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 R
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
¨ Preliminary
Proxy Statement
¨ Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
R Definitive
Proxy Statement
¨ Definitive
Additional Materials
¨ Soliciting
Material Pursuant to §240.14a-12
ADAMS GOLF, INC.
|
(Name
of Registrant as Specified In Its Charter)
|
|
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
|
Payment
of Filing Fee (Check the appropriate box):
R No
fee required.
¨ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
|
|
|
(1)
|
Title
of each class of securities to which transaction
applies:
|
|
|
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11
|
|
|
(set
forth the amount on which the filing fee is calculated and state how it
was determined):
|
|
|
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
|
|
¨
|
Fee paid previously with preliminary
materials.
|
¨
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
Previously Paid:
|
|
|
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
|
|
B.H.
(Barney) Adams
Chairman
of the Board
Adams
Golf, Inc.
2801 E.
Plano Parkway
Plano,
Texas 75074
April 9,
2010
Dear
Adams Golf Stockholder:
I am
pleased to invite you to Adams Golf’s Annual Meeting of
Stockholders. The meeting will be held at 9:00 a.m. central daylight
time on Tuesday, May 25, 2010 at Adams Golf, Inc.’s offices, 2801 E. Plano
Parkway, Plano, Texas, 75074.
At the
meeting, you and the other stockholders will be asked to (1) re-elect three
Directors to the Adams Golf Board and (2) ratify the appointment of BKD, LLP as
our independent auditors for the current fiscal year. You will also have the
opportunity to ask questions about our business. You will find other detailed
information about Adams Golf and its operations, including its audited
consolidated financial statements, in the enclosed Annual Report.
We hope
you can join us on May 25th.
Whether or not you can attend, please read the enclosed Proxy Statement. When
you have done so, please mark
your votes on the enclosed proxy, sign and date the proxy, and return it to us in the
enclosed envelope. Your vote is important, so please return your proxy
promptly.
Yours
truly,
B.H.
(Barney) Adams
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
SHAREHOLDER MEETING TO BE HELD ON MAY 25, 2010:
Our
Proxy Statement and 2009 Annual Report are available at:
http://bnymellon.mobular.net/bnymellon/adgf.
Adams
Golf, Inc.
2801
E. Plano Parkway
Plano,
Texas 75074
April 9,
2010
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 25, 2010
Adams
Golf will hold its Annual Meeting of Stockholders at our principal executive
offices, which are located at 2801 E. Plano Parkway, Plano, Texas, 75074 on
Thursday, May 25, 2010 at 9:00 a.m. central daylight time.
We are
holding this meeting:
|
·
|
to
re-elect three Class III Directors to serve until the 2013 Annual Meeting
of Stockholders; and
|
|
·
|
to
ratify the appointment of BKD, LLP as our independent auditors for the
year ending December 31, 2010.
|
Your
Board of Directors has selected March 31, 2010 as the record date for
determining stockholders entitled to vote at the meeting. A list of
stockholders on that date will be available for inspection at Adams Golf, Inc.,
2801 East Plano Parkway, Plano, Texas, 75074 for at least 10 days before the
meeting.
This
Notice of Annual Meeting, Proxy Statement, Proxy and Adams Golf’s 2009 Annual
Report to Stockholders are being distributed on or about April 9,
2010.
By Order
of the Board of Directors,
Pamela
High
Secretary
WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE MARK, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. IF
YOU DO ATTEND THE ANNUAL MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE
IN PERSON. THE PROMPT RETURN OF PROXIES WILL HELP TO ENSURE A QUORUM AND SAVE
ADAMS GOLF THE EXPENSE OF FURTHER SOLICITATION.
ADAMS GOLF,
INC.
Proxy
Statement
for
the
Annual
Meeting of Stockholders
to be
held
May 25,
2010
This
Proxy Statement and Form of Proxy are being distributed on or about April 9,
2010.
TABLE
OF CONTENTS
Proxy
Statement
|
|
1
|
|
|
|
Proposal
No. 1 – Election of Directors
|
|
6
|
|
|
|
Corporate
Governance
|
|
9
|
|
|
|
Board
Structure and Committee Membership
|
|
10
|
|
|
|
Director
Nomination Process
|
|
14
|
|
|
|
Executive
Officers
|
|
16
|
|
|
|
Compensation
Discussion and Analysis
|
|
16
|
|
|
|
Compensation
Committee Report
|
|
28
|
|
|
|
Executive
Compensation
|
|
29
|
|
|
|
Director
Compensation
|
|
35
|
|
|
|
Stock
Ownership
|
|
38
|
|
|
|
Proposal
No. 2 – Ratification of Independent Registered Public
Accounting Firm
|
|
40
|
|
|
|
Audit
Committee Report
|
|
41
|
|
|
|
Annual
Meeting Advance Notice Requirements
|
|
43
|
Please
see the back cover of this Proxy Statement for directions to the Annual
Meeting.
PROXY
STATEMENT
FOR
THE 2010 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors (the “Board”) of
Adams Golf, Inc. is soliciting proxies for the Annual Meeting of
Stockholders. You are receiving a proxy statement because you own
shares of Adams Golf common stock that entitle you to vote at the
meeting. By use of a proxy, you can vote whether or not you attend
the meeting. The proxy statement describes the matters we would like
you to vote on and provides information on those matters so you can make an
informed decision.
This proxy statement includes
information relating to the proposals to be voted on at the meeting, the voting
process, compensation of our Directors and officers, and other required
information.
In this proxy statement, unless
otherwise indicated, the words “the Company,” “Adams Golf,” “we,” “our” and “us”
refer to Adams Golf, Inc.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
SHAREHOLDER MEETING TO BE HELD ON MAY 25, 2010:
Our
Proxy Statement and 2009 Annual Report are available at:
http://bnymellon.mobular.net/bnymellon/adgf.
Purpose
of the Annual Meeting
The purpose of the Annual Meeting is to
elect Directors, to ratify the Audit Committee’s selection of the independent
registered public accounting firm, and to transact such other business as may
properly come before the Annual Meeting.
Annual
Meeting Admission
You are invited to attend the Annual
Meeting in person. The Annual Meeting will be held at 9:00 a.m.
central daylight time on Thursday, May 25, 2010 at our offices at 2801 E. Plano
Parkway, Plano, Texas, 75074.
Quorum
A majority of the outstanding shares of
our common stock must be represented in person or by proxy at the meeting to
establish a quorum. Both abstentions and broker non-votes are counted
as present for determining the presence of a quorum. Broker non-votes
occur when you fail to provide voting instructions for shares you hold in
“street name.” In that case, your broker may be authorized to vote
your shares on routine items but is prohibited from voting your shares on other
matters. The “non-votes” on those other matters are known as “broker
non-votes.”
Stockholders
Entitled to Vote
Each share of our common stock
outstanding as of the close of business on March 31, 2010, the record date, is
entitled to one vote per share at the Annual Meeting on each matter properly
brought before the meeting. As of the record date, there were 6,988,892
shares of common stock issued and outstanding. This number does not
include treasury shares, which are not entitled to be voted at the
meeting.
Adams Golf stockholders hold their
shares in various forms, including through a stockbroker, bank, trustee, or
other nominee and directly in their own name. As summarized below, there
are some distinctions between shares held of record and those owned
beneficially:
|
·
|
Stockholder of Record –
If your shares are registered directly in your name with Adams Golf’s
transfer agent, BNY Mellon Shareowner Services, you are the record
stockholder of those shares and these proxy materials are being sent
directly to you by Adams Golf. As the stockholder of record, you
have the right to grant your voting proxy directly to Adams Golf or to
vote in person at the meeting.
|
|
·
|
Beneficial Owner – If
your shares are held in a stock brokerage account, by a bank, trustee, or
other nominee, you are considered to be the beneficial owner of shares
held in street name and these proxy materials are being forwarded to you
by your broker, trustee, or nominee who is considered the record
stockholder of those shares. As the beneficial owner, you have the
right to direct your broker, trustee or nominee on how to vote and are
also invited to attend the meeting. However, because you are not the
stockholder of record, you may not vote these shares in person at the
meeting. Your broker, trustee, or nominee is obligated to provide
you with a voting instruction card for your
use.
|
Proposals
You are Asked to Vote on and the Board’s Voting Recommendations
The following proposals are scheduled
to be voted on at the meeting. Our Board recommends that you vote your
shares as indicated below:
Proposal
|
|
The Board’s Voting Recommendation
|
|
|
|
1. The
Election of Three Director Nominees
|
|
“FOR”
Each
nominee to the Board
|
|
|
|
2. Ratification
of Independent Registered Public Accounting Firm
|
|
“FOR”
Ratification
of the Independent Registered
Public
Accounting Firm
|
Other than the proposals described in
this proxy statement, the Board is not aware of any other matters to be
presented for a vote at the Annual Meeting. If you grant a proxy, any
of the persons named as proxy holders will have the discretion to vote your
shares on any additional matters properly presented for a vote at the
meeting. If any of our nominees is unavailable as a candidate for
director, the proxy holders will vote your proxy for another candidate or
candidates as they may be nominated by the Board.
Required
Vote
The nominees for election as Directors
at the Annual Meeting will be elected by a plurality of the votes cast at the
meeting. This means that the director nominee with the most votes for
a particular slot is elected for that slot. Votes withheld from one
or more director nominees will have no effect on the election of any director
from whom votes are withheld.
The ratification of our independent
registered public accounting firm requires the affirmative “FOR” vote of a
majority of those shares present and in person or represented by proxy at the
meeting and entitled to vote on the matter. If you are a beneficial
owner and you do not provide the stockholder of record with voting instructions,
your shares may constitute broker non-votes, as described in the section on page
1 entitled Quorum. In
tabulating the voting result for any particular proposal, shares that constitute
broker non-votes will have no effect on the outcome of any vote.
Voting
Methods
If you are a “stockholder of
record,” you may vote your shares in person at the Annual Meeting, vote
by telephone, or vote by mailing in the enclosed proxy card. Please
refer to the specific instructions set forth on the enclosed proxy
card.
If you hold your shares in “street
name,” you must obtain a proxy from your broker, banker, trustee or
nominee giving you the right to vote the shares at the Annual
Meeting. Please contact your broker/banker/trustee/nominee to obtain
instructions for voting your shares.
Revoking
Your Proxy
You may revoke your proxy by doing one
of the following:
|
·
|
by
sending a written notice of revocation to the Secretary of the Company
that is received at least one business day prior to the Annual Meeting,
stating that you revoke your proxy;
|
|
·
|
by
signing a later-dated proxy card and submitting it so that it is received
prior to the Annual Meeting in accordance with the instructions included
in the proxy card; or
|
|
·
|
by
attending the Annual Meeting and voting your shares in
person.
|
Counting
the Vote
In the election of Directors, you may
vote “FOR” all of the nominees or your vote may be “WITHHELD” from one or more
of the nominees. With respect to the ratification of our independent
registered public accounting firm, you may vote “FOR,” “AGAINST,” or
“ABSTAIN.” If you sign your proxy card or broker voting instructions
card with no further instructions, your shares will be voted in accordance with
the recommendations of the Board.
Results
of the Vote
We will announce preliminary voting
results at the meeting and publish final results in a Current Report on Form 8-K
filed with the Securities and Exchange Commission within four business days of
the Annual Meeting.
Dissenters’
Right of Appraisal
None of
our stockholders have any dissenters’ or appraisal rights with respect to the
matters to be voted on at the Annual Meeting.
Delivery
of Proxy Materials
Securities and Exchange Commission
rules allow us to deliver a single copy of an annual report and proxy statement
to any household at which two or more stockholders reside, if we believe the
stockholders are members of the same family. This rule benefits both
you and the Company. We believe it eliminates duplicate mailings that
stockholders living at the same address receive and it reduces our printing and
mailing costs. This rule applies to any annual reports, proxy
statements, proxy statements combined with a prospectus, or information
statements. Each stockholder will continue to receive a separate
proxy card or voting instruction card.
Your household may have received a
single set of proxy materials this year. If you prefer to receive
your own copy now or in future years, or if you are receiving multiple copies
and would like to receive only one copy, please request a duplicate set by
contacting Ms. Pamela High, Interim Chief Financial Officer, at (972) 673-9000
or by mail at 2801 E. Plano Parkway, Plano, Texas 75074 or by email at
[email protected].
If a broker or other nominee holds your
shares, you may continue to receive some duplicate mailings. Certain
brokers will eliminate duplicate account mailings by allowing stockholders to
consent to such elimination, or through implied consent if a stockholder does
not request continuation of duplicate mailings. Because not all
brokers and nominees may offer stockholders the opportunity this year to
eliminate duplicate mailings, you may need to contact your broker or nominee
directly to discontinue duplicate mailings.
List
of Stockholders
The names of stockholders of record
entitled to vote at the Annual Meeting will be available at the Annual Meeting
for any purpose germane to the meeting. The list will be available 10
days prior to the meeting between the hours of 9:00 am and 4:30 p.m. at our
principal executive offices at 2801 East Plano Parkway, Plano, Texas, 75074, by
contacting Ms. Pamela High, Interim Chief Financial Officer.
Cost
of Proxy Solicitation
Adams Golf will pay for the cost of
preparing, assembling, printing, mailing and distributing these proxy
materials. In addition to mailing these proxy materials, the
solicitation of proxies or votes may be made in person, by telephone, or by
electronic communication by our Directors, officers and employees who do not
receive any additional compensation for these solicitation
activities. We will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
for forwarding proxy and solicitation materials to beneficial owners of
stock.
