SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A
Proxy
Statement Pursuant To Section 14(a)
of
the Securities Exchange Act of 1934
Filed by
the Registrant
T
Filed by
a Party other than the Registrant
£
Check the
appropriate box:
¨
Preliminary
Proxy Statement
¨
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
T
Definitive
Proxy Statement
¨
Definitive
Additional Materials
¨
Soliciting
Material Pursuant to § 240.14a-12
ICO,
INC.
|
(Name
of Registrant as Specified in its
Charter)
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Payment
of Filing Fee (Check the appropriate box):
T
No
fee required.
¨
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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________________________________________________________________________________
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(2)
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Aggregate
number of securities to which transaction
applies:
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_______________________________________________________________________________
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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________________________________________________________________________________
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(4)
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Proposed
maximum aggregate value of
transaction:
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________________________________________________________________________________
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________________________________________________________________________________
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¨
Fee
paid previously with preliminary materials.
¨
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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________________________________________________________________________________
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(2)
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Form,
Schedule or Registration Statement
No.:
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________________________________________________________________________________
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________________________________________________________________________________
1811
BERING DRIVE, SUITE 200
HOUSTON,
TEXAS 77057
NOTICE
OF 2009 ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MONDAY, MARCH 9, 2009
The 2009
Annual Meeting of Shareholders of ICO, Inc. (the “Company”) will be held at the
Doubletree Guest Suites Houston located at 5353 Westheimer Road, Houston, Texas
77056, on Monday, March 9, 2009, beginning at 10:00 a.m., Central Standard Time,
for the following purposes:
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1.
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To
elect three Class III Directors to serve on the Board of Directors of the
Company until the Company’s 2012 Annual Meeting of Shareholders, and until
their successors are elected and qualified or until their earlier
resignation or removal;
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2.
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To
consider and act upon a proposal to approve the amendment to the Second
Amended and Restated ICO, Inc. 2007 Equity Incentive Plan to increase the
number of shares of common stock issuable thereunder from 1,960,000 to
2,310,000 shares;
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3.
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To
consider and act upon a proposal to approve the amendment to the 2008
Equity Incentive Plan for Non-Employee Directors of ICO, Inc. to increase
the number of shares of common stock issuable thereunder from 410,000 to
560,000 shares;
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4.
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To
consider and act upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the Company’s independent registered public
accounting firm for the fiscal year ending September 30, 2009;
and
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5.
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To
transact such other business that may properly come before the annual
meeting and any adjournment or postponement
thereof.
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Only
holders of shares of common stock of record on the books of the Company at the
close of business on January 13, 2009 will be entitled to vote at the annual
meeting or any adjournment thereof. A list of shareholders entitled to vote at
the annual meeting will be available for inspection by any shareholder at the
offices of the Company during ordinary business hours for a period of at least
ten days prior to the annual meeting.
Whether
or not you intend to be present at the annual meeting, we urge you to complete,
date, sign and return the accompanying proxy at your earliest
convenience. A reply envelope is provided for this purpose, which
needs no postage if mailed in the United States. Alternatively,
certain shareholders may authorize their proxy or direct their vote by telephone
or the Internet as described in the enclosed Proxy Statement. See
“Voting of Proxies” on page 1 of the Proxy Statement for more
information.
IMPORTANT
NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE 2009
ANNUAL
MEETING
OF SHAREHOLDERS TO BE HELD ON MONDAY, MARCH 9, 2009
Under new
rules promulgated by the Securities and Exchange Commission, the Company is
providing access to its proxy materials both by sending you this full set of
proxy materials and by notifying you of the availability of its proxy materials
on the Internet. You may access the following information as of the
date the proxy materials are first sent our shareholders at
www.edocumentview.com/ICOC
,
which does not have “cookies” that identify visitors to the site:
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·
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Notice
of 2009 Annual Meeting of Shareholders to be held on Monday, March 9,
2009;
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·
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Proxy
Statement for 2009 Annual Meeting of Shareholders to be held on Monday,
March, 9, 2009; and
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·
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Annual
Report on Form 10-K for the fiscal year ended September 30,
2008.
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By Order
of the Board of Directors
/s/
Gregory T. Barmore
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/s/
A. John Knapp, Jr.
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Gregory
T. Barmore
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A.
John Knapp, Jr.
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Chairman
of the Board
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President
and Chief Executive
Officer
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Houston,
Texas
January
23, 2009
ICO,
INC.
1811
BERING DRIVE, SUITE 200
HOUSTON,
TEXAS 77057
(713)
351-4100
PROXY
STATEMENT
FOR
THE
2009
ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON MONDAY, MARCH 9, 2009
This
Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of ICO, Inc. (the “Company”) for use at the
2009 Annual Meeting of Shareholders to be held on Monday, March 9, 2009,
beginning at 10:00 a.m., Central Standard Time, at the Doubletree Guest Suites
Houston located at 5353 Westheimer Road, Houston, Texas 77056, and at any
adjournment(s) or postponement(s) of the annual meeting for the purposes set
forth in this Proxy Statement and the accompanying Notice of 2009 Annual Meeting
of Shareholders. The approximate date on which this Proxy Statement,
the Notice of 2009 Annual Meeting of Shareholders and the enclosed form of proxy
are first being sent to shareholders is January 28, 2009.
SOLICITATION,
REVOCABILITY AND VOTING OF PROXIES
Shares of
our common stock represented at the annual meeting by an executed and unrevoked
proxy in the form enclosed will be voted in accordance with the instructions
contained in such proxy. If no instructions are given on an executed
and returned form of proxy, the proxies intend to vote the shares represented by
the proxy in favor of each of the proposals to be presented to and voted upon by
the shareholders as set forth in this Proxy Statement.
Our Board
of Directors knows of no other matters to be presented at the annual
meeting. If any other matter should be presented at the annual
meeting upon which a vote may be properly taken, shares represented by an
executed and unrevoked proxy received by our Board of Directors may be voted
with respect to such other matters in accordance with the judgment of the
proxies. The proxy also confers on the proxies the discretionary
authority to vote with respect to any matter presented at the annual meeting for
which advance notice was not received by us in accordance with our Amended and
Restated Bylaws.
You may
submit your proxy by mail (in the enclosed postage-prepaid
envelope). In addition, certain shareholders may also submit their
proxies by telephone or the Internet, as described below. Please note
that the following procedures are not available to all
shareholders. The procedures applicable to your shares may differ
depending on whether you hold your shares of record, in the Company’s 401(k)
plan or in a brokerage account.
If your
shares (including restricted shares) are registered in your name with
Computershare Trust Company, N.A., our transfer agent and registrar
(“Computershare”), or your shares are held in the Company’s 401(k) plan, you may
authorize a proxy for or vote such shares by telephone or the
Internet:
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·
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Telephone:
You
may authorize a proxy for or vote your shares by telephone by calling
toll-free 1 (800) 652-VOTE (8683) within the United States, Canada and
Puerto Rico at any time on a touch tone telephone and following the
instructions provided on the recorded message. There is no
charge to you for the telephone
call.
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·
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Internet
:
You may
authorize a proxy for or vote your shares via the Internet by accessing
www.envisionreports.com
/ICOC
and following the
steps outlined on the secured
website.
|
If your
shares are registered in your name with Computershare or your shares are held in
the Company’s 401(k) plan, proxies submitted by telephone or the Internet must
be received by 1:00 a.m., Central Standard Time, on March 9,
2009.
Please
note that if your shares are held in a brokerage account, the availability of
voting by telephone or the Internet will depend upon the voting processes of
your broker. Therefore, you should either contact your broker
directly and/or follow the voting procedures in the materials you receive from
your broker. If your broker permits voting by telephone or the
Internet, the submission of your proxy by such means will not affect your right
to revoke such proxy as described below. If your shares are not held
in a brokerage account, you must submit your proxy by mail, telephone, the
Internet or vote in person at the annual meeting.
The
submission of your proxy by telephone or the Internet will not affect your right
to revoke such proxy as described below or to vote in person if you decide to
attend the annual meeting.
