Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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x
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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Symmetry
Medical Inc.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(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
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(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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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be Held on June 22, 2009
To our
stockholders:
You are
cordially invited to attend the Annual Meeting of Symmetry Medical Inc. The
information for the meeting is as follows:
TIME
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12:00 p.m.
CDT
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June
22, 2009
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PLACE
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Hilton
Chicago O’Hare Airport
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Chicago,
Illinois 60666
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Phone:
773-686-8000; Fax: 773-601-2873
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ITEMS
OF BUSINESS
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(1)
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To
elect three Class I Directors for a three-year term.
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(2)
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To
ratify the appointment of Ernst & Young, LLP as our independent
auditors for the fiscal year ending January 2, 2010.
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(3)
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To
approve Symmetry Medical Inc.’s Amendment No.1 to the Amended and Restated
2004 Equity Incentive Plan.
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(4)
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To
conduct other business properly raised before the meeting and any
adjournment or postponement of the meeting.
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RECORD
DATE
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You
may vote if you were a stockholder of record on April 27,
2009.
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INTERNET
AVAILABILITY
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In
accordance with U.S. Securities and Exchange Commission rules, we are
using the Internet as our primary means of furnishing proxy materials to
stockholders. Rather than sending a paper copy, we are sending a notice
along with instructions for accessing the materials and voting
online. This 2009 Proxy Statement and our 2008 Annual Report to
Stockholders, which is not a part of this proxy soliciting material, are
available on our Web site at www. symmetrymedical.com under the heading
“Investor Relations” then “Annual Report/Proxy”.
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PROXY
VOTING
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You
will be able to vote two ways:
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(1)
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Visit
www.edocumentview.com/SMA and follow the on-screen instructions for voting
via the Internet.
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(2)
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Vote
in person at the meeting.
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You
may always revoke your proxy before it is voted at the meeting by
following the instructions in the accompanying proxy
statement.
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/s/
Brian S. Moore
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President &
Chief Executive Officer
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May 1,
2009
SYMMETRY
MEDICAL INC.
3724
North State Road 15
Warsaw,
IN 46582
Telephone:
(574) 267-8700
ANNUAL
MEETING OF STOCKHOLDERS
To
be Held on June 22, 2009
Voting
Information
Purpose. We are providing
proxy materials in connection with the solicitation of proxies by our Board of
Directors, to be voted at our 2009 Annual Meeting of Stockholders and at any
postponement or adjournment thereof. We will hold the meeting on June 22, 2009,
beginning at 12:00 p.m. CDT, at the Chicago Hilton O’Hare Airport, Chicago,
Illinois, 60666. We are soliciting proxies from all of our stockholders to give
all stockholders an opportunity to vote on matters to be presented at the
meeting, even if they do not attend in person. In the following pages of this
proxy statement, you will find information on matters to be voted on at the
meeting or at any adjournment or postponement of the meeting. This Notice of
Annual Meeting of Stockholders and 2009 Proxy Statement, along with our 2008
Annual Report to Stockholders, are available on our Web site at
www.symmetrymedical.com under the heading “Investor Relations” then “Annual
Report/Proxy.” However, other than our proxy statement and form of proxy, no
other information on our Web site is to be considered a part of our proxy
soliciting materials.
Notice of Electronic Availability of
Proxy Statement and Annual Report. Symmetry Medical Inc. is
making this proxy statement and its 2008 Annual Report to Stockholders available
electronically via the Internet. Under rules recently adopted by the U.S.
Securities and Exchange Commission (“SEC”), we are furnishing these proxy
materials primarily via the Internet, instead of mailing printed copies to each
stockholder. On May 1, 2009, we mailed to our stockholders of record, as of the
close of business on April 27, 2009, a Notice of Internet Availability
containing instructions on how to access our proxy materials, including our 2009
Proxy Statement and our 2008 Annual Report to Stockholders. The Notice of
Internet Availability also provides instructions on how to access your proxy
card to vote through the Internet. This new process is designed to expedite
stockholders’ receipt of proxy materials, lower the cost of the annual meeting,
and help conserve natural resources. However, if you would prefer to receive
printed proxy materials, please follow the instructions included in the Notice
of Internet Availability.
Who Can Vote. You are entitled
to notice of, and to vote at, the Annual Meeting if you were a stockholder of
record at the close of business on April 27, 2009. If your shares of common
stock are registered in your name with our transfer agent, Computershare Trust
Company, N.A., you are the stockholder of record. If your shares are held in the
name of a broker, custodian, bank, or other holder of record, that person is the
stockholder of record and you are considered the “beneficial” owner. If you are
not present in person at the Annual Meeting, your shares can be voted only if
represented by a valid proxy, as described below under “Voting of
Shares.”
Shares Outstanding. On April
27, 2009, there were 35,799,265 shares of common stock outstanding. A list of
stockholders entitled to vote at the meeting is available at our corporate
headquarters office and will also be available at the meeting. Each share is
entitled to one vote on each matter properly brought before the
meeting.
Voting of Shares. We realize
that most of our stockholders will probably not be able to attend the meeting in
person. However, it is very important that your shares be represented by proxy.
This is because we can only take action at the Annual Meeting, with respect to a
particular matter, if a quorum, or majority, of the total number of shares of
common stock outstanding and entitled to vote on that matter is present, in
person or by proxy. Therefore, we are asking for your proxy to authorize the
persons named in the proxy to vote your shares at the Annual Meeting in
accordance with your instructions.
You may
vote by proxy over the Internet by following the instructions provided in the
Notice of Internet Availability. Voting in this manner will not limit your right
to vote in person at the meeting if you decide to attend the
meeting.
If you
are a beneficial owner and your shares are held in the name of a broker,
custodian, bank, or other holder of record, you will need to obtain, and should
receive in the ordinary course of business from that broker, bank or other
holder of record, a proxy, executed in your favor from that record holder,
authorizing you to vote those shares at the Annual Meeting.
If any
other matters are properly presented for consideration at the Annual Meeting,
including consideration of a motion to adjourn the meeting to another time or
place in order to solicit additional proxies in favor of the recommendations of
the Board of Directors, the persons named as proxies and acting hereunder will
have the discretion to vote on those matters according to their best judgment to
the same extent as the person granting the proxy. At the date this proxy
statement was printed, we did not anticipate that any other matters would be
raised at the Annual Meeting.
You may
revoke your proxy at any time before it is voted at the meeting in one of three
ways:
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Notify
our Corporate Secretary in writing before the meeting that you wish to
revoke your proxy.
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Submit
another proxy with a later
date.
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Vote
in person at the meeting.
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The
effect of you not voting depends on how ownership of your shares is registered
and the proposal to be voted upon.
Voting
Shares Held by Brokers, Banks and Other Nominees. Brokers,
banks or other nominees typically hold shares of common stock for many
stockholders. In this situation the “registered holder” on our stock
register is the broker, bank or other nominee. When stock is held in this manner
by an institution, it is referred to as holding shares in “street name.” In such
cases, you – as the actual “beneficial owner” of the stock – do not appear
anywhere in our stockholder register. If you own your shares in street name and
do not give your voting instructions to your broker, bank or other nominee, that
institution may represent your shares at the stockholder meeting. However, in
the absence of your voting instructions, the institution will be able to vote
your shares only with respect to items which are considered routine under the
rules of the New York Stock Exchange. Your vote on any non-routine matters will
therefore be considered a “broker non-vote.” For purposes of determining whether
a quorum is present, shares voted FOR, AGAINST or ABSTAIN, as well as broker
“non-votes” count as shares that are present, although they will not count in
determining total votes actually cast on a particular matter.
If you
properly complete and sign your proxy card, your “proxy”—that is, the persons
named in your proxy card—will vote your shares as you have directed. If you do
not make specific choices, your proxy will vote your shares as recommended by
the Board of Directors as follows:
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FOR
the election of the director
nominees.
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FOR
the ratification of the appointment of Ernst & Young, LLP as
independent auditors for the fiscal year ending January 2,
2010.
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Voting Shares Held in Your
Name. If you are the record owner, and if you submit your proxy
instructions by internet, your proxy - the person named in your proxy card -
will vote your shares as you have directed. If you do not make specific choices,
your proxy will vote your shares as recommended by the Board of Directors as
follows:
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FOR
the election of the director
nominees.
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FOR
the ratification of the appointment of Ernst & Young, LLP as
independent auditors for the fiscal year ending January 2,
2010.
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FOR
the Amendment No. 1 to the Symmetry Medical Inc. Amended and Restated 2004
Equity Incentive Plan.
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Required Vote. So long as a
quorum is present, the affirmative vote of a majority of the shares present, in
person or by proxy, and entitled to vote at the meeting is needed to ratify the
appointment of Ernst & Young, LLP as independent auditors for the fiscal
year 2009, to approve Amendment No. 1 to the Symmetry Medical Inc. Amended and
Restated 2004 Equity Incentive Plan and to vote on any other matters that may
properly come before the Annual Meeting. Director nominees receiving the
greatest number of votes will be elected as directors.
Cost of Preparing, Mailing and
Soliciting Proxies. We will pay all of the costs of preparing, printing
and mailing the Notice of Internet Availability, of printing and mailing proxy
materials to our stockholders who specifically request them and of soliciting
proxies. We will also reimburse brokers, custodians, banks and other holders of
record for their reasonable expenses incurred in forwarding notice and proxy
materials to our beneficial owners.
Proxies
may be solicited on our behalf in person, by telephone, or otherwise by our
officers, directors and employees without additional compensation. We have not
retained a proxy solicitor in conjunction with the annual meeting.
Annual Report. Our 2008 Annual
Report to Stockholders, including our financial statements for the required
period ended January 3, 2009, is available on our Web site at
www.symmetrymedical.com under the heading “Investor Relations” then “Annual
Report/Proxy”. The 2008 Annual Report to Stockholders includes audited financial
statements for the years ended January 3, 2009, December 29, 2007 and December
30, 2006. The 2008 Annual Report to Stockholders is not a part of this proxy
statement.
Voting Results. We will
publish the voting results in our Form 10-Q for the second quarter of 2009,
which we will file with the Securities and Exchange Commission
(“SEC”).
Investor Relations
Department. You may contact our Investor Relations Department
in one of four ways:
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Write
to Symmetry Medical Inc., at
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3724
North State Road 15
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Fax to Fred L. Hite
at (574) 267-4551.
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Telephone
Fred L. Hite at (574)
267-8700.
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Director
Communications. Stockholders and other interested parties who
wish to communicate with individual directors or the entire Board may do so by
sending a communication, marked “Director Communications,” to our corporate
offices, 3724 North State Road 15, Warsaw, Indiana 46582. If addressed to
individual directors, the communication will be forwarded, unopened to the
Chairperson of the Governance and Nominating Committee for review and
appropriate dissemination.
Governance
of the Company
Our
business, property and affairs are managed by, or are under the direction of our
Board of Directors, pursuant to Delaware’s Business Corporation Law and our
bylaws. Members of the Board are kept informed of our business and of business
and industry developments through discussions with the Chief Executive Officer
and other officers, by reviewing materials provided to them by management or
otherwise obtained, and through participation in meetings of the Board and its
Committees.
We have
three classes of directors and each class is to be as equal as possible in
number. One class is to be elected at each Annual Meeting of the Stockholders.
Currently, there are three Class I directorships, two Class II
directorships and two Class III directorships. As of the date of this proxy
statement, there are no vacancies.
During
March 2008, the Company became a member of the National Association of Corporate
Directors (“NACD”). The Board of Directors authorized, recommended and
encourages each Board member and the Company CFO to attend one NACD education
course every two years. Each attendee is limited to $10,000 per course for
travel and fees and must gain approval by the Chairman of the Board before
attending. Both James S. Burns and Francis T. Nusspickel attended an educational
course in the fall of 2008.
The Board
has adopted a set of Corporate Governance Guidelines that address the role,
function, composition and responsibilities of the Board and the various
Committees of the Board. You can find a copy of these Corporate Governance
Guidelines on our Web site, at www.symmetrymedical.com, or by writing to Fred L.
Hite, Senior Vice President, Chief Financial Officer and Secretary at Symmetry
Medical Inc., 3724 North State Road 15, Warsaw, IN 46582 and requesting a copy.
As the operation of the Board and its Committees is a dynamic process, the Board
regularly reviews changing legal and regulatory requirements, evolving best
practices and other developments. We will keep these policies and our governance
practices current, as may be required by the Sarbanes-Oxley Act of 2002 and any
rule changes prescribed by the SEC and the New York Stock Exchange
(“NYSE”).
Committees, Director Independence and
Meetings of the Board of Directors. During 2008, the Board of Directors
had four Committees: the Audit Committee, the Compensation and Organizational
Committee, the Governance and Nominating Committee and the Finance and Systems
Committee. The Audit Committee is responsible for providing independent and
objective oversight of our accounting functions and internal controls and
monitoring the objectivity of our financial statements. The Compensation and
Organizational Committee assists the Board in addressing matters relating to the
fair and competitive compensation of our executive officers and non-employee
directors, together with matters relating to retirement, welfare and other
benefit plans. The Governance and Nominating Committee assists the Board by
identifying individuals qualified to become members of the Board consistent with
criteria set by the Board and developing corporate governance principles. The
Finance and Systems Committee is responsible for reviewing budgetary, finance
and information systems matters.
The Audit
Committee, Governance and Nominating Committee and the Compensation and
Organizational Committee have each adopted charters that govern their respective
authority, responsibilities and operation. Each Committee, along with the Board
of Directors, has reviewed the provisions of the Sarbanes-Oxley Act of 2002, the
rules of the SEC and NYSE regarding corporate governance policies and
processes and listing standards. In conformity with the requirement of such
rules and listing standards, we have adopted our Corporate Governance
Guidelines, and we have adopted written charters for the Audit Committee, the
Compensation and Organizational Committee, and the Governance and Nominating
Committee. We
have also adopted a Code of Business Conduct and Ethics (which applies to
directors, officers (including our Chief Executive Officer, Chief Financial
Officer, and Chief Accounting Officer) and employees). The Code of Business
Conduct and Ethics, the Corporate Governance Guidelines, and the charters of the
Audit Committee, Governance and Nominating Committee, and the Compensation and
Organizational Committee are available on our Web site at
www.symmetrymedical.com.Stockholders may request a
copy of this information by writing to Fred L. Hite, Senior Vice President,
Chief Financial Officer and Secretary at Symmetry Medical Inc., 3724 North State
Road 15, Warsaw, IN 46582 and requesting a copy. Any waivers of, or changes to,
our Code of Business Conduct and Ethics that apply to our executive officers,
directors, or persons performing similar functions, will be promptly disclosed
on our Web site in the “Investor Relations” then “Corporate Governance” section,
as required by the SEC and the NYSE.
Pursuant
to our Corporate Governance Guidelines, our Board must meet independence
standards established by the SEC, NYSE and other governing laws and
regulations. Our Board of Directors, considering all relevant facts
and circumstances, regularly makes an affirmative determination that all such
independence standards have been and continue to be met by the directors and
members of each of our Committees, including a determination that none of such
directors has a material relationship with our Company (either directly or
indirectly as a partner, stockholder or officer of an entity that has a material
relationship with our Company). Similarly, the Board makes affirmative
determination of independence with respect to members of the Audit Committee,
under the special Audit Committee independence criteria.
Annually,
each director is required to complete a questionnaire concerning his
independence and any direct or indirect business, family, employment,
transaction or other relationship or affiliation with the Company. In
determining director independence, the Board considers and evaluates the
directors’ answers to these questionnaires. Further, any new Director
nominees complete a similar questionnaire prior to being recommended to join the
Board of Directors.
As of the
date of this proxy statement, based upon the information submitted by each of
our directors, and based upon recommendation from the Governance and Nominating
Committee, the Board has made an affirmative determination that a majority of
our current Board is independent as that term is defined by the NYSE listing
standards and Rule 10A-3(b)(1) under the Securities Exchange Act of
1934 (the “Exchange Act”), are “non-employee directors” (within the meaning of
amended Rule 16b-3 under the Act) and are “outside directors” within the
meaning of Section 162(m) of the Code and Treasury Regulations
Sections 1.162- 27(e)(3). For fiscal 2008, all of the non-management
directors met such independence criteria. These members included:
Frank Turner, James S. Burns, John S. Krelle, Francis T. Nusspickel, Stephen B.
Oresman and Craig B. Reynolds. The sole management director, Brian S.
Moore, did not meet independence criteria due to his employment as Chief
Executive Officer of the Company.
For
fiscal 2009, the Board made an affirmative determination that all of the
incumbent non-management directors (James S. Burns, John S. Krelle, Francis T.
Nusspickel, and Craig B. Reynolds) as well as the non-management directors
nominated under Proposal No. 1 of this Proxy Statement (Thomas E. Chorman
and Robert G. Deuster) meet independence criteria. The sole
management director, Brian S. Moore, did not meet independence criteria due
to his employment as Chief Executive Officer of the Company. Based on
these determinations, 86% of our Board is considered independent for fiscal
2009. All of our Committees consist solely of independent
directors.
