8503
Hilltop Drive
Ooltewah,
Tennessee 37363
(423)
238-4171
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MAY 22, 2009
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The
annual meeting of shareholders of Miller Industries, Inc. will be held at 9:00
a.m. (Eastern time), on Friday, May 22, 2009, at 1100 Peachtree Street,
Suite 2800, Atlanta, Georgia, for the following purposes:
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1.
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to
elect five directors to hold office for a term of one year or until their
successors are duly elected and qualified; and
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2.
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to
transact such other business as may properly come before the meeting or
any adjournment thereof.
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Only
shareholders of record at the close of business on April 7, 2009 are entitled to
notice of and to vote at the annual meeting. Your attention is
directed to the proxy statement accompanying this notice for a complete
statement regarding matters to be acted upon at the annual meeting.
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By
order of the Board of Directors,
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/s/
Frank Madonia
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Frank
Madonia
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Secretary
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Ooltewah,
Tennessee
April 15,
2009
We
urge you to attend the annual meeting. Whether or not you plan
to attend, please complete, date and sign
the enclosed proxy card and return it in the enclosed postage-paid
envelope, or submit your proxy by
Internet or telephone as described on the enclosed proxy
card. You may revoke your proxy at any time before it is
voted.
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TABLE
OF CONTENTS
Page
GENERAL
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1
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VOTING
PROCEDURES
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1
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NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS
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2
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PROPOSAL
1 — ELECTION OF DIRECTORS
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2
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Introduction
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2
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Information
Regarding Nominees
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3
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CORPORATE
GOVERNANCE
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4
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Independence,
Board Meetings and Related Information
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4
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Committees
of the Board of Directors
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4
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Director
Nominations
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5
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Related
Transactions and Business Relationships
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5
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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6
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COMPENSATION
OF EXECUTIVE OFFICERS AND DIRECTORS
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7
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Compensation
Discussion and Analysis
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7
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Report
of the Compensation Committee
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10
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Compensation
Committee Interlocks and Insider Participation
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10
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Summary
Compensation Table
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10
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Grants
of Plan-Based Awards Table
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11
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Additional
Discussion of Material Items in Summary Compensation Table
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11
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Outstanding
Equity Awards at Fiscal Year-End 2008
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12
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Option
Exercises and Stock Vested in 2008
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12
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Potential
Payments Upon Termination or Change in Control
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12
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Non-Employee
Director Compensation for 2008
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16
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ACCOUNTING
MATTERS
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16
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Audit
Committee Report
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16
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Independent
Public Accountants
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17
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CODE
OF BUSINESS CONDUCT AND ETHICS
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18
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EQUITY
COMPENSATION PLAN INFORMATION
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18
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COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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19
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OTHER
MATTERS
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19
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Deadline
for Shareholder Proposals for 2010 Annual Meeting
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19
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Expenses
of Solicitation
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19
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MILLER
INDUSTRIES, INC.
8503
Hilltop Drive
Ooltewah,
Tennessee 37363
(423)
238-4171
PROXY
STATEMENT FOR
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD MAY 22, 2009
GENERAL
This
proxy statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of Miller Industries, Inc. (the “Company” or
“Miller Industries”) for use at the Company’s 2009 annual meeting of
shareholders (the “Annual Meeting”) to be held at 1100 Peachtree Street,
Suite 2800, Atlanta, Georgia, on Friday, May 22, 2009, at 9:00 a.m. (Eastern
time), and any adjournments or postponements thereof. It is
anticipated that this proxy statement and the accompanying proxy card will first
be mailed to shareholders on or about April 17, 2009.
Only
holders of the Company’s common stock, $0.01 par value per share (the “Common
Stock”), at the close of business on April 7, 2009 are entitled to notice of and
to vote at the Annual Meeting. On such date, the Company had issued
and outstanding 11,608,360 shares of Common Stock. A list of all
shareholders entitled to vote will be available for inspection at the Annual
Meeting.
VOTING
PROCEDURES
A
majority of shares entitled to vote and represented in person or by proxy at the
Annual Meeting will constitute a quorum. Abstentions and broker
non-votes will be counted for the purpose of determining a
quorum. Each outstanding share of Common Stock is entitled to one
vote.
The
election of a nominee to the Board of Directors requires a plurality of the
votes cast by holders of shares of Common Stock present in person or represented
by proxy at the Annual Meeting. Therefore, those nominees receiving
the greatest number of votes at the Annual Meeting shall be elected, even though
such nominees may not receive a majority of the votes cast.
Abstentions
and broker non-votes will not be considered in the election of nominees to the
Board of Directors, but will be treated as votes against any other proposals
presented to the shareholders. A broker non-vote occurs when a proxy
received from a broker or other nominee holding shares on behalf of a client
does not contain voting instructions on a “non-routine” matter because the
broker or nominee has not received specific voting instructions from the client
with respect to such non-routine matter. Typically, the election of
directors is considered a routine matter by brokers and other nominees allowing
them to have discretionary voting power to vote shares they hold on behalf of
their clients.
If you
hold shares of Common Stock in your own name as holder of record, you may give a
proxy to be voted at the Annual Meeting in any of the following ways:
(i) over the telephone by calling a toll-free number;
(ii) electronically, using the Internet; or (iii) by completing,
signing and mailing the enclosed printed proxy card. If you are a
shareholder of record and would like to submit your proxy vote by telephone or
Internet, you should refer to the specific instructions provided on the enclosed
proxy card. If you are a shareholder of record and wish to submit
your proxy by mail, you should sign and return the proxy card in accordance with
the instructions thereon prior to the Annual Meeting. Additionally, a
holder of record may vote in person by completing a ballot at the Annual
Meeting. Even if you currently plan to attend the Annual Meeting, the
Company recommends that you also submit your proxy as described above so that
your vote will be counted if you later decide not to attend the Annual
Meeting.
If you
hold shares of Common Stock through a broker or other nominee (i.e., in “street
name”), the broker or nominee should provide instructions on how you may
instruct the broker or other nominee to vote those shares on your
behalf.
A
shareholder of record who votes over the Internet or by telephone may revoke the
proxy by: (i) attending the Annual Meeting, notifying the Secretary of the
Company (or his delegate), and voting in person; or (ii) voting again over
the Internet or by telephone by no later than 1:00 a.m. (Central time) on May
22, 2009. A shareholder of record who signs and returns a proxy may
revoke such shareholder’s proxy at any time before it has been exercised
by: (i) attending the Annual Meeting, notifying the Secretary of
the Company (or his delegate), and voting in person; (ii) filing with the
Secretary of the Company a written revocation; or (iii) executing and
delivering a timely and valid proxy bearing a later date. Unless
revoked, where a choice is specified on the proxy, the shares represented
thereby will be voted in accordance with such choice. If no choice is
specified, such shares will be voted FOR the election of each of
the five director nominees, and in the discretion of the proxy holders on any
other matter that may properly come before the meeting. If you hold
shares of Common Stock in street name you must follow the instructions given by
your broker or nominee to change your voting instructions.
The Board
of Directors has designated William G. Miller and Frank Madonia, and each or
either of them, to vote on its behalf the proxies being solicited hereby. The
Board of Directors knows of no matters which are to be brought to a vote at the
Annual Meeting other than those set forth in the accompanying Notice of Annual
Meeting. However, if any other matter properly does come before the
Annual Meeting, the persons appointed in the proxy, or their substitutes, will
vote in accordance with their best judgment on such matters.
NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS
The
Company posted materials related to the Annual Meeting on the Internet. The
following materials are available on the Internet at www.shareholdermaterial.com/MillerIndustries:
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this
proxy statement for the Annual Meeting; and
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the
Company’s 2009 Annual Report to Shareholders (which includes the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008, other
than the exhibits
thereto).
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PROPOSAL
1
ELECTION
OF DIRECTORS
Introduction
Pursuant
to the Company’s Charter and Bylaws, the Board of Directors has fixed the number
of directors at five. The members of the Board of Directors comprise
a single class, and at each annual meeting of shareholders all directors are
elected. The directors elected at the Annual Meeting will serve until
the annual meeting of shareholders in 2010, or until their successors are duly
elected and qualified. The Board of Directors may fill directorships
resulting from vacancies, and may increase or decrease the number of directors
to as many as fifteen or as few as three. Executive officers are
appointed annually and serve at the discretion of the Board of
Directors.
Upon the
recommendation of the Nominating Committee, the Board of Directors has nominated
Jeffrey I. Badgley, A. Russell Chandler, III, Paul E. Drack, William G. Miller
and Richard H. Roberts, the current members of the Board, for re-election as
directors. Each such nominee has consented to be named herein and to
serve as a director, if elected.