Transfer
Agent
Our Transfer Agent is BNY Mellon
Shareowner Services. All communications concerning record stockholder
accounts, including address changes, name changes, common stock transfer
requirements, and similar issues can be handled by contacting our Transfer Agent
at 877-884-3492 or on the internet at www.bnymellon.com/shareowner/isd.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Our Board is divided into three
classes. One class of Directors is elected at each Annual Meeting of
Stockholders for a three-year term of office.
The Directors elected at this meeting
will serve until the Annual Meeting of Stockholders held in
2013. Directors not up for election this year will continue in office
for the remainder of their terms.
The Board of Directors has nominated
three Directors to serve for a three-year term expiring in 2013.
If a nominee is unavailable for
election, proxy holders will vote for another nominee proposed by the Board or,
as an alternative, the Board may reduce the number of Directors to be elected at
the meeting.
The Board unanimously recommends a vote
“FOR” the election of these director nominees.
Directors
Up for Election in 2010 for Terms Expiring in 2013
Name and Principal Occupation
|
|
Age
|
|
Director Class
(Terms)
|
|
Director Since
|
|
Other Directorships
|
|
|
|
|
|
|
|
|
|
B.H.
(Barney) Adams
|
|
71
|
|
Class
III
|
|
1987
|
|
n/a
|
Chairman
of the Board of the
|
|
|
|
(Exp.
2013)
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
R. Gregory
|
|
55
|
|
Class
III
|
|
2007
|
|
n/a
|
President
& Chief Executive Officer,
|
|
|
|
(Exp.
2013)
|
|
|
|
|
Gregory
Management Co., LLC
|
|
|
|
|
|
|
|
|
Chairman
& Chief Executive Officer,
|
|
|
|
|
|
|
|
|
Epic
Secure Solutions, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
R. Mulvoy
|
|
68
|
|
Class
III
|
|
1998
|
|
n/a
|
Retired
Editor of Sports
Illustrated
|
|
|
|
(Exp.
2013)
|
|
|
|
|
Each of
our board members provides differing talents to enhance the strength of our
business. Many members have extensive experience in the golf industry
or business growth experience in a variety of industries. We expect
our board members to use their expertise and talents to represent the interest
of all Company stockholders.
B.H. Barney
Adams – Age 71, a
Director since 1987. Mr. Adams founded Adams Golf in 1987 and
has served as our Chairman of the Board since that time. Mr. Adams
served as our Chief Executive Officer from 1987 until January 2002, and as our
President from 1987 until August 2000. Mr. Adams is the inventor of
the Tight Lies® Fairway Wood. Additionally, Mr. Adams, as founder of
our business, brings a wealth of golf industry experience.
Joseph R.
Gregory – Age 55, a
Director since November 2007. Mr. Gregory is currently the
president and chief executive officer of Gregory Management Co., LLC, a private
investment management company, and is chairman and chief executive officer of
Epic Secure Solutions, Inc., a privately-held security software company.
Previously, he was a co-founder of King Pharmaceuticals, Inc. (NYSE: KG) where
he served as vice chairman and secretary of the board of directors and led the
company's sales and marketing efforts. He also served as president
and chief executive officer of Monarch Pharmaceuticals. He serves on the boards
of numerous community charities, and runs a private family foundation focusing
on children’s issues. Mr. Gregory is a graduate of the University Of Maryland
School Of Business, where he received his Bachelor of Science degree in business
administration in 1977. Mr. Gregory brings perspective as a
significant shareholder and private investor, his expertise and talents as they
relate to developing and managing emerging and growth companies through service
as an officer and director, and his perspective from industries other than
golf.
Mark R.
Mulvoy – Age 68, a
Director since April 1998. Mr. Mulvoy is a retired executive
of Sports Illustrated magazine where he was employed from 1965 to
1996. He was managing editor of Sports Illustrated from 1984 through
1996 and publisher from 1990 to 1992. Mr. Mulvoy, with his many years at Sports
Illustrated, brings significant sports-related marketing, media and public
relations experience.
Directors
Continuing in Office
Name and Principal Occupation
|
|
Age
|
|
Director Class
(Term)
|
|
Director Since
|
|
Other Directorships
|
|
|
|
|
|
|
|
|
|
John
M. Gregory
|
|
57
|
|
Class
I
|
|
2007
|
|
Stellar
Pharmaceuticals
|
Chief
Manager, SJ Strategic
|
|
|
|
(Exp.
2011)
|
|
|
|
UPM
Pharmaceuticals
|
Investments
LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Rogers
|
|
73
|
|
Class
I
|
|
2004
|
|
Texas
Industries, Inc.
|
Chairman
of the Board
|
|
|
|
(Exp.
2011)
|
|
|
|
|
of
Texas Industries, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip) Brewer III
|
|
46
|
|
Class
II
|
|
2000
|
|
n/a
|
President
and Chief Executive
|
|
|
|
(Exp.
2012)
|
|
|
|
|
Officer
of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell
L. Fleischer
|
|
42
|
|
Class
II
|
|
2005
|
|
n/a
|
Chief
Executive Officer,
|
|
|
|
(Exp.
2012)
|
|
|
|
|
HighJump
Software
|
|
|
|
|
|
|
|
|
John M.
Gregory – Age 57, a
Director since November 2007. Mr. Gregory is currently chief
manager of SJ Strategic Investments LLC, a private, family-owned investment
vehicle with a diverse portfolio of public and private investments.
Previously, he was a co-founder of King Pharmaceuticals, Inc. (NYSE:KG) and
served as chairman of the board and chief executive officer for nine
years. Currently, Mr. Gregory serves on the board of Stellar
Pharmaceuticals, Inc., a Canadian based pharmaceutical company (OTCBB: SLXCF;
TSXV: SLX), and serves as chairman and chief executive officer of UPM
Pharmaceuticals, Inc., a privately-held pharmaceutical company. Mr.
Gregory is a graduate of the University of Maryland School of Pharmacy, where he
received a Bachelor of Science in Pharmacy in 1976. Mr. Gregory brings
perspective as a significant shareholder and private investor, his expertise and
talents as they relate to founding and developing emerging and growth companies,
and his perspective from an industry other than golf.
Robert D.
Rogers – Age 73, a
Director since February 2004. Mr. Rogers has been a director of
Texas Industries, Inc. since 1970, and was elected as chairman of the board of
Texas Industries in October 2004. He retired from his position of
president and chief executive officer of Texas Industries in May 2004, a
position he had held since 1970. In addition, he is a member of the
executive board for Southern Methodist University Cox School of Business.
Mr. Rogers brings a significant amount of business expertise along with an
exceptionally strong financial background.
Oliver G. (Chip)
Brewer III – Age 46, a
Director since October 2000. Mr. Brewer has served as the President
and Chief Executive Officer of Adams Golf since January 2002. He was our
President and Chief Operating Officer from August 2000 to January 2002 and our
Senior Vice President of Sales and Marketing from September 1998 to August 2000.
Mr. Brewer brings not only his business talents but also his management skills
and a forward looking growth perspective. Since he has a long tenure with
the company he also he brings years of company specific knowledge and a vast
amount of golf industry knowledge.
Russell L.
Fleischer – Age 42, a
Director since February 2005. Mr. Fleischer is currently the Chief
Executive Officer of HighJump Software. From July 2007 to January 2010, he
was the Chief Executive Officer of Healthvision (formerly Quovadx) and from
September 2006 until July 2007, he was an Executive in Residence for Golden Gate
Capital. Mr. Fleischer was the Chief Executive Officer and a director of
TriSyn Group, a privately held software company from December 2002 until
September 2006. He was Vice President and Chief Financial Officer of Adams
Golf from November 2000 to December 2002. With Mr. Fleischer’s financial
background as a CEO and his inside knowledge garnered while he was our Chief
Financial Officer, he brings audit, finance and business knowledge coupled with
his golf industry experience. Additionally, Mr. Fleischer also has a vast
amount of experience in merger and acquisitions, capital raising and private
equity transactions.
There is no family relationship between
any of the nominees or between any nominee and any executive officer of Adams
Golf, except that Mr. John Gregory and Mr. Joseph Gregory are
brothers.
The Board of Directors has determined
that each of Messrs. Fleischer, John Gregory, Joseph Gregory, Rogers and Mulvoy
is an “independent director” pursuant to Rule 5605(a)(2) of the NASDAQ
Marketplace Rules.
CORPORATE
GOVERNANCE
Our business, property and affairs are
managed under the direction of our Board. Members of our Board are kept
informed of our business through discussions with our President and Chief
Executive Officer and other officers, by reviewing materials provided to them,
by visiting our offices and production facility, and by participating in
meetings of the Board and its Committees. The Board is committed to good
business practices, transparency of financial reporting and sound corporate
governance.
Executive
Sessions of Independent Directors
Independent Directors occasionally meet
in executive sessions without management and may or may not select a director to
facilitate the meeting. In 2009, our independent Directors held two such
meetings.
Communication
with Directors
Stockholders may communicate with the
Independent Directors or Chairs of our Audit and Compensation Committees on
Board-related issues by writing to the Committee Chairs or to the outside
Directors as a group c/o Ms. Pamela High, Interim Chief Financial Officer at
Adams Golf, 2801 E. Plano Parkway, Plano, Texas, 75074. The envelope
should clearly indicate the person or persons to whom the communication should
be forwarded.
Communications will be distributed to
the Board, or to any individual director or Directors as appropriate, depending
on the facts and circumstances outlined in the communications. The Board
has directed that certain items that are unrelated to the duties and
responsibilities of the Board do not need to be forwarded to our Directors, such
as:
|
·
|
junk
mail and mass mailings;
|
|
·
|
product
inquiries and suggestions;
|
|
·
|
resumes
and other forms of job inquiries;
|
|
·
|
business
solicitation or advertisements.
|
In addition, material that is unduly
hostile, threatening, illegal or similarly unsuitable will be excluded, with the
provision that any communication that is filtered out must be available to any
outside director upon request.
Code
of Conduct
Adams Golf has adopted a code of
conduct that applies to all of our Directors, officers and employees. To
obtain a copy of our Code of Conduct, please contact Ms. Pamela High, Interim
Chief Financial Officer, c/o Adams Golf, 2801 E. Plano Parkway, Plano, Texas,
75074.
Transactions
with Related Persons
We do not have a specific set of
policies and procedures with respect to the approval of related party
transactions. Our Code of Conduct, discussed above, which is found in our
Employee Information
Guide, governs our decision-making with respect to related party
transactions. In general, related party transactions are infrequent in
nature and, if material, are always disclosed to the Board. If a related
party transaction affects a specific Board member, that Board member will recuse
himself from voting with respect to the approval of the related party
transaction. In fiscal 2009, there were no related party transactions that
were reviewed for approval by the Board.
Ms. Cindy Adams-Herington, the daughter
of our Chairman, Barney Adams, owns 40% of Plano Paper and Supply. Her
husband, Mr. Tom Herington owns 60% of Plano Paper and Supply. Our
Chairman, Mr. Barney Adams, is a lender to Plano Paper and Supply. In June
2005, Adams Golf, in an open bid process, selected Plano Paper and Supply as a
supplier of shipping boxes for our products. In 2009, we made total
purchases of $328,000 from Plano Paper and Supply. This supply arrangement
is subject to change at any time based on then current market conditions and an
ongoing competitive bidding process.
Relationships
Two adult children of our Chairman,
Barney Adams are employees of Adams Golf. Mr. Edwin Adams serves as our
General Counsel. In 2009, Edwin Adams received an annual base salary of
$127,000 and a bonus of $500. Ms. Cindy Adams-Herington holds the position
of Vice President, Advertising and Marketing and received an annual base salary
in 2009 of $160,000 and a bonus of $500. Neither Edwin Adams nor Cindy
Herington has employment contracts or change of control arrangements with
us.
Director
Attendance at Annual Meeting of Stockholders
The Company’s policy is that our
Directors are expected to attend the Annual Meeting of Stockholders unless
extenuating circumstances prevent them from attending. All of our
then-serving Directors attended last year’s Annual Meeting of Stockholders, with
the exception of Mr. John Gregory and Mr. Joseph Gregory.
BOARD
STRUCTURE AND COMMITTEE MEMBERSHIP
The Board is divided into three classes
serving staggered three-year terms. The Board has seven Directors and two
committees: the Audit Committee and the Compensation Committee. The
membership during fiscal 2009 and the function of each Committee are described
below.
During fiscal 2009, the Board of
Directors held four regular meetings and three special meetings. The Audit
Committee held four meetings and the Compensation Committee held two meetings
during fiscal 2009. All of our Directors attended at least 75% of the
meetings of the Board and all committees on which he served either in person or
via teleconference.
The following chart shows the
composition of the committees of the Board and the number of meetings held by
each committee during fiscal year 2009.
Director
|
|
Audit
Committee
|
|
Compensation
Committee
|
|
Independent
Director 1
|
|
|
|
|
|
|
|
B.H.