You may
revoke your proxy at any time before it is exercised by (i) submitting to our
Corporate Secretary a duly executed proxy bearing a later date, (ii) delivering
to our Corporate Secretary a written notice of revocation, (iii) submitting a
revised proxy by telephone or the Internet as described above or (iv) attending
the annual meeting and voting in person. All written notices of
revocation and other communications to the Company with respect to the
revocation of proxies should be sent to: ICO Inc., 1811 Bering Drive, Suite 200,
Houston, Texas 77057, Attention: Corporate Secretary. Any
shareholder whose shares are registered in his or her name with Computershare or
whose shares are held in a brokerage account must contact his or her broker or
Computershare, as applicable, to revoke his or her proxy.
Solicitation
of Proxies
The
solicitation of proxies on behalf of our Board of Directors may be conducted by
mail, in person or by telephone, by email or by facsimile
communication. Our officers and employees may solicit proxies, but
they will not receive additional compensation for such services. The
cost of preparing, assembling and mailing the proxy materials will be borne by
the Company. In addition, upon request, we will reimburse brokers,
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
forwarding proxy material to beneficial owners of our common
stock.
Annual
Report
Our
Annual Report to Shareholders on Form 10-K for the fiscal year ended September
30, 2008, which was filed with the Securities and Exchange Commission (“SEC”) on
December 10, 2008, accompanies but does not constitute part of this Proxy
Statement.
VOTING
SHARES AND VOTING RIGHTS
Only
holders of record of our common stock on the books of the Company at the close
of business on January 13, 2009 (the “Record Date”) are entitled to notice of
and to vote at the annual meeting and any adjournments or
postponements. As of January 13, 2009, there were 27,560,092 shares
of our common stock outstanding, which is the only outstanding class of voting
securities of the Company. A majority of the outstanding shares of
common stock must be represented at the annual meeting in person or by proxy in
order to constitute a quorum for the transaction of
business. Abstentions and shares held of record by a broker or
nominee that are voted on any matter are included in determining whether a
quorum exists. Each holder of common stock shall have one vote for
each share of common stock registered, on the Record Date, in such holder’s name
on the books of the Company.
Directors
will be elected by a plurality of the votes cast in person or by
proxy. Accordingly, the three Class III nominees receiving the
greatest number of votes cast by the holders of our common stock will be
elected. There will be no cumulative voting in the election of
directors. A broker non-vote or a withholding of authority to vote
with respect to one or more nominees for director will not have the effect of a
vote against such nominee or nominees. A broker non-vote occurs when
a broker or other nominee of shares does not have discretionary authority to
vote the shares and has not received voting instructions from its customer with
respect to a particular matter.
The
affirmative vote of the holders of a majority of the outstanding shares of our
common stock represented at the annual meeting is required to approve the
amendment to the Second Amended and Restated ICO, Inc. 2007 Equity Incentive
Plan (the “2007 Employee Plan”), the amendment to the 2008 Equity Incentive Plan
for Non-Employee Directors of ICO, Inc. (the “Director Plan”) and to ratify the
appointment of the independent registered public
accounting
firm. The
proposals to approve the amendment of the 2007 Employee Plan and the amendment
of the Director Plan are “non-discretionary” items, meaning that brokers who
hold shares in an account for customers who are the beneficial owners of such
shares may not give a proxy to vote those shares without specific instructions
from their customers. Abstentions and broker non-votes will not count
as votes for or against the proposals and will not be included in calculating
the number of votes necessary for the approval of such
matters.
Any other
matters that come before the annual meeting will be decided by the affirmative
vote of the holders of a majority of the outstanding shares of common stock
entitled to vote, and voted for or against the matter. Shares not
voted (whether by abstention, broker non-votes or otherwise) will have no effect
on such other matters.
If you
have any questions, or need any assistance in voting your shares, please call
our Corporate Secretary at (713) 351-4100.
PROPOSAL
1
ELECTION
OF DIRECTORS
Our Board
of Directors currently consists of nine directors. In accordance with
our Amended and Restated Bylaws, members of our Board of Directors are divided
into three classes: Class I, Class II and Class III. The
members of each class are elected for a term of office to expire at the third
succeeding annual meeting of shareholders following their
election. The term of office of the current Class III directors
expires at the annual meeting. The terms of the current Class I
and Class II directors expire at the annual meeting of shareholders in 2010
and 2011, respectively.
Our Board
of Directors has approved the nominations of Eric O. English, David E. K.
Frischkorn, Jr. and Max W. Kloesel to fill the three expiring Class III
director positions. Messrs. English, Frischkorn and Kloesel currently
serve as Class III directors. If elected at the annual meeting,
the three Class III director nominees will serve until the annual
meeting of shareholders in 2012.
If the
three nominees for Class III director are elected at the annual meeting, the
composition of our Board of Directors will be three Class I directors, three
Class II directors and three Class III directors.
The three
Class III director nominees receiving the greatest number of affirmative
votes duly cast at the annual meeting will be elected. Unless the
authority to vote for the election of directors is withheld as to one or more of
the nominees, all shares of common stock represented by proxy will be voted FOR
the election of the nominees. If the authority to vote for the
election of directors is withheld as to one or more, but not all of the
nominees, all shares of common stock represented by any such proxy will be voted
FOR the election of the nominee or nominees, as the case may be, as to whom such
authority is not withheld.
If a
nominee becomes unavailable to serve as a director for any reason before the
election, the shares represented by proxy will be voted for such other person,
if any, as may be designated by the Board of Directors. The Board of
Directors has no reason to believe that any nominee will be unavailable to serve
as a director. All of the nominees have consented to being named
herein and to serve if elected.
Any
director vacancy occurring after the election may be filled by the affirmative
vote of a majority of the remaining directors, even if less than a quorum of the
Board of Directors. A director elected to fill a vacancy will be
elected for the unexpired portion of the term of his predecessor in
office.
The Board
of Directors has determined that two of the three director nominees, Messrs.
English and Frischkorn, are “independent” as that term is defined by Rule 10A-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
by Rule 4200(a)(15) of the NASDAQ Marketplace Rules for issuers whose securities
are listed on the NASDAQ Stock Market.
The
following table sets forth the name, age and positions with the Company of each
nominee for election as a director of the Company:
Name
|
|
Age
|
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Position
with the Company
|
|
|
|
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Eric
O. English
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50
|
|
Class
III Director
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David
E. K. Frischkorn, Jr.
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57
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Class
III Director
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Max
W. Kloesel
|
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68
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|
Class
III Director and Senior Vice President of Bayshore Industrial (a division
of the
Company)
|
Eric O.
English
. Mr. English was first elected as a Class III director
in June 2004 and is the Chairman of the Governance and Nominating Committee and
a member of the Compensation Committee. Mr. English has been a
partner with Resolution Strategies LLP (formerly Resolution Counsel L.L.P.), a
boutique legal firm specializing in the resolution of significant business
disputes, since September 2003. Mr. English served as the Senior Vice
President of Legal Affairs for Hollywood Entertainment Corporation, a movie and
video game rental entertainment company, from August 1999 to August
2004.
David E. K. Frischkorn,
Jr.
Mr. Frischkorn was first elected as a Class III director
in March 2002 and is the Chairman of the Compensation Committee and a member of
the Audit Committee. Mr. Frischkorn has been the Vice
Chairman-Corporate Finance of Dahlman Rose & Company LLC, a New York-based
investment bank, since November 2004. Mr. Frischkorn was previously a
Managing Director of the Energy Group of Jefferies & Co., an investment
bank, from August 1996 to February 2003.
Max W.
Kloesel
. Mr. Kloesel was elected by the Board of Directors as
a Class III director in January 2008 to fill the vacancy created by the
resignation of Jon C. Biro, a Class III director who resigned from the Board on
January 11, 2008. Mr. Kloesel is a Senior Vice President of Bayshore
Industrial, a division of the Company. Mr. Kloesel has been with
Bayshore Industrial since August 1983. Prior to his employment with
Bayshore Industrial, Mr. Kloesel held positions at Southwest Chemical Services
(now a division of PolyOne Corporation) and The Dow Chemical
Company.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
“
FOR”
THE ELECTION OF EACH OF THE
NOMINEES
LISTED ABOVE TO THE BOARD OF DIRECTORS.