Unless
contrary instructions are received, shares of Common Stock represented by duly
executed proxies will be voted in favor of the election of each of the five
nominees named above to constitute the entire Board of Directors. The
Board of Directors has no reason to expect that any nominee will be unable to
serve and, therefore, at this time it does not have any substitute nominees
under consideration.
Directors
are elected by a plurality of the votes cast by holders of the shares of Common
Stock entitled to vote at the Annual Meeting. Shareholders have no
right to vote cumulatively for directors. Each shareholder shall have
one vote for each director for each share of Common Stock held by such
shareholder.
Information
concerning the nominees for election, based on data furnished by them, is set
forth below. Currently, they are all directors of the
Company. The Board of Directors has determined that Messrs. Chandler,
Drack and Roberts are independent directors under the listing standards of the
New York Stock Exchange (“NYSE”).
THE
BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE ELECTION OF
EACH OF THE FIVE DIRECTOR NOMINEES.
Information
Regarding Nominees
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Jeffrey
I. Badgley
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Mr.
Badgley, 57, has served as Co-Chief Executive Officer of the Company with
William G. Miller since October 2003, as President of the Company since
June 1996 and as a director since January 1996. Mr. Badgley
served as Chief Executive Officer of the Company from November 1997 to
October 2003. In June 1997, he was named Co-Chief Executive
Officer of the Company, a title he shared with Mr. Miller until November
1997. Mr. Badgley served as Vice President of the Company from
1994 to 1996, and as Chief Operating Officer of the Company from June 1996
to June 1997. In addition, Mr. Badgley has served as President
of Miller Industries Towing Equipment Inc. since 1996. Mr.
Badgley served as Vice President—Sales of Miller Industries Towing
Equipment Inc. from 1988 to 1996. He previously served as Vice
President—Sales and Marketing of Challenger Wrecker Corporation from 1982
until joining Miller Industries Towing Equipment Inc.
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A.
Russell Chandler, III
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Mr.
Chandler, 64, has served as a director of the Company since April
1994. He is founder and Chairman of Whitehall Group Ltd., a
private investment firm based in Atlanta, Georgia. Mr. Chandler
served as Chairman of Datapath, Inc., a company that builds mobile
communications trailers for military application, from October 2004 until
June 2006 and he served as the Mayor of the Olympic Village for the
Atlanta Committee for the Olympic Games from 1990 through August
1996. From 1987 to 1993, he served as Chairman of United
Plastic Films, Inc., a manufacturer and distributor of plastic
bags. He founded Qualicare, Inc., a hospital management
company, in 1972 and served as its President and Chief Executive Officer
until its sale in 1983.
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Paul
E. Drack
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Mr.
Drack, 80, has served as a director of the Company since April
1994. Mr. Drack retired in December 1993 as President and Chief
Operating Officer of AMAX Inc., positions he held since August
1991. From 1985 to 1991, Mr. Drack served in various capacities
for operating subsidiaries of AMAX Inc., including Chairman, President and
Chief Executive Officer of Alumax Inc. and President of Kawneer
Company. He was a director of AMAX Inc. from 1988 to
1993. Prior to its acquisition by Cyprus Minerals in November
1993, AMAX Inc. was a producer of aluminum and manufactured aluminum
products with interests in domestic energy and gold
production.
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William
G. Miller
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Mr.
Miller, 62, has served as Chairman of the Board since April 1994 and
Co-Chief Executive Officer of the Company since October
2003. Mr. Miller served as Chief Executive Officer of the
Company from April 1994 until June 1997. In June 1997, he was
named Co-Chief Executive Officer, a title he shared with Jeffrey I.
Badgley until November 1997. Mr. Miller also served as
President of the Company from April 1994 to June 1996. He
served as Chairman of Miller Group, Inc., from August 1990 through May
1994, as its President from August 1990 to March 1993, and as its Chief
Executive Officer from March 1993 until May 1994. Prior to
1987, Mr. Miller served in various management positions for Bendix
Corporation, Neptune International Corporation, Wheelabrator-Frye Inc. and
The Signal Companies, Inc.
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Richard
H. Roberts
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Mr.
Roberts, 54, has served as a director of the Company since April
1994. From August 2007 until February 2008, Mr. Roberts served
as the Chief Financial Officer of Friends of Fred Thompson,
Inc. Mr. Roberts served as Senior Vice President and Secretary
of Landair Transport, Inc. from July 1994 to April 2003, and from July
1994 until April 2003, Mr. Roberts served as Senior Vice President,
General Counsel and Secretary of Forward Air Corporation. From
May 1995 until May 2002, Mr. Roberts served as a director of Forward Air
Corporation. Mr. Roberts also was a director of Landair
Corporation from September 1998 until February 2003. Mr.
Roberts was a partner in the law firm of Baker, Worthington, Crossley
& Stansberry from January 1991 to August 1994, and prior thereto was
an associate of the
firm.
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CORPORATE
GOVERNANCE
Independence,
Board Meetings and Related Information
Independence
The Board
of Directors has determined that a majority of the members of the Board of
Directors are “independent,” as “independent” is defined under applicable
federal securities laws and the listing standards of the NYSE. The
independent directors are Messrs. Chandler, Drack and Roberts.
Meetings
The Board
of Directors held six meetings during 2008. All incumbent directors
attended more than 75% of the meetings of the Board of Directors and the
respective committees of which they are members. The non-management
directors meet in executive session as a part of the meetings of the Audit
Committee. The presiding director at those sessions is selected by
the non-management directors on a meeting-by-meeting basis. The
Company does not require its directors to attend its annual meeting of
shareholders. In 2008, two of the Company’s directors attended the
annual meeting of shareholders in person, and the remaining three directors
participated in the annual meeting by telephone.
Communication
with Directors
Interested
parties may communicate with any non-management director by mailing a
communication to the attention of that director at 8503 Hilltop Drive, Ooltewah,
Tennessee 37363.
Committees
of the Board of Directors
The Board
of Directors has standing Audit, Compensation and Nominating
Committees. Generally, members of these committees are elected
annually by the Board of Directors, but changes to the committees may be made at
the Board of Directors’ discretion at any time. These committees
operate pursuant to separate written charters adopted by the Board of
Directors. These charters, along with the Company’s Corporate
Governance Guidelines, are available on the Company’s website at www.millerind.com through the
“Investor Relations” link. In addition, copies of these charters and
guidelines can be obtained upon request from the Company’s Corporate
Secretary.
Audit
Committee
The Audit
Committee is comprised of Messrs. Chandler, Drack and Roberts. The
Board of Directors has determined that each of the members of the audit
committee is “financially literate” within the meaning of the listing standards
of the NYSE, and qualifies as an “audit committee financial expert” as defined
by applicable SEC rules.
The Audit
Committee, among other things, recommends the appointment of the Company’s
independent public accountants, reviews the scope of audits proposed by the
Company’s independent public accountants, reviews audit reports on various
aspects of corporate operations, and periodically consults with the Company’s
independent public accountants on matters relating to internal financial
controls and procedures. The Audit Committee held four meetings
during 2008. The report of the Audit Committee is included in this
proxy statement beginning on page 16.
Compensation
Committee
The
Compensation Committee is comprised of Messrs. Chandler, Drack and
Roberts. The Compensation Committee establishes, among other things,
salaries, bonuses and other compensation for the Company’s officers, and
administers the Company’s stock option and other employee benefit
plans. The Compensation Committee held three meetings during
2008. The report of the Compensation Committee is included in this
proxy statement beginning on page 10.
Nominating
Committee
The
Nominating Committee is comprised of Messrs. Chandler, Drack and
Roberts. The Nominating Committee was established to evaluate
candidates for service as directors of the Company and to conduct the Board’s
annual self-assessment process. The Nominating Committee will
consider candidates recommended by shareholders. Shareholder
recommendations must comply with the procedures for director nominations set
forth in Article I, Section 1.2, of the Company’s Bylaws and applicable
law. The Nominating Committee held two meetings during
2008.
Director
Nominations
The
Nominating Committee considers qualifications and characteristics that it, from
time to time, deems appropriate when it selects individuals to be nominated for
election to the Board of Directors. These qualifications and
characteristics may include, without limitation, independence, integrity,
business experience, education, accounting and financial expertise, age,
diversity, reputation, civic and community relationships and industry knowledge
and experience. In addition, prior to nominating an existing director
for re-election to the Board of Directors, the Nominating Committee will
consider and review the existing director’s Board and committee attendance,
performance and length of Board service.
