def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Ennis, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Ennis, Inc.
2441 Presidential Parkway
Midlothian, TX 76065
NOTICE OF 2007 ANNUAL MEETING OF SHAREHOLDERS
To Be Held Thursday, June 28, 2007
We will hold the Annual Meeting of Shareholders of Ennis, Inc. on Thursday at the Midlothian
Community Center located at One Community Circle, Midlothian, Texas 76065 (the Annual Meeting),
June 28, 2007 at 10:00 a.m., local time. At the Annual Meeting, we will ask you to vote on the
following proposals:
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The election of three Directors to serve as Directors for a three year term or until
their successors are duly elected and qualified; and |
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To transact such other business as may properly come before the Annual Meeting and any
adjournment or postponement thereof. |
The foregoing items of business, including the nominees for directors are more fully described
in the Proxy Statement which is attached to and made part of this Notice. If you were a
shareholder at the close of business on April 30, 2007, you are entitled to notice of and to vote
on the proposals to be considered at this years Annual Meeting. It is important that your Common
Stock be represented at the Annual Meeting regardless of the number of shares you hold.
You are cordially invited to attend the Annual Meeting in person. However, if you are unable
to attend in person, please know that we desire to have maximum representation of our shareholders
at the meeting and respectfully request that you complete, date, sign and return the enclosed proxy
as promptly as possible in the enclosed postage-paid self-addressed envelope. No additional
postage is required if mailed in the United States. You may revoke your proxy at any time prior to
the Annual Meeting as specified in the enclosed Proxy Statement. We look forward to hearing from
you.
By Order of the Board of Directors
/s/ Richard L. Travis, Jr.
Corporate Secretary
Midlothian, Texas
May 31, 2007
YOUR VOTE IS IMPORTANT.
Please vote early, even if you plan to attend the Annual Meeting.
TABLE OF CONTENTS
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Ennis, Inc.
2441 Presidential Parkway
Midlothian, TX 76065
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation of proxies by
the Board of Directors of Ennis, Inc., a Texas corporation (Ennis, the Company, we, us, or
our), for use at the Annual Meeting of Shareholders of Ennis, Inc. (Annual Meeting) to be held
on Thursday, June 28, 2007, at One Community Circle, Midlothian, Texas 76065, commencing at 10:00
am, local time, and at any adjournment or postponement, for the purpose of considering and acting
upon the matters set forth in the accompanying Notice of Annual Meeting of Shareholders.
This Proxy Statement and accompanying forms of proxy and voting instructions are first being
mailed on or about May 31, 2007 to shareholders entitled to vote at the Annual Meeting. For
information about shareholders eligibility to vote at the Annual Meeting, shares outstanding on
the record date and the ways to submit and revoke a proxy, please see What will occur at the Annual
Meeting and How do I vote sections below.
Annual Report
A copy of the Companys Annual Report on Form 10-K to shareholders for the fiscal year ended
February 28, 2007 has been sent simultaneously with this Proxy Statement. Additional copies of our
Annual Report on Form 10-K and/or Proxy Statement are available without charge to shareholders upon
written request to Investor Relations Department, Ennis, Inc. P.O. Box 403, Midlothian, Texas
76065-0403 or via the Internet at www.ennis.com.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the Boards proposal to elect the nominated Directors.
1
QUESTIONS AND ANSWERS
Why did I receive this Proxy Statement?
We are providing these proxy materials in connection with the solicitation by the Board of
Directors of Ennis, Inc. of proxies to be voted at our 2007 Annual Meeting of Shareholders (Annual
Meeting).
You are invited to attend our Annual Meeting on June 28, 2007 at 10:00 a.m., local time. The
Annual Meeting is open to all holders of our Common Stock. Each shareholder is permitted to bring
one guest. The meeting will be held at the Midlothian Community center located at One Community
Circle, Midlothian, Texas 76065.
The Notice of 2007 Annual Meeting of Shareholders, Proxy Statement, form of proxy and voting
instructions are being mailed on or about May 31, 2007.
I may have received more than one Proxy Statement. Why?
If you received more than one Proxy Statement, your shares are probably registered differently
or are in more than one account. Please vote each proxy card that you received.
How does the Board recommend that I vote my shares?
Unless you give other instructions on your proxy card, the persons named as proxy holders on
the proxy card will vote in accordance with the recommendations of the Board. The Boards
recommendation can be found with the description of each item in this Proxy Statement. In summary,
the Board recommends a vote:
FOR the Boards proposal to elect the nominated Directors.
What will occur at the Annual Meeting?
We will determine whether enough shareholders are present at the meeting to conduct business.
Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in
person or if you properly return a proxy by mail. In order for us to hold our meeting, holders of
a majority of our outstanding shares of our Common Stock as of April 30, 2007 must be present in
person or by proxy at the meeting. This is referred to as a quorum. Absentions and broker
non-votes will be counted for purposes of establishing a quorum at the meeting.
All shareholders of record at the close of business on April 30, 2007 will be entitled to vote
on matters presented at the meeting or any adjournment thereof. On April 30, 2007, there were
25,585,451 shares of our Common Stock issued and outstanding. The holders of a majority, or
12,792,726 of the shares of our Common Stock entitled to vote at the meeting, must be represented
at the meeting in person or by proxy to have a quorum for the transaction of business at the
meeting and to act on the matters specified in the Notice.
If enough shareholders are present at the meeting to conduct business, then we will vote to
elect as members of our Board of Directors for a three-year term (Michael J. Schaefer, Kenneth G.
Pritchett, and James C. Taylor) and any other business properly coming before the meeting.
After each proposal has been voted on at the meeting, we will discuss and take action on any
other matter that is properly brought before the meeting. We have hired Computershare Investor
Services, LLC, our transfer agent, to count the votes represented by proxies cast by ballot.
Employees of Computershare Investor Services, LLC and the Company will act as Inspectors of
election.
We know of no other matters that will be presented for consideration at the Annual Meeting.
If, however, other matters or proposals are presented and properly come before the meeting, the
proxy holders intend to vote all proxies in accordance with their best judgment in the interest of
Ennis, Inc. and our shareholders.
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A representative of Grant Thornton LLP, our independent accountants, is expected to be present
at the Annual Meeting and will be afforded an opportunity to make a statement, if such
representative so desires, and to respond to appropriate questions.
What is a broker non-vote?
If a broker does not have discretion to vote shares held in street name on a particular
proposal and does not receive instructions from the beneficial owner on how to vote those shares,
the broker may return the proxy card without voting on that proposal. This is known as a broker
non-vote. Broker non-votes will have no effect on the vote for the election of directors.
How many votes are necessary to elect the nominees for director?
The nominees for election as directors at the Annual Meeting who receive the highest number of
FOR votes will be elected as directors, provided a quorum is present. This is called plurality
voting. Unless you indicate otherwise on your proxy card, the persons named as your proxies will
vote your shares FOR all the nominees for director named in this Proxy Statement.
With respect to the election of directors, shareholders have cumulative voting rights, which
means that each shareholder entitled to vote (a) has the number of votes equal to the number of
shares held by such shareholder multiplied by the number of directors to be elected and (b) may
cast all such votes for one nominee or distribute such shareholders votes among the nominees as
the shareholder chooses. The right to cumulate votes may not be exercised until a shareholder has
given written notice of the shareholders intention to vote cumulatively to the corporate secretary
on or before the day preceding the election. If any shareholder gives such written notice, then
all shareholders entitled to vote or their proxies may cumulate their votes. Upon such written
notice, the persons named in the accompanying form of proxy may cumulate their votes. As a result,
the Board also is soliciting discretionary authority to cumulate votes.
What if a nominee is unwilling or unable to serve?
The persons nominated for election to our Board of Directors have agreed to stand for
election. However, should a nominee become unable or unwilling to accept nomination or election,
the proxies will be voted for the election of such other person as the Board may recommend. Our
Board of Directors has no reason to believe that the nominees will be unable or unwilling to serve
if elected, and to the knowledge of the Board, the nominees intend to serve the entire term for
which election is sought.
How do I vote?
You can vote either in person at the meeting or by proxy without attending the meeting.
To vote by proxy, you must fill out the enclosed proxy card, date and sign it, and return it
in the enclosed postage-paid envelope.
Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you
plan to vote in person at the Annual Meeting, and you hold your Company stock in street name, you
must obtain a proxy from your broker and bring that proxy to the meeting.
If you hold your stock through the Companys employee benefit plans, you will receive a proxy
card with instructions to vote, which are the same as any other shareholder.
What if I want to change my vote?
You can change or revoke your vote at any time before the polls close at the Annual Meeting. You
can do this by:
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Signing another proxy card with a later date and returning it to us prior to the meeting, or |
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Sending our Corporate Secretary a written document revoking your earlier proxy, or |
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Voting again at the meeting. |
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Will my shares be voted if I dont provide my proxy and dont attend the Annual Meeting?
If you do not provide a proxy or vote your shares held in your name, your shares will not be
voted.
If you hold your shares in street name, your broker may be able to vote your shares for
certain routine matters even if you do not provide the broker with voting instructions. The
election of directors for 2007 is considered a routine matter. For matters not considered
routine, if you do not give your broker instructions on how to vote your shares, the broker may
return the proxy card without voting on that proposal. This is a broker non-vote.
If you hold your shares through one of the Companys employee benefit plans and do not vote
your shares, your shares (along with all other shares in the plan for which votes are not cast)
will be voted pro rata by the trustee in accordance with the votes directed by other participants
in the plan who elect to act as a fiduciary entitled to direct the trustee of the applicable plan
on how to vote the shares.
How are votes counted?
In the election of directors, you may vote FOR all of the nominees or your vote may be
WITHHELD with respect to one or more of the nominees. Votes that are withheld will be counted
for purposes of determining the presence or absence of a quorum but will have no other effect on
the election of directors. For any other proposal, you may vote FOR, AGAINST, or ABSTAIN.
If you ABSTAIN, it has the same effect as a vote AGAINST.
What if I return my proxy but dont vote for some of the matters listed on my proxy card?
If you return a signed card without indicating your vote, your shares will be voted FOR the
nominee directors listed on the card.
How do I raise an issue for discussion or vote at the next Annual Meeting?
Under SEC rules, a shareholder who intends to present a proposal, including the nomination of
directors, at the 2008 Annual Meeting of Shareholders and who wishes the proposal to be included in
the Proxy Statement for that meeting must submit the proposal in writing to our Corporate
Secretary. The proposal must be received no later than February 29, 2008.
All written proposals should be directed to Investor Relations Department, Ennis, Inc., P.O.
Box 403, Midlothian, Texas 76065-0403.
The Nominating and Corporate Governance Committee is responsible for selecting and
recommending director candidates to our Board, and will consider nominees recommended by
shareholders. If you wish to have the Nominating and Corporate Governance Committee consider a
nominee for director, you must send a written notice to the Companys Corporate Secretary at the
address provided above and include the information required by the Nominating and Corporate
Governance Committee Charter and discussed in the section entitled Director Nominating Processes of
this Proxy Statement.
Who will pay for the cost of this solicitation?
Our Board has sent you this Proxy Statement. Our directors, officers, and employees may
solicit proxies by mail, by telephone or in person. Those persons will receive no additional
compensation for any solicitation activities. We will request banking institutions, brokerage
firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of our Common Stock held of record by those entities, and we will, upon the
request of those record holders, reimburse reasonable forwarding expenses. We will pay the costs
of preparing, printing, assembling and mailing the proxy materials used in the solicitation of
proxies.
Where can I find the voting results of the Annual Meeting?
We will announce the voting results at the Annual Meeting and will publish the results in our
quarterly report on Form 10-Q for the quarter ending August 31, 2007. We will file that report with
the Securities and Exchange
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Commission on or before October 10, 2007. This Form 10-Q will be available without charge to
shareholders upon written request to Investor Relations Department, Ennis, Inc., P.O. Box 403,
Midlothian, Texas 76065-0403 or via the Internet at www.ennis.com.
How can I access the Companys proxy materials and Annual Report electronically?
The Proxy Statement and 2007 Annual Report on Form 10-K are available on our website at
www.ennis.com in the Investor Relations section.
ELECTION OF DIRECTORS
The number of directors who shall constitute the Companys Board of Directors is
currently set at nine. The Board of Directors consists of three classes serving staggered
three-year terms. Directors for each class are elected at the Annual Meeting of Shareholders held
in the year in which the term for their class expires.
Our Board of Directors proposes the election of Michael J. Schaefer, Kenneth G. Pritchett, and
James C. Taylor as directors, to hold office for a term of three years, expiring at the close of
our Annual Meeting of Shareholders to be held in 2010, or until their successors are duly elected
and qualified. Mr. Schaefer, our new nominee, was introduced to our Nomination and Corporate
Governance Committee by Mr. Pritchett, the Chairman of the Compensation Committee. It is the
Boards opinion that because of the Candidates business experience and Mr. Pritchetts and Mr.
Taylors tenure as directors, they are sufficiently familiar with the Company and its business to
be able to competently direct and manage the Companys business affairs. Biographical information
on Mr. Schaefer, Mr. Pritchett, and Mr. Taylor is set forth below in Directors Summary of Our
Independent Directors.
If Mr. Schaefer, Mr. Pritchett, or Mr. Taylor becomes unavailable for election, which is not
anticipated, the proxies will be voted for the election of such other person as the Board may
recommend.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
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CORPORATE GOVERNANCE MATTERS
General
Our Corporate Governance Guidelines address the following matters, among others: director
qualifications, director responsibilities, Board Committees, director access to officers, employees
and independent advisors, director compensation, Board performance evaluations, director
orientation and continuing education, CEO evaluation and succession planning. The Corporate
Governance Guidelines also contain categorical standards, which are consistent with the standards
set forth in the New York Stock Exchange (NYSE) listing standards, to assist the Board in
determining the independence of the Companys directors. A copy of these guidelines is available
free of charge upon written request to Investor Relations Department, Ennis, Inc., P.O. Box 403,
Midlothian, Texas 76065-0403 or via the Internet at www.ennis.com.