Continuing
Directors and Executive Officers
The
following table sets forth certain information with respect to the Company’s
Class I and Class II directors, whose terms of office do not expire at
the annual meeting, and certain executive officers of the Company and its
subsidiaries:
Name
|
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Age
|
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Position
with the Company
|
|
|
|
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Directors:
|
|
|
|
|
|
|
|
|
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Gregory
T. Barmore
|
|
67
|
|
Class
I Director and Chairman of the Board
|
Eugene
R. Allspach
|
|
61
|
|
Class
I Director
|
A.
John Knapp, Jr.
|
|
57
|
|
Class
I Director and President and Chief Executive Officer
|
Daniel
R. Gaubert
|
|
59
|
|
Class
II Director
|
Kumar
Shah
|
|
60
|
|
Class
II Director
|
Warren
W. Wilder
|
|
51
|
|
Class
II Director
|
|
|
|
|
|
Executive
Officers who are not also Directors:
|
|
Stephen
E. Barkmann
|
|
49
|
|
President
of the Company’s Bayshore Industrial division
|
Derek
R. Bristow
|
|
48
|
|
President
of the Company’s ICO Europe division
|
Donald
E. Parsons
|
|
38
|
|
President
of the Company’s ICO Polymers North America division
|
Charlotte
Fischer Ewart
|
|
41
|
|
General
Counsel and Secretary
|
Bradley
T. Leuschner
|
|
37
|
|
Chief
Financial Officer and
Treasurer
|
Eugene R.
Allspach
. Mr. Allspach was elected by the Board of Directors
as a Class I director in October 2008 to fill the vacancy created by the
resignation of Phillip D. Ashkettle, who resigned from the Board effective
August 27, 2008. Mr. Allspach is a member of the Compensation Committee and the
Governance and Nominating Committee. He has been the President of E. R. Allspach
& Associates, LLC, which provides consulting services for new business
development activities in the petrochemical industry, since 2003. He also is the
President of Energy Capital Group Holdings, LLC, a gasification business
development company, a post he has held since November 2007. In
addition, he serves as an advisory board member of Energy Capital Group
Holdings, LLC and The Plaza Group, a petrochemical marketing
company. He previously served as President and Chief Operating
Officer for Equistar Chemicals, L.P., a petrochemical company, from 1997 to
2002. Mr. Allspach has more than 35 years of experience in executive
management, business development, manufacturing, operations, marketing and
process engineering.
Gregory T.
Barmore
. Mr. Barmore has been Chairman of the Board since
October 2005, and has served on the Board of Directors since June
2004. He is a member of the Audit Committee and the Governance and
Nominating Committee. Mr. Barmore has served on the board of
directors of NovaStar Financial, Inc., a specialty finance company, since
1996. He also serves on the board of advisors of Thos. Moser
Cabinetmakers (a privately held corporation). In addition, Mr.
Barmore serves on the board of trustees of The Maine Maritime Museum and The
Maine Island Trail Association. Mr. Barmore retired in 1997 as
Chairman and Chief Executive Officer of General Electric Capital Mortgage
Corporation, a subsidiary of General Electric Capital Corporation, and held
numerous executive level positions within the General Electric family of
companies after commencing employment with GE in 1966.
A. John Knapp,
Jr.
Mr. Knapp has been President and Chief Executive Officer
of the Company since October 2005, and has served on the Company’s Board of
Directors since April 2001. He has also been President of Andover
Group, Inc., a Houston-based private real estate investment and development
company, for more than the past five years. In addition, he has acted
as a private investor in venture capital transactions for more than the past
five years. In October 2007, Mr. Knapp joined the board of directors
of Eagle Geophysical, Inc., a private company that provides geophysical
services, and currently serves as its Chairman.
Daniel R.
Gaubert
. Mr. Gaubert was first elected to the Board of
Directors in July 2006, and is Chairman of the Audit Committee. Mr.
Gaubert served as Chief Accounting Officer of Kellogg Brown and Root, an
engineering, construction and services company (“KBR”), from May 2003 until May
2005, and served as a consultant to KBR until June 2006. Prior to his
employment with KBR, Mr. Gaubert served in various capacities at McDermott
International Inc., an engineering and construction company, including as Chief
Financial Officer, from 1996 to 2001. Mr. Gaubert has over 30 years
of experience in operational and corporate accounting, tax, finance and audit
functions.
Kumar Shah
. Mr. Shah
was first elected to the Board of Directors in March 2008 and is a member of the
Audit Committee and the Governance and Nominating Committee. He is an
independent advisor and consultant to private equity firms in the evaluation of
mergers and acquisitions of specialty chemical companies. He also serves
on the board of directors of two privately-held companies: Premium
Molding, Inc., in the plastics blow molding business, and Theraject, Inc., in
the business of developing drug delivery devices. From 2005 to 2007, Mr.
Shah provided exclusive independent advisory services to Bear Stearns Merchant
Banking, an institutional private equity fund (now known as Irving Place
Capital). Mr. Shah was a Senior Vice President of Corporate and
Business Development for Noveon International Corporation (now a division
of Lubrizol), a producer of polymers and specialty additives, from 2001
to
2004. Mr.
Shah has over 28 years experience in management, strategic planning and business
development in the chemicals industry.
Warren W.
Wilder
. Mr. Wilder was first elected to the Board of Directors
in July 2006 and is a member of the Compensation Committee. He
currently serves as the Managing Director of Titan Chemicals Corp. Bhd., a
petrochemical company based in Kuala Lumpur, Malaysia. Prior to
joining Titan Chemicals Corp. Bhd. in July 2008, Mr. Wilder was Senior Vice
President – Olefins for Westlake Chemical Corporation, a petrochemical and
plastics company, from January 2000 to July 2008.
Executive
Officers Who Are Not Also Directors
Stephen E.
Barkmann
. Mr. Barkmann has been employed as the President of
Bayshore Industrial since March 1999, after joining Bayshore Industrial as
General Manager in June 1998. In these capacities, Mr. Barkmann has
had primary responsibility for the business operations and management of the
Company’s Bayshore Industrial division, located in La Porte,
Texas.
Derek R.
Bristow
. Mr. Bristow has been employed as President of the
Company’s ICO Europe division since May 2004. In this capacity, he
oversees the Company’s European division, which includes the Company’s French,
Italian, British and Dutch operations. In addition, Mr. Bristow has
also served as Managing Director of the Company’s Italian subsidiary, ICO
Polymers Italy S.r.l., since July 2003. Mr. Bristow previously served
as Marketing and Operations Manager of the Company’s New Zealand operating
subsidiary from August 1998 to July 2003.
Donald E. (“Eric”)
Parsons
. Mr. Parsons has been employed as President of the
Company’s ICO Polymers North America division (“IPNA”) since December
2004. In this capacity, he oversees the Company’s polymers processing
facilities and businesses located in Fontana, California; East Chicago, Indiana;
Allentown, Pennsylvania; Grand Junction, Tennessee; and China,
Texas. Mr. Parsons began his employment with IPNA in
1994. Most recently, he served as IPNA’s Senior Vice President of
Operations from October 2000 to December 2004, IPNA’s Eastern Regional Manager
from July 1999 to October 2000 and the Plant Manager of IPNA’s New Jersey
facility from December 1996 to July 1999.
Charlotte Fischer
Ewart
. Ms. Ewart
has been employed as General
Counsel of the Company since June 2001, and in addition, as the Company’s
Corporate Secretary since April 2002. Ms. Ewart served as Associate
General Counsel of the Company from August 1999 to June
2001.
Bradley T.
Leuschner
. Mr. Leuschner, a certified public accountant, has
been employed as the Chief Financial Officer and Treasurer of the Company since
January 2008, after serving as the Company’s Chief Accounting Officer since
April 2002. From April 1999 to April 2002, Mr. Leuschner served as
Senior Vice President and Controller of IPNA, after serving as Vice President
and Controller of IPNA since September 1996.