Related
Transactions and Business Relationships
Policy
on Related Party Transactions
The
Company recognizes that transactions between the Company or its subsidiaries and
any of its directors or executive officers can present potential or actual
conflicts of interest. Accordingly, as a general matter it is the
Company’s preference to avoid such transactions. Nevertheless, the
Company recognizes that there are circumstances where such transactions may be
in, or not inconsistent with, the best interests of the
Company. Therefore, the Company has adopted a formal policy that
requires the Company’s Audit Committee to review and, if appropriate, approve or
ratify any such transactions. Pursuant to the policy, the Committee
will review any transaction in which the Company is or will be a participant and
the amount involved exceeds $120,000, and in which any of the Company’s
directors, executive officers or 5% shareholders had, has or will have a direct
or indirect material interest. After its review, the Committee will
only approve or ratify those transactions that are in, or are not inconsistent
with, the best interests of the Company and its shareholders.
Certain
Related Transactions and Business Relationships
In 2008,
the son of William G. Miller, the Company’s Chairman and Co-Chief Executive
Officer and holder of approximately 4.13% of the Company’s Common Stock, was
employed by a subsidiary of the Company as Vice President of Strategic Planning
and Business Development and received salary and bonus payments of
$128,150.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of March 31, 2009, certain information with
respect to the Common Stock beneficially owned by (i) each director or
nominee for director, (ii) the executive officers named in the Summary
Compensation Table, (iii) all executive officers and directors of the
Company as a group, and (iv) all shareholders known to be beneficial owners
(as that term is defined under SEC rules) of more than 5% of the Common
Stock. Except as otherwise indicated, the shareholders listed in the
table have sole voting and investment powers with respect to the Common Stock
owned by them.
Name
and Address of Beneficial Owner
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Amount
and Nature of
Beneficial
Ownership (1)
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Directors and Executive
Officers
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A.
Russell Chandler, III
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123,916 |
(3) |
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1.07%
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Paul
E. Drack
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21,709 |
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*
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Richard
H. Roberts
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17,776 |
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*
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William
G. Miller
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479,619 |
(4) |
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4.13%
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Jeffrey
I. Badgley
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25,000 |
(5) |
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*
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Frank
Madonia
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7,501 |
(6) |
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*
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J.
Vincent Mish
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21,101 |
(7) |
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*
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All
Directors and Executive Officers as a Group (7 persons)
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696,622 |
(8) |
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6.00%
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Beneficial Owners of More than 5% of the Common
Stock
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Hotchkis
and Wiley Capital Management, LLC
725
Figueroa Street, 39th
Floor
Los
Angeles, CA 90017
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2,088,598 |
(9) |
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17.99%
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Amica
Mutual Insurance Company
100
Amica Way
Lincoln,
RI 02865
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1,064,194 |
(10) |
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9.17%
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Morehead
Opportunity Fund, LP
5151
Glenwood Avenue, Suite 300
Raleigh,
NC 27612
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595,053 |
(11) |
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5.13%
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____________________
*
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Less
than one percent.
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(1)
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Includes
shares of Common Stock that the named person or entity has the right to
acquire beneficial ownership within 60 days of March 31, 2009 through the
exercise of any stock option or other right.
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(2)
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The
percentage of beneficial ownership is based on 11,608,360 shares of Common
Stock outstanding on March 31, 2009, and represents the percentage that
the named person or entity would beneficially own if such person or
entity, and only such person or entity, exercised all options and rights
to acquire shares of Common Stock that are held by such person or entity
and that are exercisable within 60 days of March 31,
2009.
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(3)
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Includes
36,452 shares held by a limited partnership of which Mr. Chandler’s
children are limited partners, and 29,847 shares held in trust for the
benefit of Mr. Chandler’s children. Mr. Chandler disclaims
beneficial ownership with respect to these shares.
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(4)
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As
reported in an amendment to Schedule 13D filed with the SEC on January 6,
2009. Does not include 900,000 shares owned by Mr. Miller’s adult
children, Christopher Charles Miller, Sarah Louise Miller and William G.
Miller, II, with respect to which Mr. Miller disclaims beneficial
ownership.
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(5)
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Includes
25,000 shares issuable pursuant to options that are exercisable within 60
days of March 31, 2009.
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(6)
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Includes
7,500 shares issuable pursuant to options that are exercisable within 60
days of March 31, 2009.
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(7)
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Includes
15,000 shares issuable pursuant to options that are exercisable within 60
days of March 31,
2009.
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(8)
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Includes
47,500 shares issuable pursuant to options that are exercisable within 60
days of March 31, 2009.
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(9)
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As
reported in an amendment to Schedule 13G filed with the SEC on February
13, 2009 by Hotchkiss and Wiley Capital Management, LLC, a registered
investment adviser.
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(10)
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As
reported in a Schedule 13G filed with the SEC on February 11, 2009, by
Amica Mutual Insurance Company.
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(11)
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As
reported in a Schedule 13D filed with the SEC on October 30, 2008, by
Morehead Opportunity Fund, LP and Investor Management
Corporation.
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COMPENSATION
OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation
Discussion and Analysis
Overview
This
discussion and analysis addresses the material elements of the Company’s
compensation program for named executive officers, including the Company’s
compensation objectives and overall compensation philosophy, the compensation
process and the administration of the compensation program. It is
intended to complement and enhance an understanding of the compensation
information presented in the “Summary Compensation Table” and other accompanying
tables in this proxy statement.
As used
in this proxy statement, the term “named executive officers” means the Company’s
Chairman and Co-Chief Executive Officer; President and Co-Chief Executive
Officer; Executive Vice President and Chief Financial Officer; and Executive
Vice President, Secretary and General Counsel. In this “Compensation
Discussion and Analysis” section, the terms “we,” “our,” “us” and the
“Committee” refer to the Compensation Committee of the Company’s Board of
Directors.
Compensation
Objectives and Overall Compensation Philosophy
The
Company’s executive compensation program is designed to enhance Company
profitability, and thus shareholder value, by aligning executive compensation
with the Company’s expectations and performance, and by establishing a system
that can retain and reward executive officers who contribute to the long-term
success of the Company. More specifically, the overall goals of the
executive compensation program include:
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offering
competitive total compensation opportunities to retain talented
executives;
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providing
strong links between Company performance and total compensation earned –
i.e., paying for performance;
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emphasizing
the long-term performance of the Company, thus enhancing shareholder
value; and
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promoting
and facilitating stock ownership by executive
officers.
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We
believe that it is in the best interests of the Company’s shareholders and its
named executive officers that the Company’s executive compensation program, and
each of its elements, remain simple and straightforward. This
approach should reduce the time and cost involved in setting the Company’s
executive compensation policies and calculating the payments under such
policies, and should enhance the transparency of, and the ability to comprehend,
these policies.
Administration
The
Committee has overall responsibility with respect to approving and monitoring
the Company’s executive compensation program, and operates under a Charter that
was approved by the Company’s Board of Directors in 2004. None of the
members of the Committee has been an officer or employee of the Company, and the
Board of Directors has considered and determined that all of the members are
“independent,” as that term is defined under NYSE rules, and otherwise meet the
criteria set forth in the Committee’s Charter.
In
fulfilling its responsibilities, the Committee, among other things, establishes
and approves the compensation level of each of the named executive officers,
reviews and approves corporate goals and objectives relevant to the compensation
of the named executive officers, evaluates the performance of the named
executive officers in light of these goals and objectives, determines and
approves compensation based on these objectives and its evaluations, establishes
criteria for granting stock options to the named executive officers and the
Company’s other employees, considering the recommendations of senior management,
and approves such stock option grants.
We
regularly review and discuss the compensation of the named executive officers
with William G. Miller, the Company’s Chairman and Co-Chief Executive Officer,
and consult with Mr. Miller in evaluating the performance of the named executive
officers. In addition, Mr. Miller may make recommendations to us
regarding compensation for all of the named executive officers, other than for
himself.
As
discussed in greater detail below, the levels of each element of compensation
for the named executive officers are determined based on several factors, which
may include the Company’s historical performance and relative shareholder
return, our informal assessment of compensation paid to executives in comparable
industries, the amount and the elements of compensation provided in previous
years, the terms of each named executive officer’s employment agreement with the
Company, our expectations for the Company’s future financial performance and
other matters that we deem relevant. In addition, we consider the
level of experience and the responsibilities of each named executive officer,
his performance and the personal contributions he makes to the success of the
Company. Leadership skills, analytical skills, organization
development, public affairs and civic involvement have been and will continue to
be deemed to be important qualitative factors to take into account in
considering elements and levels of compensation. We have not adopted
any formal or informal policy for allocating compensation between long-term and
short-term elements, between cash and non-cash or among the different possible
forms of non-cash compensation.
In 2008,
the Company’s executive compensation program consisted of three primary
elements: base salary, annual discretionary cash bonuses (which are
disclosed in the “Summary Compensation Table” under the “Bonus” column) and
stock option awards. In addition to these primary elements, the
Company has provided, and will continue to provide, its named executive officers
with certain benefits, such as healthcare plans, that are available to all
employees.
