def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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TABLE OF CONTENTS
Lawson Products, Inc.
1666 East Touhy Avenue
Des Plaines, Illinois 60018
OF STOCKHOLDERS
December 8, 2009
TO THE STOCKHOLDERS:
You are cordially invited to attend the annual meeting of
stockholders of Lawson Products, Inc. (the Company),
which will be held at the offices of the Company, 1666 East
Touhy Avenue, Des Plaines, Illinois, on December 8, 2009 at
10:00 a.m., Central time, for the following purposes:
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(1)
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To elect three directors to serve three years;
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(2)
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To ratify the appointment of Ernst & Young LLP the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2009;
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(3)
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To approve the Lawson Products, Inc. 2009 Equity Compensation
Plan; and
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(4)
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To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
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The Board of Directors has fixed the close of business on
November 2, 2009, as the record date for the determination
of stockholders entitled to notice of and to vote at the
meeting. Accompanying this Notice is a Proxy, a Proxy Statement
and a copy of the Companys 2008 Annual Report on
Form 10-K.
Additionally, a copy of this Notice, the accompanying Proxy
Statement and a copy of the Companys 2008 Annual Report on
Form 10-K
are available at www.edocumentview.com/LAWS.
Even if you expect to attend the meeting in person, please
sign and return the enclosed proxy in the envelope provided so
that your shares may be voted at the meeting. You may also vote
your shares by telephone or via the Internet as set forth in the
enclosed proxy. If you execute a proxy, you still may attend the
meeting and vote in person.
By Order of the Board of Directors
Neil E. Jenkins
Secretary
Des Plaines, Illinois
November 4, 2009
Lawson Products, Inc.
1666 East Touhy Avenue
Des Plaines, Illinois 60018
ANNUAL MEETING OF STOCKHOLDERS
December 8, 2009
This Proxy Statement is being sent to stockholders on or about
November 4, 2009, in connection with the solicitation of
the accompanying proxy by our Board of Directors. Only
stockholders of record at the close of business on
November 2, 2009 are entitled to notice of and to vote at
the meeting. We have retained Morrow & Co., LLC,
470 West Ave., Stamford, Connecticut. 06902, a firm
specializing in the solicitation of proxies, to assist in the
solicitation at a fee estimated to be $5,000 plus expenses.
Officers of the Company may make additional solicitations in
person or by telephone. Expenses incurred in the solicitation of
proxies will be borne by the Company. If the accompanying form
of proxy is executed and returned in time or you vote your
shares by telephone or via the Internet as set forth in the
enclosed proxy, the shares represented thereby will be voted. A
proxy may be revoked at any time prior to its voting by
execution of a later dated proxy or by voting in person at the
annual meeting.
As of November 2, 2009, we had 8,522,001 shares of
Common Stock (the Common Stock) outstanding and such
shares are the only shares entitled to vote at the annual
meeting. Each holder of Common Stock is entitled to one vote per
share on all matters to come before the meeting. For purposes of
the meeting, a quorum means a majority of the outstanding
shares. In determining whether a quorum exists, all shares
represented in person or by proxy will be counted.
Directors will be elected by a plurality of the votes cast at
the meeting by the holders of shares represented in person or by
proxy. There is cumulative voting with respect to the election
of directors. It is intended that the named proxies will vote in
favor of the election of directors of the nominees listed below,
except as otherwise indicated on the proxy form. If any nominee
should become unavailable for election as a director, which is
not contemplated, the proxies will have discretionary authority
to vote for a substitute. In the absence of a specific direction
from the stockholders, proxies will be voted for the election of
all named director nominees. Because directors are elected by a
plurality of the votes cast at the meeting, a proxy card marked
Withhold with respect to one or more director
nominees will have no effect on the election of the nominees.
The ratification of Ernst & Young LLP as the
Companys independent registered public accounting firm and
the approval of the 2009 Equity Compensation Plan require the
approval of the affirmative vote of a majority of the shares of
Common Stock present or represented by proxy and voting at the
meeting. Accordingly, a proxy card marked Abstain
with respect to either of the proposals will constitute a vote
against such proposal.
Proxies received but marked as abstentions and broker non-votes
will be included in the calculation of the number of shares
considered to be present at the meeting. In general, banks,
brokers or other
nominees are permitted to vote shares held by them on behalf of
their customers on matters determined to be routine, even though
the bank, broker or nominee has not received instructions from
its customer. A Broker non-vote occurs when a bank, broker or
nominee has not received voting instructions from its customer
and the bank, broker or nominee does not have discretion to vote
the shares of street name holders because the matter is not
considered routine. Broker non-votes will not affect the
determination of the outcome of the vote on the election of
directors and the ratification of Ernst & Young LLP as
the Companys independent registered public accounting
firm. With respect to the meeting, the election of directors and
the ratification of Ernst & Young LLP as the
Companys independent registered public accounting firm are
routine matters on which a broker has the discretion to vote if
instructions are not received from the client in a timely
manner. The proposal to approve the 2009 Equity Compensation
Plan is a non-routine matter.
Proposal 1:
Election of Directors
Stockholders are entitled to cumulative voting in the election
of directors. Under cumulative voting, each stockholder is
entitled to that number of votes equal to the number of
directors to be elected, multiplied by the number of shares such
stockholder owns, and such stockholder may cast its votes for
one nominee or distribute them in any manner it chooses among
any number of nominees. Unless otherwise indicated on the proxy
card, votes may, in the discretion of the proxies, be equally or
unequally allocated among the nominees named below. Directors
will be elected by a plurality of the votes cast at the meeting
by the holders of shares represented in person or by proxy.
Thus, assuming a quorum is present, the three persons receiving
the greatest number of votes will be elected as directors and
votes that are withheld will have no effect.
The By-Laws of the Company provide that the Board of Directors
shall consist of such number of members, between five and nine,
as the Board of Directors determines from time to time. The size
of the Board of Directors is currently set at nine members. The
Board of Directors is divided into three classes, with one class
being elected each year for a three-year term. At the annual
meeting, three directors are to be elected to serve until 2012.
On October 7, 2009, James T. Brophy notified the Company of
his resignation from the Board of Directors, with such
resignation to be effective on October 19, 2009. On
October 20, 2009, the Board of Directors appointed Andrew
B. Albert as a Director to fill the vacancy created by
Mr. Brophys resignation. On October 12, 2009,
Mitchell H. Saranow notified the Company of his decision not to
stand for reelection for the Board of Directors. With
Mr. Saranows term to expire on December 8, 2009,
the Board of Directors has nominated I. Steven Edelson to fill
the vacancy created by his decision not to stand for reelection.
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First Year
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Elected
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Name
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Age
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Director
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Nominees to Serve Until 2012
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Andrew B. Albert
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64
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2009
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I. Steven Edelson
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50
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Thomas S. Postek
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67
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2005
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First Year
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Elected
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Name
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Age
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Director
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Directors to Serve Until 2010
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James S. Errant
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61
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2007
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Lee S. Hillman
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54
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2004
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Thomas J. Neri
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58
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2007
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First Year
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Elected
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Name
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Age
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Director
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Directors to Serve Until 2011
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Ronald B. Port, M.D.
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68
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1984
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Robert G. Rettig
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80
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1989
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Wilma J. Smelcer
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60
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2004
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The following information has been furnished by the respective
nominees and continuing directors. Each nominee and continuing
director has held the indicated position, or an executive
position with the same employer, for at least the past five
years, unless otherwise indicated below.
Andrew B. Albert has served as Managing Director and
Operating Partner of Svoboda Capital Partners LLC, a private
equity investment firm, since February 2007. From December 2000
through May 2006, Mr. Albert served as Chairman and Chief
Executive Officer of Nashua Corporation, a manufacturer of
specialty paper products. Mr. Albert also served as
non-executive Chairman of Nashuas Board of Directors from
December 2006 through September 2009. Mr. Albert serves as
a Director on the Boards of Border Construction Specialties, a
distributor of specialty construction products; Forsythe
Technologies, a technology consulting and sales firm; and
Transco, Inc., a diversified industrial company.
I. Steven Edelson has served as a Principal of
Mercantile Capital, a private equity investment firm, and a
Managing Director of its Chicago office since 1997.
Mr. Edelson has also served as a managing Director of
International Facilities Group, a leading facilities and
management company, since June 1995.
Thomas S. Postek is a Certified public accountant and
chartered financial analyst currently affiliated with Geneva
Investment Management of Chicago since January 2005.
Mr. Postek was a partner and principal of William
Blair & Company, LLC, a Chicago-based investment firm,
from 1986 to 2001. During his tenure at William Blair,
Mr. Postek covered various business services as an analyst,
including industrial distribution. Mr. Postek is also a
director of UniFirst Corporation.
James S. Errant has served as Managing Partner of Gore
Range Brewery from 1997 to the present. Mr. Errant has
served as Managing Partner of Frites, LLC from 2004 to the
present. Mr. Errant served as President of Prima
Corporation from 1973 to 2006. The companies listed above are in
the business of operating restaurants.
Lee S. Hillman has served as President of Liberation
Investment Advisory Group and Liberation Management Services,
both private management consulting firms, since 2003.
Mr. Hillman has served as Chief Executive Officer of
Performance Health Systems, LLC, an early-stage business
distributing BioDensity branded, specialty health and exercise
equipment, since January 2009. From February
2
2006 to May 2008, Mr. Hillman served as Executive Chairman
and Chief Executive Officer of Power Plate International, a
global business manufacturing and distributing high-tech, Power
Plate branded health and exercise equipment. From 2005 to
February 2006, he was President of Power Plate
North America, the exclusive, independent distributor of
Power Plate International in the United States.
Mr. Hillman serves as a director of RCN Corporation and as
a Trustee of the Adelphia Recovery Trust.
Thomas J. Neri has served as President and Chief
Executive Officer of Lawson Products, Inc. since April 2007.
Mr. Neri was elected to the Board of Directors in December
2007. Mr. Neri was elected President and Chief Operating
Officer in January 2007. Mr. Neri was elected Executive
Vice President, Finance, Planning and Corporate Development;
Chief Financial Officer and Treasurer in 2004. He also served as
Chief Financial Officer and Treasurer from 2004 to January 2006.
Mr. Neri joined the Company in October 2003 as Executive
Vice President, Finance and Corporate Planning.
Ronald B. Port, M.D. has served as Chairman of the
Board of Directors since April 2007. Mr. Port is a Retired
Physician.
Robert G. Rettig is a Consultant and a Retired Executive
Vice President of Illinois Tool Works, Inc., a global industrial
company.
Wilma J. Smelcer served as a member of the Board of
Governors of the Chicago Stock Exchange from 2001 until April
2004. From 2001 through 2006, Ms. Smelcer was a trustee of
Goldman Sachs Mutual Fund Complex (a registered investment
company). Ms. Smelcer served as Chairman of Bank of
America, Illinois from 1998 to 2001.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THESE NOMINEES.
Proposal 2:
Ratification of the Appointment of Ernst & Young
LLP
The Audit Committee of the Board of Directors has appointed
Ernst & Young LLP to serve as the Companys
independent registered public accounting firm for the fiscal
year ending December 31, 2009. Although the Companys
governing documents do not require the submission of this matter
to stockholders, the Board of Directors considers it desirable
that the appointment of Ernst & Young LLP be ratified
by stockholders.
Audit services provided by Ernst & Young LLP for the
fiscal year ended December 31, 2008 included the audit of
the consolidated financial statements of the Company; audit of
the Companys internal control over financial reporting;
and services related to periodic filings made with the
Securities and Exchange Commission (SEC).
Additionally, Ernst & Young LLP provided certain
services relating to domestic and international tax compliance
and consulting services.
One or more representatives of Ernst & Young LLP will
be present at the meeting. The representatives will have an
opportunity to make a statement if they desire and will be
available to respond to questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP.
Proposal 3: On March 17, 2009, the
Board of Directors, on the recommendation of the Compensation
Committee, adopted the Lawson Products, Inc. 2009 Equity
Compensation Plan (2009 Equity Plan).
Purpose
The purpose of the 2009 Equity Plan is to motivate employees and
non-employee directors to put forth maximum efforts toward the
growth, profitability and success of the Company by providing
incentives through cash payments
and/or
through the ownership and performance of the Common
3
Stock. In addition, the 2009 Equity Plan is intended to provide
incentives that will attract and retain highly qualified
individuals and to assist in aligning the interests of employees
and directors with the interests of the stockholders of the
Company. Given the current economic times, the ongoing
restructuring of the company, and the competitive landscape, we
believe that it is important to retain and motivate our
employees through stock ownership.
Summary of the
2009 Equity Plan
Set forth below is a summary of the principal features of the
2009 Equity Plan. The summary is qualified in its entirety by
reference to the complete text of the 2009 Equity Plan, which is
attached as Appendix A to this Proxy Statement.
Administration and Delegation. The
Compensation Committee will have the responsibility, in its sole
discretion, to control, operate, manage and administer the 2009
Equity Plan in accordance with its terms. The Compensation
Committee may delegate in writing such administrative duties as
it may deem advisable to one or more of its members or to one or
more agents. All determinations and interpretations by the
Compensation Committee shall be binding and conclusive on the
participants.
Eligibility. The 2009 Equity Plan authorizes
the Compensation Committee to make awards to employees and to
non-employee directors of the Company. The number of options and
other awards, if any, that an individual will be entitled to
receive under the 2009 Equity Plan will be at the discretion of
the Compensation Committee and therefore cannot be determined in
advance.
Authorized Shares. The 2009 Equity Plan
authorizes the issuance of a maximum of 500,000 shares of
Common Stock, subject to adjustment upon the occurrence of
certain events as described below. No single participant may
receive awards of more than 40,000 shares of Common Stock
in any calendar year.
Adjustments to Awards. The 2009 Equity Plan
provides that if there is a change in the Common Stock, through
merger, consolidation, reorganization, recapitalization, stock
dividend, stock split,
split-up,
spin-off, combination of shares, exchange of shares, dividend in
kind or other similar change in capital structure, or
distribution (other than normal cash dividends) to stockholders
of the Company, an adjustment shall be made to each outstanding
award so that the value of each award immediately after the
change is not significantly diluted or enhanced. Subject to
certain restrictions, the Compensation Committee may make
adjustments to the number and kind of shares subject to awards
and the exercise price of stock options and may make other
modifications to awards to address changes in the Common Stock
or for other equitable purposes or in response to unusual events
affecting the Company or changes in applicable laws or
accounting principles.
Types of Awards
Allowed Under the 2009 Equity Plan
Stock Options. The Compensation Committee may
grant nonqualified options and incentive stock options. The
option price of nonqualified stock options and incentive stock
options will be the fair market value of the Common Stock on the
date of grant, unless in the case of nonqualified options the
Compensation Committee determines otherwise on the date of the
grant due to special circumstances. Options qualifying as
incentive stock options will be required to meet certain
requirements of the Internal Revenue Code of 1986 (the
Code) and only participants who are employees will
be eligible to receive incentive stock options.
The 2009 Equity Plan allows the Compensation Committee to
determine the method or methods of payment to be allowed for the
exercise of stock options including payment in cash, withholding
shares otherwise issuable on exercise of the options or by
delivering other shares of Common Stock.
The 2009 Equity Plan requires the Compensation Committee to fix
the term of each option, but the term may not exceed twenty
years from the date of grant for nonqualified stock options and
ten years from the date of grant for incentive stock options.
Unless provided otherwise in the option agreement,
4
one-third of the options will vest and become exercisable on
each of the first three anniversaries of the date of grant. The
exercisability of options may be accelerated by the Compensation
Committee when it would be in the best interest of the Company.
In the absence of different action by the Compensation
Committee, each stock option that vests on the basis of time
will immediately and automatically vest on the date of the
change in control to the extent it would have otherwise vested
on the first anniversary of the date of the change in control.
Stock Awards and Stock Units. The 2009 Equity
Plan authorizes the Compensation Committee to grant awards of
Common Stock, subject to any terms and conditions the
Compensation Committee determines to be appropriate. The 2009
Equity Plan also authorizes the Compensation Committee to grant
awards of stock units, representing the right to receive shares
of Common Stock upon the fulfillment of applicable criteria
established by the Compensation Committee. Upon the vesting of
stock units, the shares of Common Stock corresponding to the
stock units will be distributed to the participant, unless the
Compensation Committee provides for the payment of such stock
units either partially or entirely in cash. Upon the occurrence
of a change in control, the Compensation Committee may in its
sole discretion take such actions as it deems appropriate with
respect to outstanding stock awards and stock units, including
accelerating the vesting date or payout of such awards or units.
In the absence of different action by the Compensation
Committee, each stock award or stock unit that vests on the
basis of time shall immediately and automatically vest on the
date of the change in control to the extent it would have
otherwise vested on the first anniversary of the date of the
change in control.
Other Information. The Board of Directors may
terminate the 2009 Equity Plan at any time but such termination
will not reduce or adversely affect any outstanding award
outstanding. Unless terminated by action of the Board of
Directors, the 2009 Equity Plan will continue in effect until
March 17, 2019, but awards granted prior to that date will
continue in effect until they expire in accordance with original
terms. The Board of Directors may amend the 2009 Equity Plan at
any time with or without prior notice, as long as the amendment
does not adversely change any terms and conditions without the
participants consent.
Federal Income
Tax Consequences
With respect to incentive stock options, if the holder of an
option does not dispose of the shares acquired upon exercise of
the option within one year from the transfer of the shares to
the participant, or within two years from the date the option to
acquire the shares is granted, then for federal income tax
purposes (1) the optionee will not recognize any income at
the time of exercise of the option; (2) the excess of
the fair market value of the shares as of the date of exercise
over the option price will constitute an item of
adjustment for purposes of the alternative minimum tax;
and (3) the difference between the option price and the
amount realized upon the sale of the shares by the optionee will
be treated as a long-term capital gain or loss. Otherwise, the
participant will recognize ordinary income equal to the
difference between the fair market value of the shares as of the
date of exercise and the option price, or if less, the amount by
which the value of the shares on the date of the sale or other
disposition exceeds the option exercise price; any additional
increase in the value of option shares after the exercise date
will be taxed as capital gain. The Company will not be allowed a
deduction for federal income tax purposes in connection with the
granting of an incentive stock option or the issuance of shares
if the holding period discussed above is met. If the shares are
sold or disposed of before the expiration of the required
holding period, the Company will be allowed a tax deduction
equal to the amount of ordinary income recognized by the
participant.
With respect to the grant of options which are not incentive
stock options, upon the exercise of the option, the optionee
will recognize ordinary income in the amount of the difference
between the option price and the fair market value of the shares
on the date the option is exercised. The Company generally will
receive an equivalent deduction at that time.
5
With respect to restricted stock awards and other stock awards,
an amount equal to the fair market value of the shares of Common
Stock distributed to the participant (in excess of any purchase
price paid by the participant) will be includable in the
participants gross income at the time of receipt unless
the award is not transferable and subject to a substantial risk
of forfeiture. If a participant receives an award subject to a
forfeiture restriction, the participant may elect to include in
gross income the fair market value of the award, otherwise the
participant will include in gross income the fair market value
of the award subject to a forfeiture restriction on the earlier
of the date the restrictions lapse or the date the award becomes
transferable. The Company generally is entitled to a deduction
at the time and in the amount equal to the income included in
the gross income of a participant.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE APPROVAL OF THE 2009 EQUITY COMPENSATION
PLAN.
6
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of
October 31, 2009 concerning the beneficial ownership by
each person (including any group as defined in
Section 13(d)(3) of the Securities Exchange Act of
1934) known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock of the Company, each
director, each named executive officer, and all executive
officers and directors as a group. Unless otherwise noted below,
the address of each beneficial owner listed in the table is 1666
East Touhy Avenue, Des Plaines, Illinois, 60018. Because the
voting or dispositive power of certain stock listed in the
following table is shared, in some cases the same securities are
listed opposite more than one name in the table. The total
number of the Companys shares of Common Stock issued and
outstanding as of October 31, 2009 is 8,522,001.
