nndef14a041609.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE
14A
(Rule
14a-10)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities
Exchange Act of
1934 (Amendment No. __)
Filed by the
Registrant x
Filed by a Party other
than the Registrant o
Check
the appropriate box:
o Preliminary Proxy
Statement
o Confidential, for
use of the Commission only (as permitted by Rule
14a-6(e)(2))
x Definitive Proxy
Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to Rule 14a-12
NN,
INC.
(Name of Registrant as Specified in Its
Charter)
Not
Applicable
(Name of Person(s) Filing Proxy Statement, if
Other Than the Registrant)
Payment of Filing Fee (Check the appropriate
box):
x No fee
required.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to
which transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value
of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of
transaction:
(5) Total fee paid:
o Fee paid
previously with preliminary materials:
o Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by Registration Statement number, or the Form or
Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement
no.:
(3) Filing party:
(4) Date filed:
|
NN,
Inc. |
|
|
|
Corporate
Office |
|
www.nnbr.com |
|
2000
Waters Edge Drive • |
Building C,
Suite 12 • |
Johnson City,
TN 37604 |
|
|
423-743-9151
|
fax
423-743-2670 |
|
April 20,
2009
Dear
Shareholder:
You are
cordially invited to attend the 2009 Annual Meeting of NN, Inc., which will be
held on May 21, 2009, at 10:00 a.m., local time, at the Renaissance Suites
Charlotte Hotel, 2800 Coliseum Centre Drive, Charlotte, North Carolina
28217.
The
business to be conducted at the Annual Meeting is described in the attached
Notice of Meeting and Proxy Statement. You are urged to read the
Proxy Statement carefully before completing the enclosed proxy
card.
To assure
your representation at the meeting, please mark, date and sign the proxy card
and return it in the enclosed envelope at your earliest convenience, whether or
not you plan to attend the meeting. If you attend the Annual Meeting,
you may revoke your proxy and vote in person if you so
desire. Management will not conduct a formal presentation at this
year’s meeting.
Sincerely,
/s/Roderick
R. Baty
Roderick R. Baty
Chairman
and Chief Executive Officer
NN,
Inc.
2000
Waters Edge Drive, Building C, Suite 12
Johnson
City, TN 37604
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
Notice is
hereby given that the Annual Meeting of Shareholders of NN, Inc., a Delaware
corporation, will be held on May 21, 2009, at 10:00 a.m., local time, at
Renaissance Suites Charlotte Hotel, 2800 Coliseum Centre Drive, Charlotte, North
Carolina 28217, for the following purposes:
(1)
|
To
elect two Class II directors, to serve for a term of three
years;
|
(2)
|
To
ratify the selection of PricewaterhouseCoopers LLP as the Company’s
registered independent public accounting firm for the fiscal year ending
December 31, 2009; and
|
(3)
|
To
conduct such other business as properly may come before the
meeting. |
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THESE PROPOSALS.
Details
regarding these matters are contained in the accompanying Proxy
Statement.
Holders
of record of Common Stock at the close of business on March 25, 2009, are
entitled to notice of and to vote at the Annual Meeting.
Please
mark, date and sign the enclosed proxy card and return it in the envelope
provided. You may revoke your proxy at any time before the votes are
cast at the Annual Meeting in accordance with the instructions given in the
accompanying Proxy Statement.
By Order
of the Board of Directors,
/s/William C. Kelly,
Jr.
William
C. Kelly, Jr.
Vice
President, Secretary, and Chief Administrative Officer
Johnson
City, Tennessee
April 20,
2009
NN,
INC.
PROXY
STATEMENT
FOR
2009
ANNUAL MEETING OF SHAREHOLDERS
Proxies are being solicited by the
board of directors of NN, Inc. (the "Company"), in connection with
the annual meeting of shareholders to be held on May 21, 2009 at the Renaissance Charlotte Suites Hotel,
2800 Coliseum Centre Drive, Charlotte, North Carolina 28217 (the "Annual
Meeting"), for the purpose of considering and acting upon the matters set forth
in the foregoing Notice of Annual Meeting of Shareholders (the
"Notice"). Shareholders of record of the Company's common stock, par
value $0.01 per share ("Common Stock"), as of the close of business on March 25,
2009, will be entitled to vote at the meeting. On March 25, 2009 (the
"Record Date"), 16,267,924 shares of Common Stock were issued and
outstanding.
The entire cost of this proxy
solicitation is being paid by the Company. In addition to
solicitation by mail, officers and employees of the Company, without additional
remuneration, may solicit proxies by telephone, facsimile transmission or
personal contact. Brokerage houses, banks, nominees, fiduciaries and
other custodians will be requested to forward soliciting material to the
beneficial owners of shares held by them of record and will be reimbursed by the
Company for their expenses in so doing.
The mailing address of the Company's
executive office is 2000 Waters Edge Drive, Building C, Suite 12, Johnson City,
Tennessee 37604. This Proxy Statement and the form of proxy were mailed to
shareholders on or about April 20, 2009.
Voting;
Quorum; Proxies
Each share of Common Stock outstanding
on the Record Date is entitled to one vote on each matter submitted to a vote of
shareholders at the Annual Meeting. A quorum for the conduct of
business is established when the holders of at least a majority of the
outstanding shares of Common Stock entitled to vote in the election of directors
is present at the meeting or is represented by proxy. Representatives
of the Company will serve as inspectors of election for the Annual
Meeting.
Shares represented by a properly
executed proxy will be voted at the Annual Meeting in the manner
specified. In the absence of specific instructions, shares
represented by a properly executed proxy will be voted for each of the nominees
for election to the board of directors named herein and for the proposal to
ratify the selection of PricewaterhouseCoopers LLP to serve as the Company's
registered independent public accounting firm for 2009.
The board of directors does not now
intend to bring before the Annual Meeting any matters other than those disclosed
in the Notice, and it is not aware of any business that any other persons intend
to bring before the Annual Meeting. Should any such matter requiring
a vote of the shareholders arise, the enclosed form of proxy confers upon the
persons named therein the discretionary authority to vote the shares represented
by the proxy as they deem appropriate.
A proxy may be revoked at any time
before it is exercised by delivery to the Secretary of the Company of a written
revocation or a subsequently dated proxy and will be deemed revoked if the
shareholder votes in person at the Annual Meeting.
Required
Vote
Proposal
I: Election of
Directors. Directors are elected by a plurality of the votes
cast in person or by proxy. Abstentions and broker non-votes will not
be taken into account in determining the outcome of the election.
Proposal
II: Ratification of Registered
Independent Public Accounting Firm. To be approved, this
matter must receive the affirmative vote of the majority of the shares present
in person or by proxy and entitled to vote on the matter. Abstentions
will have the effect of “no” votes on this matter. A broker non-vote
will not be considered present and will not be entitled to vote on non-routine
items and will have no impact on the vote for this proposal.
