x
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Preliminary
Proxy Statement
|
o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
o
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Definitive
Proxy Statement
|
o
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Definitive
Additional Materials
|
o
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Soliciting
Material Pursuant to §240.14a-12
|
x
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No
fee required.
|
o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction
applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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4)
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Proposed
aggregate value of transaction:
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5)
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Total
fee paid:
|
o
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Fee
paid previously with preliminary
materials.
|
o
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount
previously paid:
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2)
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Form,
Schedule or Registration Statement
No.:
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3)
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Filing
Party:
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4)
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Date
Filed:
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Date:
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May
8, 2008
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||
Place:
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Grand
Sierra Resort
|
||
2500
East 2nd
Street
|
|||
Reno,
Nevada 89595
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|||
Time:
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11:30
a.m., local time
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Purposes:
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To
elect two Class I directors, each to serve for a term of three years and
until his successor is duly elected and qualified.
|
||
To
approve the adoption of an Amended and Restated Certificate of
Incorporation.
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|||
To
approve the adoption of an amendment to Article FOURTH of Certificate of
Incorporation to increase the number of shares of common stock that the
Company is authorized to issue from 14 million shares to 19 million
shares.
|
|||
To
consider the ratification of the selection of Grant Thornton LLP as the
Company's independent registered public accounting firm for
2008.
|
|||
To
transact any other business that may properly come before the
meeting.
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April
__, 2008
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Roger
M. Barzun, Secretary
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1
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35
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35
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35
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FOR
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the
election of the nominees for director listed on the
proxy;
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FOR
|
the
approval of the Amended and Restated Certificate of
Incorporation;
|
FOR
|
the
approval of an amendment to the Certificate of Incorporation to increase
the number of shares of common stock that the Company is authorized to
issue from 14 million shares to 19 million shares;
and
|
FOR
|
the
ratification of the selection of Grant Thornton LLP as the Company's
independent registered public accounting
firm.
|
·
|
By
sending to the Secretary of the Company at the Company's address set forth
above a written statement saying that you wish to revoke your
proxy;
|
·
|
By
submitting another proxy dated later than a previous proxy;
or
|
·
|
By
attending the Annual Meeting in person and notifying the chairman of the
meeting that you wish to vote in
person.
|
·
|
In
the election of directors (Proposal 1) a nominee who receives more votes
for his election than against his election will be
elected.
|
|
·
|
The
approval of the Amended and Restated Certificate of Incorporation
(Proposal 2) requires the affirmative vote of the holders of at least
75% of the outstanding shares of common stock of the
Company.
|
|
·
|
The
approval of the amendment of Article FOURTH of the Certificate of
Incorporation to increase the number of shares of common stock that the
Company is authorized to issue from 14 million shares to 19 million shares
(Proposal 3) requires the affirmative vote of the holders
of a majority of the outstanding shares of common stock of the
Company
|
|
·
|
For
the effect of your vote on the ratification of the selection of Grant
Thornton LLP as our independent registered public accounting firm for 2008
(Proposal 4) see the information below under the heading Ratification of the Selection
of Independent Registered Public Accounting Firm (Proposal
4).
|
Name
|
Committee
Assignment
|
John
D. Abernathy
|
Audit
Committee (Chairman)
Compensation
Committee
|
Robert
W. Frickel
|
Compensation
Committee (Chairman)
Corporate
Governance & Nominating Committee
|
Milton
L. Scott
|
Audit
Committee
Corporate
Governance & Nominating Committee
|
David
R. A. Steadman
|
Corporate
Governance & Nominating Committee (Chairman)
Audit
Committee
|
Donald
P. Fusilli, Jr.
|
Audit
Committee
Compensation
Committee
|
Christopher
H. B. Mills
|
None
|
Nominees
|
Current
Position
|
Age
|
Class
|
Director
Since
|
Term
Expires
|
Patrick
T. Manning
|
Chairman
of the Board of Directors & Chief Executive Officer
|
62
|
I
|
2001
|
2008
|
Joseph
P. Harper, Sr.
|
President,
Treasurer &
Chief
Operating Officer, Director
|
62
|
I
|
2001
|
2008
|
Continuing
Directors
|
|||||
John
D. Abernathy
|
Director
|
70
|
II
|
1994
|
2009
|
Robert
W. Frickel
|
Director
|
64
|
II
|
2001
|
2009
|
Milton
L. Scott
|
Director
|
51
|
II
|
2005
|
2009
|
Donald
P. Fusilli, Jr.
|
Director
|
56
|
III
|
2007
|
2010
|
Maarten
D. Hemsley
|
Director
|
58
|
III
|
1998
|
2010
|
Christopher
H. B. Mills
|
Director
|
55
|
III
|
2001
|
2010
|
·
|
Elimination
of the requirement for a written ballot in the election of
directors.
|
·
|
Currently,
only a majority of the
total number of authorized directors (currently eight directors) may call
a special meeting of stockholders. This is amended to provide
that the call of a special meeting requires only the approval of the Board
of Directors, which under the Bylaws may act by majority vote if a quorum
of directors is present.
|
·
|
Elimination
in its entirety of Article SIXTH, which contains the restrictions on
stockholders acquiring more than 4.5% of the Company's common stock that
were designed to protect the Company's tax
benefits.
|
·
|
Elimination
of the requirement that an amendment to the Company's Bylaws by
stockholders requires approval by the holders of at least 75% of the
Company's common stock, which is replaced with a requirement that an
amendment to the Company's Bylaws by stockholders requires approval only
by the affirmative vote of the holders of a majority of all classes and
series of the Company's outstanding capital stock voting together as a
single class. Currently the Company has only one class of
capital stock, the common stock, outstanding, but the Board of Directors
is authorized to issue up to one million shares of preferred
stock.
|
·
|
Elimination
of the requirement that the affirmative vote of the holders of at least
75% of the Company's common stock is required to remove directors, which
is replaced with a requirement that the removal of directors requires the
affirmative vote of the holders of only a majority of all classes and
series of the Company's outstanding capital stock voting together as a
single class.
|
·
|
Elimination
of the requirement that an amendment to the following articles of the
charter requires approval by the holders of at least 75% of the Company's
common stock:
|
|
o
|
Article
FIFTH, which sets forth certain powers of directors and related
matters;
|
|
o
|
Article
SEVENTH, which provides for a staggered board of directors;
and
|
|
o
|
Article
EIGHTH regarding amendment of the Company's Bylaws by
stockholders.
|
·
|
The
addition of a provision that sets forth the voting rights of the holders
of the Company's common stock that are now in effect, but are not included
in the charter.
|
·
|
An
increase in the number of shares of common stock the Company is authorized
to issue from 14 million shares to 19 million
shares.
|
·
|
The
charter currently provides that a director elected by the Board to fill a
vacancy on the Board serves for the unexpired term of the class of
directors to which the new director was elected. The amended
and restated charter provides that the new director serves only until the
next Annual Meeting of Stockholders at which directors are
elected.
|
·
|
The
addition of a provision that any increase in the limitation of the
personal liability of directors that arises from an amendment of Delaware
law automatically becomes applicable to the Company's
directors.
|
·
|
The
addition of a provision that any decrease or the elimination of the
limitation of the personal liability of directors or the indemnification
of directors by the Company will only have prospective
effect.