(Barney) Adams
|
|
|
|
|
|
|
Oliver
G. (Chip) Brewer III
|
|
|
|
|
|
|
Russell
L. Fleischer
|
|
X
|
|
X
|
|
X
|
John
M. Gregory
|
|
|
|
|
|
X
|
Joseph
R. Gregory
|
|
|
|
|
|
X
|
Mark
R. Mulvoy
|
|
X
|
|
X
|
|
X
|
Robert
D. Rogers
|
|
X
|
|
|
|
X
|
|
|
|
|
|
|
|
Fiscal
2009 Meetings
|
|
4
|
|
2
|
|
|
|
(1)
|
Individuals
who are independent Directors in accordance with NASDAQ’s independence
standards set forth in
Rule 5605(a)(2).
|
Board
Leadership Structure and Risk Oversight
Until
January 2002, we operated with Mr. Adams, the founder of Adams Golf, serving as
our Chief Executive Officer and Chairman of the Board. Since January 2002,
Mr. Brewer has served as our Chief Executive Officer, and Mr. Adams has remained
our Chairman of the Board. Mr. Brewer has also served on our Board since
2000. Although Mr. Adams is no longer an executive officer of the Company,
he continues to participate in certain aspects of our business and operations in
addition to his service as Chairman of the Board. We believe our Chief
Executive Officer and Chairman of the Board have an excellent working
relationship that has allowed Mr. Brewer to focus on the challenges that the
Company is facing in the current business environment.
Our Board
has five independent members and two non-independent members, Messrs. Brewer and
Adams. Our Audit Committee and Compensation Committee are each comprised
solely of independent directors. We believe that the number of independent
directors that make up our Board benefits our Company and our stockholders and
that our Board structure provides strong leadership for our Board while also
positioning our Chief Executive Officer as the leader of the Company in the eyes
of our customers, employees and other stakeholders.
Our Audit Committee is primarily
responsible for overseeing the Company’s risk management processes on behalf of
the full Board. The Audit Committee receives reports from management
concerning the Company’s assessment of risks. In addition, the Audit
Committee reports regularly to the full Board, which also considers the
Company’s risk profile. The Audit Committee and the full Board focus on
the most significant risks facing the Company and the Company’s general risk
management strategy. In addition, our Compensation Committee considers
whether any of our compensation policies and practices create risks to our risk
management practices or provide risk-taking incentives to our executives and
other employees. While the Board oversees the Company’s risk management,
Company management is responsible for day-to-day risk management
processes. We believe this division of responsibilities is the most
effective approach for addressing the risks facing our Company and that our
Board structure supports this approach.
Audit
Committee
The Audit Committee assists the Board
in its oversight of the integrity of the Company’s financial statements,
compliance with legal and regulatory requirements, the qualifications,
independence and performance of the Company’s independent auditor, and the
performance of the Company’s internal auditing function. In addition, the
Audit Committee:
|
·
|
Reviews
the annual audited and quarterly consolidated financial
statements;
|
|
·
|
Reviews
the Company’s financial reporting process and disclosure and internal
controls and procedures, including major issues regarding accounting
principles and financial statement presentation, and critical accounting
policies to be used in the consolidated financial
statements;
|
|
·
|
Appoints,
oversees and approves compensation of the independent
auditor;
|
|
·
|
Reviews
with the independent auditor the scope of the annual audit, including
fees, and approves all audit and permitted non-audit services provided by
the auditor;
|
|
·
|
Reviews
findings and recommendations of the independent auditor and management’s
response to the recommendations of the independent auditor;
and
|
|
·
|
Discusses
policies with respect to risk assessment and risk management, the
Company’s major risk exposures, and the steps management has taken to
monitor and mitigate such
exposures.
|
Russell L. Fleischer, Mark R. Mulvoy
and Robert D. Rogers are the members of the Audit Committee. The Board of
Directors has determined that all of our Audit Committee members are independent
and Mr. Fleischer and Mr. Rogers qualify under the NASDAQ listing standards as
“audit committee financial experts” within the meaning of the rules of the
Securities and Exchange Commission and they both are co-chairs of the audit
committee. The charter of the Audit Committee is available at www.adamsgolf.com
under the tab “Corporate –
Corporate Governance.”
Compensation
Committee
The primary functions of the
Compensation Committee are to review and refine our executive compensation
philosophy and guiding principles to reflect Adams Golf’s mission, values and
long-term strategic objectives and to adopt and administer executive
compensation programs in a manner that furthers the interests of our
stockholders.
Compensation
Committee Interlocks and Insider Participation
None of
the members of the Compensation Committee: (i) was an officer or employee of the
Company during the fiscal year 2009, or (ii) had any relationship requiring
disclosure by the Company under the rules of the Securities and Exchange
Commission requiring disclosure of certain relationships and related party
transactions. None of our executive officers serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving on our Board or Compensation Committee.
Russell
L. Fleischer and Mark R. Mulvoy are the members of the Compensation
Committee. Mr. Mulvoy serves as the Compensation Committee Chairman. Both
Mr. Fleischer and Mr. Mulvoy qualify as independent Directors under the NASDAQ
listing standards. The Compensation Committee does not currently operate
under a Compensation Committee charter.
Role
of Committee
The
fundamental responsibilities of our Compensation Committee are:
|
·
|
to
adopt, review and refine the Company’s executive compensation philosophy
and guiding principles that reflect Adams Golf’s mission, values and
long-term strategic objectives;
|
|
·
|
to
administer the Company’s executive compensation program in a manner that
furthers the Company’s strategic goals and serves the interest of our
stockholders;
|
|
·
|
to
establish compensation-related performance objectives for executive
officers that support our strategic
plan;
|
|
·
|
to
evaluate the job performance of the Chief Executive Officer in light of
those goals and objectives;
|
|
·
|
to
determine the total compensation levels of the senior executive officers
and to allocate total compensation among the various components of
executive pay;
|
|
·
|
to
assess whether any compensation policies provide incentive for taking
risks that are reasonably likely to have a material adverse effect on
Adams Golf;
|
|
·
|
to
make recommendations to the Board of Directors regarding the adoption or
amendment of the incentive and equity-based compensation plans;
and
|
|
·
|
to
recommend to the Board the compensation arrangements with non-employee
Directors.
|
Committee
Meetings
Our
Compensation Committee meets as often as necessary to perform its duties and
responsibilities. The Compensation Committee held two formal meetings
during fiscal year 2009 and multiple informal conference calls regarding
employment contract and Director compensation issues.
The
Compensation Committee frequently receives and reviews materials in advance of
each meeting. These materials are typically compiled by management and
include information that management believes will be helpful to the Committee as
well as materials that the Committee has specifically requested. Depending
on the agenda for the particular meeting, these materials may
include:
|
·
|
financial
reports on year-to-date performance versus budget and compared to prior
year performance;
|
|
·
|
calculations
and reports on levels of achievement of individual and corporate
performance objectives; and
|
|
·
|
information
on the executive officers’ stock ownership and option
holdings.
|
For a
further discussion of the Compensation Committee’s role in executive officer
compensation, please see the “Compensation Discussion and
Analysis” section of this Proxy Statement beginning on page
17.
DIRECTOR
NOMINATION PROCESS
We have
adopted corporate governance procedures that mandate that a majority of
independent Directors must nominate all new Directors to the entire Board for a
vote. These governance procedures allow us to comply with NASDAQ
nominating committee standards. Subject to the rights of the holders of
preferred stock or any other class of our capital stock (other than common
stock), or any series of the foregoing that has been outstanding, nominations
for the election of Directors may be made by our Board, any committee appointed
by our Board, or by any stockholder entitled to vote for the election of
Directors. We do not currently have a standing nominating committee or a
charter with respect to the nominating process. Our Board believes that it
is not necessary to have such a committee because the Board’s size and
composition allow it to adequately identify and evaluate qualified candidates
for Directors. However, our Board of Directors may consider appointing
such a committee at some time in the future.
On
November 2, 2007, Stephen R. Patchin and Paul F. Brown, Jr. each resigned as a
director of Adams Golf. On November 5, 2007, the Board elected John M.
Gregory and Joseph R. Gregory as Directors.
Messrs.
Patchin and Brown resigned, and the new Directors were selected, in connection
with and pursuant to the sale on November 2, 2007 by Royal Holding Company, Inc.
to SJ Strategic Investments LLC and Joseph R. Gregory of 676,143 and 917,485
shares of Adams Golf Common Stock, respectively. Mr. Patchin is the chief
executive officer of Royal Holding Company, Inc. Mr. Brown is the vice
president, finance and chief financial officer of Royal Holding Company, Inc.
John M. Gregory is the chief manager of SJ Strategic Investments LLC. John M.
Gregory and Joseph R. Gregory are brothers.
After
Messrs. Patchin and Brown indicated to the our Board that they would be
resigning in connection with the sale, Messrs. Gregory and Gregory indicated to
the Board that they were interested in being selected as Directors in connection
with the sale to replace Messrs. Patchin and Brown. Certain of the independent
Directors of Adams Golf subsequently agreed to meet with Messrs. Gregory and
Gregory to discuss and consider their potential selection as Directors. Messrs.
Gregory and Gregory were appointed as Directors of Adams Golf at a Board meeting
held on November 5, 2007. John M. Gregory took the vacated seat of Mr.
Patchin, which expired in 2008, but John Gregory was elected at the Annual
Meeting of Stockholders in 2008. Joseph R. Gregory took the vacated seat
of Mr. Brown, which expires at this Annual Meeting.
Our Board
evaluates director nominees based on financial literacy, knowledge of our
industry or other background relevant to our needs, status as one of our
stockholders, “independence” for purposes of compliance with the rules of the
Securities and Exchange Commission and NASDAQ, moral character and willingness,
ability and availability for service. The Board does not have a policy
with regard to the consideration of diversity in indentifying director nominees,
but evaluates nominees taking into consideration the overall composition and
diversity of the Board and areas of expertise that director nominees may be able
to offer. Aside from the qualities stated above, our Board does not have a
set of minimum qualifications that must be met by director
nominees.
We have
not paid fees to any third party to assist in the process of identifying or
evaluating director candidates. Because we do not have a standing
nominating committee, this year’s nominees (each of whom is currently serving as
a Director) were selected for re-election by our entire Board.
Nominations
by Stockholders at the Annual Meeting
Our
Bylaws provide that stockholder proposals and director nominations by
stockholders may be made in compliance with certain advance notice,
informational and other applicable requirements. For a detailed
description of our Annual Meeting advance notice requirements and our
stockholder nomination procedures, please see page 42 of this proxy
statement.
EXECUTIVE
OFFICERS
Below are the names and ages of our
Chief Executive Officer and Interim Chief Financial Officer as of
December 31, 2009 (the “named executive officers”) and a brief description
of their prior experience and qualifications.
Name
|
|
Age
|
|
Position
|
Oliver
G. (Chip) Brewer III
|
|
46
|
|
President
and Chief Executive Officer
|
Pamela
J. High
|
|
35
|
|
Interim
Chief Financial Officer
|
Oliver G. (Chip)
Brewer III – Please see biography of Mr. Brewer on page 6.
Pamela J.
High – Age
35. Ms. High has served as Interim Chief Financial Officer of
Adams Golf since April 2009. She was our Controller from July 2002 to
April 2009.
COMPENSATION
DISCUSSION AND ANALYSIS
Our Compensation Discussion and
Analysis addresses the following topics:
|
·
|
the
members and role of our Compensation
Committee;
|
|
·
|
our
compensation-setting process;
|
|
·
|
our
compensation philosophy and policies regarding executive
compensation;
|
|
·
|
the
components of our executive compensation program;
and
|
|
·
|
our
compensation decisions for fiscal year 2009 and the first quarter of
fiscal 2010.
|
In this “Compensation Discussion and
Analysis” section, the terms “we,” “our,” “us,” and the “Committee” refer
to the Compensation Committee of Adams Golf’s Board.
Compensation
Philosophy and Objectives
Our compensation philosophy and
objectives are intended to align the interests of management with those of our
stockholders. The following principles influence and guide our
compensation decisions.
We
Focus on Results and Strategic Objectives
Our compensation analysis begins with
an examination of Adams Golf’s business plan and strategic objectives. In
analyzing Adams Golf’s business plan and strategic objectives, the Compensation
Committee may consider any of the following:
|
·
|
Adams
Golf products to be launched in the fiscal
year;
|
|
·
|
the
competitive environment;
|
|
·
|
targeted
revenue growth rates;
|
|
·
|
targeted
profitability rates;
|
|
·
|
investments
in the current fiscal year, including, but not limited to, personnel,
marketing, tour pro investment and capital
expenditures;
|
|
·
|
customer
concentration and channel mix
changes;
|
|
·
|
market
share data by product category; and
|
Our compensation decisions for named
executive officers are made following a detailed discussion of the
aforementioned business plan and strategic objectives. Our compensation
decisions are intended to reward key management and employees for their
participation in advancing Adams Golf’s strategic initiatives and financial
performance measures. The most significant financial performance measures
considered in setting compensation are:
|
·
|
revenue
growth versus business plan for the current fiscal
year;
|
|
·
|
profitability
versus business plan for the current fiscal year;
and
|
|
·
|
prudent
investments to build the Adams Golf brand and to focus on long-term growth
and the health of the Company.
|
At Adams Golf, our most significant
profitability measure is EBITDA (earnings before interest, taxes, depreciation
and amortization).