The Board
of Directors has adopted a “Related Party Transaction” policy. This policy
covers all transactions with related parties and requires approval of any
related party transactions or material amendments thereto by the Audit
Committee.
The Board
of Directors held six meetings in 2008, four in person and two
telephonically. All of the directors attended at least 75% of the
meetings of the Board of Directors and of the various Committees on which they
served during 2008. Each member of the Board of Directors who served as of May
22, 2008, the date of our last year’s Annual Meeting of Stockholders, attended
the stockholders’ meeting.
The Board
of Directors has the authority, at their discretion, to appoint the chair of
each Committee and the members of each Committee. Typically such
positions are appointed annually by the Board.
The Audit
Committee. The Audit Committee is responsible for providing
independent and objective oversight of our accounting functions and internal
controls and monitoring the objectivity of our financial statements. The
Committee assists in the Board’s oversight of (1) the integrity of our
financial statements, (2) compliance with legal and regulatory
requirements, (3) the independent auditor’s qualifications and
independence, and (4) the performance of our internal audit function and
independent auditors. In performing these functions, the Committee has the
responsibility to review and discuss the annual audited financial statements and
quarterly financial statements and related reports with management and
independent auditors, including our disclosures under “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” to monitor the
adequacy of financial disclosure in its other filings; to retain and terminate
our independent auditors and exercise the Committee’s sole authority to review
and approve all audit engagement fees and terms and approve in advance the
nature, extent, and cost of all non-audit services provided by independent
auditors; and to review annual reports from the independent auditors regarding
their internal quality control procedures. The Committee is also
responsible for preparing the audit committee report to be included in our proxy
statement.
The
Committee members are Francis T. Nusspickel, Stephen B. Oresman and James S.
Burns. Francis T. Nusspickel serves as the Chairman of the Committee. Each
member of the Committee is independent as defined in Rule 303A of the NYSE
listing standards. The Board has determined that each member meets the financial
literacy qualifications of the NYSE listing standards and each is an “Audit
Committee financial expert” as such term is defined in the Sarbanes-Oxley Act
and related SEC regulations. The Audit Committee held seven meetings in 2008,
four in person and three telephonically.
Compensation and Organizational
Committee.
The Compensation and Organizational Committee assists the Board in addressing
matters relating to the fair and competitive compensation of our executives
officers and non-employee directors, together with matters relating to
retirement, welfare and other benefit plans as well as the organizational
effectiveness and succession planning of the Company. The Committee’s principal
responsibilities include: (1) reviewing and recommending to the Board (i)
the design of our Director and executive officer benefit plans, (ii) plans
entitled to exemption under Rule 16b-3 of the Securities Exchange Act of 1934,
(iii) material terms of all employment, severance and change of control
agreements for our executive officers, (iv) compensation of our Board members
and (v) incentive components of our CEO’s compensation and bonus awards; (2)
reviewing and approving the compensation of our executive officers; (3)
providing oversight regarding our retirement, welfare and other benefit plans;
(4) reviewing NYSE, key institutional stockholders, and other applicable
compensation policies and guidelines and (5) preparing and discussing with
management the Compensation Discussion and Analysis for inclusion in our proxy
statement.
The
members of the Committee are John S. Krelle, Francis T. Nusspickel and Stephen
B. Oresman. John S. Krelle serves as the Chairman of the Committee. Each of the
current Compensation and Organizational Committee Members are independent. The
Committee met four times during 2008, all in person.
Governance and Nominating
Committee. The Governance and Nominating Committee assists
the Board by identifying individuals qualified to become members of the Board
consistent with criteria set by the Board and developing corporate governance
principles. The Committee’s responsibilities include: (1) evaluating and
recommending candidates for election to our Board; (2) reviewing our corporate
governance principles and providing recommendations to the Board regarding
possible changes; (3) establishing procedures for and overseeing the evaluation
of our Board, Committees and management and providing annual assessment reports
to the Board; (4) reviewing the makeup of our Committees and making
recommendations of director nominees for each Committee; (5) evaluating our
CEO’s performance; and (6) reviewing succession plans of our CEO and President
and recommending candidates for CEO and other senior executive
officers.
Annually,
the Governance and Nominating Committee reviews the qualifications and
backgrounds of the Directors, as well as the overall composition of the Board,
and recommends to the full Board the individuals to be nominated for election at
the Annual Meeting of Stockholders. Nominations to the Board may also be
submitted to the Governance and Nominating Committee by our stockholders. The
nominations put forth by stockholders will be given the same due consideration
along with nominations by the Committee. The Chairman of the Governance and
Nominating Committee, acting on behalf of the full Board, extends the formal
invitation to become a member of the Board of Directors. The Committee also has
the discretion, from time to time, to hire a professional search firm to
identify potential candidates. If and when the Board determines the need for new
or replacement Directors, it will seek candidates that are interested in serving
and will devote time necessary to understand the importance of corporate
governance. The Board will seek candidates possessing specific skills and
experience that are desirable to supplement the experience of those directors
serving on the Board.
The
members of the Committee are James S. Burns, John S. Krelle and Craig B.
Reynolds. James S. Burns serves as Chairman of the Committee. Each of
the current Governance and Nominating Committee members are independent. The
Committee held five meetings in 2008, four in person and one
telephonically.
Finance and Systems
Committee. The Finance and Systems Committee, assists the
Board through oversight of budgetary, finance and information systems matters.
The Committee’s responsibilities include: (1) reviewing our financial and
fiscal affairs; (2) making recommendations to the Board regarding annual
budget, capital expenditures, dividends, financing and fiscal policies;
(3) reviewing the financial impacts of major transactions as related to
mergers, acquisitions, reorganizations and divestitures; (4) providing
oversight for information technology security and risk; and (5) reviewing
systems, processes, organizational structure and people responsible for the
finance and system functions.
The
members of the Committee are Craig B. Reynolds, James S. Burns and Francis T.
Nusspickel. Craig B. Reynolds serves as Chairman of the
Committee. The Committee met four times during 2008, all in
person.
Executive
Sessions. In accordance with our bylaws and Corporate
Governance Guidelines, the Chairman of the Board presides over all
executive sessions of the non-management directors, unless the Chairman is the
CEO, in which case an independent board member is appointed. Frank
Turner, an independent director, currently serves as Chairman of the Board,
presiding over all executive sessions of the Board. Frank Turner will
be retiring at this year’s Annual Meeting of Stockholders and a new Chairman
will be appointed at the Board’s organizational meeting to be held immediately
following this year’s Annual Meeting. Please contact Francis T. Nusspickel,
Chairman of the Audit Committee, until a new Chairman is
appointed. Mr. Nusspickel can be contacted as follows:
Francis
T. Nusspickel
Chairman of the Audit
Committee
3724
North State Road 15
Warsaw,
IN 46582
Phone: 201-891-2754
Section 16(a) Beneficial
Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934 requires our directors and executive
officers to file with the SEC initial reports of beneficial ownership of our
common stock and other equity securities, as well as reports of changes in
beneficial ownership. These individuals are required to provide us with a copy
of their required Section 16(a) reports as and when they are filed.
Based on our records and information furnished to us by our executive officers
and directors, we believe that all SEC filing requirements applicable to our
directors and executive officers with respect to 2008 were met.
Stockholder Proposals for
2010. Any stockholder satisfying the requirements of the
SEC’s Rule 14a-8 and wishing to submit a proposal to be included in the
proxy statement for the 2010 Annual Meeting of Stockholders must submit the
proposal in writing to our Secretary, at 3724 North State Road 15, Warsaw, IN
46582, on or before January 1, 2010.
In
addition, any stockholder who has not submitted a timely proposal for inclusion
in next year’s proxy statement but still wishes to make a proposal at next
year’s Annual Meeting must deliver written notice to our Secretary at the
address indicated above not less than 90 days prior to the date of the
anniversary of the previous year’s Annual Meeting; provided, however, that in
the event the Annual Meeting is scheduled to be held on a date more than 30 days
prior to or delayed by more than 60 days after such anniversary date, notice by
the stockholder in order to be timely must be received no later than the later
of the close of business 90 days prior to such Annual Meeting or the 10th
day following the day on which such notice of the date of the Annual Meeting was
provided to stockholders or such public disclosure of the date of the Annual
Meeting was made. Therefore, assuming that the 2010 Annual Meeting is
not advanced by more than 30 days nor delayed by more than 60 days from the
anniversary date of the 2010 Annual Meeting, appropriate notice of nominations,
or other matters that stockholders wish to present at an Annual Meeting of
Stockholders, would need to be provided to the Secretary at the address
indicated above no later than January 31, 2010.
Our
bylaws also specify requirements relating to the content of the notice which
stockholders must provide to the Secretary for any matter, including a
stockholder nomination for director, to be properly presented at a stockholder
meeting. A copy of the full text of our bylaws is on file with the
SEC.
Information
on Directors and Executive Officers
DIRECTORS
OF THE REGISTRANT
Set forth
below are the name, age, position and a brief account of the business experience
of each of our directors as of April 27, 2009.
Director
|
|
Age
|
|
Position
|
Frank
Turner
|
|
65
|
|
Director,
Chairman of the Board
|
James
S. Burns
|
|
62
|
|
Director
|
John
S. Krelle
|
|
57
|
|
Director
|
Brian
S. Moore
|
|
63
|
|
Director,
President and Chief Executive Officer
|
Francis
T. Nusspickel
|
|
68
|
|
Director
|
Stephen
B. Oresman
|
|
76
|
|
Director
|
Craig
B. Reynolds
|
|
60
|
|
Director
|
Information on our
executive officers is disclosed in Item 1 of our annual report filed on
Form 10-K.
Class I Directors (Terms
Expire in 2009)
FRANK TURNER has been a
director since August 2003, and served as Chairman of the Board since June
2006. From August 2003 through May 2008, Mr. Turner served as the
chairman of the Board’s Compensation and Organizational Committee. From July
2005 through May 2008, Mr. Turner served as a member of the Governance and
Nominating Committee. Mr. Turner served as Chief Executive Officer of
British Midland Aviation Services Limited from 1996 to 1999 as well as a
Director of British Midland plc from 1997 to 1999. He served as Managing
Director of Lucas Aerospace Limited as well as a Director of Lucas Industries
plc from 1992 to 1995. Prior thereto, Mr. Turner spent 33 years at Rolls-Royce
plc during which he was a main board member responsible for its Commercial
Engine Business from 1987 to 1991. Mr. Turner was formally the Chairman of the
Mettis Group, Aero Inventory plc and SRTechnics Holding. Mr. Turner currently
serves as Chairman of the Board of Potenza Enterprises Ltd., which provides
corporate support through non-executive and advisory board roles. He also serves
as Chairman for Potenza Group and Potenza Sports Cars Ltd., as Chairman of
Oxford Aviation Academy Ltd., as Chairman of GTM Cars, Ltd., as a Director for
Aero Inventory plc, and as an advisor on the aerospace and aviation industry to
3i plc and Star Capital Partners. Over the past 18 years, Mr. Turner has sat on
the Boards of Directors of 16 companies, including among others, Rolls-Royce
Inc., Rolls-Royce plc, Allied Steel & Wire plc, Apollo Metals Ltd, Cooper
Rolls Inc., International Aero Engines AG, Mott MacDonald Ltd, British Regional
Airlines Ltd and Wagon plc. He received his BSc(hons) in mechanical and
production engineering from the University of Salford in the United Kingdom and
his business education from the International Executive Program at Columbia
University USA.
JOHN S. KRELLE has served as a director
since January 4, 2008. Since May 23, 2008, Mr. Krelle has served as Chairman of
the Compensation and Organizational Committee and a member of the Governance and
Nominating Committee. Since 2005 Mr. Krelle has served as President, Chief
Executive Officer and a member of the Board of Directors of Fziomed Inc., a
privately held company based in California, specializing in the manufacture and
commercialization of medical biomaterials. Prior to his tenure at
Fziomed, Mr. Krelle worked in the medical device and pharmaceutical industries
for almost thirty years in positions of increasing scope and
complexity. From 1987 he served in various senior capacities for
Zimmer Holdings, running major business units on three continents. Mr. Krelle
was head of Spine, Trauma and Business Development at the time of Zimmer’s
acquisition of Swiss company Centerpulse, which made Zimmer the largest pure
play orthopaedic company in the world. Prior to that, he spent five
years managing businesses outside the US including Asia, Canada and Latin
America. While directing Asia and Japan operations, Mr. Krelle established a new
subsidiary in Shanghai, China as well as other geographical expansion throughout
the region, to capitalize on the explosive growth of orthopaedics in the
area. During this period, Mr. Krelle also served as a member of the
Board of Directors of Zimmer K.K. and played major roles in the spin-out from
Bristol Myers Squibb and the subsequent Zimmer public offering on the NYSE in
2001. Prior experience at Zimmer included acting as the Vice
President of Global Knee marketing. Mr. Krelle joined Zimmer from German
pharmaceutical company Schering AG where he was responsible for UK sales and
marketing. Mr. Krelle earned a B.A. in mechanical engineering at
Swindon Technical College while working in the British automobile industry and
an M.B.A. at Sussex University, U.K.
STEPHEN B. ORESMAN has
served as a director and member of the Board’s Audit and Compensation and
Organizational Committee since the completion of our initial public offering in
December 2004. From July 19, 2005 through May 23, 2008, Mr. Oresman served as
Chairman of the Governance and Nominating Committee. From April 27, 2006 through
May 23, 2008, Mr. Oresman served as a member of the Finance and Systems
Committee. Since 1991, Mr. Oresman has served as President of Saltash, Ltd., a
management consulting firm. From 1988 to 1991, he was a partner and Vice
President of The Canaan Group consulting firm. Mr. Oresman’s early career
included ten years in the manufacturing sector, including Bausch & Lomb,
Inc. and Interlake Steel Corp. Subsequently, Mr. Oresman joined Booz Allen
Hamilton, Inc., where he served various positions, including Managing Officer of
the firm’s Eastern Region and Chairman of Booz Allen Hamilton International. Mr.
Oresman later joined BBDO International as President of the firm’s independent
marketing companies. While continuing his consulting practice, Mr. Oresman also
served periods as Chief Executive Officer and then Chairman of the Board for
Technology Solutions Company where he was a long time director. Mr. Oresman
received his B.A. from Amherst College and his M.B.A. from the Harvard Business
School.
Class II Directors (Term
Expires in 2010)
JAMES S. BURNS has served as a
director and member of the Audit Committee, Governance and Nominating Committee
and the Finance and Systems Committee since the 2006 Annual Meeting of
Stockholders. From April 2006 through May 2008, Mr. Burns served as Chairman of
the Finance and Systems Committee, and currently serves as the Chairman of the
Governance and Nominating Committee. Mr. Burns is currently President of the
Delafield Corporation, a strategy and investment advisory firm. He
served as President and Chief Executive Officer of EntreMed, Inc. from June 2004
to December 2008. From 2001-2003, Mr. Burns was a co-founder and served as
President and as Executive Vice President of MedPointe, Inc., a specialty
pharmaceutical company that develops, markets and sells branded prescription
pharmaceuticals. From 2000-2001, he served as a founder and Managing Director of
MedPointe Capital Partners, a private equity firm that led a leveraged buyout of
a NYSE company to form MedPointe Pharmaceuticals. From 1993 to 1999, Mr. Burns
served as a founder, Chairman, President and CEO of Osiris Therapeutics, Inc., a
publicly held biotech company developing therapeutic stem cell products for the
regeneration of damaged or diseased tissue. From 1986-1992, he was Vice Chairman
of HealthCare Investment Corporation and a founding General Partner of
Healthcare Ventures L.P., a venture capital partnership specializing in forming
companies built around new pharmaceutical and biotechnology products. From
1981-1986, Mr. Burns served as Group President and as Vice President of the
Laboratory Products Group at Becton Dickinson and Company, a multinational
medical device company. Previously, he was a Vice President and Partner at Booz
Allen & Hamilton, Inc., an international consulting firm. Mr. Burns is a
Director of the International BioResources Group and the American Type Culture
Collection (ATCC), and a Director of Vermillion, Inc. He earned his B.S. and
M.S. degrees in biological sciences from the University of Illinois and an
M.B.A. degree from DePaul University.
CRAIG B. REYNOLDS has served as a director
since January 4, 2008. Since May 23, 2008, Mr. Reynolds has served as the
Chairman of the Finance and Systems committee and a member of the Governance and
Nominating Committee. Mr. Reynolds is currently the Chief Operating Officer of
Respironics, Inc., a subsidiary of Philips that develops, manufactures and
markets medical devices worldwide. The product lines of Respironcs, Inc. include
sleep medicine therapeutics and diagnostic equipment, intensive care ventilation
and patient monitoring and respiratory drug delivery systems. Mr.
Reynolds has been with Respironics, Inc. since 1998. From 1981 to
1998, Mr. Reynolds was with Healthdyne Inc., a medical device company, serving
for five years as Chief Executive Officer and board member. Mr.
Reynolds earned his B.S. in industrial management from the Georgia Institute of
Technology and his M.B.A. from Georgia State University.