Elements
of Compensation
Base Salary. We
determine the base salary for each of the named executive officers annually
based on, among other things, his experience and the scope of his
responsibilities, his performance and the performance of the Company, our
expectations for the Company’s future financial performance and our informal
assessment of salaries paid to executives in comparable
industries. The minimum levels of some of these base salaries are
mandated by employment agreements with the named executive officers (which are
described in more detail below under the heading “Additional Discussion of
Material Items in Summary Compensation Table―Employment Agreements
with Named Executive Officers”). We believe that base salaries are an
important part of the Company’s executive compensation program because they
provide the named executive officers with a steady income stream that is not
contingent upon the Company’s overall performance.
For 2008,
the named executive officers voluntarily reduced their salaries as part of a
broader set of company-wide cost-reduction measures undertaken at their
direction. We considered this voluntary reduction, in addition to the
other factors discussed above, in determining the base salary for each named
executive officer for 2008. For 2008, Mr. Badgley’s base salary was
reduced $27,333, Mr. Mish’s base salary was reduced $17,333, and Mr. Madonia’s
base salary was reduced $19,417. Under Mr. Miller’s employment
agreement with the Company, Mr. Miller is entitled to receive a base salary that
is substantially the same as the Company’s other Co-Chief Executive Officer;
however, from 1999 through 2006 he declined increases to which he was entitled
under his agreement. Effective July 2007, the Compensation Committee
increased Mr. Miller’s salary to match the salary of the other Co-Chief
Executive Officer in accordance with his employment agreement. For
2008, Mr. Miller’s base salary was adjusted accordingly to match the 2008 base
salary for Mr. Badgley.
Annual Discretionary Cash
Bonuses. We utilize annual discretionary cash bonuses to
provide additional compensation to the named executive officers, and to reward
them for their performance. We have not adopted any formal or
informal performance or other objectives for the calculation or payment of these
discretionary bonuses. Instead, in determining an annual
discretionary bonus, we consider, among other things, the Company’s performance
for the previous year and relative shareholder value, discretionary bonuses
awarded in previous years, the performance of the named executive officer and
his personal contributions to the success of the Company.
Annual
discretionary cash bonuses, as opposed to grants of stock options or other
equity-based awards, are designed to provide additional compensation to the
named executive officers, and to more immediately reward them for their
performance. The immediacy of these bonuses provides an incentive to
the named executive officers to raise their level of performance, and thus the
Company’s overall level of performance. Thus, we believe that
discretionary cash bonuses are an important motivating factor for the named
executive officers.
We
approved the payment of cash bonuses in 2008 to Messrs. Badgley, Mish and
Madonia in the amounts set forth in the “Summary Compensation
Table.” Taking into account the Company’s overall performance in
2007, and the reductions in base salary for 2008, the bonus amounts paid to
Messrs. Badgley, Mish and Madonia were approximately 30% less than the bonus
amounts paid for the prior year period. In 2008, as in prior years,
Mr. Miller declined an annual cash bonus from the Company.
Equity
Awards. Although we did not award stock options to the named
executive officers from 2005 through 2007, we consider equity-based awards to be
an important part of the Company’s overall executive compensation
philosophy.
Stock
options and other equity-based awards provide the named executive officers with
a strong link to the Company’s long-term performance, promote an ownership
culture and more closely align the interest of the named executive officers and
the Company’s shareholders. Equity incentive awards are granted under
the Company’s 2005 Equity Incentive Plan. This plan provides us with
broad discretion to fashion the terms of awards to provide eligible participants
with such stock-based incentives as we deem appropriate. It permits
the issuance of awards in a variety of forms, including non-qualified stock
options and incentive stock options, stock appreciation rights, restricted stock
awards and performance shares.
In
general, options for the purchase of 500 or more shares vest in four equal
annual installments, and all options for the purchase of fewer than 500 shares
vest in two equal annual installments. All stock options are
exercisable until the tenth anniversary of the grant date unless otherwise
earlier terminated pursuant to the terms of the individual option
agreement.
We
approved the award of stock options in 2008 to Messrs. Badgley, Mish and Madonia
in the amounts set forth in the “Grants of Plan-Based Awards
Table.” The decision to grant awards in 2008, and the determination
of the size of the awards, were based on, among other things, the lower levels
of equity ownership by the named executive officers relative to prior periods
and our desire for these levels of ownership to be more significant to the named
executive officers. In light of the reductions in the named executive officers’
base salaries and the reductions in their discretionary cash bonus
amounts, we also believe that the grant of equity awards will provide
a form of remuneration with an attractive opportunity for long-term
growth. In 2008, Mr. Miller declined any equity awards from the
Company as he has historically done.
Severance and Change of Control
Arrangements. As discussed in more detail in the “Additional
Discussion of Material Items in Summary Compensation Table―Employment Agreements
with Named Executive Officers” and “Potential Payments Upon Termination or
Change in Control” sections below, the named executive officers may be
entitled to certain benefits upon the termination of their respective employment
or change in control agreements.
Other
Compensation. The named executive officers currently are
entitled to participate in the Company’s health, life and disability insurance
plans and in our 401(k) plan to the same extent that the Company’s employees are
entitled to participate.
2009 Compensation
Decisions. For 2009, taking into account the
current economic conditions and our expectations for the Company’s financial
performance in this difficult economic environment, the base salary for each
named executive officer was increased 1.5%, which is the same rate at which
compensation for all other employees was increased in 2009, resulting in the
reductions in base salary for 2008 being continued in large
part. Additionally, based primarily on the Company's performance in
2008, we determined not to pay an annual discretionary cash bonus to the named
executive officers in 2009.
Report
of the Compensation Committee
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis contained under that heading in this proxy
statement. On the basis of its reviews and discussions, the Committee
has recommended that the Compensation Discussion and Analysis be included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and
this proxy statement.
|
Compensation
Committee
|
|
|
Paul
E. Drack
|
|
|
A.
Russell Chandler, III
|
|
|
Richard
H. Roberts
|
|
Compensation
Committee Interlocks and Insider Participation
During
2008, the Compensation Committee was comprised of Messrs. Chandler, Drack and
Roberts, all of whom were non-employee, independent directors. During
2008, no executive officer of the Company served as a member of the board of
directors or compensation committee of any other entity whose executive
officer(s) served on the Company’s Board of Directors or Compensation
Committee.
Summary
Compensation Table
The
following table sets forth the compensation awarded to, earned by, or paid by
the Company during the years ended December 31, 2008, 2007 and 2006,
respectively, to the Company’s Co-Chief Executive Officers, Chief Financial
Officer and the Company’s other most highly compensated executive officer (who
are referred to together as the Company’s named executive
officers).
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
G. Miller
|
|
2008
|
|
$ |
283,500 |
(4) |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
283,500 |
|
Chairman
and Co-Chief Executive Officer
|
|
2007
|
|
$ |
258,753 |
(4) |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
258,753 |
|
|
|
2006
|
|
$ |
180,007 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
180,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
I. Badgley
|
|
2008
|
|
$ |
283,500 |
|
|
$ |
47,150 |
|
|
$ |
32,592 |
|
|
$ |
7,138 |
(5) |
|
$ |
370,380 |
|
President
and Co-Chief Executive Officer
|
|
2007
|
|
$ |
310,833 |
|
|
$ |
69,250 |
|
|
$ |
90,529 |
|
|
$ |
7,484 |
(5) |
|
$ |
478,096 |
|
|
|
2006
|
|
$ |
290,003 |
|
|
$ |
60,600 |
|
|
$ |
90,529 |
|
|
$ |
5,629 |
(5) |
|
$ |
446,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
Madonia
|
|
2008
|
|
$ |
193,500 |
|
|
$ |
33,150 |
|
|
$ |
10,109 |
|
|
$ |
5,570 |
(5) |
|
$ |
242,329 |
|
Executive
Vice President, Secretary and
|
|
2007
|
|
$ |
212,917 |
|
|
$ |
46,250 |
|
|
$ |
27,159 |
|
|
$ |
5,642 |
(5) |
|
$ |
291,968 |
|
General
Counsel
|
|
2006
|
|
$ |
202,502 |
|
|
$ |
40,600 |
|
|
$ |
27,159 |
|
|
$ |
4,564 |
(5) |
|
$ |
274,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Vincent Mish
|
|
2008
|
|
$ |
193,500 |
|
|
$ |
33,150 |
|
|
$ |
10,109 |
|
|
$ |
5,122 |
(5) |
|
$ |
241,881 |
|
Executive
Vice President, Treasurer and
|
|
2007
|
|
$ |
210,833 |
|
|
$ |
46,250 |
|
|
$ |
27,159 |
|
|
$ |
4,683 |
(5) |
|
$ |
288,925 |
|
Chief
Financial Officer
|
|
2006
|
|
$ |
190,002 |
|
|
$ |
40,600 |
|
|
$ |
27,159 |
|
|
$ |
3,739 |
(5) |
|
$ |
261,500 |
|
(1)
|
Base
salary paid to the named executive officer.