Compensation
Decisions Should Promote the Interests of Stockholders
At the core of our compensation
philosophy is our guiding belief that pay should be directly linked to
performance. Linking pay to performance, in our opinion, aligns the
objectives of our senior executives with the interests of our
stockholders. This philosophy has guided many of our compensation related
decisions, such as:
|
·
|
A
substantial portion of senior executive compensation is contingent on, and
variable with, achievement of objective corporate and/or individual
performance goals. A substantial majority of the variable or bonus-related
component of compensation is determined by corporate revenue growth and
profitability metrics. We believe that linking the payment of bonuses to
our senior executives to the achievement of our most significant financial
performance measures as noted above aligns the objectives of our executive
officers with the interests of our
stockholders.
|
|
·
|
We
believe that equity ownership by our senior executives aligns their
long-term incentives with those of Adams Golf’s
stockholders.
|
Compensation
Should be Reasonable and Responsible
It is essential that Adams Golf’s
overall compensation levels be sufficiently competitive to attract talented
leaders and motivate those leaders to achieve superior results. At the
same time, we believe that compensation should be set at responsible
levels. We believe that our compensation policies are responsible if our
executive compensation programs are consistent with Adams Golf’s constant focus
on controlling costs while remaining competitive to allow Adams Golf to attract
highly qualified candidates for management positions.
Compensation
Disclosures Should be Clear and Complete
We believe that all aspects of
executive compensation should be clearly, comprehensibly and promptly disclosed
in plain English to stockholders. We believe that compensation disclosures
should provide all of the information necessary to permit stockholders to
understand our compensation philosophy and objectives, our compensation-setting
process and how much our executives are paid.
The
Use of Compensation Consultants
We have in the past engaged
compensation consultants to help provide guidance on median pay and equity
ownership levels for executives in similarly-sized companies in comparable
industries. Most recently in July 2007, we engaged Mercer Human Resource
Consulting to consult with us concerning the compensation package of our
President and Chief Executive Officer, Chip Brewer for his 2008 – 2010
employment agreement.
Mercer created a peer list of
similarly-sized companies in comparable industries in order to benchmark
executive compensation levels against companies that have executive positions
with responsibilities similar in breadth and scope to ours. Because a paucity of
publicly traded, similarly sized golf equipment and golf component businesses
exists, Mercer included in its peer group analysis similarly sized companies in
the sporting goods and apparel categories. The following are several of the
companies used in the peer group for Adams Golf: Ashworth, Cutter & Buck,
Radica Games, Cybex International, Fountain Powerboat Industries, Gametech
International, Vermont Teddy Bear and Aldila. The Compensation Committee
reviewed a summary of the compensation data prepared by Mercer to ensure that
our named executive officers’ compensation programs were
competitive.
We do not currently have Mercer or any
other compensation consultant under engagement. In our opinion, our
relatively small size and the fact that the compensation package of our Chief
Executive Officer is determined by his employment agreement restricts our need
for a continuing engagement with a consultant. The Compensation Committee
may engage a compensation consultant in the future if the needs of the business
so dictate.
Elements
of Executive Compensation
Base
Salary
Base pay is a critical element of
executive compensation because it provides executives with a base level of
monthly income. In determining base salaries, we consider the executive’s
qualifications and experience, scope of responsibilities and future potential,
the goals and objectives established for the executive, the executive’s past
performance, competitive salary practices at comparable companies, internal pay
equity and the tax deductibility of base salary.
For our named executive officers, we
establish base salaries at a level so that a significant portion of the total
compensation that such named executive officers can earn is performance-based
pay.
Annual Management
Incentive Compensation Plan
Our Annual Management Incentive
Compensation Plan (the “Plan”) was established in 1998. The Plan provides
named executive officers and key employees an opportunity to earn a semi-annual
cash bonus for achieving specified performance-based goals established for each
half of the fiscal year. Performance goals are tied to measures of
financial performance rather than appreciation in stock price. Performance
goals are generally based on financial results as defined by our business plan
and bonus evaluations are made in July and January. Our business plan is
developed by our named executive officers in consultation with other members of
management of the Company and is ultimately presented to and approved by the
Board. The named
executive officers and other key employees are evaluated and paid primarily
on:
|
·
|
revenue
growth versus plan for the current fiscal
year;
|
|
·
|
profitability
versus plan for the current fiscal year;
and
|
|
·
|
prudent
investments to build the Adams Golf brand and to focus on long-term growth
and the health of the Company.
|
The Compensation Committee has been
pleased with the Plan and with the balance inherent in the measures upon which
the named executive officers and other key employees are paid under the
Plan. We are committed to growing revenue and maintaining profitability in
the short term, and in the long-term making prudent, brand-building investments
such as our commitments on the professional golf tours and our commitment to
research and development.
The Compensation Committee sets
targeted incentive payout percentages as a percentage of base salary for each
named executive officer. These targets are based on competitive practices
for each comparable position based on results from the Mercer report in 2007 and
reviews of informal surveys conducted by our human resources department.
The majority of the weighting of whether the named executive officer achieves
his or her semi-annual bonus is determined by the financial performance metrics
mentioned previously in this section. In addition, each named executive
officer has individual semi-annual goals that must be achieved, in full or in
part, in order to attain the targeted payout of the semi-annual bonus.
Performance above or below the targeted payout can be achieved based on numerous
factors including our performance versus semi-annual financial metrics and the
named executive officer’s individual performance versus his or her specific
semi-annual performance goals.
Equity-Based
Compensation
We believe that equity compensation is
the most effective and most widely accepted means of creating a long-term link
between the compensation provided to named executive officers and other key
management personnel with gains realized by the stockholders. The
Compensation Committee’s objective is to provide named executive officers with
long-term incentive opportunities that are consistent with those of comparable
companies.
The 2002 Equity Incentive Plan governs
the granting of equity-denominated securities to Adams Golf employees and was
approved by the Company’s stockholders in May 2002. The 2002 Equity Incentive
Plan allows us to grant Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Awards, Dividend Equivalents or Other
Stock-Based Awards (all terms defined in the 2002 Equity Incentive Plan).
Through 2007, we had only awarded options to purchase our common stock under the
2002 Equity Incentive Plan. The Compensation Committee regularly discusses and
evaluates the use of alternative types of awards under the 2002 Equity Incentive
Plan and may use such alternative awards in the future.
All
restricted stock awards incorporate the following features:
|
·
|
The
vesting period of current restricted stock awards varies between six
months and four years; and
|
|
·
|
Grants
do not include “reload” provisions.
|
All stock
option awards incorporate the following features:
|
·
|
The
term of the grant does not exceed 10
years;
|
|
·
|
Since
January 2005, the grant prices of option grants are not less than the
market price on the date of grant;
|
|
·
|
Grants
do not include “reload” provisions;
and
|
|
·
|
Options
generally vest 25% per year over four years beginning with the first
anniversary of the date of grant. In some instances we have used
six-month and one-year option vesting
periods.
|
We
currently use restricted stock awards as a long-term incentive vehicle
because:
|
·
|
Restricted
stock grants align the interests of executives with those of the
stockholders, support a pay-for-performance culture, foster employee stock
ownership, and focus the management team on increasing value for the
stockholders.
|
|
·
|
Restricted
stock grants help to provide a balance to the overall compensation
program; our annual bonus incentive program focuses on the achievement of
annual performance targets; the long-term vesting period for restricted
stock awards creates incentives for increases in stockholder value over a
longer term.
|
|
·
|
The
vesting period encourages executive retention and the preservation of
stockholder value.
|
We may
continue to use stock options as a long-term incentive vehicle
because:
|
·
|
Stock
options align the interests of executives with those of the stockholders,
support a pay-for-performance culture, foster employee stock ownership,
and focus the management team on increasing value for the
stockholders.
|
|
·
|
All
of the value received by the recipient from a stock option is based on the
growth of the stock price above the exercise
price.
|
|
·
|
Stock
options help to provide a balance to the overall compensation program; our
annual bonus incentive program focuses on the achievement of annual
performance targets; the four-year vesting period for stock option awards
creates incentives for increases in stockholder value over a longer
term.
|
|
·
|
The
vesting period encourages executive retention and the preservation of
stockholder value.
|
In determining the number of options
and/or restricted shares to be granted to named executive officers and other key
employees, we take into account the individual’s position, scope of
responsibility, ability to affect revenue growth, profitability and stockholder
value, as well as the individual’s historic and recent performance and the
equity value of the grant in relation to other elements of total
compensation.
Option grants for our President and
Chief Executive Officer, Chip Brewer, have been made concurrent with his
employment agreements of 2002 and 2005. As discussed in more detail in the
section entitled “Employment
Contracts and Change in Control Arrangements” on page 31 of this Proxy
Statement, in 2008 and 2009, we awarded shares of restricted stock to Mr.
Brewer, our President and Chief Executive Officer, as part of his employment
contract. These grants were approved by the Compensation Committee and the
entire Board. There have been two option grants for our Interim Chief
Financial Officer, Pamela High –one made as a key employee in October 2002 and
the other in November 2004. Ms. High was also awarded a restricted stock
grant in 2009. The grants were approved by the Compensation Committee and
the entire Board. The date of Board approval is generally the date at
which any option agreement or restricted stock grant becomes
effective.
In the past, we have granted stock
options with an exercise price less than the market price of the stock at the
date of grant. The grants were meant to incentivize key employees to help
to turn around the Company. The grants were made at a time when there was
minimal Black Scholes value in options granted with an exercise price equal to
market price on the date of grant. We believe the grants have achieved
their purpose, as we have been profitable for five of the previous seven fiscal
years and the executive team and key employees have remained largely
intact.
The expenses from these options have
been accounted for from the inception of the option grants. Given current
IRS tax rulings in Section 409A, we do not expect to grant stock options in the
future with exercise prices less than the market price of the stock at the date
of grant. We may grant other types of incentive awards under the 2002
Equity Incentive Plan in the future to the extent such awards are consistent
with and further our compensation objectives.
The application of Section 409A of the
Internal Revenue Service tax code resulted in many option holders designating
option exercise dates in advance for some options that were granted with an
exercise price less than the market price of the stock at the date of
grant. For more information about the scheduled timing of these exercises
for our employees, please consult our Annual Report for the year ended December
31, 2009, a copy of which is included with this proxy statement. In
particular, please see Note 11 of the financial statements to the Annual Report
regarding Stockholders’ Equity.
Additional
Benefits
Executive officers participate in other
employee benefit plans generally available to all employees on the same terms as
similarly situated employees. We offer a variety of health and welfare and
retirement savings programs to all eligible employees. The named executive
officers generally are eligible for the same benefit programs on the same basis
as the rest of the Company’s employees. The health and welfare programs
are intended to protect employees against catastrophic loss and to encourage a
healthy lifestyle. Our health and welfare programs include medical,
wellness, pharmacy, dental, vision, life insurance and accidental death and
disability. All employees are eligible for our 401(k)
program.
In addition, certain officers receive
other additional perquisites that are described in this Proxy Statement under
the heading “Executive
Compensation.” These perquisites include:
|
·
|
Country
Club memberships: We provide 100% of the monthly due expenses at various
country club membership opportunities for some of our officers and other
key employees.
|
|
·
|
Executive
Medical Reimbursement: We pay 100% of the costs of reimbursing top
executives and key employees for out-of-pocket medical expenses they have
incurred after our standard health insurance pays the allotted coverage
amount.
|
Our
Compensation Decisions
This section describes the compensation
decisions that we made with respect to the named executive officers for fiscal
year 2009, and the first fiscal quarter of 2010.
Executive
Summary
In 2009 and the first quarter of 2010,
we continued to apply the compensation principles previously described in
determining the compensation of our named executive officers. These
compensation decisions were made in the context of Adams Golf’s recent financial
performance.
In summary, the compensation decisions
made in 2009 and the first quarter of 2010 for the named executive officers were
as follows:
|
·
|
For
fiscal year 2010, the base salary level for our President and Chief
Executive Officer, Chip Brewer is governed by his employment agreement,
which called for an increase in base salary for 2009 to $450,000 from
$425,000. However, Mr. Brewer chose to reduce his annual base salary
to $360,000 beginning April 1, 2009, and subsequently agreed to
another reduction to $300,000 beginning June 1, 2009. Mr.
Brewer’s annualized salary between November 1, 2009 and
December 31, 2009 was $360,000. Based upon his current
employment agreement, Mr. Brewer’s salary for 2010 through 2012 will be
based upon our revenues, but will not be less than $360,000 or more than
$500,000.
|
|
·
|
The
base salary level for fiscal year 2009 for our Interim Chief Financial
Officer, Pamela High was reduced June 1, 2009 and then increased to
$110,000 in November1, 2009. Eric Logan, our former Chief Financial
Officer, chose to reduce his annualized base salary level for fiscal year
2009 to $200,000 from $215,000 beginning April 1, 2009 and then left Adams
Golf on April 30, 2009.
|
|
·
|
Because
Adams Golf did not achieve its 2008 or 2009 Annual Plan revenue or EBITDA
targets, neither Mr. Brewer nor Ms. High were paid incentive bonuses
relating to performance in fiscal year 2009. Ms. High was paid a $500 end
of year bonus, in appreciation of her efforts during the challenging
business environment of 2009.
|
We believe that these decisions are
consistent with our core compensation principles and objectives:
|
·
|
We
believe in a “pay-for-performance”
culture;
|
|
·
|
Compensation
decisions should promote the interests of long-term stockholders;
and
|
|
·
|
Compensation
should be reasonable and
responsible.
|
Base
Salary Decisions
We have historically adjusted base
salaries on a calendar year basis. For fiscal year 2010, the base salary
level for our President and Chief Executive Officer, Chip Brewer is governed by
his employment agreement. The base salary level for fiscal year 2010 for
our Interim Chief Financial Officer, Pamela High remained at her 2009 base
salary of $110,000.