|
·
|
The
addition of a provision that indemnification by the Company will not be
available to a director for a settlement entered into by the director that
was not approved by the Company and will not be available to cover a
judicial award if the Corporation was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of the
action.
|
·
|
The
charter currently give the Board of Directors the power to issue preferred
stock. The amended and restated charter gives the Board the
added power to amend the terms of already issued preferred stock subject
to any required approval of the holders of the preferred stock and
provides that if the number of shares of any series of preferred stock is
decreased, those shares resume the status they had before the adoption of
the resolution originally fixing the number of shares of the
series. There are currently no outstanding shares of preferred
stock.
|
·
|
The
elimination of the provision that requires the Company to maintain a
separate office as well as separate records and books of account from its
subsidiaries, and that prohibits the Company from commingling its assets
with those of another corporation, such as a
subsidiary.
|
·
|
Elimination
of a lengthy provision no longer needed relating to arrangements by the
Company with its creditors in the event of insolvency, bankruptcy and the
like.
|
·
|
Simplification
of the description of the purpose for which the Company was formed to
provide that the Company may engage in any activity that is lawful under
Delaware law.
|
·
|
The
updating of the address of the Company and its resident agent in Delaware
and the reformatting of the articles and sections of the
charter.
|
·
|
Review
financial reports and other financial information, internal accounting and
financial controls, controls and procedures relating to public disclosure
of information, and the audit of the Company's financial statements by the
Company's independent auditors;
|
·
|
Appoint
independent auditors, approve their compensation, supervise their work,
oversee their independence and evaluate their qualifications and
performance;
|
·
|
Review
with management and the independent auditors the audited and interim
financial statements that are included in filings with the
SEC;
|
·
|
Review
the quality of the Company's accounting
policies;
|
·
|
Review
with management major financial risk
exposures;
|
·
|
Review
all proposed transactions between the Company and related parties in which
the amount involved exceeds $50,000;
and
|
·
|
Provide
for the confidential, anonymous submission by employees and others of
concerns regarding questionable accounting or auditing
matters.
|
·
|
Review
and approve any corporate goals and objectives relating to the
compensation of the Company's chief executive officer; chief financial and
other executive officers;
|
·
|
Evaluate
performance of the Company's chief executive officer; chief financial and
other executive officers in light of those corporate goals and
objectives;
|
·
|
Either
as a committee or together with the other independent directors (as
directed by the Board), determine and approve the compensation of
Company's chief executive officer; chief financial and other executive
officers, and together with the boards of directors of the Company's
subsidiaries, to determine and approve the compensation of their senior
officers;
|
·
|
Either
as a committee or together with the other independent directors (as
directed by the Board), review and approve any employment agreements,
severance arrangements, change-in-control arrangements or special or
supplemental employee benefits, and any material amendments to the
foregoing, that are applicable to senior officers of the Company and,
together with the boards of directors of the Company's subsidiaries, that
are applicable to their senior
officers;
|
·
|
Either
as a committee or together with the other independent directors (as
directed by the Board), administer the Company's stock plans and make
grants of stock options and other awards as provided in those
plans;
|
·
|
Make
recommendations to the Board regarding incentive compensation plans and
equity-based plans for other senior officers and those of the Company's
subsidiaries;
|
·
|
Advise
the Corporate Governance & Nominating Committee on the compensation of
directors, including the chairman of the board and the chairpersons of the
committees of the Board; and
|
·
|
Make
a recommendation to the Board of Directors as to the inclusion of the
Compensation Discussion and Analysis in SEC
filings.
|
·
|
Develop
and recommend to the Board appropriate corporate governance principles and
rules;
|
·
|
Recommend
appropriate policies and procedures to ensure the effective functioning of
the Board;
|
·
|
Identify
and nominate qualified candidates for election to the Board and its
committees;
|
·
|
Recommend
directors for membership on Board
committees;
|
·
|
Develop
and make recommendations to the Board regarding standards and processes
for determining the independence of directors under applicable laws, rules
and regulations;
|
·
|
Develop
and oversee the operation of an orientation program for new directors and
determine whether and what form and level of continuing education for
directors is appropriate;
|
·
|
Periodically
review the Company's Code of Business Conduct & Ethics and its Insider
Trading Policy to ensure that they remain responsive both to legal
requirements and to the nature and size of the business;
and
|
·
|
With
the advice of the Chairman of the Compensation Committee, make
recommendations to the Board of Directors for the remuneration for
non-employee directors and for committee members and committee
chairpersons.
|
Name |
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards
(1)(3)
($)
|
Total(2)
($)
|
|||||||||
John
D. Abernathy (Lead director)
Chairman
of the Audit Committee
Member
of the Compensation Committee
|
$ | 33,300 | $ | 35,000 | $ | 68,300 | ||||||
Robert
W. Frickel
Chairman
of the Compensation Committee
Member
of the Corporate Governance & Nominating Committee
|
$ | 21,700 | $ | 35,000 | $ | 56,700 | ||||||
Donald
P. Fusilli, Jr.
Member of the Audit
Committee
Member
of the Compensation Committee
|
$ | 17,350 | $ | 35,000 | $ | 52,350 | ||||||
Maarten
D. Hemsley (for November and December 2007)
|
$ | 5,550 | — | $ | 5,550 | |||||||
Christopher
H. B. Mills
|
$ | 12,600 | $ | 35,000 | $ | 47,600 | ||||||
Milton
L. Scott
Member
of the Audit Committee
Member of the Corporate
Governance & Nominating Committee
|
$ | 23,400 | $ | 35,000 | $ | 58,400 | ||||||
David
R. A. Steadman
Chairman
of the Corporate Governance & Nominating Committee
Member of the Audit
Committee
|
$ | 24,600 | $ | 35,000 | $ | 59,600 |
(1)
|
The
aggregate value of these restricted stock awards was $210,000, including
$140,000 recognized in 2007 for financial reporting purposes in accordance
with FAS 123R. No amounts earned by a director have been
capitalized on the balance sheet for 2007. The cost does not
reflect any estimates made for financial statement reporting purposes of
future forfeitures related to service-based vesting
conditions. The valuation of the awards was made on the equity
valuation assumptions described in Note 8 of Notes to Consolidated
Financial Statements in the Company's Annual Report on Form 10-K, which
accompanies this Proxy Statement. None of the awards has been
forfeited to date.
|
(2)
|
During
2007, none of the non-employee directors received any other compensation
for any service provided to the Company. All directors are
reimbursed for their reasonable out-of-pocket expenses incurred in
attending meetings of the Board and Board committees. Directors
living outside of North America, currently only Mr. Mills, have the
option of attending regularly-scheduled in-person meetings by telephone,
and if they choose to do so, they are paid an attendance fee as if they
had attended in person.
|
(3)
|
The
following table shows for each non-employee director the grant date fair
value of each stock award that has been expensed, the aggregate number of
shares of stock awarded, and the number of shares underlying stock options
that were outstanding on December 31,
2007.