Class III Directors
(Terms Expire in 2011)
BRIAN S. MOORE has been
President, Chief Executive Officer and a director since our acquisition of
Mettis (UK) Limited (“Mettis”) in June 2003. From April 1999 to June 2003, Mr.
Moore served as the Chief Executive Officer of Mettis Group Limited, the parent
company of Mettis. From April 1994 to March 1999, Mr. Moore held various
positions with EIS Group plc, including Chairman of the Aircraft and Precision
Engineering Division, and from 1987 to 1999, Mr. Moore served as Chief Executive
Officer of AB Precision (Poole) Limited. Prior thereto, Mr. Moore served in
various management positions at Vanderhoff plc, Land Rover Vehicles, Bass
Brewing and Prudential Insurance, and as the Financial Director for a subsidiary
of GEC Ltd. (UK). Mr. Moore has qualified as a Graduate Mechanical Engineer by
the Institution of Mechanical Engineers (the qualifying body for mechanical
engineers in the UK) and as an Accountant with the UK Chartered Institute of
Management Accountants.
FRANCIS T. NUSSPICKEL has
served as a director and member of the Board’s Audit Committee since the
completion of our initial public offering in December 2004. Mr. Nusspickel is
the current Chairman of the Audit Committee. Mr. Nusspickel also served as a
member of the Governance and Nominating Committee from 2004 through 2006, at
which time he resigned to accept positions on the Compensation and
Organizational and Finance and Systems Committees, on which he continues to
serve. Mr. Nusspickel is a retired audit partner of Arthur Andersen LLP. Mr.
Nusspickel spent the majority of his 35 years of public accounting expertise in
Arthur Andersen’s Transportation Industry Group and was the worldwide Industry
Head for the Ocean Shipping Segment. Mr. Nusspickel is a certified public
accountant and from 2004 to 2007 served as Chairman of the Professional Ethics
Committee of the New York State Society of Certified Public Accountants. Mr.
Nusspickel was a former member of the Council of the American Institute of
Certified Public Accountants and a former President of the New York State
Society of Certified Public Accountants. Mr. Nusspickel serves as a director for
Tsakos Energy Navigation Limited. Mr. Nusspickel received his B.B.A. from
Manhattan College.
Class
I Director Nominees
At the
2009 Annual meeting of Stockholders, two of our incumbent independent Class I
Directors will retire; Frank Turner and Stephen B. Oresman. As a
result, the Governance and Nominating Committee commenced a search for two new
independent directors in early 2009. The profile for the nominees was
determined through discussion amongst the current Board, taking into account the
background of the incumbent Board members and the specialties of the two
retiring Board members. Candidates meeting this profile were then
identified from NACD Directors Registry ™ and approximately twelve were
initially screened by the Chairman of the Governance and Nominating
Committee. The top six candidates were interviewed either
telephonically or in person by members of the Governance and Nominating
Committee. Thereafter, the top three candidates were recommended to
the Board by the Governance and Nominating Committee and were interviewed by all
our continuing Board members. Background and independence
verifications were completed and two candidates were approved by the full
Board. Below are details regarding these two new Class I Director
Nominees.
Director
|
|
Age
|
|
Position
|
Thomas
E. Chorman
|
|
54
|
|
Nominee
for Director
|
Robert
G. Deuster
|
|
58
|
|
Nominee
for
Director
|
THOMAS E. CHORMAN has
served as an independent director and member of the Audit Committee of Standex
International Corp. (NYSE: SXI) since June 2004. In October 2008 he
was also appointed to the Governance and Nominating Committee of
Standex. An entrepreneur and private investor since June 2006,
co-founding two companies; Foam Partners, LLC (polyurethane foam fabrication)
and Boomer Capital (authoritative baby boomer website and
consulting). In December 2008, he purchased Discovery Manufacturing
Inc. and established Solar LED Innovations, LLC, a designer, manufacturer and
marketer of solar rechargeable lighting products. Prior
thereto, Mr. Chorman served as President, CEO and director of Foamex
International (manufacturer of comfort cushioning for the furniture and
automotive markets) from September 2001 through June 2006. Previously, Mr.
Chorman was CFO at Ansell Healthcare (2000-2001), Armstrong Flooring Products
Division CFO (1997-2000), and CFO for Corporate New Ventures and other financial
positions at Procter & Gamble (1984-1997). Mr. Chorman holds an
M.B.A. from Rutgers and a B.S. from the City University of New
York.
ROBERT G. DEUSTER has
served as Chairman and Chief Executive Officer of Newport Corporation (NASDAQ:
NEWP), a global supplier of laser, optical and motion control products since May
1996. Mr. Deuster retired from Newport in October of 2007. Mr. Deuster also
served as President of Newport from May 1996 until July 2004, and in June 1997
became Chairman of the Board.. From 1985 to 1996, Mr. Deuster served in various
senior management positions at Applied Power, Inc (now Actuant Corp NYSE: ATU),
a global manufacturer of electrical and hydraulic products, serving as Senior
Vice President of the Distributed Products Group from 1994 to 1996, President of
the Barry Controls Division from 1989 to 1994, President of the APITECH Division
from 1986 to 1989 and Vice President of Sales and Marketing of the Enerpac
Division from 1985 to 1986. From 1975 to 1985, he held engineering and marketing
management positions at General Electric Company’s Medical Systems
Division. Mr. Deuster currently serves as a director on the board of
NEXX Systems, a privately held semiconductor capital equipment company. Mr.
Deuster received a B.S. in Electrical Engineering from Marquette University in
1973.
STOCK
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The
following table sets forth information known to us regarding beneficial
ownership of our Common Stock, as of the Record Date, by each director and each
of the executive officers identified in the Summary Compensation Table and by
all of its directors and executive officers as a group. Information in the table
is derived from SEC filings made by such people under Section 16(a) of
the Securities Exchange Act of 1934, as amended and other information received
by us.
|
|
Beneficial Ownership as of
April 27, 2009 (1)
|
|
|
|
|
|
|
|
Name
|
|
Current
Beneficial
Holdings
|
|
|
Shares Subject
to Options
|
|
|
Total
|
|
|
Percent
Owned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
S. Moore
|
|
|
156,500 |
|
|
|
178,481 |
|
|
|
334,981 |
|
|
|
* |
|
Fred
L. Hite
|
|
|
84,443 |
|
|
|
29,310 |
|
|
|
113,753 |
|
|
|
* |
|
D.
Darin Martin
|
|
|
48,590 |
|
|
|
— |
|
|
|
48,590 |
|
|
|
* |
|
Michael
W. Curtis
|
|
|
55,563 |
|
|
|
— |
|
|
|
55,563 |
|
|
|
* |
|
John
Hynes
|
|
|
16,900 |
|
|
|
— |
|
|
|
16,900 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Directors & Nominees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
Turner (2)
|
|
|
43,733 |
|
|
|
— |
|
|
|
43,733 |
|
|
|
* |
|
James
S. Burns (3)
|
|
|
19,500 |
|
|
|
— |
|
|
|
19,500 |
|
|
|
* |
|
John
S. Krelle (4)
|
|
|
34,800 |
|
|
|
— |
|
|
|
34,800 |
|
|
|
* |
|
Francis
T. Nusspickel (5)
|
|
|
21,167 |
|
|
|
— |
|
|
|
21,167 |
|
|
|
* |
|
Stephen
B. Oresman (5)
|
|
|
21,167 |
|
|
|
— |
|
|
|
21,167 |
|
|
|
* |
|
Craig
B. Reynolds (4)
|
|
|
34,800 |
|
|
|
— |
|
|
|
34,800 |
|
|
|
* |
|
Thomas
E. Chorman
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
* |
|
Robert
G. Deuster
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
* |
|
Directors &
Executive Officers as a Group
|
|
|
537,163 |
|
|
|
207,791 |
|
|
|
744,954 |
|
|
|
2.1 |
% |
*
|
Less
than one percent; assumes the exercise of all vested
options.
|
(1)
|
Unless
otherwise indicated and subject to community property laws where
applicable, the individuals and entities named in the table have sole
voting and investment power with respect to all shares of our common stock
shown as beneficially owned by them. Beneficial ownership and percentage
ownership are determined in accordance with the rules of the SEC. In
calculating the number of shares beneficially owned by an individual or
entity and the percentage ownership of that individual or entity, shares
underlying options and warrants held by that individual or entity that are
either currently exercisable or exercisable within 60 days from April 27,
2009 are deemed outstanding. These shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any
other individual or entity.
|
(2)
|
Consists
of 22,566 shares beneficially owned by Potenza Enterprises Ltd.
Mr. Turner is the Chairman of Potenza Enterprises Ltd. Also consists
of restricted shares: 1,667 issued in 2005; 1,000 issued in 2006; 3,700
issued in 2007; 7,400 issued in 2008 and 7,400 in 2009; all grants vest
equally over three years.
|
(3)
|
Consists
of restricted shares: 1,000 issued in 2006; 3,700 issued in 2007; 7,400
issued in 2008 and 7,400 issued in 2009. All grants vest
equally over three years.
|
(4)
|
Consists
of restricted shares: 7,400 issued in 2008 and 2009, respectively, which
vest equally over three years and 20,000 common shares purchased in
2009.
|
(5)
|
Consists of restricted shares:
1,667 issued in 2005; 1,000 issued in 2006; 3,700 issued in 2007; 7,400
issued in 2008 and 7,400 issued in 2009; all grants vest equally over
three years.
|
Security
Ownership of Certain Beneficial Owners
The
following table shows each person who, based upon their most recent filings with
the Securities and Exchange Commission, beneficially owns more than 5% of our
Common Stock as of April 27, 2009.
Name and address of
Beneficial Owner
|
|
Number of Shares
Beneficially Owned
|
|
|
Percent of
Class
|
|
|
|
|
|
|
|
|
Wells
Fargo & Co. (1)
420
Montgomery Street
San
Francisco, CA 94163
|
|
|
3,615,792 |
|
|
|
10.09 |
% |
|
|
|
|
|
|
|
|
|
Blum
Capital Partners, L.P. (2)
909
Montgomery Street,
Suite
400
San
Francisco, CA 94133
|
|
|
3,059,404 |
(3) |
|
|
8.60 |
% |
|
|
|
|
|
|
|
|
|
HWP
Capital Partners II, LP.(4)
c/o
Haas Wheat & Partners, L.P.
300
Crescent Court,
Suite 1700
Dallas,
TX 75201
|
|
|
2,962,875 |
|
|
|
8.40 |
% |
|
|
|
|
|
|
|
|
|
Barclays
Global Investors (Deutschland) AG
Apianstrasse
6 D-85774
Unterfohring,
Germany
|
|
|
2,740,329 |
|
|
|
7.65 |
% |
|
|
|
|
|
|
|
|
|
Lord,
Abbett & Co. LLC
90
Hudson Street
Jersey
City, NJ 07302
|
|
|
2,586,054 |
|
|
|
7.22 |
% |
|
|
|
|
|
|
|
|
|
Goldman
Sachs Asset Management (5)
32
Old Slip
New
York, NY 10005
|
|
|
2,117,468 |
(6) |
|
|
5.90 |
% |
|
|
|
|
|
|
|
|
|
Wellington
Management Co., LLP
75
State Street
Boston,
MA 02109
|
|
|
1,990,233 |
(7) |
|
|
5.55 |
% |
(1)
|
Wells
Fargo & Co.; Wells Capital Management Incorporated; Wells Fargo Funds
Management, LLC; and Wells Fargo Bank, N.A; Wachovia Bank, N.A.; and
Wachovia Capital Markets,
LLC.
|
(2)
|
Blum
Capital Partners, L.P.; Richard C. Blum & Associates, Inc.; Blum
Strategic GP III, L.L.C.; Blum Strategic GP III, L.P.; Blum Strategic GP
IV, L.L.C.; Blum Strategic GP IV, L.P.; and Saddlepoint Partners GP,
L.L.C.
|
(3)
|
Represents
3,059,404 shares over which it exercises shared voting and dispositive
powers.
|
(4)
|
HWP Capital Partners
II, L.P.; HWP II, L.P.; HWP II, LLC; and Robert B.
Haas.
|
(5)
|
Goldman
Sachs Asset Management, L.P., together with GS Investment Strategies,
LLC.
|
(6)
|
Represents
2,117,468 shares over which it exercises shared voting and dispositive
powers.
|
(7)
|
Represents
1,792,533 shares over which it exercises shared voting power and 1,935,633
shares over which it exercises shared dispositive
power.
|
Executive
Compensation
Compensation
Discussion and Analysis
Table
of Contents |
|
|
|
|
|
|
|
|
|
Introduction
and Objectives
|
|
|
13 |
|
Compensation
Philosophy
|
|
|
14 |
|
Compensation
Programs
|
|
|
15 |
|
Annual
Salary
|
|
|
16 |
|
Annual
Incentive Cash Bonuses
|
|
|
17 |
|
Long-Term
Incentive Compensation
|
|
|
18 |
|
Performance
Based Restricted Shares
|
|
|
18 |
|
Stock
Options
|
|
|
18 |
|
Perquisites
and Other Personal Benefits
|
|
|
18 |
|
Employment
Agreements
|
|
|
19 |
|
Compensation
Deductibility
|
|
|
20 |
|
Summary
|
|
|
20 |
|
Introduction
and Objectives
The
Compensation and Organizational Committee (“Committee”) assists the Board in
addressing matters relating to the fair and competitive compensation of our
executive officers and non-employee directors, together with matters relating to
retirement, welfare and other benefit plans. The Compensation and Organizational
Committee is composed of three independent non-executive directors, John S.
Krelle, Francis T. Nusspickel, and Stephen B. Oresman.
The
Committee met four times in 2008; each meeting included an executive session
with only the non-management directors. The Committee also met on January 29,
2009 to finalize the 2008 bonuses and determine the 2009 base salary
compensation amounts for the executive officers. All Committee members were
present for the meeting.
Two
members of management, Chief Executive Officer, Brian S. Moore, and Chief
Financial Officer, Fred L. Hite, attended the non-executive portions of each
meeting. The agenda for each meeting was determined by the Committee members
prior to the meeting. The Committee receives and reviews materials in advance of
each meeting which include information that management believes will be helpful
to the Committee as well as materials that the Committee specifically requested.
Depending on the agenda for the particular meeting, these materials may
include:
|
·
|
Reports on levels of
achievement of corporate performance
objectives;
|
|
·
|
Tally
sheets setting forth the total compensation of the named executive
officers, including base salary, cash incentives, equity awards,
perquisites and other compensation and any potential amounts payable to
the executives pursuant to employment agreements, severance agreements and
change of control provisions;
|
|
·
|
Wealth
accumulation summaries which show the named executive officers’ total
accumulated stock and option holdings;
and
|
|
·
|
Information
regarding compensation of peer groups at companies identified by our
outside compensation consultant or by
management.
|
The
Committee’s primary responsibilities consist of:
|
·
|
Review
of corporate goals and objectives relevant to the compensation of named
executive officers, evaluation of the performance of the named executive
officers in light of these goals and objectives and determination and
approval of the compensation level of named executive officers based on
that evaluation;
|
|
·
|
Evaluation
and recommendation to the Board of the incentive components of the CEO’s
compensation and related bonus awards, taking into account our performance
and relative stockholder return, the value of similar incentive awards to
CEOs at comparable companies, the services rendered by the CEO and the
awards given to the CEO in past
years;
|
|
·
|
Review
and recommendation to the Board of the design of the compensation and
benefit plans which pertain to Directors, the CEO and other senior
executive officers who report directly to the CEO, including oversight of
Rule 162(m) plans;
|
|
·
|
Review
and recommendation to the Board all plans entitled to the exemption under
Rule 16b-3 of the Securities Exchange Act of 1934, as amended,
including stock options, restricted stock and deferred stock
plans;
|
|
·
|
Review
and recommendation to the Board the material terms of all employment,
severance and change-of-control agreements for named executive
officers;
|
|
·
|
Review
and make recommendations to the Board regarding compensation of Board
members, such as retainer, Committee Chairman fees, stock options,
restricted stock and other similar items as appropriate, and pursuant to
our Corporate Governance
Guidelines;
|
|
·
|
Oversight
regarding our retirement, welfare and other benefit plans, policies and
arrangements on an as needed
basis;
|
|
·
|
Review
compensation policies and guidelines issued by (i) the NYSE and other
applicable authorities and (ii) key institutional shareholders and (iii)
entities that offer proxy voting services or recommendations to
shareholders;
|
|
·
|
Preparation
of a compensation committee report on executive compensation to be
included in our annual proxy statement or Annual Report on Form 10-K
filed with the SEC; and
|
|
·
|
Review
and discussion with management regarding the Compensation Discussion and
Analysis required by the SEC Regulation S-K, Item 401, and based on such
review and discussion, make recommendation to the Board to include the
Compensation Discussion and Analysis in the Annual Report on
Form 10-K or in our proxy
statement.
|
The
Committee’s Charter reflects these responsibilities, and the Committee and the
Board periodically review and revise the Charter. The Charter was last revised
in the fall of 2008 to address changes required in light of changing
business, legal and other conditions. The full text of the Compensation and
Organizational Committee Charter is available on our Web site at
www.symmetrymedical.com.