Submission
of Shareholder Proposals
Any shareholder proposal intended to be
presented at next year's Annual Meeting must be received by the Company at its
executive offices not later than December 15, 2009 in order to be considered for
inclusion in the Company's proxy statement and form of proxy for such
meeting. These proposals should be sent to NN, Inc., Attention:
Secretary, 2000 Waters Edge Drive, Building C, Suite 12, Johnson City, Tennessee
37604. Proposals of shareholders not intended for inclusion in the
Company’s 2010 proxy statement must be received by the Company in writing no
later than February 28, 2010 in order to preclude the Company’s use of its
discretionary proxy voting authority to vote on the proposal or nominee if the
proponent is present at the 2010 annual meeting.
PROPOSAL
I
Election
of Directors
The Company's Certificate of
Incorporation provides for the division of the board of directors into three
classes: Class I, Class II and Class III. Only one class of directors
is elected at each annual meeting. Each director so elected serves
for a three-year term and until his or her successor is elected and qualified,
subject to such director's earlier death, resignation or removal.
Nominees
Two Class II directors will be elected
to the board of directors at the Annual Meeting. The Company has
nominated for election Roderick R. Baty and Robert M. Aiken, Jr., each a current
director of the Company. The nominees have both indicated a
willingness to continue to serve as directors if elected, but if either of them
should decline or be unable to serve, the persons named as proxies intend to
vote all shares in favor of the election of such other persons who may be
nominated as replacements by the board of directors.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” THIS PROPOSAL.
PROPOSAL
II
Ratification
of Selection of Registered Independent Public Accounting Firm
The firm of PricewaterhouseCoopers LLP
has been selected by the Audit Committee of the board of directors as the
Company's registered independent public accounting firm for
2009. Although it is not required to do so, the Board has determined
that it is desirable to seek shareholders' ratification of the selection of
PricewaterhouseCoopers LLP. If the shareholders should not ratify the
appointment of PricewaterhouseCoopers LLP, the Audit Committee will reconsider
the appointment.
A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting and
will have an opportunity to make a statement, if he or she so desires, and will
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” THIS PROPOSAL.
Information
about the Directors
The board of directors consists of 6
directors. The board has determined that each of the directors, with
the exception of Mr. Baty, qualifies as “independent” as defined by the Nasdaq
rules. In making this determination, the board has concluded that
none of these members has a relationship which, in the opinion of the board,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
The following table sets forth the
names of each current director (including the nominees for election), their age,
their years of service as a director, the year in which their current term
expires and their current positions with the Company. The table is
followed by a more detailed biographical description for each
director.
Name
|
Age
|
Director
Since
|
Term
Expires
|
Positions
with the Company
|
|
|
|
|
|
Roderick
R. Baty
|
55
|
1995
|
2009
|
Chairman
of the Board, Chief Executive Officer, President and Director – nominee
for re-election
|
Robert
M. Aiken, Jr.
|
66
|
2003
|
2009
|
Director
– nominee for re-election
|
Richard
G. Fanelli
|
70
|
2005
|
2010
|
Director
|
Michael
E. Werner
|
64
|
1995
|
2010
|
Director
|
G.
Ronald Morris
|
72
|
1994
|
2011
|
Director
|
Steven
T. Warshaw
|
60
|
1997
|
2011
|
Director
|
Roderick R. Baty became President and Chief Executive Officer in July 1997 and
was elected Chairman of the Board in September 2001. He joined the
Company in July 1995 as Vice President and Chief Financial Officer and was
elected to the Board of Directors to fill a vacant seat in August
1995. Prior to joining the Company, Mr. Baty served as President and
Chief Operating Officer of Hoover Precision Products from 1990 to January 1995
and as Vice President and General Manager of Hoover Group from 1985 to
1990.
Robert M. Aiken, Jr. retired in
December 2003 as President of RMA Consulting, Inc., a management consulting firm
he founded in 1998. Prior to this position, Mr. Aiken served as
Executive Vice President and Chief Financial Officer of Sunoco, an independent
refiner and marketer of petroleum and petrochemical products. Mr.
Aiken held this position from 1996 and served as Senior Vice President and Chief
Financial Officer from 1990 to 1996. From 1970 to 1990 Mr. Aiken held
various financial positions within Sunoco, Inc. Prior to Mr. Aiken
joining Sunoco, he held positions with Coopers and Lybrand and earlier with
Hershey Foods.
Richard G. Fanelli retired in 2000 from
Enthone-OMI, Inc., where he spent the majority of his
career. Enthone-OMI, Inc. is a global specialty chemical company that
develops, produces and markets high performance coatings for metals and plastics
for the electronics, automotive, aerospace and telecommunications
industries. Mr. Fanelli served as President and Chief Executive
Officer of Enthone-OMI, Inc. from 1992 to his retirement in
2000. Prior to this position, Mr. Fanelli served as President of
Enthone-OMI – Europe from 1991 to 1992. From 1989 to 1991, he served
as Executive Vice President and Chief Operating Officer of Enthone-OMI– North
America. Prior to this position, Mr. Fanelli held a variety of
positions within Enthone-OMI, Inc. including positions in sales and marketing
and general management.
Michael E. Werner is a management
consultant with Werner & Associates, a management consulting firm that Mr.
Werner co-founded in 1982 specializing in manufacturing
companies. During the five years prior to starting his business, Mr.
Werner served as Director of Strategic Planning and Business Development for the
Uniroyal Chemical Company. He also has held positions with the New
York Central Company, Western Electric Company and the Continental
Group.
G. Ronald Morris retired during 1999
from Western Industries, Inc., a contract manufacturer of metal and plastic
products. Mr. Morris had served as President, Chief Executive Officer
and director of Western Industries, Inc. since July 1991. From 1989
to 1991, Mr. Morris served as Chairman of the Board of Integrated Technologies,
Inc., a manufacturer of computer software, and from 1988 to 1989, he served as
Vice Chairman of Rexnord Corporation, a manufacturer of mechanical power
transmission components and related products, including anti-friction
bearings. From 1982 to 1988, Mr. Morris served as President and Chief
Executive Officer of PT Components, Inc., a manufacturer of mechanical power
transmission components and related products that was acquired by Rexnord
Corporation in 1988.
Steven T. Warshaw retired during 2005
from M Cubed Technologies, a developer and manufacturer of advanced composite
materials and ultra-precise electronic components and modules. Mr.