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Sole Voting or
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Dispositive Power
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Shared Dispositive
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Shared Voting
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Percent of
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Name of Beneficial Owner
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(1)
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Power
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Power
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Class
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Five Percent Shareholders:
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Roberta Port Washlow(2)(3)(4)
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22,471
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3,011,436
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240,000
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38.4
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%
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Sidney L. Port Trust,
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1,170,389
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13.7
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%
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dated July 22, 1970 (the 1970 Trust)(5)
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Royce & Associates LLC(6)
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1,065,245
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12.5
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%
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1414 Avenue of the Americas
New York, NY 10019
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H. George Mann, Trustee(7)
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2,345,000
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27.5
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%
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1186 Linden Ave. Highland Park,
Il 60035
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Non-Executive Directors and Director Nominees:
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Andrew B. Albert
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James S. Errant(8)
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19,204
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12,378
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*
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Lee S. Hillman
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2,289
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*
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Ronald B. Port, M.D.(2)(3)(9)
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18,904
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3,011,436
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240,000
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38.4
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%
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Thomas S. Postek
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12,585
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|
|
|
|
|
|
|
|
*
|
|
Robert G. Rettig
|
|
|
6,289
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Mitchell H. Saranow
|
|
|
2,289
|
|
|
|
8,000
|
|
|
|
|
|
|
|
*
|
|
Wilma J. Smelcer
|
|
|
2,289
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Neri
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. Terrence Blanchard
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil E. Jenkins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harry Dochelli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stewart A. Howley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott F. Stephens(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Ruprich(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group (15 persons)
|
|
|
63,849
|
|
|
|
3,031,814
|
|
|
|
240,000
|
|
|
|
39.1
|
%
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Stockholdings shown include shares issuable upon the exercise of
stock options exercisable within 60 days of
February 28, 2009 by Dr. Port (2,500 shares) and
Mr. Saranow (2,500 shares). |
|
(2) |
|
Indicated ownership excludes 58,157 shares, the beneficial
ownership of which is disclaimed by Ms. Washlow, that are
owned by Ms. Washlows spouse. |
7
|
|
|
(3) |
|
Includes shares held in two family partnerships in the aggregate
amount of 3,011,436 in which Dr. Ronald B. Port and Roberta
Port Washlow (Mr. Sidney Ports daughter) are the
managing partners. Approval of both of the managing general
partners is required for any actions with respect to the
reported securities. 1,200,000 of the shares (the LP
Pledged Shares) held by one of the limited partnerships
have been pledged as collateral for loans to the 1970 Trust in
an amount of $11,625,000 (the Loans). Does not
include shares held by the 1970 Trust as described in footnote
(5). |
|
(4) |
|
Includes 240,000 shares held by a voting trust pursuant to
which Ms. Washlow and Dr. Port are trustees.
Ms. Washlow and Dr. Port together have voting power
with respect to the shares, but have no power to dispose of the
shares. |
|
(5) |
|
Any disposition of the 1,170,289 shares held by the 1970
Trust must be approved by a majority of the three trustees,
Dr. Port, Ms. Washlow and H. George Mann, as trustee.
1,155,000 of the shares (together with the LP Pledged Shares,
the Pledged Shares) held by the 1970 Trust have been
pledged as collateral for the Loans. |
|
(6) |
|
Royce & Associates LLC holdings as of June 30,
2009 as reported on Nasdaq.com. |
|
(7) |
|
Shares listed as beneficially owned by George Mann consist of
the Pledged Shares owned by one of the family limited
partnerships and by the 1970 Trust. Due to the market price of
Lawsons Common Stock falling below a certain level, George
Mann, as trustee for various family trusts, has acquired the
right, but not the obligation, to dispose of the Pledged Shares. |
|
(8) |
|
Mr. Errant is the former
brother-in-law
of Ms. Washlow and Dr. Port. |
|
(9) |
|
Does not include 4,803 shares held by Dr. Ports
wife. |
|
(10) |
|
Mr. Stephens resigned from the Company effective
June 27, 2008. The share information provided for
Mr. Stephens is current through this date. |
|
(11) |
|
Mr. Ruprich left the Company effective May 31, 2008.
The share information provided for Mr. Ruprich is current
through this date. |
8
CORPORATE
GOVERNANCE
Board of Director
Meetings and Committees
The Board of Directors has standing Audit, Compensation,
Financial Strategies, Nominating and Governance, and Management
Development Committees. The Audit, Compensation and Nominating
and Governance Committees have each adopted a charter for their
respective committees. These charters may be viewed on the
Companys website, www.lawsonproducts.com, and
copies may be obtained by request to the Secretary of the
Company. Those requests should be sent to Corporate Secretary,
Lawson Products, Inc., 1666 East Touhy Avenue, Des Plaines,
Illinois 60018.
In 2008, the Board of Directors held 14 meetings, the Audit
Committee held 10 meetings, the Compensation Committee held 5
meetings and the Financial Strategies Committee held 1 meeting.
The Management Development Committee and the Nominating and
Governance Committee did not hold a meeting in 2008. In 2008
each director attended at least 75% of the meetings of the Board
of Directors and of the respective committees on which he or she
served.
Directors
The names and ages of all directors and all persons nominated to
become directors can be found in the section entitled
Proposal 1: Election of Directors.
The Audit
Committee
The functions of the Audit Committee include the appointment,
compensation, retention and oversight of the Companys
independent auditors, reviewing the scope and results of the
audit by the Companys independent auditors and reviewing
the Companys procedures for monitoring internal control
over financial reporting. The current members of the Audit
Committee consist of Thomas Postek (Chairman), Robert G. Rettig
and Mitchell H. Saranow. Each member of the Audit Committee
satisfies the independence requirements of The Nasdaq Stock
Market and the SEC. James T. Brophy, who served as a member of
the Audit Committee until his resignation on October 19,
2009, also satisfied the independence requirements of The Nasdaq
Stock Market and the SEC. The Board of Directors has determined
that Mr. Postek is an audit committee financial
expert as such term is defined by the SEC and satisfies
the financial sophistication requirements of The Nasdaq Stock
Market.
The Compensation
Committee
The Compensation Committee discharges the responsibilities of
the Board of Directors relating to compensation of the Chief
Executive Officer and establishes compensation for all other
executive officers of the Company. The Compensation Committee
consists of Lee S. Hillman (Chairman), Robert G. Rettig,
Mitchell H. Saranow and Wilma J. Smelcer. The Compensation
Committee is responsible for reviewing and approving corporate
goals and objectives relevant to the compensation for executive
officers, evaluating the performance of executive officers in
light of those goals and objectives, and setting the
compensation level of executive officers based on this
evaluation. The Compensation Committee also administers
incentive-compensation plans and equity-based plans established
or maintained by the Company from time to time; makes
recommendations to the Board of Directors with respect to the
adoption, amendment, termination or replacement of the plans;
and recommends to the Board of Directors the compensation for
members of the Board of Directors. The Compensation Committee
reviews and approves the compensation programs for the Chief
Executive Officer and senior management, which include the named
executives whose compensation is included in this report. The
Companys Chief Executive Officer makes recommendations on
compensation to the Compensation Committee for all executive
officers except himself. Each member of the Compensation
Committee satisfies the independence requirements of The Nasdaq
Stock Market and is an outside director as defined
in Section 162(m) of the Code.
9
The Nominating
and Governance Committee
The Nominating and Governance Committee identifies and nominates
potential directors to the Board of Directors and otherwise
takes a leadership role in shaping the corporate governance of
the Company. The Nominating and Governance Committee consists of
Mitchell H. Saranow (Chairman), James S. Errant, Robert G.
Rettig, and Wilma J. Smelcer. Each member of the Nominating and
Governance Committee satisfies the independence requirements of
The Nasdaq Stock Market. James T. Brophy, who served
as a member of the Nominating and Governance Committee until his
resignation on October 19, 2009, also satisfied the
independence requirements of The Nasdaq Stock Market.
The Financial
Strategies Committee
The Financial Strategies Committee reviews and evaluates the
financial activities of the Company and makes recommendations to
the Board of Directors and management regarding business
strategies and financial policies and objectives to promote and
maintain superior standards of performance. The Financial
Strategies Committee consists of Mitchell H. Saranow (Chairman),
James S. Errant, Lee S. Hillman, and Ronald B.
Port, M.D. James T. Brophy served as a member of the
Financial Strategies Committee until his resignation on
October 19, 2009.
The Management
Development Committee
The Management Development Committee is responsible for
management development and succession. Activities since the
creation of the Management Development Committee in 2007 include
evaluative and developmental discussions with members of the
Executive Committee and numerous Vice Presidents of the Company
in order to formulate succession plans, development plans and
concur with hiring decisions at senior levels. In addition,
members of the committee have met with recommended candidates
for various executive positions. The directors who serve on the
Management and Development Committee are Wilma J. Smelcer
(Chairwoman), James S. Errant, Lee S. Hillman, Ronald B.
Port, M.D. and Robert G. Rettig.
Director
Nominations
The Nominating and Governance Committee will consider Board of
Director nominees recommended by stockholders. Those
recommendations should be sent to the Chairman of the Nominating
and Governance Committee, at
c/o Corporate
Secretary of Lawson Products, Inc., 1666 East Touhy Avenue, Des
Plaines, Illinois 60018. In order for a stockholder to nominate
a candidate for director, under the Companys certificate
of incorporation, timely notice of the nomination must be given
in writing to the Secretary of the Company. With respect to the
meeting, in order to be timely, such notice must be mailed or
delivered to the Secretary of the Company not less than fourteen
days prior to the meeting. The Companys certificate of
incorporation specifies additional information regarding the
nominee that must accompany the notice.
The Nominating and Governance Committee will follow procedures
which the Nominating and Governance Committee deems reasonable
and appropriate in the identification of candidates for election
to the Board of Directors and evaluating the background and
qualifications of those candidates. Those processes include
consideration of nominees suggested by an outside search firm,
by incumbent members of the Board of Directors and by
stockholders. The Nominating and Governance Committee will seek
candidates having experience and abilities relevant to serving
as a director of the Company and who represent the best
interests of stockholders as a whole and not any specific
interest group or constituency. The Nominating and Governance
Committee will consider a candidates qualifications and
background, including, but not limited to responsibility for
operating a public company or a division of a public company,
other relevant business experience, a candidates technical
background or professional qualifications and other public
company boards of directors on
10
which the candidate serves. The Nominating and Governance
Committee will also consider whether the candidate would be
independent for purposes of The Nasdaq Stock Market
and the rules and regulations of the SEC. The Nominating and
Governance Committee may from time to time engage the service of
a professional search firm to identify and evaluate potential
nominees.
Director
Independence
The Companys Board of Directors has determined that
Director Nominees Andrew B. Albert and I. Steven Edelson
and Directors James S. Errant, Lee S. Hillman, Thomas S. Postek,
Robert G. Rettig, Mitchell H. Saranow, and Wilma J. Smelcer are
independent within the meaning of the rules of The Nasdaq Stock
Market. The Board also determined that James T. Brophy, who
served on our Board of Directors until his resignation on
October 19, 2009, was independent within the meaning of the
rules of The Nasdaq Stock Market. In determining independence,
the Board of Directors considered the specific criteria for
independence under The Nasdaq Stock Market rules and also the
facts and circumstances of any other relationships of individual
directors with the Company.
The independent directors and the committees of the Board of
Directors regularly meet in executive session without the
presence of any management directors or representatives.
Annual Meeting
Attendance Policy
The Company expects all members of the Board of Directors to
attend the annual meeting of stockholders, but from time to
time, other commitments may prevent all directors from attending
each meeting. All directors attended the most recent annual
meeting of stockholders.
Code of Business
Conduct
The Company has adopted a Code of Business Conduct (the
Code of Conduct) applicable to all employees
and sales agents. The Code of Conduct is applicable to senior
financial executives including the principal executive officer,
principal financial officer and principal accounting officer of
the Company. The Code of Conduct is available on the Corporate
Governance page in the Investor Relations section of the
Companys website at www.lawsonproducts.com. The
Company intends to post on its website any amendments to or
waivers from the Code of Conduct applicable to senior financial
executives. The Company will provide a copy of the Code of
Conduct without charge upon written request directed to the
Company at
c/o Corporate
Secretary, Lawson Products, Inc., 1666 East Touhy Avenue, Des
Plaines, Illinois 60018.
Stockholder
Communications with Board of Directors
Stockholders may send communications to members of the Board of
Directors by either sending a communication to the Board of
Directors or a committee thereof
and/or a
particular member
c/o Corporate
Secretary, Lawson Products, Inc., 1666 East Touhy Avenue, Des
Plaines, Illinois 60018. Communications intended for
non-management directors should be directed to the Chairman of
the Nominating and Governance Committee. All such communications
will be reviewed promptly and, as appropriate, forwarded to the
Board of Directors or the relevant committee or individual
member of the Board of Directors or committee based on the
subject matter of the communication.
11
Executive
Officers
The executive officers of the Company as of October 31,
2009 are as follows.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
|
Position
|
|
Thomas J. Neri
|
|
|
58
|
|
|
Chief Executive Officer and Director
|
F. Terrence Blanchard
|
|
|
56
|
|
|
Chief Financial Officer
|
Neil E. Jenkins
|
|
|
59
|
|
|
Executive Vice President, Secretary and General Counsel
|
Harry Dochelli
|
|
|
50
|
|
|
Executive Vice President Sales and Marketing
|
William Holmes
|
|
|
49
|
|
|
Vice President and Treasurer
|
Stewart Howley
|
|
|
48
|
|
|
Senior Vice President Strategic Business Development
|
Michelle Russell
|
|
|
48
|
|
|
Senior Vice President Operations and Supply Chain Management
|
Mary Ellen Schopp
|
|
|
46
|
|
|
Senior Vice President, Human Resources
|
Biographical information for the past five years relating to
each of our executive officers is set forth below.
Mr. Neri was elected Chief Executive Officer in
April 2007. Mr. Neri was elected to the Board of Directors
in December 2007. Mr. Neri was elected President and Chief
Operating Officer in January 2007. Mr. Neri was elected
Executive Vice President, Finance, Planning and Corporate
Development; Chief Financial Officer and Treasurer in 2004.
Mr. Neri joined the Company in October 2003 as Executive
Vice President, Finance and Corporate Planning.
Mr. Blanchard was elected Chief Financial Officer
effective June 30, 2008. Mr. Blanchard has been a
partner in the executive services firm Tatum, LLC
(Tatum) since 2006, where he has served as Interim
Vice President, Controller and Chief Accounting Officer for Dura
Automotive Systems, Inc., as Senior Financial Officer for
Hyperfeed Technologies, Inc. and in a financial consultation
role for Zimmer Holdings, Inc. Mr. Blanchard served from
1999 to 2006 in various management positions with Florsheim
Group Inc., including as President and Chief Financial Officer,
Vice President, Finance and Vice President and Controller.
Florsheim Group Inc. filed a petition for relief under
Chapter 11 of the U.S. Bankruptcy Code on
March 4, 2002.
Mr. Jenkins was elected Executive Vice President,
Secretary and General Counsel in 2004. From 2000 to 2003
Mr. Jenkins served as Secretary and Corporate Counsel of
the Company.
Mr. Dochelli was elected Executive Vice President
Sales and Marketing effective April 2008. Previously,
Mr. Dochelli served as Executive Vice President, North
America Contract Sales for OfficeMax from 2007 until 2008,
Executive Vice President of U.S. Operations for
OfficeMax/Boise Cascade Office Solutions from 2005 to 2007 and
in various other management positions with OfficeMax/Boise
Cascade Office Solutions from 1987 to 2005.
Mr. Holmes was elected Vice President and Treasurer
effective January 2006. From 2001 through 2005 Mr. Holmes
was Vice President and Assistant Treasurer of the Company.
Mr. Howley was elected Senior Vice President
Strategic Business Development effective April 2008.
Mr. Howley served as Chief Marketing Officer from December
2005 until May 2008. From August 2002 through December 2005, he
was Director of Strategic Business Development with Home Depot
Supply.
Ms. Russell was elected Senior Vice President
Operations and Supply Chain Management in August 2007.
Ms. Russell served as Chief Ethics and Compliance Officer
from April 2006 until August 2007 and in a consulting capacity
from November 2005 through March 2006. Prior to this,
Ms. Russell held the role of Vice President of Operations
at Associated Materials from 2001 until 2005.
Ms. Schopp was elected Senior Vice President, Human
Resources in 2007. Prior to this, Ms. Schopp held the role
of Vice President, Human Resources at ConAgra Foods, Inc. from
2003 until 2006.
12
REMUNERATION OF
EXECUTIVE OFFICERS
Compensation
Discussion and Analysis (CD&A)
Compensation
Philosophy and Objectives
The Companys executive compensation programs are designed
to reward executives for the development and execution of
successful business strategies. In determining the type and
amount of compensation for each executive, we use both annual
compensation and the opportunity to earn long-term compensation
in a manner that we believe optimizes the executives
contributions to our Company. Our compensation programs are
designed to encourage and reward the creation of long-term
shareholder value.
The Company guides its executive compensation programs with a
compensation philosophy expressed in these three principles:
|
|
1.
|
Talent Acquisition & Retention. We
believe that having qualified people at every level of our
Company is critical to our success. Although we strive to
develop executives from within to lead the organization, a
significant number of executives have been recruited from
outside the Company during the past three years. Finding
talented people with the right competencies and experience is
very important. Our compensation programs should encourage
talented executives to join and continue their careers as part
of our senior management team.
|
|
2.
|
Accountability for Lawsons Business
Performance. To achieve alignment between the
interests of our executives and our stockholders, we use
short-term and long-term incentive plans. Our executives
compensation will increase or decrease based on how well they
achieve performance goals.
|
|
3.
|
Accountability for Individual Performance. We
believe teams and individuals should be rewarded when their
contributions are exemplary and significantly support Company
performance and value creation.
|
To support these principles, the compensation opportunities
provided to our executives emphasize performance-based pay, with
significant upside potential when stretch goals are met.
Specifically, Lawson:
|
|
|
Targets base salaries at the 50th percentile (median) of the
market;
|
|
|
Targets annual incentive opportunities at the median of the
market with upside potential for exceeding established targets;
and,
|
|
|
Provides objective-based, long-term incentive opportunities that
provide for payouts significantly above market levels if stretch
goals are met.
|
When making compensation decisions, the various elements of
compensation are evaluated together, and the level of
compensation opportunity provided for one element may impact the
level and design of other elements. Lawson is currently focusing
its executive officer total compensation program on the
achievement of long-term performance goals. For this reason,
long-term incentive opportunities are positioned to lead market
median practices, while short-term incentives are targeted at
market median practices. While each compensation program has
specific objectives, through the analysis of competitive
practices, the Company positions its executive officer total
compensation program in aggregate in alignment with the market.
13
Named Executive
Officers
For 2008, our named executive officers are as follows:
|
|
|
Executive Name
|
|
Title
|
|
Thomas J. Neri
|
|
Chief Executive Officer
|
F. Terrence Blanchard(1)
|
|
Chief Financial Officer
|
Neil E. Jenkins
|
|
Executive Vice President, Secretary & General Counsel
|
Harry Dochelli
|
|
Executive Vice President, Sales & Marketing
|
Stewart A. Howley
|
|
Senior Vice President Strategic Business Development
|
Michael W. Ruprich(2)
|
|
Former Group President, MRO & New Channels
|
Scott F. Stephens(3)
|
|
Former Senior Vice President & Chief Financial Officer
|
|
|
|
(1) |
|
Mr. Blanchard is employed as CFO of Lawson on an interim
basis under a contract between the Company and Tatum, LLC, a
financial consultancy firm, of which Mr. Blanchard is a
partner. |
|
(2) |
|
Mr. Ruprich, former Group President, MRO and New Channels,
left the Company in May 2008. |
|
(3) |
|
Mr. Stephens, former Chief Financial Officer, resigned from
the Company in June 2008. |
Determining
Competitive Practices
Peer Group for
Compensation Benchmarking
We established a peer group of companies used for evaluating
competitive total compensation levels. These companies represent
a mix of wholesale trade companies, closely-held companies and
our direct competitors, with revenues and net income similar to
that of Lawson.
Specifically, the peer companies have annual revenues ranging
from $200 million to $1 billion, with median revenue
of approximately $575 million. We used this peer group
specifically to review the appropriate mix and size of target
awards for similar-sized companies. We periodically re-evaluate
the peer group as mergers and acquisitions occur
and/or
company data is reviewed to maintain an appropriate comparator
group based on revenue size and other factors. When we last
examined the compensation of our named executive officers in
2007, the compensation peer group included the following
companies:
|
|
|
APAC Customer Services, Inc
Bandag, Inc.