Our
executive management supports the Committee in its work by proposing
compensation increases for executive officers, administering our retirement,
welfare and other benefit plans and providing data to the Committee for
analysis.
Our
Committee has discretionary authority under its Charter to engage the services
of outside consultants and advisors, as it deems necessary or appropriate in the
discharge of its duties and responsibilities. The Committee has budgetary
authority to authorize and pay for the services of outside consultants who
report directly to the Committee.
The use
of outside compensation consultants allows the Committee to evaluate
compensation data and plan design information from national surveys and other
public companies, including companies we consider to be our peers. The Committee
has, in the past, utilized the services of Mercer Human Resources Consulting
(“Mercer”), a compensation consulting company, to assist in evaluating both the
executive and director compensation programs. When utilized, Mercer is engaged
directly by the Committee and its findings are reported directly to the
Committee.
The
Committee engaged Mercer to complete a review of its compensation programs for
key management executives in late 2005 and early 2007, and the non-executive
directors in early 2006 by comparing compensation levels to competitive market
pay data using both survey and competitive peer group data
sources. These reports were updated internally in October 2007 and
December 2008. Additionally, Mercer conducted a stock option dilution
analysis of our Company and our peer groups, by analyzing current stock option
overhang rates of each company and the three-year historical run-rates of each
company. All of the decisions with respect to our executive
compensation are made by the Committee alone and may reflect factors and
considerations other than, or that may differ from, the information and
recommendations provided by management or Mercer.
Our
Compensation Philosophy
The
Compensation and Organizational Committee is in place to address matters
relating to the fair and competitive compensation of our executive officers and
non-employee directors, together with matters relating to our retirement,
welfare, and other benefit plans. The Committee, composed entirely of
independent directors, is guided by three principal goals and objectives:
(1) in order to allow us to attract and retain talent, our salaries should
be in the range with the level of salaries paid to companies that are considered
peers and for those with whom we compete for talent; (2) annual incentive
bonuses should be directly related to our results produced during the year; and
(3) long term compensation in the form of restricted shares and stock
options should be directly linked to Company performance and enhancement of
stockholder value.
The
Committee believes that executive compensation should be aligned with the
values, objectives and financial performance of the Company. The Committee wants
to motivate our officers and key employees to achieve the Company’s goals of
providing our stockholders with a competitive return on their investments, while
at the same time producing high quality products. Our compensation program is
designed to attract and retain highly qualified individuals who are capable of
making significant contributions to our long-term success, promote a performance
oriented environment that encourages Company and individual achievement, reward
executive officers for long-term strategic management and to enhance stockholder
value.
The
Committee believes that compensation paid to executive officers should be
closely aligned with the performance of the Company on both a short-term and
long-term basis, and that such compensation should assist us in attracting and
retaining key executives critical to its long-term success. Symmetry Medical is
headquartered in Warsaw, Indiana, which is frequently referred to as the
“Orthopedics Capital of the World.” Because of the number of customers and
competitors in the immediate Warsaw, Indiana area, it is important that our
compensation program be competitive to allow us to continue to attract and
retain all levels of employees.
Annually,
compensation is initially determined by the CEO for each executive (excluding
the CEO), consisting of base salary, annual cash incentive bonus, and long-term
incentive compensation, which is then provided to the Committee for review and
approval. Any decision to materially increase compensation is based upon the
factors listed above, taking into account all forms of compensation, as well as
based upon individual achievement of performance goals. These goals include
revenue, profit and cash generation targets as well as specific management
tasks. Decisions regarding the CEO’s compensation are made by the Committee in
executive session and reflect the same considerations as used for the other
named executive officers. The Committee then submits its decisions regarding
compensation for the CEO to the Board for ratification. The compensation policy
is consistent for each executive, with the exception of the annual incentive
bonus, which is tailored to the executive’s specific area of influence. For
example, sales executives have a higher percentage of their bonus weighted on
growth while finance executives may have more of their bonus weighted on the
generation of cash. If performance objectives are not attained, annual incentive
bonuses will not typically be paid. Refer to the table on page 17 for the
specific metrics of compensation contingent on performance.
The
Committee believes that the executive officers’ total compensation programs
should strengthen the relationship between pay and performance by emphasizing
variable, at-risk compensation that is dependent upon the successful achievement
of specified corporate, business segment and individual performance goals. The
Committee also believes that a significant amount of pay for executive officers
should be comprised of long-term, at-risk pay to align management interests with
those of stockholders. The total compensation package should enhance our ability
to attract, retain and develop exceptionally knowledgeable and experienced
executives upon whom our successful operation and management
depends.
Our
Compensation Programs
The total
compensation program for our executive officers consists of the following
elements:
|
·
|
Annual
cash incentive bonuses
|
|
·
|
Long-term
incentive compensation in the form of restricted
stock
|
|
·
|
Perquisites
and other personal benefits
|
It is our
Committee’s intent that our salaries, annual incentive bonuses and long-term
incentive award values be targeted at a level approaching the median of
competitive market pay practices.
To
establish total compensation for our executive officers, the Committee compares
our executive officers’ compensation against comparative company pay practices
and also considers recommendations from the Chief Executive Officer regarding
those executives reporting directly to him. Our management team provides the
Committee with historical and prospective breakdowns of the total compensation
components for each executive officer.
At the
Committee’s meeting on January 29, 2009, the Committee finalized the 2008 annual
incentive bonuses and determined the 2009 base salary compensation amounts for
the named executive officers. At this meeting, the Committee reviewed wealth
accumulation summaries and tally sheets for each named executive officer in
determining appropriate compensation levels.
To ensure
our compensation programs are at proper levels, the Committee compares our
compensation practices and levels of pay to an industry peer
group. Companies were selected based upon the following
criteria:
|
·
|
Similar
size with executive positions similar in breadth, complexity and scope of
responsibility;
|
|
·
|
International
operations; and
|
|
·
|
In
the medical field or competitors for executive
talent.
|
For 2008,
our peer group consisted of the following eight companies: Resmed, Inc.,
Mentor Corporation, Cantel Medical Corporation, Datascope Corporation,
Greatbatch Inc., Integra Medical Corporation, Thoratec Corporation, and Wright
Medical Group Inc. The analysis was discussed at the Committee’s
January 29, 2009 meeting. Results of the analysis were used to assist
the Committee in determining the 2008 bonus and 2009 base compensation amounts
for our executives.
In
addition to the market-based data, the Committee ensures compensation is aligned
with our values, objectives and financial performance, as described
above.
Our
compensation focuses heavily upon cash compensation. We also utilize various
non-cash compensation programs, specifically performance based restricted stock
and stock options, within our compensation philosophy. Based upon our internal
analysis of competitive pay practices, our total cash compensation, in
aggregate, is approximately 65% of the median value of our peers while our
long-term incentive compensation, in aggregate, is approximately 80% of the
median value of our peers. Our total direct compensation, in aggregate, is
approximately 71% of the median value of our peers.
In
determining compensation increases, the Committee’s main goal is the recruitment
and retention of talent. To accomplish this goal, the Committee believes base
salary should be at approximately the median value of our peer group with bonus
and long-term incentive compensation at approximately the 75th
percentile of our peer group.
The
Committee reviews its current compensation programs annually in conjunction with
its determination of the compensation for the coming year.
The 2008
base salaries of our executive officers are shown in the “Salary” column of the
Summary Compensation Table of our proxy statement. Salaries for executive
officers are reviewed on an annual basis, as well as at the time of a promotion
or other changes in responsibilities.
Base
compensation is targeted at the approximate median of compensation paid to
executives with similar levels of experience in order to ensure that we can
attract and retain appropriate levels of executive talent. Individual executives
may be paid at levels higher or lower than this target pay positioning at the
discretion of the Committee. The base salaries of our executive officers were
established by the Committee and approved by the Board of Directors after
considering compensation salary trends, overall level of responsibilities, total
performance and compensation levels for comparable positions in the market for
executive talent.
As
discussed above, our total cash compensation appears to be approximately 65% of
the median value of our peer group based upon our internal analysis. The
Committee has utilized this information, as well as suggestions from management,
in determining annual salary increases.
The
Committee reviewed base salary increases for 2009, deciding not to increase any
salaries of the named executive officers in 2009. This decision was indicative
of the economic environment of 2008 and 2009 and was not a reflection of
performance.
Annual
Incentive Cash Bonuses
The
objective of the annual incentive cash bonus plan is to provide executives with
a competitive total cash compensation opportunity relative to market practices
while aligning rewards with short-term financial and individual performance
results which the Committee believes will help achieve our goals of providing
our stockholders with a competitive return on their investments over the long
term.
Annual
incentive awards are determined as a percentage of each executive officer’s base
salary. Each Named Executive Officer could earn up to the following percentages
of his base salary in 2008:
|
|
Performance is between
15% below plan
budget and plan budget
|
|
|
Bonus for
achievement
|
|
|
Performance is between
plan budget and
10% above plan budget
|
|
|
|
|
Name and Position
|
|
Sales
|
|
|
Net
Income
|
|
|
Operating
Cash
|
|
|
Total
|
|
|
of tasks
specified
by Board
|
|
|
Sales
|
|
|
Net
Income
|
|
|
Operating
Cash
|
|
|
Total
|
|
|
Maximum
Possible
Bonus
|
|
Brian
S. Moore,
|
|
|
— |
|
|
|
50 |
% |
|
|
|
|
|
50 |
% |
|
|
20 |
% |
|
|
— |
|
|
|
30 |
% |
|
|
— |
|
|
|
30 |
% |
|
|
100 |
% |
President
and Chief
|
|
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|
|
|
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|
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|
Executive Officer
|
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|
|
|
|
|
|
Fred
L. Hite,
|
|
|
— |
|
|
|
35 |
% |
|
|
10 |
% |
|
|
45 |
% |
|
|
5 |
% |
|
|
— |
|
|
|
20 |
% |
|
|
10 |
% |
|
|
30 |
% |
|
|
80 |
% |
Senior
Vice President,
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
Chief
Financial Officer and
|
|
|
|
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|
|
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|
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|
Secretary
|
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|
|
|
|
|
|
|
D.
Darin Martin,
|
|
|
— |
|
|
|
40 |
% |
|
|
— |
|
|
|
40 |
% |
|
|
10 |
% |
|
|
— |
|
|
|
30 |
% |
|
|
— |
|
|
|
30 |
% |
|
|
80 |
% |
Senior
Vice President,
|
|
|
|
|
|
|
|
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|
Quality Assurance/
|
|
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|
Regulatory
Affairs,
|
|
|
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Compliance
Officer
|
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|
|
Michael
W. Curtis,
|
|
|
— |
|
|
|
35 |
% |
|
|
10 |
% |
|
|
45 |
% |
|
|
5 |
% |
|
|
— |
|
|
|
20 |
% |
|
|
10 |
% |
|
|
30 |
% |
|
|
80 |
% |
Chief
Operating Officer, USA
|
|
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|
|
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|
|
John
Hynes,
|
|
|
— |
|
|
|
35 |
% |
|
|
10 |
% |
|
|
45 |
% |
|
|
5 |
% |
|
|
— |
|
|
|
20 |
% |
|
|
10 |
% |
|
|
30 |
% |
|
|
80 |
% |
Chief
Operating Officer, Europe
|
|
|
|
|
|
|
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|
The
Committee establishes the performance measures and other terms and conditions of
awards for executive officers and has the authority to cancel or award an
additional bonus amount at its discretion. The bonus plan is based on
performance against the Board approved budget and uses sales, net income and
operating cash as the primary metrics.
According
to the performance criteria described above, Brian S. Moore should have received
100% of his base salary, thus his full performance based award during
2008. However, the Compensation and Organizational Committee
exercised negative discretion to reduce the performance based award for Brian S.
Moore to account for the current market economy. Further, the
Committee exercised its discretion to award additional task-related bonuses to
Fred L. Hite and John Hynes based on their contributions and efforts during the
2008 fiscal year.
Long-Term
Incentive Compensation
The
Committee believes that equity-based compensation ensures that our executive
officers have a continuing stake in our long-term success. As such, the
Committee has implemented, with Board and stockholder approval, two equity-based
plans: the Symmetry Medical Inc. Amended and Restated 2004 Equity Incentive Plan
(“2004 Equity Incentive Plan”) covering our United States employees (which, if
approved by stockholders at this Annual Meeting in connection with Proposal No.
3, will be amended by Amendment No. 1 to the Symmetry Medical Inc. Amended and
Restated 2004 Equity Incentive Plan), and the Symmetry Medical Inc. UK Share
Incentive Plan 2006, covering our United Kingdom employees.
Under
Proposal No. 3 of this Proxy Statement, we are requesting stockholder approval
of an amendment to our existing 2004 Equity Incentive Plan, entitled Amendment
No. 1 to the Symmetry Medical Inc. Amended and Restated 2004 Equity Incentive
Plan (the "Amended Plan"). The Amended Plan was previously approved
by the Committee and by our Board of Directors. Since the basic design and
operation of the Amended Plan is very similar to our 2004 Equity Incentive
Plan and because the 2004 Equity Incentive Plan was in effect during 2008,
for purposes of this report, we will discuss the operation of the 2004 Equity
Incentive Plan.
Our 2004
Equity Incentive Plan (“US Plan”) provides for the opportunity to grant stock
options and other equity-based incentive awards to officers, other key employees
and non-employee directors to help align those individuals’ interests with those
of stockholders, to motivate executives to make strategic long-term decisions,
and to better enable us to attract and retain capable directors and executive
personnel. We have
recently awarded more performance based restricted stock than stock options to
minimize the financial impact given the expensing of stock options which started
January 1, 2006.
During
2008, award grants were determined by the Committee as a result of
recommendations by the CEO based upon performance reviews.
Any
performance based restricted stock or stock options awarded are treated as
ordinary income to the employee, who is responsible for the payment of any
associated taxes upon vesting for restricted stock or exercise for
options. We currently have no policy with regard to stock ownership
guidelines for our executive officers or our directors, however, our Board of
Directors is in the process of considering such a policy.
Our UK
Share Incentive Plan 2006 (also referred to as the “UK Plan”) allows us to award
eligible United Kingdom participants restricted stock based on certain
performance allowances determined by the Board of Directors. The Plan also
allows for the award of “matching shares” upon the purchase of Company
stock. The UK Plan is independently administered by Computershare
Investor Services plc (“Computershare”) in the UK. Participants’ contributions
are made out of pre tax income which results in the participants receiving a Tax
and National Insurance benefit. The maximum number of shares that may be issued
under the UK Plan is 300,000. Currently there are no participants
under the UK Plan.
(a)
Performance Based Restricted Shares
Our
internal compensation study indicates that our long term incentive compensation
lags behind competitive market practices. Using the report, the Committee
recommended, and the Board authorized, the grant of 310,850 performance based
restricted shares to certain employees. These restricted shares were granted on
May 23, 2008 and are subject to three year cliff vesting if cumulative operating
performance metrics for the Company are met or, if not, default to a seven year
schedule. Notwithstanding, the Compensation Committee of the Board of
Directors may, in its sole discretion, vest or accelerate vesting at any
time.
(b)
Stock Options
Stock
options that have been granted are performance based stock options which vest in
equal installments over four years if the budgeted EBITDA is achieved on a
cumulative basis. At the time the grants were made, the timing of the grants and
vesting period were determined based upon the results of a Mercer report, to
allow our compensation program to become more consistent with competitive market
practices. Award levels were determined based upon market data and vary among
executives based upon their positions.
The
Committee has granted to two of the five named executive officers such amounts
as are set forth in the Summary Compensation Table of the proxy
statement.
Perquisites
and Other Personal Benefits
We
provide named executive officers with perquisites and other benefits that we and
the Committee believe are reasonable and consistent with the overall
compensation program to better enable us to attract and retain superior
employees for key positions. The Committee periodically reviews the levels of
perquisites and other benefits provided to named executive
officers.
Certain
named executive officers are provided use of company automobiles, country club
memberships and a match of their 401k contributions, as described in more detail
in the Summary Compensation Table.
Employment
Agreements
We
currently have employment agreements with Brian S. Moore, Fred L. Hite and John
Hynes.