Name
|
|
Title
|
|
2010 Base Salary
|
|
|
2009 Base Salary
|
|
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip) Brewer III
|
|
President
and Chief Executive Officer
|
|
Variable
between
$360,000
and $500,000
|
|
|
$ |
351,000 |
|
|
|
|
|
|
|
|
|
|
|
Pamela
J. High
|
|
Interim
Chief Financial Officer
|
|
110,000 |
|
|
|
98,000 |
|
In setting these base salaries, we
considered:
|
·
|
our
compensation philosophy and guiding principles described
above;
|
|
·
|
the
experience and industry knowledge of the named executive officers and the
quality and effectiveness of their leadership at the
Company;
|
|
·
|
all
of the components of executive compensation, including base salary,
incentive compensation, stock options, and benefits and
perquisites;
|
|
·
|
the
mix of performance pay to total compensation;
and
|
|
·
|
internal
pay equity among Adams Golf’s senior
executives.
|
For a more detailed description of Mr.
Brewer’s current employment agreement, please see “Employment Contracts and Change in
Control Arrangements” on page 31.
Annual Management
Incentive Compensation Plan Decisions
Our Annual Management Incentive
Compensation Plan provides our named executive officers and key employees an
opportunity to earn a semi-annual cash bonus for achieving specified
performance-based goals established for the fiscal year. In 2008, 2009 and
2010, the Compensation Committee has established performance objectives for the
named executive officers based on targeted levels of revenue growth and EBITDA
(earnings before interest, taxes, depreciation and amortization). We
believe that focusing on revenue growth is important because there are distinct
advantages to revenue and profitability scale in the golf equipment business,
such as the ability to advertise on network-televised golf events, to sponsor
professional tour pros, and the ability to compete for strong research and
development talent. We believe that focusing on EBITDA is important
because it is the most widely-accepted metric for the cash flow generated by a
business. The performance objectives allow the named executive officers to
earn a cash bonus up to a specified percentage of their base salary if Adams
Golf achieves at least a specified threshold of the above
metrics.
The targeted bonus levels as a
percentage of salary for 2010 for the named executive officers are specified
below:
|
|
|
|
Potential Bonus
as Percentage (%) of Salary (1)
|
|
Name
|
|
Title
|
|
Threshold
|
|
|
Target
|
|
|
Stretch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip) Brewer III
|
|
President
and Chief Executive Officer
|
|
|
0 |
% |
|
|
100 |
% |
|
|
200 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela
J. High
|
|
Interim
Chief Financial Officer
|
|
|
0 |
% |
|
|
20 |
% |
|
|
— |
|
(1)
|
The
named executive officers are eligible to receive a bonus equal to up to
the specified percentage of their base salary if Adams Golf achieves the
specified level of revenue growth and EBITDA as defined in the Company’s
business plan.
|
Per the terms of Mr. Brewer’s
employment contract, Mr. Brewer is entitled to a targeted bonus percentage of
100% with a stretch bonus percentage of 200%.
Stock
Option and Restricted Stock Grant Decisions
In March 2008 per Mr. Brewer’s
employment agreement, we granted Mr. Brewer 150,000 shares of our restricted
common stock, which vested or will vest in six equal installments on the last
trading days of June and December 2008, 2009 and 2010. In November 2009,
per an amendment to Mr. Brewer’s employment agreement, we granted Mr. Brewer
175,000 shares of our restricted common stock. 12,500 of the shares vest
on each of the last trading day of June 2010 and the second to last trading day
of December 2010. 37,500 of the shares vest on each of the last trading
days of June 2011 and June 2012 and the second to last trading days of December
2011 and December 2012.
Ms. High
received a grant of 50,000 shares of restricted stock in October 2009, which
shares will vest in four equal annual installments beginning on October 23,
2010.
As of the record date for the 2010
Annual Meeting, the named executive officers hold the following unvested
restricted stock grants and stock options that would become vested upon a change
in control.
Name
|
|
No. of Shares
Underlying
Unvested
Awards (#)
|
|
|
Unrealized
Value of
Unvested
Awards ($)
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip) Brewer III
|
|
|
225,000 |
|
|
$ |
663,750 |
|
|
|
|
|
|
|
|
|
|
Pamela
J. High
|
|
|
50,000 |
|
|
$ |
147,500 |
|
Note: The unrealized value of
these unvested restricted stock awards were calculated by multiplying the number
of unvested shares remaining in such restricted stock awards by the closing
price of our common stock as of December 31, 2009, $2.95.
Reasonableness
of Compensation
After considering all components of the
compensation paid to the named executive officers, the Compensation Committee
has determined that the compensation is reasonable and is not excessive.
In making this determination, we considered many factors, including the
following:
|
·
|
Management
has generally led Adams Golf to increasing levels of profitability and
revenue growth over their tenure.
|
|
·
|
Management
has generally matched or exceeded the performance of peer companies in the
golf industry.
|
|
·
|
Management
has consistently led Adams Golf to increasing brand strength over their
tenure.
|
|
·
|
Management’s
compensation as compared to the compensation of executives at peer list
companies studied in the past.
|
|
·
|
The
stockholder return performance of Adams Golf for the past six
years.
|
|
·
|
The
compensation program for named executive officers and other key employees
has generally achieved the goals of retaining and attracting talented
management members who can and have helped us return the Company to
profitability.
|
The
Compensation Committee has also reviewed our compensation policies and practices
for all of our executive officers and other employees and determined that any
risks arising from such compensation policies and practices, including any risks
to our risk management practices and risk-taking incentives created from such
compensation policies and practices, are not reasonably likely to have a
material adverse effect on us.
Management’s
Role in the Compensation-Setting Process
Management plays a significant role in
the compensation-setting process. The most significant aspects of
management’s role are:
|
·
|
evaluating
employee performance;
|
|
·
|
establishing
business performance targets and
objectives;
|
|
·
|
recommending
salary levels and option awards;
and
|
|
·
|
preparing
meeting information for each Compensation Committee
meeting.
|
Upon request, the Chief Executive
Officer may also participate in Compensation Committee meetings to
provide:
|
·
|
background
information regarding Adams Golf’s strategic
objectives;
|
|
·
|
his
evaluation of the performance of the senior executive officers;
and
|
|
·
|
compensation
recommendations as to senior executive officers other than
himself.
|
Compensation
Policies
The
Tax Deductibility of Compensation Should be Maximized Where
Appropriate
The Company generally seeks to maximize
the deductibility for tax purposes of all elements of compensation. For example,
the Company has historically only issued nonqualified stock options that result
in a tax deduction to Adams Golf upon exercise. Section 162(m) of the Internal
Revenue Code generally disallows a tax deduction to public corporations for
non-qualifying compensation in excess of $1.0 million paid in any taxable year
to an individual who, on the last day of the taxable year, is either the
Company’s principal executive officer or an individual who is among the three
most highly compensated officers for the taxable year (other than the principal
executive officer or the principal financial officer). We review compensation
plans in light of applicable tax provisions, including Section 162(m), and may
revise compensation plans from time to time to maximize deductibility. We may,
however, approve compensation that does not qualify for deductibility when we
deem it to be in the best interest of Adams Golf.
Financial
Restatement
It is the Board’s policy that the Board
will, to the extent permitted by governing law, have the sole and absolute
authority to make retroactive adjustments to any cash or equity-based incentive
compensation paid to named executive officers and certain other key management
where the payment was predicated on the achievement of certain financial results
that were subsequently the subject of restatement. Where applicable, the
Company will seek to recover any amount determined to have been inappropriately
received by the individual involved. We have not had to pursue recovery
from any individual as a result of a restatement of our financial
statements.
Stock
Ownership Guidelines
We have not adopted formal stock
ownership guidelines for our named executive officers however, we do believe
that the ownership of stock by named executive officers helps align their
interests with those of long-term stockholders.
Timing
of Stock Option Grants
Adams Golf has adopted a policy on
stock option grants that includes the following provisions relating to the
timing of option grants:
|
·
|
The
grant date of stock options is always the date of approval of the grants
(or a specified later date if for any reason the grant is approved during
a time when Adams Golf is in possession of material, non-public
information).
|
|
·
|
The
exercise price is the closing price of the underlying common stock on the
grant date for those stock options that may be granted in the
future.
|
COMPENSATION
COMMITTEE REPORT
We have reviewed and discussed the
foregoing “Compensation
Discussion and Analysis” with management. Based on our review and
discussion with management, we have recommended to the Board that the “Compensation Discussion and
Analysis” be included in this proxy statement.
Submitted
by:
Russell
L. Fleischer
Mark
R. Mulvoy
Members
of the Compensation Committee
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth
information concerning the compensation of our named executive officers during
the fiscal year ended December 31, 2009.
Name and
Principal Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Option
Awards
|
|
|
Restricted
Stock
Awards
|
|
|
All Other
Compensation
|
|
|
Total
Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip)
|
|
2009
|
|
$ |
351,000 |
|
|
$ |
0 |
(1) |
|
|
— |
|
|
$ |
551,000 |
(3) |
|
$ |
58,345 |
(5) |
|
$ |
960,345 |
|
Brewer
III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
and Chief
|
|
2008
|
|
|
425,000 |
|
|
|
1,544,000 |
(2) |
|
|
— |
|
|
|
1,275,000 |
(4) |
|
|
77,930 |
(6) |
|
|
3,321,930 |
|
Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
400,000 |
|
|
|
400,000 |
|
|
|
— |
|
|
|
— |
|
|
|
79,194 |
|
|
|
879,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
T. Logan
|
|
2009
|
|
|
65,833 |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
8,389 |
(7) |
|
|
74,222 |
|
Senior
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
Chief Financial
|
|
2008
|
|
|
215,000 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
|
34,846 |
(8) |
|
|
299,846 |
|
Officer
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
200,000 |
|
|
|
220,000 |
|
|
|
— |
|
|
|
— |
|
|
|
32,515 |
(9) |
|
|
452,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela
J. High
|
|
2009
|
|
|
98,000 |
|
|
|
500 |
|
|
|
|
|
|
|
160,000 |
(11) |
|
|
7,497 |
(12) |
|
|
265,497 |
|
Interim
Chief Financial Officer (10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
company did not meet it’s performance objectives thus, no performance
based bonuses were awarded.
|
(2)
|
Includes
a $1,344,000 long-term incentive payment pursuant to Mr. Brewer’s 2005 –
2007 employment agreement and a semi-annual bonus award of $200,000
related to the Company’s financial performance in the second half of
fiscal year 2007.
|
(3)
|
The
value of the restricted stock award was based on a share price of $3.15
per share, which was the closing price of our common stock on November 6,
2009, the date of the restricted stock
award.
|
(4)
|
The
value of the restricted stock award was based on a share price of $8.50
per share, which was the closing price of our common stock on March 13,
2008, the date of the restricted stock
award.
|
(5)
|
Includes
$23,799 of automobile expenses; $1,174 for Group Term Life insurance
premiums; $10,675 for health and welfare benefits; $18,446 for country
club memberships and $4,250 of 401(k) matching
contributions.
|
(6)
|
Includes
$24,586 of automobile expenses; $1,436 for Group Term Life insurance
premiums; $21,833 for health and welfare benefits; $2,430 of
non-reimbursed business expenses; $18,446 for country club memberships and
$9,200 of 401(k) matching
contributions.
|
(7)
|
Effective
as of April 21, 2009, Mr. Logan no longer served as our Chief Financial
Officer. Includes $415 for Group Term Life insurance premiums; $5,357 for
health and welfare benefits; and $2,8809 of 401(k) matching
contributions.
|
(8)
|
Includes
$455 for Group Term Life insurance premiums; $24,013 for health and
welfare benefits; and $10,379 of 401(k) matching
contributions.
|
(9)
|
Includes
$420 for Group Term Life insurance premiums; $25,345 for health and
welfare benefits; and $6,750 of 401(k) matching
contributions.
|
(10)
|
Ms.
High began serving as our Interim Chief Financial Officer on April 27,
2009.
|
(11)
|
The
value of the restricted stock award was based on a share price of $3.20
per share, which was the closing rice of our common stock on
October 23, 2009, the date of the restricted stock
award.
|
(12)
|
Includes
$157 for Group Term Life insurance premiums; $6,197 for health and welfare
benefits; and $1,143 of 401(k) matching
contributions.
|
Narrative
Discussion of Summary Compensation Table
The salary and stock option awards for
Mr. Brewer are determined by his employment agreement with the Company.
For a more detailed description of the Employment Agreement, please see “Employment Contracts and Change in
Control Arrangements” beginning on page 31. Bonuses for Mr.
Brewer and Ms. High are paid semi-annually under the terms of the Company’s
Annual Management Incentive Compensation Plan. The Summary Compensation
Table presents the total amount of bonuses paid to the Company’s named executive
officers in fiscal years 2007, 2008 and 2009. While Mr. Brewer and Mr.