Books-a-Million,
Inc.
Crawford & Company
DXP Enterprises, Inc.
Empire Resources, Inc.
Farmer Brothers Company
H&E Equipment Services, Inc.
Industrial Distribution Group, Inc.
|
|
Keystone Automotive Industries, Inc.
Markwest Hydrocarbon, Inc.
Newpark Resources, Inc.
Nu Horizons Electronics. Corporation
Olympic Steel, Inc.
PAM Transportation Services, Inc.
RPC, Inc.
Tessco Technologies, Inc.
Universal Truckload Services, Inc.
|
In 2008, five of the peer companies were either acquired or were
de-listed Bandag, Inc., Empire Resources, Inc.,
Industrial Distribution Group, Inc., Keystone Automotive
Industries, Inc., and Markwest Hydrocarbon, Inc. As a result,
Lawson and the Compensation Committee intend to
14
reexamine the peer group to ensure a meaningful pay and
performance benchmarking for the upcoming year.
Other
Competitive Benchmarks
To supplement compensation data gathered from our peer group
companies, compensation for our named executive officers is also
compared to published survey data from the Watson Wyatt Top
Management Survey and the Mercer Benchmark Executive Survey.
These surveys include data from the following categories:
1. Companies in the United States, excluding financial
services;
2. Wholesale and retail trade organizations; and,
3. For-profit organizations with less than $1 billion
in revenue.
Elements of Total
Compensation
Base
Salary
We provide base salaries to compensate executives for the
services rendered during the fiscal year. We establish salary
ranges such that the midpoint is positioned at the median of the
market for companies comparable to Lawson in terms of size,
industry and complexity. Each salary range then has a minimum
that is 75% of the midpoint and a maximum that is 125% of the
midpoint. In setting 2008 base salaries for executives other
than the CEO, the Committee considered:
|
|
|
Competitive market data;
|
|
|
The experience, skills and competencies of the individual;
|
|
|
The compensation of the individual relative to other members of
the executive team; and
|
|
|
Individual performance of the executive in the prior year.
|
Based on the competitive benchmarking, we found that the base
salaries for our executive officers lagged their respective
market medians. Accordingly, we adjusted base salaries for
selected named executive officers in 2008 as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
%
|
|
Executive Name
|
|
Salary
|
|
|
Salary
|
|
|
Increase
|
|
|
Thomas J. Neri
|
|
$
|
500,000
|
|
|
$
|
450,000
|
|
|
|
11
|
%
|
F. Terrence Blanchard(1)
|
|
|
386,400
|
|
|
|
|
|
|
|
|
|
Neil E. Jenkins
|
|
|
365,000
|
|
|
|
325,000
|
|
|
|
12
|
|
Harry Dochelli(2)
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
Stewart A. Howley
|
|
|
295,610
|
|
|
|
275,000
|
|
|
|
7
|
|
|
|
|
(1) |
|
Contractually agreed upon base salary |
|
(2) |
|
Hired in 2008 |
Given the current economic recession and our financial
performance, the Committee has determined that none of the
executive officers will receive salary increases in 2009.
Annual
Incentive Plan (AIP)
The AIP is designed to reward executives for the achievement of
fiscal year goals that, depending on the role of the executive,
are composed of a mix of corporate and individual objectives.
The purpose of the AIP is to focus on the achievement of key
business objectives for the fiscal year, but also to be
15
aligned with the strategic plan which has a longer-term time
horizon focused on creating shareholder value.
Mr. Blanchard does not participate in the AIP.
At the beginning of each year, AIP award opportunities are
established as a percentage of the participants annual
base salary. The 2008 AIP award opportunities at threshold,
target and maximum for the named executive officers in 2008 are
provided in the table in the section entitled Grants of
Plan Based Awards in 2008.
In 2008, the key corporate performance measures for our
executives were adjusted EBITDA and adjusted Return on Invested
Capital (ROIC). As a result of the Companys
restructuring efforts and ongoing resolution of the 2005
investigation, the Committee determined that a greater emphasis
on individual performance goals was necessary for the 2008 AIP.
Accordingly, the ROIC goal was weighted at 10% for each of each
named executive officers target annual incentive payment
while adjusted EBITDA was weighted at 40% for Mr. Neri and
30% each for Mr. Jenkins, Mr. Dochelli and
Mr. Howley. The 2008 AIP target for adjusted EBITDA was set
at $50.4 million and the target for adjusted ROIC was set
at 7.65%.
The remaining components of the AIP consisted of key individual
performance measures and weightings which were established for
each of the named executive officers as follows.
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|
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Thomas J. Neri 50% of his AIP opportunity was
based on objectives set to develop and begin to implement sales
strategies, corporate leadership and develop the senior
management team.
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|
|
Neil E. Jenkins 60% of his AIP opportunity
was based on objectives set to manage legal affairs, develop and
expand investor relations and advise and serve as liaison for
the Board of Directors.
|
|
|
Harry Dochelli 60% of his AIP opportunity was
based on objectives set to achieve sales goals in the MRO unit,
develop and implement sales strategy and recruit and reorganize
the sales organization.
|
|
|
Stewart Howley 60% of his AIP opportunity was
based on objectives set to develop operating and sales
strategies, business development and the development of pricing
strategies.
|
EBITDA of $(11.9) million was adjusted for expenses not
generally within the control of management. These adjustments
were related to various factors outside of managements
control and decisions made by the prior management team that had
an adverse effect on the Companys value. These adjustments
include the Deferred Prosecution Agreement penalty, costs
related to the federal investigation, severance charges,
impairment of goodwill and unclaimed property costs primarily
associated with years prior to 2003. Adjustments also reflect
the effects of the lost revenues due to the government
investigation and unforeseen expenses, and the effects of the
loss of revenue resulting from the transition to the Reno
distribution center. The aggregate amount of all adjustments was
$51.8 million resulting in an adjusted EBITDA of
$39.9 million and an adjusted ROIC of 5.64% which did not
meet the 2008 AIP threshold levels of $46.9 million and
6.85%. Since corporate performance measures were not met,
executives received no payments based on the corporate
performance component of the AIP award. AIP awards were paid out
to executives based on their performance compared to their
individual goals. Except for Mr. Jenkins, payout levels
were below target levels for each executives individual
performance goals component. Mr. Jenkins payout level
exceeded target as it was determined that his performance and
achievement of individual objectives surpassed the
Companys expectations.
16
Target bonuses and actual bonuses received for 2008 are outlined
below:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual
|
|
|
|
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Total Target
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Component Target
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|
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Executive
|
|
Bonus
|
|
Bonus
|
|
Bonus Awarded
|
|
Thomas Neri
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|
$
|
500,000
|
|
|
$
|
250,000
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|
|
$
|
225,000
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|
Neil Jenkins
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|
|
182,500
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|
|
|
109,500
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|
|
|
120,000
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Harry Dochelli
|
|
|
176,393
|
|
|
|
105,836
|
|
|
|
100,000
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|
Stewart Howley
|
|
|
147,805
|
|
|
|
88,683
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|
|
|
50,000
|
|
In 2008, the performance metric for the AIP was changed from
adjusted operating income to adjusted EBITDA for better
alignment with the long-term incentive plan. For comparison
purposes, 2007 bonuses based on corporate adjusted operating
income of $39.5 million, and 2008 bonuses based on
corporate adjusted EBITDA of $31.8 million are outlined
below.
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|
|
|
|
|
|
|
|
|
Bonus Awarded
|
|
Executive
|
|
2008
|
|
|
2007
|
|
|
Thomas Neri
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|
$
|
225,000
|
|
|
$
|
345,000
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Neil Jenkins
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|
|
120,000
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|
|
|
93,750
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Harry Dochelli
|
|
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100,000
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|
|
|
|
|
Stewart Howley
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|
|
50,000
|
|
|
|
85,332
|
|
We anticipate the Compensation Committee will evaluate potential
annual incentive bonuses for 2009 based on a number of factors,
including but not limited to, achievement of operational goals,
the Companys adjusted EBITDA performance and the
Companys cash flow performance, relative to predetermined
targets.
Long-Term
Incentive Plans
Through various long-term incentive opportunities, Lawson ties a
considerable portion of each executives compensation to
sustained growth and the achievement of measurable corporate
performance goals. Goals are established to link executive
compensation levels to increased shareholder value.
For 2008, we had two long-term incentive plans in operation.
2004-2008
Long-Term Capital Accumulation Plan
(LTCAP)
The Long Term Capital Accumulation Plan was a multi-year
incentive plan that provided awards for corporate performance
over a five-year period. These awards gained value as specified
levels of earnings and working capital were achieved and a
formula-based shareholder value was then calculated. It
commenced on January 1, 2004 and concluded on
December 31, 2008. The amount of compensation to be paid to
the LTCAP participants was based on the increase in:
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a)
|
EBITDA; and
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|
|
b)
|
the net value of certain non-operating assets and liabilities of
the Company, as described in the LTCAP. The value of the Company
at the end of the performance period, as calculated using those
criteria, was compared with the value of the Company as of
December 31, 2003, which was calculated as
$242.1 million using the same criteria. However, no
compensation would be payable under the LTCAP unless the
calculated increase in Company value during the performance
period was greater than an amount representing a cumulative 10%
annual preferred rate of return for the stockholders of the
Company.
|
The overall LTCAP pool amount was calculated by applying a
participation rate to the net increase in stockholder value
during the performance period. The net increase in stockholder
value was the
17
ending value of the Company at the end of 2008 reduced by the
initial calculated value of $242.1 million as of
December 31, 2003, further reduced by the calculated amount
of the cumulative 10% annual preferred return for stockholders.
For purposes of calculating the amount of the pool, the ending
value of the Company was the sum of (a) 8 times the EBITDA
of the Company for the preceding 12 months, plus
(b) the net value of certain non-operating assets and
liabilities, as described in the LTCAP, plus (c) all
dividend distributions and stock repurchases by the Company
since December 31, 2003, with certain additional
adjustments as described in the LTCAP.
Selected executives, including the named executive officers,
were participants in the LTCAP, with the exception of
Messrs. Blanchard and Dochelli. The compensation payable to
a participant was intended to be a percentage of an overall
funding pool that is generated based on LTCAP performance. A
participant received rights of participation, each of which
would normally represent one-tenth of 1% of the pool. A maximum
of 1,000 participation rights were to be awarded under the
LTCAP, and no individual would receive more than 350
participation rights. The LTCAP did not specify any maximum
dollar amount that can be earned by any one participant.
In October 2008, due to strategic decisions being implemented by
the Company, the Compensation Committee decided to determine the
size of award pool under the LTCAP based on operating results
achieved as of August 31, 2008 and projected results for
September 1, 2008 through December 31, 2008. At that
time, the Committee also proposed and the Board approved various
adjustments to the calculation of the incentive EBITDA by
excluding certain extraordinary expenses from the calculation.
These adjustments were related to the unfavorable effects on the
Companys value of various actions taken by prior
management, who are no longer participants in the plan. A large
majority of these adjustments were comprised of two categories.
First, adjustments were made for the unforeseen expenses and the
effects of the loss of revenue resulting from the transition to
the Reno distribution center, which caused many customers to
discontinue purchasing from Lawson. Second, adjustments were
made to reflect the effects of lost revenues by the Drummond
business due to the government investigation which commenced in
2005. The Committee believed these adjustments were in the best
interests of the shareholders as they helped to fairly evaluate
the current management teams performance versus the goals
of the LTCAP and retain the executives as required to complete
the Companys restructuring plan.
After making allowances for these adjustments, the net increase
in stockholder value created during the performance period was
$90.6 million and the corresponding LTCAP incentive pool to
be distributed to all participants was $8,232,000. The
Committee, under its authority, limited the payouts to
$6,542,000 or 79% of the LTCAP incentive pool. Amounts earned
under the LTCAP plan will be paid out 50% in 2009, 25% in 2010
and 25% in 2011. In accordance with the requirements of the
LTCAP and as approved by the Board, Mr. Ruprich received
his full share of the LTCAP pool. Each named executive officer
was awarded an LTCAP payout as follows.
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Target Value of
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2008 LTCAP
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Executive Name
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Allocated Units
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Payout
|
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Thomas J. Neri
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$
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4,053,000
|
|
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$
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2,395,000
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Neil E. Jenkins
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|
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2,748,000
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|
|
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1,624,000
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Stewart A. Howley
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|
|
746,000
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|
|
|
441,000
|
|
Michael Ruprich
|
|
|
1,504,000
|
|
|
|
889,000
|
|
2008-2009
Long-Term Incentive Plan (Current
LTIP)
In 2008, the Compensation Committee recommended and received
shareholder approval for a new cash based long-term incentive
plan. The Current LTIP is intended to provide for cash awards
payable upon achievement of predetermined three-year operating
performance goals. The intent of the Current LTIP is to provide
such opportunities each year under overlapping performance
periods that commence on January 1 and end on December 31 three
years later. Current LTIP participants will
18
generally include the named executive officers plus other senior
executives important to the achievement of Lawsons
long-term operating goals and creation of shareholder value.
2008 was the first year participants were granted an
opportunity under this plan. Accordingly, the first cycle under
the Current LTIP is set based on two-year operating performance
goals, starting at the beginning of 2008 and concluding at the
end of 2009. The rationale behind this two-year cycle is to
focus the current leadership on mid-term goals and to keep them
motivated to meet the longer-term restructuring goals of the
Company. It is anticipated that all future performance periods
will be three-year cycles.
The performance goals for the cumulative
2008-2009
performance cycle are as follows (dollars in thousands):
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Threshold
|
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Target
|
|
|
Stretch
|
|
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EBITDA
|
|
$
|
103,394
|
|
|
$
|
107,295
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|
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$
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112,172
|
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ROIC
|
|
|
6.9
|
%
|
|
|
7.3
|
%
|
|
|
7.9
|
%
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As a result of changes to the economic environment in which the
Company operates, at this time it appears highly unlikely that
the actual results achieved related to the
2008-2009
cycle will meet the established performance threshold.
2009-2011
Long-Term Incentive Plan (New LTIP)
The Compensation Committee is in the process of establishing
goals related to the intended New LTIP. Given the economic
conditions and considerable turbulence in the markets impacting
Lawsons business, the Committee intends to review the
terms of the New LTIP in order to ensure that the plan
effectively motivates executives towards achievement of
longer-term operating results and retains the leadership talent
necessary as part of the Companys restructuring.
Stock
Performance Rights (SPRs)
Lawson has historically paid close attention to potential
shareholder equity dilution. We have generally believed that
non-equity incentives, guided by strategic performance
objectives, are the best way to align executive interests with
those of shareholders, create shareholder value, and attract,
retain and motivate executives. Lawson has granted SPRs
primarily to members of the Board of Directors to link a portion
of compensation to the creation of shareholder value. In 2008,
to supplement the Current LTIP, Lawson granted SPRs to
executives as part of the current restructuring of the Company
and allows the executives to participate in future creation of
shareholder value. Operating similarly to a stock option, the
exercise price of an SPR is equal to the fair market value of
the Companys stock as of date of grant and value is only
realized by the executive if the stock price at the time of
exercise is higher than at grant. The executive receives a cash
payment of the difference upon exercise. Generally, SPR grants
have a three-year vesting schedule, with awards vesting ratably
over the requisite service period. SPRs expire 10 years
from the date of grant.
Benefits
The named executive officers are eligible for both
qualified and non-qualified benefits.
Qualified benefits are generally available to all Lawson
employees and are subject to favorable tax treatment by the IRS
under the current tax code. Qualified benefit plans cover such
items as health insurance, life insurance, vacation, profit
sharing, and 401(k) retirement savings. Named executive officers
and employees are required to contribute to offset a portion of
the cost of certain plans. In contrast to qualified benefits
plans, non-qualified plans are not generally available to all
employees and are not subject to favorable tax treatment under
the current Internal Revenue Code. Non-qualified benefit plans
are designed to fill a gap in executive compensation that is not
covered by qualified plans.
19
One non-qualified benefit for executives is the opportunity to
defer compensation in a deferred compensation plan. The plan
allows participants to defer the receipt of earnings until a
later year and therefore, defer payment of income taxes. A
feature of the deferred compensation plan allows participants to
select a set of mutual funds, which are then tracked for growth.
Based on the increase or decrease in the tracked mutual
funds total value, the Company uses its own funds to
adjust the deferred compensation by that gain (or loss) when
distributed. This type of plan is an attractive way to defer the
receipt of compensation into retirement years when income and
tax levels are generally lower. This is a positive feature in
Lawsons compensation program and a good way to help retain
executives without significant cost. The Company is required to
maintain assets in a trust to fund the deferred compensation
plan; however, the executives in the plan are unsecured
creditors and are at risk of losing part or all of their
deferrals if the Company files for bankruptcy.
The Company has broad-based, employee eligible, qualified
profit-sharing and 401(k) plans available to the named executive
officers along with many other employees to facilitate
retirement savings. For 2008, the Company made a profit sharing
contribution of 5%, of the executives base salary up to
the IRS annual compensation limit of $230,000. The Company
contributed 5% on any amounts of the executives base
salary in excess of the $230,000 limit into the Executive
Deferred Compensation Plan.
Perquisites
Our Company operates in a spirit of thrift and directs its
resources at building shareholder value. We believe that
perquisites are generally not a good Company investment. We do
not offer perquisites for our executives, such as country club
memberships, executive life insurance or car allowances. Nor do
we provide executives with the use of a company aircraft, the
services of an executive dining room or vehicles. A financial
counseling adviser was engaged to assist a small group of senior
executives to plan for retirement.
Severance
Protection & Other Potential Payments Upon a
Separation from the Company
Employment
Contracts
Certain executive officers, including some of those reported in
the Summary Compensation Table, have employment contracts with
the Company. The main purpose of the employment contracts is to
protect the Company from certain business risks (threats from
competitors, loss of confidentiality or trade secrets,
disparagement, solicitation of customers and employees) and to
define the Companys right to terminate the employment
relationship.
Employment contracts help attract executives to work for the
Company by protecting them from certain risks, such as business
reorganization with position elimination, or position
elimination in the event of a change in control or sale of the
Company. The executives or their heirs may also be protected in
case of disability or death.
Change-in-Control/Sale
of the Company
Change-in-control
arrangements are designed to retain executives, provide
continuity of management in the event of an actual or threatened
change-in-control,
and ensure that the executives act at all times in the best
interests of shareholders. These benefits are determined either
contractually or based upon the terms of specific Plans. In
2009, the Company adopted
change-in-control
agreements that provide for certain benefits upon a
change-in-control
and resulting loss of employment with two of the executive
officers Harry Dochelli and Stewart Howley, who did
not previously have
change-in-control
benefits.
Separation of
Named Executive Officers in 2008
Effective May 31, 2008, Michael Ruprich was terminated
without cause as Group President of MRO and New Channels of the
Company. In connection with his termination, the Company entered
into a
20
Separation Agreement with Mr. Ruprich. As quantified in the
Summary Compensation Table, the Company agreed to pay
Mr. Ruprich 18 months of salary continuation,
including health benefits, and an award pursuant to his
participation in the LTCAP.
Effective June 27, 2008, Scott Stephens resigned as Senior
Vice President & Chief Financial Officer of the
Company. Mr. Stephens received no severance or related
compensation and all unvested awards, as may have been paid from
the Companys various compensation and benefits programs,
were forfeited upon his separation from Lawson.
Role of the
Compensation Committee
As a subcommittee of the Board of Directors, the Compensation
Committee has overall responsibility for the compensation
programs for the CEO and other named executive officers.
Specific responsibilities include, but are not limited to:
1. Reviewing and approving corporate goals and objectives;
2. Evaluating the performance of executive officers;
3. Administering incentive and equity-based compensation
plans;
|
|
4.
|
Recommending new plans, plan amendments,
and/or the
termination of current plans;
|
|
5.
|
Recommending Board of Directors compensation levels, such
as retainers, chair fees, or equity grants; and
|
|
6.
|
Overseeing the work of external consultants advising Lawson on
compensation matters.
|
Compensation
Committee Interlocks and Insider Participation
In 2008, no executive officer of the Company served on the Board
of Directors or Compensation Committee of any other company with
respect to which any member of the Compensation Committee was
engaged as an executive officer. No member of the Compensation
Committee was an officer or employee of the Company during 2008,
and no member of the Compensation Committee was formerly an
officer of the Company.