CORPORATE
GOVERNANCE AND COMMITTEES OF THE BOARD
Meetings
of the Board of Directors
During
the fiscal year ended September 30, 2008, the number of formal meetings of our
Board of Directors and its committees was as follows:
Board
of Directors/Committee
|
|
Number
of Formal Meetings
|
|
|
|
Board
of Directors
|
|
7
|
Audit
Committee
|
|
6
|
Compensation
Committee
|
|
3
|
Governance
and Nominating Committee
|
|
3
|
Each of
our committees also meets informally throughout the year and communicates via
telephone conferences or other electronic means. Each director
attended all meetings of the Board of Directors and meetings of the committees
on which he served, except that Messrs. Barmore, Kloesel and Shah each did not
attend one Board of Directors meeting and John F. Gibson (whose service on the
Board ended on March 11, 2008) did not attend two Board of Director
meetings. In addition, Mr. Shah did not attend one Governance and
Nominating Committee meeting. Other than the Chairman of the Board
and the Chief Executive Officer, directors were not required to attend our 2008
annual meeting of shareholders.
The
Chairman of the Board and the Chief Executive Officer plan to attend this year’s
annual meeting, and local directors are encouraged, but are not required, to
attend.
Committees
of the Board of Directors
Our Board
of Directors has established three standing committees: an Audit
Committee, a Compensation Committee and a Governance and Nominating
Committee
.
Each committee
is briefly described below:
Audit
Committee
. The primary purpose of our Audit Committee is to
provide independent and objective oversight with respect to the Company’s (i)
financial reports and other financial information provided to shareholders and
others, (ii) internal controls, (iii) audit, accounting and financial reporting
processes generally and (iv) various key ethics and legal compliance policies
and procedures. The Audit Committee recommends to the Board of
Directors the selection of our independent registered public accounting firm
after considering such firm’s independence and performance. The Audit
Committee also pre-approves auditing services and permitted non-auditing
services, including fees paid to the Company’s independent registered public
accounting firm. In addition, the Audit Committee reviews, in
conjunction with our internal auditors, the internal audit organization and
internal audit goals and plans of the Company. The Audit Committee
also discusses the findings and recommendations resulting from internal audits
and any recommendations regarding enhancements to our internal audit
functions.
Pursuant
to the written charter of the Audit Committee, the Audit Committee must consist
of at least three directors who meet the independence and experience
requirements of the NASDAQ Marketplace Rules. The members of the
Audit Committee, Messrs. Barmore, Frischkorn, Gaubert and Shah, with Mr. Gaubert
serving as Chairman, all satisfy the applicable independence requirements of the
Exchange Act and NASDAQ Marketplace Rules. Our Board of Directors has
also determined that Messrs. Barmore, Gaubert and Frischkorn each have the
requisite attributes of an “audit committee financial expert” as defined by SEC
regulations.
Compensation
Committee.
The Compensation Committee is responsible for making
recommendations to our Board of Directors with respect to the compensation of
the Board and the compensation, benefits and other employment-related matters
with regard to our Chief Executive Officer and our other executive
officers. The Compensation Committee has the authority to approve the
material terms of employment and severance agreements with the Company’s
executive officers, subject only to the requirement that the full Board of
Directors must approve any provisions relating to the Chief Executive Officer’s
compensation. The Compensation Committee is responsible for the
establishment of policies dealing with various compensation and employee benefit
matters. The Compensation Committee also administers the Company’s equity
incentive plans under which awards may be made to our employees, and has the
authority to make awards of stock options and restricted shares to our employees
under such plans.
Pursuant
to the written charter of the Compensation Committee, the Compensation Committee
must consist of at least three directors who meet the independence requirements
of the NASDAQ Marketplace Rules, federal securities laws and Section 162(m) of
the Internal Revenue Code of 1986, as amended. The members of the
Compensation Committee, Messrs. Allspach, English, Frischkorn and Wilder, with
Mr. Frischkorn serving as Chairman, all satisfy the applicable independence
requirements.
Governance and Nominating
Committee.
The Governance and Nominating Committee is responsible
for assisting our Board of Directors in identifying and evaluating qualified
candidates to serve as nominees for directors and recommending such candidates
to the Board, advising the Board about the appropriate composition of the Board
and its committees, and assisting the Board in developing, reviewing, and
implementing corporate governance practices.
Pursuant
to the written charter of the Governance and Nominating Committee, the
Governance and Nominating Committee must consist of at least three directors who
meet the independence requirements of the NASDAQ Marketplace Rules. The members
of the Governance and Nominating Committee, Messrs. Allspach, Barmore,
English and Shah, with Mr. English serving as Chairman, all satisfy the
applicable independence requirements of the Exchange Act and the NASDAQ
Marketplace Rules.
Committee
Charters
The Board
of Directors has adopted charters for each of the Audit Committee, Compensation
Committee and Governance and Nominating Committee, all of which charters are
available on our website at
www.icopolymers.com
. A
copy of
each of these charters may also be obtained at no charge by written request to
the Company at: ICO, Inc., 1811 Bering Drive, Suite 200, Houston,
Texas 77057, Attention: Corporate Secretary.
Director
Independence
During
its review of director independence, the Board of Directors considered
transactions and relationships between each of our directors and any member of
his immediate family and the Company and its subsidiaries and
affiliates. The Board also considered whether there were any
transactions or relationships between director and any member of their immediate
family (or any entity of which a director or an immediate family member is an
executive officer, general partner or significant equity holder) and members of
our senior management or their affiliates. The purpose of this review
was to determine whether any such relationships or transactions existed that
were inconsistent with a determination that each of the directors is
“independent” as defined by Rule 4200(a)(15) of the NASDAQ Marketplace
Rules.
As a
result of this review, our Board of Directors has determined that, except for A.
John Knapp, Jr. and Max W. Kloesel, all directors satisfy the independence
criteria of the NASDAQ Marketplace Rules. The Board has also
determined that none of these individuals has a material relationship with the
Company that would impair his independence from management or otherwise
compromise his ability to act as an independent director.
Messrs.
Kloesel and Knapp are not independent directors because of their employment as
Chief Executive Officer of the Company and Senior Vice President of Bayshore
Industrial, respectively.
Director
Nominees
The
Governance and Nominating Committee’s responsibilities include assisting our
Board of Directors by identifying individuals qualified to become Board members,
and recommending director nominees to the Board for election at the annual
meetings of shareholders or to fill vacancies. From time-to-time
throughout the year, candidates for non-employee director are recommended to the
Governance and Nominating Committee by multiple sources, including our
non-management directors, our Chief Executive Officer, our management and our
shareholders. The Governance and Nominating Committee evaluates all
candidates based on the same criteria, including, among other factors: the
person’s reputation, integrity and independence; the person’s skills and
business, government, or other professional acumen, bearing in mind the current
composition of the Board, and the current state of the Company and the industry
generally at the time of determination; the number of other public companies for
which the person serves as director; and the availability of the person’s time
and commitment to the Company. The current nominees for director,
Eric O. English, David E. K. Frischkorn, Jr. and Max W. Kloesel, are standing
members of the Board of Directors and were nominated by the Board at the
recommendation of the Governance and Nominating Committee. In the
case of each director nominee, the Governance and Nominating Committee took into
account, among other things, the director’s tenure as a member of the Board, and
attendance at, contributions to and participation in meetings of the Board and
its committees.
Shareholders
seeking to recommend director candidates for consideration by the Governance and
Nominating Committee may do so by writing to our Corporate Secretary, 1811
Bering Drive, Suite 200, Houston, Texas 77057, and providing the recommended
candidates’ names, biographical data and qualifications. The
Governance and Nominating Committee will consider all candidates submitted by
shareholders within the time period set forth specified below “Date for
Submission of Shareholder Proposals for 2010 Annual Meeting” on page
43.
Corporate
Governance Guidelines
Our Board
of Directors has adopted Corporate Governance Guidelines to promote effective
governance of the Company. The Corporate Governance Guidelines are
available on our website at
www.icopolymers.com
. A
copy of the Corporate Governance Guidelines may also be obtained at no charge by
written request to us at: ICO, Inc., 1811 Bering Drive, Suite 200, Houston,
Texas 77057, Attention: Corporate Secretary.