Board Size
The Companys Bylaws provide that the number of directors will be nine.
Director Independence
Our Governance Guidelines provide that the Board of Directors is to be composed of a majority
of independent directors. The Board has determined that each non-employee director meets the
standards regarding independence set forth in the Corporate Governance Guidelines of the Company
and in compliance with NYSE rules and has no material relationship with the Company. The Board of
Directors has determined that the independent directors, which will consist of Mr. Gardner, Mr.
Price, Mr. Pritchett, Mr. Quiroz, Mr. Taylor, Mr. Long and Mr. Schaefer, after election, constitute
a majority of the Board. In addition, Mr. Harold W. Hartley, who has served as a director of the
Company since 1971 and announced his intention to retire and not to stand for reelection at the
Annual Meeting, was considered an independent director during fiscal year 2007.
Criteria for Membership on the Board
When identifying director nominees, the Nominating and Corporate Governance Committee (the
Committee) seeks director candidates with high personal and professional ethics, integrity and
values, that have outstanding records of accomplishments in their chosen business or profession,
and who will be committed to representing the long-term interest of the Companys shareholders.
The Board seeks members reflecting a range of talents, ages, skills, diversity, and expertise,
particularly in the areas of accounting and finance, management, domestic and international markets
and leadership sufficient to provide sound and prudent guidance with respect to the Companys
operations and interests. The Company also requires that its Board members be able to dedicate the
time and resources sufficient to ensure the diligent performance of their duties on the Companys
behalf, including attending Board and applicable committee meetings.
Director Nomination Process
The charter of our Nominating & Corporate Governance Committee (the Nominating Committee)
allows shareholders to recommend to the Nominating Committee candidates for membership on the Board
of Directors. To recommend a candidate for director using this process, the shareholder must
follow procedures set forth in the Nominating Committee Charter and the candidate must meet the
qualification standards set forth in the Companys Corporate Governance Guidelines.
Only shareholders that have owned at least 5% of the outstanding shares of our Common Stock
for more than one year from the date of the shareholders recommendation may submit the name of a
candidate for the Nominating Committee to consider for nomination. To propose a candidate, the
shareholder must provide the following information in the shareholders notice:
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Name of the candidate; |
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A resume and brief biographical sketch of the candidate; |
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Proof that the shareholder owns 5% or more of the outstanding shares of our Common Stock; |
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Proof that the shareholder has owned at least 5% of the outstanding shares of our Common
Stock for more than one year from the date of the shareholders recommendation; and |
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The candidates consent and willingness to serve on the Board if elected. |
To include a candidate in any proxy statement for the election of directors, the Company will
also need the following information:
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The nominees name, age and business and residence address; |
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The nominees principal occupation or employment; |
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The class and number of shares of our Common Stock, if any, owned by the nominee; |
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The name and address of the nominating shareholder as they appear on the Companys books; |
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The class and number of shares of our Common Stock owned by the nominating shareholder
as of the record date for the annual meeting (if this date has been announced) and as of
the date of the notice; |
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A representation that the shareholder intends to appear in person or by proxy at the
meeting to nominate the candidate specified in the notice; |
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A description of all arrangements or understandings between the shareholder and the
nominee; and |
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Any other information regarding the nominee or shareholder that would be required to be
included in a Proxy Statement relating to the election of directors. |
Candidates recommended by the Companys shareholders are evaluated on the same basis as
candidates recommended by the Companys directors, CEO, other executive officers, third party
search firms or other sources. The Nominating Committee will request and review the resume of any
of the candidates based on the qualifications set forth in the Nominating Committee Charter and the
Companys Governance Guidelines. There can be no more than one shareholder nominee in our Proxy
Statement for any given Annual Meeting.
Board Responsibilities
Our business is managed under the direction of the Board. The Board monitors management on
behalf of the shareholders. Among the Boards major responsibilities are:
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Selection, compensation and evaluation of the Executive Officers and oversight of
succession planning for the Chief Executive Officer; |
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Assurance that processes are in place to promote compliance with law and high standards
of business ethics; |
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Oversight of Ennis strategic planning; |
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Approval of all material transactions and financings; |
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Understanding Ennis financial statements and other disclosures and evaluating and
changing where necessary the process for producing accurate and complete reporting; |
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Using its experience to advise management on major issues facing Ennis; and |
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Evaluating the performance of the Board and its committees and making appropriate
changes where necessary. |
Directors are expected to maintain a good attendance record, and familiarize themselves with
any materials distributed prior to each Board or committee meeting. All directors may place items
on agendas for Board meetings. The chair of the Committee clears agendas for the meeting of
committees of the Board, and committee members may place items on the agenda.
Board Meetings and Executive Sessions
The Board of Directors not only holds regular quarterly meetings, but also holds other
meetings each year to review the Companys strategy, to approve its annual business plan and annual
budget, and to act on the Companys regulatory filings with the SEC. The Board of Directors also
communicates informally with management on a regular basis.
7
Non-employee directors meet by themselves, without management or employee directors
present, at every regularly scheduled Board meeting.
These executive sessions are led by the Chair of the committee that has primary responsibility
for the issue being discussed (e.g., the Audit Committee Chair would lead a discussion of
audit-related matters). When it is not apparent which committee has specific responsibility for the
subject matter, the Chairmen of the Committees will preside on a rotating basis.
Committees of the Board
The Board has three standing committees: the Audit Committee, the Compensation Committee and
the Nominating and Corporate Governance Committee and are comprised entirely of independent
directors. Each committee also holds regular executive sessions at which only committee members
are present.
Director Access to Management and Independent Advisors
All directors are able to directly contact members of management, including, in the case of
the Audit Committee, direct access to the head of internal audit. Broad management participation
is encouraged in presentations to the Board, and executive management frequently meets with Board
members on an individual basis. The Board and its Committees are empowered to hire, at the
Companys expense, their own financial, legal and other experts to assist them in addressing
matters of importance to the Company.
Board Self-Evaluation
The Board of Directors conducts a self-evaluation of its performance annually, which includes
a review of the Boards composition, responsibilities, leadership and committee structure,
processes and effectiveness. Each committee of the Board conducts a similar self-evaluation with
respect to such committee.
Director Orientation and Education
Directors are provided extensive material regarding Ennis upon their initial election to the
Board, including a binder containing information regarding Ennis and its policies and various
administrative and legal matters. Other orientation procedures include meetings with senior
executives of the Company in its major business units. Board meetings are occasionally held
outside the corporate office to permit directors to visit operating locations of Ennis
subsidiaries.
Non-Employee Director Compensation and Stock Ownership
The Board of Directors is responsible for establishing compensation for the Companys
non-employee directors. At least every three years (completed most recently in 2006), the
Nominating and Corporate Governance Committee reviews, with assistance from an outside consultant,
currently PricewaterhouseCoopers LLP, the compensation for non-employee directors, including
reviewing compensation provided to non-employee directors at other companies, and makes a
recommendation to the Board for its approval. It is the Companys policy that a portion of
non-employee directors compensation should be equity-based. For details on the compensation
currently provided to non-employee directors, please see Director Compensation section of this
proxy statement.
Directors are encouraged but not required to own Common Stock of the Company. For additional
information of Director stock ownership, please see Security Ownership of the Board of Directors
and Executive Officers section of this Proxy Statement.
The Company also expects all directors to comply with all federal, state and local laws
regarding trading in securities of the Company and disclosing material, non-public information
regarding the Company. The Company has procedures in place to assist directors in complying with
these laws.
8
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics for Directors and Employees
designed to help Directors and employees resolve ethical issues in an increasingly complex global
business environment. Our Code of Business Conduct and Ethics applies to all Directors and
employees, including the Chief Executive Officer, the Chief Financial Officer, and all Senior
Financial Officers. Our Code of Business Conduct and Ethics covers topics including, but not
limited to, conflicts of interest, insider trading, competition and fair dealing, discrimination
and harassment, confidentiality, payments to government personnel, anti-boycott laws, U.S. embargos
and sanctions, compliance procedures and employee complaint procedures. Our Code of Business
Conduct and Ethics is posted on our website under the Corporate Governance caption in the
Investor Relations section. A copy of the Code of Business Conduct and Ethics is available free
of charge by contacting Investor Relations Department, Ennis, Inc. P.O. Box 403, Midlothian, TX
76065-0403.
Communication with the Board
The Board of Directors maintains a process for shareholders and interested parties to
communicate with the Board. Shareholders may e-mail, call or write to the Board, as more fully
described on the Companys website under the Corporate Governance caption. Communications
addressed to individual Board members and clearly marked as shareholder communications will be
forwarded by the Corporate Secretary unopened to the individual addressed. Any communications
addressed to the Board and clearly marked as shareholder communications will be forwarded by the
Corporate Secretary unopened to James C. Taylor, Chairman of the Nominating and Corporate
Governance Committee.
DIRECTORS
Term
The Companys directors consist of three classes serving in staggered three-year terms.
Directors for each class are elected at the Annual Meeting of Shareholders held in the year in
which the term for their class expires.
Director Independence and Qualifications
As set forth in the Companys Corporate Governance Guidelines, in selecting its slate of
nominees for election to the Board, the Nominating and Corporate Governance Committee and the Board
have evaluated, among other things, each nominees independence, satisfaction of regulatory
requirements, financial literacy, personal and professional accomplishments and experience in light
of the needs of the Company, and with respect to incumbent directors, past performance on the
Board. See Corporate Governance Matters-Criteria for Membership on the Board section of this proxy
statement. The Board has determined that all three nominees have no material relationship with the
Company either directly or indirectly and are independent within the meaning of the listing
requirements of the NYSE. In addition, the Board has determined that each director nominee is
financially literate and possesses the high level of skill, experience, reputation and commitment
that is mandated by the Board. Presented below is the biographical information of all our Board
members, including the nominees (Mssrs. Schaefer, Pritchett and Taylor.)
9
Summary of Our Independent Directors
There is no family relationship among any of our directors and executive officers. The
following table, listed in alphabetical order, sets forth the names of our current non-employee
directors and nominees for director and their respective ages and positions with the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
Director |
|
Term |
|
|
Name |
|
Age |
|
Since |
|
Expires |
|
Positions |
James B. Gardner |
|
72 |
|
1970 |
|
2008 |
|
Director |
Harold W. Hartley |
|
83 |
|
1971 |
|
2007 |
|
Director |
Godfrey M. Long, Jr. |
|
65 |
|
2006 |
|
2009 |
|
Director |
Thomas R. Price |
|
68 |
|
1989 |
|
2009 |
|
Director |
Kenneth G. Pritchett |
|
69 |
|
1999 |
|
2007 |
|
Director |
Alejandro Quiroz |
|
54 |
|
2003 |
|
2009 |
|
Director |
Michael J.
Schaefer |
|
56 |
|
|
|
|
|
Nominee for Director |
James C. Taylor |
|
65 |
|
1998 |
|
2007 |
|
Director |
Set forth below is a description of the backgrounds of our non-employee directors,
including the nominees for director. Information regarding our employee directors (Mssrs. Walters
and Graham) can be found under Executive Officers Summary of Our Executive Officers section of
this Proxy Statement.
James B. Gardner, Senior Managing Director of SAMCO Capital Markets. Mr. Gardner has served
in his present position with SAMCO, a financial services firm, since May 1994. Mr. Gardner is also
a director of Century Telephone Enterprises, Inc.
Harold W. Hartley (Retiring Director), Investments. Mr. Hartley retired in December 1985 and
since that time has managed his private investments. Prior to Mr. Hartleys retirement in 1985, he
served as the Executive Vice President of Tenneco Financial Services, Inc., a subsidiary of
Tenneco, Inc. Mr. Hartley served as the Executive Vice President and Treasurer for Southwestern
Life Insurance Company, prior to its acquisition by Tenneco, Inc. He also worked as a senior
financial analyst for a large mutual fund management company. Mr. Hartleys term as Director will
end June 28, 2007.
Godfrey M. Long, Jr., Consultant and Director of Graphic Dimensions, a printing company and
forms manufacturer. Mr. Long has served in his present position with Graphic Dimensions in
Atlanta, Georgia since 2003. Previously, Mr. Long was Chairman and CEO of Short Run Companies, a
forms manufacturer in Newport, Kentucky from 1984 to 2002 and President and CEO of Blum Data
Graphics, a forms distributor in Newport, Kentucky from 1981 to 2001. Mr. Longs experience also
includes ten years of banking as a commercial loan officer at Wachovia Bank and Central Trust
Company.
Thomas R. Price, Owner and President of Price Industries, Inc., a real estate and investment
company. Mr. Price has been engaged in his present occupation since 1975.
Kenneth G. Pritchett (Incumbent Nominee), President of Ken Pritchett Properties, Inc. Ken
Pritchett Properties, Inc. is a Commercial and Residential Development Corporation in the
Dallas/Ft. Worth Metropolitan area since 1968, specializing in shopping center and exclusive
residential development. Mr. Pritchett is a member of the Board of Trustees and Chairman of the
Planning Committee for three Methodist Hospitals. He is a Life Director for the National
Home Builders, and the Texas Home Builders Association. He serves on the Executive Committee for
the Metropolitan Homebuilders Association.