Logan were each paid semi-annual incentive bonuses of $200,000 and $50,000,
respectively, in 2008, such bonuses related to the Company’s performance in the
last six months of 2007. Because Adams Golf did not achieve its 2008 or
2009 Annual Plan revenue or EBITDA targets, none of Mr. Brewer, Ms. High and Mr.
Logan were paid an incentive bonuses relating to performance in fiscal years
2008 or 2009. For a more detailed description of the Company’s Annual
Management Incentive Compensation Plan, please see “Annual Management Incentive
Compensation Plan” on page 25.
Grants
of Plan-Based Awards
Set forth in the following table is
information with respect to plan-based awards made to our named executive
officers in 2009:
Name
|
|
Grant Date
|
|
All Other
Stock Awards:
Number of
Shares of
Stock or Units
|
|
|
All Other
Option Awards:
Number of
Securities
Underlying
Options
|
|
|
Grant Date
Fair Value
of Stock and
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip) Brewer III
|
|
November
9, 2009
|
|
|
175,000 |
|
|
|
— |
|
|
$ |
551,250 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela
J. High
|
|
October
23, 2009
|
|
|
50,000 |
|
|
|
— |
|
|
|
160,000 |
(2) |
(1)
|
The
value of the restricted stock award was based on a share price of $3.15
per share, which was the closing price of our common stock on November 3,
2009, the date of the restricted stock award was approved by the
board.
|
(2)
|
The
value of the restricted stock award was based on a share price of $3.20
per share, which was the closing price of our common stock on October 23,
2009, the date of the restricted stock
award.
|
Pursuant to Mr. Brewer’s employment
agreement, he received 175,000 shares of restricted stock in
2009. 12,500 of such shares vest on each of the last trading day of
June 2010 and the second to last trading day of December 2010. 37,500
of such shares vest on each of the last trading days of June 2011 and June 2012
and the second to last trading days of December 2011 and December
2012. The restricted stock grants and stock option awards for Mr.
Brewer are determined by his employment agreement with the
Company. For a more detailed description of the Employment Agreement,
please see “Employment
Contracts and Change in Control Arrangements” beginning on page
31. Ms. High received a grant of 50,000 shares of restricted stock in
2009, which shares will vest in four equal annual installments beginning on
October 23, 2010. There were no equity grants given to Mr. Logan
during the fiscal year ended December 31, 2009.
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth
information concerning restricted stock awards and stock options held by the
named executive officers at December 31, 2009.
Name and
Principal Position
|
|
Grant Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of
Restricted
Securities
That Have
Not Vested
|
|
|
Market
Value of
Restricted
Securities
That Have
Not Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip)
|
|
1/16/2002
|
|
|
243,750 |
|
|
|
— |
|
|
$ |
0.04 |
|
1/16/2012
|
|
|
— |
|
|
|
— |
|
Brewer
III (1)
|
|
2/14/2003
|
|
|
97,474 |
|
|
|
— |
|
|
|
0.04 |
|
2/14/2013
|
|
|
— |
|
|
|
— |
|
|
|
7/31/2003
|
|
|
119,778 |
|
|
|
— |
|
|
|
0.04 |
|
7/31/2013
|
|
|
— |
|
|
|
— |
|
|
|
1/15/2004
|
|
|
66,694 |
|
|
|
— |
|
|
|
0.04 |
|
1/15/2014
|
|
|
— |
|
|
|
— |
|
|
|
3/10/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
(2) |
|
$ |
147,500 |
(3) |
|
|
11/09/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000 |
(4) |
|
$ |
516,250 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela
J. High (5)
|
|
10/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
147,500 |
(3) |
All
information in this table relates to nonqualified stock options. The
Company has not granted any incentive stock options or stock appreciation rights
(“SARs”).
(1)
|
Mr.
Brewer’s options vested as follows: Options granted 1/16/2002
vested on 7/16/2002; options granted 2/14/2003 vested on 8/14/2003;
options granted 7/31/2003 vested on 1/31/2004; and options granted
1/15/2004 vested on 7/15/2004.
|
(2)
|
Represents
restricted stock that vested or will vest in 6 equal installments on the
last trading day of June and December of
2010.
|
(3)
|
The
value of unvested shares of restricted stock is based upon the share price
of $2.95 per share, which was the closing price of our common stock on
December 31, 2009.
|
(4)
|
12,500
shares vest on each of the last trading day of June 2010 and the second to
last trading day of December 2010. 37,500 of the shares vest on
each of the last trading days of June 2011 and June 2012 and the second to
last trading days of December 2011 and December
2012.
|
(5)
|
Represents
restricted stock that vests in four equal installments on the anniversary
date of the grant.
|
Employment
Contracts and Change in Control Arrangements
Oliver
G. (Chip) Brewer III - Employment Agreement effective 2008 through
2012
On December 31, 2007, we entered into
an employment contract with Chip Brewer, our President and Chief Executive
Officer, and we amended such agreement on November 3, 2009. The term
of Mr. Brewer’s employment agreement runs from January 1, 2008 through December
31, 2012, unless earlier terminated. By the terms of his original
employment agreement, Mr. Brewer’s annual base salary for the calendar year 2009
was to be $450,000 and for the calendar year 2010 was to be
$475,000. In 2009, Mr. Brewer voluntarily agreed to reduce his annual
base salary for that year to $360,000 beginning April 1, 2009 and subsequently
agreed to another reduction to $300,000 beginning June 1,
2009. Pursuant to the amendment to his employment agreement, Mr.
Brewer’s base salary for the period commencing November 1, 2009 through December
31, 2009 was $360,000. Pursuant to his employment agreement, Mr.
Brewer’s annual base salary for the calendar years 2010, 2011 and 2012 is equal
to 0.475% of the Company’s trailing twelve-month revenues and will be
recalculated every six months, commencing July 1, 2010, using the Company’s
trailing twelve-month revenues. The Company and Mr. Brewer have
agreed that Mr. Brewer’s base salary commencing January 1, 2010 will begin at
$360,000, and that in no event will Mr. Brewer’s annual base salary be less than
$360,000 per year or more than $500,000 per year for each of the calendar years
from 2010 through 2012.
The employment agreement also provides
for retention awards of restricted stock, with vesting provisions, and subject
to proper authorization from our Board as well as compliance with all applicable
laws and regulations. On March 10, 2008, Mr. Brewer was granted
150,000 restricted shares of our common stock. The restricted stock
vests in six equal installments on the last trading days of June and December
2008, 2009 and 2010. On November 9, 2009, Mr. Brewer was granted
175,000 shares of restricted stock. 12,500 shares of such restricted
stock vest on each of the last trading day of June 2010 and the second to last
trading day of December 2010. 37,500 shares of such restricted stock
vest on each of the last trading days of June 2011 and June 2012 and the second
to last trading days of December 2011 and December 2012. If we sell
or transfer a majority of our capital stock or substantially all of our assets
to an unaffiliated entity, all of Mr. Brewer's potential restricted stock awards
under the employment agreement will vest no later than the calendar day
immediately preceding the sale or closing date of the transaction.
The agreement provides that Mr. Brewer
is eligible for a one-time long-term incentive payment at the conclusion of his
employment agreement. The amount of the payment is contingent upon
achievement of a minimum performance goal and may be increased if certain
additional performance criteria are met or exceeded.
Mr. Brewer’s employment agreement may
be terminated without cause either by us (a "termination without cause") upon
delivery of 60 days written notice, or by Mr. Brewer (a "termination without
good reason") upon delivery of 30 days’ written notice, or by the mutual
agreement of Mr. Brewer and us. We can terminate Mr. Brewer "for
cause" if Mr. Brewer (a) deliberately and intentionally breaches any material
provision of the agreement without curing such a breach within 30 days of
written notice of the breach; (b) deliberately and intentionally engages in
gross misconduct that is materially harmful to our best interests; or (c) is
convicted of a felony or crime involving moral turpitude, fraud or
deceit. Mr. Brewer can terminate his agreement "for good reason" upon
delivery of 30 days written notice to the Company no later than 90 days after
Mr. Brewer reasonably becomes aware of the circumstances giving rise to such
good reason. “Good reason” refers to any of the following conduct of
the Company: if we (a) materially breach any material provision of the agreement
without curing such breach within 30 days of written notice of the breach; (b)
assign Mr. Brewer any duties inconsistent in any material respect with his
position or diminish Mr. Brewer's status and reporting requirements, his
authority, duties, powers or responsibilities, other than an isolated incident
which is remedied within 30 days notice from Mr. Brewer; (c) fail to obtain a
written agreement to assume the obligations of this agreement five days before a
merger, consolidation or sale of all or substantially all of our
assets; (d) reduce Mr. Brewer's total compensation, other than as the result of
Mr. Brewer's failure to meet certain performance based goals established for
purposes of determining incentive based compensation; (e) relocate our principal
offices to a location more than 75 miles from Plano, Texas; or (f) if the
Company fails to set internal financial goals or adopt an equity incentive
plan. The agreement will terminate by its terms upon Mr. Brewer's
disability, if he is unable to perform his duties on a full time basis for a
period of 60 days, or upon his death.
In the event that either we terminate
the employment agreement without cause or Mr. Brewer terminates for good reason,
then Mr. Brewer will be entitled to receive (a) his annual base salary for a
period of one year after the later of the date of termination or the expiration
of the notice period; (b) all retention based restricted stock that Mr. Brewer
was potentially eligible to receive during the 12-month period following the
date on which Mr. Brewer was terminated; (c) a payment equal to both semi-annual
bonuses for which Mr. Brewer was potentially eligible in the calendar year of
termination, paid as if we achieved our internal financial goals for that
period; and (d) the long-term incentive payment for which Mr. Brewer was
potentially eligible, paid as if certain performance criteria for that period
had been achieved.
In the event that (i) Mr. Brewer
becomes disabled or upon his death; (ii) the agreement is terminated by mutual
agreement; (iii) we terminate Mr. Brewer's employment with cause; or (iv) Mr.
Brewer terminates his employment without good reason, Mr. Brewer will be
entitled to receive his accrued salary and benefits through the date of
termination, reimbursements for expenses actually incurred and benefits under
any benefit and indemnification plans for Mr. Brewer or his dependants through
the date of termination, and any continuing coverage as required by
law.
The following table shows the potential
payments upon termination or a change in control of the Company for Mr. Brewer,
based on his 2008 – 2012 employment agreement, as amended:
Executive Benefits
and Payments
Upon Separation
|
|
For
Cause
Termination
on
3/12/10
|
|
|
Resignation
Without
Good
Reason
on3/12/10
|
|
|
Without
Cause
Termination
on
3/12/10
|
|
|
Involuntary
For Good
Reason
Termination
(Change-in-
Control) on
3/12/10
|
|
|
Disability
on
3/12/10
|
|
|
Death
on
3/12/10
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
— |
|
|
|
— |
|
|
$ |
360,000 |
(1) |
|
$ |
360,000 |
(1) |
|
$ |
360,000 |
(2) |
|
$ |
360,000 |
(1) |
Expenses
|
|
|
— |
|
|
|
— |
|
|
|
— |
(3) |
|
|
— |
(3) |
|
|
— |
|
|
|
— |
(3) |
Restricted
Stock Award
|
|
|
— |
|
|
|
— |
|
|
$ |
663,750 |
(4) |
|
$ |
663,750 |
(4) |
|
|
|
|
|
|
|
|
Performance
Bonus
|
|
|
— |
|
|
|
— |
|
|
$ |
360,000 |
(5) |
|
$ |
360,000 |
(5) |
|
$ |
360,000 |
(5) |
|
|
— |
|
Long
Term Incentive Plan
|
|
|
— |
|
|
|
— |
|
|
|
1,500,000 |
(6) |
|
|
1,500,000 |
(6) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits
&Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
and Welfare Plans
|
|
|
— |
|
|
|
— |
|
|
|
42,113 |
(8) |
|
|
42,113 |
(8) |
|
|
— |
|
|
|
— |
|
Life
Insurance Benefits
|
|
|
— |
|
|
|
— |
|
|
|
1,174 |
(9) |
|
|
1,174 |
(9) |
|
|
— |
|
|
|
— |
|
(1)
|
An
additional sum equal to accrued but unpaid base salary would also be
payable to Mr. Brewer
|
(2)
|
Reflects
the total amount to be paid to Mr. Brewer including any Social Security
proceeds and disability payments.
|
(3)
|
An
additional sum equal to accrued but unpaid business expenses would also be
payable to Mr. Brewer.
|
(4)
|
Mr.
Brewer would be eligible to receive a grant of 225,000 shares of
restricted stock, with no vesting provisions upon termination without
cause or for good reason. The share price assumed was $2.95 per
share, which was the price on December 31,
2009.
|
(5)
|
Mr.
Brewer would receive the equivalent of two semi-annual bonuses,
irrespective of whether the Company was on track to achieve its internal
financial goals tied to the payment of the
bonuses.
|
(6)
|
If
EBITDA achieved by the Company is greater than a targeted level at the
time of Mr. Brewer’s separation, Mr. Brewer would receive an additional
payment equal to $0.05 for each dollar over the EBITDA
target.
|
(7)
|
An
additional sum equal to accrued but unpaid health and welfare plan and
life insurance plan benefits.
|
(8)
|
Reflects
the estimated lump-sum present value of all future costs which will be
paid on behalf of Mr. Brewer under the Company’s health and welfare and
employee benefit plans.
|
(9)
|
Reflects
the estimated lump-sum present value of the cost of coverage for life
insurance policies provided by the Company to Mr.