Warshaw had served as President and Chief Executive Officer of M Cubed
Technologies since July 2002. Prior to this position he served as
President of Hexcel Schwebel, a global producer of advanced structural
materials, from April 2000 to November 2001. Mr. Warshaw served from
February 1999 as Senior Vice President of Photronics, Inc., a global supplier to
the semiconductor industry. From 1996 to 1999, he served as President
of Olin Microelectronic Materials, a company supplying technologically advanced
chemicals, products, and services to semiconductor manufacturers. Mr.
Warshaw serves on the board of directors of Park Electrochemical Corp.,
a publicly held company.
Compensation
of Directors
Directors who are not employees of the
Company are paid an annual retainer of $25,000 and a fee of $1,000 for each
board meeting attended, $750 for each committee meeting attended and $500 for
each teleconference meeting attended. Additionally, committee chairs
are paid an annual retainer of $3,250. Directors who are employees of
the Company do not receive any compensation for their service as
directors. Directors may elect to defer some or all of the
compensation they are provided by the Company. Additionally, the
Compensation Committee has from time to time granted options to the non-employee
directors. The Company also reimburses all directors for
out-of-pocket expenses incurred in attending board and committee
meetings. Director compensation is reviewed and approved by the
Compensation Committee.
The table below provides information
about the compensation our directors received during 2008.
Director
Compensation Table For 2008
Name
|
Fees
Earned
or
Paid
in
Cash
($)(1)
|
Stock
Awards
($)
|
Option
Awards
($)(2)
|
Non-equity
Incentive
Plan
Compensa-
tion
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other Compen-
sation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
Robert
M. Aiken, Jr.
|
42,500 |
-- |
21,840 |
-- |
-- |
-- |
64,340 |
Richard
G. Fanelli
|
37,750 |
-- |
21,840 |
-- |
(32,539) |
-- |
27,051 |
G.
Ronald Morris
|
40,000 |
-- |
21,840 |
-- |
(195,786) |
-- |
(133,946) |
Steven
T. Warshaw
|
45,500 |
-- |
21,840 |
-- |
-- |
-- |
67,340 |
Michael
E. Werner
|
41,000 |
-- |
21,840 |
-- |
(13,982) |
-- |
48,858 |
(1)
|
Due
to the economic conditions the Company experienced in the fourth quarter
of 2008 and expects to continue throughout 2009, the Company’s board of
directors have voluntarily elected to reduce the annual retainer and
meeting fees by 20% starting in
2009.
|
(2)
|
Amounts
represent the market value, as calculated under the provisions of FAS
123(R), of 7,500 shares of stock options awarded Messrs. Aiken, Fanelli,
Morris, Warshaw and Werner. On March 6, 2008, the Company
awarded 160,000 options to purchase the Company’s stock to five
non-employee directors and twelve executive officers and other key
employees. The market value of these shares on the date of
grant was $9.36 per share. The shares granted to non-employee
directors vest 100% on the first anniversary of the date of grant and are
exercisable at the closing market price of the date of
grant. The aggregate amount of vested stock options held
by Messrs. Aiken, Fanelli, Morris, Warshaw and Werner on December 31, 2008
was 45,000, 15,000, 63,000, 58,000 and 63,000,
respectively.
|
The following table sets forth
information with respect to nonqualified deferred compensation during
2008.
Nonqualified Deferred Compensation For
2008
Name
|
Director
Contributions
in
Last FY ($)
|
Registrant
Contributions
in
Last FY ($)
|
Aggregate
Earnings
in
Last
FY ($)
|
Aggregate
Withdrawals/Distri-
butions
($)
|
Aggregate
Balance
at Last
FYE
($)
|
|
|
|
|
|
|
Robert
M. Aiken, Jr.
|
--
|
--
|
--
|
--
|
--
|
Richard
G. Fanelli
|
37,421
|
--
|
(32,539)
|
--
|
50,377
|
G.
Ronald Morris
|
39,670
|
--
|
(195,786)
|
--
|
237,123
|
Steven
T. Warshaw
|
--
|
--
|
--
|
--
|
--
|
Michael
E. Werner
|
--
|
--
|
(13,982)
|
--
|
310,219
|
Committees
of the Board
Audit
Committee. The Audit Committee consists of Robert M. Aiken,
Jr., G. Ronald Morris and Steven T. Warshaw. All members of the Audit
Committee are independent as defined in the Nasdaq rules and Mr. Aiken has been
designated as the “audit committee financial expert” as defined by Item 407(d)
of Regulation S-K. Among other matters described in its charter, the
Audit Committee is responsible for engaging the registered independent public
accounting firm to conduct the annual audit of the books and accounts of the
Company and for reviewing the effectiveness of the internal auditing, accounting
and financial controls of the Company with the registered independent public
accounting firm and the Company's internal financial and accounting
staff. The Audit Committee originally adopted a written charter in
June 2000. This charter, which has been amended, is subject to review
and reassessment at least annually. This revised charter is included
on the Company's website at www.nnbr.com. The
Audit Committee met seven times in 2008.
Compensation
Committee. The Compensation Committee consists of Steven T.
Warshaw, Michael E Werner and Richard G. Fanelli. All members of the
Compensation Committee are independent as defined by Nasdaq
rules. The Compensation Committee annually reviews and approves
corporate goals and objectives relative to the Chief Executive Officer
evaluation, compensation and performance. Additionally, the
Compensation Committee is responsible for reviewing and approving the Company's
executive compensation policies and practices and supervising the administration
of the Company's employee benefit plans, including the NN, Inc. Incentive
Plan. In April 2003, the Compensation Committee presented to the
board and the board approved a written charter. This charter, which
has been amended, is subject to review and reassessment at least
annually. This revised charter is included on the Company's website
at www.nnbr.com. The
functions of the Compensation Committee are discussed in further detail in the
section entitled "Report of the Compensation Committee" herein. The
Compensation Committee met four times in 2008.
Governance Committee. The
Governance Committee was formed in 2002. The Committee consists of
Michael E. Werner, G. Ronald Morris and Richard G. Fanelli. All
members of the Governance Committee are independent as defined by Nasdaq
rules.
As provided in its charter, the
Governance Committee is responsible for reviewing and recommending qualified
candidates for membership on the board of directors. The Committee seeks input
from the Chairman of the board, other board members, and professional search
firms, if applicable. The Committee will also consider and evaluate any
qualified candidates recommended by shareholders. In accordance with
the board's governance principles, the Committee seeks to establish a board that
will bring to the Company a broad range of experience, knowledge and
professional judgment. The Committee believes that the board should have
collective competency, knowledge and experience with respect to corporate
governance, business, finance and accounting, economics, industry knowledge,
manufacturing, technology, legal and government affairs, and international
operations, among other things.