In
June 2003, we entered into an employment agreement with Brian S. Moore to
serve as our President and Chief Executive Officer and a member of the Board of
Directors until June 11, 2006. After June 11, 2006, the
agreement is subject to one year automatic renewals until either party
provides notice of non-renewal. Mr. Moore’s current annual
salary is $500,000, subject to annual review and potential increase by the
Board. In addition, Mr. Moore is eligible to receive an annual cash bonus,
based upon the satisfaction of certain performance criteria in accordance with
terms of our 2004 Equity Incentive Plan. In 2006, the Board of Directors, in
accordance with the agreement, increased his bonus to a potential 100% of his
annual salary. If Mr. Moore’s employment is terminated by us without
“cause”, defined as “(i) the commission of a felony or other crime
involving moral turpitude or the commission of any other act or omission
involving dishonesty, disloyalty, misappropriation or fraud that adversely
affects us or any of our subsidiaries or any of their customers or suppliers,
(ii) reporting to work under the influence of alcohol or illegal drugs, the
use of illegal drugs (whether or not at the workplace) or other repeated conduct
causing us or any of our subsidiaries substantial public disgrace or
disrepute or economic harm, (iii) substantial and repeated failure to
perform duties as reasonably directed by the Board, (iv) any act or
omission aiding or abetting a competitor, supplier or customer of our Company or
any of our subsidiaries to the material disadvantage or detriment of us and our
Subsidiaries, (v) breach of fiduciary duty, gross negligence or willful
misconduct that adversely affects us or any of our Subsidiaries or (vi) any
other material breach of this agreement that is not cured by Mr. Moore
within 30 days of written notification of any such material breach,” or by
Mr. Moore for “good reason”, defined as “ (i) any change in
responsibilities, status, title or duties which represents a material reduction
in his responsibilities, status, title or duties as in effect immediately prior
thereto (which shall not include the hiring of subordinates to fill some of such
duties or responsibilities) that is not cured by us within 30 days after
Mr. Moore notifies the Board in writing of any such material reduction, or
(ii) any material failure by us to comply with any of the material
provisions of this agreement that is not cured by us within 30 days after
Mr. Moore provides written notification to the Board of any such material
failure,” during the employment term, then Mr. Moore will be entitled to
continue to receive his base salary for twelve months after the date of such
termination. He will also be entitled to receive a pro rata portion of his
maximum performance bonus for the year in which such termination occurs
(currently 100% of his base salary). Mr. Moore has agreed not to compete
with the Company during the term of his employment and for twenty-four months
following termination.
In
January 2004, we signed an offer letter with Fred L. Hite outlining the
terms of employment for Mr. Hite as the Chief Financial Officer commencing
on March 1, 2004. Mr. Hite’s current annual salary is $300,000,
subject to annual review. In addition, Mr. Hite will receive an annual
bonus, based upon the achievement of budget, of up to 80% of his annual salary.
If Mr. Hite’s employment terminates in the event of the sale of the
Company, he will be entitled to continue to receive his base salary for twelve
months after the date of such termination and he will be entitled to receive an
average of any bonuses paid within the past twelve months.
In
October 2007, we entered into an employment agreement with John Hynes to serve
as the Chief Operating Officer of Thornton Precision Components Ltd. for a
continuous period, subject to twelve months prior notice of termination. If
Mr. Hynes’ employment is terminated by us with less than twelve months
prior notice, Mr. Hynes is entitled to receive a payment equal to his base
salary and benefits for twelve months. Mr. Hynes’ current salary is
£130,000 per year, subject to annual review in April of each year. In
addition, Mr. Hynes is eligible to receive an annual cash bonus of up to
80% of his base salary, which amount will be determined by the Compensation and
Organizational Committee. Mr. Hynes has agreed not to compete with the
Company during the term of his employment and for 12 months following
termination.
In
general, the remaining named executive officers are not covered under a general
severance plan and any severance benefits payable to them would be determined by
the Compensation and Organizational Committee in its
discretion.
We also include a change
of control provision within our performance based restricted stock agreement that states all
restricted stock will vest upon a change of control in accordance with the
2004 Equity Incentive Plan. As
indicated earlier, under Proposal No. 3 of this Proxy Statement, the
Company is requesting stockholder approval of our Amended Equity Incentive Plan,
previously approved by the Committee and by our Board of
Directors. Since the basic design and operation of the Amended Plan,
with minor exceptions, is similar to our 2004 Incentive Plan, for purposes of
this report, we will discuss the operation of the plan that was in effect during
2008—namely the 2004 Equity Incentive Plan.
Under the
2004 Equity Incentive Plan, a change in control is defined as: (1) an event in
which any person or group secures more than 50% of the Company’s outstanding
shares; (2) replacing a majority of the directors within any two-year period;
(3) any merger or consolidation resulting in the Company transferring more than
50% of the combined voting power; or (4) a liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company’s assets.
According
to the 2004 Equity Incentive Plan, if there is a Change in Control and a
participant’s employment or service as a director, officer, or employee of our
Company or of a subsidiary is terminated (1) by us without Cause,
(2) by reason of the participant’s death, Disability, or Retirement, or
(3) by the participant for Good Reason, within twelve months after such
Change in Control, any award carrying a right to exercise that was not
previously vested and exercisable as of the time of the Change in Control,
becomes immediately vested and exercisable, and remains so for up to 180 days
after the date of termination. With respect to any outstanding performance
awards, the Committee may, within its discretion, deem the performance goals and
other conditions as having been met as of the date of the Change in
Control.
Compensation
Deductibility
Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) imposes a
limit on tax deductions for annual compensation in excess of $1.0 million paid
by a corporation to its Chief Executive Officer and the other four most highly
compensated executive officers (excluding the Chief Financial Officer). This
provision excludes certain forms of “performance-based compensation,” including
restricted stock, from the compensation taken into account for purposes of that
limit. The Compensation and Organizational Committee believes that our Amendment
No. 1 to the Symmetry Medical Inc. Amended and Restated 2004 Equity Incentive
Plan, further described under Proposal No. 3 of this Proxy Statements, is
“performance-based” within the meaning of that restriction. Nonetheless, the
Compensation and Organizational Committee believes that, although it is
desirable for executive compensation to be fully tax deductible, whenever in the
Committee’s judgment that would be inconsistent with the objectives pursuant to
which the particular compensation is paid, we should compensate our executive
officers fairly in accordance with our compensation philosophy, regardless of
the anticipated tax treatment. The Compensation and Organizational Committee
will from time to time continue to assess the impact of Section 162(m) of the
Code on its compensation practices and will determine what further action, if
any, may be appropriate in the future.
It is the
opinion of the Compensation and Organizational Committee that the executive
compensation policies and programs in effect for our executive officers and
directors provide an appropriate level of total compensation that properly
aligns the Company’s performance and interests of our stockholders with
competitive executive compensation in a balanced and reasonable
manner.
Summary
Compensation Table
The
following table sets forth certain information with respect to the salaries,
bonuses and other compensation we paid for services rendered in 2008, 2007 and
2006 for our Chief Executive Officer, Chief Financial Officer and our four other
most highly compensated executive officers. The amounts shown include
compensation for services rendered in all capacities.
|
|
Summary
Compensation Table
|
|
Name
and
Principal
Position
|
|
Year
|
|
Salary
($) (1)
|
|
|
Bonus
($) (2)
|
|
|
Stock
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(3)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
|
|
|
All
Other
Compensation
($) (4)
|
|
|
Total ($)
|
|
Brian
S. Moore
|
|
2008
|
|
$ |
500,000 |
|
|
$ |
- |
|
|
$ |
453,208 |
|
|
$ |
300,000 |
(5) |
|
$ |
- |
|
|
$ |
18,000 |
|
|
$ |
1,271,208 |
|
President
and Chief
|
|
2007
|
|
$ |
430,000 |
|
|
$ |
60,000 |
|
|
$ |
120,075 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
16,200 |
|
|
$ |
626,275 |
|
Executive
Officer
|
|
2006
|
|
$ |
375,000 |
|
|
$ |
50,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
15,665 |
|
|
$ |
440,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred
L. Hite
|
|
2008
|
|
$ |
300,000 |
|
|
$ |
20,000 |
|
|
$ |
472,868 |
|
|
$ |
180,000 |
|
|
$ |
- |
|
|
$ |
18,700 |
|
|
$ |
991,568 |
|
|
|
2007
|
|
$ |
250,000 |
|
|
$ |
60,000 |
|
|
$ |
48,030 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
17,400 |
|
|
$ |
375,430 |
|
President
and Chief
Financial
Officer
|
|
2006
|
|
$ |
220,000 |
|
|
$ |
30,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
16,956 |
|
|
$ |
266,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.
Darin Martin
|
|
2008
|
|
$ |
200,000 |
|
|
$ |
- |
|
|
$ |
181,073 |
|
|
$ |
160,000 |
|
|
$ |
- |
|
|
$ |
19,860 |
|
|
$ |
560,933 |
|
|
|
2007
|
|
$ |
165,000 |
|
|
$ |
50,000 |
|
|
$ |
20,013 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
15,860 |
|
|
$ |
250,873 |
|
Quality
Assurance/ Regulatory Affairs and Compliance
Officer
|
|
2006
|
|
$ |
160,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
14,292 |
|
|
$ |
174,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
W. Curtis
|
|
2008
|
|
$ |
260,000 |
|
|
$ |
- |
|
|
$ |
357,302 |
|
|
$ |
208,000 |
|
|
$ |
- |
|
|
$ |
5,885 |
|
|
$ |
831,187 |
|
Chief
Operating
|
|
2007
|
|
$ |
210,000 |
|
|
$ |
60,000 |
|
|
$ |
40,025 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
4,553 |
|
|
$ |
314,578 |
|
Officer,
USA
|
|
2006
|
|
$ |
180,000 |
|
|
$ |
20,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
4,553 |
|
|
$ |
204,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Hynes
|
|
2008
|
|
$ |
231,250 |
(6) |
|
$ |
46,250 |
|
|
$ |
48,198 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
52,013 |
|
|
$ |
368,461 |
|
Chief
Operating
|
|
2007
|
|
$ |
40,036 |
|
|
$ |
9,800 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
6,803 |
|
|
$ |
56,639 |
|
Officer,
Europe
|
|
2006
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
(1)
|
The salary amounts
relate to cash only wages received on a regular basis. With regard to John
Hynes, currency translation at average for the year—$1.85/GBP in
2008.
|
|
(2)
|
The
bonus amounts relate to a one-time discretionary cash payment received in
addition to salary and are assumed earned by year end.
|
|
(3)
|
Non-equity
incentive plan thresholds were not met in 2006 and 2007, but were met in
2008.
|
|
(4)
|
The
other compensation amounts relate to perquisites. The
perquisites provided to senior management in 2008 include the
following:
|
|
–
|
Company
Car—For total compensation purposes, for named executive officers, the
incremental cost of personal use of a Company car has been valued at the
cost of the annual lease and fuel, estimated at $14,000 for Brian S.
Moore, $14,700 for Fred L. Hite, $14,900 for D. Darin Martin, and $35,178
for John Hynes.
|
|
–
|
401k
Match/UK Pension—In the U.S., we provide a discretionary match of the each
employee’s contribution to its 401k retirement account to a maximum of
$4,000. We contributed $4,000 for Brian S. Moore, Fred L. Hite, D. Darin
Martin and Michael W. Curtis in 2008. In the UK, we contributed $16,835 to
John Hynes' pension account in accordance with Company
policy.
|
|
–
|
Country
club dues - $960 for D. Darin Martin and $1,885 for Michael W. Curtis,
which reflects the actual cost of annual
membership.
|
|
(5)
|
The Compensation and
Organizational Committee exercised negative discretion to reduce the
non-equity plan based compensation for Brian S. Moore due to the current
market economy.
|
|
(6)
|
Reflects increase in
salary from £120,000 to £130,000 on July 1,
2008.
|
The
following table sets forth certain information with respect to each grant of an
award made to our Chief Executive Officer, Chief Financial Officer and our four
other most highly compensated executive officers in 2008.
Grants
of Plan-Based Award
Name
|
|
Grant
Date
(1)
|
|
Estimated
Possible Payouts
Under
Non-Equity
Incentive
Plan Awards (2)
|
|
|
Estimated
Future
Payouts
Under
Equity
Incentive
Plan
Awards
|
|
|
All
Other
Stock
Awards;
Number
of
Shares
of
Stock
or
Units
(3)
|
|
|
All
Other
Stock
Awards;
Number
of
Securities
Underlying
Options
|
|
|
Exercise
or
Base
Price
of
Option
Awards
|
|
|
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
Target
|
|
|
|
|
|
|
|
Brian
S. Moore
|
|
5/3/2008
2/6/2008
|
|
$ |
-
350,000
|
|
|
$ |
-
500,000
|
|
|
|
-
-
|
|
|
|
80,000
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
Fred
L. Hite
|
|
5/3/2008
2/6/2008
|
|
$ |
-
150,000
|
|
|
$ |
-
240,000
|
|
|
|
-
-
|
|
|
|
60,000
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
D.
Darin Martin
|
|
5/3/2008
2/6/2008
|
|
$ |
-
100,000
|
|
|
$ |
-
160,000
|
|
|
|
-
-
|
|
|
|
10,000
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
Michael
W. Curtis
|
|
5/3/2008
2/6/2008
|
|
$ |
-
130,000
|
|
|
$ |
-
208,000
|
|
|
|
-
-
|
|
|
|
40,000
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
John
Hynes (4)
|
|
5/3/2008
2/6/2008
|
|
$ |
-
120,250
|
|
|
$ |
-
192,400
|
|
|
|
-
-
|
|
|
|
15,000
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
(1)
|
May
3, 2008 represents the date the restricted stock awards were both
determined and granted.
|
|
(2)
|
Amounts
reflect the threshold and maximum cash incentive compensation earnable in
2008 but not awarded and paid until March 13,
2009.
|
|
(3)
|
These amounts
represent the total shares issued on the given grant date. All
shares are subject to three year cliff vesting if cumulative operating
performance metrics for the Company are met or, if not, default to a seven
year schedule. Notwithstanding, the Compensation Committee of
the Board of Directors may, in its sole discretion, vest or accelerate
vesting at any time.
|
|
(4)
|
Currency
translation at average for the year—$1.85/GBP in
2008.
|
The
following table sets forth certain information with respect to unexercised
options, stock that has not vested, and equity incentive plan awards for our
Chief Executive Officer, Chief Financial Officer and our four other most highly
compensated executive officers in 2008.
Outstanding
Equity Awards at Fiscal Year-End
|
|
Option Awards
|
|
Stock
Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Equity
Incentive
Plan
Awards;
Number
of
Securities
Underlying
Unexercised
Unearned
Options
|
|
Options
Exercise
Price
(2)
|
|
Option
Expiration
Date
(3)
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(4)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(5)
|
|
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
|
Brian
S.
Moore
|
|
|
178,481 |
|
___
|
|
___
|
|
$
|
3.0424 |
|
7/29/2013
|
|
|
110,000
|
|
|
$
|
1,618,700 |
|
___
|
|
___
|
Fred L. Hite
|
|
|
29,310 |
|
___
|
|
___
|
|
$
|
4.8300 |
|
3/1/2014
|
|
|
72,000 |
|
|
$
|
1,045,920 |
|
___
|
|
___
|
D.
Darin Martin
|
|
___
|
|
___
|
|
___
|
|
|
___
|
|
___
|
|
|
15,000 |
|
|
$
|
649,250 |
|
___
|
|
___
|
Michael
W. Curtis
|
|
___
|
|
___
|
|
___
|
|
$
|
___
|
|
___
|
|
|
50,000 |
|
|
$
|
729,300 |
|
___
|
|
___
|
John
Hynes
|
|
___
|
|
___
|
|
___
|
|
$
|
___
|
|
___
|
|
|
15,000 |
|
|
$
|
213,450 |
|
___
|
|
___
|
|
(1)
|
Shares
represent the remaining, unexercised options that were granted in 2003 and
2004.
|
|
(2)
|
Amount
represents the option price of the given
grant.
|
|
(3)
|
This
date represents the expiration date of the grant, which is 10 years from
the initial grant date.
|
|
(4)
|
Shares
represent the unvested restricted stock granted in 2005, 2006, 2007 and
2008. Shares granted in 2005 and 2006 are subject to a three year vesting
schedule if cumulative operating performance metrics for the Company are
met. Shares granted in 2007 and 2008 are subject to three year
cliff vesting if cumulative operating performance metrics for the Company
are met or, if not, default to a seven year
schedule.
|
|
(5)
|
Amount
represents the restricted stock shares valued at the grant
price.
|
The
following table sets forth certain information with respect to the exercise of
stock options, SARs and similar instruments, and each vesting of stock,
including restricted stock, restricted stock units and similar instruments,
during 2008 for our Chief Executive Officer, Chief Financial Officer and our
three other most highly compensated executive officers.
Option
Exercises and Stock Vested
|
|
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
|
|
Brian
S. Moore
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
Fred
L. Hite
|
|
|
20,000 |
|
|
$ |
263,503 |
|
|
|
8,667 |
|
|
$ |
43,389 |
|
D.
Darin Martin
|
|
|
- |
|
|
$ |
- |
|
|
|
4,933 |
|
|
$ |
35,715 |
|
Michael
W. Curtis
|
|
|
- |
|
|
$ |
- |
|
|
|
7,033 |
|
|
$ |
37,445 |
|
John
Hynes
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
Pension
Benefits
Our named
executive officers do not receive any pension benefits and as such we have
excluded the Pensions Benefit Table.