|
|
|
(2)
|
Discretionary
cash bonus awarded to the named executive officer based on, among other
factors, the Company’s performance in the previous
year.
|
|
|
(3)
|
Amounts
represent compensation costs recognized by the Company for financial
statement reporting purposes under FAS 123R, based on the valuation of
option awards granted in prior years utilizing assumptions discussed in
Note 2 to the Company’s audited financial statements in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2008.
|
|
|
(4)
|
Beginning
in July 2007, the Compensation Committee determined to adjust Mr. Miller’s
salary on a going-forward basis to match the salary of the other Co-Chief
Executive Officer in accordance with Mr. Miller's employment
agreement.
|
|
|
(5)
|
Amount
represents the Company’s contribution to the named executive officer’s
401(k) plan under the plan’s matching program. No other amounts
are indicated for perquisites and personal benefits as the value provided
did not exceed $10,000.
|
Grants
of Plan-Based Awards Table
The
following table sets forth information with respect to stock option awards
granted to the named executive officers in 2008.
|
|
|
|
|
All
Other Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base Price of
Option
Awards ($/Sh)
|
|
|
Grant
Date Fair Value of
Option
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
G. Miller
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Jeffrey
I. Badgley
|
|
11/07/2008
|
|
|
|
120,000 |
|
|
$ |
5.49 |
|
|
$ |
238,800 |
|
Frank
Madonia
|
|
11/07/2008
|
|
|
|
40,000 |
|
|
$ |
5.49 |
|
|
$ |
79,600 |
|
J.
Vincent Mish
|
|
11/07/2008
|
|
|
|
40,000 |
|
|
$ |
5.49 |
|
|
$ |
79,600 |
|
When
awarding grants, the Compensation Committee sets option exercise prices at the
market closing price on the date of grant. Stock options vest over a
number of years in order to encourage employee retention and focus management’s
attention on sustaining financial performance and building shareholder value
over an extended term. Typically, vesting is in equal increments over
a four-year period from the date of the grant.
Additional
Discussion of Material Items in Summary Compensation Table
The
Company’s executive compensation policies and practices, pursuant to which the
compensation set forth in the Summary Compensation Table was paid or awarded,
are described above under “Compensation Discussion and Analysis.” A
summary of certain material terms of the Company’s compensation plans and
arrangements is set forth below.
Employment
Agreements with Named Executive Officers
William G.
Miller. In July 1997, the Company entered into an employment
agreement with Mr. Miller which was amended and restated in December
2008. The employment agreement provides for a base salary as agreed
to by the Company and Mr. Miller from time to time, but which shall in any event
be substantially the same as the base salary of the Chief Executive Officer of
the Company. Mr. Miller also receives certain insurance and other
benefits as are generally provided by the Company to its executive
employees. Mr. Miller’s employment agreement is for an indeterminate
term and allows Mr. Miller to pursue other business related interests as long as
they do not interfere with his duties for the Company. Employment may
be terminated by either party upon three years’ written notice or for “cause,”
as defined in the employment agreement.
Jeffrey I. Badgley and Frank
Madonia. In September 1998, the Company entered into
employment agreements with Messrs. Badgley and Madonia which were amended and
restated in December 2008. Each employment agreement provides for a
rolling three-year term, extended automatically each day for an additional day
such that the remaining term of each employment agreement is three
years. However, on each individual’s 62nd
birthday, the employment agreement ceases to extend automatically, and instead
terminates three years from that date. The employment agreements
provide for base salaries that are subject to annual review and adjustment by
the Board of Directors. Additionally, each individual may participate
in any bonus plans or other benefits generally available to executive officers
of the Company. The Company may terminate Messrs. Badgley or Madonia
pursuant to their respective employment agreements for any reason upon written
notice. However, if termination is for other than “just cause” (as
defined in the employment agreements), the individual is entitled to certain
benefits described under the heading “Potential Payments Upon Termination or
Change in Control” below.
J. Vincent
Mish. In December 2002, the Company entered into an employment
agreement with Mr. Mish which was amended and restated in December
2008. The employment agreement provides for a rolling three-year
term, extended automatically as of each annual shareholders’ meeting such that
the remaining term of the employment agreement is three years as of that
date. Notwithstanding the foregoing, the term of the agreement ends
on Mr. Mish’s 65th
birthday. The employment agreement provides for base salary that is
subject to annual review and adjustment by the Board of
Directors. Additionally, Mr. Mish may participate in any bonus plans
or other benefits generally available to executive officers of the
Company. The Company may terminate Mr. Mish pursuant to this
employment agreement for any reason upon written notice. However, if termination
is for other than “just cause” (as defined in the employment agreement), Mr.
Mish is entitled to certain benefits described under the heading “Potential
Payments Upon Termination or Change in Control” below.
2005
Equity Incentive Plan
The
Company’s shareholder-approved 2005 Equity Incentive Plan is a flexible plan
that provides the Compensation Committee with broad discretion to fashion the
terms of awards to provide eligible participants with such equity-based
incentives as the Committee deems appropriate. It permits the
issuance of awards in a variety of forms, including non-qualified stock options
and incentive stock options, stock appreciation rights, restricted stock awards
and performance shares. During 2008, options to purchase an aggregate
of 200,000 shares of Common Stock were granted to the Company’s named executive
officers under the 2005 Equity Incentive Plan.
Contributory
Retirement Plan
The
Company maintains a contributory retirement plan for all full-time employees
with at least 90 days of service. The plan is designed to provide
tax-deferred income to the Company’s employees in accordance with the provisions
of Section 401(k) of the Internal Revenue Code. The plan provides
that each participant may contribute up to 15% of his or her
salary. For 2008, the Company matched 50% of the first 5% of
participant contributions. Matching contributions vest over the first
five years of employment.
Outstanding
Equity Awards at Fiscal Year-End 2008
The
following table provides information on the holdings of stock options by the
named executive officers, including both unexercised and unvested awards, at
December 31, 2008.
|
|
Option Grant
|
|
|
Number
of Shares Underlying
Unexercised
Options
|
|
|
Option
|
|
|
Option
Expiration
|
|
Name
|
|
Date (1)
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercise
Price
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
G. Miller
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
$ |
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
I. Badgley
|
|
3/26/2004
|
|
|
|
25,000 |
|
|
|
– |
|
|
$ |
8.31 |
|
|
3/26/2014
|
|
|
|
11/07/2008
|
|
|
|
– |
|
|
|
120,000 |
|
|
|
5.49 |
|
|
11/06/2018
|
|
Frank
Madonia
|
|
3/26/2004
|
|
|
|
7,500 |
|
|
|
– |
|
|
$ |
8.31 |
|
|
3/26/2014
|
|
|
|
11/07/2008
|
|
|
|
– |
|
|
|
40,000 |
|
|
|
5.49 |
|
|
11/06/2018
|
|
J.
Vincent Mish
|
|
3/26/2004
|
|
|
|
15,000 |
|
|
|
– |
|
|
$ |
8.31 |
|
|
3/26/2014
|
|
|
|
11/07/2008
|
|
|
|
– |
|
|
|
40,000 |
|
|
|
5.49 |
|
|
11/06/2018
|
|
(1)
|
Vesting
for each listed stock option grant occurs in 25% increments on each yearly
anniversary of the date of
grant.
|
Option
Exercises and Stock Vested in 2008
There
were no stock options exercised by any of the named executive officers during
2008.
Potential
Payments Upon Termination or Change in Control
The
Company is party to employment agreements with each of its named executive
officers, and has also entered into change in control agreements with three of
its named executive officers. Each of these employment and change in
control agreements address, among other things, compensation and benefits that
would be paid to the applicable named executive officer in the event that his
employment is terminated for different reasons, including termination for cause
or without cause, and termination in connection with a change in
control.
Employment
Agreements
William G.