Role of
Executives in Setting Compensation
The Companys CEO makes recommendations on compensation to
the Committee for all executive officers except himself.
Executive officers will generally make compensation
recommendations to the CEO regarding employees who report to
them. Executives are not involved in decisions regarding their
own compensation.
Role of the
Compensation Consultant
In 2007, the Company engaged Capital H Group (Capital
H) to complete benchmarking analysis and make
recommendations on performance metrics and potential incentive
payout levels for its executives. Capital H was also asked to
make recommendations regarding the design of executive
compensation plans for 2008 and beyond. Capital H presented
their benchmarking analysis and recommendations to the
Compensation Committee. The primary work completed by the
consultant included market pricing, benchmarking, proxy reviews
and the development of materials supporting roll out and
communication of the Current LTIP to participants.
Capital H is independent and maintains no other direct or
indirect business relationships with the Company. All executive
compensation services provided by Capital H are conducted under
the direction or authority of the CEO
and/or the
Compensation Committee. All executive compensation work
performed by Capital H Group is subject to review and approval
of the Compensation Committee.
21
In 2009, Grant Thornton LLP was engaged to assist the Company in
complying with the SEC proxy disclosure requirements as it
relates the preparation of the Compensation
Discussion & Analysis and related tabular
calculations. Grant Thornton is independent and its services are
provided under the direction and authority of the CFO. All work
performed by Grant Thornton is subject to review and approval of
the CFO and the Compensation Committee.
Compensation
Recovery Policy
Under the terms of the Companys compensation plans, the
Compensation Committee has full discretion to adjust the size of
an award if relevant performance measures are restated or
adjusted in a manner that would reduce the size of the award.
The Committee is reviewing the adoption of a formal policy that
would cover all plans, that provides for the recovery of
incentive compensation paid to or deferred by certain executives
(including the named executive officers) if certain conditions
are met. The draft policy would apply if the named executive
officer engaged in misconduct that:
|
|
|
contributed to the need for a restatement of all or a portion of
Lawsons financial statements filed with the SEC; or
|
|
|
contributed to inaccurate operating metrics being used to
calculate incentive compensation.
|
Under the draft policy, if either of the above scenarios
applies, there must also be a determination that the named
executive officers incentive compensation would have been
lower if the misconduct had not occurred.
Tax &
Accounting Considerations
409A
Section 409A of the Internal Revenue Codes relates to the
tax treatment of earnings when a payment the Company is
obligated to make to an executive is deferred to a future tax
year. In 2008, the Company, with the assistance of outside
counsel, completed a review of all its various executive
compensation and benefits plans with respect to compliance with
Sect. 409A. As a result of this review, the Company modified
various plans and executive employment agreements in order to
ensure good faith compliance with 409A.
162(m)
Section 162(m) of the Internal Revenue Code limits the
Companys ability to deduct compensation paid in any given
year to a named executive officer in excess of
$1.0 million. Performance-based compensation plans are not
subject to this restriction. As much as practicable, Lawson
attempts to comply with the provisions of 162(m), as clarified
under Rev. Rul.
2008-13, in
order to be able to deduct compensation paid to its executive
officers. This will allow payments made to any named executive
officer in a performance-based compensation plan to be
deductible by the Company if that officers compensation
exceeds $1.0 million in a given year. In the event the
proposed compensation for any of the Companys named
executive officers is expected to exceed the $1.0 million
limitation, the Committee will, in making a decision, balance
the benefits of tax deductibility with its responsibility to
hire, retain and motivate executive officers with competitive
compensation programs.
Stock
based compensation
The fair value expense of stock-based compensation, which
includes equity incentives such as stock options, restricted
stock, and stock appreciation rights is measured in accordance
with guidance as required under Financial Accounting Standards
Board Accounting Standards Codification (ASC) 718
and is expensed over the applicable vesting period.
22
280G and
4999
Sections 280G and 4999 of the Internal Revenue Codes relate
to a 20% excise tax that may be levied on a payment made to an
executive as a result of a
change-in-control,
if the payment exceeds three times the executives base
earnings (as defined by the code section). The Company seeks to
minimize the tax consequences as might arise under a potential
change-in-control
of Lawson by limiting the amount of compensation as may be paid
to an executive in such a circumstance. In the event the excise
tax is triggered, the existing change of control agreements
provide that the Company will reduce the
change-in-control
payment by the amount necessary so that the payment will not be
subject to the excise tax, if this would result in the most
beneficial outcome for the executive, net of all federal state
and excise taxes. Should the Company not reduce the payment as
noted, the existing agreements do not provide for any
gross-up
payment related to potential 280G excise taxes, which are the
sole responsibility of the executive.
23
Report of the
Compensation Committee
The Compensation Committee reviewed and discussed with
management the foregoing Compensation Discussion and Analysis
required by Item 402(b) of
Regulation S-K
for the year ended December 31, 2008. Based on such review
and discussion, the Compensation Committee recommended to the
Board, and the Board approved, that the Compensation Discussion
and Analysis be included in this Proxy Statement.
Respectfully Submitted by the Compensation Committee:
Lee S. Hillman (Chairman)
Robert G. Rettig
Mitchell H. Saranow
Wilma J. Smelcer
24
Compensation
Agreements
Key terms of compensation agreements currently in effect between
the Company and its executive officers are summarized below.
Mr. Thomas
J. Neri
Mr. Neri is employed under an amended and restated
employment agreement as of February 19, 2009. The agreement
provides for a term of employment of three years that
automatically renews from year to year, unless either he or the
Company provides six months written notice of non-renewal
prior to the expiration of the initial or extended term. The
agreement provides that he will receive an annual base salary of
$500,000. The annual base salary may be increased or decreased
at any time, except that his base salary may not be decreased to
less than $450,000. (At January 1, 2008
Mr. Neris salary was $450,000 and he received a
salary increase to $500,000 on April 16, 2008).
The agreement provides that he will be eligible for
discretionary annual incentive bonuses, he is eligible to
participate in the Companys Long-Term Incentive Plan
(LTIP) and he is eligible for various equity-based
compensation awards, including stock options, restricted stock
and stock award grants.
If the Company terminates Mr. Neri without cause, or he
terminates his employment for good reason, Mr. Neri will
receive his then current base salary for two years or the
remainder of his term of employment, whichever is greater; a pro
rata bonus; and coverage under the Companys health benefit
plans for an additional two years following termination.
If within 12 months following a
change-in-control,
the Company terminates Mr. Neris employment without
cause or if he terminates his employment for good reason, he
will be entitled to receive a lump sum payment equal to two
times his then current annual base salary and two times the most
recent annual bonus; in addition, all previously unvested
options and rights granted to him will immediately vest and
become fully exercisable as of the date of termination for a
period of 90 days, and Mr. Neri and his family will be
covered under the Companys health benefit plans for two
years following termination.
Upon his death, Mr. Neris spouse and dependants will
receive an amount equal to two times Mr. Neris then
current annual base salary and an additional pro rata bonus
payment; and they will be entitled to coverage under the
Companys health benefit plans for an additional two years.
If Mr. Neri becomes disabled, the Company will pay his
compensation at a rate equal to 100% of his then current salary
for twelve months and at a rate equal to 60% of his then current
salary for
twenty-four
months thereafter. Coverage under the Companys health
benefit plan will be continued for five and one-half years.
If the Company terminates his employment by providing notice
that it will not renew the employment agreement on or after the
second anniversary of the agreements effective date, the
Company will pay him his base salary for one year after
termination and he will be entitled to coverage under the
Companys health benefit plans for an additional year.
Mr. Neri has agreed not to compete with the Company during
the period of employment and for a period of two years
thereafter.
Mr. F.
Terrence Blanchard
Mr. Blanchard is temporarily employed under a contract
effective June 24, 2008 between the Company and Tatum, of
which Mr. Blanchard is a partner. The contract provides for
Mr. Blanchard to receive a salary of $32,200 per month. In
addition the Company is obligated to pay a semi-monthly fee of
$6,800 to Tatum. The Company or Tatum may cancel the contract at
any time by providing the other party a minimum of 30 days
written notice. The Company has the option to make
Mr. Blanchard
25
a permanent full-time employee at any time by entering into
another agreement with Tatum at a fee calculated as 35% of first
full year salary plus bonus.
Mr. Neil E.
Jenkins
Mr. Jenkins is employed under an amended and restated
employment agreement as of February 19, 2009. The agreement
provides for a term of employment of three years that
automatically renews from year to year, unless either he or the
Company provides six months written notice of non-renewal
prior to the expiration of the initial or extended term. The
agreement provides that he will receive an annual base salary of
$365,000. The annual base salary may be increased or decreased
at any time, except that his base salary may not be decreased to
less than $325,000. (At January 1, 2008 Mr. Jenkins
salary was $325,000 and he received a salary increase to
$365,000 on April 16, 2008).
The agreement provides that he will be eligible for
discretionary annual incentive bonuses, he is eligible to
participate in the LTIP and he is eligible for various
equity-based compensation awards, including stock options,
restricted stock and stock award grants.
If the Company terminates Mr. Jenkins without cause, or he
terminates his employment for good reason, Mr. Jenkins will
receive his then current base salary for two years or the
remainder of his term of employment, whichever is greater; a pro
rata bonus; and coverage under the Companys health benefit
plans for an additional two years following termination.
If within 12 months following a
change-in-control,
the Company terminates Mr. Jenkins employment without
cause or if he terminates his employment for good reason, he
will be entitled to receive a lump sum payment equal to two
times his then current annual base salary and two times the most
recent annual bonus; in addition, all previously unvested
options and rights granted to him will immediately vest and
become fully exercisable as of the date of termination for a
period of 90 days, and Mr. Jenkins and his family will
be covered under the Companys health benefit plans for two
years following termination.
Upon his death, Mr. Jenkins spouse and dependants will
receive an amount equal to two times Mr. Jenkins then
current annual base salary and they will be entitled to coverage
under the Companys health benefit plans for an additional
two years.
If Mr. Jenkins becomes disabled, the Company will pay his
compensation at a rate equal to 100% of his then current salary
for six months and at a rate equal to 60% of his then current
salary for thirty months thereafter. Coverage under the
Companys health benefit plan will be continued for five
and one-half years.
If the Company terminates his employment by providing notice
that it will not renew the employment agreement on or after the
second anniversary of the agreements effective date, the
Company will pay him his base salary for one year after
termination and he will be entitled to coverage under the
Companys health benefit plans for an additional year.
Mr. Jenkins has agreed not to compete with the Company
during the period of employment and for a period of two years
thereafter.
Mr. Harry
Dochelli
Mr. Dochelli became employed under an agreement as of
April 7, 2008. Mr. Dochellis initial salary was
$400,000. The agreement provides that he will be eligible for
discretionary annual incentive bonuses; he is eligible to
participate in the LTIP and for various equity-based
compensation awards, including stock options, restricted stock
and stock award grants. Mr. Dochelli received a sign-on
bonus of $100,000. He is also eligible for a one-time $100,000
performance bonus after two years of employment. In the event
that Mr. Dochelli is terminated without cause, the Company
will continue to
26
pay his base salary and certain benefits for a period of one
year plus two months for every year of service.
On February 12, 2009, Mr. Dochelli entered into a
change in control agreement. If within one year following a
change in control, the Company terminates
Mr. Dochellis employment without cause or
Mr. Dochelli terminates his employment for good reason, he
will be entitled to a lump sum payment equal to one and one-half
times Mr. Dochellis then current annual base salary
and one times his most recent annual bonus; in addition, all
previously unvested options and rights will immediately vest and
become fully exercisable as of the date of termination for a
period of 90 days, and Mr. Dochelli and his family
will be covered under the Companys health benefit plans
for 12 months following termination. Mr. Dochelli
agreed not to compete with the Company during his period of
employment and for a period of eighteen months thereafter.
Mr. Stewart
A. Howley
Mr. Howley is employed under a contract effective
December 5, 2005. At January 1, 2008
Mr. Howleys salary was $275,000, and he received a
salary increase to $295,610 on May 20, 2008. The contract
provides for salary increases from time to time and eligibility
for an annual incentive bonus. The Company or Mr. Howley
may cancel the contract at any time, upon written notice. In the
event that Mr. Howley is terminated without cause or if
Mr. Howley leaves for good reason, the Company will
continue to pay his base salary and certain benefits for a
period of one year, plus two months salary for every additional
year of service. During the salary continuation period,
Mr. Howley is obligated to provide certain limited
consulting services to the Company. In the event that
Mr. Howley dies while employed by the Company,
Mr. Howleys estate will receive an amount equal to
two times his then current annual base salary.
On February 12, 2009, Mr. Howley entered into a change
in control agreement. If within one year following a change in
control, the Company terminates Mr. Howleys
employment without cause or Mr. Howley terminates his
employment for good reason, he will be entitled to a lump sum
payment equal to one and one-half times Mr. Howleys
then current annual base salary and one times his most recent
annual bonus; in addition, all previously unvested options and
rights will immediately vest and become fully exercisable as of
the date of termination for a period of 90 days, and
Mr. Howley and his family will be covered under the
Companys health benefit plans for 12 months following
termination. Mr. Howley agreed not to compete with the
Company during his period of employment and for a period of
eighteen months thereafter.
27
2008 SUMMARY
COMPENSATION TABLE(1)
The following table shows the compensation for the last three
fiscal years awarded to or earned by individuals who served as
the Companys Chief Executive Officer, Chief Financial
Officer and each of the Companys three other most highly
compensated executive officers and two additional individuals
for whom disclosure would have been provided if they had been
serving as an executive officers at the end of 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
(Stock Performance
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Rights)
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)(6)
|
|
($)
|
|
|
Thomas J. Neri
|
|
|
2008
|
|
|
|
485,417
|
|
|
|
2,395,000
|
|
|
|
(21,720
|
)
|
|
|
225,000
|
|
|
|
26,471
|
|
|
|
3,110,168
|
|
Chief Executive Officer
|
|
|
2007
|
|
|
|
432,500
|
|
|
|
|
|
|
|
2,609
|
|
|
|
345,000
|
|
|
|
37,882
|
|
|
|
817,991
|
|
|
|
|
2006
|
|
|
|
314,583
|
|
|
|
|
|
|
|
48,255
|
|
|
|
107,540
|
|
|
|
29,726
|
|
|
|
500,104
|
|
F. Terrence Blanchard(7)
|
|
|
2008
|
|
|
|
200,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,032
|
|
|
|
210,663
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil E. Jenkins(8)
|
|
|
2008
|
|
|
|
342,370
|
|
|
|
1,624,000
|
|
|
|
(63,644
|
)
|
|
|
120,000
|
|
|
|
18,327
|
|
|
|
2,041,053
|
|
Executive Vice President, Secretary and General Counsel
|
|
|
2007
|
|
|
|
277,022
|
|
|
|
|
|
|
|
(52,544
|
)
|
|
|
93,750
|
|
|
|
25,055
|
|
|
|
343,283
|
|
Harry Dochelli(9)
|
|
|
2008
|
|
|
|
294,103
|
|
|
|
100,000
|
|
|
|
42,403
|
|
|
|
100,000
|
|
|
|
14,705
|
|
|
|
551,211
|
|
Executive Vice President Sales and Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stewart A. Howley(10)
|
|
|
2008
|
|
|
|
293,818
|
|
|
|
441,000
|
|
|
|
|
|
|
|
50,000
|
|
|
|
14,691
|
|
|
|
799,507
|
|
Senior Vice President Strategic Business Development
|
|
|
2007
|
|
|
|
282,000
|
|
|
|
|
|
|
|
|
|
|
|
85,332
|
|
|
|
52,689
|
|
|
|
420,021
|
|
Scott F. Stephens(11)
|
|
|
2008
|
|
|
|
163,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163,720
|
|
Former Senior Vice
|
|
|
2007
|
|
|
|
236,667
|
|
|
|
|
|
|
|
|
|
|
|
96,251
|
|
|
|
19,525
|
|
|
|
352,443
|
|
President and Chief Financial Officer
|
|
|
2006
|
|
|
|
220,000
|
|
|
|
|
|
|
|
|
|
|
|
47,850
|
|
|
|
19,250
|
|
|
|
287,100
|
|
Michael W. Ruprich(12)
|
|
|
2008
|
|
|
|
147,436
|
|
|
|
889,000
|
|
|
|
|
|
|
|
|
|
|
|
459,000
|
|
|
|
1,495,436
|
|
Former Group President, MRO and New Channels
|
|
|
2007
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
91,046
|
|
|
|
24,751
|
|
|
|
415,797
|
|
|
|
|
(1) |
|
The Stock Awards, Change in Pension Value and Non-qualified
Deferred Compensation Earnings columns have been deleted from
the Summary Compensation Table as such compensation was not
granted in 2008. |
|
(2) |
|
The amounts listed in this column show the base salary paid to
the named executive officer in 2008, 2007 and 2006. |
|
(3) |
|
Amounts earned under the LTCAP plan of $2,395,000, $1,624,000,
441,000 and 889,000 by Mr. Neri, Mr. Jenkins,
Mr. Howley and Mr. Ruprich, respectively, will be paid
out 50% in 2009, 25% in 2010 and 25% in 2011. These amounts were
determined to be non-deductible for purposes of 162(m);
accordingly they are being reported in the Bonus column rather
the Non-Equity Incentive Plan column. Additionally,
Mr. Dochelli received a $100,000 sign-on bonus. |
|
(4) |
|
The amounts in this column represent the (benefit) expense
recognized for financial statement reporting purposes for the
years ended December 31, 2008, 2007 and 2006, in accordance
with FAS 123(R) for cash-settled stock performance rights
(SPRs). The Black-Scholes option valuation model
assumptions used in calculating the fair value are included in
Note M to our audited financial statements for the year
ended December 31, 2008, included in our Annual Report on
Form 10-K
filed with the SEC on March 11, 2009. These amounts reflect
our accounting (benefit) expense for these awards, and may not
correspond to the actual value that will be recognized by the
named executive officer. In some cases benefits were generated
due to |
28
|
|
|
|
|
the decline in fair value of certain SPR grants and, therefore,
reduced the Total compensation amount. |
|
(5) |
|
Amounts represent AIP bonuses earned (rather than paid) in the
respective year. The AIP bonuses awarded in 2008 were paid out
in 2009. |
|
(6) |
|
See All Other Compensation below for details regarding the
amounts in this column for 2008. |
|
(7) |
|
Mr. Blanchard joined the Company as Chief Financial Officer
in June 2008. |
|
(8) |
|
Mr. Jenkins became a named executive officer in 2007. |
|
(9) |
|
Mr. Dochelli joined the Company in April 2008. |
|
(10) |
|
Mr. Howley became a named executive officer in 2007. |
|
(11) |
|
Mr. Stephens resigned from the Company in June 2008. |
|
(12) |
|
Mr. Ruprich separated from the Company in May 2008. The
total amount of severance benefits to be paid to
Mr. Ruprich upon separation was $1,359,823. |
ALL OTHER
COMPENSATION IN 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
Financial
|
|
|
|
|
|
|
Profit Sharing
|
|
Compensation Plan
|
|
Counseling
|
|
Severance
|
|
Total All Other
|
|
|
Contribution
|
|
Contributions
|
|
Payments
|
|
Payments
|
|
Compensation
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
($)
|
|
Thomas J. Neri
|
|
|
11,500
|
|
|
|
12,771
|
|
|
|
2,200
|
|
|
|
|
|
|
|
26,471
|
|
F. Terrence Blanchard
|
|
|
10,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,032
|
|
Neil E. Jenkins
|
|
|
11,500
|
|
|
|
6,827
|
|
|
|
|
|
|
|
|
|
|
|
18,327
|
|
Harry Dochelli
|
|
|
11,500
|
|
|
|
3,205
|
|
|
|
|
|
|
|
|
|
|
|
14,705
|
|
Stewart A. Howley
|
|
|
11,500
|
|
|
|
3,191
|
|
|
|
|
|
|
|
|
|
|
|
14,691
|
|
Scott F. Stephens
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Ruprich(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
459,000
|
|
|
|
459,000
|
|
|
|
|
(1) |
|
The Company made a profit sharing contribution of 5.00% of base
salary up to the 2008 IRS annual compensation limit of $230,000. |
|
(2) |
|
For executives with base salaries above the IRS annual
compensation limit, the Company paid 5.00% on excess
above the IRS annual compensation limit into the Executive
Deferred Compensation Plan. Please see the Non-Qualified
Deferred Compensation Table. |
|
(3) |
|
Severance payments consist of an 18 month salary
continuation agreement ($178,500 was paid in 2008 and an
additional $280,500 will be paid in 2009). Mr. Ruprich is
also eligible for health, dental, vision and life insurance
during the salary continuation period which is not included in
the total. |
29
GRANTS OF
PLAN-BASED AWARDS IN 2008 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Exercise
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Price of
|
|
of Stock
|
|
|
Effective
|
|
|
|
|
|
|
|
Underlying
|
|
Option
|
|
and Option
|
|
|
Grant
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan
Awards
|
|
Options
|
|
Awards
|
|
Awards
|
Named Executive Officer
|
|
Date
|
|
Threshold($)
|
|
Target($)
|
|
Maximum($)
|
|
(#)(2)
|
|
($/Sh)(2)
|
|
($/Sh)(2)
|
|
Thomas J. Neri
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current LTIP(3)
|
|
|
5/13/2008
|
|
|
|
225,000
|
|
|
|
450,000
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 AIP(4)
|
|
|
3/01/2008
|
|
|
|
250,000
|
|
|
|
500,000
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil E. Jenkins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current LTIP(3)
|
|
|
5/13/2008
|
|
|
|
109,500
|
|
|
|
219,000
|
|
|
|
438,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 AIP(4)
|
|
|
3/01/2008
|
|
|
|
91,250
|
|
|
|
182,500
|
|
|
|
365,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPRs(5)
|
|
|
3/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
25.43
|
|
|
|
7.48
|
|
Harry Dochelli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current LTIP(3)
|
|
|
5/13/2008
|
|
|
|
88,683
|
|
|
|
177,366
|
|
|
|
354,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 AIP(4)
|
|
|
3/01/2008
|
|
|
|
88,197
|
|
|
|
176,393
|
|
|
|
352,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPRs(5)
|
|
|
4/07/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
27.61
|
|
|
|
8.47
|
|
Stewart A. Howley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current LTIP(3)
|
|
|
5/13/2008
|
|
|
|
160,000
|
|
|
|
320,000
|
|
|
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 AIP(4)
|
|
|
3/01/2008
|
|
|
|
73,903
|
|
|
|
147,805
|
|
|
|
295,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPRs(5)
|
|
|
3/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
25.43
|
|
|
|
7.48
|
|
Scott F. Stephens(6)
SPRs
|
|
|
3/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
25.43
|
|
|
|
7.48
|
|
Michael W. Ruprich(7)
SPRs
|
|
|
3/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
25.43
|
|
|
|
7.48
|
|
|
|
|
(1) |
|
The columns for Estimated Future Payments under Equity Incentive
Plan Awards and All Other Stock Awards have been deleted. |
|
(2) |
|
Amounts represented in these columns represent awards of SPRs
that have characteristics similar to options. |
|
(3) |
|
Any potential payouts for the
2008-2009
LTIP awards are expected to be made in 2010. |
|
(4) |
|
Reflects potential awards under the Lawson Products, Inc. 2008
AIP. These awards were paid in March 2009 as described in the
Summary Compensation Table above. |
|
(5) |
|
SPRs vest ratably over three years and have a 10 year term. |
|
(6) |
|
Mr. Stephens, former Chief Financial Officer, resigned from
the Company in June 2008. The Company cancelled his rights under
the
2008-2009
LTIP and 2008 AIP. Additionally, the 15,000 SPRs have been
forfeited. |
|
(7) |
|
Mr. Ruprich, former Group President, MRO and New Channels,
left the Company in May 2008. The Company cancelled his rights
under the
2008-2009
LTIP and 2008 AIP. Additionally, the 7,500 SPRs have been
forfeited. |
30
OUTSTANDING
EQUITY AWARDS/SPRs AT DECEMBER 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPR Awards (Stock Performance Rights)(1)
|
|
|
|
|
|
|
SPR
|
|
|
|
|
Number of Securities
|
|
Exercise
|
|
SPR
|
|
|
Underlying Unexercised SPRs
|
|
Price
|
|
Expiration
|
Named Executive Officer
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
Thomas J. Neri
|
|
|
5,000
|
|
|
|
|
|
|
|
33.15
|
|
|
|
12/08/2013
|
|
F. Terrence Blanchard
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil E. Jenkins
|
|
|
400
|
|
|
|
|
|
|
|
26.50
|
|
|
|
12/13/2010
|
|
|
|
|
4,400
|
|
|
|
|
|
|
|
27.08
|
|
|
|
12/11/2011
|
|
|
|
|
7,200
|
|
|
|
|
|
|
|
26.85
|
|
|
|
08/12/2013
|
|
|
|
|
|
|
|
|
10,000
|
(2)
|
|
|
25.43
|
|
|
|
03/17/2018
|
|
|
|
|
12,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
Stewart A. Howley
|
|
|
|
|
|
|
10,000
|
(2)
|
|
|
25.43
|
|
|
|
03/17/2018
|
|
Harry Dochelli
|
|
|
|
|
|
|
25,000
|
(3)
|
|
|
27.61
|
|
|
|
04/07/2018
|
|
Scott F. Stephens
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Ruprich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The columns for stock awards have been deleted as the named
executive officers have no outstanding stock awards as of
December 31, 2008. The data in this chart represents grants
under the SPRs, which have characteristics similar to options as
they are tied to performance of the Companys stock price
but are settled in cash upon exercise. |
|
(2) |
|
Will fully vest on March 17, 2011. |
|
(3) |
|
Will fully vest on April 7, 2011. |
OPTION/SPR
EXERCISES AND STOCK VESTED IN 2008
There were no exercises of SPRs or vesting of stock for any of
the named executive officers during the year ended
December 31, 2008.