A candidate's competencies, experience
and knowledge should enable him or her to contribute significantly to the
governance of a complex, multi-million dollar business enterprise. The candidate
should be independent in judgment and not represent the interests of particular
constituencies. The Committee will review a candidate's
qualifications and any potential conflicts they may have with the Company's
interests. In evaluating director nominees, including candidates
submitted by shareholders, the Governance Committee will consider the
candidate's experience, integrity, ability to make independent analytical
inquiries, understanding of the Company's business environment and willingness
to devote adequate time to board duties. The Governance Committee
will also consider whether a candidate meets the definition of "independent
director" under Nasdaq rules.
Shareholders who wish to recommend
director candidates for the 2010 Annual Meeting of Shareholders should notify
the Secretary in writing at NN, Inc., 2000 Waters Edge Drive, Building C, Suite
12, Johnson City, Tennessee 37604. This notification must be received
by the Company by December 15, 2009 and must provide information about the
nominee's qualifications for board membership. This requirement does
not apply to the deadline for submitting shareholder proposals for inclusion in
the Proxy Statement (see "Submission of Shareholder Proposals" on page 2), nor
does it apply to questions a shareholder may want to ask at the Annual
Meeting. The Governance Committee Charter lists the qualifications
against which a nominee will be judged. A copy of the Charter can be
obtained by writing to the Secretary at the address set forth
above. Alternatively, a copy of the Charter is available on the
Company's website, www.nnbr.com. The
Committee will evaluate any director candidate nominated by shareholders
according to the criteria discussed above and, based on the results of that
evaluation, will determine whether to include the candidate in its recommended
slate of director nominees in the Proxy Statement.
The Company retains discretion to vote
proxies it receives with respect to director nominations or any other business
proposals received after December 15, 2009. The Company retains
discretion to vote proxies it receives with respect to such proposals received
prior to December 15, 2009 provided (a) the Company includes in its proxy
statement advice on the nature of the proposal and how it intends to exercise
its voting discretion, and (b) the proponent does not issue its own proxy
statement.
The Company has not paid any third
party a fee to assist in the process of identifying or evaluating director
candidates. No shareholder or group of shareholders who beneficially
owned more than 5% of the Common Stock for at least one year at the time of such
recommendation have recommended candidates for election to the board of
directors.
Additionally, the Governance Committee
is responsible for overseeing the process of providing information to the board,
developing corporate governance principles applicable to the Company and
oversight and annual evaluation of the board of directors. In October
2002, the Governance Committee adopted a statement of Principles of Corporate
Governance. In April 2003, the Governance Committee presented to the
board and the board approved a written charter. This charter, which has been
amended, is subject to review and reassessment at least
annually. This revised charter is included on the Company's website
at www.nnbr.com. The Governance
Committee met two times in 2008.
Attendance
at Board and Committee Meetings
The board of directors held twelve
meetings in 2008. All current directors attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number of
meetings held by all committees of the board on which they
served. While the Company does not have a policy requiring attendance
by members of the board of directors at the Annual Meeting, all of the current
directors attended the 2008 Annual Meeting.
Communicating
with the Board
Interested parties may contact the
board of directors by sending correspondence to the attention of the Secretary,
NN, Inc., 2000 Waters Edge Drive, Building C, Suite 12, Johnson City, Tennessee
37604. Any mail received by the Secretary with the exception of
improper commercial solicitations will be forwarded to the members of the board
of directors (or committee members, as appropriate) for their further action, if
necessary.
Beneficial
Ownership of Common Stock
Security
Ownership of Management
The following table shows, as of March
25, 2009, the beneficial ownership of Common Stock by each director and nominee,
each executive officer named in the Summary Compensation Table (the "Named
Executive Officers"), and all directors and executive officers as a group, in
each case as reported to the Company by such persons.
Name
and Address of
Beneficial
Owner (1)
|
Number
of Shares
Beneficially
Owned (2)
|
Percentage
Beneficially
Owned (2)
|
Roderick
R. Baty
|
278,695
|
(3)
|
1.7%
|
James
H. Dorton
|
37,000
|
(4)
|
*
|
Nicola
Trombetti
|
60,334
|
(5)
|
*
|
Frank
T. Gentry III
|
81,561
|
(6)
|
*
|
James
O. Anderson
|
27,666
|
(7)
|
*
|
Michael
E. Werner
|
76,287
|
(8)
|
*
|
G.
Ronald Morris
|
76,000
|
(9)
|
*
|
Steven
T. Warshaw
|
68,000
|
(10)
|
*
|
Robert
M. Aiken, Jr.
|
56,000
|
(11)
|
*
|
Richard
G. Fanelli
|
25,000
|
(12)
|
*
|
All
directors and executive officers as a group (13 persons)
|
891,485
|
|
5.5%
|
_______________________________
* Less than
1%
(1)
|
The
address of the beneficial owner is c/o NN, Inc., 2000 Waters Edge Drive,
Building C, Suite 12, Johnson City, Tennessee
37604.
|
(2)
|
Computed
in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as
amended. Includes shares of Common Stock subject to options
exercisable within 60 days of March 25,
2009.
|
(3)
|
Includes
261,300 shares of Common Stock subject to presently exercisable
options.
|
(4)
|
Includes
34,000 shares of Common Stock subject to presently exercisable
options.
|
(5)
|
Includes
57,000 shares of Common Stock subject to presently exercisable
options.
|
(6)
|
Includes
50,000 shares of Common Stock subject to presently exercisable
options.
|
(7)
|
Includes
24,666 shares of Common Stock subject to presently exercisable
options.
|
(8)
|
Includes
71,000 shares of Common Stock subject to presently exercisable options and
5,287 shares of Common stock owned by Mr. Werner’s
spouse.
|
(9)
|
Includes
71,000 shares of Common Stock subject to presently exercisable
options.
|
(10)
|
Includes
66,000 shares of Common Stock subject to presently exercisable
options.
|
(11)
|
Includes
53,000 shares of Common Stock subject to presently exercisable
options.
|
(12)
|
Includes
23,000 shares of Common Stock subject to presently exercisable
options.
|
Security
Ownership of Certain Beneficial Owners
The following table sets forth the
number of shares of the Company's Common Stock beneficially owned by the only
parties known to the Company's management to own more than 5% of the Company's
Common Stock, based on 16,267,924 shares of Common Stock outstanding on March
25, 2009.
Name
and Address of
Beneficial
Owner
|
Number
of Shares
Beneficially
Owned
|
Percentage
Beneficially
Owned
|
Wells
Capital Management Incorporated
525
Market Street
10th
Floor
San
Francisco, CA 94104
|
1,357,720
|
(1)
|
8.4%
|
Dimensional
Fund Advisors LP
1299
Ocean Avenue
Santa
Monica, CA 90401
|
1,327,816
|
(2)
|
8.2%
|
Royce
& Associates, LLC
1414
Avenue of the Americas
New
York, NY 10019
|
1,228,308
|
(3)
|
7.6%
|
Barclays
Global Investors, N.A.