Alejandro Quiroz, Chairman of the Board of NEXT, a Mexico printing company, and President of
Presto Capital, a commercial real estate company. Mr. Quiroz has served in his present position
for over ten years. Mr. Quiroz, currently a resident of San Antonio, Texas, has been engaged in
the printing business in both the United States and Mexico, primarily in an executive capacity,
since 1975.
10
Michael J. Schaefer (New Nominee), Executive Vice President, Chief Financial Officer and
Treasurer of Methodist Health System, Dallas, TX (Methodist). Methodist owns and operates three
acute care hospitals and associated services in the Dallas metropolitan area. Mr. Schaefer has
served in his present position with Methodist since 1982 and joined Methodist in 1979. Prior to
Methodist, Mr. Schaefer was an audit supervisor with the public accounting firm of Ernst & Ernst
(now Ernst & Young) where he worked from 1972 to 1979. Mr. Schaefer is a member of the American
Institute of Certified Public Accountants.
James C. Taylor (Incumbent Nominee), Principal of The Anderson Group, Inc. The Anderson Group
Inc., Bloomfield Hills, Michigan, is a private investment firm engaged in the acquisition and
management of businesses in a variety of industries. Mr. Taylor joined The Anderson Group Inc. in
1989 and served as the President and Chief Executive Officer of four businesses affiliated with The
Anderson Group Inc. Prior to 1989, Mr. Taylor was with United Technologies Corporation for 19
years, primarily in manufacturing operations, including seven years as a Group Vice President.
Attendance
During fiscal year 2007, the Board of Directors met four times. No incumbent directors
attended fewer than 75% of the total number of meetings of the Board of Directors and the
committees of which he was a member. In addition, the Directors are encouraged and expected to
attend the annual meetings of the Companys shareholders. All of the incumbent directors attended
the 2006 Annual Meeting of Shareholders.
Committee Membership
The Company currently has three standing committees of the Board: Audit Committee,
Compensation Committee and the Nominating and Corporate Governance Committee. Each committee
currently is comprised of non-employee directors, all of whom are considered independent under NYSE
listing standards and our Governance Guidelines. The Board of Directors and the members of each
committee meet regularly in executive session without management. The charters for these
committees can be found on the Companys website at www.ennis.com under the Corporate Governance
caption in the Investor Relations section. A copy of these charters is available free of charge
by contacting Investor Relations Department, Ennis, Inc., P.O. Box 403, Midlothian, TX 76065-0403.
The following table details the membership of each of our committees as of February 28, 2007
and the number of times during the year each of these committees met.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominating |
|
|
|
|
|
|
|
|
|
|
and Corporate |
Directors Name |
|
Audit |
|
Compensation |
|
Governance |
Number of meetings held during |
|
|
|
|
|
|
|
|
|
|
|
|
fiscal year end February 28, 2007 |
|
|
5 |
|
|
|
2 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Employee Independent Directors |
|
|
|
|
|
|
|
|
|
|
|
|
James B. Gardner |
|
|
C |
|
|
|
X |
|
|
|
|
|
Harold W. Hartley retiring |
|
|
X |
|
|
|
|
|
|
|
X |
|
Godfrey Long, Jr. |
|
|
X |
|
|
|
|
|
|
|
|
|
Thomas R. Price |
|
|
X |
|
|
|
|
|
|
|
X |
|
Kenneth G. Pritchett |
|
|
X |
|
|
|
C |
|
|
|
|
|
Alejandro Quiroz |
|
|
|
|
|
|
|
|
|
|
X |
|
James C. Taylor |
|
|
|
|
|
|
X |
|
|
|
C |
|
|
|
|
C |
|
Committee Chairman |
|
X |
|
Committee Member |
11
Audit Committee
During fiscal year 2007, the Audit Committee met five times. The Audit Committee (i)
discusses with management, the independent auditors, and the internal auditors the integrity of our
accounting policies, internal controls, corporate governance, financial statements, financial
reporting practices and significant corporate risk exposures, and steps management has taken to
monitor, control and report such exposures; (ii) monitors the qualifications, independence and
performance of our independent auditors and internal auditors; (iii) monitors our overall direction
and compliance with legal and regulatory requirements and corporate governance, including our code
of business conduct and ethics; and (iv) maintains open and direct lines of communication with the
Board and our management, internal auditors and independent auditors.
Compensation Committee
During fiscal year 2007, the Compensation Committee met two times. The Compensation Committee
oversees and administers our executive compensation policies, plans and practices and assists the
Board in discharging its responsibilities relating to the fair and competitive compensation of our
executives and other key employees. In particular, the Compensation Committee is charged with
assisting the Board in (i) assessing whether the various compensation programs of the Company are
designed to attract, motivate and retain the senior management necessary for the Company to deliver
consistently superior results and are performance based, market driven and shareholder aligned;
(ii) its oversight of specific incentive compensation plans adopted by the Company, with the
approval of this Committee, included stock, plans, supplemental executive retirement plans and
short term and long term incentive compensation plans for members of senior management of the
company; (iii) assessing the effectiveness of succession planning relative to senior management of
the Company; (iv) its approval, review and oversight of benefit plans of the company; and (v) its
oversight of the performance and compensation of the Chief Executive Officer of the Company and the
other members of the senior management team of the Company. In addition, the Compensation
Committee will direct the production of all reports that the SEC rules require be included in the
Companys annual proxy statement. For further information regarding the Compensation Committees
role in determining executive compensation, please see the Compensation Compensation Discussion &
Analysis below.
Nominating and Corporate Governance Committee
During fiscal year 2007, the Nominating and Corporate Governance Committee met three times.
The Nominating and Corporate Governance Committee identifies, investigates and recommends to the
Board director candidates with the goal of creating balance of knowledge, experience and diversity.
Generally, the Committee identifies candidates through the personal, business and organizational
contacts of the directors and management. Potential directors should possess the highest personal
and professional ethics, integrity and values, and be committed to representing the long-term
interests of the Companys shareholders. In addition to reviewing a candidates background and
accomplishments, candidates for director nominees are reviewed in the context of the current
composition of the Board and the evolving needs of the Companys businesses. It is the Boards
policy that at all times at least a majority of its members meets the standards of independence
promulgated by the NYSE and the SEC and as set forth in the Companys Corporate Governance
Guidelines, and that all members reflect a range of talents, ages, skills, diversity, and
expertise, particularly in the areas of accounting and finance, management, domestic and
international markets and leadership sufficient to provide sound and prudent guidance with respect
to the Companys operations and interests. The Company also requires that its Board members be able
to dedicate the time and resources sufficient to ensure the diligent performance of their duties on
the Companys behalf, including attending all Board and applicable committee meetings.
Compensation Committee Interlocks and Insider Participation
All of the members of the Compensation Committee are non-employee directors of the Company and
are not former officers of the Company. During fiscal year 2007, no executive officer of the
Company served as a member of the board or compensation committee of a corporation whose executive
officers served on the Board or Compensation Committee of this Corporation.
12
EXECUTIVE OFFICERS
Summary of Our Executive Officers
The following table, listed in alphabetical order, sets forth the names of our executive
officers and their respective ages and positions with the Company. For those executive officers on
our Board of Directors, it indicates the date they became a board member and when their current
term expires. There is no family relationship among any of our directors and executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
On |
|
|
|
|
|
|
|
|
Board |
|
Term |
|
|
Name |
|
Age |
|
Since |
|
Expires |
|
Positions |
Ronald M. Graham |
|
59 |
|
2003 |
|
2008 |
|
Vice President - Administration and Director |
Michael D. Magill |
|
59 |
|
|
|
|
|
Executive Vice President and Treasurer |
David T. Scarborough |
|
39 |
|
|
|
|
|
Vice President - Apparel Division |
Richard L. Travis, Jr. |
|
51 |
|
|
|
|
|
Secretary, CFO and Vice President - Finance |
Keith S. Walters |
|
57 |
|
1997 |
|
2008 |
|
Chairman of the Board, CEO, President and Director |
Set forth below is a description of the backgrounds of our executive officers.
Ronald M. Graham, Vice President Administration. Mr. Graham joined the Company in January
1998 as Director of Human Relations and subsequently was elected to Vice President Human Resources
in June 1998. Prior to joining the Company, Mr. Graham was with E. V. International, Inc.
(formerly Mark IV Industries, Inc.), an electronics manufacturing company, for 17 years as
Corporate Vice President, Administration. Prior to that time, Mr. Graham was with Sheller-Globe, an
automotive parts manufacturing company, for three years as Corporate Director of Human Resources.
Michael D. Magill, Executive Vice President and Treasurer. Mr. Magill joined the Company in
2003 as Vice President and Treasurer and subsequently was elected Executive Vice President in
February 2005. Prior to joining the Company, Mr. Magill was President and Chief Executive Officer
of Safeguard Business Systems, Inc., a manufacturer and distributor of business forms, for six
years. Prior to that time, Mr. Magill was Executive Vice President and CFO of KBK Capital
Corporation, a publicly traded finance company. Mr. Magill joined KBK Capital Corporation after
ten years with MCorp, a publicly traded bank holding company, where he held various positions
beginning as head of corporate finance and ending as CFO during MCorps bankruptcy.
David T. Scarborough, Vice President Apparel Division. The
Apparel Division was formed in November 2004 from the merger of the Company and Alstyle Apparel
(Alstyle). Mr. Scarborough has held the position of President of Alstyle since January 2005.
Previous to his January 2005 appointment as President of Alstyle, Mr. Scarborough was Alstyles
Vice President of Sales and Marketing from November 2003 to January 2005 and its eastern division
sales manager from July 2002 to November 2003. Prior to his experience at Alstyle, Mr. Scarborough
was a sales associate at Tee Jays Manufacturing, a custom vertical knit manufacturer, from February
2002 to July 2002, and the director of manufacturing and sourcing for Lexington Fabrics, Inc., a
custom vertical knit manufacturer, from August 2000 to January 2002.
Richard L. Travis, Jr. Vice President Finance, Chief Financial Officer and Secretary. Mr.
Travis joined the Company in November 2005 as Vice President Finance and Chief Financial Officer.
Previously, Mr. Travis was employed as the Chief Financial Officer and Senior Vice President of
Human Resources with Peerless Mfg. Co. in Dallas, Texas, a publicly traded manufacturer of
filtration/separation and environmental systems for the gas, petrochemical, refinery and power
markets from February 2002 to November 2005. Prior to his experience at Peerless, Mr. Travis
served as the Chief Financial Officer at TrinTel Communications, a provider of services to the
wireless industry, from January 1999 to December 2001, as President/Chief Operating and Chief
Financial Officer at CT Holdings, Inc., a publicly traded software development and incubation
company, from December 1996 to December 1999, and as Executive Vice President and Chief Financial
Officer for 10 years at Texwood Industries, Inc., a multi-state/country manufacturer of kitchen
cabinets and doors. His 10 years of public accounting experience
13
included positions as a Senior Audit Manager at Grant Thornton LLP as well as audit experience
with Laventhol & Horwath and Ernst & Whinney (now Ernst & Young). Mr. Travis is a registered
certified public accountant.
Keith S. Walters, Chairman of the Board, CEO and President. Mr. Walters joined the Company in
August 1997 as Vice President-Commercial Printing Operations and was appointed Vice Chairman of the
Board and Chief Executive Officer in November 1997. Prior to joining the Company, Mr. Walters was
with Atlas/Soundolier, a division of American Trading and Production Company, a manufacturer of
electronic sound and warning systems, from 1989 to 1997, in various capacities, most recently as
Vice President of Manufacturing. Prior to that time, Mr. Walters was with the Automotive Division
of United Technologies Corporation, an automotive parts and manufacturing company, for 15 years,
primarily in manufacturing and operations.
SECURITY OWNERSHIP
Security Ownership of the Board of Directors and Executive Officers
The following table sets forth information regarding the beneficial ownership of our Common
Stock as of April 30, 2007 for our Common Stock beneficially owned by each director, each of the
executive officers, and all directors and executive officers as a group:
The percentages of shares outstanding provided in the table are based on 25,585,451 voting
shares outstanding as of April 30, 2007. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally includes voting or investment power
with respect to securities. Unless otherwise indicated, each person or entity named in the table
has sole voting and investment power, or shares voting and investment power with his or her spouse,
with respect to all shares of stock listed as owned by that person. The number of shares shown does
not include the interest of certain persons in shares held by family members in their own right.