Brewer.
|
Option
Exercises and Stock Vested
During fiscal 2009, the named executive
officers exercised stock options as shown in the table below.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number
of Shares
Acquired or
Exercised
|
|
|
Value
Realized
on
Exercise
|
|
|
Number of
Shares
Acquired on
Vesting
|
|
|
Value
Realized on
Vesting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oliver
G. (Chip) Brewer III
|
|
|
— |
|
|
|
— |
|
|
|
50,000 |
(1) |
|
$ |
138,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
T. Logan
|
|
|
28,125 |
|
|
|
78,188 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela J. High
|
|
|
5,000 |
(2) |
|
$ |
14,725 |
|
|
|
— |
|
|
|
— |
|
|
(1)
|
Comprised
of 25,000 shares vested on June 30, 2009, valued at $2.57 per share, the
average trading price of our common stock on June 30, 2009, and 25,000
shares vested on December 31, 2009, valued at $2.96 per share, the average
trading price of our common stock on December 31,
2009.
|
|
(2)
|
Mr.
Logan exercised all his remaining options at the point of his termination
in April 2009.
|
|
(3)
|
Comprised
of 5,000 shares acquired through the exercise of options on May 15, 2009,
valued at $2.98 per share, the average trading price of our common stock
on May 15, 2009.
|
Pension
Benefits
None of
the named executive officers has received any pension benefits from Adams
Golf.
Nonqualified
Deferred Compensation
None of the named executive officers
received any nonqualified deferred compensation during fiscal 2009.
Equity
Compensation Plan Information
Plan Category
|
|
Number of Securities to
Be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
|
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
|
Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation Plans
(Excluding Securities Reflected in
Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Compensation Plans Approved by Security Holders
|
|
|
891,044 |
|
|
$ |
0.52 |
|
|
|
415,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Compensation Plans Not Approved by Security Holders
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
DIRECTOR
COMPENSATION
Compensation
Arrangements for Fiscal 2009
The following table describes the
compensation arrangements with our non-employee Directors for the 2009 fiscal
year.
|
|
2009
|
|
Annual
Cash Retainer (1)
|
|
$ |
20,000 |
|
Attendance
Fee per Meeting (2)
|
|
|
1,000 |
|
Committee
Stipends (3):
|
|
|
|
|
Audit
Committee Chair
|
|
|
5,000 |
|
Compensation
Committee Chair
|
|
|
5,000 |
|
Non-Chair
Committee Membership
|
|
|
2,500 |
|
Adams
Golf Annual Product Allowance (4)
|
|
|
1,000 |
|
|
(1)
|
Each
non-employee director who serves as a member of the Board for at least one
month of each quarter receives a quarterly director fee of
$5,000.
|
|
(2)
|
Each
non-employee director who serves as a member of the Board for at least one
month of each quarter receives $1,000 per meeting attended in person or by
telephone. We reimburse our Directors for travel and lodging
expenses that they incur in connection with their attendance of Directors’
meetings and meetings of stockholders of the
Company.
|
|
(3)
|
Each
non-employee director serving as chairperson of any committee of the Board
receives an additional $1,250 per quarter provided such person serves in
such capacity for at least one month during that quarter. Each
non-employee director serving as a member of any committee receives an
additional $625 per quarter provided such person serves in such capacity
for at least one month during that
quarter.
|
|
(4)
|
Our
non-employee Directors are also entitled to receive, at no charge, up to
$1,000 of Adams Golf products annually for promotional
purposes.
|
Actual
Fiscal 2009 Director Compensation
The following table shows the
compensation paid to our non-executive Directors for the 2009 fiscal
year. Neither Mr. Adams nor Mr. Brewer receives fees for serving as
Directors of the Company. For a description of each type of
compensation shown below, please see the footnotes above for the table entitled
“Compensation Arrangements for
2009.”
Director Compensation for Fiscal 2009
|
|
Name
|
|
Fees
Earned or Paid
In Cash
|
|
|
Option
Awards
|
|
|
All Other
Compensation
|
|
|
Total
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B.H.
(Barney) Adams
|
|
|
— |
|
|
|
— |
|
|
$ |
160,452
|
(1) |
|
$ |
160,452 |
|
Russell
L. Fleischer
|
|
$ |
37,333 |
|
|
|
— |
|
|
|
— |
|
|
|
47,750 |
|
John
M. Gregory
|
|
|
32,333 |
|
|
|
— |
|
|
|
— |
|
|
|
40,087 |
|
Joseph
R. Gregory
|
|
|
32,333 |
|
|
|
— |
|
|
|
— |
|
|
|
40,087 |
|
Mark
R. Mulvoy
|
|
|
39,833 |
|
|
|
— |
|
|
|
4,516
|
(2) |
|
|
44,349 |
|
Robert
D. Rogers
|
|
|
34,833 |
|
|
|
— |
|
|
|
— |
|
|
|
45,875 |
|
|
(1)
|
Includes
$120,000 in salary, $12,090 in automobile expenses, $4,778 in group term
life insurance premiums, $22,271 for health and welfare benefits, and
$1,312 of 401(k) company matching
contributions.
|
|
(2)
|
Represents
reimbursement of travel expenses related to meeting
attendance.
|
Narrative
to Director Compensation Table
Although
Mr. Adams is not an executive officer of Adams Golf, he is compensated for
services he provides both as Chairman of the Board and as an employee of Adams
Golf. In fiscal 2009 Mr. Adams was paid pursuant to an employment agreement
entered into on dated as of January 1, 2009. Mr. Adams is the founder of Adams
Golf and its former Chief Executive Officer, and continues to participate in
certain aspects of Adams Golf’s business and operations in addition to his
service as Chairman of the Board. Mr. Adams has been Chairman of the Board of
Adams Golf since its inception. Accordingly, the Compensation Committee and the
Board of Directors, excluding Mr. Adams, agreed that Mr. Adams should be
compensated in a different manner from that of the other non-executive Directors
of the Company.
Barney
Adams – Employment Agreement effective 2009 through 2011
The term of Mr. Adams’ current
employment agreement began on January 1, 2009 and continues until December 31,
2011, unless earlier terminated. Mr. Adams receives an annual base
salary of $120,000 during the term of the agreement. Mr. Adams serves
as our non-executive Chairman of the Board of Directors pursuant to the
agreement and performs such duties as would be reasonably expected of a
non-executive Chairman of the Board of Directors of a similarly sized
corporation.
The agreement may be terminated without
cause by us (a "termination without cause") at anytime, by Mr. Adams (a
"termination without good reason") upon delivery of 60 days’ written notice, or
by the mutual agreement of Mr. Adams and us. We can terminate Mr.
Adams "for cause" if Mr. Adams (a) deliberately and intentionally breaches any
material provision of the agreement without curing such a breach within 30 days
of written notice of the breach; (b) deliberately and intentionally engages in
gross misconduct that is materially harmful to our best interests; or (c) is
convicted of a felony or crime involving moral turpitude, fraud or
deceit. Mr. Adams can terminate his agreement "for good reason" upon
delivery of 30 days’ written notice if we (a) materially breach any provision or
fail to perform any covenant of the agreement without curing such breach or
failure to perform within 30 days of written notice of the breach or failure to
perform; (b) substantially reduce Mr. Adams' title, position, reporting
requirements, responsibilities or duties, which is not be remedied within 30
days’ notice from Mr. Adams; (c) reduce Mr. Adams' base compensation; (d) fail
to obtain a written agreement from any successor to assume the obligations of
this agreement five days before a merger, consolidation or sale of all or
substantially all of our assets; or (e) deliver to Mr. Adams written notice of
our approval for Mr. Adams to tender his resignation with good
reason.
In the event that either we terminate
the employment agreement without cause or Mr. Adams terminates for good reason,
then Mr. Adams will be entitled to receive his annual base salary for a period
of one year after such termination plus any accrued but unpaid base salary as of
the date of such termination.
The Compensation Committee determined
that Mr. Adams’ compensation was not only consistent with the compensation
philosophy and objectives of Adams Golf but comparable to companies with similar
revenues in similar industries. Adams Golf updated the data from a
study done by Mercer in 2007 to analyze the compensation practices for similar
non-executive chairpersons and presented such analysis to the Compensation
Committee prior to finalizing the terms of Mr. Adams’
compensation. Although Mr. Adams’ compensation is subject to the
terms of his agreement, the Compensation Committee may periodically review the
terms of his compensation arrangements to confirm that it continues to be
consistent with Adams Golf’s compensation philosophy and objectives, and
comparable to current compensation for non-executive chairpersons within Adams
Golf’s industry.
The following table shows the potential
payments upon termination or a change in control of the Company for Mr.
Adams:
Executive Benefits
and Payments
Upon Separation
|
|
For
Cause
Termination
on
3/12/10
|
|
|
Resignation
Without
Good
Reason
on 3/12/10
|
|
|
Without
Cause
Termination
on
3/12/10
|
|
|
Involuntary
For Good
Reason
Termination
(Change-in-
Control) on
3/12/10
|
|
|
Disability
on
3/12/10
|
|
|
Death
on
3/12/10
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
— |
|
|
|
— |
|
|
|
120,000 |
(1) |
|
$ |
120,000
|
(1) |
|
$ |
120,000
|
(2) |
|
$ |
120,000
|
(1) |
Expenses
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Performance
Bonus
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Benefits
& Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
and Welfare Plans
|
|
|
— |
|
|
|
— |
|
|
|
27,352
|
(3) |
|
|
27,352
|
(3) |
|
|
— |
|
|
|
— |
|
Life
Insurance Benefits
|
|
|
— |
|
|
|
— |
|
|
|
4,778
|
(4) |
|
|
4,778
|
(4) |
|
|
— |
|
|
|
— |
|
(1)
|
An
additional sum equal to accrued but unpaid base salary would also be
payable to Mr. Adams.
|
(2)
|
Reflects
the total amount to be paid to Mr. Adams including disability
payments.
|
(3)
|
Reflects
the estimated lump-sum present value of all future costs which will be
paid on behalf of Mr. Adams under the Company’s health and welfare benefit
plans.
|
(4)
|
Reflects
the estimated lump-sum present value of the cost of coverage for life
insurance policies provided by the Company to Mr.
Adams.
|
STOCK
OWNERSHIP
Beneficial
Ownership of Certain Stockholders, Directors and Executive Officers
This table shows, as of March 31, 2010,
the beneficial ownership of Adams Golf common stock by (1) each person known to
us to be the beneficial owner of more than 5% of our common stock; (2) each
director and nominee for director; (3) each named executive officer set forth in
the “Summary Compensation
Table” on page 29; and (4) all Directors and executive officers as a
group. The address of each executive officer and director is c/o
Adams Golf, Inc., 2801 E. Plano Parkway, Plano, Texas 75074.
|
|
Amount and Nature of Common Stock Beneficially Owned (1)
|
|
Name of Beneficial Owners
|
|
Shares Owned
as of
March 31, 2010
|
|
|
Shares Subject to
Options or
Restricted Shares
Which Are or Will
Become Exercisable
Prior to May 31,
2010 (2)
|
|
|
Total
Beneficial
Ownership
|
|
|
Percent of
Class (3)
|
|
Certain
Persons
|
|
|
|
|
|
|
|
|
|
|
|
|
SJ
Strategic Investments LLC (5)
|
|
|
2,241,142 |
|
|
|
0 |
|
|
|
2,241,142 |
|
|
|
33.7 |
% |
Roland
E. Casati (7)
|
|
|
459,650 |
|
|
|
0 |
|
|
|
459,650 |
|
|
|
7.1 |
% |
Directors
and Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B.H.
(Barney) Adams (8)
|
|
|
502,978 |
|
|
|
0 |
|
|
|
502,978 |
|
|
|
7.6 |
% |
Russell
L. Fleischer
|
|
|
2,273 |
|
|
|
12,500 |
|
|
|
14,773 |
|
|
|
* |
|
John
M. Gregory (6)
|
|
|
2,241,142 |
|
|
|
0 |
|
|
|
2,241,142 |
|
|
|
33.7 |
% |
Joseph
R. Gregory (4)
|
|
|
2,241,142 |
|
|
|
0 |
|
|
|
2,241,142 |
|
|
|
33.7 |
% |
Mark
R. Mulvoy
|
|
|
2,523 |
|
|
|
12,500 |
|
|
|
15,023 |
|
|
|
* |
|
Robert
D. Rogers (9)
|
|
|
3,523 |
|
|
|
12,500 |
|
|
|
16,023 |
|
|
|
* |
|
Oliver
G. (Chip) Brewer III
|
|
|
277,219 |
|
|
|
527,696 |
|
|
|
804,915 |
|
|
|
12.1 |
% |
Pamela
J. High
|
|
|
6,678 |
|
|
|
0 |
|
|
|
6,678 |
|
|
|
* |
|
All Directors
and Named Executive Officers as a Group (8
persons)
|
|
|
3,036,336 |
|
|
|
565,196 |
|
|
|
3,601,532 |
|
|
|
53.4 |
% |
(1)
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities.
|
(2)
|
Shares
of common stock subject to options that are presently exercisable or
exercisable within 60 days of March 31, 2010 are deemed to be beneficially
owned by the person holding such options for the purpose of computing the
beneficial ownership of such person, but are not treated as outstanding
for the purpose of computing the beneficial ownership of any other
person.
|
(3)
|
Applicable
percentage of ownership is based on 6,650,867 voting shares of common
stock outstanding on March 31,
2010.
|
(4)
|
Includes
1,116,923 shares owned by SJ Strategic Investments LLC and 2,273 shares
owned by Mr. John Gregory. Mr. Joseph Gregory’s brother, Mr.