|
Name
|
Grant
Date
|
Securities Underlying Option
Awards Outstanding
at December 31, 2007
(#)
|
Aggregate Stock Awards
Outstanding
at December 31, 2007
(#)
|
Grant Date Fair
Value of Stock
and
Option Awards
($)
|
|||||||||
John
D. Abernathy
|
5/1/1998
|
3,000 | † | ||||||||||
5/1/1999
|
3,000 | † | |||||||||||
5/1/2000
|
3,000 | † | |||||||||||
5/1/2001
|
1,166 | † | |||||||||||
7/23/2001
|
12,000 | 57,600 | |||||||||||
5/19/2005
|
5,000 | 27,950 | |||||||||||
5/7/2007
|
1,598 | 35,000 | |||||||||||
Total
|
27,166 | 1,598 | N/A |
Name
|
Grant
Date
|
Securities Underlying Option
Awards Outstanding
at December 31, 2007
(#)
|
Aggregate Stock Awards
Outstanding
at December 31, 2007
(#)
|
Grant Date Fair
Value of Stock
and
Option Awards
($)
|
|||||||||
Robert
W. Frickel
|
7/23/2001
|
12,000 | 57,600 | ||||||||||
5/19/2005
|
5,000 | 27,950 | |||||||||||
5/7/2007
|
1,598 | 35,000 | |||||||||||
Total
|
17,000 | 1,598 | 120,550 | ||||||||||
Donald
P. Fusilli, Jr.
|
5/7/2007
|
— | 1,598 | 35,000 | |||||||||
Maarten
D. Hemsley
|
7/18/2007
|
2,800 | 27,640 | ||||||||||
7/18/2006
|
2,800 | 45,917 | |||||||||||
7/18/2005
|
2,800 | 17,534 | |||||||||||
8/12/2004
|
5,000 | 12,762 | |||||||||||
1/13/1998
|
75,000 | † | |||||||||||
Total
|
88,400 | N/A | |||||||||||
Christopher
H. B. Mills
|
5/19/2005
|
5,000 | 27,950 | ||||||||||
5/7/2007
|
1,598 | 35,000 | |||||||||||
Total
|
5,000 | 1,598 | 62,950 | ||||||||||
Milton
L. Scott
|
5/7/2007
|
1,598 | 35,000 | ||||||||||
David
R. A. Steadman
|
5/19/2005
|
5,000 | 27,950 | ||||||||||
5/7/2007
|
1,598 | 35,000 | |||||||||||
Total
|
5,000 | 1,598 | 62,950 |
†
|
These
options were not expensed
|
Annual
Fees
|
Each
Non-Employee Director
|
|||
$ | 7,500 |
Additional
Annual Fees for Committee Chairmen
|
||||
Chairman
of the Audit Committee
|
$ | 7,500 | ||
Chairman
of the Compensation Committee
|
$ | 2,500 | ||
Chairman
of the Corporate Governance & Nominating Committee
|
$ | 2,500 | ||
Meeting
Fees
|
||||
In-Person
Meetings
|
Per
Director, Per Meeting
|
|||
Board Meetings
|
$ | 1,500 |
Committee Meetings
|
||||
Audit Committee
Meetings
|
||||
on
the same day as a Board meeting
|
$ | 1,000 | ||
on
a day other than a Board meeting day
|
$ | 1,500 | ||
Other Committee
Meetings
|
||||
on
the same day as a Board meeting
|
$ | 500 | ||
on
a day other than a Board meeting day
|
$ | 750 | ||
Telephonic Meetings (Board & committee
meetings)
|
||||
One hour or
longer
|
$ | 1,000 | ||
Less than one
hour
|
$ | 300 |
|
*
|
The
shares awarded are restricted because they may not be sold, assigned,
transferred, pledged or otherwise disposed of until the restrictions
expire. The restrictions for the award made on May 7, 2007
expire on the day before the 2008 Annual Meeting of Stockholders, but
earlier if the director dies or becomes disabled or if there is a change
in control of the Company. The shares are forfeited if before
the restrictions expire, the director ceases to be a director other than
because of his death or disability.
|
Name and Address of Beneficial
Owner
|
Number of
Outstanding
Shares of
Common Stock
Owned
|
Shares Subject
to
Purchase*
|
Total
Beneficial
Ownership
|
Percent
of Class
|
||||||||||||
North
Atlantic Smaller Companies Investment Trust plc (or NASCIT)
℅ North
Atlantic Value LLP, Ryder Court, 14 Ryder Street,
London
SW1Y 6QB, England
|
500,000 | (1) | — | 500,000 | 3.82 | % | ||||||||||
North
Atlantic Value LLP (or NAV)
Ryder
Court, 14 Ryder Street,
London
SW1Y 6QB, England
|
500,000 | (1) | — | 500,000 | 3.82 | % | ||||||||||
John
D. Abernathy
|
29,801 | (2) | 27,166 | 56,967 | † |
Name and Address of Beneficial
Owner
|
Number of
Outstanding
Shares of
Common Stock
Owned
|
Shares Subject
to
Purchase*
|
Total
Beneficial
Ownership
|
Percent
of Class
|
||||||||||||
Robert
W. Frickel
|
64,805 | (2) | 17,000 | 81,805 | † | |||||||||||
Donald
P. Fusilli, Jr.
|
1,598 | (2) | — | 1,598 | † | |||||||||||
Joseph
P. Harper, Sr.
|
550,141 | (3) | 172,574 | 722,715 | 4.20 | % | ||||||||||
Maarten
D. Hemsley
|
246,924 | (4) | 88,400 | 335,324 | 2.08 | % | ||||||||||
Patrick
T. Manning
|
132,500 | (5) | 65,120 | 197,620 | 1.01 | % | ||||||||||
Christopher
H. B. Mills
℅
North Atlantic Value LLP, Ryder Court, 14 Ryder Street,
London
SW1Y 6QB, England
|
514,805 | (2)(6) | 5,000 | 519,805 | 3.93 | % | ||||||||||
Milton
L. Scott
|
2,805 | (2) | — | 2,805 | † | |||||||||||
David
R. A. Steadman
|
16,805 | (2) | 5,000 | 21,805 | † | |||||||||||
All
directors and executive officers as a group (10 persons)
|
1,573,047 | (7) | 382,780 | (7) | 1,955827 | (7) | 14.57 | % |
*
|
These
are the shares that the entity or person can acquire within sixty days of
February 15, 2008.
|
†
|
Less
than one percent.
|
(1)
|
According
to a Form 13G/A (Amendment No. 4) filed with the Securities and Exchange
Commission on February 7, 2008, each of NASCIT, NAV and Mr. Mills have
shared voting and investment power over these
shares.
|
(2)
|
This
number includes, or in the case of Mr. Fusilli, consists entirely of,
1,598 restricted shares awarded to non-employee directors described above
in footnote (1) to the table of directors' compensation in 2007 under the
heading Compensation of
Directors. The restrictions expire on the day preceding
the 2008 Annual Meeting of Stockholders, but earlier if the director dies
or becomes disabled or if there is a change in control of the
Company. The shares are forfeited before the expiration of the
restrictions if the director ceases to be a director other than because of
his death or disability.
|
(3)
|
This
number includes 8,000 shares held by Mr. Harper as custodian for his
grandchildren.
|
(4)
|
This
number includes 10,000 shares owned by the Maarten and Mavis Hemsley
Family Foundation as to which Mr. Hemsley has shared voting and investment
power with his wife and two
daughters.
|
(5)
|
Of
these shares 100,000 have been pledged to Mr. Manning's broker to secure a
line of credit with the broker of up to $1.5
million.