Nonqualified
Deferred Compensation
The
following table sets forth certain information with respect to each defined
contribution or other plan that provides for the deferral of compensation on a
basis that is not tax-qualified for our Chief Executive Officer, Chief Financial
Officer and our four other most highly compensated executive
officers.
|
|
Non-Qualified
Deferred Compensation
|
|
Name
|
|
Executive
Contributions in
Last FY
|
|
|
Registrant
Contributions in
Last FY
|
|
|
Aggregate Earnings
in Last FY
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
Aggregate
Balance at Last
FYE
|
|
Brian
S. Moore
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Fred
L. Hite
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
D.
Darin Martin
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Michael
W. Curtis
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
John
Hynes
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
We also
have existing employment agreements with Brian S. Moore, Fred L. Hite, and John
Hynes as noted above, which include termination provisions having potential
future compensation. According to the terms of the employment agreements, we are
required to compensate the executives for a certain period following their
termination if specific criteria are met, as noted below:
·
Brian S. Moore—If Mr. Moore’s employment is terminated by us without
“cause”, or by Mr. Moore for “good reason” (which shall not including
hiring of subordinates to fill some of such duties or responsibilities that is
not cured by us within 30 days after Executive notifies the Board in writing of
any such material reduction, or (ii) any material failure by the Company to
comply with any of the material provisions of his Agreement that is not cured by
us within 30 days after Executive notifies the Board in writing of any such
material failure) during the employment term, then Mr. Moore will be
entitled to continue to receive his base salary for twelve months after the date
of such termination. He will also be entitled to receive a pro rata portion of
his performance bonus (maximum of 100% of his annual salary) for the year in
which such termination occurs. Based upon his current annual salary, the maximum
payment is estimated at $1,000,000.
·
Fred L. Hite—If Mr. Hite’s employment terminates in the event of the sale
of the Company, he will be entitled to continue to receive his base salary for
twelve months after the date of such termination and he will be entitled to
receive an average of twelve months bonus. Based upon his current annual salary,
the maximum payment is estimated at $540,000.
·
John Hynes —If Mr. Hynes’ employment is terminated by us with less than
twelve months prior notice, Mr. Hynes is entitled to receive a payment
equal to his base salary and benefits for twelve months. Based upon his current
annual salary, the maximum payment is estimated at £130,000 plus
benefits.
Potential
Payments upon Termination or Change of Control
Under
certain types of terminations of employment (other than a termination following
a change of control of the Company), severance benefits may be paid to the named
executive officers. The severance benefits available only relate to executives
with employment agreements: Brian S. Moore, Fred L. Hite, and John Hynes, as
described in more detail above. The other named executive officers are not
covered under a general severance plan and any severance benefits payable to
them would be determined by the Compensation and Organizational Committee in its
discretion.
We also
include a change of control provision within our performance based restricted
stock agreements stating that all executive officers would vest prior to the
change in control. At the time of termination, all vested stock
options or performance based restricted stock are retained by the executive, and
any unvested options or shares would be forfeited. The employment agreements do
not include change of control provisions.
We do not
regularly provide additional awards, such as retention, sign-on or special
recognition bonuses. During 2008, the Company did award discretionary
task-related awards to Fred L. Hite and John Hynes.
The
following table sets forth certain information with respect to compensation of
our directors for services rendered in 2008.
|
|
Director
Compensation
|
|
Name
|
|
Fees
Earned or
Paid
in Cash
|
|
|
Stock
Awards
(1)
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Change
in
Pension
Value
and
Non-
Qualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
Frank
Turner
|
|
$ |
78,008 |
|
|
$ |
58,581 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
136,589 |
|
James
S. Burns
|
|
$ |
37,500 |
|
|
$ |
58,581 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
96,081 |
|
John
S. Krelle (2)
|
|
$ |
29,492 |
|
|
$ |
33,386 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
62,878 |
|
Brian
S. Moore
|
|
$ |
- |
|
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
- |
|
Francis
T. Nusspickel
|
|
$ |
50,000 |
|
|
$ |
58,581 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
108,581 |
|
Stephen
B. Oresman
|
|
$ |
35,508 |
|
|
$ |
58,581 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
94,089 |
|
Craig
B. Reynolds (2)
|
|
$ |
29,492 |
|
|
$ |
33,386 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
62,878 |
|
(1)
|
The
value of stock awards vested in 2008, expensed at grant date
value. This includes restricted shares that vest ratably over a
three year period.
|
(2)
|
Directors
as of January 4, 2008.
|
Director
Compensation.
In fiscal
year 2008 all independent directors received an annual cash payment of $25,000.
The Chairman of the Board and the Chairman of the Audit Committee received
additional cash compensation of $50,000 and $20,000, respectively. The Chairman
of the other three committees received $5,000 additional cash compensation.
Members of the Audit Committee each received additional $5,000 cash compensation
while the members of the three remaining committees received additional $2,500
cash compensation. All directors were reimbursed for their out-of-pocket
expenses incurred in connection with such services.
The
Board, upon recommendation from the Compensation and Organizational Committee,
approved three grants of restricted stock to the non-employee directors in
fiscal 2008 pursuant to our 2004 Equity Incentive Plan and Restricted Stock
Agreements. On January 1, 2008, the Board approved a grant in the
amount of 3,700 shares to each of the non-employee directors serving at that
time. On January 14, 2008, the Board approved a grant of 3,700 shares
to each of the two individuals, John S. Krelle and Craig B. Reynolds, who became
new non-employee directors on January 4, 2008. On May 23, 2008, the
Board approved an increase from 3,700 to 7,400 in the annual amount of
restricted stock to be granted to each of the non-employee directors of the
company and, in connection therewith, granted to each of the non-employee
directors an additional 3,700 shares of restricted common stock pursuant to our
2004 Equity Incentive Plan and Restricted Stock Agreements. The stock
vests ratably over a three-year period, beginning on December 31,
2008.
The
Board, upon recommendation from the Compensation and Organizational Committee,
also approved a grant of restricted stock on January 3, 2009 in the amount of
7,400 shares to each of the non-employee directors pursuant to our 2004 Equity
Incentive Plan and Restricted Stock Agreements. The stock vests ratably
over a three-year period, beginning on December 31, 2009.
Compensation
Committee Interlocks and Insider Participation
The
members of the Compensation and Organizational Committee are John S. Krelle,
Francis T. Nusspickel and Stephen B. Oresman. The Board of Directors has
determined that each of the members are independent directors as defined in
Rule 303A of the NYSE listing standards, outside directors as such term is
defined with respect to Section 162(m) of the Internal Revenue Code
and non-employee directors under Section 16(b) of the Securities
Exchange Act of 1934. None of the members has had a relationship requiring
disclosure under SEC regulations, Item 404.
None of
our Committee members currently serve or have ever served as an officer of
Symmetry Medical Inc.
During
the most recent fiscal year, there were no interlocking relationships between
any of our executive officers and the Committee and the executive officers and
the Compensation and Organizational Committee of any other companies, nor has
any such interlocking relationship existed in the past.
Report
of the Compensation and Organizational Committee
on
Executive Compensation
The
following is the report of the Compensation and Organizational Committee of the
Board of Directors with respect to our executive compensation.
The
Compensation and Organizational Committee has reviewed all components of
compensation for our Chief Executive Officer, our Chief Financial Officer and
our four named executive officers, including salary, bonus, equity and long-term
incentive compensation, restricted stock, the dollar value to the executive and
the cost of all perquisites and other personal benefits, the actual projected
payout obligations under our severance and change-in-control
scenarios.
Furthermore,
the Committee has reviewed and discussed the Compensation Discussion and
Analysis required by Item 402(b) with management and based on this review
and discussion, the Compensation and Organizational Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis be included
herein.
|
The
Compensation and Organizational Committee:
|
|
JOHN S. KRELLE,
Chairman
|
|
STEPHEN B. ORESMAN,
Member
|
|
FRANCIS T.
NUSSPICKEL,
Member
|
Related
Party Transactions
It is our
policy not to enter into any Related Party Transactions unless the Audit
Committee or its Chairman, after having reviewed all the relevant facts and
circumstances, determines that the transaction is in our best interest and in
the best interest of our stockholders and approves the transaction in accordance
with the guidelines set forth in our written Related Party Transactions
Policy.
The
Related Party Transactions Policy covers any transaction, arrangement or
relationship (or any series of similar transactions, arrangements or
relationships in the same fiscal year) in which we (including any of our
subsidiaries) were, are or will be a participant and in which any Related Party
has, had or will have a direct or indirect material interest.
The Board
has determined that it is the responsibility of the general manager or managing
director at each facility to notify corporate management of any arrangements
falling within the scope of this Policy. Corporate management is tasked with
notifying the Audit Committee Chairman, who then reviews and approves all
related party transactions. All transactions which exceed an aggregate amount of
$60,000 in the same fiscal year are required to be reviewed and approved by the
entire Audit Committee. The Audit Committee Chairman, in his discretion, may
seek the approval of the entire Audit Committee to review any transactions. In
reviewing and approving a related party transaction, or any material amendment
thereto, the Chairman or Committee, as applicable, is required to: 1) satisfy
itself that it has been fully informed as to the related party’s relationship
and interest and as to the material facts of the proposed related party
transaction or the proposed material amendment to such transaction; and 2)
determine, based on all relevant facts and circumstances, if the related party
transaction is in the best interests of our Company and our
stockholders.
Related-Party
Transactions
During
the years ended January 3, 2009 and December 29, 2007, we purchased
contract manufacturing services totaling $285,000 and $719,000, respectively,
from ADS Precision Limited (ADS), a company controlled by a relative of the
former general manager of our Sheffield, UK facility. The Audit
Committee’s investigation determined that ADS had participated in certain
irregular transactions with our Sheffield, UK operating
unit. These irregularities involved the sale and repurchase of
inventory in connection with short-term financing to the unit. We
have outstanding payables to ADS of $96,000 as of January 3, 2009.
We also
did business with Laser Engineering Inc. (LEI), a company owned by the
principles of SSI and UCA. Subsequent to August 31, 2007, the date of
the SSI and UCA acquisition, we received approximately $84,000 of
commissions from LEI for sales of product. All transactions were
executed on an arm’s length basis, and we believe this relationship is not
significant to our overall financial results.
Audit
and Non-Audit Fees
Audit and Non-Audit
Fees. The following table presents fees for professional
audit services rendered by Ernst & Young LLP for the audit of our
annual financial statements for the years ended January 3, 2009 and
December 29, 2007.
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$ |
1,353 |
|
|
$ |
2,572 |
|
Audit-Related
Fees
|
|
|
— |
|
|
|
— |
|
Tax
Fees
|
|
|
434 |
|
|
|
337 |
|
All
Other Fees
|
|
|
2 |
|
|
|
2 |
|
|
|
$ |
1,789 |
|
|
$ |
2,911 |
|
Audit
Fees: consist of fees billed for professional services
rendered for the audit of Symmetry Medical Inc.’s consolidated financial
statements and services that are normally provided by Ernst & Young LLP
in connection with statutory and regulatory filings or engagements.
Audit-Related
Fees: there were no audit-related fees in 2008 or 2007.
Tax Fees: are
principally comprised of fees for services provided in connection with worldwide
tax planning and compliance services, expatriate tax services, and assistance
with tax audits and appeals.
All Other Fees: are
principally comprised of fees for the use of accounting research
software.
Policy on Audit Committee
Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Auditor. Consistent with SEC policies regarding auditor
independence, the Audit Committee must pre-approve all audit and permissible
non-audit services provided by our independent auditors. Our Non-Audit Services
Pre-Approval Policy covers all services to be performed by our independent
auditors. The policy contemplates a general pre-approval for all audit,
audit-related, tax and all other services that are permissible, with a general
pre-approval period of twelve months from the date of each pre-approval. Any
other proposed services that are to be performed by our independent auditors,
not covered by or exceeding the pre-approved levels or amounts, must be
specifically approved in advance.
Prior to
engagement, the Audit Committee will pre-approve the following categories of
services. These fees are budgeted, and the Audit Committee requires the
independent auditors and management to report actual fees versus the budget
periodically throughout the year, by category of service.
1.
|
Audit services include
the annual financial statement audit (including required quarterly
reviews), subsidiary audits, and other work required to be performed by
the independent auditors to be able to form an opinion on our Consolidated
Financial Statements. Such work includes, but is not limited to, comfort
letters, and services associated with SEC registration statements,
periodic reports and other documents filed with the SEC or other documents
issued in connection with securities
offerings.
|
2.
|
Audit-related services
are for services that are reasonably related to the performance of the
audit or review of our financial statements or that are traditionally
performed by the independent auditor. Such services typically include but
are not limited to, due diligence services pertaining to potential
business acquisitions or dispositions, accounting consultations related to
accounting, financial reporting or disclosure matters not classified as
“audit services,” statutory audits or financial audits for subsidiaries or
affiliates, and assistance with understanding and implementing new
accounting and financial reporting
guidance.
|
3.
|
Tax services include all
services performed by the independent auditors’ tax personnel, except
those services specifically related to the financial statements, and
includes fees in the area of tax compliance, tax planning and tax
advice.
|
Report
of the Audit Committee
The Board
has determined that each member of the Audit Committee meets the independence
and financial literacy requirements set forth by the SEC and the NYSE, and that
Francis T. Nusspickel, Stephen B. Oresman and James S. Burns each qualifies as
an “audit committee financial expert”, as defined by the SEC.
The Audit
Committee of the Board of Directors operates pursuant to a written
charter. A printable version of the charter may be accessed through
the Corporate Governance section of the Symmetry Medical, Inc. Web site,
accessible through the Investor Relations page at www.symmetrymedical.com. The
charter describes the Committee’s purpose, which is to assist the Board in its
general oversight of: (1) the integrity of the Company’s
financial statements and the Company’s financial reporting processes and systems
of internal control, (2) the qualifications, independence and performance
of the Company’s independent public accounting firm and the performance of the
Company’s internal audit function, (3) the Company’s compliance with legal
and regulatory requirements involving financial, accounting and internal control
matters, (4) investigations into complaints concerning financial matters
and (5) risks that may have a significant impact on the Company’s financial
statements.
The Audit
Committee reviews and assesses the adequacy of its charter on an annual
basis. The Audit Committee last reviewed its charter in July, 2008,
and at that time determined that no changes were required in light of changing
business, legal or other conditions. The Audit Committee has adopted
pre-approval policies and procedures regarding the retention of the Company’s
independent auditors (and certain other independent audit firms) to provide
audit and non-audit services and for the retention of any firm to provide audit
services.
The
Company’s management is responsible for the Company’s financial reporting
process including its system of internal control over financial reporting, and
for the preparation of consolidated financial statements in accordance with
accounting principles generally accepted in the United States. Ernst &
Young LLP, the Company’s independent registered public accounting firm, is
responsible for expressing an opinion based on their audits of the consolidated
financial statements. In accordance with its written charter, the Audit
Committee assists the Board of Directors in its oversight.
Further,
the Audit Committee reviews reports prepared by management on various matters
including critical accounting policies and issues, material written
communications between the independent auditors and management, significant
changes in the Company’s selection or application of accounting principles and
significant changes to internal control procedures. It is not the duty or
responsibility of the Audit Committee to conduct auditing and accounting reviews
or procedures.
In
discharging its oversight responsibilities with respect to the audit process,
the Audit Committee: (1) has received and reviewed a formal written
statement from Ernst & Young LLP describing all communications and
relationships between Ernst & Young LLP and the Company, including its Audit
Committee, that might bear on Ernst & Young LLP’s independence consistent
with applicable requirements of the Public Company Accounting Oversight Board;
(2) discussed with Ernst & Young LLP any relationships that may impact
its objectivity and independence; and (3) considered whether the non-audit
services provided to the Company by Ernst & Young LLP are compatible
with maintaining their independence. The Audit Committee also reviewed and
discussed with the independent auditing firm their identification of audit risk,
audit plans and audit scope, as well as all matters required to be discussed by
generally accepted auditing standards, including those described in Statement on
Auditing Standard No. 61, as amended, as adopted by the Public Company
Oversight Board in Rule 3200T.
The Audit
Committee reviewed and discussed with management and its independent public
auditors the Company’s 2008 annual audited financial statements and quarterly
financial statements, including a review of the “Managements’ Discussion and
Analysis of Financial Condition and Results of Operations” included in the
Company’s Form 10-K for the fiscal year ended January 3, 2009 and 10-Q
filings, as well as the Company’s earnings press releases and information
related thereto.
During
fiscal year 2008, the Audit Committee held seven meetings, four of which were in
person. During four such in person meetings, the Audit Committee met with
representatives of the independent public accounting firm, both with management
present and in private sessions without management present, to discuss the
results of the audit and to solicit their evaluation of the Company’s accounting
principles, practices and judgments applied by management and the quality and
adequacy of the Company’s internal controls. At such in person meetings, the
Audit Committee also met in private sessions with the Director of Internal
Audit, who reports directly to the Committee, to discuss audit results for 2008
and audit plans for 2009.