We have
adopted a Code of Business Ethics for all directors, officers and employees of
the Company and its subsidiaries. The Code of Business Ethics is
available on our website at
www.icopolymers.com
. Any
waiver or material amendments to the Code of Business Ethics will be posted on
our website, as required by the federal securities
laws. A
copy of
the Code of Business Ethics may also be obtained at no charge by writing to us
at: ICO, Inc., 1811 Bering Drive, Suite 200, Houston, Texas 77057,
Attention: Corporate Secretary.
Shareholder
Communications with the Board of Directors
We
encourage shareholder communications with our Board of Directors, its committees
and/or individual directors. Written communications may be made to
the Board, one of its committees and/or individual directors by delivering such
communications to the intended addressee, in care of our Corporate Secretary,
at: ICO, Inc., 1811 Bering Drive, Suite 200, Houston, Texas 77057.
Communications submitted by shareholders will be reviewed by the Company to
ensure they relate to the business of the Company. Communications determined not
to relate to the business of the Company, or which are frivolous, offensive or
otherwise inappropriate for consideration by the Board of Directors, will not be
forwarded to the Board.
DIRECTOR
COMPENSATION
Overview
of Director Compensation Program
We use a
combination of cash and equity incentive compensation to attract and retain
highly qualified individuals to serve as members of our Board of Directors.
Directors who are also employees of the Company do not receive any additional
compensation for their services on the Board. The Compensation
Committee periodically reviews non-employee director compensation and recommends
changes (if appropriate) to the full Board of Directors.
Directors’
Fees
Our
non-employee directors received the following cash compensation during the time
period from January 1, 2007 to December 31, 2007:
|
·
|
An
annual retainer in the amount of $20,000 paid
quarterly;
|
|
·
|
A
payment in the amount of $1,000 for attendance at each Board meeting;
and
|
|
·
|
A
payment in the amount of $1,000 for attendance at each formal committee
meeting.
|
In
addition, the Chairmen of the Audit, Compensation and Governance and Nominating
Committees each received an additional annual retainer in the amount of $5,000,
payable quarterly. The Chairman of the Board also received an
additional annual retainer in the amount of $10,000, payable quarterly, plus
$1,000 per diem for each day the Chairman spent out of town on Company business
and for which he did not receive a customary Board of Director meeting
fee.
Effective
January 1, 2008, the cash compensation received by our non-employee directors
was adjusted as follows:
|
·
|
An
annual retainer in the amount of $30,000 paid
quarterly;
|
|
·
|
A
payment in the amount of $1,500 for attendance at each Board meeting;
and
|
|
·
|
A
payment in the amount of $1,500 for attendance at each committee
meeting.
|
In
addition, effective as of January 1, 2008: the Chairman of the Audit
Committee receives an additional annual retainer in the amount of $20,000,
payable quarterly. The Chairmen of the Compensation Committee and the
Governance and Nominating Committee each receive an additional annual retainer
in the amount of $10,000, payable quarterly. The Chairman of the
Board receives an annual retainer in the amount of $25,000, payable
quarterly. The Chairman of the Board continues to receive an
additional $1,000 per diem for each day he spends out of town on Company
business and for which he does not receive a customary Board or committee
meeting fee.
Any
director who lives out of town from where a Board or committee meeting is held
receives reimbursement of his travel expenses to attend such
meetings.
Equity
Incentive Plan for Non-Employee Directors
Each of
our non-employee directors is a participant in the 2008 Equity Incentive Plan
for Non-Employee Directors of ICO, Inc. (the “Director Plan”). A copy
of the Director Plan (as proposed to be amended) is filed as Exhibit 10.2 to
this Proxy Statement. Under the Director Plan, our Board of
Directors, acting as the committee that administers the
Director
Plan, may award (i) stock options to purchase shares of our common stock and/or
(ii) restricted shares of our common stock to a director based upon his
achievement of certain performance and/or other measures.
Prior to
our 2008 annual meeting of shareholders, stock options were the only awards
available for issuance under the Director Plan. At the 2008 annual
meeting, our shareholders approved the amendment and restatement of the Director
Plan to, among other things, allow for the award of restricted shares of common
stock to our non-employee directors. In addition, the amendments
removed a provision from the Director Plan that had provided for “automatic”
annual stock option awards to non-employee directors on the first business day
after each annual meeting of our shareholders. As a result of the
amendment and restatement of the Director Plan, our Board of Directors adopted
an informal policy of providing “periodic” awards of restricted shares as equity
incentive compensation to each of our non-employee directors at or shortly after
the time the director is elected to the Board. The number of
restricted shares so awarded is generally equal to the number of restricted
shares having a “fair market value” (as defined in the Director Plan) on the
date of grant equal to $30,000 for every year of service remaining in the
director’s term as of the date of the director’s election. For
directors elected to a three-year term, therefore, the restricted share award
will have a value of $90,000. For directors elected to a term of less
than three years (including directors appointed by the Board between annual
meetings to fill a vacancy), the value and number of restricted shares will be
pro-rated. The vesting date for such restricted share awards is a
date estimated to be approximately one month prior to the date when the
director’s current term will expire. If a director resigns prior to
the end of his term or does not serve until the vesting date for any other
reason, the award will be forfeited, except in the case of death of the director
or other unusual circumstances as provided in the Director
Plan.
Shortly
after the election of our Class II directors at our 2008 annual meeting of
shareholders, the following periodic awards of restricted shares of common stock
were made on April 1, 2008 under the Director Plan, pursuant to the
above-described informal policy: (i) Messrs. Barmore and McCord, each a Class I
director having two years remaining in his term of office, were awarded 8,600
shares having a fair market value of $60,000 on the date of grant; (ii) Messrs.
Gaubert, Shah, and Wilder, each a Class II director having three years remaining
in his term of office, were awarded 12,900 shares having a fair market value of
$90,000 on the date of grant; and (iii) Messrs. English and Frischkorn, each a
Class III director having one year remaining in his term of office, were awarded
4,300 shares having a fair market value of $30,000 on the date of
grant. Mr. McCord resigned from the Board on May 9, 2008 and thereby
forfeited his 8,600 restricted shares. In the future, the Board
intends to follow its informal policy of making periodic restricted share awards
only at the outset of a director’s term rather than on an annual basis, except
in unusual circumstances such as the discretionary award to the Chairman of the
Board described below.
In
addition to the periodic restricted share awards summarized above, the Board of
Directors also approved a discretionary award on April 1, 2008 of 9,000
restricted shares to Mr. Barmore, our Chairman of the Board, based on
his exceptional contributions to the Company, and as a long-term incentive for
his continued service to the Board. This restricted share award vests
on August 13, 2010, provided that Mr. Barmore continues to serve on the Board as
of the vesting date.
Mr.
Allspach received a periodic award of 10,900 restricted shares having a market
value of $42,728 in connection with his election to the Board of
Directors on October 22, 2008, which amount was pro-rated based on his election
as a Class I director with a term ending in 2010.
The
Director Plan also provides for discretionary stock option
awards. However, effective after the amendment to the Director Plan
allowing for restricted share awards was approved by the Company’s shareholders
in 2008, our Board of Directors adopted an informal policy of granting all
equity incentive compensation under the Director Plan in the form of restricted
shares only, in part because restricted share awards result in less dilution for
our existing shareholders. As of the date of this Proxy Statement,
the Board has made only one discretionary award of stock options to a
non-employee director. On November 18, 2005, the Board approved an
award of stock options to Mr. Barmore, the Chairman of the Board, to purchase
60,000 shares of common stock. Mr. Barmore has exercised all 60,000
non-qualified stock options and continues to hold the shares resulting from the
exercise.
Our Board
of Directors has approved an amendment to the Director Plan that provide for an
increase in the number of shares of common stock issuable under the Director
Plan from 410,000 to 560,000 shares. The proposed amendment to the
Director Plan must be approved by our shareholders at the annual meeting in
order to become effective. For additional information, please refer
to Proposal 3 herein.
Director
Summary Compensation Table
The
following table summarizes the compensation paid to our non-employee directors
for fiscal year 2008.