|
(6)
|
This
number consists of the 500,000 shares owned by NASCIT; 13,207 shares owned
by Mr. Mills personally over which he claims sole voting and investment
power; and the 1,598 restricted shares the Company awarded to each
non-employee director described above in footnote
(2).
|
(7)
|
See
the footnotes above for a description of certain of the shares included in
this total.
|
|
Plus
|
Interest
expense for the period;
|
|
Plus
|
Depreciation
and amortization expense for the
period;
|
|
Plus
|
Federal
and state income tax expense incurred for the
period;
|
|
Plus
|
Extraordinary
items (to the extent negative) if any, for the
period;
|
|
Plus
|
Any
and all fees paid to Menai Capital, LLC, and any fees paid to non-employee
directors;
|
|
Plus
|
Any
and all parent-company charges for corporate overhead or similar
non-operating charges;
|
Minus
|
Extraordinary
items (to the extent positive) if any;
and
|
Minus
|
Interest
income for the period.
|
·
|
Compensation
should consist of two main elements, base salary and cash incentive bonus
for the reasons discussed above.
|
·
|
Equity
compensation should not be an element of compensation for executives who
already hold a substantial number of shares of the Company's common stock
or options to purchase a substantial number of shares of common stock, or
both.
|
·
|
The
cash incentive bonus element of compensation should be divided into two
parts: one part, 60%, of the incentive bonus based on the achievement by
the Company, on a consolidated basis, of financial goals, and the other
part, 40%, based on the achievement by the executive of personal goals and
objectives to be established annually by the Committee in consultation
with the executive.
|
·
|
Perquisites
such as car allowances, reimbursement of club dues and the like should not
be an element of compensation because salaries are designed to be
sufficient for the executive to pay these items
personally.
|
·
|
The
Committee should determine at the end of each year the extent to which
each of Messrs. Manning, Harper and Allen have achieved his personal goals
as provided in the committee’s
charter.
|
·
|
In
determining individual compensation levels, the Committee should take into
account, among other things, the
following:
|
|
o
|
The
elimination of stock options as an element of compensation (except for
Mr. Allen, who is a new
employee.)
|
|
o
|
The
executives' existing salaries.
|
|
o
|
Salaries
of comparable executives in the
industry.
|
|
o
|
Wage
inflation from 2004 through 2007, to the extent
applicable.
|
|
o
|
The
Company's growth since July 2004 when the prior agreements became
effective and the resulting increase in senior management
responsibilities.
|
|
o
|
The
total amount that is appropriate for the Company to allocate to the
compensation of all seven members of the Company's senior management given
the Company's size and industry.
|
|
o
|
The
elimination of perquisites.
|
·
|
Except
for net income, the Company is at or about the median of the peer group in
sales, assets, market capitalization and number of
employees. In total shareholder return, growth in income before
interest and taxes, and return on investment, the Company is ahead of the
peer group.
|
·
|
The
Company's 2006 net income was above the peer group and its stockholders'
equity was 135% of the peer-group
median.
|
·
|
Using
the peer group, the base salaries of Messrs. Manning and Harper under the
prior agreements were 64% and 81%, of the median, respectively; the sum of
their base salaries and annual incentive awards were 130% and 150% of the
median, respectively; and their total direct compensation (which includes
equity compensation) was 86% and 93% of the median,
respectively.
|
·
|
Using Hay Group's so called
national general industry database updated to July 2007, the prior
agreements' base salaries of Messrs. Manning and Harper were below the
median, 91% and 81% respectively, but their total cash compensation was
above the median, 144% and 132%,
respectively.
|
·
|
The
Company's excellent, above-median performance in net income and
stockholders' equity;
|
·
|
The
growth of the Company since 2004 and the resulting increase in the
complexity of the business; and
|
·
|
The elimination of equity
as an element of compensation.
|
·
|
In
spite of adverse weather conditions in 2007, the achievement of budgeted
EBITDA and earnings per share
goals.
|
·
|
The
completion of a major acquisition
(RHB);
|
·
|
The
completion of a refinancing of the Company's revolving line of credit;
and
|
·
|
The completion of a public
offering of 1.8 million shares of the Company's common
stock.
|
·
|
Employment
Agreements of Named Executive
Officers
|
·
|
Summary
Compensation Table for 2007
|
·
|
Grants
of Plan-Based Awards for 2007
|
Mr. Manning
|
Mr. Harper
|
Mr. Hemsley
|
||||||||||
Base
Salary
|
$ | 240,000 | $ | 215,000 | $ | 135,000 | ||||||
Threshold Cash Incentive
Bonus(1)
|
$ | 125,000 | $ | 125,000 | $ | 50,000 | ||||||
Maximum Additional Cash
Incentive Bonus(1)
|
$ | 240,000 | $ | 215,000 | $ | 75,000 | ||||||
Annual Option Grant
(Shares)
(2)
|
10,000 | 10,000 | 2,800 | |||||||||
Vacation
Time
|
(3) | (3) |
Not
specified
|
|||||||||
Benefits Paid by the
Company(4)
|
||||||||||||
Car
Allowance
|
$700/month
|
$700/month
|
No
|
|||||||||
Country
Club Dues
|
Yes
|
Yes
|
No
|
|||||||||
Payment
of Commuting Expenses
|
Yes
|
Yes
|
No
|
|||||||||
Company-Paid
Long-Term Disability Insurance
|
No
|
No
|
$7,500/month
benefit
|
|||||||||
Company-Paid
Term Life Insurance
|
No
|
No
|
$100,000
death benefit
|
(1)
|
This
cash incentive bonus was based on the financial performance of TSC for
Messrs. Manning and Harper, and of the Company for Mr.
Hemsley. The calculation of the cash incentive bonus and the
additional cash incentive bonus is described below in footnote (1) to the
table of Grants of
Plan-Based Awards for 2007.
|
(2)
|
The
terms of these stock options are described below in footnote (2) to the
table of Grants of
Plan-Based Awards for 2007.
|
(3)
|
Mr.
Manning was entitled to eight weeks of vacation per year and Mr. Harper
was entitled to 18 weeks of vacation each year. Mr. Harper
could take additional vacation by forfeiting salary at the rate of $4,000
per week and he could forfeit his vacation time and be paid for it at the
rate of $4,000 per week.
|
(4)
|
For
the Company's cost of these benefits in 2007, see footnote (3) of the
Summary Compensation
Table for 2007, below.
|
Mr. Manning
|
Mr. Harper
|
Mr. Allen
|
||||||||||
Base
Salary
|
$ | 365,000 | $ | 365,000 | $ | 250,000 | ||||||
Base
Deferred Salary
|
$ | 162,500 | $ | 162,500 | $ | 75,000 |
Mr. Manning
|
Mr. Harper
|
Mr. Allen
|
||||||||||
Maximum
Incentive Bonus
|
$ | 162,500 | $ | 162,500 | $ | 75,000 | ||||||
Equity
Compensation
|
None
|
None
|
13,707-share
stock option award (1)
|
|||||||||
Vacation
|
Discretionary
(2)
|
Discretionary
(2)
|
5
weeks
|
|||||||||
Benefits
Paid by the Company
|
None
|
None
|
None(3)
|
(1)
|
The
terms of this August 7, 2007 stock option are described below in the
section entitled Grants
of Plan-Based Awards for
2007.