As part
of its oversight role and in reliance upon its reviews and discussions as
outlined above, the Audit Committee reviewed and discussed with management its
assessment and report on the effectiveness of the Company’s internal control
over financial reporting as of January 3, 2009, which was made using the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control—Integrated Framework. The Audit Committee also
reviewed and discussed with Ernst & Young LLP its attestation report on
internal control over financial reporting. This report is included in Symmetry
Medical’s Annual Report on Form 10-K for the fiscal year ended January 3,
2009 filed with the SEC on March 11, 2009.
In
performing the above described functions, the Audit Committee acts only in an
oversight capacity and necessarily relies on the work and assurances of the
Company’s management and independent public accounting firm, which, in their
report, express an opinion on the conformity of the Company’s annual financial
statements to accounting principle generally accepted in the United
States.
Based
upon the Audit Committee’s discussion with the Company’s management and
Ernst & Young LLP and the Audit Committee’s review of the annual
audited financial statements, representations of the Company’s management and
the report of the independent public accountants to the Audit Committee, the
Audit Committee recommended to the Board, and the Board has approved, that the
audited consolidated financial statements be included in the Company’s Annual
Report on Form 10-K for the fiscal year ended January 3, 2009.
The Audit
Committee also approved, subject to stockholder ratification, the selection of
Ernst & Young LLP as the Company’s independent auditor for the fiscal
year 2009.
FRANCIS
T. NUSSPICKEL, Chairman
STEPHEN
B. ORESMAN, Member
|
Notwithstanding
anything to the contrary set forth in any of our previous or future filings with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that might
“incorporate by reference” future or previous filings, including this proxy
statement, in whole or in part, the previous “Report of the Compensation and
Organizational Committee on Executive Compensation,” and “Report of the Audit
Committee” shall not be incorporated by reference into any such filings, nor
shall they be deemed to be soliciting material or deemed filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
or under the Securities Exchange Act of 1934, as amended.
This
proxy statement also includes references to our or the SEC’s Web site addresses.
These Web site addresses are intended to provide inactive, textual references
only. The information on these Web sites is not part of this proxy
statement.
Code
of Business Conduct and Ethics
Pursuant
to Section 406 of the Sarbanes-Oxley Act of 2002, we have adopted a Code of
Business Conduct and Ethics that applies to our senior executive officers and to
all employees and directors and is available on our Web site
www.symmetrymedical.com under the heading “Investor Relations” then “Corporate
Governance” or by writing to Fred L. Hite, Senior Vice President, Chief
Financial Officer and Secretary at Symmetry Medical Inc., 3724 North State Road
15, Warsaw, IN 46582 and requesting a copy. We also intend to satisfy the
disclosure requirements under Item 10 of Form 8-K regarding any amendments
to or waivers of a provision of the codes by posting such information on our Web
site, unless a Form 8-K is otherwise required by applicable SEC or NYSE
rules.
Proposal
No. 1
Election
of Directors
We
currently have a Board consisting of seven directors, classified into three
classes, each of which is required to be as equal as possible in number. One
class is to be elected at each Annual Meeting of Stockholders. We currently have
three Class I directors, whose terms expire at this 2009 Annual
Stockholder’s Meeting, two Class II directors, whose terms will expire at
the 2010 Annual Stockholder’s Meeting, and two Class III directors, whose
terms will expire at the 2011 Annual Stockholder’s
Meeting.
Our
stockholders are being asked to vote to elect three directors to Class I to
serve for a three year term expiring in 2012. The nominees for director
have consented to serve, if elected, and we have no reason to believe that the
nominees will be unable to serve. Should any nominee become unavailable
for any reason, proxies may be voted for an alternate candidate chosen by the
Board. The nominees for Class I Directors receiving the greatest number of
votes will be elected as Directors.
We will
vote your shares as you specify on your proxy card. If you do not specify how
you want your shares voted, we will vote them FOR the election of all of
the nominees listed below. If unforeseen circumstances (such as death or
disability) make it necessary for us to substitute another person for any of the
nominees, we will vote your shares FOR that other person.
If you
wish your shares voted for some but not all of the nominees, or if you wish to
withhold your vote from some but not all of the nominees, you may so indicate on
the proxy card. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
Our Board
of Directors has nominated, upon recommendations from the Governance and
Nominating Committee, the persons named below for election as Class I
Directors. Following is the principal occupation during the past five years
and certain other information of each nominee.
Director
Nominee — Class I
JOHN S. KRELLE has served as a director
since January 4, 2008. Since May 23, 2008, Mr. Krelle has served as Chairman of
the Compensation and Organizational Committee and a member of the Governance and
Nominating Committee. Since 2005 Mr. Krelle has served as President, Chief
Executive Officer and a member of the Board of Directors of Fziomed Inc., a
privately held company based in California, specializing in the manufacture and
commercialization of medical biomaterials. Prior to his tenure at
Fziomed, Mr. Krelle worked in the medical device and pharmaceutical industries
for almost thirty years in positions of increasing scope and
complexity. From 1987 he served in various senior capacities for
Zimmer Holdings, running major business units on three continents. Mr. Krelle
was head of Spine, Trauma and Business Development at the time of Zimmer’s
acquisition of Swiss company Centerpulse, which made Zimmer the largest pure
play orthopaedic company in the world. Prior to that, he spent five
years managing businesses outside the US including Asia, Canada and Latin
America. While directing Asia and Japan operations, Mr. Krelle established a new
subsidiary in Shanghai, China as well as other geographical expansion throughout
the region, to capitalize on the explosive growth of orthopaedics in the
area. During this period, Mr. Krelle also served as a member of the
Board of Directors of Zimmer K.K. and played major roles in the spin-out from
Bristol Myers Squibb and the subsequent Zimmer public offering on the NYSE in
2001. Prior experience at Zimmer included acting as the Vice
President of Global Knee marketing. Mr. Krelle joined Zimmer from German
pharmaceutical company Schering AG where he was responsible for UK sales and
marketing. Mr. Krelle earned a B.A. in mechanical engineering at
Swindon Technical College while working in the British automobile industry and
an M.B.A. at Sussex University, U.K.
THOMAS E. CHORMAN has
served as an independent director and member of the Audit Committee of Standex
International Corp. (NYSE: SXI) since June 2004. In October 2008 he
was also appointed to the Governance and Nominating Committee of
Standex. An entrepreneur and private investor since June 2006,
co-founding two companies; Foam Partners, LLC (polyurethane foam fabrication)
and Boomer Capital (authoritative baby boomer website and
consulting). In December 2008, he purchased Discovery Manufacturing
Inc. and established Solar LED Innovations, LLC, a designer, manufacturer and
marketer of solar rechargeable lighting products. Prior
thereto, Mr. Chorman served as President, CEO and director of Foamex
International (manufacturer of comfort cushioning for the furniture and
automotive markets) from September 2001 through June 2006. Previously, Mr.
Chorman was CFO at Ansell Healthcare (2000-2001), Armstrong Flooring Products
Division CFO (1997-2000), and CFO for Corporate New Ventures and other financial
positions at Procter & Gamble (1984-1997). Mr. Chorman holds an
M.B.A. from Rutgers and a B.S. from the City University of New
York.
ROBERT G. DEUSTER has
served as Chairman and Chief Executive Officer of Newport Corporation (NASDAQ:
NEWP), a global supplier of laser, optical and motion control products since May
1996. Mr. Deuster retired from Newport in October of 2007. Mr. Deuster also
served as President of Newport from May 1996 until July 2004, and in June 1997,
he became Chairman of the Board. From 1985 to 1996, Mr. Deuster served in
various senior management positions at Applied Power, Inc (now Actuant Corp
NYSE: ATU), a global manufacturer of electrical and hydraulic products, serving
as Senior Vice President of the Distributed Products Group from 1994 to 1996,
President of the Barry Controls Division from 1989 to 1994, President of the
APITECH Division from 1986 to 1989 and Vice President of Sales and Marketing of
the Enerpac Division from 1985 to 1986. From 1975 to 1985, he held engineering
and marketing management positions at General Electric Company’s Medical Systems
Division. Mr. Deuster currently serves as a director on the board of
NEXX Systems, a privately held semiconductor capital equipment company. Mr.
Deuster received a B.S. in Electrical Engineering from Marquette University in
1973.
The
Board of Directors recommends a vote FOR the proposed election of
the
Class I
Director nominees described in this proxy statement.
Proposal
No. 2
Ratification
of the Appointment of Independent Auditors
In
accordance with the provisions of the Sarbanes-Oxley Act of 2002, the Audit
Committee has appointed Ernst & Young, LLP as our independent auditors
to conduct our annual audit for the year ending January 2, 2010, and, although
not legally required but in accordance with established policy, we are
submitting this appointment to stockholders for ratification. In the event the
appointment is not ratified by a majority of votes cast, in person or by proxy,
we anticipate that no change in auditors would be made for the current year
because of the difficulty and expense of making any change so long after the
beginning of the current year. However, any such vote would be considered in
connection with the auditors’ appointment for the year ended January 1,
2011.
The
Board of Directors recommends a vote FOR the ratification of the
appointment
of
Ernst & Young, LLP as independent auditors for our year ending January
2, 2010.
Proposal
No. 3
Approval
of Amendment No. 1 to the Symmetry Medical Inc.
Amended and Restated
2004 Equity Incentive
Plan
Background of Need for an Amended
Plan
Our Board
of Directors has approved Amendment No. 1 to the Symmetry Medical Inc. Amended
and Restated 2004 Equity Incentive Plan (the “Amended Plan”), subject to
stockholder approval, which is designed to amend our Symmetry Medical Inc.
Amended and Restated 2004 Equity Incentive Plan (the “2004 Equity Incentive
Plan”).
Our 2004
Equity Incentive Plan authorizes the grant of restricted and non-restricted
shares of Common Stock, stock appreciation rights, stock units, cash performance
awards, and options to purchase shares of the Company’s stock (collectively the
“Awards”). The basic design and operation of our Amended Plan is the
same as our 2004 Equity Incentive Plan. The only material difference
between the Amended Plan and the 2004 Equity Incentive Plan is
the description of the business criteria upon which performance awards are
based. Under the 2004 Equity Incentive Plan, the Compensation and Organizational
Committee has authority to grant awards. The Amended Plan contains a detailed
listing of business criteria objectives the Compensation and Organizational
Committee will utilize when setting the performance goals for those awards. The
list of the objectives is as follows: (i) operating income (before or after
taxes); (ii) earnings per share (before or after taxes); (iii) sales or product
volume growth; (iv) operating income before or after depreciation and
amortization (and including or excluding capital expenditures); (v) cash flow
(including but not limited to, operating cash flow, free cash flow and cash flow
return on capital); (vi) operating profit (before or after taxes); (vii) book
value; (viii) net earnings (before or after taxes); (ix) market share; (x)
return measures (including, but not limited to, return on capital, invested
capital, assets, equity); (xi) margins; (xii) share pricing (including but not
limited to, growth measures and total shareholder return); (xiii) comparable or
sales; (xiv) net income (before or after taxes); (xv) productivity improvement
or operating efficiency; (xvi) costs or expenses; (xvii) shareholder’s equity;
(xviii) revenues or sales; (xix) earnings before or after taxes, interest,
depreciation, and/or amortization; (xx) revenue-generating unit-based metrics;
(xxi) expense targets; (xxii) individual performance objectives; (xxiii) working
capital targets; (xxiv) measures of economic value added; (xxv) inventory
control; (xxvi) enterprise value; (xxvii) objective measures of customer
satisfaction.
Why We are Seeking Stockholder
Approval
Under
Section 162(m), a company may not deduct for tax purposes compensation over
$1,000,000 paid to its Chief Executive Officer or its four other most highly
compensated executive officers (excluding the Chief Financial Officer), unless
the compensation is "performance-based." Compensation is considered
"performance-based" only if the executive officer meets one or more objective
performance goals. The performance goals must also be in writing and set by a
compensation committee consisting of two or more members, all of whom must be
"outside directors" as defined by the Code. The performance goals must be set
before it can be known whether or not the executive officer will meet the goals.
The material terms of the performance goals or the means of determining them
must also be disclosed to and approved by stockholders before the compensation
is paid. We believe that the criteria described in the Amended Plan as the basis
for awarding incentive compensation meet all of the necessary requirements and,
if approved by stockholders, will render compensation paid under the Amended
Plan deductible. We are seeking stockholder approval in order to obtain
favorable tax treatment under Section 162(m) of the Internal Revenue
Code.
In
addition to the aforementioned criteria, in order for our Company to fully
deduct performance-based compensation, our stockholders must approve the
material terms of the performance measures every five years. Our last
stockholder approval was in 2004.
In the
event that stockholders do not approve, compensation paid to the named executive
officers in excess of $1,000,000 each will not be deductible under Section
162(m) of the Code.
Description
of the Amended Plan
General. The Amended Plan is designed to enable
us to attract, retain and motivate our directors, officers, employees and
consultants, and to further align their interests with those of our
stockholders, by providing for or increasing their ownership interests in our
company. The following description of the Amended Plan is a summary and is
therefore qualified in its entirety by reference to the complete text of the
Amended Plan, which is attached hereto as Exhibit A.
Administration. The Amended Plan is
administered by the Compensation and Organizational Committee of our Board of Directors. Our
Board may, however, at any time resolve to administer the Amended Plan. Subject
to the specific provisions of the Amended Plan, the Compensation and
Organizational Committee is authorized to select persons to participate in the
Amended Plan, determine the form and substance of grants made under the Amended
Plan to each participant, modify the terms of grants made under the Amended
Plan, and otherwise make all determinations for the administration of the
Amended Plan.
Participation. Individuals eligible to
participate in the Amended Plan are directors (including non-employee
directors), officers (including non-employee officers) and employees of, and
other individuals performing services for, or to whom an offer of employment has
been extended by, us or our subsidiaries.
Type of Award. The Amended Plan provides
for the issuance of stock options, stock appreciation rights (“SARs”),
restricted stock, deferred stock, dividend equivalents, other stock-based awards
and performance awards. Performance awards will be based on the achievement of
one or more business or personal criteria or goals, as described
above.
Available Shares. An aggregate of 1,673,333
shares of our common stock are reserved for issuance under the Amended Plan,
subject to certain adjustments reflecting changes in our
capitalization. The shares were registered on Form S-8 under the
Securities Act of 1933 on March 28, 2005. To date, we have granted
514,390 shares of restricted common stock to certain of our officers, directors
and employees under the 2004 Equity Incentive Plan. If any grant
under the Amended Plan expires or terminates unexercised, becomes unexercisable
or is forfeited as to any shares, or is tendered or withheld as to any shares in
payment of the exercise price of the grant or the taxes payable with respect to
the exercise, then such unpurchased, forfeited, tendered or withheld shares will
thereafter be available for further grants under the Amended Plan. The Amended
Plan provides that the Compensation and Organizational Committee shall not
grant, in any one calendar year, to any one participant awards to purchase or
acquire a number of shares of common stock in excess of 15% of the total number
of shares authorized for issuance under the Amended Plan.
Option Grants. Options
granted under the Amended Plan may be either incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”) or non-qualified stock options, as the Compensation and Organizational
Committee may determine. Incentive stock options may only be granted to our
employees. The exercise price per share for each option will be established by
the Compensation and Organizational Committee, except that the exercise price
may not be less than 100% of the fair market value of a share of common stock as
of the date of grant of the option. In the case of the grant of any incentive
stock option to an employee who, at the time of the grant, owns more than 10% of
the total combined voting power of all of our classes of stock, the exercise
price may not be less than 110% of the fair market value of a share of common
stock as of the date of grant of the option.
Terms of Options. The term during which each
option may be exercised will be determined by the Compensation and
Organizational Committee, but if required by the Code and except as otherwise
provided in the Amended Plan, no option will be exercisable in whole or in part
more than ten years from the date it is granted, and no incentive stock option
granted to an employee who at the time of the grant owns more than 10% of the
total combined voting power of all of our classes of stock will be exercisable
more than five years from the date it is granted. All rights to purchase shares
pursuant to an option will, unless sooner terminated, expire at the date
designated by the Compensation and Organizational Committee. The Compensation
and Organizational Committee will determine the date on which each option will
become exercisable and may provide that an option will become exercisable in
installments. The shares constituting each installment may be purchased in whole
or in part at any time after such installment becomes exercisable, subject to
such minimum exercise requirements as may be designated by the Compensation and
Organizational Committee. Prior to the exercise of an option and delivery of the
shares represented thereby, the optionee will have no rights as a stockholder,
including any dividend or voting rights, with respect to any shares covered by
such outstanding option. If required by the Code, the aggregate fair market
value, determined as of the grant date, of shares for which an incentive stock
option is exercisable for the first time during any calendar year under all of
our equity incentive plans may not exceed $100,000.
Stock Appreciation
Rights. SARs entitle a participant
to receive shares of our common stock with a value equal to the amount by which
the fair market value of a share of our common stock on the date of exercise
exceeds the grant price of the SAR. The grant price and the term of a SAR will
be determined by the Compensation and Organizational Committee, provided that
(1) the exercise price of a SAR may never be less than the fair market value of
a shares of our common stock on the date the SAR is granted, (2) our common
stock is traded on an established securities market, (3) only shares of our
common stock may be delivered in settlement of the right upon exercise and (4)
the SAR does not include any feature for the deferral of compensation other than
the deferral of recognition of income until exercise of the SAR.