Director
Compensation for 2008
(1)
Name
|
Fees
Earned
or
Paid
in
Cash
($)
(2)
|
Stock
Awards
($)
(3)(4)
|
Option
Awards
($)
(5)
(6)
|
All
Other
Compensation
($)
|
Total
($)
|
Philip
D. Ashkettle†
|
9,000
|
--
|
--
|
--
|
9,000
|
Gregory
T. Barmore
|
61,750
|
26,289
(7)
|
676
(7)
|
--
|
88,715
|
Eric
O. English
|
45,000
|
17,182
(9)
|
--
|
--
|
62,182
|
David
E. K. Frischkorn, Jr.
|
46,500
|
17,182
(9)
|
--
|
--
|
63,682
|
Daniel
R. Gaubert
|
52,500
|
13,564
(10)
|
--
|
--
|
66,064
|
John
F. Gibson†
|
10,500
|
--
|
--
|
--
|
10,500
|
Max
W. Kloesel
(11)
|
180,000
|
--
|
5,773
(12)
|
7,332
(13)
|
193,105
|
Charles
T. McCord, III†
|
24,000
|
--
|
--
|
--
|
24,000
|
Kumar
Shah
|
21,000
|
13,564
(10)
|
--
|
--
|
34,564
|
Warren
W. Wilder
|
45,000
|
13,564
(10)
|
--
|
--
|
58,564
|
___________________
† Phillip
D. Ashkettle, John F. Gibson and Charles T. McCord, Jr. no longer serve on the
Board of Directors. Mr. Ashkettle resigned from the Board effective August
27, 2008, and Mr. McCord resigned from the Board effective May 9, 2008. Mr.
Gibson’s term on the Board ended effective March 11, 2008. Restricted
shares previously awarded to Messrs. Ashkettle, Gibson and McCord were forfeited
at the time of the resignation of each director as such awards had not yet
vested at the time of the directors’ resignations.
(1)
Employee directors who are named executive officers do not receive any
additional compensation for serving on the Board of Directors.
Accordingly, the compensation of Messrs. Knapp and Biro is reflected in the
Summary Compensation Table for 2008 on page 26.
(2) Represents
the amount of cash compensation earned in fiscal year 2008 for Board and
committee service, including for service as Chairman of the Board or of a
committee.
(3) Represents
the dollar amount of restricted share compensation cost recognized for financial
statement reporting purposes during fiscal year 2008, based on the fair value,
as of the date of grant, of restricted shares awarded in fiscal year
2008 and prior fiscal years, in accordance with FAS No. 123R. Non-employee
directors did not receive restricted share awards prior to fiscal year 2008 and
therefore no restricted share compensation is recognized for financial reporting
purposes for prior fiscal years. The fair value was calculated using the
closing market price of the common stock on the date of award. Assumptions
made in the valuation of equity incentive compensation awards are discussed in
Note 12 of the Company’s audited financial statements for fiscal year 2008,
included in the Company’s Annual Report on Form 10-K filed with the SEC on
December 10, 2008. These amounts reflect the Company’s accounting expense
for these restricted share awards, and do not correspond to the actual value
that will be recognized by the directors.
(4) At September
30, 2008, the total number of restricted shares awarded as non-employee director
compensation and held by each non-employee director included in the above table
was: Mr. Ashkettle, 0; Mr. Barmore, 17,600; Mr. English, 4,300; Mr. Frischkorn,
4,300; Mr. Gaubert, 12,900; Mr. Gibson, 0; Mr. McCord, 0; Mr. Shah, 12,900 and
Mr. Wilder, 12,900. Mr. Kloesel, an employee director, held no restricted
shares at September 30, 2008. For the total number of restricted shares
held at September 30, 2008 by employee directors who are also named executive
officers (Messrs. Biro and Knapp), refer to the Outstanding Equity Awards at
Fiscal Year-End for 2008 Table on page 29.
(5) Represents
the dollar amount of stock option compensation cost recognized for financial
statement reporting purposes during fiscal year 2008 based on the fair value, as
of the date of grant, of stock options awarded in fiscal year 2008 and prior
fiscal years, in accordance with FAS No. 123R. All stock options held by
non-employee directors vested prior to fiscal year 2008 and therefore no stock
option compensation was recognized for financial reporting purposes with regard
to the non-employee directors in fiscal year 2008. Only Mr. Kloesel, an
employee director, held stock options for which stock option compensation was
recognized for financial reporting purposes during fiscal year 2008. The
fair value of Mr. Kloesel’s options as of the date of grant was estimated using
the Black-Scholes model. Assumptions made in the valuation of equity incentive
compensation awards are discussed in Note 12 of the Company’s audited financial
statements for fiscal year 2008, included in the Company’s Annual Report on Form
10-K filed with the SEC on December 10, 2008. These amounts reflect the
Company’s accounting expense for these stock option awards, and do not
correspond to the actual value that will be recognized by the directors.
(6) At September
30, 2008, the total number of outstanding stock options awarded during previous
fiscal years as non-employee director compensation and held by each non-employee
director was: Mr. Ashkettle, 0; Mr. Barmore, 0; Mr. English, 20,000 options; Mr.
Frischkorn, 30,000 options; Mr. Gaubert, 0; Mr. Gibson, 0; Mr. McCord, 0; Kumar
Shah, 0 and Mr. Wilder, 5,000 options. All stock options held by non-employee
directors and referenced in the previous sentence vested prior to fiscal year
2008. Mr. Kloesel, an employee director, held 7,500 outstanding stock
options at September 30, 2008. For the total number of stock options held
at September 30, 2008 by employee directors who are also named executive
officers (Messrs. Biro and Knapp), refer to the Outstanding Equity Awards at
Fiscal Year-End for 2008 Table on page 29.
(7) This amount
is based on two separate awards of 9,000 restricted shares and 8,600 restricted
shares, respectively, awarded on April 1, 2008. The fair value of each
restricted share was $7.01.
(8) This amount
is based on two separate awards on November 18, 2005 totaling 40,000 stock
options. The fair value of each stock option was $1.32.
(9) This amount
is based on an award of 4,300 restricted shares on April 1, 2008. The fair
value of each restricted share was $7.01.
(10) This amount is based on
an award of 12,900 restricted shares on April 1, 2008. The fair value of
each restricted share was $7.01.
(11) Employee directors do
not receive any additional compensation for serving on the Board of
Directors. Mr. Kloesel is an employee of the Company’s Bayshore Industrial
division. He is not, however, an executive officer or named executive
officer (as defined herein) of the Company and therefore his compensation is not
reflected elsewhere in this Proxy Statement. Accordingly, his compensation
for fiscal year 2008 is presented in this table, which represents the
compensation he received in his capacity as an employee of the Company’s
Bayshore Industrial division.
(12) This amount is based
on four separate awards on May 3, 2006 totaling 10,000 stock options, an award
of 1,800 stock options on January 21, 2005 and an award of 2,100 stock options
on May 25, 2005. The fair value of each of the stock options awarded on
May 3, 2006 was $2.72. The fair value of each of the stock options awarded
on January 21, 2005 was $2.38. The fair value of each of the stock options
awarded on May 25, 2005 was $1.36.
(13) Consists of 401(k)
Plan matching contributions of $7,200 and payment of the premium on a life
insurance benefit policy for the benefit of Mr. Kloesel of $132. These
payments and contributions were made to or on behalf of Mr. Kloesel pursuant to
certain health, welfare and retirement savings benefit plans in which all
eligible employees of the Company are entitled to participate.
EXECUTIVE
COMPENSATION DISCUSSION AND ANALYSIS
Compensation
Discussion and Analysis
Overview
of Compensation Program
The
Compensation Committee of our Board of Directors is responsible for developing
and making recommendations to the Board with respect to our executive
compensation programs. The Compensation Committee also administers
our equity incentive compensation plans. The members of the
Compensation Committee are Messrs. Frischkorn (Chairman), Allspach, English and
Wilder, each of whom the Board of Directors has determined to be an independent
director, as defined in the listing requirements of the NASDAQ Marketplace
Rules. This discussion and analysis describes the components of our
compensation program for our named executive officers and describes the basis on
which the compensation determinations for fiscal years 2007 and 2008 were made
by the Compensation Committee with respect to such officers.