NONQUALIFIED
DEFERRED COMPENSATION
With respect to the Companys 2004 Executive Deferral Plan,
certain executives, including named executive officers may defer
portions of base salary, bonus, LTIP awards, and the
excess contribution to the profit-sharing plan.
Deferral elections are made by eligible executives by the end of
the year preceding the plan year for which the election is made.
An executive may defer a minimum of $2,000 aggregate of Base
Salary, Bonus
and/or LTIP.
The maximum deferral amount for each plan year is 80% of base
salary, 100% of bonus and 100% of LTIP amounts.
The investment options available to an executive include some
funds generally similar to or as available through the
Companys qualified retirement plan. The Company does not
provide for any above market return for participants in the
Executive Deferral Plan.
Distributions
from the Plan
Unforeseeable Financial Emergency: Upon
showing a financial hardship and receipt of approval from the
Committee, an executive may interrupt deferral or be allowed to
access funds in his or her deferred compensation account. An
executive may elect to receive distributions under four
scenarios, receiving benefits in either a lump sum or in annual
installment of between 2 and 15 years. The four scenarios
include retirement, termination of employment, disability, or
death. In the event of a change in control of the Company, an
independent third party administrator would be appointed to
oversee the plan.
31
NONQUALIFIED
DEFERRED COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
Executive
|
|
Registrant
|
|
(Loss)
|
|
Withdrawals/
|
|
Aggregate
|
|
|
Contributions
|
|
Contributions in
|
|
Earnings in
|
|
Distributions
|
|
Balance
|
|
|
in Last FY
|
|
Last FY
|
|
Last FY
|
|
in Last FY
|
|
at Last FYE
|
Name
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)(2)
|
|
Thomas J. Neri
|
|
|
|
|
|
|
12,771
|
|
|
|
(22,615
|
)
|
|
|
|
|
|
|
49,508
|
|
F. Terrence Blanchard
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil E. Jenkins
|
|
|
|
|
|
|
6,827
|
|
|
|
(40,157
|
)
|
|
|
|
|
|
|
63,418
|
|
Harry Dochelli
|
|
|
18,667
|
|
|
|
3,205
|
|
|
|
(3,783
|
)
|
|
|
|
|
|
|
18,089
|
|
Stewart A. Howley
|
|
|
|
|
|
|
3,191
|
|
|
|
66
|
|
|
|
|
|
|
|
7,959
|
|
Scott F. Stephens
|
|
|
12,900
|
|
|
|
|
|
|
|
(25,026
|
)
|
|
|
|
|
|
|
40,375
|
|
Michael W. Ruprich
|
|
|
|
|
|
|
|
|
|
|
1,031
|
|
|
|
60,273
|
|
|
|
|
|
|
|
|
(1) |
|
Each of these amounts was also reported in column All Other
Compensation in the 2008 Summary Compensation Table above. |
|
(2) |
|
Amounts reported in the aggregate balance at last fiscal year
end that were reported as compensation to the named executive
officer in the Summary Compensation Table for previous years
were $59,352, $96,748, $4,702, $52,501 and $59,242 for
Mr. Neri, Mr. Jenkins, Mr. Howley,
Mr. Stephens and Mr. Ruprich, respectively. |
SUMMARY TABLE OF
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
The following table outlines potential payments to our named
executive officers under existing contracts, agreements, plans
or arrangements for various scenarios under termination or a
change-in-control,
assuming a December 31, 2008 termination date and the
closing price of our common stock of $22.85 on that date. The
termination benefits are described in the foregoing Compensation
Agreements section. In addition, upon termination, payments due
to executives include distribution of any balance in the
deferred compensation plan, any accrued and unpaid vacation and
all other benefits that have been accrued but not yet paid.
Payments may be reduced if it would result in the imposition of
an excise tax under the Internal Revenue Services
(IRS) code section 280G and the reduction would
result in the executive officer receiving a greater net of tax
payment. Amounts reported represent the full payments to be made
to the executives upon separation, as this would result in a
higher net of tax payment to each executive.
The potential payments, upon termination or
change-in-control
of the individual executive officers, are as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
Voluntary
|
|
due to Non-
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Termination
|
|
Renewal of
|
|
|
|
|
|
Termination
|
|
|
Without
|
|
|
|
for Good
|
|
contract by
|
|
|
|
|
|
Upon
|
|
|
Good
|
|
Termination
|
|
Reason by
|
|
Lawson
|
|
|
|
|
|
Change of
|
|
|
Reason
|
|
without Cause
|
|
Executive
|
|
or Executive
|
|
Death
|
|
Disability
|
|
Control
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Thomas J. Neri
|
|
|
68,739
|
|
|
|
1,089,809
|
|
|
|
1,089,809
|
|
|
|
68,739
|
|
|
|
1,089,809
|
|
|
|
1,226,681
|
|
|
|
1,989,809
|
|
F. Terrence Blanchard
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil E. Jenkins
|
|
|
77,456
|
|
|
|
828,526
|
|
|
|
828,526
|
|
|
|
77,456
|
|
|
|
828,528
|
|
|
|
865,398
|
|
|
|
1,388,854
|
|
Harry Dochelli
|
|
|
27,828
|
|
|
|
427,828
|
|
|
|
27,828
|
|
|
|
27,828
|
|
|
|
27,828
|
|
|
|
27,828
|
|
|
|
1,146,430
|
|
Stewart A. Howley
|
|
|
19,329
|
|
|
|
462,744
|
|
|
|
462,744
|
|
|
|
19,329
|
|
|
|
610,549
|
|
|
|
610,549
|
|
|
|
756,422
|
|
The components of these potential payments are detailed below,
by individual executive.
32
Mr. Thomas
J. Neri
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
without
|
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
Cause or
|
|
Termination
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Voluntary
|
|
due to Non-
|
|
|
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Renewal of
|
|
|
|
|
|
Termination
|
|
|
Without
|
|
for Good
|
|
contract by
|
|
|
|
|
|
Upon
|
|
|
Good
|
|
Reason by
|
|
Lawson
|
|
|
|
|
|
Change of
|
|
|
Reason
|
|
Executive
|
|
or Executive
|
|
Death
|
|
Disability
|
|
Control
|
Compensation
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)(2)
|
|
Base salary
|
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
1,100,000
|
|
|
|
1,000,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
SPRs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
Executive deferral plan
|
|
|
49,508
|
|
|
|
49,508
|
|
|
|
49,508
|
|
|
|
49,508
|
|
|
|
49,508
|
|
|
|
49,508
|
|
Health and welfare payments
|
|
|
|
|
|
|
21,070
|
|
|
|
|
|
|
|
21,070
|
|
|
|
57,942
|
|
|
|
21,070
|
|
Accrued vacation
|
|
|
19,231
|
|
|
|
19,231
|
|
|
|
19,231
|
|
|
|
19,231
|
|
|
|
19,231
|
|
|
|
19,231
|
|
Total
|
|
|
68,739
|
|
|
|
1,089,809
|
|
|
|
68,736
|
|
|
|
1,089,809
|
|
|
|
1,226,681
|
|
|
|
1,989,809
|
|
|
|
|
(1) |
|
Additional severance amounts are triggered at the two year
anniversary of the effective date (which will be
February 19, 2011) |
|
(2) |
|
The value of the exercise of SPRs is calculated using 135% of
year-end share price to simulate a potential sale price premium
for the Company. This includes any accelerated vesting upon a
change of control. |
Mr. F.
Terrence Blanchard
Mr. Blanchard is temporarily employed under a contract that
does not provide for any post-employment termination or
change-in-control
payments.
Mr. Neil E.
Jenkins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
without
|
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
Cause or
|
|
Termination
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Voluntary
|
|
due to Non-
|
|
|
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Renewal of
|
|
|
|
|
|
Termination
|
|
|
Without
|
|
for Good
|
|
contract by
|
|
|
|
|
|
Upon
|
|
|
Good
|
|
Reason by
|
|
Lawson or
|
|
|
|
|
|
Change of
|
|
|
Reason
|
|
Executive
|
|
Executive
|
|
Death
|
|
Disability
|
|
Control
|
Compensation
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)(2)
|
|
Base salary
|
|
|
|
|
|
|
730,000
|
|
|
|
|
|
|
|
730,000
|
|
|
|
730,000
|
|
|
|
730,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
SPRs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,328
|
|
LTIP award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219,000
|
|
Executive deferral plan
|
|
|
63,418
|
|
|
|
63,418
|
|
|
|
63,418
|
|
|
|
63,418
|
|
|
|
63,418
|
|
|
|
63,418
|
|
Health and welfare payments
|
|
|
|
|
|
|
21,070
|
|
|
|
|
|
|
|
21,070
|
|
|
|
57,942
|
|
|
|
21,070
|
|
Accrued vacation
|
|
|
14,038
|
|
|
|
14,038
|
|
|
|
14,038
|
|
|
|
14,038
|
|
|
|
14,038
|
|
|
|
14,038
|
|
Total
|
|
|
77,456
|
|
|
|
828,526
|
|
|
|
77,456
|
|
|
|
828,526
|
|
|
|
865,398
|
|
|
|
1,388,854
|
|
|
|
|
(1) |
|
Additional severance amounts are triggered at the two year
anniversary of the effective date (which will be
February 19, 2011) |
33
|
|
|
(2) |
|
The value of the exercise of SPRs is calculated using 135% of
year-end share price to simulate a potential sale price premium
for the Company. This includes any accelerated vesting upon a
change of control. |
Mr. Harry
Dochelli
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Voluntary
|
|
|
|
Voluntary
|
|
due to Non-
|
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Termination
|
|
Renewal of
|
|
|
|
Termination
|
|
|
Without
|
|
Without
|
|
for Good
|
|
contract by
|
|
|
|
Upon
|
|
|
Good
|
|
Cause by
|
|
Reason by
|
|
Lawson or
|
|
Death and
|
|
Change of
|
|
|
Reason
|
|
Lawson
|
|
Executive
|
|
Executive
|
|
Disability
|
|
Control
|
Compensation
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)(1)
|
|
Base salary
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
SPRs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,000
|
|
LTIP award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
320,000
|
|
Executive deferral plan
|
|
|
18,089
|
|
|
|
18,089
|
|
|
|
18,089
|
|
|
|
18,089
|
|
|
|
18,089
|
|
|
|
18,089
|
|
Health and welfare payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,602
|
|
Accrued vacation
|
|
|
9,739
|
|
|
|
9,739
|
|
|
|
9,739
|
|
|
|
9,739
|
|
|
|
9,739
|
|
|
|
9,739
|
|
Total
|
|
|
27,828
|
|
|
|
427,828
|
|
|
|
27,828
|
|
|
|
27,828
|
|
|
|
27,828
|
|
|
|
1,146,430
|
|
|
|
|
(1) |
|
The value of the exercise of SPRs is calculated using 135% of
year-end share price to simulate a potential sale price premium
for the Company. This includes any accelerated vesting upon a
change of control. |
Mr. Stewart
A. Howley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
without
|
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
Cause or
|
|
Termination
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Voluntary
|
|
due to Non-
|
|
|
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Renewal of
|
|
|
|
|
|
Termination
|
|
|
Without
|
|
for Good
|
|
contract by
|
|
|
|
|
|
Upon
|
|
|
Good
|
|
Reason by
|
|
Lawson or
|
|
|
|
|
|
Change of
|
|
|
Reason
|
|
Executive
|
|
Executive
|
|
Death
|
|
Disability
|
|
Control
|
Compensation
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
($)(2)
|
|
Base salary
|
|
|
|
|
|
|
443,415
|
|
|
|
|
|
|
|
591,220
|
|
|
|
591,220
|
|
|
|
443,415
|
|
AIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
SPRs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,200
|
|
LTIP award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,366
|
|
Executive deferral plan
|
|
|
7,959
|
|
|
|
7,959
|
|
|
|
7,959
|
|
|
|
7,959
|
|
|
|
7,959
|
|
|
|
7,959
|
|
Health and welfare payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,112
|
|
Accrued vacation
|
|
|
11,370
|
|
|
|
11,370
|
|
|
|
11,370
|
|
|
|
11,370
|
|
|
|
11,370
|
|
|
|
11,370
|
|
Total
|
|
|
19,329
|
|
|
|
462,744
|
|
|
|
19,329
|
|
|
|
610,549
|
|
|
|
610,540
|
|
|
|
756,422
|
|
|
|
|
(1) |
|
Includes consulting fees equal to 18 months of salary. |
|
(2) |
|
The value of the exercise of SPRs is calculated using 135% of
year-end share price to simulate a potential sale price premium
for the Company. This includes any accelerated vesting upon a
change of control. |
34
DIRECTOR
COMPENSATION
Lawsons non-employee Directors received an annual cash
retainer of $75,000 for attending Board and Board Committee
meetings. The Chairman of the Board received an additional
$25,000 in 2008 for service as the Chairman. The Chairmen of the
Audit Committee and Compensation Committee received an
additional annual fee of $15,000 and $10,000, respectively, in
2008 for their service in leading these committees. The
Chairpersons of the other Board committees received an
additional $5,000 annual fee in 2008 for their service in
leading these committees. A special Committee of the Board of
Directors was formed to oversee the internal investigation of
the Company by the federal government into certain Company
customer loyalty programs. Mr. Brophy, Mr. Postek,
Mr. Rettig and Ms. Smelcer comprised the Committee and
were compensated an additional $20,000 in 2008 for their
services on this committee. The special Committee of the Board
of Directors has completed its assignment and was discontinued
as of December 31, 2008. Directors travel expenses for
attending meetings are reimbursed by the Company.
An award of 5,000 Stock Performance Rights (SPRs)
was granted to each director on May 12, 2008 using the
closing price of the Companys common stock of $25.53 on
that date. The SPRs are a cash-based award that provides
directors with a meaningful link to creating shareholder value
by tying their compensation to the increase in value of the
Company stock from grant date. SPRs granted to retirement
eligible directors are expensed at date of grant while grants
for directors who are not retirement eligible are expensed over
a three-year vesting schedule. Pursuant to the requirements of
ASC 718 all SPRs outstanding have been remeasured at fair value
on December 31, 2008 using the Black-Scholes valuation
model. Assumptions used in the calculation of fair value are
included in Footnote M Stock performance plan
in the Companys audited financial statements for the
year ended December 31, 2008, included in the
Companys Annual Report on
Form 10-K
filed with the SEC on March11, 2009.