Shares issuable upon the exercise of options that are exercisable within 60 days of April 30, 2007
are considered outstanding for the purpose of calculating the percentage of outstanding shares of
our Common Stock held by the individual, but not for the purpose of calculating the percentage of
outstanding shares held by any other individual. In addition, the following shares have not been
pledged by the respective officers or directors, unless otherwise stated in the footnotes following
the table. The address of our directors, the director nominee and executive officers listed below
is c/o Ennis, Inc., 2441 Presidential Parkway, Midlothian, Texas 76065.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested (1) |
|
|
|
|
|
of |
|
|
|
|
|
|
Shares Owned |
|
Stock |
|
Option |
|
|
|
|
|
Outstanding |
Name/Group |
|
|
|
|
|
Direct |
|
Indirect |
|
Awards |
|
Awards |
|
Total |
|
Shares |
James B. Gardner |
|
|
(2 |
) |
|
|
17,125 |
|
|
|
|
|
|
|
666 |
|
|
|
32,500 |
|
|
|
50,291 |
|
|
|
* |
|
Ronald M. Graham |
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
625 |
|
|
|
56,200 |
|
|
|
59,825 |
|
|
|
* |
|
Harold W. Hartley |
|
|
(3 |
) |
|
|
3,375 |
|
|
|
26,975 |
|
|
|
666 |
|
|
|
32,500 |
|
|
|
63,516 |
|
|
|
* |
|
Godfrey M. Long, Jr. |
|
|
(4 |
) |
|
|
1,700 |
|
|
|
300 |
|
|
|
1,333 |
|
|
|
|
|
|
|
3,333 |
|
|
|
* |
|
Michael D. Magill |
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
2,208 |
|
|
|
9,450 |
|
|
|
14,658 |
|
|
|
* |
|
Thomas R. Price |
|
|
(5 |
) |
|
|
115,000 |
|
|
|
10,000 |
|
|
|
666 |
|
|
|
10,000 |
|
|
|
135,666 |
|
|
|
* |
|
Kenneth G. Pritchett |
|
|
(2 |
) |
|
|
36,250 |
|
|
|
|
|
|
|
666 |
|
|
|
6,250 |
|
|
|
43,166 |
|
|
|
* |
|
Alejandro Quiroz |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
666 |
|
|
|
8,750 |
|
|
|
9,416 |
|
|
|
* |
|
David T. Scarborough |
|
|
|
|
|
|
17,511 |
|
|
|
|
|
|
|
833 |
|
|
|
5,200 |
|
|
|
23,544 |
|
|
|
* |
|
James C. Taylor |
|
|
|
|
|
|
29,000 |
|
|
|
|
|
|
|
666 |
|
|
|
17,500 |
|
|
|
47,166 |
|
|
|
* |
|
Richard L. Travis, Jr. |
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
333 |
|
|
|
5,200 |
|
|
|
6,533 |
|
|
|
* |
|
Keith S. Walters |
|
|
|
|
|
|
88,287 |
|
|
|
|
|
|
|
3,306 |
|
|
|
269,563 |
|
|
|
361,156 |
|
|
|
1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and officers, as |
|
|
|
|
|
|
315,248 |
|
|
|
37,275 |
|
|
|
12,634 |
|
|
|
453,113 |
|
|
|
818,270 |
|
|
|
3.1 |
% |
a group (12 individuals) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Denotes ownership of less than 1%. |
|
(1) |
|
Amounts include those awards that would be vested within 60 days of the Record Date
(4/30/07). |
14
|
|
|
(2) |
|
Shares attributable to Mr. Gardner and Mr. Pritchett are held in trust for the benefit of
the named director. Each exercises sole voting rights with respect to such shares. |
|
(3) |
|
Indirect shares attributable to Mr. Hartley are held in trust. Mr. Hartley is one of two
trustees with shared voting discretion. |
|
(4) |
|
Indirect shares attributable to Mr. Long include 300 shares held by Mr. Longs wife. |
|
(5) |
|
Included in directly owned is 30,000 shares held in an irrevocable trust that Mr. Price
exercises sole voting control over. Mr. Price disclaims beneficial ownership of his
sister-in-laws portion of 20,000 shares jointly owned by her and Mr. Prices wife. Reflected
in the table is his wifes interest only. |
Security Ownership of Certain Beneficial Owners
The
following table gives information regarding all of the persons known by us to own, in their name or
beneficially 5% or more of our outstanding Common Stock as of April 30, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of |
|
|
|
|
|
|
|
|
Combined |
Name and Address |
|
|
|
Number |
|
Voting |
of Beneficial Owner |
|
Class |
|
of Shares |
|
Power |
Royce & Associates, LLC (1) |
|
Common |
|
|
1,729,400 |
|
|
|
6.76 |
% |
1414 Avenue of the Americas
New York, NY 10019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors, LP (2) |
|
Common |
|
|
1,580,782 |
|
|
|
6.18 |
% |
1299 Ocean Avenue
Santa Monica, CA 90401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclays Global Investors, NA (3) |
|
Common |
|
|
1,284,037 |
|
|
|
5.02 |
% |
45 Fremont Street
San Francisco, CA 94105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The information is based on a Schedule 13G filed pursuant to Rule 13(d)-1(b) with the
Securities and Exchange Commission by Royce & Associates, LLC. on January 19, 2007. |
|
(2) |
|
The information is based on a Schedule 13G filed pursuant to Rule 13(d)-1(b) with the
Securities and Exchange Commission by Dimensional Fund Advisors LP on February 09, 2007.
Dimensional Fund Advisors LP (formerly, Dimensional Fund Advisors Inc.) (Dimensional), an
investment advisor registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain other commingled group trusts
and separate accounts. These investment companies, trusts and accounts are the Funds. In
its role as investment advisor or manager, Dimensional possesses investment and/or voting
power over the securities of the Company described in this schedule that are owned by the
Funds, and may be deemed to be the beneficial owner of the shares of the Company held by the
Funds. However, all securities reported in this schedule are owned by the Funds. Dimensional
disclaims beneficial ownership of such securities. In addition, the filing of the Schedule
13G by Dimensional shall not be construed as an admission that the reporting person or any of
its affiliates is
the beneficial owner of any securities covered by the Schedule 13G for any other purposes than
Section 13(d) of the Securities Exchange Act of 1934. |
|
(3) |
|
The information is based on a Schedule 13G filed pursuant to Rule 13(d)-1(b) with the
Securities and Exchange Commission by Barclays Global Investors NA on January 23, 2007. The
amount indicated represents the aggregate shares beneficially owned by Barclays Global
Investors NA (855,312 shares) and Barclays Global Fund Advisors (428,725 shares) of the same
address. |
15
AUDIT-RELATED MATTERS
Audit Committee Report
The Audit Committee of the Board (the Audit Committee) is responsible for providing
independent, objective oversight of the Companys financial reporting functions and internal
control systems. The Audit Committee is currently composed of five non-employee directors. The
Board has determined that the members of the Audit Committee satisfy the requirements of the NYSE
as to independence, financial literacy and expertise. The Board has determined that at least one
member, James B. Gardner, is an audit committee financial expert as defined by the SEC. The
responsibilities of the Audit Committee are as set forth in the written charter adopted by the
Companys Board and last amended on January 13, 2004. One of the Audit Committees primary
responsibilities is to assist the Board in its oversight of the integrity of the Companys
financial statements. To assist it in fulfilling its oversight, the Committee regularly meets
separately with the internal auditor, the independent auditors, management and the Companys
outside counsel. The following report summarizes certain of the Committees activities in this
regard during the fiscal year ended February 28, 2007.
Independent Auditors and Internal Audit Matters
The Audit Committee has discussed with the Companys independent auditors their plan for the
audit of the Companys annual consolidated financial statements, including the independent
auditors evaluation of managements assessment of and the effectiveness of the Companys internal
control over financial reporting, as well as reviews of the Companys quarterly financial
statements. During fiscal 2007, the Audit Committee met regularly with the independent auditors,
with and without management present, to discuss the results of their audits and reviews, as well as
their evaluations of the Companys internal control over financial reporting and the overall
quality of the Companys accounting principles. In addition, the Audit Committee has received the
written disclosures and the letter from the independent auditors required by the Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and discussed with
the independent auditors the auditors independence from the Company and its management. In
determining that the auditors are independent, the Committee also considered whether the provision
of any of the non-audit services described in Independent Auditors Services and Fees section of
this proxy is compatible with maintaining their independence. The Audit Committee has also
appointed Grant Thornton LLP as the Companys independent auditors for fiscal year 2008, and the
Board concurred in its appointment.
The Audit Committee has reviewed and approved the annual internal audit plan and has met
regularly with the Companys internal auditor, with and without management present, to review and
discuss the internal audit reports, including reports relating to operational, financial and
compliance matters.
Financial Statements for the Fiscal Year Ended February 28, 2007
Management has the primary responsibility for the financial statements and the reporting
process, including the systems of internal and disclosure controls (including internal control over
financial reporting). The independent auditors are responsible for performing an independent audit
of the Companys consolidated financial statements and internal control over financial reporting
and expressing opinions on (i) the conformity of the consolidated financial statements with U.S.
generally accepted accounting principles and (ii) managements assessment of and the effectiveness
of the Companys internal control over financial reporting.
In this context, the Audit Committee has met and held discussions with management and the
independent auditors with respect to the Companys audited financial statements for the fiscal year
ended February 28, 2007. Management represented to the Audit Committee that the Companys
consolidated financial statements were prepared in accordance with U.S. generally accepted
accounting principles.
In connection with its review of the Companys year-end financial statements, the Audit
Committee has reviewed and discussed with management and the independent auditors the consolidated
financial statements, managements assessment of the effectiveness of the Companys internal
control over financial reporting and the independent auditors evaluation of managements
assessment of and the effectiveness of the Companys internal control over financial reporting.
The Audit Committee also discussed with the independent auditors matters
16
required to be discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees), as amended, including the quality and acceptability of the Companys accounting
policies, financial reporting processes and controls.
In performing its functions, the Audit Committee acts only in an oversight capacity and
necessarily relies on the work and assurances of the Companys management and independent auditors,
which, in their reports, express opinions on the conformity of the Companys annual financial
statements with U.S. generally accepted accounting principles and managements assessment of and
the effectiveness of the Companys internal control over financial reporting. In reliance on the
reviews and discussions referred to in this Report and in light of its role and responsibilities,
the Audit Committee recommended to the Board of Directors, and the Board approved, that the audited
financial statements of the Company be included in the Companys Annual Report on Form 10-K for the
fiscal year ended February 28, 2007 for filing with the SEC.
THE ENNIS, INC. AUDIT COMMITTEE
James B. Gardner, Chairman
Harold Hartley
Godfrey M. Long, Jr.
Thomas R. Price
Kenneth G. Pritchett
Policy Regarding Pre-Approval of Services Provided by the Independent Auditors
The Audit Committee pre-approves all audit and permissible non-audit services provided by the
independent registered public accounting firm. These services may include audit services,
audit-related services and tax services and may include, to a very limited extent, specifically
designated non-audit services, which in the opinion of the Audit Committee, will not impair the
independence of the registered public accounting firm. Pre-approval is generally provided for up
to one year, and any pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent registered public accounting firm
and management are required to periodically report to the Audit Committee regarding the extent of
services provided by the independent registered public accounting firm in accordance with this
pre-approval, and the fees for the services performed to date. In addition, the Audit Committee
may, as required, also pre-approve particular services on a case-by-case basis.
Independent Auditors Services and Fees
Grant Thornton LLP served as our independent registered public accounting firm during our
fiscal years ended February 28, 2007 and 2006. For the fiscal year ended February 28, 2007 and
2006, we were billed the following fees by Grant Thornton LLP.
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007 |
|
Fiscal 2006 |
Audit Fees (1)
|
|
|
$819,286 |
|
|
|
$846,348 |
|
Audit-Related Fees (2)
|
|
|
|
|
|
|
|
Tax Fees (3)
|
|
|
54,014 |
|
|
|
72,888 |
|
All Other Fees (4)
|
|
|
750 |
|
|
|
2,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$874,050 |
|
|
|
$921,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Aggregate fees for professional services billed for the audit of the Companys consolidated
financial statements and review of the interim consolidated financial statements included in
quarterly reports and services that are normally provided by the independent registered public
accounting firm in conjunction with statutory and regulatory filings or engagements. |
|
(2) |
|
Aggregate fees billed for assurance and related services that are reasonably related to the
performance of the audit or review of the Companys consolidated financial statements and are
not reported under Audit Fees. Their services include accounting consultations in
connection with acquisitions, attest services that are not required by statute or regulations. |
|
(3) |
|
Fees for tax services, tax advice, state, federal and international tax consultation. |
|
(4) |
|
Fees for information services. |
The Audit Committee has concluded that the provision of the non-audit services listed
above is compatible with maintaining the independence of Grant Thornton LLP. During the year,
approximately $27,934, or 51% of the total fiscal year 2007 non-audit fees were approved by the
Audit Committee pursuant to their pre-approval policy.
17
COMPENSATION
Director Compensation
The Company compensates its non-employee directors using a mix of compensation, including: an
annual cash retainer, meeting fees and committee chair fees and stock option and restricted stock
grants. Directors who are Company employees receive no additional compensation for serving on the
Board.
Cash Compensation
All non-employee directors receive $18,000 annual cash compensation (the retainer) and $2,000
per Board meeting fee. All retainers are paid monthly and meeting fees are paid as incurred.
Non-employee directors serving in specified committee positions also receive the following
additional cash compensation.
|
|
|
$6,000 Chair of the Audit Committee |
|
|
|
|
$6,000 Chair of the Compensation Committee |
|
|
|
|
$6,000 Chair of the Nominating and Corporate Governance Committee |
|
|
|
|
$1,500 All other Committee members per meeting fee |
Equity Compensation
In addition to cash compensation, all non-employee directors receive annual stock grants,
which can take the form of stock options or restricted stock units. Stock option and restricted
stock unit grants vest ratably over four years and three years, respectively. Options are granted
with an exercise price equal to the fair market value of the Companys stock on the date of grant.
In addition, new Board members, upon their initial election, receive either a grant of stock
options or restricted stock. During fiscal year 2007, each member of the Board received a grant of
2,000 restricted stock units. Mr. Long received an initial grant of 4,000 restricted stock units,
upon his election to the Board.