The
Company’s “Executive Leadership Team” (“ELT”) is the group of executives with
primary oversight responsibility for the Company’s management and global
policies and business strategy. The ELT currently consists of six
individuals:
|
·
|
the
Chief Executive Officer and President (“CEO”): A. John Knapp, Jr., who was
appointed CEO on October 1, 2005.
|
|
·
|
the
Chief Financial Officer and Treasurer (“CFO”): Bradley T.
Leuschner, who was appointed CFO effective January 11, 2008 and continues
to serve in this position. Jon C. Biro served as CFO until
January 11, 2008, the effective date of his resignation from the
Company.
|
|
·
|
the
three “Business Unit Presidents,”
namely:
|
|
o
|
Stephen
E. Barkmann, President of the Company’s Bayshore Industrial
division.
|
|
o
|
Derek
R. Bristow, President of the Company’s ICO Europe
division.
|
|
o
|
Donald
E. (“Eric”) Parsons, President of the Company’s ICO Polymers North America
division.
|
|
·
|
the
General Counsel and Secretary (“GC”): Charlotte Fischer
Ewart.
|
Dario E.
Masutti served as President of the Company’s ICO Asia Pacific division and as an
ELT member until his resignation on December 31, 2008. The Company
intends to appoint another qualified individual to serve as Business Unit
President with oversight responsibility for our Asia Pacific division in the
near future.
Our
“named executive officers” for fiscal year 2008, as indicated in the Summary
Compensation Table for 2008 on page 26, includes Messrs. Knapp, Biro, Leuschner,
Barkmann, Bristow and Parsons.
Compensation
Philosophy and Objectives
The
primary goals of the Compensation Committee with respect to executive
compensation are to: (i) attract, motivate and retain strong executive talent;
(ii) encourage financial and operational performance by executive management;
and (iii) align executive compensation with shareholder value
creation. Each element of executive
compensation
is designed to fulfill one or more of these goals. These compensation
elements consist of base salary, annual performance compensation and long-term
equity incentive compensation, as more specifically described
below. Our named executive officers are also entitled to participate
in standard health, welfare and retirement savings plans to the extent available
to our other employees. The Compensation Committee believes that our
executive compensation programs are properly balanced to provide appropriate
motivation for both the executives in the field and in the corporate
office.
Compensation
Objectives
Attract, Motivate and
Retain
. The Compensation Committee believes that its total
executive compensation package payout opportunities serve to attract, motivate
and retain strong, talented executive officers, including its named executive
officers. The Compensation Committee believes that the combination of
the three key elements of executive compensation serve to motivate and encourage
the continued service of our named executive officers. These three
elements are:
|
·
|
a
base salary that is periodically adjusted to reflect an individual’s
management experience and effectiveness over
time;
|
|
·
|
incentive
compensation in the form of an annual incentive cash bonus tied to
specific performance measures and subjective factors, with significant
payout potential if targets are achieved;
and
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·
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periodic
long-term equity incentive compensation awards of stock options or
restricted stock, with vesting schedules designed to promote
retention.
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The base
salary element is designed to provide reasonable, but not excessive, base pay
compensation for ongoing efforts, management experience and effectiveness and
demonstration of leadership ability. The annual incentive bonus
element is designed to reward annual achievements, and to be commensurate with
each named executive officer’s scope of responsibility. The equity
incentive compensation element is intended to reward performance, but also to
incentivize longer-term performance and results, and to serve as a retention
tool.
Prior to
March 2007, stock options were the only form of equity incentive compensation
available for awards to our employees, including named executive
officers. In March 2007, our shareholders approved an amendment and
restatement of the Company’s Fourth Amended and Restated 1998 Stock Option Plan
(now known as the Second Amended and Restated ICO, Inc. 2007 Equity Incentive
Plan, and hereinafter referred to as the “2007 Employee Plan”) to, among other
things, provide for the award of restricted shares. Following the
March 2007 amendment and restatement of the 2007 Employee Plan, equity incentive
compensation for named executive officers has been in the form of restricted
shares rather than stock options. For the foreseeable future, the
Compensation Committee’s intention is to continue to award restricted shares
instead of stock options as equity incentive compensation, in part because
restricted share awards result in less dilution to our existing
shareholders.
Performance
. The
amount of executive compensation for each named executive officer is designed to
reflect his continued high performance, including the performance of the
business unit or other areas of responsibility of the named executive
officer. The key elements of compensation that are performance-based
are:
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·
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the
annual incentive bonus; and
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·
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equity
incentive compensation.
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Alignment with Shareholders
.
The Compensation Committee seeks to directly link a significant portion of
executive compensation to the enhancement of shareholder value. The
key elements of executive compensation that align the interests of the named
executive officers with those of our shareholders are:
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·
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equity
incentive compensation, which ties a portion of executive compensation
directly to shareholder value because the value of these awards depends
upon the appreciation of shares of our common stock;
and
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·
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for
our U.S.-based employees, including those who are named executive
officers, the Company matches employee salary deferrals to our retirement
savings plan established pursuant to Internal Revenue Code Section 401(k)
up to an amount equal to 4% of the employee’s base salary, which directly
links a portion of
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executive
compensation to shareholder value because the Company match is in the form of
shares of our common stock.
Implementing
the Compensation Objectives
Determining
Compensation
. The Compensation Committee reviews the
performance of the Company and carefully considers each named executive
officer’s performance and scope of responsibility in making decisions about
whether to materially increase or decrease an executive’s
compensation. Specific factors affecting compensation decisions for
named executive officers include:
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·
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evaluation
of the executive’s performance on strategic initiatives within the
executive’s scope of responsibility, as well as the executive’s
contributions toward achieving strategic Company-wide
objectives;
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·
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the
overall performance of the Company during the fiscal year, considering
factors including the Company’s consolidated operating income,
return on invested capital and return on
equity;
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with
regard to the named executive officers who are Business Unit Presidents,
evaluation of performance of the business units under their control
against the key financial measurements of operating income, return on
invested capital, investment turnover and cash flow from continuing
operations;
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·
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with
regard to the CFO, success in controlling corporate expenses;
and
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In
establishing annual performance payout targets for the annual incentive bonus
element of compensation, the Compensation Committee considers the Company’s
business plan for the fiscal year as well as industry and market factors that
may affect performance during the upcoming year.
The
Compensation Committee may consider competitive market compensation paid by
other companies, but does not attempt to maintain a certain target percentile
within a peer group or otherwise rely on such data to determine executive
compensation. The Compensation Committee does not have a specific
policy regarding allocation between cash and non-cash compensation, but believes
it achieves an appropriate balance between cash payments and equity incentive
compensation to meet the objectives of its executive compensation
program.
Role of the Executives in
Determining Compensation
. The Compensation Committee has final
approval authority with regard to all of our named executive officers except the
CEO, whose compensation must ultimately be approved by the full Board of
Directors. The CEO does provide significant input to the Compensation Committee
regarding the compensation of the named executive officers, including his own
pay. The other named executive officers do not play a significant
role in their own compensation determinations, other than discussing individual
performance objectives with the CEO and the Chairman of the
Board.
Role of Compensation
Consultants
. Neither the Company nor the Compensation
Committee has used the services of any compensation consultants in matters
affecting the compensation of named executive officers or
directors.
Equity Award
Practices
. As noted above, prior to fiscal year 2007, equity
incentive compensation was exclusively in the form of stock options, as the
Company’s equity incentive compensation plans did not allow for restricted share
awards. In fiscal year 2007, the 2007 Employee Plan was amended to
allow for restricted share awards, and equity incentive compensation awarded to
our named executive officers in fiscal year 2007 was exclusively in the form of
restricted shares. The Compensation Committee believes that stock
options and restricted shares are both excellent tools for long-term
compensation and shareholder alignment, but the Committee currently prefers to
award restricted shares, in part, because restricted share awards result in less
dilution to our existing shareholders. Therefore, as of fiscal year
2007, it is the Compensation Committee’s informal policy to award restricted
shares rather than stock options to employees, including named executive
officers, except with regard to employees located in some countries outside the
U.S. where tax, accounting or legal considerations warrant
otherwise.