Termination of Options and
SARs. Unless otherwise
determined by the Compensation and Organizational Committee, and subject to
certain exemptions and conditions, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for us for any reason
other than death, disability, retirement or termination for cause, all of the
participant’s options and SARs that were exercisable on the date of such
cessation will remain exercisable for, and will otherwise terminate at the end
of, a period of 90 days after the date of such cessation, but in no event after
the expiration date of the options or SARs; provided that the participant does
not compete with us during such 90-day period without the written consent of the
Board of Directors or the Compensation and Organizational Committee. In the case
of death or disability, but in no event after the expiration date of the options
or SARs, all of the participant’s options and SARs that were exercisable on the
date of such death or disability will remain so for a period of 180 days from
the date of such death or disability; provided that the participant does not
compete with us during such 180-day period without the written consent of the
Board of Directors or the Compensation and Organizational Committee. In the case
of retirement, all of the participant’s options and SARs that were exercisable
on the date of retirement will remain exercisable for, and shall otherwise
terminate at the end of, a period of 90 days after the date of retirement, but
in no event after the expiration date of the options or SARs; provided that the
participant does not compete with us during such 90-day period without the
written consent of the Board of Directors or the Compensation and Organizational
Committee. In the case of a termination for cause, or if a participant does not
become a director, officer or employee of, or does not begin performing other
services for us for any reason, all of the participant’s options and SARs will
expire and be forfeited immediately upon such cessation or non-commencement,
whether or not then exercisable.
Restricted Stock and Restricted
Stock Units. Restricted stock is a grant of shares of our common stock
that may not be sold or disposed of, and that may be forfeited in the event of
certain terminations of employment, prior to the end of a restricted period set
by the Compensation and Organizational Committee. A participant granted
restricted stock generally has all of the rights of a stockholder, unless the
Compensation and Organizational Committee determines otherwise. An award of a
restricted stock unit confers upon a participant the right to receive shares of
our common stock at the end of a vesting period set by the Compensation and
Organizational Committee, unless the participant elects in a timely fashion to
defer the receipt of shares with respect to the restricted stock unit, subject
to possible forfeiture of the award in the event of certain terminations of
employment prior to the end of the vesting or deferral period. Prior to
settlement, an award of a restricted stock unit carries no voting or dividend
rights or other rights associated with share ownership, although the participant
shall have the right to receive accumulated dividends on distributions with
respect to the corresponding number of shares of our common stock underlying the
unit at the end of the vesting or deferral period.
Dividend Equivalents. Dividend equivalents
confer the right to receive, currently or on a deferred basis, cash, shares of
our common stock, other awards or other property equal in value to dividends
paid on a specific number of shares of our common stock. Dividend equivalents
may be granted alone or in connection with another award, and may be paid
currently or on a deferred basis. If deferred, dividend equivalents may be
deemed to have been reinvested in additional shares of our common
stock.
Other Stock-Based Awards. The Compensation and
Organizational Committee is authorized to grant other awards that are
denominated or payable in, valued by reference to, or otherwise based on or
related to shares of our common stock, under the Amended Plan. These awards may
include convertible or exchangeable debt securities, other rights convertible or
exchangeable into shares of common stock, purchase rights for shares of common
stock, awards with value and payment contingent upon our performance as a
company or any other factors designated by the Compensation and Organizational
Committee. The Compensation and Organizational Committee will determine the
terms and conditions of these awards.
Performance Awards. The Compensation and
Organizational Committee may subject a participant’s right to exercise or
receive a grant or settlement of an award, and the timing of the grant or
settlement, to performance conditions specified by the Compensation and
Organizational Committee. Performance awards may be granted under the Amended
Plan in a manner that results in their qualifying as performance-based
compensation exempt from the limitation on tax deductibility under Section
162(m) of the Internal Revenue Code for compensation in excess of $1,000,000
paid to our chief executive officer and our four highest compensated officers.
The Compensation and Organizational Committee will determine performance award
terms, including the required levels of performance with respect to particular
business criteria, as listed below, the corresponding amounts payable upon
achievement of those levels of performance, termination and forfeiture
provisions and the form of settlement. In granting performance awards, the
Compensation and Organizational Committee may establish unfunded award “pools,”
the amounts of which will be based upon the achievement of a performance goal or
goals based on one or more business criteria. Business criteria will include,
for example, any one or more of the following: (i) operating income (before or
after taxes); (ii) earnings per share (before or after taxes); (iii) sales or
product volume growth; (iv) operating income before or after depreciation and
amortization (and including or excluding capital expenditures); (v) cash flow
(including but not limited to, operating cash flow, free cash flow and cash flow
return on capital); (vi) operating profit (before or after taxes); (vii) book
value; (viii) net earnings (before or after taxes); (ix) market share; (x)
return measures (including, but not limited to, return on capital, invested
capital, assets, equity); (xi) margins; (xii) share pricing (including but not
limited to, growth measures and total shareholder return); (xiii) comparable or
sales; (xiv) net income (before or after taxes); (xv) productivity improvement
or operating efficiency; (xvi) costs or expenses; (xvii) shareholder’s equity;
(xviii) revenues or sales; (xix) earnings before or after taxes, interest,
depreciation, and/or amortization; (xx) revenue-generating unit-based metrics;
(xxi) expense targets; (xxii) individual performance objectives; (xxiii) working
capital targets; (xxiv) measures of economic value added; (xxv) inventory
control; (xxvi) enterprise value or (xxvii) objective measures of customer
satisfaction.
Amendment of Outstanding Awards and
Amendment/Termination of Plan. The Board of Directors or
the Compensation and Organizational Committee generally will have the power and
authority to amend or terminate the Amended Plan at any time without approval
from our stockholders. The Compensation and Organizational Committee generally
will have the authority to amend the terms of any outstanding award under the
plan, subject to certain limitations set forth in the plan, at any time without
approval from our stockholders. No amendment will become effective without the
prior approval of our stockholders if stockholder approval would be required by
applicable law or regulations, including if required for continued compliance
with the performance-based compensation exception of Section 162(m) of the Code,
under provisions of Section 422 of the Code or by any listing requirement of the
principal stock exchange on which our common stock is then listed. Unless
previously terminated by the Board of Directors or the Compensation and
Organizational Committee, the Amended Plan will terminate on the tenth
anniversary of the adoption of the 2004 Equity Incentive Plan. No termination of
the Amended Plan will materially and adversely affect any of the rights or
obligations of any person, without his or her written consent, under any grant
of options or other incentives theretofore granted under the Amended
Plan.
Transfer of Awards. Unless the Compensation
and Organizational Committee determines otherwise or unless a transfer meets
certain requirements set forth in the Amended Plan, no award granted under the
Amended Plan may be transferred by a participant. In the event an award is
transferred in accordance with the requirements of the Amended Plan, all
provisions of the Amended Plan will continue to apply to such award and the
transferee of such award shall be bound thereby.
Change of Control. Unless otherwise
determined by the Compensation and Organizational Committee, if certain events
occur which constitute a change of control of the Company as defined in the plan
and a participant’s employment or service as a director, officer or employee is
terminated within 12 months thereafter without cause, by reason of death,
disability or retirement, or by the participant after certain changes in the
nature of that participant’s employment or failure by the Company to fulfill
their obligations towards the participant: (i) any awards carrying a right to
exercise that was not previously vested and exercisable shall be fully vested
and exercisable for 180 days after the date of such termination and (ii) with
respect to other awards, any restrictions, deferrals of settlement or other
conditions, with certain exceptions, will be deemed lapsed and such awards
deemed fully vested and (iii) the performance goals and conditions relating to
any performance awards, in the discretion of the Compensation and Organizational
Committee, shall be deemed met as of the date of the change in control. In the
event of a merger or consolidation in which our capital stock outstanding
immediately prior thereto does not represent 50% of the outstanding capital
stock of the surviving entity, the Compensation and Organizational Committee may
cancel any or all outstanding options under the Amended Plan in consideration
for payment to the holders of those options the net consideration they would
have received in such transaction if their options had been fully exercised
immediately prior thereto.
Amended Plan
Benefits
Future
grants under the Amended Plan will be made at the discretion of the Compensation
and Organizational Committee and, accordingly, are not yet determinable, except
with respect to our annual automatic grants of restricted stock to our
non-management directors. Currently, our non-management directors
receive an annual grant of 7,400 shares of restricted stock, however, the
Compensation and Organizational Committee has the discretion to increase or
decrease this annual grant.
In
addition to the discretionary nature of future grants, the value of the awards
granted under the Plan will depend on a number of factors, including the fair
market value of our common stock on future dates and the exercise decisions made
by the participants. Consequently, it is not possible to determine
the benefits that might be received by participants receiving discretionary
grants under the Amended Plan, including the automatic grants to our
non-management directors. The Securities Authorized for Issuance
under the Equity Compensation Plans Table below provides information as of
January 3, 2009, regarding the equity outstanding under our equity compensation
plans, the weighted average exercise price of outstanding equity and the number
of securities remaining available for issuance.
Equity
Compensation Plan Information
The
following table sets forth, as of January 3, 2009, certain information related
to our equity:
Equity
Compensation Plan Information as of January 3, 2009
Plan
Category
|
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants
and rights
(a)
|
|
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
(b)
|
|
|
Number
of securities
remaining
available for
future
issuance under equity
incentive
plans (excluding
securities
reflected in column
(a))
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
|
804,334 |
|
|
$ |
3.1789 |
|
|
|
2,599,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
- |
|
|
|
- |
|
|
|
300,000 |
|
Total
|
|
|
804,334 |
|
|
$ |
3.1789 |
|
|
|
2,899,954 |
|
Certain U.S. Federal
Income Tax Consequences
The
following discussion summarizes the federal income tax consequences to
participants who may receive grants of Awards under the Amended
Plan. This discussion of federal income tax consequences does not
purport to be a complete analysis of all potential tax effects of the Amended
Plan. This discussion is based upon interpretation of laws,
regulations, rulings and decisions now in effect, all of which are subject to
change. No information is provided with respect to foreign, state or
local tax laws, or estate and gift tax considerations. This
discussion is limited to the U.S. federal income tax consequences to individuals
who are citizens or residents of the U.S., other than those individuals who are
taxed on a residence basis in a foreign country.
Restricted Stock. In the absence of a
Section 83(b) election (as described below), a participant who receives
restricted shares will recognize no income at the time of grant. When the
restrictions expire, a participant will recognize ordinary income (treated as
compensation) equal to the fair market value of the shares when the restrictions
expire over the amount paid for the shares (if any). The Company generally will
be entitled to a deduction equal to the fair market value of the shares when
included in the participant's income.
If a
Section 83(b) election is made within 30 days of the initial grant,
the participant must recognize the fair market value of the restricted shares on
the date of grant as ordinary income (treated as compensation) as of the date of
grant, and the holding period would begin at the time the restricted shares are
granted. The Company generally would be entitled to a corresponding business
expense deduction for the grant, but dividends on the shares would not be
deductible. Any subsequent disposition of the shares by the participant, other
than by forfeiture, would result in capital gain or loss, which would be long-
or short-term, depending on the holding period. Upon a subsequent forfeiture of
restricted shares with respect to which a Section 83(b) election has been
made, no deduction will be allowed in respect of the amount included as income
at the time the Section 83(b) election was made; however, the participant
will generally be allowed a loss deduction equal to the amount (if any) the
participant paid for the restricted shares over the amount (if any) the Company
paid the participant for the restricted shares at the time it is
forfeited.
Incentive Stock
Options. A participant will not recognize any taxable income
upon the grant or exercise of an incentive stock option qualifying under Section
422 of the Code; however, the exercise of an incentive stock option may increase
the participant’s alternative minimum tax liability, if any.
If stock
acquired upon the exercise of an incentive stock option is disposed of within
two years after the date of grant and within one year after the issuance of such
shares to the participant, (a “disqualifying disposition”), generally (i) the
participant will recognize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of the shares at
exercise or, if less, the amount realized on the disposition of the shares) over
the option exercise price paid for such shares and (ii) the Company will be
entitled to a tax deduction in the same amount. Any further gain or
loss realized by the participant will be taxed as short-term or long-term
capital gain or loss, as the case may be, and will not result in any deduction
by the Company.
If stock
is issued to a participant pursuant to the exercise of an incentive stock
option, and if no disposition of the shares is made by the participant within
two years after the date of grant and within one year after the issuance of such
shares to the participant, then (i) upon the resale of such shares, any
amount realized in excess of the option exercise price will be treated as a
long-term capital gain and any loss sustained will be a long-term capital loss
and (ii) no deduction will be allowed to the Company for federal income tax
purposes.
Non-qualified Stock
Options. A
participant will not recognize taxable income for the grant of nonqualified
stock options. Upon the exercise of a nonqualified stock option,
ordinary income is recognized by the participant in an amount equal to the
difference between the option exercise price paid for the shares and the fair
market value of the shares on the date of exercise and the Company is entitled
to a tax deduction in the same amount. Upon disposition of the
shares, any gain or loss is treated as capital gain or loss. In the case of a
participant who is also an employee at the time of grant, any income recognized
upon exercise of a nonqualified stock option will constitute wages for which
withholding will be required.
Stock Appreciation
Rights. Upon
exercise of a stock appreciation right, the participant will recognize ordinary
income (treated as compensation) in an amount equal to the cash received. The
Company generally will be entitled to a business expense deduction in the same
amount and at the same time as the participant recognizes ordinary compensation
income.
Restricted Stock Units. A
participant who receives restricted share units will recognize no income at the
time of grant. In general, the participant will recognize ordinary income in the
year in which the shares subject to that award vest and are actually issued to
the participant in an amount equal to the fair market value of the shares on the
date of issuance. The Company will be entitled (subject to the
requirement of reasonableness, the provisions of Section 162(m) of the Code and
the satisfaction of a tax reporting obligation) to an income tax deduction equal
to the amount of ordinary income recognized by the participant at the time the
shares are issued. In general, the deduction will be allowed for the
taxable year in which such ordinary income is recognized by the
participant.
Performance Awards. A
participant generally will recognize no income upon the grant of a performance
share or a performance unit award. Upon the settlement of such awards,
participants normally will recognize ordinary income in the year of receipt in
an amount equal to the cash received, if any, and the fair market value of any
unrestricted shares received. If the participant is an employee, such ordinary
income generally is subject to withholding of income and employment taxes. If
the participant receives shares of restricted stock, the participant generally
will be taxed in the same manner as described above in "Restricted Stock." Upon
the sale of any shares received, any gain or loss, based on the difference
between the sale price and the fair market value on the "determination date,"
will be taxed as a capital gain or loss. The Company generally should be
entitled to a deduction equal to the amount of ordinary income recognized by the
participant on the determination date, except to the extent such deduction is
limited by applicable provisions of the Code.
Section 162(m). Under
Section 162(m) of the Internal Revenue Code, the Company may not take a tax
deduction for compensation to certain executive officers in excess of
$1 million per year, unless the compensation is "performance-based
compensation" or qualifies under certain other exceptions. The Amended Plan
contains provisions authorizing the grant of stock options, stock appreciation
rights, restricted shares and restricted share units that may constitute
performance-based awards within the meaning of Section 162(m). To the
extent that awards under the Amended Plan constitute performance-based awards,
the awards should qualify as "performance-based compensation" for purposes of
Section 162(m).
Other
Matters
We do not
intend to bring any other matters before the Annual Meeting, nor are we aware of
any other matters that are to be properly presented to the Annual Meeting by
others. In the event that other matters do properly come before the Annual
Meeting or any adjournments thereof, it is the intention of the persons named in
the Proxy to vote such Proxy in accordance with their best judgment on such
matters.
|
By
Order of the Board of Directors
|
|
|
|
/s/ FRANK
TURNER
|
|
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Chairman
of the Board
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May
1, 2009
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PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION.
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Proxy
— Symmetry Medical Inc.
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Solicited
on Behalf of the Board of Directors
ANNUAL
MEETING OF STOCKHOLDERS — June 22, 2009— 12:00 p.m. CDT
Hilton
Chicago O’Hare Airport
Chicago,
Illinois 60666
The
undersigned, revoking all prior proxies, hereby appoints Francis T. Nusspickel
and Brian S. Moore or either of them, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated on the reverse side hereof, all the shares of Common Stock of
Symmetry Medical Inc. held of record by the undersigned on April 27, 2009, at
the Annual Meeting of Stockholders to be held on June 22, 2009, or any
adjournment or postponement thereof.
In their
discretion, the proxies are authorized to vote upon such other matters as may
properly come before the meeting or any amendments or postponement
thereof.
You
are encouraged to specify your choices by marking the appropriate boxes ON THE
REVERSE SIDE. You need not mark any boxes if you wish to vote in accordance with
the Board of Directors’ recommendations. If no direction is given, this proxy
will be voted
FOR all proposals.