|
(2)
|
The
executive is entitled to take so many days vacation per year as he
believes is appropriate in light of the needs of the
business.
|
(3)
|
When
he joined the Company, the Company, at Mr. Allen's request, agreed that he
would continue his then current health plan rather than participate in the
Company's health plan and would be reimbursed for up to $1,000 of the
monthly premiums. This arrangement is less expensive for the
Company than if Mr. Allen had joined the Company's health
plan.
|
Event
|
Payment
and/or Other Obligations *
|
1.Termination
by the Company without cause(1)
|
The
Company must —
·
Continue to pay the executive his base salary for the balance of
the term of his employment agreement or for one year, whichever period is
longer;
·
Continue to cover him under its medical and dental plans provided
the executive reimburses the Company the COBRA cost thereof, in which
event the Company must reimburse the amount of the COBRA payments to the
executive; and
· Pay him
a portion of any base deferred salary and cash incentive bonus that he
would have earned had he remained an employee of the Company through the
end of the calendar year in which his employment is terminated, based on
the number of days during the year that he was an employee of the
Company.
|
Event
|
Payment
and/or Other Obligations *
|
Estimated December 31, 2007
termination payments:
Messrs. Manning & Harper
(each)
|
$1,095,000
in monthly installments plus COBRA payment reimbursement, which currently
would be approximately $48,400 for Mr. Manning and $29,200 for Mr. Harper
for the three year-period.
|
Mr. Allen
|
$786,000
in monthly installments
|
2.Termination
by reason of the executive's death
|
The
Company is obligated to pay the executive a portion of any base deferred
salary and of any cash incentive bonus that he would have earned had he
remained an employee of the Company through the end of the calendar year
in which his employment terminated, based on the number of days during the
year that he was an employee of the Company.
|
Estimated termination
payments:
|
None
|
3.Termination
by the Company for cause(1)
|
The
Company is required to pay the executive any accrued but unpaid base
payroll salary through the date of termination and any other
legally-required payments through that date.
All
of the executive's stock options terminate.
|
Estimated termination
payments:
|
None
|
4.Involuntary
resignation of the executive
(2)
|
An
involuntary resignation, also known as a constructive termination, is
treated under the agreement as a termination by the Company without
cause.
|
Estimated termination
payments:
|
See
Event 1, above.
|
5.Voluntary
resignation by the executive
|
The
Company is obligated to pay the executive a portion of any base deferred
salary that he would have earned had he remained an employee of the
Company through the end of the calendar year in which he resigned, based
on the number of days during the year that he was an employee of the
Company.
|
Estimated December 31, 2007
termination payments:
|
None
|
6.A
change in control of the Company.
|
All
the executives' unexercisable in-the-money stock options become
exercisable in full and at December 31, 2007, had the following
value based upon their market value at that date less their exercise
price:
Mr.
Manning $43,883
Mr.
Harper $4,536
Mr.
Allen $38,791
Mr.
Barzun $3,024
|
*
|
The
base payroll salaries, base deferred salaries and cash incentive bonus
eligibility of the executives are set forth above under the heading Employment Agreements of Named
Executive Officers.
|
(1)
|
The
term cause is defined in the employment agreements and means what is
commonly referred to as cause in employment matters, such as gross
negligence, dishonesty, insubordination, inadequate performance of
responsibilities after notice and the like. A termination
without cause is a termination for any reason other than for cause, death
or voluntary resignation.
|
(2)
|
The
executive is entitled to resign in the event that the Company commits a
material breach of a material provision of his employment agreement and
fails to cure the breach within thirty days, or, if the nature of the
breach is one that cannot practicably be cured in thirty days, if the
Company fails to diligently and in good faith commence a cure of the
breach within the thirty-day
period.
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Option
Awards(1)
($)
|
Non-Equity
Incentive
Plan
Compensation(2)
($)
|
All
Other
Compensation
($)(3)
|
Total
($)
|
|||||||||||||||
Patrick
T. Manning
|
2006
|
240,000 | 82,883 | 341,000 | 38,950 | 702,833 | |||||||||||||||
Chairman
of the Board
&
Chief Executive
Officer
(principal executive officer)
|
2007
|
296,500 | — | 325,000 | 31,258 | 652,758 | |||||||||||||||
Joseph
P. Harper, Sr.
|
2006
|
235,800 | * | 82,883 | 318,500 | 21,150 | 658,333 | ||||||||||||||
President,
Treasurer & Chief Operating Officer
|
2007
|
282,500 | — | 325,000 | 14,396 | 621,896 | |||||||||||||||
James
H. Allen, Jr.
Senior
Vice President & Chief Financial Officer (principal accounting
officer)
|
2007
|
115,500 | 14,553 | 100,000 | 865 | 230,918 |
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Option
Awards(1)
($)
|
Non-Equity
Incentive
Plan
Compensation(2)
($)
|
All
Other
Compensation
($)(3)
|
Total
($)
|
|||||||||||||||
Maarten
D. Hemsley
|
2006
|
129,808 | 22,862 | 117,500 | 12,350 | 282,520 | |||||||||||||||
Chief
Financial
Officer
(former principal financial officer)
|
2007
|
106,500 | 27,640 | 50,000 | 6,823 | 190,963 | |||||||||||||||
Roger
M. Barzun
Senior
Vice President & General Counsel, Secretary
|
2007
|
62,500 | — | 75,000 | 137,500 |
*
|
This
includes $20,800 paid to Mr. Harper for foregoing approximately five weeks
of the vacation he was entitled to under his prior employment agreement,
which expired in July 2007.
|
(1)
|
The
value of these stock option awards is the total dollar cost of the award
recognized by the Company in the year of grant for financial reporting
purposes in accordance with FAS 123R. No amounts earned by the
executive officers have been capitalized on the balance sheet for
2007. The cost does not reflect any estimates made for
financial statement reporting purposes of forfeitures by the executive
officers related to service-based vesting
conditions.
|
|
The
valuation of these options was made on the equity valuation assumptions
described in Note 8 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K, which accompanies this Proxy
Statement. None of the awards has been
forfeited. The following section, entitled Grants of Plan-Based
Awards for 2007, contains a description of the basis on which these stock
options were awarded and their full grant date fair market
value.
|
(2)
|
Cash
incentive bonuses were calculated and approved by the Committee in March
2007 and February and March 2008. The bonuses for 2006 were
determined in part by the application of a formula found in the prior
employment agreement of each executive officer and in part by the
Committee exercising its discretion as to the amount of additional cash
incentive bonus within the range provided for in his employment
agreements. Footnotes (1) and (2) to the table in the following
section, entitled Grants of Plan-Based Awards for 2007, contain a
description of the formula and its
application.
|
(3)
|
The
following table shows a breakdown of the amounts shown above in the All
Other Compensation column. The dollar amounts are the costs of
the items to the Company.
|
Type
of Other Compensation
|
Year
|
Mr.
Manning
|
Mr. Harper
|
Mr. Hemsley
|
Mr.