DIRECTOR
COMPENSATION TABLE(1)
The following table shows compensation information for 2008 for
the non-employee directors (including Mr. Brophy, who
resigned as director on October 19, 2009).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
Paid in Cash
|
|
SPR Awards
|
|
Total
|
Name
|
|
($)
|
|
($)(2)
|
|
($)
|
|
James T. Brophy
|
|
|
95,000
|
|
|
|
(120,885
|
)
|
|
|
(25,885
|
)
|
James S. Errant
|
|
|
75,000
|
|
|
|
6,675
|
|
|
|
81,675
|
|
Lee S. Hillman
|
|
|
85,000
|
|
|
|
(24,128
|
)
|
|
|
60,872
|
|
Ronald B. Port, M.D.
|
|
|
100,000
|
|
|
|
(120,885
|
)
|
|
|
(20,885
|
)
|
Thomas S. Postek
|
|
|
110,000
|
|
|
|
(27,500
|
)
|
|
|
82,500
|
|
Robert G. Rettig
|
|
|
95,000
|
|
|
|
(120,885
|
)
|
|
|
(25,885
|
)
|
Mitchell H. Saranow
|
|
|
85,000
|
|
|
|
(90,613
|
)
|
|
|
(5,613
|
)
|
Wilma J. Smelcer
|
|
|
100,000
|
|
|
|
(24,128
|
)
|
|
|
75,872
|
|
|
|
|
(1) |
|
The Stock Awards, Non-equity Incentive Plan Compensation, the
Change in Pension Value and Nonqualified Deferred Compensation
Earnings and All Other Compensation columns have been eliminated
as the Company does not have any compensation to report in these
columns. Mr. Neri is not listed in the table because he was
an employee of the Company and received no additional
compensation to serve as a Director. |
|
(2) |
|
The amounts in this column reflect the (benefit) expense
recognized for financial statement purposes for the year ended
December 31, 2008. The SPR benefit is due to the decline in
fair value of certain SPR grants. As of December 31, 2008,
each director had the following aggregate |
35
|
|
|
|
|
number of SPRs or options outstanding: James T. Brophy, 28,000
SPRs; James S. Errant, 10,000 SPRs; Lee S. Hillman, 20,000 SPRs;
Ronald B. Port, M.D., 29,000 SPRs, 2,500 options; Thomas S.
Postek, 15,000 SPRs; Robert G. Rettig, 29,000 SPRs; Mitchell H.
Saranow, 29,000 SPRs and 2,500 options; and Wilma J. Smelcer,
SPRs 20,000 SPRs. |
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2008 regarding the number of shares of common stock that were
available for issuance under the Companys equity
compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
securities
|
|
|
|
|
|
|
|
|
|
remaining available
|
|
|
|
Number of
|
|
|
|
|
|
for future issuance
|
|
|
|
securities to be
|
|
|
|
|
|
under equity
|
|
|
|
issued upon
|
|
|
Weighted-average
|
|
|
compensation plans
|
|
|
|
exercise of
|
|
|
exercises price of
|
|
|
(excluding
|
|
|
|
outstanding
|
|
|
outstanding
|
|
|
securities
|
|
|
|
options, warrants
|
|
|
options, warrants
|
|
|
reflected in the
|
|
Plan category
|
|
and rights
|
|
|
and rights
|
|
|
first column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
5,000
|
|
|
$
|
23.11
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,000
|
|
|
$
|
23.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Certain
Relationships and Related Transactions, and Director
Independence
Certain
Relationships and Related Transactions
The Companys practice has been that all transactions
between the Company and any related person will be approved by a
majority of the members of the Companys Board of Directors
and by a majority of independent and disinterested directors.
All proposed related person transactions are generally reported
to the Chief Executive Officer, President and Chief Operating
Officer, Chief Financial Officer, or General Counsel, who assist
in gathering the relevant information about the transaction, and
present the information to the Board of Directors or one of its
Committees. The Board then determines whether the transaction is
a related person transaction and approves, ratifies, or rejects
the transaction.
Mr. Blanchard is employed as Chief Financial Officer on an
interim basis under a contract between the Company and Tatum,
LLC, a financial consultancy firm, of which Mr. Blanchard
is a partner. The contract provides for Mr. Blanchard to
receive a salary of $32,200 per month. In addition the Company
is obligated to pay a semi-monthly fee of $6,800 to Tatum.
Additionally, the Company has a contract with Tatum for the
services of the Companys Interim Vice President,
Information Systems, a Tatum employee, in exchange for $40,000
per month. In total the Company paid Tatum $347,620 in 2008.
INDEPENDENT
PUBLIC ACCOUNTANTS
Audit and
Non-Audit Fees
Ernst & Young LLP was the Companys principal
accountant for years 2008 and 2007. Aggregate fees for
professional services rendered for the Company by
Ernst & Young LLP for such years were as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit Services
|
|
$
|
1,042,600
|
|
|
$
|
1,014,600
|
|
Audit-Related Fees
|
|
|
46,100
|
|
|
|
8,100
|
|
Tax Fees
|
|
|
175,862
|
|
|
|
299,000
|
|
All Other Fees
|
|
|
25,000
|
|
|
|
33,700
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,289,562
|
|
|
$
|
1,355,400
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees
Audit services include fees for the annual audit, review of the
Companys reports on
Form 10-Q
each year, consulting on accounting and auditing matters and
fees related to Ernst & Young LLPs audit of the
Companys effectiveness of internal control over financial
reporting as required by the Rule 404 Sarbanes-Oxley Act of
2002. Tax fees relate to domestic and international income tax
compliance and consulting services. Ernst & Young LLP
did not render any other services to the Company.
Audit-Related Fees
Aggregate fees of $46,100 in 2009 and $8,100 in 2007 were billed
by Ernst & Young LLP for consultations and procedures
related to certain accounting issues.
Tax Fees
Aggregate fees of $175,862 in 2008 and $229,000 in 2007 were
billed by Ernst & Young LLP for domestic and
international income tax compliance and consulting services.
37
All Other
Fees
Aggregate fees of $25,000 in 2008 and $33,700 in 2007 were
billed by Ernst & Young LLP for benefit plan audits.
The Audit Committee has considered the compatibility of the
non-audit services provided by Ernst & Young LLP to
Ernst & Young LLPs continued independence and
has concluded that the independence of Ernst & Young
LLP is not compromised by the performance of such services.
Pre-Approval of
Services by External Auditor
The Audit Committee has adopted policies and procedures for the
pre-approval of the audit and non-audit services performed by
the independent auditor in order to assure that the provision of
such services does not impair the auditors independence.
The Audit Committee approves all audit fees and terms for all
services provided by the independent auditor and consider
whether these services are compatible with the auditors
independence. The Chairman of the Audit Committee may approve
additional proposed services that arise between Committee
meetings provided that the decision to approve the service is
presented at the next scheduled Committee meeting. All non-audit
services provided by the external auditor must be pre-approved
by the Audit Committee Chairman prior to the engagement. The
Chief Financial Officer has provided quarterly reports of
external auditor services, by category, to the Audit Committee.
The Audit Committee pre-approved all audit and permitted
non-audit services by the Companys external auditors in
2008.
Any proposed engagement that does not fit within the definition
of a pre-approved service may be presented to the Audit
Committee for consideration at its next regular meeting or, if
earlier consideration is required, to the Audit Committee or one
or more of its members. The member or members to whom such
authority is delegated shall report any specific approval of
services at the Committees next regular meeting. The Audit
Committee will regularly review summary reports detailing all
services being provided to the Company by its external auditor.
38
Report of the
Audit Committee of the Board of Directors
The responsibilities of the Audit Committee, which are set forth
in the Audit Committee Charter adopted by the Board of Directors
in 2004 include providing oversight to the Companys
financial reporting process through periodic meetings with the
Companys independent auditors and management to review
accounting, auditing, internal controls, and financial reporting
matters. The management of the Company is responsible for the
preparation and integrity of the financial reporting information
and related systems of internal controls. The Audit Committee,
in carrying out its role, relies on the Companys senior
management, including senior financial management, and its
independent auditors.
With regard to the 2008 audit, the Audit Committee discussed
with the Companys independent auditors the scope, extent
and procedures for their audits. Following the completion of the
audit, the Audit Committee met with the independent auditors,
with and without management present, to discuss the results of
their examinations, the cooperation received by the auditors
during the audit examination, their evaluation of the
Companys internal control over financial reporting and the
overall quality of the Companys financial reporting.
The Audit Committee reviewed and discussed the audited financial
statements included in the 2008 Annual Report on
Form 10-K
with management. Management has confirmed to us that such
financial statements (i) have been prepared with integrity
and objectivity and are the responsibility of management and
(ii) have been prepared in conformity with accounting
principles generally accepted in the United States.
We have discussed with Ernst & Young LLP, our
independent auditors, the matters required to be discussed by
SAS 61, as amended and adopted by the Public Company Accounting
Oversight Board in Rule 3200T (Communications with Audit
Committee). SAS 61 requires our independent auditors to provide
us with additional information regarding the scope and results
of their audit of the Companys financial statements with
respect to (i) their responsibility under auditing
standards generally accepted in the United States,
(ii) significant accounting policies, (iii) management
judgments and estimates, (iv) any significant audit
adjustments, (v) any disagreements with management, and
(vi) any difficulties encountered in performing the audit.
We have received from Ernst & Young LLP a letter
providing the disclosures required by Public Company Accounting
Oversight Board (Communication with Audit Committees Concerning
Independence) with respect to any relationships between
Ernst & Young LLP and the Company that in its
professional judgment may reasonably be thought to bear on
independence. Ernst & Young LLP has discussed its
independence with us. Ernst & Young LLP confirmed in
its letter, that in its professional judgment, it is independent
of the Company within the meaning of the federal securities laws.
Based on the review and discussions described above with respect
to the Companys audited financial statements included in
the Companys 2008 Annual Report on
Form 10-K,
we have recommended to the Board of Directors that such
financial statements be included in the Companys Annual
Report on
Form 10-K.
The Audit Committee has selected Ernst & Young LLP as
the Companys independent auditors for the fiscal year
ending December 31, 2009, and the Board of Directors has
concurred with such selection.
The Audit Committee also reviewed managements process
designed to achieve compliance with Section 404 of the
Sarbanes-Oxley Act of 2002 and received periodic updates
regarding managements progress.
As specified in the Audit Committee Charter, it is not the duty
of the Audit Committee to plan or conduct audits or to determine
that the Companys financial statements are complete and
accurate and in accordance with accounting principles generally
accepted in the United States. That is the
39
responsibility of management and the Companys independent
auditors. In giving our recommendation to the Board of
Directors, we have relied on (i) managements
representation that such financial statements have been prepared
with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States and
(ii) the report of the Companys independent auditors
with respect to such financial statements.
Respectfully submitted by the Audit Committee:
Thomas S. Postek (Chairman)
Robert G. Rettig
Mitchell H. Saranow
The foregoing report of the Audit Committee does not
constitute soliciting material and shall not be deemed
incorporated by reference by any general statement incorporating
by reference the proxy statement into any filing by the Company
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that we specifically incorporate
this information by reference, and shall not otherwise be deemed
filed under such acts.
40
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys directors and executive officers,
and persons who own more than 10% of shares of the
Companys Common Stock (collectively, Reporting
Persons) to file reports of ownership and changes in
ownership with the SEC. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on its review
of the copies of such forms received or written representations
from the Reporting Persons, the Company believes that with
respect to the year ended December 31, 2008, all of the
Reporting Persons complied with all applicable
Section 16(a) filing requirements.
Householding of
Annual Meeting Materials
Some banks, brokers, and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
this Notice of Annual Meeting and Proxy Statement and the 2008
Annual Report on
Form 10-K
may have been sent to multiple stockholders in your household.
If you would prefer to receive separate copies of these
documents either now or in the future, please contact your bank,
broker or other nominee. Upon written or oral request to the
Corporate Secretary, we will provide a separate copy of the 2008
Annual Report on
Form 10-K
or Notice of Annual Meeting and Proxy Statement.
Proposals of
Security Holders
A stockholder proposal to be presented at the annual meeting to
be held in 2010 must be received at the Companys executive
offices, 1666 East Touhy Avenue, Des Plaines, Illinois 60018, by
no later than December 31,2009 for evaluation as to
inclusion in the Proxy Statement in connection with such meeting.
In addition, the Companys bylaws provide for the timing
and content of the notice that stockholders must provide to the
Secretary of the Company for proposals to be properly presented
at a stockholder meeting. Pursuant to these provisions, notice
of a proposal must be received by the Company not less than
90 days nor more than 110 days prior to the first
anniversary of the preceding years meeting; provided that
in the event that the date of the annual meeting is advanced by
more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder must be
delivered not later than the tenth day following the day on
which public announcement of the date of such meeting is first
made.
41
Other
Matters
A copy of our Annual Report on
Form 10-K
and the for the year ended December 31, 2008, excluding
certain of the exhibits thereto, may be obtained without charge
by writing to: Corporate Secretary, Lawson Products, Inc., 1666
East Touhy Avenue, Des Plaines, Illinois 60018. Copies are also
available to the public free of charge on or through our website
at www.lawsonproducts.com. Information on our website is
not incorporated by reference into this report.
The Board of Directors knows of no other proposals which may be
presented for action at the meeting. However, if any other
proposal properly comes before the meeting, the persons named in
the proxy form enclosed will vote in accordance with their
judgment upon such matter.
Stockholders are urged to execute and return promptly the
enclosed form of proxy in the envelope provided or to vote your
shares by telephone or via the Internet.
By Order of the Board of Directors
Neil E. Jenkins
Secretary
November 4, 2009
42
Appendix A
Lawson Products,
Inc.
2009 Equity Compensation
Plan
As Adopted
Effective ,
2009
A-1
LAWSON PRODUCTS,
INC.
2009 EQUITY COMPENSATION PLAN
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
1.0
|
|
|
DEFINITIONS
|
|
|
A-3
|
|
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2.0
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PURPOSE OF PLAN
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3.0
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TERM OF PLAN
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4.0
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STOCKHOLDER APPROVAL
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5.0
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ADMINISTRATION
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6.0
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ELIGIBILITY AND PARTICIPATION
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7.0
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SHARES SUBJECT TO PLAN
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8.0
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MAXIMUM INDIVIDUAL AWARDS
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9.0
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AWARDS
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10.0
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STOCK OPTIONS
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11.0
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STOCK AWARDS AND STOCK UNITS
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12.0
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PERFORMANCE-BASED AWARDS
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13.0
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CHANGE IN CONTROL
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14.0
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TERMINATION OF EMPLOYMENT
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15.0
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TAXES
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16.0
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MISCELLANEOUS
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17.0
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AMENDMENT OR TERMINATION OF PLAN OR AWARDS
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A-2
LAWSON PRODUCTS,
INC.
2009 EQUITY COMPENSATION PLAN
1.0 Definitions
The following terms shall have the following meanings unless the
context indicates otherwise:
1.1 Award shall mean an equity-based
compensation award as specified in Section 9 below and
granted by the Committee under and in accordance with the Plan.
1.2 Award Agreement shall mean a written
agreement between the Company and the Participant that
establishes the terms, conditions, restrictions
and/or
limitations applicable to an Award in addition to those
established by the Plan and by the Committees exercise of
its administrative powers.
1.3 Board shall mean the Board of
Directors of the Company.
1.4 Cause for termination of a
Participants employment shall mean (i) the
Participants willful or intentional failure to perform the
duties of his or her employment in any material respect,
(ii) malfeasance or negligence in the performance of the
Participants duties of employment in any material respect,
(iii) the Participants commission of a felony under
the laws of the United States or any state thereof or any other
jurisdiction in which the Participant resides (whether or not in
connection with his or her employment), (iv) the
Participants disclosure of material confidential
information about the business of the Company or any of its
subsidiaries to any individual or entity, other than in the
performance of the duties of his or her employment, (v) the
Participants material violation of any formal written
policy adopted by the Company, (vi) the Participants
knowing certification of any misrepresentation or false
information in any filing by the Company with a government
agency, (vii) the Participants commission of an act
or acts that result in the imposition of criminal or civil
penalties against the Company by a government agency, or
(viii) any other act or omission by the Participant (other
than an act or omission resulting from the exercise by the
Participant of good faith business judgment) which is materially
injurious to the financial condition or the business reputation
of the Company or any of its subsidiaries; provided, however,
that no act or omission by the Participant shall constitute
Cause unless the Company gives written notice thereof to the
Participant, and the Participant fails to remedy such act or
omission within seven (7) days after receiving such notice.
1.5 Change in Control shall mean
(i) the acquisition (in one or a series of transactions) by
one or more related or affiliated (within the meaning of the
Exchange Act) entities or persons (other than related or
affiliated entities or persons who as of the effective date of
this Plan own more than fifty percent (50%) of the outstanding
voting securities of the Company) of more than fifty percent
(50%) of the outstanding voting securities of the Company,
(ii) the sale or other disposition of all or substantially
all of the assets of the Company, (iii) the merger or
consolidation of the Company with or into another entity, as a
result of which merger or consolidation the holders of the
outstanding voting securities of the Company immediately prior
to such transaction hold less than fifty percent (50%) of the
outstanding voting securities of the surviving entity
immediately after such transaction or (iv) any other
transaction that is determined by the Committee to constitute a
major change in the ownership and control of the assets
previously held, and operations previously conducted, by the
Company.
1.6 Code shall mean the Internal Revenue
Code of 1986, as amended from time to time.
1.7 Committee shall mean (i) the
Board or (ii) a committee or subcommittee of the Board
appointed by the Board from among its members. The Committee may
be the Boards Compensation Committee or such committee
that performs the functions generally associated with those
functions performed by the compensation committees of publicly
traded corporations. Unless the Board determines otherwise, and
such determination is reduced to a writing articulating the
reasons for such
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determination, the Committee shall be comprised solely of not
less than 2 members, each of whom shall qualify as:
(a) a Non-Employee Director within the meaning
of
Rule 16b-3(b)(3)
(or any successor rule) under the Exchange Act, and
(b) an outside director within the meaning of
Code Section 162(m) and the Treasury Regulations thereunder
(or any successor law or regulation), and
(c) if the Common Stock is readily tradeable on a national
securities exchange or other market system, then an
independent director as such term is defined or used
by the rules of the exchange or system on which the
Companys Common Stock is listed.
1.8 Common Stock shall mean the common
stock, $1.00 par value per share, of the Company.
1.9 Company shall mean Lawson Products,
Inc., a Delaware corporation.
1.10 Disability shall be determined by
the Committee in its reasonable discretion.
1.11 Effective Date shall be the date
the Board approves and adopts the Plan.
1.12 Employee shall mean an employee of
the Company or any Subsidiary as described in Treasury
Regulation Section 1.421-7(h).
1.13 Exchange Act shall mean the
Securities Exchange Act of 1934, as amended from time to time,
including applicable regulations thereunder.
1.14 Fair Market Value of a Share of the Common
Stock shall mean:
(a) if the Common Stock is readily tradeable on a national
securities exchange or other market system, the closing price of
the Common Stock on the date of calculation (or on the last
preceding trading date if Common Stock was not traded on such
date), or
(b) if the Common Stock is not readily tradeable on a
national securities exchange or other market system:
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(i)
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the book value of a share of Common Stock as of the last day of
the last completed fiscal quarter preceding the date of
calculation; or
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(ii)
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any other value as otherwise determined in good faith by the
Board.
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1.15 ISO shall mean an incentive
stock option as such term is defined in Code
Section 422.
1.16 Nonemployee Director shall mean a
member of the Board who is not an Employee.
1.17 Nonqualified Stock Option shall
mean a Stock Option that does not qualify as an ISO.
1.18 Participant shall mean any Employee
or Nonemployee Director to whom an Award has been granted by the
Committee under the Plan.
1.19 Plan shall mean the Lawson
Products, Inc. 2009 Equity Compensation Plan.
1.20 Stock Award shall mean the grant by
the Committee to a Participant of an Award of Common Stock in
accordance with Section 11.1, below.
1.21 Stock Option shall mean the grant
by the Committee to a Participant of an Award of an option to
purchase Common Stock in accordance with Section 10, below.
1.22 Stock Unit shall mean the grant by
the Committee to a Participant of a right to receive a share of
Common Stock in accordance with Section 11.2, below.
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1.23 Subsidiary shall mean a corporation
of which the Company directly or indirectly owns more than
50 percent of the Voting Stock or any other business entity
in which the Company directly or indirectly has an ownership
interest of more than 50 percent.