400
Howard Street
San
Francisco, CA 94105
|
1,203,224
|
(4)
|
7.4%
|
|
|
|
|
_______________________________
(1)
|
Amount
based on Schedule 13G filed on January 21, 2009 with the Securities and
Exchange Commission by Wells Fargo & Company, on behalf of Wells
Capital Management Incorporated, Wells Fargo Funds Management, LLC and
Wells Fargo Bank, National Association, its
subsidiaries.
|
(2)
|
Amount
based on Schedule 13G filed on February 9, 2009 with the Securities and
Exchange Commission by Dimensional Fund Advisors
LP.
|
(3)
|
Amount
based on Schedule 13G filed on January 27, 2009 with the Securities and
Exchange Commission by Royce & Associates,
LLC.
|
(4)
|
Amount
based on Schedule 13G filed on February 5, 2009 with the Securities and
Exchange Commission by Barclays Global Investors,
N.A.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities
Exchange Act of 1934, as amended, each of the Company's directors and executive
officers, and any beneficial owner of more than 10% of the Common Stock, is
required to file with the SEC initial reports of beneficial ownership of the
Common Stock and reports of changes in beneficial ownership of the Common
Stock. These persons also are required by SEC regulations to furnish
the Company with copies of all filed reports.
Based solely on its review of the
copies of these reports furnished to the Company for the year ended December 31,
2008, the Company is not aware of any instance of noncompliance with Section
16(a) by its directors, executive officers or owners of more than 10% of the
Common Stock.
Compensation
Discussion and Analysis
Compensation
Principles
The goal of the Company is to structure
its compensation arrangements for executive officers in a manner that will
promote the Company's profitability and enhance shareholder value. In
designing its compensation arrangements to achieve this goal, the Company is
guided by the following objectives:
·
|
attracting
and retaining qualified and dedicated executives who are essential to the
long-term success of the Company;
|
·
|
providing
compensation packages that are competitive with the compensation
arrangements offered by comparable companies, including the Company's
competitors;
|
·
|
tying
a significant portion of an executive officer's compensation to the
Company's and the individual's performance;
and
|
·
|
directly
aligning the interests of management with the interests of the
shareholders through stock-based compensation
arrangements.
|
In 2008, the components of the
Company's executive compensation arrangements consisted of salary, cash bonus,
stock option award opportunities, restricted stock opportunities and long-term
incentive plan opportunities pursuant to the Incentive Plan.
Executive
Officer Compensation
The Company believes the interests of
the Company and its shareholders are best served by developing and maintaining
compensation policies that are consistent and competitive with peer group
companies. The Company, therefore, periodically retains the services
of an outside compensation consulting firm to conduct peer group benchmarking of
public industrial companies of similar size, manufacturing capabilities and
market segments and utilizes this information to aid in establishing a
competitive compensation program for the Company. The following
criteria are utilized as a basis for this program: performance (revenue growth,
earnings per share growth, return on net assets, return on equity and total
shareholder return), executive pay, annual incentive/bonus, benefits, stock
option award opportunities and long-term incentive plan
opportunities. The most recent benchmarking study conducted by
Mercer, an outside consulting firm, in August 2007 included the following
companies: Central Steel and Wire Co., Astec Industries, Inc., Cascade
Corporation, Esco Technologies, Keystone Consolidated Industries, Haynes
International, Kaydon, WHX Corporation, Northwest Pipe Company, Claymont Steel
Holdings, Hardinge Inc., RBC Bearings, Gorman-Rupp Company, Webco Industries and
Universal Stainless & Alloy Products. Additionally, the study
utilized relevant published compensation surveys to develop total market data
for executive management positions within the Company.
The current executive compensation
structure includes a formal salary grade structure that establishes five levels
of executive compensation within the Company. In addition, a formal
annual incentive bonus plan includes threshold, target and maximum awards based
upon pre-established financial performance criteria.
Salary
The salary levels for the
Company’s executive officers and managers are reviewed and determined annually
by the Compensation Committee. Salaries are established and adjusted
based upon three factors: individual performance, financial performance of the
Company and peer group and total market data established by the compensation
studies performed by an outside compensation consulting firm. It is
the policy of the Company to compensate executives in a targeted range of
approximately the 50th
percentile of market of total direct compensation. Direct
compensation is defined as base salary, bonus, stock option award opportunities
and long-term incentive plan opportunities.
Annual
Bonus
Annual bonus payments are made
contingent on achieving certain goals and objectives as defined in a formalized
plan. At the beginning of each fiscal year, the Compensation
Committee establishes net income goals for each operating business unit and the
consolidated results of the Company based upon the Board of Director approved
annual business plan. The Committee then sets certain threshold,
target and maximum bonus payment percentages for each executive officer
dependent upon the executive’s salary level and base
compensation. The Compensation Committee, at its discretion, may make
adjustments to the net income goals and set additional strategic goals based on
certain factors as it feels appropriate and may grant bonuses using other
criteria at its sole discretion.
For the fiscal years 2007 and 2008, the
Company’s formal bonus plan established consolidated threshold net income at
$16.0 million and $13.7 million, respectively, consolidated target net income at
$17.3 million and $15.2 million, respectively, and consolidated maximum net
income at $22.4 million and $18.2 million, respectively. Beginning
for fiscal year 2008, the Company’s formal bonus plan included working capital
improvement goals. Improvements in accounts receivable and inventory
levels of consolidated threshold reductions of $4.0 million and $2.0 million,
respectively, consolidated target reductions of $4.4 million and $2.2 million,
respectively, and consolidated maximum reductions of $5.4 million and $2.6
million, respectively. Net income goals and working capital
improvement goals accounted for 80% and 20% of the total bonus opportunity
respectively.
The bonuses paid to Named Executive
Officers for 2007 and 2008 are set forth in the Summary Compensation
Table.
Incentive
Plan
The Incentive Plan which was adopted by
the board of directors on April 8, 2005 and approved by the shareholders on May
18, 2005 reserves 1.0 million shares of Common Stock for the issuance of options
and stock appreciation rights and 300,000 shares of restricted stock, restricted
stock units, performance shares and stock awards to directors, executive
officers and other key employees. This Incentive Plan replaced the
NN, Inc. Stock Incentive Plan which was adopted on March 2, 1994 and expired on
March 2, 2004. Stock options granted under the former plan prior to
its expiration are exercisable upon vesting for a period of ten years after the
date of grant.
Stock options and restricted share
grants to the Company’s executive officers and managers are generally reviewed
and determined annually by the Compensation Committee. With respect
to options and restricted shares awarded, the Committee utilizes a structure
based upon the following: recommendations from the independent
compensation review, Mr. Baty’s recommendations (other than for himself) and
rewards to officers and other key employees for superior performance and to
provide financial incentives for officers and employees to continue to perform
in a superior manner. The Company awarded 160,000 options to fifteen
directors, executive officers and other key employees during 2008.