John Gregory, is the managing member of SJ Strategic Investments
LLC. Mr. Joseph Gregory has disclaimed beneficial ownership of
the shares owned by SJ Strategic Investments and Mr. John
Gregory.
|
(5)
|
Includes
1,121,946 shares owned by Mr. Joseph R. Gregory and 2,273 shares owned by
Mr. John Gregory. Mr. John Gregory is the brother of Mr. Joseph
Gregory. SJ Strategic Investments has disclaimed beneficial
ownership of the shares owned by Mr. Joseph R. Gregory and Mr. John
Gregory. The address for SJ Strategic Investments LLC is 340
Edgemont Avenue, Suite 200, Bristol, TN
37620.
|
(6)
|
Includes
1,116,923 shares owned by SJ Strategic Investments LLC and 1,121,946
shares owned by Mr. Joseph R. Gregory. Mr. John Gregory is the
managing member of SJ Strategic Investments LLC. Mr. Joseph
Gregory is the brother of Mr. John Gregory. Mr. John Gregory
has disclaimed beneficial ownership of the shares owned by Mr. Joseph
Gregory.
|
(7)
|
The
address for Mr. Casati is Continental Offices, Ltd., 2700 River Road,
Suite 211, Des Plaines, IL 60018.
|
(8)
|
Includes
502,978 shares Mr. Adams holds jointly with Jackie Adams, his
spouse.
|
(9)
|
Represents
shares of common stock held by a trust for which Mr. Rogers has sole
voting and dispositive power over the shares held by the
trust.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Under the U.S. securities laws,
Directors, certain executive officers and persons holding more than 10% of Adams
Golf’s common stock must report their initial ownership of the common stock, and
any changes in that ownership, to the Securities and Exchange Commission. The
Securities and Exchange Commission has designated specific due dates for these
reports. Based solely on our review of copies of the reports filed
with the Securities and Exchange Commission and written representations of our
Directors and executive officers, we believe all persons subject to reporting
filed the required reports on time in 2009.
PROPOSAL
NO. 2
RATIFICATION
OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit
Committee has selected BKD, LLP as the Company’s independent registered public
accounting firm to examine the consolidated financial statements of the Company
for fiscal year 2010. The Board of Directors seeks an indication from
stockholders of their approval or disapproval of the Audit Committee’s
appointment of BKD, LLP as independent registered public accounting firm
(auditors) for fiscal year 2010.
KBA Group LLP served as our independent
auditors from 2005 until June of 2009 when they joined with BKD,
LLP. In connection with the KBA Group LLP joining BKD, LLP, effective
June 1, 2009, KBA Group LLP resigned as our principal independent auditing firm
and our Audit Committee engaged BKD, LLP as our independent
auditor. Such resignation and engagement were not as a result of any
disagreement with KBA Group LLP. No relationship exists, other than
the usual relationship between auditor and client.
Representatives
of BKD, LLP who were formerly with KBA Group LLP will be available to respond to
questions at the Annual Meeting of Stockholders and will have the opportunity to
make a statement at the Annual Meeting of Stockholders if they desire to do
so.
KBA Group
LLP’s reports on our financial statements for the past two years did not contain
an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope, or accounting principles.
Audit
and Non-Audit Fees
Service Provided
|
|
Fiscal 2009
|
|
|
Fiscal 2008
|
|
|
|
|
|
|
|
|
Audit
Fees (1)
|
|
|
|
|
|
|
Annual
Audit
|
|
|
115,500 |
|
|
$ |
128,100 |
|
|
|
|
|
|
|
|
|
|
All
Other Fees
|
|
|
|
|
|
|
|
|
401(k)
Audit
|
|
|
10,500 |
|
|
|
9,450 |
|
|
|
|
|
|
|
|
|
|
Total
Fees
|
|
$ |
126,000 |
|
|
$ |
137,550 |
|
|
(1)
|
Audit
fees consisted of audit work performed in the preparation of the financial
statements and in the assessment of internal controls over financial
reporting as required by Section 404 of the Sarbanes-Oxley Act, as well as
work that generally only the independent auditor can reasonably be
expected to provide, such as statutory audits.
|
|
|
|
Pre-Approval
Policies
As required by the Sarbanes-Oxley Act,
all audit and non-audit services performed by independent registered public
accounting firms must be pre-approved by Adams Golf’s Audit Committee unless the
pre-approval provision is waived in applicable securities rules and regulations
of the Securities and Exchange Commission. The Audit Committee may delegate to
one or more members of the Audit Committee the authority to grant pre-approval
of non-audit services. The decision of any member to whom such authority is
delegated to pre-approve non-audit services will be presented to the full Audit
Committee for its approval at its next scheduled meeting.
During fiscal year 2009, the Audit
Committee approved 100% of the total fees that were paid to BKD,
LLP.
Board
of Directors’ Recommendation
Stockholder ratification of the
selection of BKD, LLP as our independent registered public accounting firm for
the year ending December 31, 2010 is not required by our By-laws or otherwise.
We are submitting the selection of BKD, LLP to the stockholders for ratification
as a matter of good corporate practice. In the event that the stockholders fail
to ratify the selection, the Audit Committee will reconsider whether or not to
continue to retain that firm. Even if the selection is ratified, the Audit
Committee, in its discretion, may direct the appointment of a different
independent registered public accounting firm at any time during the year if the
Audit Committee determines that such a change could be in the best interest of
our stockholders.
The Company’s Board of Directors
recommends that you vote “FOR” Proposal No. 2.
AUDIT
COMMITTEE REPORT
The Audit Committee reviews the
Company’s financial reporting process on behalf of the
Board. Management has the primary responsibility for the financial
statements and the reporting process, including the system of internal
controls.
In this context, the Audit Committee
has met and held discussions with management and the independent registered
public accounting firm regarding the fair and complete presentation of the
Company’s results and the assessment of the Company’s internal control over
financial reporting. The Audit Committee has discussed significant
accounting policies applied to the Company in its financial statements, as well
as alternative treatments. Management represented to the Audit
Committee that the Company’s consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States of
America, and the Audit Committee has reviewed and discussed the consolidated
financial statements with management and the independent registered public
accounting firm. The Audit Committee discussed with the independent
registered public accounting firm matters required to be discussed by Statement
on Auditing Standards No. 61, as amended (Communications with Audit
Committees).
In addition, the Audit Committee has
discussed with the independent registered public accounting firm the auditor’s
independence from the Company and its management, including the matters in the
written disclosures required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). The Audit Committee
has received the written disclosures and the letter from independent registered
public accounting firm required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant’s communications
with the audit committee concerning independence. The Audit Committee
also had considered whether the independent registered public accounting firm’s
provision of non-audit services to the Company is compatible with the auditor’s
independence. The Audit Committee has concluded that the independent
registered public accounting firm is independent from the Company and its
management.
The Audit Committee reviewed and
discussed Company policies with respect to risk assessment and risk
management.
The Audit Committee discussed with the
Company’s internal auditor and independent registered public accounting firm the
overall scope and plans for their respective audits. The Audit
Committee met with the internal auditor and the independent registered public
accounting firm to discuss the result of their examinations, the evaluations of
the Company’s internal controls, and the overall quality of the Company’s
financial reporting.
In reliance on the reviews and
discussions referred to above, the Audit Committee recommended to the Board, and
the Board has approved, that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2009, for
filing with the Securities and Exchange Commission. The Committee has
selected BKD, LLP as the Company’s independent registered public accounting firm
for fiscal 2010.
Submitted
by:
Robert
D. Rogers
Russell
L. Fleischer
Mark
R. Mulvoy
Members
of the Audit Committee
ANNUAL
MEETING ADVANCE NOTICE REQUIREMENTS
Our By-laws provide that stockholder
proposals and director nominations by stockholders may be made in compliance
with certain advance notice, informational and other applicable
requirements. With respect to stockholder proposals (concerning
matters other than the nomination of Directors), the individual submitting the
proposal must file a written notice with the secretary of Adams Golf c/o Adams
Golf, Inc. at 2801 E. Plano Parkway, Plano, Texas 75074 setting forth certain
information about the stockholder and all persons acting in concert with him or
her, including the following information:
|
·
|
a
brief description of the business desired to be brought before the meeting
and the reasons for conducting such business at the Annual
Meeting;
|
|
·
|
the
names and addresses of the supporting
stockholders;
|
|
·
|
the
class and number of shares of our stock that are beneficially owned by
such persons; and
|
|
·
|
any
material interest of such persons in the matter
presented.
|
The notice must be delivered to the
secretary (1) at least 90 days before any scheduled meeting or (2) if less than
100 days notice or prior public disclosure of the meeting is given, by the close
of business on the 10th day
following the giving of notice or the date public disclosure was made, whichever
is earlier.
Stockholder
Nomination Procedures
A stockholder may recommend a nominee
to become a director of Adams Golf by giving the secretary (at the address set
forth above) a written notice setting forth certain information,
including:
|
·
|
the
name, age, business and residence address of the person intended to be
nominated;
|
|
·
|
a
representation that the nominating stockholder is in fact a holder of
record of Adams Golf common stock entitled to vote at the meeting and that
he or she intends to be present at the meeting to nominate the person
specified;
|
|
·
|
a
description of all arrangements between the nominating stockholder, the
nominee and other persons concerning the
nomination;
|
|
·
|
any
other information about the nominee that must be disclosed in the proxy
solicitations under Rule 14(a) promulgated under the Securities Exchange
Act of 1934, as amended;
and
|
|
·
|
the
nominee’s written consent to serve, if
elected.
|
Such nominations must be made pursuant
to the same advance notice requirements for stockholder proposals set forth in
the preceding paragraph.
We currently plan to hold our annual
meetings on the fourth Tuesday in May of each year. Accordingly, our
2011 Annual Meeting of Stockholders is currently scheduled for May 24, 2011, but
we reserve the right to change the date in the future. Unless a
change to this scheduled meeting date occurs, in order to be properly brought
before the 2011 Annual Meeting, a stockholder’s notice of a matter the
stockholder wishes to present, or the person or persons the stockholder wishes
to nominate as a director, must be received at Adams Golf’s principal executive
offices no later than the close of business on February 23, 2011.
The requirements described above do not
supersede the requirements or conditions established by the Securities and
Exchange Commission for stockholder proposals to be included in Adams Golf’s
proxy materials for a meeting of stockholders. Stockholders who, in
accordance with SEC Rule 14a-8, wish to present proposals for inclusion in the
proxy materials to be distributed in connection with our 2011 Annual Meeting
Proxy Statement must submit their proposals so that they are received at Adams
Golf’s principal executive offices no later than the close of business on
December 10, 2010.
Copies of our By-laws are available
upon written request made to the secretary of Adams Golf at the above
address. The Chairman of the meeting may refuse to bring before a
meeting any business not brought in compliance with applicable law and our
By-laws.
2801 E.
Plano Parkway
Plano,
Texas 75074
(972)
673-9000
Directions
to Adams Golf’s Annual Meeting of Stockholders
From DFW
Airport: Proceed to North exit from terminal. After
the tollbooth, stay left to enter Hwy. 121 North. Stay right on Hwy.
121 for a short distance to Hwy. 635 East exit. Follow Hwy. 635 east
to Hwy. I-75 North. Follow I-75 north approximately six miles to the
Plano Parkway exit. Turn right on Plano Parkway and follow
approximately two miles through the Jupiter Road intersection. Adams Golf is
located on the left (north) side of E. Plano Parkway.
From Love
Field: Exit Love Field and turn left on Mockingbird
Lane. Proceed to North Dallas Tollway, go left (north) to the Hwy.
635 exit. Follow Hwy. 635 east to Hwy. I-75 North. Follow
I-75 north approximately six miles to the Plano Parkway exit. Turn
right on Plano Parkway and follow approximately two miles through the Jupiter
Road intersection. Our offices are located on the left (north) side
of E. Plano Parkway.
Annual
Report
The 2009 Annual Report accompanies this
Proxy Statement. We will provide without charge upon written request, to any
person receiving a copy of this proxy statement, a copy of Adams Golf’s 2009
Form 10-K annual report, including the audited consolidated financial statements
and the financial statement schedules thereto. These requests should be
addressed to Ms. Pamela High, Interim Chief Financial Officer, c/o Adams Golf,
Inc., 2801 E. Plano Parkway, Plano, Texas 75074 (972-673-9000).
We are delivering one copy of this
Proxy Statement and the accompanying Annual Report to households even when
multiple stockholders share the same address unless we have received
instructions to the contrary from one of these stockholders. Upon a
written or verbal request from a stockholder at a shared address, we will
deliver a separate copy of this proxy statement and Annual Report, including the
audited consolidated financial statements and the financial statement schedules
thereto, and will deliver separate copies of any future Proxy Statement or
Annual Report if desired. Such a request may be made by contacting
Ms. Pamela High, Interim Chief Financial Officer, c/o Adams Golf, Inc., 2801 E.
Plano Parkway, Plano, TX 75074 (972-673-9000).