Allen
|
||||||||||||
Car
allowance
|
2006
|
$ | 8,400 | $ | 8,400 | — | — | ||||||||||
2007
|
$ | 5,000 | $ | 5,000 | — | — | |||||||||||
Expenses
of commuting to work
|
2006
|
$ | 2,500 | $ | 1,800 | — | — | ||||||||||
2007
|
$ | 2,400 | $ | 1,750 | — | — | |||||||||||
Country
club dues
|
2006
|
$ | 25,000 | $ | 4,500 | — | — | ||||||||||
2007
|
$ | 15,000 | $ | 3,420 | — | — | |||||||||||
Company
contribution to 401(k)
|
2006
|
$ | 3,050 | $ | 6,450 | $ | 7,500 | — | |||||||||
Plan
account
|
2007
|
$ | 8,858 | $ | 4,226 | $ | 6,407 | $ | 865 | ||||||||
Long-term
disability insurance
|
2006
|
— | — | $ | 4,502 | — | |||||||||||
premium
|
2007
|
— | — | $ | 152 | — | |||||||||||
Term
life insurance premium
|
2006
|
— | — | $ | 348 | — | |||||||||||
2007
|
— | — | $ | 264 | — |
Name
|
Grant
Date
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan Awards(1)
($)
|
All Other Option Awards: Number
of Securities Underlying Options(2)
(#)
|
Exercise or Base Price of
Option Awards (3)
($/share)
|
Grant
Date
Fair
Value
of
Option
Awards(4)
($)
|
||||||||||||||||||||
Threshold
|
Target
|
Maximum
|
|||||||||||||||||||||||
Patrick
T. Manning
|
7/19/2007
|
142,156 | 239,656 | 304,656 | -0- | N/A | N/A | ||||||||||||||||||
Joseph
P. Harper, Sr.
|
7/19/2007
|
142,156 | 239,656 | 304,656 | -0- | N/A | N/A | ||||||||||||||||||
James
H. Allen, Jr.
|
8/7/2007
|
50,000 | 50,000 | 100,000 | 13,707 | 18.99 | $ | 172,692 | |||||||||||||||||
Maarten
D. Hemsley
|
7/18/2007
|
50,000 | 75,000 | 125,000 | 2,800 | 21.60 | $ | 27,640 | |||||||||||||||||
Roger
M. Barzun
|
75,000 | 75,000 | 75,000 | -0- | N/A | N/A |
|
Mr. Allen. Mr. Allen's
employment agreement has the same goal for earning a base deferred salary
($75,000) and a cash incentive bonus ($75,000) as do the new employment
agreements of Messrs. Manning and Harper, except that since Mr. Allen was
an employee for slightly less than half of 2007, his employment agreement
provides for the pro-ration of his base deferred salary and cash incentive
bonus based on the 169 days or 46% of 2007 that he was an
employee.
|
|
As
described above in the Compensation Discussion &
Analysis, the Compensation Committee decided to award Mr. Allen
two-thirds of his base deferred salary and two-thirds of both the 60%
earnings-per-share portion and the 40% discretionary portion of his cash
incentive bonus. Accordingly, in the table above, the Threshold amount is
two-thirds of Mr. Allen's base deferred salary, the Target amount is the
sum of the Threshold amount and
two-thirds of the 60% portion of his cash incentive bonus, and the Maximum amount is the
sum of the Target
amount and two-thirds of the 40% portion of his cash incentive
bonus.
|
|
Mr. Hemsley. Under
his employment agreement, which expired by extension on October 31, 2007,
Mr. Hemsley is entitled to a cash incentive bonus of $50,000 for any
year during the term of his agreement in which the Company on a
consolidated basis achieves 75% or more of its budgeted
EBITDA. He is also eligible for an additional cash incentive
bonus not to exceed $75,000 in the discretion of the Compensation
Committee. In exercising their discretion, members of the
Committee are to consider the Company's consolidated financial results for
the year in question, the number of non-routine business transactions to
which Mr. Hemsley devoted substantial time during the year and such
other matters as they considered relevant. Accordingly, the
Maximum amount is
the sum of the Threshold and the Target
amounts.
|
|
Mr. Barzun. Mr. Barzun's
cash incentive bonus for a given year is entirely in the discretion of the
Committee and is based on the Company's consolidated financial results for
the year, the number of non-routine legal transactions to which he devoted
substantial time during the year, and such other matters as the Committee
deems relevant. Accordingly, for Mr. Barzun, his Threshold, Target and Maximum in the table
above is the bonus amount awarded to him for
2007.
|
(2)
|
Stock
Option Awards. The stock
option awards in this column were all granted under the Company's 2001
Stock Incentive Plan. In addition to the vesting dates of these
options, described below, they vest in full if there is a change in
control of the Company.
|
|
·
|
This
stock option was granted to Mr. Hemsley pursuant to the terms of his
employment agreement.
|
|
·
|
The
option has a five-year term and vests, or becomes exercisable, in full on
the date of grant.
|
|
·
|
The
exercise or purchase price of the shares subject to this option is the
closing price of the common stock on the NASDAQ Global Select Market on
the date of grant.
|
|
·
|
Had
Mr. Hemsley's employment been terminated by the Company for cause,
which is defined in the stock option agreement, or for good cause, which
is defined in his employment agreement, all of his options would have
immediately terminated.
|
|
·
|
Because
his employment terminated upon the expiration of his employment agreement,
he may exercise this stock option from the date it became exercisable
through its expiration date. Mr. Hemsley's employment
agreement is described above in the section entitled Employment Agreements of Named
Executive Officers.
|
|
·
|
This
stock option was awarded by the Committee in the exercise of its
discretion in connection with Mr. Allen's election as Senior Vice
President & Chief Financial Officer of the
Company.
|
|
·
|
The
option has a ten-year term and vests, or becomes exercisable, in three
substantially equal installments on each of the first three anniversaries
of the date of the grant.
|
|
·
|
The
exercise price, or purchase price, of the shares subject to this stock
option is the closing price of the Company's common stock on August 7,
2007, which was the date of the meeting of the Committee at which the
stock option was approved.
|
|
·
|
If
Mr. Allen's employment terminates by reason of his permanent
disability or death, or if he dies within three months after he ceases to
be an employee, then he, his legal representative, his estate, or his
beneficiaries (depending on the circumstances of the termination) may
exercise the option for a period of one year or until the option's
expiration date, whichever comes first, but only for the number of shares
that had become exercisable on the date his employment
terminated.
|
|
·
|
If
Mr. Allen's employment is terminated for cause, which is defined in
the option agreement, the option immediately
terminates.
|
|
·
|
If
Mr. Allen's employment terminates for any other reason, he may
exercise the option for a period of ninety days after his employment
terminates or until the expiration date of the option, whichever comes
first, but only for the number of shares that had become exercisable on
the date his employment terminated.
|
(3)
|
Establishing
the Option Exercise Price. It is the Company's policy to
use the closing price of the common stock on the date of the meeting at
which a stock option award is approved as the option's per-share exercise
price. In the case of a stock option awarded on a date
specified in an employment agreement, the exercise price is the closing
price of the common stock on that
date.
|
(4)
|
The
grant date fair value is the value computed for financial reporting
purposes in accordance with FAS 123R. The valuation was made on
the equity valuation assumptions described in Note 8 of Notes to
Consolidated Financial Statements in the Company's Annual Report on Form
10-K, which accompanies this Proxy
Statement.