Compensation
of the Chief Executive Officer
The Company's decisions regarding
compensation of its Chief Executive Officer are guided by the same policies and
considerations that govern compensation of the Company's other executive
officers. Mr. Baty’s salary is established and adjusted based upon
three factors: individual performance, financial performance of the Company and
peer group and total market data established by compensation studies performed
by an outside compensation consulting firm. The Compensation
Committee reviews and evaluates Mr. Baty’s individual performance annually on
the basis of his actual performance in comparison to written financial and
strategic objectives established at the beginning of the year by Mr. Baty and
the Committee. The Compensation Committee also evaluates Mr. Baty
based upon the financial performance of the Company as compared to the Company’s
annual business plan and compares Mr. Baty’s compensation to the peer companies
at the 50th
percentile of market of total direct compensation. Direct
compensation is defined as base salary, bonus, stock option award opportunities
and long-term incentive plan opportunities. Additionally, on an
annual basis, Mr. Baty prepares a written succession plan that is reviewed by
the Compensation Committee. This plan includes a plan of succession
for Mr. Baty and the executive management of the Company.
Compliance
with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue
Code of 1986, as amended, precludes any public corporation from taking a
deduction for compensation in excess of $1 million paid to its chief executive
officer or any of its other executive officers. Certain
performance-based compensation, however, is exempt from the deduction
limit. No formal policy has been adopted by the Company with respect
to minimizing the risk that compensation paid to its executive officers will
exceed the deduction limit. No compensation paid to the executive
officers in 2008 exceeded the limit imposed by Section 162(m).
Executive
Compensation
The following table sets forth for the
year ended December 31, 2008 information concerning the compensation paid for
services rendered in all capacities by the Company to its Chief Executive
Officer and Chief Financial Officer and to each of the other three most highly
compensated executive officers of the Company whose annual salary and bonus in
2008 exceeded $100,000.
Summary
Compensation Table for 2008
Name
and Principal Position
|
Year
|
Salary
($)(1)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)(3)
|
Non-equity
Incentive
Plan
Compen-sation
($)(2)
|
Change
in Nonqualified
Deferred
Compensation Earnings
($)
|
All
Other
Compensation
($)(4)(5)(6)(7)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
Roderick
R. Baty
|
|
|
|
|
|
|
|
|
|
Chairman/Chief
|
2008
|
420,774
|
--
|
--
|
81,900
|
24,940
|
--
|
14,942
|
542,556
|
Executive
Officer
|
2007
|
430,080
|
--
|
--
|
114,188
|
--
|
--
|
16,490
|
560,758
|
|
|
|
|
|
|
|
|
|
|
James
H. Dorton
|
|
|
|
|
|
|
|
|
|
Vice
President -Chief
|
2008
|
250,006
|
--
|
--
|
32,760
|
10,550
|
--
|
14,327
|
307,643
|
Financial
Officer
|
2007
|
219,738
|
--
|
--
|
48,938
|
--
|
--
|
14,737
|
283,413
|
|
|
|
|
|
|
|
|
|
|
Nicola
Trombetti
|
|
|
|
|
|
|
|
|
|
Vice
President -
|
|
|
|
|
|
|
|
|
|
Managing Director,
|
2008
|
397,126
|
--
|
--
|
32,760
|
43,821
|
--
|
4,851
|
478,558
|
NN
Europe
|
2007
|
366,341
|
--
|
--
|
48,938
|
118,381
|
--
|
5,951
|
539,611
|
|
|
|
|
|
|
|
|
|
|
Frank
T. Gentry III
|
|
|
|
|
|
|
|
|
|
Vice
President –
|
|
|
|
|
|
|
|
|
|
General
Manager,
|
2008
|
218,800
|
--
|
--
|
32,760
|
90,640
|
--
|
14,209
|
356,409
|
U.S.
Ball & Roller Div.
|
2007
|
207,009
|
--
|
--
|
48,938
|
76,720
|
--
|
14,796
|
347,463
|
|
|
|
|
|
|
|
|
|
|
James
O. Anderson
|
|
|
|
|
|
|
|
|
|
Vice
President –
|
2008
|
215,000
|
--
|
--
|
32,760
|
8,600
|
--
|
12,585
|
268,945
|
Plastics
& Rubber Div.
|
2007
|
191,206
|
--
|
--
|
43,500
|
64,500
|
--
|
12,628
|
311,834
|
______________________________
(1)
|
Due
to the economic conditions the Company experienced in the fourth quarter
of 2008 and expects to continue throughout 2009, the Company’s executive
management has voluntarily elected to reduce their base
salaries. Mr. Baty’s base salary was reduced by 20% effective
November 17, 2008. Base salaries for Messrs. Dorton, Trombetti,
Gentry and Anderson were reduced by 15% effective February 9,
2009. Salaries for executive management will remain frozen at
these levels until economic conditions improve or until a time deemed
appropriate by the Company’s board of
directors.
|
(2)
|
Bonuses
that were earned in fiscal 2007 were paid during the second fiscal quarter
of 2008. Because of the current economic environment and the
resulting efforts of the Company to conserve cash during this time, the
payment of bonuses earned in fiscal 2008 have been deferred until economic
conditions improve or until a time deemed appropriate by the Company’s
board of directors. For 2008, with the exception of Mr. Gentry,
all earned bonuses for the above Named Executives relate to achievement of
established working capital objectives. Mr. Gentry achieved
both net income and working capital
objectives.
|
(3)
|
Amounts
represent the market value, as calculated under the provisions of FAS
123(R), of 30,000 shares of stock options awarded Mr. Baty and 12,000
shares each awarded Messrs. Dorton, Trombetti, Gentry and
Anderson. On March 6, 2008, the Company awarded 160,000 options
to purchase the Company’s stock to five non-employee directors and ten
executive officers and other key employees. The market value of
these shares on the date of grant was $9.36 per share. The
shares granted to officers and other key employees vest over a period of
three years beginning on the first anniversary of the date of grant and
are exercisable at the closing market price of the date of
grant. The shares granted to non-employee directors vest 100%
on the anniversary date of the grant and are exercisable at the closing
market price of the date of grant. The assumptions used to
calculate the value of these option awards are set forth under Note 9 of
the Notes to Consolidated Financial Statements included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008 filed with
the Commission on March 31, 2009.
|
(4)
|
Amounts
include $9,000 for a car allowance for each of Messrs. Baty, Dorton,
Gentry and Anderson.
|
(5)
|
Amounts
include $4,600, $4,600, $4,556 and $3,360 in Company matching
contributions under a “401(k)” savings plan for Messrs. Baty, Dorton,
Gentry and Anderson, respectively. This plan is open to
substantially all of the Company’s U.S. employees and officers who have
met certain service and age
requirements.
|
(6)
|
Amounts
include $1,342, $727, $653 and $225 in premiums paid by the Company for
supplemental life insurance for the benefit of Messrs. Baty, Dorton,
Gentry and Anderson, respectively.
|
(7)
|
Amounts
include $4,851 for a travel indemnity paid to Mr. Trombetti by the
Company.
|
The following table sets forth
information with respect to options granted during 2008 to the Named Executive
Officers.
