See reverse for voting instructions.