|
Name
|
Option
Awards
|
|
Number
of Shares Acquired
on
Exercise
(#)
|
Value
Realized Upon
Exercise(1)
($)
|
|
Patrick
T. Manning
|
—
|
—
|
Joseph
P. Harper, Sr.
|
—
|
—
|
James
H. Allen, Jr.
|
—
|
—
|
Maarten
D. Hemsley
|
128,424
|
$2,714,821
|
Roger
M. Barzun
|
9,990
|
$207,503
|
(1)
|
SEC
regulations define the "Value Realized Upon Exercise" as the difference
between the market price of the shares on the date of the purchase, and
the option exercise price of the shares, whether or not the shares are
sold, or if they are sold, whether or not the sale occurred on the date of
the exercise.
|
Option
Awards
|
||||||||||||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price/Share
($)
|
Option
Grant
Date
|
Option
Expiration
Date
|
Vesting
Date
Footnotes
|
||||||||||||
Patrick
T. Manning
|
200 | 800 | $ | 25.21 |
8/08/2006
|
9/08/2011
|
(1) | |||||||||||
10,000 | — | $ | 24.96 |
7/18/2006
|
7/18/2011
|
(2) | ||||||||||||
600 | 900 | $ | 16.78 |
8/12/2005
|
9/12/2010
|
(1) | ||||||||||||
10,000 | — | $ | 9.69 |
7/18/2005
|
7/18/2010
|
(2) | ||||||||||||
2,100 | 1,400 | $ | 3.10 |
8/12/2004
|
8/12/2014
|
(1) | ||||||||||||
10,000 | — | $ | 3.10 |
8/12/2004
|
8/12/2009
|
(2) | ||||||||||||
2,800 | 700 | $ | 3.05 |
8/20/2003
|
8/20/2013
|
(1) | ||||||||||||
3,500 | — | $ | 1.725 |
7/24/2002
|
7/24/2012
|
(1) | ||||||||||||
3,700 | — | $ | 1.50 |
7/23/2001
|
7/23/2011
|
(1) | ||||||||||||
Joseph
P. Harper, Sr.
|
200 | 800 | $ | 25.21 |
8/08/2006
|
9/08/2011
|
(1) | |||||||||||
10,000 | — | $ | 24.96 |
7/18/2006
|
7/18/2011
|
(2) | ||||||||||||
600 | 900 | $ | 16.78 |
8/12/2005
|
9/12/2010
|
(1) | ||||||||||||
10,000 | — | $ | 9.69 |
7/18/2005
|
7/18/2010
|
(2) | ||||||||||||
3,500 | — | $ | 3.10 |
8/12/2004
|
8/12/2014
|
(3) | ||||||||||||
10,000 | — | $ | 3.10 |
8/12/2004
|
8/12/2009
|
(2) | ||||||||||||
3,500 | — | $ | 3.05 |
8/20/2003
|
8/20/2013
|
(3) | ||||||||||||
3,500 | — | $ | 1.725 |
7/24/2002
|
7/24/2012
|
(3) | ||||||||||||
3,700 | — | $ | 1.50 |
7/23/2001
|
7/23/2011
|
(1) |
Option
Awards
|
||||||||||||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price/Share
($)
|
Option
Grant
Date
|
Option
Expiration
Date
|
Vesting
Date
Footnotes
|
||||||||||||
James
H. Allen, Jr.
|
— | 13,707 | $ | 18.99 |
8/7/2007
|
8/7/2012
|
(3) | |||||||||||
Maarten
D. Hemsley
|
2,800 | — | $ | 21.60 |
7/18/2007
|
7/18/2012
|
(4) | |||||||||||
2,800 | — | $ | 24.96 |
7/18/2006
|
7/18/2011
|
(2) | ||||||||||||
2,800 | — | $ | 9.69 |
7/18/2005
|
7/18/2010
|
(2) | ||||||||||||
5,000 | — | $ | 3.10 |
8/12/2004
|
1/29/2008
|
(5) | ||||||||||||
75,000 | — | $ | 0.875 |
1/13/1998
|
10/27/2013
|
(6) | ||||||||||||
Roger
M. Barzun
|
120 | 480 | $ | 25.21 |
8/8/2006
|
9/8/2011
|
(1) | |||||||||||
400 | 600 | $ | 16.78 |
8/12/2005
|
9/12/2010
|
(1) | ||||||||||||
2,000 | — | $ | 3.10 |
8/12/2004
|
8/12/2014
|
(4) | ||||||||||||
1,190 | — | $ | 0.875 |
2/4/1998
|
2/4/2008
|
(4) |
(1)
|
This
option vests in equal installments on the first five anniversaries of its
grant date.
|
(2)
|
This
option vested in a single installment on July 18,
2007.
|
(3)
|
This
option vests in equal installments on the first three anniversaries of its
grant date.
|
(4)
|
This
option vested in a single installment on its grant
date.
|
(5)
|
This
option vests in equal installments on the grant date and the first three
anniversaries of its grant date.
|
(6)
|
This
option vested in a single installment on December 18,
1998.
|
December
2002
|
December
2003
|
December
2004
|
December
2005
|
December
2006
|
December
2007
|
|||||||||||||||||||
Sterling
Construction Company, Inc
|
100.00 | 258.86 | 296.57 | 961.71 | 1,243.43 | 1,246.86 | ||||||||||||||||||
Dow
Jones US
|
100.00 | 130.75 | 146.45 | 155.72 | 179.96 | 190.77 | ||||||||||||||||||
Dow
Jones US Heavy Construction
|
100.00 | 136.41 | 165.42 | 239.03 | 298.17 | 566.39 |
Fee
Category
|
2007
|
Percentage
Approved
by
the
Audit
Committee
|
2006
|
Percentage
Approved
by
the
Audit
Committee
|
||||||||||||
Audit
Fees:
|
$ | 602,900 | 100 | % | $ | 529,300 | 100 | % | ||||||||
Audit-Related
Fees:
|
$ | 25,500 | 100 | % | $ | 110,300 | 100 | % | ||||||||
Tax
Fees:
|
$ | 3,300 | 100 | % | — |
NA
|
||||||||||
All
Other Fees:
|
— |
NA
|
— |
NA
|
1.
|
Election
of two Class I directors (or if a nominee is not available for election, a
substitute designated by the Board of
Directors.)
|
Nominees
|
Class
|
Term
|
FOR
|
AGAINST
|
ABSTAIN
|
Patrick
T. Manning
|
I
|
Three
years
|
o
|
o
|
o
|
Joseph
P. Harper, Sr.
|
I
|
Three
years
|
o
|
o
|
o
|
2.
|
Approval
of an Amended and Restated Certificate of
Incorporation.
|
FOR
|
o
|
AGAINST
|
o
|
ABSTAIN
|
o
|
3.
|
Approval
of an increase in the number of shares of common stock that the Company is
authorized to issue from 14 million shares to 19 million
shares.
|
FOR
|
o
|
AGAINST
|
o
|
ABSTAIN
|
o
|
4.
|
Ratification
of the selection of Grant Thornton LLP as the Company's independent
registered public accounting firm.
|
FOR
|
o
|
AGAINST
|
o
|
ABSTAIN
|
o
|
5.
|
In
their discretion, the named proxies are authorized to vote upon any other
matters that may properly come before the Annual Meeting or any
adjournment thereof.
|
FOR
|
o
|
AGAINST
|
o
|
ABSTAIN
|
o
|
Signature:
|
Date:
|
||||
Signature:
|
Date:
|
1.