Miller. The Company’s employment agreement with Mr. Miller
provides that either the Company or Mr. Miller may terminate the agreement for
any reason upon three years’ prior notice, that Mr. Miller may terminate the
agreement upon 60 days’ notice in the event of a change in control of the
Company, and that the Company may terminate the agreement at any time for
“cause,” or if Mr. Miller dies or becomes disabled. Under the
employment agreement:
|
●
|
Upon
any termination of Mr. Miller’s employment for “cause,” Mr. Miller will be
entitled to receive all compensation due to him through his last day of
employment.
|
|
|
|
|
●
|
If
Mr. Miller’s employment is terminated due to death or disability, the
Company will have no further liability under the employment
agreement.
|
|
|
|
|
●
|
If
Mr. Miller’s employment is terminated by the Company without “cause”
without the required three year's prior notice or, if such notice has been
given, prior to the end of the three-year notice period, Mr. Miller
will be entitled to receive a lump sum pro-rated bonus (based on the
average monthly bonus earned by him for the three calendar years
immediately preceding the year in which his employment is terminated) for
the number of days he worked during the year in which his employment is
terminated, and Mr. Miller will be entitled to receive, monthly over the
shorter of a 36-month period or the remaining portion of the three-year
notice period: (i) his then-current base salary;
(ii) the average monthly bonus earned by him for the three calendar
years immediately preceding the year in which his employment is
terminated; and (iii) continued health and life insurance
coverage.
|
Under the
employment agreements, “cause” means: (i) willful malfeasance or
gross negligence; or (ii) knowingly engaging in wrongful conduct resulting
in detriment to the goodwill of the Company or damage to the Company’s
relationships with its customers, suppliers or employees. The
employment agreement also provides for confidentiality during employment, and
for non-competition during employment and for a three-year period from
termination if the Company terminates the agreement for cause or Mr. Miller
terminates his employment in breach of the agreement.
Jeffrey I. Badgley, Frank Madonia
and J. Vincent Mish. The Company’s employment agreements with
Messrs. Badgley, Madonia and Mish address the rights and obligations of the
Company in connection with the termination of the executive’s employment in
different situations including in connection with a change in control of the
Company. Under each agreement:
|
●
|
Upon
any termination of the executive’s employment, including if the executive
terminates his employment voluntarily, or if the Company terminates the
executive’s employment for “just cause,” the executive will be entitled to
receive all compensation due to him through his last day of
employment.
|
|
|
|
|
●
|
If
the executive’s employment is terminated due to death, the executive’s
beneficiary will be entitled to receive, in one lump sum, an amount equal
to: (i) 12 months of his then-current base salary;
(ii) 12 months of the average monthly bonus earned by him for the
three calendar years immediately preceding the year in which his
employment is terminated; and (iii) a pro-rated bonus, based on the
average monthly bonus earned by him for the three calendar years
immediately preceding the year in which his employment is terminated, for
the number of days he worked during the year in which his employment is
terminated.
|
|
|
|
|
●
|
If
the executive’s employment is terminated due to disability, all of the
executive’s outstanding stock options will vest and become exercisable,
the executive (or his beneficiary) will be entitled to receive a lump sum
pro-rated bonus (based on the average monthly bonus earned by him for the
three calendar years immediately preceding the year in which his
employment is terminated) for the number of days he worked during the year
in which his employment is terminated, and the executive (or his
beneficiary) will be entitled to receive, monthly over a period of 24
months from the last day of employment: (i) his
then-current base salary; (ii) the average monthly bonus earned by
him for the three calendar years immediately preceding the year in which
his employment is terminated; and (iii) continued health and life
insurance coverage.
|
|
|
|
|
●
|
If
the executive’s employment is terminated by the Company without “just
cause,” or if the executive’s employment is terminated under circumstances
that would entitle him to receive benefits under his change in control
agreement (i.e., in connection with a change in control of the Company)
with the Company, if any, all of the executive’s outstanding stock options
will vest and become exercisable, the executive will be entitled to
receive a lump sum pro-rated bonus (based on the average monthly bonus
earned by him for the three calendar years immediately preceding the year
in which his employment is terminated) for the number of days he worked
during the year in which his employment is terminated, and the executive
will be entitled to receive, monthly over the shorter of a 36-month period
or the remaining term of the employment agreement: (i) his
then-current base salary; (ii) the average monthly bonus earned by
him for the three calendar years immediately preceding the year in which
his employment is terminated; and (iii) continued health and life
insurance coverage; provided, that if the executive dies during the
post-termination period in which these benefits are being paid, the
monthly base salary and bonus payments will continue for the shorter of 12
months after his death or the remaining term of the employment
agreement.
|
Under the
employment agreements, “just cause” means: (i) executive’s
material fraud, malfeasance, gross negligence or willful misconduct with respect
to the business affairs of the Company which is directly or materially harmful
to the business or reputation of the Company or its subsidiaries, and which is
incapable of being remedied or not remedied within 30 days of notice from the
Company; (ii) executive’s conviction of or failure to contest prosecution
for a felony or a crime involving moral turpitude; or (iii) executive’s
material breach of the employment agreement which is incapable of being remedied
or not remedied within 30 days of notice from the Company.
Each
employment agreement also provides for non-competition and confidentiality
during employment and for a period ending two years from termination or
expiration of the employment agreement (or one year if termination occurs
pursuant to a change in control).
Change
in Control Agreements
In
September 1998, the Company entered into change in control agreements with
Messrs. Badgley and Madonia, and in December 2002, the Company entered into a
change in control agreement with Mr. Mish. The change in control
agreements with Messrs. Badgley, Madonia and Mish were amended and restated in
December 2008. Under each agreement, if the executive’s employment is
terminated within six months before, or 24 months after, a “change in control”
of the Company, and the termination was either involuntary on the part of the
executive (other than for cause, disability or death), or “voluntary” on the
part of the executive, then all of the executive’s outstanding stock options
will vest and become exercisable, and the executive will be entitled to
receive:
|
●
|
a
lump sum payment equal to the present value of 36 months
of:
|
|
|
|
|
|
-
|
his
then-current base salary; and
|
|
|
|
|
|
|
-
|
the
average monthly bonus earned by him for the three calendar years
immediately preceding the year in which his employment is
terminated;
|
|
|
|
|
|
●
|
a
lump sum pro-rated bonus, based on the average monthly bonus earned by him
for the three calendar years immediately preceding the year in which his
employment is terminated, for the number of days he worked during the year
in which his employment is terminated, discounted to present value;
and
|
|
|
|
|
●
|
health
and life insurance benefits over the shorter of a 36-month period or the
remaining term of the employment
agreement.
|
However,
any amounts paid under the change in control agreements will be reduced to the
extent that the executive receives or is entitled to receive payments in respect
of the change in control under the executive’s employment
agreement. If the executive does not actually receive payments under
the employment agreement, or the employment agreement is breached by the
Company, payments will be made under the change in control
agreement. Additionally, under the change in control agreements, the
Company has agreed to provide the executive with a gross-up payment for federal
and state income taxes and federal excise taxes imposed on any “excess parachute
payment.”
Under the
change in control agreements, “voluntary” termination by the executive means
termination of employment that is voluntary on the part of the executive, and,
in the judgment of the executive, is due to: (i) a reduction of
the executive’s responsibilities, title or status resulting from a formal change
in title or status, or from the assignment to the executive of any duties
inconsistent with his title, duties or responsibilities in effect within the
year prior to the change in control, (ii) a reduction in the executive’s
compensation or benefits, or (iii) a Company-required involuntary
relocation or the executive’s place of residence or a significant increase in
the executive’s travel requirements.
Potential
Payments
Assuming
that a termination event or change in control occurred on December 31, 2008, the
value of potential payments and benefits payable to each named executive officer
who was employed by the Company on such date is summarized in the following
table. The price per share of Common Stock used for purposes of the
following calculation is the closing market price on the NYSE as of December 31,
2008, the last trading day in 2008, which was $5.30. The table
excludes (i) amounts accrued through December 31, 2008 that would be paid
in the normal course of continued employment, such as accrued but unpaid salary,
(ii) vested account balances in the Company’s contributory retirement plan
that are generally available to all of the Company’s U.S. salaried employees,
and (iii) any amounts to be provided under any arrangement that does not
discriminate in scope, terms or operation in favor of named executive officers
and that is available generally to all salaried employees. Actual
amounts to be paid can only be determined at the time of such executive’s
termination.