1.24 Treasury Regulation shall mean the
regulations promulgated under the Code by the United States
Department of the Treasury, as amended from time to time.
1.25 Unvested shall mean an Award (or
portion of an Award) that has not yet Vested.
1.26 Vest shall mean:
(a) with respect to Stock Options, when the Stock Option
(or a portion thereof) first becomes exercisable and remains
exercisable subject to the terms and conditions of such Stock
Option, so that the Participant has an unrestricted right, title
and interest (but subject to any expiration date) to obtain the
compensation (if any) attributable to such Stock Option (or a
portion thereof) or to otherwise enjoy the benefits underlying
such Stock Option; or
(b) with respect to Awards other than Stock Options, when
the Participant has:
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(i)
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an unrestricted right, title and interest to receive the
compensation (whether payable in cash or Common Stock or a
combination of both) attributable to an Award (or a portion of
such Award) or to otherwise enjoy the benefits underlying such
Award; and
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(ii)
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a right to transfer an Award subject to no Company-imposed
restrictions or limitations other than restrictions
and/or
limitations imposed by the Plan
and/or by
the Committee in accordance with the Plan.
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1.27 Vesting Date shall mean the date or
dates on which an Award Vests.
1.28 Voting Stock shall mean the capital
stock of any class or classes having general voting power under
ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation.
2.0 Purpose of Plan
Purpose. The purpose of the Plan is to
motivate certain Employees and Nonemployee Directors to put
forth maximum efforts toward the growth, profitability, and
success of the Company and Subsidiaries by providing incentives
to such Employees and Nonemployee Directors through cash
payments
and/or
through the ownership and performance of the Common Stock. In
addition, the Plan is intended to provide incentives that will
attract and retain highly qualified individuals as Employees and
Nonemployee Directors, and to assist in aligning the interests
of such Employees and Nonemployee Directors with the interests
of the stockholders of the Company.
3.0 Term of Plan
Term. The Plan shall be effective as of the
Effective Date and shall terminate on the 10th anniversary
of the Effective Date (unless sooner terminated by the Board in
accordance with Section 17, below).
4.0 Stockholder Approval
4.1 Initial Stockholder Approval. The
Plan shall be approved by the stockholders of the Company at an
annual meeting or any special meeting of the stockholders of the
Company within twelve (12) months before or after the
Effective Date, and such approval by the stockholders of the
Company shall be a condition to the right of each Participant to
receive
and/or
retain Awards hereunder. Any Award granted under the Plan prior
to the approval by the stockholders of the Company shall be
effective as of the date of grant (unless the Committee
specifies otherwise at the time of grant), but no such Award may
Vest, be paid out, or otherwise be disposed of prior to such
A-5
stockholder approval. If the stockholders of the Company fail to
approve the Plan in accordance with this Section 4.1, any
Award granted under the Plan shall be cancelled.
4.2 Plan Amendment. Any amendment to the
Plan that is determined to be a material amendment
or a material revision or a material
modification (or word(s) of similar effect) under the
rules of the exchange or system on which the Companys
Common Stock is listed must be approved by the stockholders of
the Company before such amendment shall be effective.
4.3 Repricings. Any amendment, revision,
replacement, cancellation and regrant, or other change to an
outstanding Award that is determined to be a
repricing (or word(s) of similar effect) under the
rules of the exchange or system on which the Companys
Common Stock is listed must be approved by the stockholders of
the Company before such repriced Award shall be
effective.
4.4 Stockholder Reapproval. If required
by Treasury
Regulation Section 1.162-27(e)(4)(vi)
or any successor regulation or rule, the material terms of
performance goals as described in Section 9.3 below shall be
disclosed to and reapproved by the stockholders of the Company
no later than the first stockholder meeting that occurs in the
fifth year following the year in which the Companys
stockholders previously approved such performance goals.
5.0 Administration
5.1 Responsibility. The Committee shall
have the responsibility, in its sole discretion, to control,
operate, manage and administer the Plan in accordance with its
terms.
5.2 Award Agreement. Each Award granted
under the Plan shall be evidenced by an Award Agreement which
shall be signed by the Committee and the Participant;
provided, however, that in the event of any conflict
between a provision of the Plan and any provision of an Award
Agreement, the provision of the Plan shall prevail.
5.3 Authority of the Committee. The
Committee shall have all the discretionary authority that may be
necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan, including but not
limited to the following:
(a) to determine eligibility for participation in the Plan;
(b) to determine eligibility for and the type and size of
an Award granted under the Plan;
(c) to grant Awards to, and to enter into Award Agreements
with, Participants;
(d) to supply any omission, correct any defect, or
reconcile any inconsistency in the Plan in such manner and to
such extent as it shall deem appropriate in its sole discretion
to carry the same into effect;
(e) to issue administrative guidelines as an aid to
administer the Plan and make changes in such guidelines as it
from time to time deems proper;
(f) to make rules for carrying out and administering the
Plan and make changes in such rules as it from time to time
deems proper;
(g) to the extent permitted under the Plan, grant waivers
of Plan terms, conditions, restrictions, and limitations;
(h) to accelerate the Vesting of any Award when such action
or actions would be in the best interest of the Company;
(i) subject to Section 4.3, above, to grant Awards in
replacement of Awards previously granted under this Plan or any
other executive compensation plan of the Company; and
(j) to take any and all other actions it deems necessary or
advisable for the proper operation or administration of the Plan.
A-6
5.4 Action by the Committee. The
Committee may act only by a majority of its members. Any
determination of the Committee may be made, without a meeting,
by a writing or writings signed by all of the members of the
Committee. In addition, the Committee may authorize any one or
more of its members to execute and deliver documents on behalf
of the Committee.
5.5 Delegation of Authority. The
Committee may delegate to one or more of its members, or to one
or more agents, such administrative duties as it may deem
advisable; provided, however, that any such delegation
shall be in writing. In addition, the Committee, or any person
to whom it has delegated duties under this Section 5.5, may
employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the
Plan. The Committee may employ such legal or other counsel,
consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion or
computation received from any such counsel, consultant or agent.
Expenses incurred by the Committee in the engagement of such
counsel, consultant or agent shall be paid by the Company, or
the Subsidiary whose employees have benefited from the Plan, as
determined by the Committee.
5.6 Determinations and Interpretations by the
Committee. All determinations and interpretations
made by the Committee shall be binding and conclusive on all
Participants and their heirs, successors, and legal
representatives.
5.7 Liability. No member of the Board, no
member of the Committee and no employee of the Company shall be
liable for any act or failure to act hereunder, except in
circumstances involving his or her bad faith, gross negligence
or willful misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to
whom duties in connection with the administration of the Plan
have been delegated.
5.8 Indemnification. The Company shall
indemnify members of the Committee and any agent of the
Committee who is an employee of the Company, against any and all
liabilities or expenses to which they may be subjected by reason
of any act or failure to act with respect to their duties on
behalf of the Plan, except in circumstances involving such
persons bad faith, gross negligence or willful misconduct.
6.0 Eligibility and Participation
6.1 Eligibility. All Employees and
Nonemployee Directors shall be eligible to participate in the
Plan and to receive Awards.
6.2 Participation. The Committee in its
sole discretion shall designate who shall be a Participant and
receive Awards under the Plan. Designation of a Participant in
any year shall not require the Committee to designate such
person or entity to receive an Award in any other year or, once
designated, to receive the same type or amount of Award as
granted to the Participant in any other year. The Committee
shall consider such factors as it deems pertinent in selecting
Participants and in determining the type and amount of their
respective Awards.
7.0 Shares Subject to Plan
7.1 Available Shares. The aggregate
number of shares of Common Stock that shall be available for
issuance or payments of Awards under the Plan during its term
shall be equal to [500,000]. Such shares of Common Stock
available for issuance under the Plan may be either authorized
but unissued shares, shares of issued stock held in the
Companys treasury, or both, at the discretion of the
Company, and subject to any adjustments made in accordance with
Section 7.2 below.
7.2 Adjustment to Shares. If there is any
change in the Common Stock of the Company, through merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split, reverse stock split,
split-up,
split-off, spin-off, combination of shares, exchange of shares,
dividend in kind or other similar change in capital structure,
or distribution (other than normal cash dividends) to
A-7
stockholders of the Company, an adjustment shall be made to each
outstanding Award so that the value of each such Award
immediately after such change shall not be significantly diluted
or enhanced relative to its value immediately prior to such
change. Such adjustment shall be made successively each time any
such change shall occur. In order to prevent such dilution or
enhancement of Participants rights under the Plan, the
Committee shall have the authority to adjust, in an equitable
manner, the number and kind of shares that may be issued under
the Plan, the number and kind of shares subject to outstanding
Awards, the exercise price applicable to outstanding Stock
Options, and the Fair Market Value of a Share of the Common
Stock and other value determinations applicable to outstanding
Awards. Appropriate adjustments may also be made by the
Committee in the terms of any Awards granted under the Plan to
reflect such changes and to modify any other terms of
outstanding Awards on an equitable basis, including
modifications of performance goals and changes in the length of
performance periods; provided, however, that with
respect to Awards that may be subject to Code
Section 162(m), such modifications
and/or
changes must not disqualify compensation attributable to such
Awards as performance-based compensation under Code
Section 162(m). In addition, the Committee is authorized to
make adjustments to the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Company or the financial
statements of the Company, or in response to changes in
applicable laws, regulations, or accounting principles.
Notwithstanding anything contained in the Plan, any adjustment:
(a) with respect to an ISO due to a change described in
this Section 7.2 shall comply with the rules of Code
Section 424(a), and in no event shall any adjustment be
made which would render any ISO granted hereunder other than an
incentive stock option for purposes of Code
Section 422, and
(b) with respect to an Award that qualifies as
nonqualified deferred compensation under Code
Section 409A shall fully comply with the rules under Code
Section 409A, and in no event shall any adjustment be made
which would render any Award granted hereunder to be subject to
tax under Code Section 409A.
8.0 Maximum Individual Awards
Maximum Aggregate Number of Shares That May Be Granted
To Any Single Participant. The maximum aggregate
number of shares of Common Stock that may be granted to any
single Participant in any calendar year with respect to Awards
under the Plan shall be [40,000], subject to adjustment
as provided in Section 7.2 above. For purposes of the
preceding sentence, any Award or portion of an Award that is
cancelled or repriced shall continue to be counted in
determining such maximum aggregate number of shares of Common
Stock that may be granted to any single Participant.
9.0 Awards
9.1 Type of Awards. The Committee may, in
its sole discretion, grant the following Awards to Employees
and/or
Nonemployee Directors:
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Stock Options
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Stock Awards
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Stock Units
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9.2 Award Terms and Conditions. Subject
to any terms
and/or
conditions explicitly required by the Plan, the Committee, in
its sole discretion, shall determine all of the terms and
conditions of each Award, including but not limited to the
following:
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exercise price or purchase price
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method of exercise
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Vesting
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expiration term of Award
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effects of termination of Participants employment or
service
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Change-in-Control
Vesting and other effects of a Change in Control
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qualification of a Stock Option as an ISO
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payout in cash, in property, or any combination of cash and
property
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restrictive covenants
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transferability
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tax withholding
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tax deferral arrangements
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tandem or combination Awards
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any other term or condition that is not inconsistent with the
Plan.
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9.3 Performance Measures. The Committee
may set performance goals using such performance measures
(either individually or in any combination) as it deems
appropriate with respect to the grant or Vesting of an Award,
including but not limited to:
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revenue
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sales
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pretax income before allocation of corporate overhead and bonus
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budget
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cash flow
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earnings per share
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net income
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division, group or corporate financial goals
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appreciation in
and/or
maintenance of the price of the Common Stock or any other
publicly traded securities of the Company
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dividend
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total stockholder return
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return on stockholders equity
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return on assets
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return on investment
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internal rate of return
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attainment of strategic and operational initiatives
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market share
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operating margin
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profit margin
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gross profits
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earnings before interest and taxes
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earnings before interest, taxes, depreciation and amortization
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economic value-added models
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comparisons with various stock market indices
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increase in number of customers
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reductions in costs
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mortgage loans
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bringing assets to market
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resolution of administrative or judicial proceedings or disputes
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funds from operations.
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10.0 Stock Options
10.1 In General. The Committee may, in
its sole discretion, grant Stock Options to Employees
and/or
Nonemployee Directors on or after the Effective Date. The
Committee shall, in its sole discretion, determine the Employees
and Nonemployee Directors who will receive Stock Options and the
number of shares of Common Stock underlying each Stock Option.
With respect to Employees who become Participants, the Committee
may grant such Participants ISOs or Nonqualified Stock Options
or a combination of both. With respect to Nonemployee Directors
who become Participants, the Committee may grant such
Participants only Nonqualified Stock Options. Each Stock Option
shall be subject to such terms and conditions consistent with
the Plan as the Committee may impose from time to time. In
addition, each Stock Option shall be subject to the following
terms and conditions set forth in Sections 10.2 through
10.8 below.
10.2 Exercise Price. The Committee shall
specify the exercise price of each Stock Option in the Award
Agreement; provided, however, that (i) the exercise
price of any ISO shall not be less than 100 percent of the
Fair Market Value of a Share of the Common Stock on the date of
grant, and (ii) the exercise price of any Nonqualified
Stock Option shall not be less than 100 percent of the Fair
Market Value of a Share of the Common Stock on the date of grant
unless the Committee in its sole discretion and due to special
circumstances determines otherwise on the date of grant.
10.3 Term of Stock Option. The Committee
shall specify the term of each Stock Option in the Award
Agreement; provided, however, that (i) no ISO shall
be exercised after the tenth anniversary of the date of grant of
such ISO and (ii) no Nonqualified Stock Option shall be
exercised after the twentieth anniversary of the date of grant
of such Nonqualified Stock Option. Each Stock Option shall
terminate at such earlier times and upon such conditions or
circumstances as the Committee shall, in its sole discretion,
set forth in the Award Agreement on the date of grant.
10.4 Vesting Date. The Committee shall
specify the Vesting Date with respect to each Stock Option in
the Award Agreement. The Committee may grant Stock Options that
are Vested, either in whole or in part, on the date of grant. If
the Committee fails to specify a Vesting Date in the Award
Agreement, one-third (1/3) of such Stock Option shall Vest and
become exercisable on each of the first three
(3) anniversaries of the date of grant and shall remain
exercisable following such anniversary date until the Stock
Option expires in accordance with its terms under the Award
Agreement or under the terms of the Plan. The Vesting of a Stock
Option may be subject to such other terms and conditions as
shall be determined by the Committee, including, without
limitation, accelerating the Vesting if certain performance
goals are achieved.
10.5 Exercise of Stock Options. The Stock
Option exercise price may be paid in cash or, in the sole
discretion of the Committee, by the delivery of shares of Common
Stock then owned by the
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Participant, by the withholding of shares of Common Stock for
which a Stock Option is exercisable, or by a combination of
these methods. In the sole discretion of the Committee, payment
may also be made by delivering a properly executed exercise
notice to the Company together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the exercise price. To
facilitate the foregoing, the Company may enter into agreements
for coordinated procedures with one or more brokerage firms. The
Committee may prescribe any other method of paying the exercise
price that it determines to be consistent with applicable law
and the purpose of the Plan, including, without limitation, in
lieu of the exercise of a Stock Option by delivery of shares of
Common Stock then owned by a Participant, providing the Company
with a notarized statement attesting to the number of shares
owned by the Participant, where upon verification by the
Company, the Company would issue to the Participant only the
number of incremental shares to which the Participant is
entitled upon exercise of the Stock Option. In determining which
methods a Participant may utilize to pay the exercise price, the
Committee may consider such factors as it determines are
appropriate; provided, however, that with respect
to ISOs, all such discretionary determinations by the Committee
shall be made at the time of grant and specified in the Award
Agreement.
10.6 Restrictions Relating to ISOs. In
addition to being subject to the terms and conditions of this
Section 10, ISOs shall comply with all other requirements
under Code Section 422. Accordingly, ISOs may be granted
only to Participants who are employees (as described in Treasury
Regulation Section 1.421-7(h))
of the Company or of any Parent Corporation (as
defined in Code Section 424(e)) or of any Subsidiary
Corporation (as defined in Code Section 424(f)) on the
date of grant. The aggregate market value (determined as of the
time the ISO is granted) of the Common Stock with respect to
which ISOs (under all option plans of the Company and of any
Parent Corporation and of any Subsidiary Corporation) are
exercisable for the first time by a Participant during any
calendar year shall not exceed $100,000. For purposes of the
preceding sentence, ISOs shall be taken into account in the
order in which they are granted. ISOs shall not be transferable
by the Participant otherwise than by will or the laws of descent
and distribution and shall be exercisable, during the
Participants lifetime, only by such Participant. The
Committee shall not grant ISOs to any Employee who, at the time
the ISO is granted, owns stock possessing (after the application
of the attribution rules of Code Section 424(d)) more than
10 percent of the total combined voting power of all
classes of stock of the Company or of any Parent Corporation or
of any Subsidiary Corporation, unless the exercise price of the
ISO is fixed at not less than 110 percent of the Fair
Market Value of a Share of the Common Stock on the date of grant
and the exercise of such ISO is prohibited by its terms after
the fifth anniversary of the ISOs date of grant. In
addition, no ISO shall be issued to a Participant in tandem with
a Nonqualified Stock Option issued to such Participant in
accordance with Treasury
Regulation Section 14a.422A-1,
Q/A-39.
10.7 Additional Terms and Conditions. The
Committee may, by way of the Award Agreements or otherwise,
establish such other terms, conditions, restrictions
and/or
limitations, if any, of any Stock Option, provided they are not
inconsistent with the Plan, including, without limitation, the
requirement that the Participant not engage in competition with
the Company.
10.8 Conversion Stock Options. The
Committee may, in its sole discretion, grant a Stock Option to
any holder of an option (hereinafter referred to as an
Original Option) to purchase shares of the stock of
any corporation:
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the stock or assets of which were acquired, directly or
indirectly, by the Company or any Subsidiary, or
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which was merged with and into the Company or a Subsidiary;
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so that the Original Option is converted into a Stock Option
(hereinafter referred to as a Conversion Stock
Option); provided, however, that such Conversion Stock
Option as of the date of its grant (the Conversion Stock
Option Grant Date) shall have the same economic value as
the Original Option as
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of the Conversion Stock Option Grant Date. In addition, unless
the Committee, in its sole discretion determines otherwise, a
Conversion Stock Option which is converting an Original Option
intended to qualify as an ISO shall have the same terms and
conditions as applicable to the Original Option in accordance
with Code Section 424 and the Treasury Regulations
thereunder so that the conversion (x) is treated as the
issuance or assumption of a stock option under Code
Section 424(a) and (y) is not treated as a
modification, extension or renewal of a stock option under Code
Section 424(h).
11.0 Stock Awards and Stock Units
11.1 Stock Awards. The Committee may, in
its sole discretion, grant Stock Awards to Employees
and/or
Nonemployee Directors as additional compensation or in lieu of
other compensation for services to the Company. A Stock Award
shall consist of shares of Common Stock which shall be subject
to such terms and conditions as the Committee in its sole
discretion determines appropriate, including, without
limitation, restrictions on the sale or other disposition of
such shares, the Vesting Date with respect to such shares, and
the right of the Company to reacquire such shares for no
consideration upon termination of the Participants
employment within specified periods. The Committee may require
(a) the Participant to deliver a duly signed stock power,
endorsed in blank, relating to the Common Stock covered by such
Stock Award
and/or
(b) that the stock certificates evidencing such shares be
held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed. With respect to the
shares of Common Stock subject to a Stock Award, the Participant
may have all of the rights of a holder of shares of Common
Stock, including the right to receive dividends and to vote the
shares, to the extent that the Committee so determines on the
date of grant and provides in the Award Agreement.
11.2 Stock Units. The Committee may, in
its sole discretion, grant to Employees
and/or
Nonemployee Directors Stock Units as additional compensation or
in lieu of other compensation for services to the Company. A
Stock Unit is a hypothetical right to receive a share of Common
Stock and is represented by a notional account established and
maintained (or caused to be established or maintained) by the
Company for a Participant who receives a grant of Stock Units.
Stock Units shall be subject to such terms and conditions as the
Committee, in its sole discretion, determines appropriate
including, without limitation, determinations of the Vesting
Date with respect to such Stock Units and the criteria for the
Vesting of such Stock Units. A Stock Unit granted by the
Committee shall provide for payment in shares of Common Stock at
such time or times as the Award Agreement shall specify.