|
The
name of the corporation (the "Corporation") is Sterling
Construction Company, Inc. The date of filing of the
original certificate of incorporation of the Corporation with the
Secretary of State of the State of Delaware was April 1, 1991 and it was
filed under the name Hallwood Holdings Incorporated. The
Corporation's name was subsequently changed to Oakhurst Capital, Inc.;
then to Oakhurst Company, Inc.; and finally to its current
name.
|
2.
|
Pursuant
to Sections 242 and 245 of the General Corporation Law of the State of
Delaware, this Amended and Restated Certificate of Incorporation was duly
adopted by the Board of Directors of the Corporation, and on May 8, 2008,
it was approved by the stockholders of the Corporation entitled to vote
thereon in accordance with Section 242 of the Delaware General Corporation
Law and the provisions of the Certificate of Incorporation then in effect
regarding the amendment thereof.
|
3.
|
The
Certificate of Incorporation of the Corporation is hereby amended and
restated to read in its entirety as set forth below, which instrument
shall be entitled and hereafter referred to as the "Certificate of
Incorporation of Sterling Construction Company,
Inc."
|
4.1
|
Capitalization. The
Corporation is authorized to issue two classes of stock, one to be
designated common stock ("Common Stock") and the
other to be designated preferred stock ("Preferred
Stock.")
|
|
(a)
|
The
number of shares of Preferred Stock the Corporation has authority to issue
is one million (1,000,000) with a par value of one cent ($0.01) per
share.
|
|
(b)
|
The
number of shares of Common Stock the Corporation has authority to issue is
nineteen million (19,000,000) with a par value one cent ($0.01) per
share.
|
4.2
|
Preferred
Stock.
|
(a)
|
Preferred
Stock may be issued from time to time in one or more series, without
further stockholder approval.
|
|
(b)
|
In
a resolution providing for the issue of any wholly-unissued series of
Preferred Stock, the Board of Directors is hereby authorized within the
limitations and restrictions stated in this Certificate of Incorporation
to fix, alter or amend the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking
fund provisions,) the redemption price or prices, and the liquidation
preferences of any wholly-unissued series of Preferred Stock and the
number of shares constituting any such series and the designation thereof,
or any of them.
|
(c)
|
The
Board of Directors is hereby authorized to increase or decrease the number
of shares of any series subsequent to the issue of shares of that series,
but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution originally
fixing the number of shares of such
series.
|
|
(d)
|
The
Board of Directors is hereby authorized to alter or amend the dividend
rights, dividend rate, conversion rights, voting rights, rights and terms
of redemption (including sinking fund provisions) the redemption price or
prices, and the liquidation preferences of any issued and outstanding
series of Preferred Stock, subject to any required approval of the holders
thereof.
|
4.3
|
Common
Stock. Each holder of Common Stock shall be entitled to
one vote for each share of Common Stock held of record by such holder on
all matters on which stockholders generally are entitled to vote; provided, however, that
except as otherwise required by law, holders of Common Stock shall not be
entitled to vote on any amendment to this Certificate of Incorporation
(including any Certificate of Designations relating to any series of
Preferred Stock) that relates solely to the terms of one or more
outstanding series of Preferred Stock if the holders of that series are
entitled, either separately or together with the holders of one or more
other series to vote thereon pursuant to this Certificate of Incorporation
(including any Certificate of Designations relating to any series of
Preferred Stock) or pursuant to the Delaware General Corporation
Law.
|
5.1
|
Powers of
Directors. The business and affairs of the Corporation
shall be managed by, or under the direction of, the Board of
Directors. In addition to the powers and authority expressly
conferred upon them by statute or by this Certificate of Incorporation or
the Bylaws of the Corporation, the directors are hereby empowered to
exercise all such powers and to do all such acts and things as are not by
statute or by this Certificate of Incorporation to be exercised or done by
the stockholders of the
Corporation.
|
5.2
|
Written
Ballot. The directors of the Corporation need not be
elected by written ballot unless the Bylaws so
provide.
|
5.3
|
Stockholders Must Meet to
Act. Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual
or special meeting of stockholders of the Corporation and may not be
effected by any written consent by such
stockholders.
|
5.4
|
Special Meetings of
Stockholders. Special meetings of stockholders of the
Corporation may be called only by the Board of
Directors.
|
6.1
|
Number of
Directors. The number of directors of the Corporation
which shall constitute the entire Board of Directors shall be such number
as is initially fixed by the Incorporator and thereafter as fixed from
time to time exclusively by the Board of
Directors.
|
6.2
|
Classification of
Directors. At the first annual meeting of stockholders
of the Corporation, the directors shall be divided into three classes as
nearly equal in number as reasonably possible, with the initial term of
office of directors of the first class to expire at the second annual
meeting of stockholders of the Corporation, the initial term of office of
directors of the second class to expire at the third annual meeting of
stockholders of the Corporation, and the initial term of office of
directors of the third class to expire at the fourth annual meeting of
stockholders of the Corporation. At each annual meeting of
stockholders following such initial classification and election, directors
shall be chosen for a full term of three years to succeed those directors
whose terms expire. All directors shall hold office until the
expiration of their terms and until their successors are elected and
qualified, except in the case of death, resignation or removal of a
director.
|
6.3
|
Filling Vacancies on the
Board. Subject to the rights of the holders of any
outstanding series of Preferred Stock, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, removal from office, disqualification or other cause may be
filled only by a majority vote of the directors then in office, although
less than a quorum. Directors so chosen shall hold office for a
term expiring at the next annual meeting of stockholders at which
directors are to be elected. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of
any incumbent director.
|
6.4
|
Removal of
Directors. Subject to the rights of the holders of any
outstanding series of Preferred Stock, any director or the entire Board of
Directors may be removed from office at any time, but only for cause and
only by the affirmative vote of the holders of a majority of the combined
voting power of the then outstanding shares of capital stock of all
classes and series of the Corporation entitled to vote generally in the
election of directors, voting together as a single
class.
|
7.1
|
Power to Amend
Bylaws.
|
(a)
|
The
Board of Directors is expressly empowered to adopt, amend or repeal any or
all of the Bylaws of the Corporation. Any adoption, amendment
or repeal of the Bylaws of the Corporation by the Board of Directors shall
require the approval of a majority of the Whole Board. The term
"Whole Board" shall mean the total number of authorized directors whether
or not there exists any vacancy in previously authorized
directorships.
|
|
(b)
|
The
stockholders shall also have the power to adopt, amend or repeal the
Bylaws of the Corporation. In addition to any vote of the
holders of any class or series of stock of the Corporation required by law
or by this Certificate of Incorporation, the affirmative vote of the
holders of a majority of the combined voting power of the then outstanding
shares of capital stock of all classes and series of the Corporation
entitled to vote generally in the election of directors, voting together
as a single class shall be required to adopt, amend or repeal any
provisions of the Bylaws of the
Corporation.
|
8.1
|
Elimination of Certain
Liability of Directors. A director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of his or her fiduciary duty as a director,
except for liability —
|
(a)
|
For
any breach of the director's duty of loyalty to the Corporation or its
stockholders;
|
(b)
|
For
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of
law;
|
(c)
|
Under
Section 174 of the Delaware General Corporation Law;
or
|
(d)
|
For
any transaction from which the director derived an improper personal
benefit.
|