Name
and payment or benefit
|
|
Termination
by
Company
without
just
cause
|
|
|
Involuntary
termination
by
Company
or
“voluntary”
termination
by
executive
after
change
in control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
G. Miller
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
and bonus
|
|
$ |
850,500 |
(1) |
|
$ |
850,000 |
(1) |
|
$ |
– |
|
|
$ |
– |
|
Healthcare
and life insurance coverage
|
|
|
14,465 |
(2) |
|
|
14,465 |
(2) |
|
|
– |
|
|
|
– |
|
Tax
gross-up
|
|
|
– |
|
|
|
334,633 |
(3) |
|
|
– |
|
|
|
– |
|
Market
value of stock options vesting on termination
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
I. Badgley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
and bonus
|
|
$ |
1,086,500 |
(1) |
|
$ |
1,086,500 |
(1) |
|
$ |
744,000 |
(4) |
|
$ |
401,500 |
(5) |
Healthcare
and life insurance coverage
|
|
|
40,750 |
(2) |
|
|
40,750 |
(2) |
|
|
27,167 |
(6) |
|
|
– |
|
Tax
gross-up
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Market
value of stock options vesting on termination
|
|
|
636,000 |
|
|
|
636,000 |
|
|
|
636,000 |
|
|
|
636,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
Madonia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
and bonus
|
|
$ |
740,500 |
(1) |
|
$ |
740,500 |
(1) |
|
$ |
507,000 |
(4) |
|
$ |
273,500 |
(5) |
Healthcare
and life insurance coverage
|
|
|
28,507 |
(2) |
|
|
28,507 |
(2) |
|
|
19,005 |
(6) |
|
|
– |
|
Tax
gross-up
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Market
value of stock options vesting on termination
|
|
|
212,000 |
|
|
|
212,000 |
|
|
|
212,000 |
|
|
|
212,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Vincent Mish
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
and bonus
|
|
$ |
740,500 |
(1) |
|
$ |
740,500 |
(1) |
|
$ |
507,000 |
(4) |
|
$ |
273,500 |
(5) |
Healthcare
and life insurance coverage
|
|
|
39,166 |
(2) |
|
|
39,166 |
(2) |
|
|
26,111 |
(6) |
|
|
– |
|
Tax
gross-up
|
|
|
– |
|
|
|
269,435 |
(3) |
|
|
– |
|
|
|
– |
|
Market
value of stock options vesting on termination
|
|
|
212,000 |
|
|
|
212,000 |
|
|
|
212,000 |
|
|
|
212,000 |
|
(1)
|
Reflects
the value of (i) monthly payments over the shorter of 36 months or the
remaining term of the executive’s employment agreement of salary and
average monthly bonus and (ii) a lump sum pro-rated bonus, based on
average monthly bonus, for the number of days worked by the executive
during the year in which his employment is terminated.
|
|
|
(2)
|
Reflects
the employer share of premiums for continued healthcare and life insurance
coverage for 36 months.
|
(3)
|
The
tax gross-up payment payable for the executive was estimated without
assigning a value to the restrictive covenants to which he would be
subject under his employment and change in control agreement, if any, with
the Company following termination.
|
|
|
(4)
|
Reflects
the value of (i) monthly payments over 24 months of salary and average
monthly bonus and (ii) a lump sum pro-rated bonus, based on average
monthly bonus, for the number of days worked by the executive during the
year in which his employment is terminated.
|
|
|
(5)
|
Reflects
the value of a lump sum payment of (i) 12 months of salary and average
monthly bonus and (ii) pro-rated bonus, based on average monthly bonus,
for the number of days worked by the executive during the year in which
his employment is terminated.
|
|
|
(6)
|
Reflects
the employer share of premiums for continued healthcare and life insurance
coverage for 24
months.
|
Non-Employee
Director Compensation for 2008
The
current compensation program for the Company’s non-employee directors is
designed to pay directors for work required for a company of Miller Industries’
size and scope and to align the director’s interests with the long-term
interests of Company shareholders.
Non-employee
directors receive annual compensation comprised of a cash component and an
equity component. Under the cash component, each non-employee
director receives an annual cash payment of $25,000 as compensation for service
on the Board of Directors. Additionally, each non-employee director
receives a cash payment of $3,000 for each Board of Directors meeting that he
attends and a cash payment of $1,000 for each committee meeting that he
attends. Under the equity component, each non-employee director is
entitled to an annual award under the Company’s Non-Employee Director Stock
Plan, to be paid in fully-vested shares of Common Stock, equal to $25,000
divided by the closing price of the Common Stock on the first trading day of
such year. On January 1, 2008, each of Messrs. Chandler, Drack and
Roberts was granted 1,803 shares of Common Stock, which number of shares was
determined by dividing $25,000 by $13.87, the closing price per share of Common
Stock as reported on the NYSE on January 2, 2008, the first trading day in
2008. Each of Messrs. Chandler, Drack and Roberts has been granted an
aggregate of 17,655 shares of Common Stock under the terms of the Company’s
Non-Employee Director Stock Plan through the end of 2008.
The
members of the Board of Directors who are employees of the Company do not
receive additional compensation for Board or committee service.
|
|
Fees
Earned or
Paid
in Cash
|
|
|
|
|
|
|
|
A.
Russell Chandler, III
(1)
|
|
$ |
43,000 |
|
|
$ |
25,000 |
|
|
$ |
68,000 |
|
Paul
E. Drack
(1)
|
|
$ |
43,000 |
|
|
$ |
25,000 |
|
|
$ |
68,000 |
|
Richard
H. Roberts
(1)
|
|
$ |
43,000 |
|
|
$ |
25,000 |
|
|
$ |
68,000 |
|
(1)
|
Member
of the Audit, Compensation and Nominating Committees of the Board of
Directors.
|
In
March 2009, in light of the current economic conditions and expectations
for the Company’s financial performance in 2009, the non-employee directors
reduced by 10% the compensation that each of them receives for attendance at
Board of Directors and committee meetings. From the effectiveness of
such reduction in March 2009 through the remainder of 2009, each non-employee
director will receive a cash payment of $2,700 for each Board of Directors
meeting that he attends and a cash payment $900 for each committee meeting that
he attends.
ACCOUNTING
MATTERS
Audit
Committee Report
The
Company’s Audit Committee is comprised of three independent members, as required
by applicable listing standards of the NYSE. The Audit Committee acts
pursuant to a written Charter, which was amended and restated by the Board of
Directors in March 2007. The Company’s management is responsible for
its internal accounting controls and the financial reporting
process. The Company’s independent accountants, Joseph Decosimo and
Company, PLLC, are responsible for performing an audit of the Company’s
consolidated financial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and for expressing an opinion
as to their conformity with generally accepted accounting
principles. The Audit Committee’s responsibility is to monitor and
oversee these processes.
In
keeping with that responsibility, the Audit Committee has reviewed and discussed
the Company’s audited consolidated financial statements with management and the
independent accountants. In addition, the Audit Committee has
discussed with the Company’s independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61, “Communications with Audit
Committee,” as currently in effect. In addition, the Audit Committee
has received the written disclosures from the independent accountants required
by Independence Standards Board Standard No. 1, “Independence Discussions with
Audit Committees,” and has discussed with the independent accountants their
independence. The Audit Committee has also considered whether the
provision of non-audit services by the independent accountants is compatible
with maintaining such accountants’ independence.
The
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not experts in the fields of accounting or
auditing, including in respect of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them and on the representations made by management and the independent
accountants. Accordingly, the Audit Committee’s oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or appropriate
internal control and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee’s considerations and discussions referred to above do not assure that
the audit of the Company’s consolidated financial statements has been carried
out in accordance with the standards of the Public Company Accounting Oversight
Board (United States), that the consolidated financial statements are presented
in accordance with generally accepted accounting principles, or that the
Company’s auditors are in fact “independent.”
Based on
the reports and discussions described in this report, and subject to the
limitations on the role and responsibilities of the Committee referred to above
and in the Audit Committee Charter, the Audit Committee recommended to the Board
of Directors that the audited consolidated financial statements of the Company
be included in the Annual Report on Form 10-K for the year ended December 31,
2008 for filing with the SEC.
This
report is respectfully submitted by the Audit Committee of the Board of
Directors.
|
Audit
Committee
|
|
|
Paul
E. Drack
|
|
|
A.
Russell Chandler, III
|
|
|
Richard
H. Roberts
|
|
Independent
Public Accountants
General
Joseph
Decosimo and Company, PLLC were the Company’s independent public accountants for
2008, and the Company anticipates that Joseph Decosimo and Company, PLLC will be
retained as the Company’s independent public accountants for
2009. Representatives of Joseph Decosimo and Company, PLLC are
expected to be present at the Annual Meeting, and will have the opportunity to
make statements and to respond to appropriate questions.
The
decision to engage Joseph Decosimo and Company, PLLC was made upon the
recommendation of the Company’s Audit Committee and the approval of the Board of
Directors.
Audit
Fees
Joseph
Decosimo and Company, PLLC billed fees of $289,500 and $263,000 for 2008 and
2007, respectively, for professional services rendered for the audit of the
Company’s consolidated financial statements included within the Company’s Form
10-K, and review of interim consolidated financial statements included within
Form 10-Qs during such periods, and for the audit of the Company’s internal
control over financial reporting.
Audit-Related
Fees
Joseph
Decosimo and Company, PLLC did not perform any, or bill the Company for,
assurance and related services related to the performance of the audit and
review of financial statements for 2008 or 2007.
Tax
Fees
Joseph
Decosimo and Company, PLLC billed fees of $86,600 and $89,000 for tax services
for 2008 and 2007, respectively.
All
Other Fees
Joseph
Decosimo and Company, PLLC did not perform or bill the Company for any other
services during 2008 or 2007.
Approval
of Audit and Non-Audit Services
The Audit
Committee of the Board of Directors pre-approves all audit and non-audit
services performed by the Company’s independent auditor. The Audit
Committee specifically approves the annual audit services
engagement. Certain non-audit services that are permitted under the
federal securities laws may be approved from time to time by the Audit
Committee.