Grants
of Plan-Based Awards For 2008
|
|
Estimated
Future payouts
Under
Non-Equity
Incentive
Plan Awards
|
Estimated
Future Payouts
Under
Equity Incentive Plan
Awards
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)(2)
|
All
Other
Option
Awards:
Number
of Securities Underlying Options (#)
|
Exercise
or
Base
Price
of Option Awards
($/sh)
|
Grant
Date
Fair
Value
($)
(1)
|
Name
|
Grant
Date
|
Thres-
hold
($)
|
Target
($)
|
Maxi-
mum
($)
|
Thres-
hold
($)
|
Target
($)
|
Maxi-
mum
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Baty
|
2008
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
30,000
|
9.36
|
81,900
|
Mr.
Dorton
|
2008
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
12,000
|
9.36
|
32,760
|
Mr.
Trombetti
|
2008
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
12,000
|
9.36
|
32,760
|
Mr.
Gentry
|
2008
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
12,000
|
9.36
|
32,760
|
Mr.
Anderson
|
2008
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
12,000
|
9.36
|
32,760
|
(1)
|
Amounts
represent the market value, as calculated under the provisions of FAS
123(R), of 30,000 shares, 12,000 shares, 12,000 shares, 12,000 shares and
12,000 shares of stock options awarded Messrs. Baty, Dorton, Trombetti,
Gentry and Anderson, respectively. On March 6, 2008, the
Company awarded 160,000 options to purchase the Company’s stock to five
non-employee directors and twelve executive officers and other key
employees. The market value of these shares on the date of
grant was $9.36 per share. The shares granted to officers and
other key employees vest over a period of three years beginning on the
first anniversary of the date of grant and are exercisable at the closing
market price of the date of grant.
|
(2)
|
On
November 23, 20008, the Company’s board of directors voted to terminate
the 2007 long-term incentive plan.
|
The
following table sets forth information with respect to outstanding equity awards
as of December 31, 2008.
Outstanding
Equity Awards at Fiscal Year-End 2008
|
Option
Rewards
|
Stock
Rewards
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable(1)
|
Number
of
Securities
Underlying
Unexercised
Options
(#) Unexercisable(1)
|
Equity
Incentive
Plan
Awards:
Number
of Securities Underlying Unexercised Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not Vested
(#)
|
Market
Value
of Shares or Units of
Stock
That
Have
Not Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
|
|
|
|
|
|
|
|
|
|
Mr.
Baty
|
66,300
|
--
|
--
|
7.63
|
10/10/2010
|
--
|
--
|
--
|
--
|
|
75,000
|
--
|
--
|
8.09
|
9/17/2011
|
--
|
--
|
--
|
--
|
|
40,000
|
--
|
--
|
12.62
|
3/1/2014
|
--
|
--
|
--
|
--
|
|
35,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
17,500
|
8,750
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
8,750
|
17,500
|
--
|
12.12
|
5/25/2017
|
--
|
--
|
--
|
--
|
|
--
|
30,000
|
--
|
9.36
|
3/6/2018
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Mr.
Dorton
|
15,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
7,500
|
3,750
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
3,750
|
7,500
|
--
|
12.12
|
5/25/2017
|
--
|
--
|
--
|
--
|
|
--
|
12,000
|
--
|
9.36
|
3/6/2018
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Mr.
Trombetti
|
10,000
|
--
|
--
|
10.67
|
5/28/2013
|
--
|
--
|
--
|
-
|
|
13,000
|
--
|
--
|
12.62
|
3/1/2014
|
--
|
--
|
--
|
--
|
|
15,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
7,500
|
3,750
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
3,750
|
7,500
|
--
|
12.12
|
5/25/2017
|
--
|
--
|
--
|
--
|
|
--
|
12,000
|
--
|
9.36
|
3/6/2018
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Mr.
Gentry
|
16,000
|
--
|
--
|
12.62
|
3/1/2014
|
--
|
--
|
--
|
--
|
|
15,000
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
7,500
|
3,750
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
3,750
|
7,500
|
--
|
12.12
|
5/25/2017
|
--
|
--
|
--
|
--
|
|
--
|
12,000
|
--
|
9.36
|
3/6/02018
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Mr.
Anderson
|
7,945
|
--
|
--
|
11.61
|
8/19/2015
|
--
|
--
|
--
|
--
|
|
4,000
|
3,000
|
--
|
11.50
|
8/14/2016
|
--
|
--
|
--
|
--
|
|
3,333
|
6,667
|
--
|
12.12
|
5/25/2017
|
--
|
--
|
--
|
--
|
|
--
|
12,000
|
--
|
9.36
|
3/6/2018
|
--
|
--
|
--
|
--
|
(1)
|
Stock
options vest by one-third on each anniversary date over a three-year
period beginning on the first anniversary date of
grant.
|
The
following table sets forth information with respect to option exercises and
stock vesting as of December 31, 2008.
Option
Exercises and Stock Vested During 2008
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of Shares
Acquired
on
Exercise
(#)
|
Value
Realized
on
Exercise ($)
|
Number
of
Shares
Acquired
on
Vesting (#)
|
Value
Realized on
Vesting
($)
|
|
|
|
|
|
Mr.
Baty
|
160,000
|
1,202,056
|
5,000
|
64,250
|
Mr.
Dorton
|
--
|
--
|
1,667
|
21,434
|
Mr.
Trombetti
|
15,000
|
103,950
|
1,667
|
21,443
|
Mr.
Gentry
|
--
|
--
|
1,667
|
21,434
|
Mr.
Anderson
|
1,055
|
6,060
|
1,000
|
12,850
|
|
Employment
and Change of Control Agreements with Named Executive
Officers
|
Messrs. Baty, Dorton, Trombetti, Gentry
and Anderson have written employment agreements to serve in their respective
positions that extend automatically for successive one-year terms unless either
party gives notice of termination. The Company may terminate each
executive’s employment with or without cause, but if terminated without cause,
the executive would continue to receive his annual salary, paid on a monthly
basis, for one year from the date of termination. Additionally,
Messrs. Baty, Dorton, Trombetti, Gentry and Anderson have a written change of
control agreement. These agreements state if an executive’s
employment is terminated within two years following a change of control as
defined in the document that each executive will receive a lump sum payment of a
multiple of his annual salary. The multiple for each of the executive
officers is as follows: Mr. Baty – 2.5, Mr. Dorton – 2.0, Mr. Gentry
– 2.0 and Mr. Anderson – 2.0. Additionally, some benefits will
continue to be paid by the Company to each executive officer for a period of
time of 12 months. Each of Messrs. Baty, Dorton, Gentry and Anderson
have also agreed to a non-competition agreement that ends two years after the
conclusion of his employment with the Company.