The table below sets forth the information regarding compensation earned by the Companys
non-employee directors during the year ended February 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value |
|
|
|
|
|
|
Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
|
|
|
|
Earned |
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Nonqualified |
|
|
|
|
|
|
or Paid |
|
Stock |
|
Option |
|
Incentive |
|
Deferred |
|
|
|
|
|
|
in Cash |
|
Awards |
|
Awards |
|
Plan |
|
Compensation |
|
All Other |
|
|
Directors Name |
|
($) |
|
($) (3) (4) |
|
($) (5) |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
James B. Gardner |
|
$ |
42,500 |
|
|
$ |
8,753 |
|
|
$ |
9,147 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
60,400 |
|
Harold W. Hartley |
|
$ |
38,000 |
|
|
$ |
8,753 |
|
|
$ |
9,147 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
55,900 |
|
Godfrey Long, Jr. (1) |
|
$ |
19,000 |
|
|
$ |
17,506 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
36,506 |
|
Robert L. Mitchell (2) |
|
$ |
10,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
10,000 |
|
Thomas R. Price |
|
$ |
36,500 |
|
|
$ |
8,753 |
|
|
$ |
9,147 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
54,400 |
|
Kenneth G. Pritchett |
|
$ |
44,000 |
|
|
$ |
8,753 |
|
|
$ |
9,147 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
61,900 |
|
Alejandro Quiroz |
|
$ |
30,500 |
|
|
$ |
8,753 |
|
|
$ |
9,182 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
48,435 |
|
James C. Taylor |
|
$ |
41,000 |
|
|
$ |
8,753 |
|
|
$ |
9,147 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
58,900 |
|
|
|
|
(1) |
|
Mr. Longs term as director began on June 29, 2006. |
|
(2) |
|
Mr. Mitchells term as director ended on June 29, 2006. |
|
(3) |
|
The dollar amount recognized for financial statement reporting purposes for our fiscal year
ended February 28, 2007, in accordance with Statement of Financial Accounting Standards No.
123 (revised 2004), Share-Based Payment (FAS 123R). The assumptions used to calculate these
values are set forth in Note 8 to our consolidated financial statements, which
are included in our Annual Report on Form 10-K for the year ended February 28, 2007. Listed
below are the unvested restricted shares and unexercised stock options as of February 28, 2007. |
18
|
|
|
(4) |
|
Presented below are the grant date fair value of each stock award granted in fiscal year
2007 (computed in accordance with FAS 123R) and the aggregate number of stock awards
outstanding on February 28, 2007. There were no option awards granted during fiscal year
2007. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted |
|
Grant |
|
Total Stock |
|
Total Option |
|
|
Date of |
|
Stock Units |
|
Date Fair |
|
Awards |
|
Awards |
Directors Name |
|
Grant |
|
Awarded |
|
Value |
|
Outstanding |
|
Outstanding |
James B. Gardner |
|
|
6/29/2006 |
|
|
|
2,000 |
|
|
$ |
39,280 |
|
|
|
2,000 |
|
|
|
40,000 |
|
Harold W. Hartley |
|
|
6/29/2006 |
|
|
|
2,000 |
|
|
$ |
39,280 |
|
|
|
2,000 |
|
|
|
40,000 |
|
Godfrey Long, Jr. |
|
|
6/29/2006 |
|
|
|
4,000 |
|
|
$ |
78,560 |
|
|
|
4,000 |
|
|
|
|
|
Thomas R. Price |
|
|
6/29/2006 |
|
|
|
2,000 |
|
|
$ |
39,280 |
|
|
|
2,000 |
|
|
|
17,500 |
|
Kenneth G. Pritchett |
|
|
6/29/2006 |
|
|
|
2,000 |
|
|
$ |
39,280 |
|
|
|
2,000 |
|
|
|
13,750 |
|
Alejandro Quiroz |
|
|
6/29/2006 |
|
|
|
2,000 |
|
|
$ |
39,280 |
|
|
|
2,000 |
|
|
|
20,000 |
|
James C. Taylor |
|
|
6/29/2006 |
|
|
|
2,000 |
|
|
$ |
39,280 |
|
|
|
2,000 |
|
|
|
25,000 |
|
|
|
|
(5) |
|
The dollar amount recognized for financial statement reporting purposes for our fiscal year
ended February 28, 2007, in accordance with FAS 123R. The assumptions used to calculate these
values are set forth in Note 8 to our consolidated financial statements, which are included in
our Annual Report on Form 10-K for the year ended February 28, 2007. |
Executive Compensation
Compensation Discussion and Analysis
The following section describes our compensation structure and programs for our executive
officers, including our named executive officers. The discussion primarily focuses on the
compensation elements and decisions during our fiscal year ended February 28, 2007. We address why
we believe the elements of our program are right for our Company and our shareholders as we explain
how compensation is determined.
Ennis currently has five named executive officers. They have the broadest job
responsibilities and policy authority in the Company. They are held accountable for the Companys
performance and for maintaining a culture of strong ethics and integrity. The details of
compensation for our CEO, CFO and three other named executive officers can be found in the tables
within this section.
Overview
Who is responsible for determining the compensation of executive officers?
The Compensation Committee (the Committee) of our Board of Directors determines compensation
for all executive officers, including named executive officers. The Committee consists entirely of
independent directors who are determined by the Nominating and Corporate Governance Committee of
the Board of Directors. The committee reviews the performance of the Company, assesses the
performance of the individuals, and confers with an independent consultant from
PricewaterhouseCoopers, LLP about compensation for comparable executives within the manufacturing
industry and more specifically the printing and apparel industries.
The ability of the Committee members to judge performance effectively is enhanced by the
exposure they get to Ennis operations as members of our Board of Directors. The Board
participates in regular updates on our business priorities, strategies and results through
attendance at regularly scheduled Board meetings. The Committee has frequent interaction with and
open access to executive officers. This gives them considerable opportunity to ask questions and
assess the performance of individual executives and the Company.
The Committee has taken action where appropriate and possible, to preserve the deductibility
of compensation paid to the named executive officers in compliance with Internal Revenue Code
Section 162(m),
which requires, among other things, that executive compensation must qualify as
performance-based compensation to qualify for and preserve tax deductibility.
19
What are the objectives of our compensation program for executive officers and what is it
designed to reward?
The objective of the compensation program for our executive officers is to hold them
accountable for the financial and competitive performance of the Company and their individual
contributions toward successful Company results. The compensation program is based on the
following principles:
|
1. |
|
Pay for performance pay better than the market median for performance that is
superior to competitors. |
|
|
2. |
|
Provide rewards that motivate executives to think and act in the best interest of our
shareholders. |
The Committee judges performance based on three specific measures: revenue goals, operating
margin and return on capital. Additionally, the Committee considers and assesses the Companys
progress in key strategic areas such as new markets served and acquisitions and the executives
contribution in these key areas.
What are the elements of our executive compensation?
Our executive compensation consists of four basic elements:
|
1. |
|
Cash compensation, consisting of base salary and performance bonus. |
|
|
2. |
|
Long-term compensation awarded as equity, consisting generally of stock options and
restricted stock units. |
|
|
3. |
|
Basic Company benefits, consisting of standard benefits as offered to other employees,
including retirement benefits, health and life insurance. |
|
|
4. |
|
Perquisites, consisting of auto allowance, opportunity to defer cash compensation,
supplemental retirement contributions and company-paid supplemental life insurance. |
Why do we choose to pay each element and how do we decide how much to pay or include as
compensation?
We believe the combination of cash compensation and long-term equity compensation creates the
right balance between performance, reward, retention and promotion of shareholders interests.
The Committee determines the combination and amount of each of these elements when setting the
levels of our executives compensation. Executive compensation is reviewed annually at the first
quarterly Board meeting following the conclusion of our fiscal year. From time to time the
Committee may meet to consider any off cycle changes that it deems appropriate because of changes
in job responsibility or regulatory requirements.
The specifics of each element are as follows:
Cash Compensation
Cash compensation is a combination of base salary and performance bonus. Our objective is to
deliver total cash compensation that reflects the Companys performance as well as the executives
individual contribution to that performance. If the Company and individual perform better than
competitors, the goal is to deliver total cash compensation that is generally above the market
median. If performance is below expectation, the total cash compensation will be generally below
the market median.
Base Salary This is the least variable form of compensation intended to compensate
the executive officer for the job duties assigned. The Company generally pays base salaries
between the median and the 75th percentile of the market for officers performing
comparable jobs. The base salary and the percentile can vary depending on the individuals
qualifications, experience and performance and is at the Committees discretion.
The Committee estimates the target range for a job by gathering specific information about
base salaries for similar jobs in the relevant study category as specified by the Committee. The
relevant study category typically includes matching jobs at manufacturing companies within our
industry and other companies of a similar size. This
information is compiled and supplied to the Committee by an independent compensation
consultant. The Committee may or may not adjust base salaries based upon its analysis of study
data and performance.
20
Performance Bonuses This element is variable and depends upon the Companys
performance and the executive officers contribution toward that performance. The Committee has
full discretion to determine the participation in, and the allocation of, any developed bonus pool
for the named executive officers.
The Annual Performance Bonus Plan is designed to reward executives for the attainment of
Company performance measures. Each executive is assigned a percentage of base salary eligibility
for reaching targeted performance. A threshold is established at 95% of targeted performance
before a bonus is considered. Executives are eligible for up to 150% of their assigned target
percentage should targeted goals be reached or exceed 150%. These percentages are based upon the
Committees determination of level of responsibility. The current percentages of base salary
eligibility for the named executive officers are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum |
|
|
Threshold |
|
Target |
|
150% of Target |
CEO/President |
|
|
0 |
|
|
|
60 |
% |
|
|
90 |
% |
Executive Vice President |
|
|
0 |
|
|
|
40 |
% |
|
|
60 |
% |
Vice President Finance (CFO) |
|
|
0 |
|
|
|
40 |
% |
|
|
60 |
% |
Vice President Administration |
|
|
0 |
|
|
|
40 |
% |
|
|
60 |
% |
Vice President Apparel Division |
|
|
0 |
|
|
|
40 |
% |
|
|
60 |
% |
A bonus pool is generated based upon these percentages if predetermined goals are met in
the areas of profit, return on capital and sales. These goals are weighted by importance at 40%
profit, 40% return on capital and 20% sales growth. These goals are established and approved by
the Board at the beginning of the fiscal year based upon the approved business plan. The business
plan is presented to the Board after review by management to assure that the plan meets or exceeds
strategic objectives for the year.
When the year-end audited financials are available, the bonus pool is finalized by Management
and presented to the Committee. The Committee analyzes the performance of the executive officers
and the performance of the Company against the predetermined goals to determine the extent of bonus
to be awarded. The Committee arrives at its own conclusions as to the level of bonus awards. They
present the recommendations to the Board for discussion and approval. Only independent directors
vote on the final awards.
The Board also determines any discretionary bonus awards for the prior fiscal year period at
the April quarterly meeting. Discretionary bonuses are sometimes awarded to executives for
exceptional performance that was not anticipated by the business plan used in establishing the
annual performance goals. An example would be a successful acquisition of a business during the
previous year. Another could be the successful sale of a business during the year. The
independent directors have the sole authority in determining and awarding any discretionary bonus.
All bonuses awarded are performance based.
Equity Awards
Equity awards for our named executive officers have been granted from our 1998 and 2004
Long-Term Incentive Plans. There were no equity awards granted during this fiscal year. All
previously granted awards are disclosed in the Outstanding Equity
Awards at Fiscal Year End Table.
When granted, equity awards are meant to align the interests of named executive officers with
our shareholders, and to motivate and reward our executive officers to increase the shareholder
value of the Company over the long term. The 2004 Long-Term Incentive Plan, as approved by
shareholders, allocated 500,000 shares of stock to be available to management and non-employee
directors in the form of options (either incentive stock options or non-qualified stock options),
restricted stock grants, stock appreciation rights, restricted unit grants, phantom stock options
or other incentive awards. The Compensation Committee determines eligible employees, the
timing of options and award grants, the number of shares granted, vesting schedules, option
prices and duration and other terms of any stock options and other awards.
We also believe that long-term incentive awards are a key element in retaining key
individuals. The Committee believes it is important to retain a strong, capable executive team
that has aligned interests with the Companys shareholders. The type of equity awards granted
under the 1998 and 2004 Long-Term Incentive Plans include:
21
Incentive Stock Options Each stock option represents the right to purchase a
specified number of shares of our Common Stock at the set exercise price subject to the terms of an
option agreement. The exercise price is the fair market value of the Companys stock on the day
the Committee grants the option. As a result, any value that an executive receives from a stock
option is solely the result of increases in the value of the stock. Any increase in the value of
the stock benefits all our shareholders, which aligns the executive and shareholder interests.
These options vest ratably over four years at 25 percent per year. They have a term of ten years.
Non-Qualified Stock Options This type of option is similar to the Incentive Stock
Option and is typically used only when Incentive Stock Options are limited by the plan or IRS
limitations.
Restricted Stock Grants The Committee can also grant awards of restricted stock to
the executive officers. Any granted shares are typically granted with a restrictive vesting
schedule which renders the shares subject to substantial risk of forfeiture if or when an executive
terminates employment prior to vesting. The stock is granted at the fair market value of the
Companys stock on the day the Committee awards the grant. The recipient of a grant is entitled to
dividends on the shares beginning on the grant date.
There are additional methods of rendering stock value to recipients under the terms of the
shareholder approved Long-Term Incentive Plan including, stock appreciation rights, phantom stock
options and dividend equivalent rights. The Committee has determined that these methods will not
be used at this time.
Perquisites
The fourth basic element of compensation for the named executive officers are perquisites.
The named executive officers typically enjoy the same benefit as all salaried employees; however,
the Committee has determined that the named executive officers will receive an auto allowance as
follows:
|
|
|
Mr. Walters
|
|
$12,000 annually |
Mr. Travis
|
|
$ 8,000 annually |
Mr. Magill
|
|
$ 8,000 annually |
Mr. Graham
|
|
$ 8,000 annually |
Mr. Scarborough
|
|
$ 8,000 annually |
Other Benefits
Retirement Plans
All
named executive officers except Mr. Scarborough, Vice President Apparel Group,
participate in the Pension Plan For The Employees of Ennis, Inc. This is a Company funded defined
benefit plan which promises a certain benefit to the eligible named executive officers upon normal
retirement. Normal retirement is defined as the first day of the month of the latter of his
65th birthday or the fifth anniversary of participation if hired after age 60. The
pension plan provides for retirement benefits on a formula based on the average pay of the highest
five consecutive compensation years during active employment, integration of certain Social
Security benefits, years of service and reaching a normal retirement age of 65.