11.3 Payout of Stock Units. Subject to a
Participants possible election to defer in accordance with
Section 15.4 below, upon the Vesting of a Stock Unit, the
share of Common Stock corresponding to the Stock Unit shall be
distributed to the Participant, unless the Committee, in its
sole discretion, provides for the payment of the Stock Unit in
cash (or partly in cash and partly in shares of Common Stock)
equal to the value of the shares of Common Stock which would
otherwise be distributed to the Participant.
12.0 Performance-Based Awards
12.1 In General. The Committee, in its
sole discretion, may designate Awards granted under the Plan as
Performance-Based Awards (as defined below) if it determines
that such compensation might not be tax deductible by the
Company due to the deduction limitation imposed by Code
Section 162(m). Accordingly, an Award granted under the
Plan may be granted in such a manner that the compensation
attributable to such Award is intended by the Committee to
qualify as performance-based compensation (as such
term is used in Code Section 162(m) and the Treasury
Regulations thereunder) and thus be exempt from the deduction
limitation imposed by Code Section 162(m)
(Performance-Based Awards).
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12.2 Qualification of Performance-Based
Awards. Awards shall only qualify as Performance-Based
Awards under the Plan if:
(a) at the time of grant the Committee is comprised solely
of two (2) or more outside directors (as such
term is used in Code Section 162(m) and the Treasury
Regulations thereunder);
(b) with respect to either the granting or Vesting of an
Award (other than a Nonqualified Stock Option which is granted
with an exercise price at or above the Fair Market Value of a
Share of the Common Stock on the date of grant), such Award is
subject to the achievement of a performance goal or goals for
the Company based on one or more performance measures specified
by the Committee;
(c) the Committee establishes in writing, no later than
ninety (90) days after the commencement of the applicable
performance period (but in no event after twenty-five percent
(25%) of such performance period has elapsed), (i) the
objective performance-based goals applicable to a given
performance period and (ii) the individual employees or
class of employees to which such performance-based goals apply;
(d) no compensation attributable to a Performance-Based
Award will be paid to or otherwise received by a Participant
until the Committee certifies in writing that the performance
goal or goals (and any other material terms) applicable to such
performance period have been satisfied; and
(e) after the establishment of a performance goal, the
Committee shall not revise such performance goal (unless such
revision will not disqualify compensation attributable to the
Award as performance-based compensation under Code
Section 162(m)) or increase the amount of compensation payable
with respect to such Award upon the attainment of such
performance goal.
13.0 Change in Control
13.1 Accelerated Vesting. Notwithstanding
any other provision of this Plan to the contrary, if there is a
Change in Control of the Company, the Committee, in its sole
discretion, may take such actions as it deems appropriate with
respect to outstanding Awards, including, without limitation,
accelerating the Vesting Date
and/or
payout of such Awards; provided, however, that
such action shall not conflict with any provision contained in
an Award Agreement unless such provision is amended in
accordance with Section 17.3 below; and provided further
that, in the absence of different action by the Committee,
each outstanding Award which Vests on the basis of the passage
of time shall immediately and automatically Vest on the date of
the Change in Control to whatever additional extent (if any) it
would have been vested on the date that is one (1) year
after the date of the Change in Control.
13.2 Cashout. The Committee, in its sole
discretion, may determine that, upon the occurrence of a Change
in Control of the Company, all or a portion of certain
outstanding Awards shall terminate within a specified number of
days after notice to the holders, and each such holder shall
receive an amount equal to the value of such Award on the date
of the Change in Control, which with respect to each share of
Common Stock subject to a Stock Option shall be an amount equal
to the excess of the Fair Market Value of a Share of the Common
Stock immediately prior to the occurrence of such Change in
Control over the exercise price per share of such Stock Option.
Such amount shall be payable in cash, in one or more kinds of
property (including the property, if any, payable to
stockholders of the Company in the Change in Control
transaction) or in a combination thereof, as the Committee, in
its sole discretion, shall determine.
13.3 Assumption or Substitution of
Awards. Notwithstanding anything contained in the
Plan to the contrary, the Committee may, in its sole discretion,
provide that an Award may be assumed by
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any entity which acquires control of the Company or may be
substituted by a similar award under such entitys
compensation plans.
14.0 Termination of Employment
14.1 Termination of Employment Due to Death or
Disability. Subject to any written agreement
between the Company and a Participant, if a Participants
employment is terminated due to death or Disability:
(a) all non-Vested portions of Awards held by the
Participant on the date of the Participants death or the
date of the termination of his or her employment, as the case
may be, shall immediately be forfeited by such Participant as of
such date;
(b) all Vested portions of Awards (other than Vested
portions of Stock Options) held by the Participant on the date
of the Participants death or the date of the termination
of his or her employment, as the case may be, shall be paid in
accordance with the payout schedule applicable to Vested
Awards; and
(c) all Vested portions of Stock Options held by the
Participant on the date of the Participants death or the
date of the termination of his or her employment, as the case
may be, shall remain exercisable until the earlier of:
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12-month
period following the date of the Participants death or the
date of the termination of his or her employment, as the case
may be, or
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the date the Stock Option would otherwise expire.
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14.2 Termination of Employment for
Cause. Subject to any written agreement between
the Company and a Participant, if a Participants
employment is terminated by the Company for Cause, all Awards
held by a Participant on the date of the termination of his or
her employment for Cause, whether Vested or non-Vested, shall
immediately be forfeited by such Participant as of such date. In
the event that Stock, cash or other property comprising a Vested
Award has been distributed to a Participant prior to a
termination of employment for Cause, the Participant shall be
obligated to return to the Company within thirty (30) days
after such termination of employment (a) the Stock, cash or
other property comprising that Award or (b) if such Stock
or other property has been disposed of by the Participant, cash
equal in amount to the greater of (i) the fair market value
of such Stock or other property at the time of its disposition
or (ii) the amount received in exchange for such Stock or
other property.
14.3 Other Terminations of
Employment. Subject to any written agreement
between the Company and a Participant, if a Participants
employment is terminated for any reason other than for Cause,
death or Disability:
(a) all non-Vested portions of Awards held by the
Participant on the date of the termination of his or her
employment shall immediately be forfeited by such Participant as
of such date;
(b) all Vested portions of Awards (other than Vested
portions of Stock Options) held by the Participant on the date
of the termination of his or her employment shall be paid in
accordance with the payout schedule applicable to Vested
Awards; and
(c) all Vested portions of Stock Options held by the
Participant on the date of the termination of his or her
employment s shall remain exercisable until the earlier of:
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90-day
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employment, or
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the date the Stock Option would otherwise expire.
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14.4 Committee
Discretion. Notwithstanding anything contained in
the Plan to the contrary, the Committee may, in its sole
discretion, provide that:
(a) any or all non-Vested portions of Stock Options held by
the Participant on the date of the Participants death
and/or the
date of the termination of his or her employment, as the case
may be, shall immediately become exercisable as of such date
and, except with respect to ISOs, shall remain exercisable until
a date that occurs on or prior to the date the Stock Option is
scheduled to expire;
(b) any or all Vested portions of Nonqualified Stock
Options held by the Participant on the date of the
Participants death
and/or the
date of the termination of his or her employment, as the case
may be, shall remain exercisable until a date that occurs on or
prior to the date the Stock Option is scheduled to expire;
(c) any or all non-Vested portions of Stock Awards
and/or Stock
Units held by the Participant on the date of the
Participants death
and/or the
date of the termination of his or her employment shall
immediately Vest or shall become Vested on a date that occurs on
or prior to the date the Award is scheduled to vest; and/or
(d) all Vested portions of Awards (other than Vested
portions of Stock Options) held by the Participant on the date
of the Participants death or the date of the termination
of his or her employment, as the case may be, shall be paid on a
date that occurs prior than the Vested Award is schedules to be
paid.
14.5 ISOs. Notwithstanding anything
contained in the Plan to the contrary, (i) the provisions
contained in this Section 14 shall be applied to an ISO
only if the application of such provision maintains the
treatment of such ISO as an ISO and (ii) the exercise
period of an ISO in the event of a termination of the
Participants employment due to Disability provided in
Section 14.1, above, shall be applied only if the
Participant is permanently and totally disabled (as
such term is defined in Code Section 22(e)(3)).
15.0 Taxes
15.1 Withholding Taxes. With respect to
Employees, the Company, or the applicable Subsidiary, may
require a Participant who has become Vested in a Stock Award or
Stock Unit granted hereunder, or who exercises a Stock Option
granted hereunder, to reimburse the corporation which employs
such Participant for any taxes required by any governmental
regulatory authority to be withheld or otherwise deducted and
paid by such corporation or entity in respect of the issuance or
disposition of such shares or the payment of any amounts. In
lieu thereof, the corporation or entity which employs such
Participant shall have the right to withhold the amount of such
taxes from any other sums due or to become due from such
corporation or entity to the Participant upon such terms and
conditions as the Committee shall prescribe. The corporation or
entity that employs such Participant may, in its discretion,
hold the stock certificate to which such Participant is entitled
upon the Vesting of a Stock Award or Stock Unit or the exercise
of a Stock Option as security for the payment of such
withholding tax liability, until cash sufficient to pay that
liability has been accumulated.
15.2 Use of Common Stock to Satisfy Withholding
Obligation. With respect to Employees, at any
time that the Company, Subsidiary or other entity that employs
such Participant becomes subject to a withholding obligation
under applicable law with respect to the Vesting of a Stock
Award or Stock Unit or the exercise of a Nonqualified Stock
Option (the Tax Date), except as set forth below, a
holder of such Award may elect to satisfy, in whole or in part,
the holders related personal tax liabilities (an
Election) by (i) directing the Company,
Subsidiary or other entity that employs such Participant to
withhold from shares issuable in the related vesting or exercise
either a specified number of shares or shares of Common Stock
having a specified value (in each case equal to the related
minimum statutory personal withholding tax liabilities with
respect to the applicable taxing jurisdiction in order to comply
with the requirements for equity accounting in
accordance with Statement of Financial Accounting
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Standards No. 123R, (ii) tendering shares of Common
Stock previously issued pursuant to the exercise of a Stock
Option or other shares of the Common Stock owned by the holder,
or (iii) combining any or all of the foregoing Elections in
any fashion. An Election shall be irrevocable. Any withheld
shares and any other shares of Common Stock tendered in payment
shall be valued based on the Fair Market Value of a Share of the
Common Stock on the Tax Date. The Committee may disapprove of
any Election, suspend or terminate the right to make Elections
or provide that the right to make Elections shall not apply to
particular shares or exercises. The Committee may impose any
additional conditions or restrictions on the right to make an
Election as it shall deem appropriate, including conditions or
restrictions with respect to Section 16 of the Exchange Act.
15.3 No Guarantee of Tax Consequences. No
person connected with the Plan in any capacity, including, but
not limited to, the Company and any Subsidiary and their
directors, officers, agents and employees makes any
representation, commitment, or guarantee that any tax treatment,
including, but not limited to, federal, state and local income,
estate and gift tax treatment, will be applicable with respect
to amounts deferred under the Plan, or paid to or for the
benefit of a Participant under the Plan, or that such tax
treatment will apply to or be available to a Participant on
account of participation in the Plan.
15.4 Section 409A Deferred
Compensation. At the time of grant, the Committee
shall determine whether an Award will be treated as
nonqualified deferred compensation under Code
Section 409A. The Committee shall ensure that if an award will
be treated as nonqualified deferred compensation
under Code Section 409A, that the Award fully complies with
the requirements of Code Section 409A and the Treasury
Regulations promulgated thereunder, including but not limited to:
(a) Requiring a minimum
6-month
delay of payment if the Participant is a specified
employee (as such term is defined under Code
Section 409A);
(b) Deferring or accelerating the payment of compensation
attributable to any Award only in strict compliance with Code
Section 409A; and
(c) Establishing and operating the Plan in strict
compliance with Code Section 409A.
The Committee may, in its sole discretion, allow a Participant
to elect to defer the receipt of any compensation attributable
to an Award, but only under guidelines and procedures consistent
with Code Section 409A compliance to be established by the
Committee after taking into account the advice of the
Companys tax counsel.
15.5 Golden Parachutes. Subject to any
written agreement between the Company and a Participant, if any
payment to be made under the Plan would be treated by the
Internal Revenue Service as an excess parachute
payment as such term is defined in Code Section 280G,
then the Company or the applicable Subsidiary may reduce the
amount of such payment so that such payment will not be treated
as an excess parachute payment; provided,
however, that such reduction must take into account all
parachute payments as such term is defined in Code
Section 280G, so that such reduction results in the
aggregate of all parachute payments to the
Participant being equal to $1.00 less than the
Participants applicable base amount as such
term is defined in Code Section 280G.
16.0 Miscellaneous
16.1 Listing of Shares and Related
Matters. If at any time the Committee shall
determine that the listing, registration or qualification of the
shares of Common Stock subject to any Award on any securities
exchange or under any applicable law, or the consent or approval
of any governmental regulatory authority, is necessary or
desirable as a condition of, or in connection with, the granting
of an Award or the issuance of shares of Common Stock
thereunder, such Award may not be exercised, distributed or paid
out, as the case may be, in whole or in part, unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not
acceptable to the Committee.
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16.2 No Right, Title, or Interest in Company
Assets. Participants shall have no right, title,
or interest whatsoever in or to any investments which the
Company may make to aid it in meeting its obligations under the
Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between
the Company and any Participant, beneficiary, legal
representative or any other person. To the extent that any
person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of
an unsecured general creditor of the Company. All payments to be
made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and
no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan. The Plan is
not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.
16.3 No Right to Continued Employment or Service or to
Grants. The Participants rights, if any, to
continue to serve the Company as a director, officer, employee,
or otherwise, shall not be enlarged or otherwise affected by his
or her designation as a Participant under the Plan, and the
Company or the applicable Subsidiary reserves the right to
terminate the employment of any Employee at any time. The
adoption of the Plan shall not be deemed to give any Employee or
Nonemployee Director or any other individual or entity any right
to be selected as a Participant or to be granted an Award.
16.4 Awards Subject to Foreign Laws. The
Committee may grant Awards to individual Participants who are
subject to the tax laws of nations other than the United States,
and such Awards may have terms and conditions as determined by
the Committee as necessary to comply with applicable foreign
laws. The Committee may take any action that it deems advisable
to obtain approval of such Awards by the appropriate foreign
governmental entity; provided, however, that no action
may be taken which would result in a violation of the Exchange
Act or any other applicable law.
16.5 Governing Law. The Plan, all Awards
granted hereunder, and all actions taken in connection herewith
shall be governed by and construed in accordance with the laws
of the State of Illinois without reference to principles of
conflict of laws, except as superseded by applicable federal law.
16.6 No Fractional Shares. No fractional
shares of Common Stock shall be issued or delivered pursuant to
the Plan or any Award. The Committee shall determine whether
cash or other property shall be issued or paid in lieu of
fractional shares, or whether such fractional shares or any
rights relating thereto shall be forfeited or otherwise
eliminated.
17.0 Amendment or Termination of Plan or Awards
17.1 Amendment of Plan. The Board may
amend the Plan at any time with or without prior notice;
provided, however, that no such action shall reduce the
amount of any outstanding Award or otherwise adversely change
the terms and conditions thereof without the Participants
consent.
17.2 Termination of Plan. The Board may
suspend or terminate the Plan at any time with or without prior
notice; provided, however, that no such action shall
reduce the amount of any outstanding Award or otherwise
adversely change the terms and conditions thereof without the
Participants consent.
17.3 Amendment or Cancellation of Award
Agreements. The Committee may amend or modify any
Award Agreement at any time, provided that if the amendment or
modification adversely affects the Participant, such amendment
or modification shall be by mutual agreement between the
Committee and the Participant or such other persons as may then
have an interest therein. In addition, and subject to
stockholder approval in accordance with Section 4.3, above,
by mutual agreement between the Committee and a Participant or
such other persons as may then have an interest therein, Awards
may be granted to a Participant in substitution and exchange
for, and in cancellation of, any Awards previously granted to
such Participant under the Plan, or any award previously granted
to such Participant under any other present or future plan of
the Company or any present or future plan of an entity which
(i) is purchased by the Company, (ii) purchases the
Company, or (iii) merges into or with the Company.
* * * * *
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Using a black ink pen, mark
your votes
with an X as shown in this example. Please
do not write outside the designated areas.
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Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting
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 11:59 p.m., Central Time, on December 7, 2009.
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Vote by Internet |
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Log on to the Internet and go to
www.envisionreports.com/LAWS
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Follow the steps outlined on the secured website.
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Vote by telephone |
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Call toll free 1-800-652-VOTE (8683) within the USA,
US territories & Canada any time on a touch tone
telephone. There is NO CHARGE to you for the call. |
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Follow the instructions provided by the recorded message. |
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE. 6
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Proposals The Board of Directors recommends a vote FOR
all the nominees listed and FOR Proposals 2 and 3.
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1. ELECTION OF DIRECTORS:
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01 - Thomas S. Postek
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02 - Andrew B. Albert
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03 - I. Steven Edelson
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Instruction: To maximize the number of nominees elected to the Companys
Board of Directors, unless otherwise specified below, this proxy authorizes the proxies named above to cumulate all votes that the undersigned is entitled to cast at the Annual Meeting for,
and to allocate such votes among, one or more of the nominees listed above as the proxies shall determine, in their sole and absolute discretion. To specify a different method of cumulative voting, write Cumulate For
and the number of shares and the name(s) of the nominee(s) on this
line:_______________________________________________________________________________________________
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For
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Abstain
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2.
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RATIFICATION OF ERNST & YOUNG LLP AS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING DECEMBER 31, 2009
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3. |
APPROVAL OF THE LAWSON PRODUCTS, INC. 2009 EQUITY COMPENSATION PLAN
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4.
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In their discretion, the Proxy is authorized to vote on any other matter that may properly come before the meeting or any adjournment thereof.
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B
Non-Voting Items
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Change of Address Please print Your new address below.
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Comments Please print your comments below.
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Meeting Attendance |
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Mark the box to the right
if you plan to attend the
Annual Meeting.
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
Please sign exactly as your name(s) appear(s) on this card. When signing as attorney, executor, administrator, trustee, officer, partner or guardian, please give full title. If more than one trustee, all should sign.
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Date (mm/dd/yyyy) Please print
date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box. |
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Dear Stockholder:
We encourage you to vote your shares electronically this year either by telephone or via the
Internet. This will eliminate the need to return your proxy card. You will need your proxy card and
Social Security number (where applicable) when voting your shares electronically.
The Computershare Vote by Telephone and Vote by Internet systems can be accessed 24-hours a day,
seven days a week up until the day prior to the meeting.
Your vote is important. Please vote immediately.
If you vote over the internet or by telephone, please do not mail your card.
6IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Proxy LAWSON PRODUCTS, INC.
C/O COMPUTERSHARE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
This proxy is solicited on behalf of the Board of Directors for the Annual Meeting on December 8,
2009.
The undersigned hereby makes, constitutes and appoints Neil E. Jenkins, Thomas Neri, and Ronald B.
Port, M.D., and each of them, proxies for the undersigned, with full power of substitution, to vote
on behalf of the undersigned at the Annual Meeting of Stockholders of Lawson Products, Inc. (the
Company), to be held at the offices of the Company, 1666 East Touhy Avenue, Des Plaines,
Illinois, on Tuesday, December 8, 2009, at 10:00 A.M. (Local Time), or any adjournment thereof.
If a properly signed proxy is returned without any choices marked, the proxies will distribute, in
their discretion, votes in respect of all proxies they hold equally or unequally to or among the
Board of Directors nominees.
The undersigned hereby revokes any proxy heretofore given and confirms all that said proxies, or
any of them, or any substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1, FOR PROPOSAL
2, AND FOR PROPOSAL 3.
PLEASE SEE REVERSE SIDE FOR INFORMATION ON VOTING YOUR PROXY BY TELEPHONE OR INTERNET.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2009 ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON DECEMBER 8, 2009. A copy of the Notice, the accompanying
Proxy Statement for the 2009 Annual Meeting of Shareholders and our 10-K Report are available at
www.edocumentview.com/LAWS.
(Please Sign on Reverse Side)