The following table shows the
compensation these officers would have received under the employment agreements
had a change in control occurred as of December 31, 2008
Name
|
Compensation($)
|
|
|
Mr.
Baty
|
1,256,568
|
Mr.
Dorton
|
577,027
|
Mr.
Gentry
|
495,806
|
Mr.
Anderson
|
458,670
|
Compensation
Committee Report
The Compensation Committee of the Board
of Directors
·
|
Has
reviewed and discussed the section in this proxy statement
entitled “Compensation Discussion and Analysis” with management
and
|
·
|
Based
on the review and discussions referred to above, the Compensation
Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this proxy
statement.
|
Members
of the Compensation Committee:
Steven T.
Warshaw
Richard
G. Fanelli
Michael
E. Werner
Compensation
Committee Interlocks and Insider Participation
All compensation decisions during the
fiscal year ended December 31, 2008 for each of the Named Executive Officers
were made by the Compensation Committee, consisting of Messrs. Warshaw, Fanelli
and Werner, none of whom is or was an officer or employee of the Company during
the last fiscal year.
Audit
Committee Report to Shareholders
In accordance with its written charter
adopted by the board of directors, the Audit Committee assists the board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the
Company. Management has responsibility for preparation of the
Company’s financial statements and the registered independent public accounting
firm has responsibility for the audit of those statements. Each of
the members of the Audit Committee meets the independence requirements of the
Nasdaq rules.
The Audit Committee has reviewed and
discussed with the Company’s management and PricewaterhouseCoopers LLP, the
Company’s registered independent public accounting firm, the audited financial
statements of the Company for 2008; has discussed with PricewaterhouseCoopers
LLP matters required to be discussed by the Statement on Auditing Standards No.
61, as amended, as adopted by the Public Company Accounting Oversight Board in
Rule 3200T; has received from the registered independent public accounting firm
the written disclosures and letter required by PCAOP Rule 3526; and has
discussed with the registered independent public accounting firm their
independence, including whether PricewaterhouseCoopers LLP’s provision of
non-audit services to the Company was compatible with maintaining
PricewaterhouseCoopers LLP’s independence. Based on the review and
discussions described above, the Audit Committee recommended to the Company’s
board of directors that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008
for filing with the Securities and Exchange Commission.
The Audit Committee originally adopted
a written charter in June 2000. The Audit Committee reviews and
approves the charter on an annual basis. In March 2008, the Audit
Committee approved a revised charter.
Members
of the Audit Committee:
Robert M.
Aiken, Jr.
G. Ronald
Morris
Steven T.
Warshaw
Fees
Paid to Independent Registered Accounting Firm
During 2008, PricewaterhouseCoopers LLP
not only acted as the registered independent public accounting firm for the
Company (work related to auditing the annual financial statements for fiscal
year 2008 and reviewing the financial statements included in our Forms 10-Q) but
also rendered on our behalf other services, including tax-related services and
other accounting and auditing services. The following table sets
forth the aggregate fees billed by PricewaterhouseCoopers LLP for audit services
rendered in connection with the financial statements and reports for fiscal
years 2008 and 2007 and for other services rendered during fiscal years 2007 and
2008 on our behalf, as well as all expenses incurred in connection with these
services, which have been or will be billed to us.
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$ |
1,280,952 |
|
|
$ |
1,180,425 |
|
Audit
Related Fees
|
|
|
65,197 |
|
|
|
44,645 |
|
Tax
Consulting and Compliance Fees
|
|
|
368,886 |
|
|
|
267,126 |
|
Total
|
|
$ |
1,715,035 |
|
|
$ |
1,492,196 |
|
Pre-Approval Policies and
Procedures
The Audit Committee
pre-approves all audit and permissible non-audit services to be provided to the
Company by its registered independent public accounting firm prior to
commencement of services. The Audit Committee Chairman has the
authority to pre-approve such services up to a specified fee amount and these
pre-approved decisions are presented to the full Audit Committee at its next
scheduled meeting. Since the effective date of the Securities and
Exchange Commission’s rules regarding strengthening auditor independence, all of
the audit, audit-related and tax services by PricewaterhouseCoopers LLP were
pre-approved in accordance with the Audit Committee’s policies and
procedures.
Certain
Relationships and Related Transactions
Except as described below, the Company
did not engage in any transaction with a related person as defined under the
rules of the Securities and Exchange Commission. While the board of
directors currently does not have a written policy with respect to approval of
transactions with related parties, it is the policy of the board to approve any
transactions with related persons. Any approvals would be reflected
in the minutes of the meeting of the board of directors at which the board
approved the transaction. Other than the transaction described below,
the Company has not engaged in a related party transaction in the last six
years.
As part of the board-approved
acquisition of Whirlaway Corporation on November 30, 2006, the Company entered
into operating leases covering two of the Whirlaway manufacturing facilities
with a company owned by Thomas Zupan, who is now an executive officer of NN,
Inc. The terms of the leases are at prevailing market rates of the
rental market in which the facilities are located. The rent payments
in 2007 and 2008 to Mr. Zupan were $0.6 million and $0.6 million,
respectively. The total future rental payments will be $1.9 million
over 3 years or $0.6 million per year.
Annual
Report
The Company's 2008 Annual Report to
Shareholders, which includes its Annual Report on Form 10-K for the year ended
December 31, 2008, is being mailed together with this Proxy
Statement. Exhibits to the Annual Report on Form 10-K may be obtained
by contacting the Secretary of the Company at 2000 Waters Edge Drive, Building
C, Suite 12, Johnson City, Tennessee 37604.
Notwithstanding anything to the
contrary set forth in the Company’s previous filings under the Securities Act of
1933, as amended, or the Exchange Act that might incorporate future filings,
including this Proxy Statement, in whole or in part, the Audit Committee Report,
and the Compensation Committee Report (included herein) shall not be
incorporated by reference into any such filings.
|
By Order of the
Board of Directors |
|
|
|
|
|
|
/s/ William C.
Kelly, Jr. |
|
|
Name:
William C. Kelly, Jr. |
|
|
Title:
Vice President, Secretary and Chief Administrative Officer |
|
|
|
|
|
SHAREHOLDERS ARE REQUESTED TO MARK,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION
WILL BE APPRECIATED.