The Internal Revenue Code limits the maximum annual compensation covered by the plan. The
limit for 2007 is $225,000. This limitation as well as the limitation on highly compensated
participants in the Ennis 401(k),
significantly limits the retirement benefit for the named executive officers. This past year
the Board decided that a select number of executives, including the named executive officers, would
be granted a supplemental benefit under the Ennis Deferred Compensation Plan to make-up some of the
retirement benefit lost because of the imposed limitations. The named executive officers were
granted the following non-qualified deferred benefits during fiscal year 2007:
|
|
|
|
|
|
|
|
|
|
|
Supplemental Retirement |
|
Deferred 401(k) |
|
|
Grant |
|
Match |
Mr. Walters |
|
$ |
189,000 |
|
|
$ |
2,692 |
|
Mr. Travis |
|
$ |
56,250 |
|
|
$ |
5,254 |
|
Mr. Magill |
|
$ |
93,750 |
|
|
$ |
0 |
|
Mr. Graham |
|
$ |
56,250 |
|
|
$ |
1,038 |
|
Mr. Scarborough |
|
$ |
45,000 |
|
|
$ |
0 |
|
22
All the named executive officers were eligible to participate in the Ennis 401(k) Plan,
which is a qualified plan that allows all employees of the Company to save up to allowed limits on
a before tax basis. The named executive officers did not receive any matching Company
contributions under the qualified plan.
All named executive officers were eligible to defer cash compensation under the Ennis Deferred
Compensation Plan, which is a non-qualified plan that allows deferral of compensation until
retirement or termination. The amounts deferred by the named executive officers are indicated on
the following tables.
Additionally, Mr. Scarborough receives a housing allowance of $54,000 annually, which was
awarded at the time of his appointment and transfer to become the President of the Apparel Division
of the Company. He also receives the benefit of temporarily living in a Company leased residence
for which the value is imputed to him as income. This imputed value was $107,308 during the 2007
fiscal year.
The named executive officers receive an annual non-qualified match of 25% limited to $5,000
for savings in the Companys 401(k) Plan. The match would accumulate in the Companys
Non-qualified Deferred Compensation Plan.
The named executive officers are eligible for Company paid supplemental term life insurance at
the following benefit amounts:
|
|
|
|
|
Mr. Walters |
|
$ |
1,000,000 |
|
Mr. Travis |
|
$ |
500,000 |
|
Mr. Magill |
|
$ |
500,000 |
|
Mr. Graham |
|
$ |
500,000 |
|
Mr. Scarborough |
|
$ |
500,000 |
|
The Companys contribution paid for this benefit is imputed as income to the executive.
The named executive officers do not receive a tax gross up for any of these benefits.
Employment Agreements
The Committee has determined that it is in the best interests of the Company and its
shareholders to enter into employment agreements with each of the named executive officers. The
current agreements are for three-year terms beginning April 31, 2006 and can be extended on a
year-to-year basis. The employment contracts are referenced as exhibits to our Annual Report on
Form 10K. We entered into these agreements to ensure that the executives perform their roles for
an extended period of time with focus on annual and multiple year objectives.
The agreements establish the beginning base salary, eligibility for bonuses, benefits,
perquisites, as well as, certain non-compete, non-solicitation and confidentiality covenants that
protect the Company.
Compensation upon termination is outlined in the agreements and described in detail below. If
one of the named executive officers is terminated without cause or within two years after a change
of control, or if the executive terminates the agreement for good reason, as defined in the
agreement, then the executive would receive a multiple of current base salary and the prior years
bonus as set forth in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
With Cause |
|
Change of Control* |
|
|
(base salary + bonus) |
|
(base salary) |
|
(280G base + bonus) |
Mr. Walters |
|
|
2X |
|
|
|
1.0X |
|
|
|
2.99 X |
|
Mr. Travis |
|
|
1X |
|
|
|
.5X |
|
|
|
1.00 X |
|
Mr. Magill |
|
|
1X |
|
|
|
.5X |
|
|
|
1.00 X |
|
Mr. Graham |
|
|
1X |
|
|
|
.5X |
|
|
|
1.00 X |
|
Mr. Scarborough |
|
|
1X |
|
|
|
.5X |
|
|
|
1.00 X |
|
|
|
|
* |
|
Limited to the maximum amount of severance payment permitted to be deducted as compensation
expense under the provisions of Section 280G of the Internal Revenue Code. |
23
In addition to these cash severance amounts, the named executive officer would be
eligible for continuation of basic employee group benefits if terminated without cause, upon a
change of control triggering event or resigns for good reason and would also vest for all qualified
plan benefits and be eligible to receive either pay or reimbursement for employee costs and
expenses for outplacement services, as is customary and reasonable in the Dallas area for the
executives level of responsibility. The basic benefit continuation period is 12 months for Mr.
Walters and three months for all other named executive officers.
Definitions for Types of Termination Summarized from Employment Agreements.
Termination by the Company includes termination at death, total disability of 120 consecutive
days or more or retirement. There would be no severance payment due the executive for terminations
with respect to death or retirement. For payments required for our executive officers in the event
of disability, please see the tables on page 32 entitled Termination Due to Disability and
Termination Due to Death.
Termination for cause is defined to mean: (i) the willful and continued failure by the
executive to follow the reasonable instructions of the Board and which is not cured within 10 days
of written notice from the Company specifying such failure; (ii) the willful commission by the
executive of acts that are dishonest or inconsistent with local normal standards and is
demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise;
(iii) the commission by the executive of a felonious act; (iv) ongoing alcohol/drug addiction and
failure to successfully complete a recovery program; (v) intentional wrongful disclosure of
confidential information of the Company; (vi) intentional wrongful engagement in any competitive
activity; or (vii) gross neglect of his duties by the executive which is not cured within 10 days
of written notice specifying the failure, or in the event the failure is not curable within 10
days, the executive shall have a longer period of up to 30 days to cure the failure so long as he
is diligently pursuing a cure.
Termination without cause is defined as any termination of executives employment by
the Company for any reason other than those specified above.
Termination by executive. The executive shall be entitled to terminate his employment
(i) in the event of a change of control, (ii) for good reason defined as the executives
resignation within 90 days of the following:
|
(a) |
|
Without the express consent of executive, any duties assigned are materially
inconsistent with the executives position, duties and status with the Company as
contemplated by the employment agreement; |
|
|
(b) |
|
Any action by the Company which results in a material diminution in the position,
duties or status of the executive as contemplated by the employment agreement or any
transfer or proposed transfer of the executive for any extended period to a location
outside the area of the corporate office without the executives consent, except for
strategies reallocations of personnel reporting to the executive; |
|
|
(c) |
|
The base annual salary of the executive is reduced; or |
|
|
(d) |
|
The Company fails to materially comply with the employment agreement obligations. |
Severance Payment After Change of Control
If any of the named executive officers is terminated within 90 days prior to or within two
years after a change of control as defined by the employment agreements, the executive will be
entitled to a lump sum severance payment and immediate vesting of benefits and long-term incentive
awards and options. The value of these payments and benefits is set
forth in the Potential
Payments Upon Termination or Change in Control section.
Any change of control severance is limited to the maximum amount of severance payment as
defined in Section 280G of the Internal Revenue Code of 1986, as amended.
Discussion of Performance and Compensation Committee Actions for Fiscal Years 2007 and 2008
The Committee held a meeting on April 20, 2007 for the purpose of considering compensation for
the named executive officers of the Company. During this meeting, the members discussed and
considered each officers performance and relative contribution toward the performance of the
Company during the fiscal year. The
24
Committee also discussed the bonus pool generated for the
fiscal year and the performance factors that contributed to the pool. There were discussions about
the competitive positioning of the named executive officers base salaries as compared to the
survey information supplied by the Companys independent consultant, Pricewaterhouse Coopers, LLP.
After these considerations and factoring responsibility changes during the year, the Committee
recommended the following adjustments to base salaries to the Board effective on April 23, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From |
|
To |
|
% |
CEO, President |
|
Mr. Walters |
|
$ |
750,000 |
|
|
$ |
788,000 |
|
|
|
5.1 |
% |
Vice President Finance |
|
Mr. Travis |
|
$ |
250,000 |
|
|
$ |
325,000 |
|
|
|
30.0 |
% |
Executive Vice President |
|
Mr. Magill |
|
$ |
400,000 |
|
|
$ |
420,000 |
|
|
|
5.0 |
% |
Vice President Administrative |
|
Mr. Graham |
|
$ |
240,000 |
|
|
$ |
250,000 |
|
|
|
4.2 |
% |
Vice President Apparel |
|
Mr. Scarborough |
|
$ |
342,000 |
|
|
$ |
370,000 |
|
|
|
8.2 |
% |
Mr. Travis base salary increase was both performance-based and an adjustment to bring
his base more in line with competitive salaries for a CFO in similar sized companies as indicated
by the available data.
In addition to these base salary adjustments, it was determined that the following incentive
payments should be awarded to the named executive officers fiscal year 2007 performance.
|
|
|
|
|
|
|
CEO, President |
|
Mr. Walters |
|
$ |
513,000 |
|
Vice President Finance |
|
Mr. Travis |
|
$ |
110,000 |
|
Executive Vice President |
|
Mr. Magill |
|
$ |
175,000 |
|
Vice President Administration |
|
Mr. Graham |
|
$ |
95,000 |
|
Vice President Apparel |
|
Mr. Scarborough |
|
$ |
175,000 |
|
The Company reached or exceeded its planned targets for sales, profits and return on
capital for the fiscal year. The incentive payments awarded by the Board are consistent with the
level of performance the Company achieved.
The Committee and Board also awarded Restricted Stock grants under the Ennis Long-Term
Incentive Plan to the named executive officers in the amounts listed below. These grants were made
at the closing price on the date of grant, April 20, 2007. The shares will vest equally at 33 1/3%
each year for the next three years. These grants will be reported in the next fiscal year report.
|
|
|
Mr. Walters
|
|
14,400 shares |
Mr. Travis
|
|
6,000 shares |
Mr. Magill
|
|
7,000 shares |
Mr. Graham
|
|
4,200 shares |
Mr. Scarborough
|
|
6,000 shares |
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management this Compensation
Discussion and Analysis section of the Companys 2007 Proxy Statement. Based on its review and
discussions with management, the Compensation Committee recommended to the Board of Directors that
the Compensation Discussion and Analysis be included in the Companys Proxy Statement for 2007 and
its Annual Report on Form 10-K for the fiscal year ended February 28, 2007.
THE ENNIS, INC. COMPENSATION COMMITTEE
Kenneth Pritchett, Chairman
James B. Gardner
James C. Taylor
25
Summary Compensation Table
The following table presents fiscal year end 2007 compensation information regarding the
Companys Chief Executive Officer, Chief Financial Officer and the three remaining most highly paid
executive officers during the year ended February 28, 2007, collectively, the named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Deferred |
|
All |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Plan |
|
Compensation |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
|
Name and Principal Position |
|
Year |
|
Salary ($) |
|
Bonus |
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
Total |
Keith S. Walters |
|
|
2007 |
|
|
$ |
713,461 |
|
|
$ |
|
|
|
$ |
65,108 |
|
|
$ |
616 |
|
|
$ |
513,000 |
|
|
$ |
189,148 |
|
|
$ |
205,612 |
|
|
$ |
1,686,945 |
|
Chairman of the Board,
President and Chief
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Travis, Jr. |
|
|
2007 |
|
|
$ |
236,538 |
|
|
$ |
|
|
|
$ |
6,563 |
|
|
$ |
|
|
|
$ |
110,000 |
|
|
$ |
15,915 |
|
|
$ |
70,886 |
|
|
$ |
439,902 |
|
Vice President-Finance,
Chief Financial Officer
and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael D. Magill |
|
|
2007 |
|
|
$ |
380,769 |
|
|
$ |
|
|
|
$ |
43,476 |
|
|
$ |
7,742 |
|
|
$ |
175,000 |
|
|
$ |
31,272 |
|
|
$ |
102,967 |
|
|
$ |
741,226 |
|
Executive Vice President
and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald M. Graham |
|
|
2007 |
|
|
$ |
228,462 |
|
|
$ |
|
|
|
$ |
12,306 |
|
|
$ |
123 |
|
|
$ |
95,000 |
|
|
$ |
46,931 |
|
|
$ |
64,955 |
|
|
$ |
447,777 |
|
Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Scarborough |
|
|
2007 |
|
|
$ |
354,461 |
|
|
$ |
|
|
|
$ |
16,408 |
|
|
$ |
|
|
|
$ |
175,000 |
|
|
$ |
6,823 |
|
|
$ |
213,641 |
|
|
$ |
766,333 |
|
Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The dollar amount recognized for financial statement reporting purposes for our fiscal year
ended February 28, 2007, in accordance with FAS 123R. The assumptions used to calculate these
values are set forth in Note 8 to our consolidated financial statements, which are included in
our Annual Report on Form 10-K for the year ended February 28, 2007. |
|
(2) |
|
The dollar amount recognized for financial statement reporting purposes for our fiscal year
ended February 28, 2007, in accordance with FAS 123R. The assumptions used to calculate these
values are set forth in Note 8 to our consolidated financial Statements, which are included in
our Annual Report on Form 10-K for the year ended February 28, 2007. |
|
(3) |
|
The amounts awarded under the Companys Annual Performance Bonus Plan for the accomplishment
of pre-set performance goals for the fiscal year ended February 28, 2007. The Company
exceeded predetermined performance goals for profit, return on capital and sales. The
incentive awards reflect this performance and awards are at or slightly above the named
executive officers target award levels. |
|
(4) |
|
The actuarial increase in the present value of the named executive officers benefits under
the Companys pension plan using the actuarial process specified by the pension plan. For
named executive officers who leave and have not completed five years vesting service, amounts
assume vesting in all cases and retirement at age of 65. Mr. Scarborough is not a participant
in the Companys Pension Plan. The earnings on Company contributions in the Deferred
Compensation Plan are reflected in the column. The Company contributions are invested in an
array of mutual funds held in a Rabbi Trust. The investment returns are consistent with the
type of funds available for retirement funds and are similar to the funds available in the
Companys 401(k) Plan. Mr. Walters, also, has 20,000 share units of phantom stock in the
Company Deferred Compensation Plan. The amount in this column for Mr. Walters includes the
increase in value and dividends during this year. |
26
|
|
|
(5) |
|
For information regarding the amounts included in this column, please see All Other
Compensation Table below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Perquisites |
|
|
|
|
|
|
Contribution |
|
and Other |
|
|
|
|
|
|
to Benefit |
|
Personal |
|
|
|
|
|
|
Plans (a) |
|
Benefits (b) |
|
Other (c) |
|
Total |
Keith S. Walters |
|
$ |
191,692 |
|
|
$ |
11,500 |
|
|
$ |
2,420 |
|
|
$ |
205,612 |
|
Richard L. Travis,
Jr. |
|
$ |
61,504 |
|
|
$ |
7,667 |
|
|
$ |
1,715 |
|
|
$ |
70,886 |
|
Michael D. Magill |
|
$ |
93,750 |
|
|
$ |
7,667 |
|
|
$ |
1,550 |
|
|
$ |
102,967 |
|
Ronald M. Graham |
|
$ |
57,288 |
|
|
$ |
7,667 |
|
|
$ |
|
|
|
$ |
64,955 |
|
David T. Scarborough |
|
$ |
45,000 |
|
|
$ |
7,333 |
|
|
$ |
161,308 |
|
|
$ |
213,641 |
|
|
|
|
(a) |
|
The contributions made to the Ennis Deferred Compensation Plan for supplemental
retirement benefits. The amounts are awarded by the Compensation Committee on an annual
basis. The awards for this fiscal year were a percentage of the prior years base salary.