CODE
OF BUSINESS CONDUCT AND ETHICS
The
Company has adopted a Code of Business Conduct and Ethics that applies to its
directors, officers and employees. A copy of the Code is available on
the Company’s website at www.millerind.com through the
“Investor Relations” link. A copy of the Code can also be obtained
upon request from the Company’s Corporate Secretary.
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth aggregate information as of December 31, 2008 about
all of the Company’s compensation plans, including individual compensation
arrangements, under which the Company’s equity securities are authorized for
issuance.
|
|
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
|
|
Equity
compensation plans approved
by
security holders
|
|
|
128,565 |
(1) |
|
$ |
8.25 |
(1) |
|
See
Note (2)
|
|
Equity
compensation plans not approved
by
security holders
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
____________________
(1)
|
Includes
only options outstanding under the Company’s 1994 Stock Option Plan and
2005 Equity Incentive Plan. Does not include shares of common
stock issued to non-employee directors under the Company’s Non-Employee
Director Stock Plan, which shares are fully vested and exercisable upon
issuance.
|
|
|
(2)
|
The
1994 Stock Option Plan expired in August 2004, therefore no securities are
available for future issuance under this plan. As of December
31, 2008, there were 563,640 securities available for future issuance
under the 2005 Equity Incentive Plan. Grants are made annually
to non-employee directors under the Non-Employee Director Stock Plan, and
the number of shares of common stock to be granted to each non-employee
director for a particular year is determined by dividing $25,000 by the
closing price of a share of the Company common stock on the first trading
day of such year. Therefore, the number of securities remaining
available for future issuance under the Non-Employee Director Stock Plan
is not presently
determinable.
|
COMPLIANCE
WITH SECTION 16(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Section
16(a) of the Securities Exchange Act of 1934 and the disclosure requirements of
Item 405 of Regulation S-K require the directors and executive officers of the
Company, and any persons holding more than 10% of any class of equity securities
of the Company, to report their ownership of such equity securities and any
subsequent changes in that ownership to the Securities and Exchange Commission,
the NYSE and the Company. Based solely on a review of the written
statements and copies of such reports furnished to the Company by its executive
officers and directors, the Company believes that, during 2008, all Section
16(a) filing requirements were met.
OTHER
MATTERS
Deadline
for Shareholder Proposals for 2010 Annual Meeting
Any
proposal intended to be presented for action at the 2010 annual meeting of
shareholders by any shareholder of the Company must be received by the Secretary
of the Company not later than December 18, 2009 in order for such proposal to be
considered for inclusion in the Company’s proxy statement and proxy relating to
that meeting. Any such shareholder proposal must meet all the
requirements for such inclusion established by the Securities and Exchange
Commission in effect at the time.
In
addition, any proposal intended to be presented for action at the 2010 annual
meeting of shareholders (other than a proposal submitted for inclusion in the
Company’s proxy statement and proxy) by any shareholder of the Company must be
received by the Secretary of the Company no later than 90 nor more than 120 days
before that annual meeting (which deadline is currently expected to be between
January 28, 2010 and February 27, 2010) in the case of a nomination for
director, and no later than 60 days prior to that annual meeting (which deadline
currently is expected to be March 29, 2010) in the case of any other proposal,
otherwise such proposal will not be considered at the 2010 annual meeting of
shareholders.
Expenses
of Solicitation
The cost
of solicitation of proxies will be borne by the Company, including expenses in
connection with preparing, assembling and mailing this proxy
statement. The Company’s executive officers or employees, who will
not receive compensation for their services other than their regular salaries,
may solicit proxies personally or by telephone. The Company does not
anticipate paying any other compensation to any other party for solicitation of
proxies, but may reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to beneficial owners.
A
COPY OF THE COMPANY’S ANNUAL REPORT TO SHAREHOLDERS FOR 2008 IS ENCLOSED WITH
THIS PROXY STATEMENT. COPIES OF EXHIBITS FILED WITH THE COMPANY’S
ANNUAL REPORT ON FORM 10-K AND OTHER REPORTS OF THE COMPANY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE UPON WRITTEN REQUEST AT NO COST
TO THE REQUESTING SHAREHOLDER. REQUESTS SHOULD BE MADE IN WRITING TO
FRANK MADONIA, EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL, MILLER
INDUSTRIES, INC., 8503 HILLTOP DRIVE, OOLTEWAH,
TENNESSEE 37363.
![GRAPHIC](img002.jpg)
Miller Industries,
Inc.
C123456789
000004 000000000.000000 ext
000000000.000000 ext
000000000.000000 ext 000000000.000000
ext
MR A SAMPLE
DESIGNATION (IF ANY) 000000000.000000
ext 000000000.000000 ext
ADD 1
Electronic Voting
Instructions
ADD 2
ADD 3 You can vote by Internet or
telephone!
ADD 4 Available 24 hours a day, 7 days a
week!
ADD 5
Instead of mailing your proxy, you may
choose one of the two voting
ADD 6
methods outlined below to vote your
proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN
THE TITLE BAR.
Proxies submitted by the Internet or
telephone must be received by
1:00 a.m., Central Time, on May 22,
2009.
X
Vote by Internet
• Log on to the Internet and go
to
www.investorvote.com/MLR
• Follow the steps outlined on the
secured website.
Vote by telephone
• Call toll free 1-800-652-VOTE (8683)
within the United
States, Canada & Puerto Rico any time on a touch
tone
telephone. There is NO CHARGE to you for
the call.
Using a black ink pen, mark your votes
with an X as shown in
• Follow the instructions provided by
the recorded message.
this example. Please do not write
outside the designated areas.
123456 C0123456789 12345Annual Meeting
Proxy Card
. IF YOU HAVE NOT VOTED VIA THE INTERNET
OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION
IN THE ENCLOSED ENVELOPE. .
A Election of Directors — The Board of
Directors recommends a vote FOR all the nominees listed.
1. Nominees: For Withhold For Withhold
For Withhold
+
01 - Jeffrey I.
Badgley
02 - A. Russell Chandler,
III
03 - Paul E. Drack
04 - William G.
Miller
05 - Richard H.
Roberts
THE BOARD OF DIRECTORS FAVORS A VOTE
“FOR” EACH OF THE NOMINEES LISTED ABOVE AND UNLESS INSTRUCTIONS TO THE CONTRARY
ARE INDICATED IN THE SPACE PROVIDED, THE PROXY WILL BE SO
VOTED.
2. Other Business:
For the transaction of such other
business as may lawfully come before the meeting, hereby revoking any proxies as
to said shares heretofore given by the undersigned and ratifying and confirming
all that said attorneys and proxies may lawfully do by virtue hereof. It is
understood that this proxy confers discretionary authority in respect to matters
not known or determined at the time of the mailing of the notice of the meeting
to the undersigned.
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting of Shareholders dated April 15, 2009 and
the Proxy Statement furnished therewith.
B Non-Voting Items
Change of Address — Please print new
address below.
C Authorized Signatures — This section
must be completed for your vote to be counted. — Date and Sign
Below
Signature should agree with the name(s)
hereon. Executors, administrators, trustees, guardians and attorneys should so
indicate when signing. For joint accounts each owner should
sign.
Corporations should sign their full
corporate name by a duly authorized officer.
Date (mm/dd/yyyy) — Please print date
below. Signature 1 — Please keep signature within the box. Signature 2 — Please
keep signature within the box.
C 1234567890 J N T MR A SAMPLE (THIS
AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE
AND
+
MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND
50AV 0218661 MR A SAMPLE AND MR A SAMPLE
AND MR A SAMPLE AND
<STOCK#>
011RUA
![GRAPHIC](img003.jpg)
IF YOU HAVE NOT VOTED VIA THE
INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE. .
Proxy — Miller Industries,
Inc.
This Proxy is Solicited by the Board of
Directors for the Annual Meeting of Shareholders to be Held on May 22,
2009
The undersigned shareholder of Miller
Industries, Inc. hereby constitutes and appoints William G. Miller and Frank
Madonia, or either of them, the true and lawful attorneys and proxies of the
undersigned with full power of substitution and appointment, for and in the
name, place and stead of the undersigned, to vote all of the undersigned's
shares of Common Stock of Miller Industries, Inc., at the Annual Meeting of the
Shareholders to be held at 1100 Peachtree Street, Suite 2800, Atlanta, Georgia
30309, on Friday, the 22nd of May, 2009, at 9:00 a.m., and at any and all
adjournments thereof as indicated on the reverse side.
This proxy is revocable at or at any
time prior to the meeting. Please sign and return this proxy to Computershare
Investor Services, LLC, P.O. Box 43102, Providence, RI 02940-5067, in the accompanying prepaid
envelope.