The percentages were: Mr. Walters, 27%; Mr. Travis, 25%; Mr. Magill, 25%; Mr. Graham,
25%; and Mr. Scarborough, 15%. The actual contributions for each of the named executives
were as follows: Mr. Walters, $189,000; Mr. Travis, $56,250; Mr. Magill, $93,750; Mr.
Graham, $56,250; and Mr. Scarborough, $45,000. In addition, each of the named executive
officers were eligible for an additional 25% match to any savings in the Companys 401(K)
Plan. The match contributions were: Mr. Walters, $2,692; Mr. Travis, $5,254; and Mr.
Graham, $1,038. |
|
(b) |
|
The amount received by the named executive officers for auto allowance. |
|
(c) |
|
The amount paid for supplemental executive life insurance premiums during this fiscal
year for Mr. Walters, Mr. Travis, and Mr. Magill. Additionally Mr. Scarboroughs amount
included a temporary housing allowance of $54,000 and the imputed value of living in a
Company leased residence in the amount of $107,308. |
Grants of Plan-Based Awards
There were no grants of plan based awards to the named executive officers during fiscal year
ended February 28, 2007.
27
Outstanding Equity Awards at Fiscal Year End
The following table provides information regarding stock options and restricted stock held by
the named executive officers as of February 28, 2007.
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Market |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
of |
|
Value of |
|
|
|
|
|
|
Number of |
|
Securities |
|
|
|
|
|
|
|
|
|
Shares or |
|
Shares or |
|
|
|
|
|
|
Securities |
|
Underlying |
|
|
|
|
|
|
|
|
|
Units of |
|
Units of |
|
|
|
|
|
|
Underlying |
|
Unexercised |
|
|
|
|
|
|
|
|
|
Stock Awards |
|
Stocks That |
|
|
Date of |
|
Unexercised |
|
Options |
|
Option |
|
Option |
|
That |
|
Have |
|
|
Option |
|
Options |
|
Unexcercisable |
|
Exercise |
|
Expiration |
|
Have Not |
|
Not |
Directors Name |
|
Grant |
|
Excercisable |
|
(1) |
|
Price |
|
Date |
|
Vested |
|
Vested (3) |
Keith S. Walters |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,614 |
|
|
$ |
170,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/10/1997 |
|
|
|
15,000 |
|
|
|
|
|
|
$ |
11.34 |
|
|
|
9/10/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
10/8/1998 |
|
|
|
81,000 |
|
|
|
|
|
|
$ |
10.06 |
|
|
|
10/8/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
4/21/1999 |
|
|
|
100,000 |
|
|
|
|
|
|
$ |
8.69 |
|
|
|
4/21/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2000 |
|
|
|
43,363 |
|
|
|
|
|
|
$ |
7.06 |
|
|
|
4/20/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
4/19/2001 |
|
|
|
25,000 |
|
|
|
|
|
|
$ |
7.90 |
|
|
|
4/19/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2006 |
|
|
|
5,200 |
|
|
|
|
|
|
$ |
19.69 |
|
|
|
2/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L.
Travis, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
667 |
|
|
$ |
17,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2006 |
|
|
|
5,200 |
|
|
|
|
|
|
$ |
19.69 |
|
|
|
2/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael D. Magill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,416 |
|
|
$ |
113,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/17/2004 |
|
|
|
3,425 |
|
|
|
10,275 |
|
|
$ |
15.64 |
|
|
|
6/17/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2006 |
|
|
|
2,600 |
|
|
|
|
|
|
$ |
19.69 |
|
|
|
2/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald M. Graham |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250 |
|
|
$ |
32,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/8/1998 |
|
|
|
16,000 |
|
|
|
|
|
|
$ |
10.06 |
|
|
|
10/8/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
4/21/1999 |
|
|
|
15,000 |
|
|
|
|
|
|
$ |
8.69 |
|
|
|
4/21/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
4/20/2000 |
|
|
|
15,000 |
|
|
|
|
|
|
$ |
7.06 |
|
|
|
4/20/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
4/19/2001 |
|
|
|
5,000 |
|
|
|
|
|
|
$ |
7.90 |
|
|
|
4/19/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2006 |
|
|
|
5,200 |
|
|
|
|
|
|
$ |
19.69 |
|
|
|
2/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Scarborough |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667 |
|
|
$ |
43,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2006 |
|
|
|
5,200 |
|
|
|
|
|
|
$ |
19.69 |
|
|
|
2/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The stock option award granted June 17, 2004 to Mr. Magill vests in equal amounts on each of June 17, 2007,
June 17, 2008 and June 17, 2009.
|
|
(2) |
|
The awards of restricted stock were all granted February 28, 2006 and vest in equal amounts on each of
February 27, 2008 and February 27, 2009.
|
|
(3) |
|
Calculated using the NYSE closing price of $25.80 per share of our Common Stock on February 27, 2007. |
28
Option Exercises and Stock Vested
The following table provides information as to each of the named executive officers
information on exercises of stock options and the vesting of restricted stock awards during fiscal
year ended February 28, 2007, including: (i) the number of shares of Common Stock underlying
options exercised during fiscal year ended February 28, 2007; (ii) the aggregate dollar value
realized upon the exercise of such options; (iii) the number of shares of our Common Stock received
from the vesting of awards of restricted stock during fiscal year ended February 28, 2007; and (iv)
the aggregate dollar value realized upon such vesting on February 28, 2007, which is the vesting
date of the restricted stock awards reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of Shares |
|
Value |
|
Number of Shares |
|
Value |
|
|
Acquired on |
|
Realized on |
|
Acquired on |
|
Realized on |
Name |
|
Exercise (#) |
|
Exercise ($) (1) |
|
Vesting (#) |
|
Vesting ($) (2) |
Keith S. Walters |
|
|
56,637 |
|
|
$ |
698,193 |
|
|
|
3,306 |
|
|
$ |
85,295 |
|
Richard L. Travis, Jr. |
|
|
|
|
|
$ |
|
|
|
|
333 |
|
|
$ |
8,591 |
|
Michael D. Magill |
|
|
|
|
|
$ |
|
|
|
|
2,208 |
|
|
$ |
56,966 |
|
Ronald M. Graham |
|
|
|
|
|
$ |
|
|
|
|
625 |
|
|
$ |
16,125 |
|
David T. Scarborough |
|
|
|
|
|
$ |
|
|
|
|
833 |
|
|
$ |
21,491 |
|
|
|
|
(1) |
|
The amount realized equals the difference between the fair market value of Common Stock on
the date of exercise and the exercise price, multiplied by the number of shares acquired on
exercise. |
|
(2) |
|
The amount realized is based on the market value of the stock at date of vesting. |
Pension Benefits
We have a noncontributory retirement plan that covers approximately 15% of our employees. The
plan provides for retirement benefits on a formula based on the average pay of the highest five
consecutive compensation years during active employment, integration of certain Social Security
benefits, length of service and a normal retirement age of sixty-five. All forms of remuneration,
including overtime, shift differentials and bonuses, are covered by the plan. However due to
restrictions imposed by the Internal Revenue Code, effective January 1, 2002, the maximum annual
compensation covered by the plan is limited to $205,000. Future years maximum can be increased
for inflation (for 2007, the maximum is $225,000). Prior to this date, the maximum annual
compensation covered by the plan was limited to $150,000 (indexed for inflation).
The following table shows the present value as of February 28, 2007, of the benefit of the
named executive officers under our qualified defined benefit pension plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Number of Years |
|
Present Value of |
|
Payments |
|
|
|
|
Credited |
|
Accumulated |
|
During |
Name |
|
Plan |
|
Service (2) |
|
Benefit (3) |
|
Fiscal 2007 |
Keith S. Walters |
|
Ennis, Inc. DB Pension Plan |
|
|
9.50 |
|
|
$ |
145,886 |
|
|
$ |
|
|
Richard L. Travis, Jr. |
|
Ennis, Inc. DB Pension Plan |
|
|
1.10 |
|
|
$ |
12,516 |
|
|
$ |
|
|
Michael D. Magill |
|
Ennis, Inc. DB Pension Plan |
|
|
3.20 |
|
|
$ |
55,184 |
|
|
$ |
|
|
Ronald M. Graham |
|
Ennis, Inc. DB Pension Plan |
|
|
9.00 |
|
|
$ |
157,652 |
|
|
$ |
|
|
David T. Scarborough (1) |
|
N/A |
|
|
0.00 |
|
|
$ |
|
|
|
$ |
|
|
|
|
|
(1) |
|
Mr. Scarborough is not eligible to participate in the Companys Pension Plan. He instead
is eligible to participate in the Companys 401(k) Defined Contribution Plan. |
|
(2) |
|
Credited service began on the date the named executive became eligible to participate in the
plan. Participation began on January 1 following the year of employment. Accordingly, each
of the named executives have been employed by Ennis for longer than the years of credited
service shown above. |
|
(3) |
|
The assumptions and valuation methods used to calculate the present value of the Accumulated
Pension Benefits shown are the same as those used by Ennis for financial reporting purposes
and are described in Note 11 to Ennis Annual Report on Form 10-K for the year ended February
28, 2007. |
29
Nonqualified Deferred Compensation in Last Fiscal Year
The following table shows the information about the contributions and earnings, if any,
credited to the accounts maintained by the named executive officers under nonqualified deferred
compensation agreements, any withdrawals or distributions from the accounts during fiscal year
2007, and the account balances on February 28, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exucutive |
|
Registrant |
|
Aggregate |
|
|
|
|
|
Aggregate |
|
|
Contribution |
|
Contribution |
|
Earning |
|
Aggregate |
|
Balance at |
|
|
in Fiscal |
|
in Fiscal |
|
in Fiscal |
|
Withdrawls/ |
|
Fabruary 28, |
|
|
Year 2007(1) |
|
Year 2007(2) |
|
Year 2007(3) |
|
Distribution |
|
2007(4) |
Keith S. Walters |
|
$ |
120,000 |
|
|
$ |
189,000 |
|
|
$ |
159,839 |
|
|
$ |
|
|
|
$ |
2,705,643 |
|
Richard L. Travis, Jr. |
|
$ |
24,415 |
|
|
$ |
56,250 |
|
|
$ |
3,399 |
|
|
$ |
|
|
|
$ |
94,389 |
|
Michael D. Magill |
|
$ |
|
|
|
$ |
93,750 |
|
|
$ |
9,901 |
|
|
$ |
|
|
|
$ |
167,262 |
|
Ronald M. Graham |
|
$ |
4,308 |
|
|
$ |
56,250 |
|
|
$ |
6,780 |
|
|
$ |
|
|
|
$ |
133,568 |
|
David T. Scarborough |
|
$ |
|
|
|
$ |
45,000 |
|
|
$ |
6,823 |
|
|
$ |
|
|
|
$ |
97,003 |
|
|
|
|
(1) |
|
The named executive officers are able to defer a percentage of their salary and bonus upon
voluntary elections made by them into the Ennis Deferred Compensation Plan. The amounts
indicated represent the portions so deferred by each named executive last fiscal year. The
amounts indicated have been included in the salary column of the Summary Compensation Table on
page 26. |
|
(2) |
|
Amounts represent contributions to be made by the Company for the 2007 fiscal year to the
Ennis Deferred Compensation Plan for Supplemental Retirement Benefits. The amounts are
awarded each year by the Compensation Committee. The awards this year were based on a
percentage of each named executives prior year base salary, and were as follows: Mr. Walters,
27%; Mr. Travis, 25%; Mr. Magill, 25%; Mr. Graham, 25%; and Mr. Scarborough, 15%. Amounts
indicated have been included in the All Other Compensation column of the Summary
Compensation Table on page 26. |
|
(3) |
|
Amounts represent earnings on Company contributions during the year on each named executives
deferred compensation account. Mr. Walters amount also includes $134,000 earned during the
year on his 20,000 shares of phantom stock. These earnings have been included in Change in
Pension Value and Non Qualified Deferred Compensation Earnings of the Summary Compensation
Table on page 26. |
|
(4) |
|
Includes quarterly payment made March 13, 2007 relating to fiscal year 2007. |
30
Potential Payments Upon Termination or Change in Control
The following tables summarize the estimated payments to be made under certain circumstances
to each named executive officer as more completely described in the Employment Agreements section
in the Compensation Disclosure and Analysis. For the purposes of the quantitative disclosure in
the following tables, and accordance with SEC regulations, we have assumed that the termination
took place on February 28, 2007.
The following table describes payments that would be required to each of our named executive
officers in the event of a Change in Control as defined by the Employment Agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHANGE IN CONTROL |
|
|
Base Salary |
|
Group |
|
|
|
|
|
|
|
|
|
Deferred |
|
|
|
|
and |
|
Benefit Plans |
|
Other |
|
Pension |
|
Compensation |
|
Equity |
|
|
Bonus (1) |
|
Continuation (2) |
|
Benefits (3) |
|
Benefits |
|
(4) |
|
Awards (5) |
Keith S. Walters |
|
$ |
4,437,134 |
|
|
$ |
12,042 |
|
|
$ |
20,000 |
|
|
$ |
145,886 |
|
|
$ |
2,705,643 |
|
|
$ |
4,665,315 |
|
Richard L. Travis, Jr. |
|
$ |
482,183 |
|
|
$ |
2,207 |
|
|
$ |
20,000 |
|
|
$ |
12,516 |
|
|
$ |
94,389 |
|
|
$ |
48,981 |
|
Michael D. Magill |
|
$ |
764,820 |
|
|
$ |
3,947 |
|
|
$ |
20,000 |
|
|
$ |
55,184 |
|
|
$ |
167,262 |
|
|
$ |
269,011 |
|
Ronald M. Graham |
|
$ |
498,031 |
|
|
$ |
2,492 |
|
|
$ |
20,000 |
|
|
$ |
157,652 |
|
|
$ |
133,568 |
|
|
$ |
943,072 |
|
David T. Scarborough |
|
$ |
761,278 |
|
|
$ |
2,372 |
|
|
$ |
20,000 |
|
|
$ |
|
|
|
$ |
97,003 |
|
|
$ |
74,781 |
|
|
|
|
(1) |
|
When termination is a result of change in control as defined in Employment Agreements and
qualifies for change in control, severance payment is equal to the lesser of 2.99 times Mr.
Walters Base Amount as defined in Section 280G of the Internal Revenue code of 1986, as
amended and a severance bonus equivalent to 2.99 times the bonus earned or paid for the
previous year. The maximum amount of severance payment is limited to the amount permitted to
be deducted as compensation expense by the Company and to be received by the Employee without
liability for the assessment of an excise tax. All other named executive officers would
receive amounts equal to 1 times the Base Amount as defined in Section 280G of the Internal
Revenue Code of 1986, as amended and a severance bonus equivalent to 1 times the bonus earned
or paid for the previous year. The maximum amount would have the same limitation as indicated
by the previous footnote. The 280G Base Amount is determined by averaging the last five
years or shorter period if not employed by the Company. All wages and salary, bonuses, fringe
benefits, pension benefits and other deferred compensation arising out of the employment
relationship are treated as compensation. Transfers of stock options and stock grants are
also treated as compensation payments. |
|
(2) |
|
Mr. Walters receives twelve months of continued group benefits. All other named executive
officers receive three months of continued group benefits. |
|
(3) |
|
All named executive officers would receive up to $20,000 toward outplacement services. |
|
(4) |
|
Aggregate account value as of February 28, 2007. The amounts shown in the Nonqualified
Deferred Compensation in Last Fiscal Year table on page 30 include the amounts shown in this
column. |
|
(5) |
|
Calculated as the (i) difference between the exercise price of all outstanding in-the-money
options and the closing price of our common stock as of February 28, 2007 ($25.80), multiplied
by the number of such options as of February 28, 2007 plus (ii) the outstanding stock grants
as of February 28, 2007 multiplied by the closing price of our common stock. |
The following table describes payments that would be required to each of our named
executive officers in the event of a Without Cause termination as defined by the Employment
Agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WITHOUT CAUSE |
|
|
Base Salary |
|
Group |
|
|
|
|
|
Deferred |
|
|
|
|
and |
|
Benefit Plans |
|
Other |
|
Compensation |
|
Equity |
|
|
Bonus (1) |
|
Continuation (2) |
|
Benefits (3) |
|
(4) |
|
Awards (5) |
Keith S. Walters |
|
$ |
2,900,000 |
|
|
$ |
12,042 |
|
|
$ |
20,000 |
|
|
$ |
2,705,643 |
|
|
$ |
4,665,315 |
|
Richard L. Travis, Jr. |
|
$ |
290,000 |
|
|
$ |
2,207 |
|
|
$ |
20,000 |
|
|
$ |
94,389 |
|
|
$ |
48,981 |
|
Michael D. Magill |
|
$ |
599,000 |
|
|
$ |
3,947 |
|
|
$ |
20,000 |
|
|
$ |
167,262 |
|
|
$ |
269,011 |
|
Ronald M. Graham |
|
$ |
300,000 |
|
|
$ |
2,492 |
|
|
$ |
20,000 |
|
|
$ |
133,568 |
|
|
$ |
943,072 |
|
David T. Scarborough |
|
$ |
502,000 |
|
|
$ |
2,372 |
|
|
$ |
20,000 |
|
|
$ |
97,003 |
|
|
$ |
74,781 |
|
|
|
|
(1) |
|
Amounts indicated in the above table are as of February 28, 2007. When a termination is
Without Cause as defined by the Employment Agreements, the severance amounts would be
calculated as follows: Mr. Walters, 2 times his fiscal year 2007 base salary and prior years
(fiscal year 2006) bonus; all other named executive officers, 1 times their fiscal year 2007
base salary and prior years (fiscal year 2006) bonus. If current salary and prior years
(fiscal year 2007) bonuses were |
31
|
|
|
|
|
used (i.e., amounts currently payable), the calculated amounts
would be as follows: Mr. Walters, $2,602,000; Mr. Travis, $435,000; Mr. Magill, $595,000; Mr.
Graham, $345,000; and Mr. Scarborough, $545,000. |
|
(2) |
|
Mr. Walters receives twelve months of continued group benefits. All other named executive
officers receive three months of continued group benefits. |
|
(3) |
|
All named executive officers would receive up to $20,000 toward outplacement services. |
|
(4) |
|
Aggregate account value as of February 28, 2007. The amounts shown in the Nonqualified
Deferred Compensation in Last Fiscal Year table on page 30 include the amounts shown in this
column. |
|
(5) |
|
Calculated as the (i) difference between the exercise price of all outstanding in-the-money
options and the closing price of our common stock as of February 28, 2007 ($25.80), multiplied
by the number of such options as of February 28, 2007 plus (ii) the outstanding stock grants
as of February 28, 2007 multiplied by the closing price of our common stock. |
The following table describes payments that would be required to each of our named
executive officers in the event of a With Cause termination, as defined by the Employment
Agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WITH CAUSE |
|
|
|
|
|
|
Base Salary |
|
Group |
|
|
|
|
|
Deferred |
|
|
|
|
and |
|
Benefit Plans |
|
Other |
|
Compensation |
|
Equity |
|
|
Bonus (1) |
|
Continuation |
|
Benefits |
|
(2) |
|
Awards (3) |
Keith S. Walters |
|
$ |
750,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
2,705,643 |
|
|
$ |
4,494,674 |
|
Richard L. Travis, Jr. |
|
$ |
125,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
94,389 |
|
|
$ |
31,772 |
|
Michael D. Magill |
|
$ |
200,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
167,262 |
|
|
$ |
50,684 |
|
Ronald M. Graham |
|
$ |
120,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
133,568 |
|
|
$ |
910,822 |
|
David T. Scarborough |
|
$ |
171,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
97,003 |
|
|
$ |
31,772 |
|
|
|
|
(1) |
|
The amounts indicated in the above table are as of February 28, 2007. When a termination
is With Cause as defined by the Employment Agreements, the severance amounts would be
calculated as follows: Mr. Walters would receive 1 times his fiscal year 2007 base salary; all
other named executive officers would receive -1/2 times their fiscal year 2007 base salary.
Amounts currently payable are as follows: Mr. Walters, $ 788,000; Mr. Travis, $162,500; Mr.
Magill, $210,000; Mr. Graham, $125,000; and Mr. Scarborough, $185,000. |
|
(2) |
|
Aggregate account value as of February 28, 2007. The amounts shown in the Nonqualified
Deferred Compensation in Last Fiscal Year table on page 30 include the amounts shown in this
column. |
|
(3) |
|
Calculated as the difference between the exercise price of all vested in-the-money options
and the closing price of our common stock as of February 28, 2007 ($25.80), multiplied by the
number of such options as of February 28, 2007 |
The following table describes payments that would be required to each of our named
executive officers in the event of a disability, or death termination as defined by the Employment
Agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION DUE TO DISABILITY |
|
TERMINATION DUE TO DEATH |
|
|
Compensation (1) |
|
Benefits (2) |
|
Benefits (3) |
Keith S. Walters |
|
$ |
788,000 |
|
|
$ |
480,000 |
|
|
$ |
1,250,000 |
|
Richard L. Travis, Jr. |
|
$ |
325,000 |
|
|
$ |
840,000 |
|
|
$ |
750,000 |
|
Michael D. Magill |
|
$ |
420,000 |
|
|
$ |
360,000 |
|
|
$ |
750,000 |
|
Ronald M. Graham |
|
$ |
250,000 |
|
|
$ |
360,000 |
|
|
$ |
250,000 |
|
David T. Scarborough |
|
$ |
370,000 |
|
|
$ |
1,560,000 |
|
|
$ |
250,000 |
|
|
|
|
(1) |
|
When termination is due to disability as determined by the Board, the compensation
amount is equal to twelve months salary. |
|
(2) |
|
Reflects monthly long term disability benefits of $5,000 until the age of 65. |
|
(3) |
|
All named executive officers benefits include basic life insurance benefits of
$250,000. Mr. Walters benefits include $1,000,000 non-qualified life insurance benefits and
Mr. Travis and Mr. Magill include $500,000 non-qualified life insurance benefits. |
32
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 a registered class of the Companys equity
securities, to file reports of ownership and changes in ownership of the Companys Common Stock
with the SEC and the NYSE, and to furnish the Company with copies of the forms they file. To the
Companys knowledge, based solely on a review of the copies of such reports furnished to it and
written representations of our officers and directors, during the year ended February 28, 2007, all
Section 16(a) reports applicable to its officers and directors were filed on a timely basis with
the following exceptions: (i) each of Mssrs. Gardner, Hartley, Long, Mitchell, and Quiroz
inadvertently filed one Form 4 late; (ii) each of Mssrs. Price, Pritchett and Taylor filed one Form
4 and one Amendment to Form 4 late and (iii) Mr. Long filed an amendment to his initial Form 3
late.
OTHER MATTERS
The Board does not intend to present any other items of business other than those stated in
the Notice of Annual Meeting of Shareholders. If other matters are properly brought before the
meeting, the persons named as your proxies will vote the shares represented by it in accordance
with their best judgment. Discretionary authority to vote on other matters is included in the
proxy.
33
ENNIS, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS
June 28, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The under hereby appoints Keith S. Walters, Michael D. Magill and Richard L. Travis, Jr., or any
one or more of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all the shares of
Common Stock of Ennis, Inc. held of record by the undersigned at the close of business on April 30,
2007 at the Annual Meeting of Shareholders to be held June 28, 2007 or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE-PAID
ENVELOPE.
A. Election of Directors for Term Ending in 2010
1. The Board of Directors recommends a vote FOR the listed nominees.
|
|
|
|
|
|
|
For |
|
Withhold |
01 - Michael
J. Schaefer |
|
|
|
|
02 - Kenneth G. Pritchett |
|
|
|
|
03 - James C. Taylor |
|
|
|
|
B. Issues
The Board of Directors recommends a vote FOR the following proposal.
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Abstain |
2. In their discretion, the Proxies are
authorized to vote
upon such other business as may properly come
before the meeting.
|
|
|
|
|
|
|
The proxy when properly executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted for Proposal 1, and in the Proxies
discretion on matters arising under 2. This proxy confers discretionary authority upon the Proxies
to cumulate votes for the election of the nominees for which proxy authority is given if (a)
cumulative voting is in effect and (b) such Proxies determine that such action is necessary to
elect as many of managements nominees as possible.
C. Authorized Signatures Sign Here This section must be completed for your instruction to be
executed.
Please sign exactly as name appears above. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian, etc., please give
full title as such. If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by authorized person.
|
|
|
|
|
Signature 1 Please keep signature within the box
|
|
Signature 2 Please keep signature within the box
|
|
Date (mm/dd/yyyy) |
|
|
|
|
/ / |
|
|
|
|
|
34