The
Compensation Committee periodically reviews the status of the Company’s employee
and non-employee director equity incentive compensation plans, considering:
stock options issued and currently outstanding under the plans; the number of
shares currently available for stock-based awards under the plans; the number of
stock options recently
exercised,
forfeited or cancelled; and total potential dilution of the outstanding shares
of common stock if all outstanding stock options were exercised and all
restricted shares became fully vested. It is the Compensation
Committee’s informal policy that dilution potential not exceed 10% of the total
number of our issued and outstanding common shares.
The
Compensation Committee does not have a formal policy regarding the number of
shares of equity incentive compensation awards it makes on an annual or other
basis to named executive officers or other key employees. The number
of shares of equity incentive compensation awards made to a particular ELT
member in a given fiscal year has been determined by the Compensation Committee,
with input from our CEO, based upon the general view of overall performance of
the ELT member, but also with considerable significance given to motivating the
employee to focus beyond the current fiscal year, and to serve as a retention
tool. With regard to ELT members who are Business Unit Presidents,
the Compensation Committee generally takes into account the intrinsic value of
the business unit overseen by such President, including recent accomplishments
that are likely to increase the business unit’s intrinsic value (which term is
not specifically defined for the Compensation Committee’s purposes or calculated
using any particular formula). When awarding equity incentive
compensation to named executive officers and other key employees, the
Compensation Committee may take into account the number of equity incentive
compensation awards previously awarded to the employee. Prior to
approving awards of equity incentive compensation to employees of the business
units, the Compensation Committee will ask each Business Unit President to make
recommendations regarding the individuals in his business unit who should
receive the awards and the allocations among them, and the CEO may discuss the
Business Unit President’s recommendation with the Business Unit President before
the recommendation is finally submitted to the Compensation Committee for
approval.
For a
discussion of the timing of equity incentive compensation awards to our named
executive officers or other key employees during the fiscal year, see “Equity
(Long-Term) Compensation” on page 16.
The
Compensation Committee’s consistent policy when awarding stock options has been
to price stock options at the “fair market value” of our shares of common stock
on the date of award. As defined in the 2007 Employee Plan and our
other employee equity incentive plans, the “fair market value” of the shares is
the closing price of the shares on the NASDAQ Stock Market on the date of
the award, or if the shares are not traded on the date of the award, then on the
most recent date of trading activity. Provisions in each of our
equity incentive plans prohibit awarding stock options with an exercise price
that is lower than the fair market value of the shares on the date of
award. We account for equity incentive compensation, including stock
options, in accordance with the requirements of the FAS 123R, which the Company
adopted effective October 1, 2005.
Tax Deductibility of
Compensation
. Section 162(m) of the Internal Revenue Code of
1986, as amended, imposes a $1 million limit on the amount that a public company
may deduct for compensation paid to its chief executive officer or any of the
company’s four other most highly compensated executive officers who are employed
as of the end of the year. This limitation does not apply to
compensation that meets the requirements under Section 162(m) for “qualifying
performance-based” compensation (which includes stock options with exercise
prices equal to the fair market value of the shares on the date of
award). The Compensation Committee currently believes that the
Company should be able to continue to manage its executive compensation program
for executive officers so as to preserve the related federal income tax
deductions.
Elements
Used to Achieve Compensation Objectives
Annual Cash Compensation
Base Salary
. The
Compensation Committee has informally established a cap on the base salaries of
the ELT members at U.S. $250,000. If a base salary is paid in foreign
currency, then the intention is that the amount paid in foreign currency roughly
equals U.S. $250,000 (subject to exchange rate
fluctuations). Currently only Messrs. Knapp, Barkmann and Bristow
earn base salaries of or targeted at U.S. $250,000, while the other ELT members
have lower base salaries, commensurate with their experience and other factors.
The Compensation Committee intends for the base salary of the ELT members,
including the named executive officers, to be reasonable, as well as
commensurate with experience and responsibilities, but not to be excessive, with
the acknowledgement that a significant portion of the annual cash payment to the
named executive officers should be based on their annual
performance.
Annual Performance
Compensation
. We have historically provided the annual
incentive bonus to the ELT members, including the named executive officers, in
the form of a cash bonus. As noted above, the ELT consists of the
CEO, the CFO, the current Business Unit Presidents and the GC. Our
named executive officers are all ELT members.
Early in
each fiscal year, the Compensation Committee establishes a separate annual
incentive bonus plan applicable for each of our ELT members. The
annual incentive bonus plan for each ELT member is customized based on the
annual budget, the Company’s business, established metrics and targets and
strategic initiatives for the business unit or area that is directly supervised
by the ELT member, and is designed with the aim of awarding the ELT member based
on performance against budget and targets, achieving strategic initiatives and
subjective factors. The ELT annual incentive plans for fiscal years 2007 and
2008 applicable to the CEO, however, consist simply of a formula based on the
average bonuses awarded to other ELT members pursuant to their respective annual
incentive plans, as described more specifically below.
The
fiscal year 2008 ELT incentive bonus plans, as originally approved by the
Compensation Committee, provided for a bonus payable only in the form of
cash. However, following the end of fiscal year 2008 the Compensation
Committee offered each ELT member the option to cancel all or a portion of their
respective cash bonus awards in exchange for an equivalent award of restricted
shares (calculated based on the fair market value of the shares as of December
15, 2008). Messrs. Knapp, Barkmann and Leuschner chose to cancel a
portion of their fiscal year 2008 cash bonus in exchange for a restricted share
award. The referenced restricted shares vest three years from the
date of grant, provided that the executives continue to be employed by the
Company as of the vesting date.
The
fiscal year 2008 base salaries and annual incentive bonuses paid to our named
executive officers are discussed below and shown in the Summary Compensation
Table for 2008 on page 26.
Equity
(Long-Term) Compensation
Stock Options and Restricted
Shares
. As described above, the Compensation Committee awards
equity incentive compensation, consisting of longer-term incentives in the form
of stock options and restricted shares. Equity incentive compensation
is designed to directly link a significant portion of executive compensation to
shareholder value because the value of this form of compensation depends on the
appreciation of the shares of our common stock. Additionally, equity
incentive compensation, which is generally awarded with vesting provisions that
will result in forfeiture of the award if the employee leaves the Company prior
to the end of the vesting period, thereby encourages employee
retention. The Compensation Committee believes that equity incentive
compensation is appropriate for the named executive officers, as well as other
key employees of the Company and its subsidiaries.
The
Compensation Committee’s equity incentive compensation award practices are
described in “Equity Award Practices” on page 14.
During
fiscal year 2008, a total of 8,000 restricted shares were awarded to employees
of the Company and its subsidiaries, of which a total of 6,000 restricted shares
were awarded to a named executive officer, as discussed more fully
below. All of the restricted share awards have three-year cliff
vesting, meaning that 100% of each award vests on the third anniversary of the
date of award. No stock options were awarded to Company employees
(including the named executive officers) in fiscal year 2008.
It should
be noted that the lack of a significant number of restricted share awards during
fiscal year 2008 is due, in part, to the fact that amendments to the 2007
Employee Plan to allow for restricted share awards did not become effective
until the middle of fiscal year 2007, when formal shareholder approval of the
amendments was obtained. Prior to fiscal year 2007, all equity
incentive compensation was in the form of stock options. In early
fiscal year 2007, the Compensation Committee informally determined that it would
prefer to award equity incentive compensation in the form of restricted shares
rather than stock options. Because shareholder approval was required
to amend the 2007 Employee Plan to provide for restricted share awards, the
Compensation Committee was unable to make such awards in early fiscal year 2007
when the Committee considered the other elements of the named executive
officers’ compensation. The Compensation Committee approved the first
awards of restricted shares in August 2007 (during the eleventh month of fiscal
year 2007). These awards consisted of a total of 211,420 restricted
shares awarded to key employees, of which a total of 134,000 restricted shares
were awarded to our named executive officers. Although these awards
were made during fiscal year 2007, they were intended by the Committee to serve
as a component of the recipients’ compensation packages for both fiscal year
2007 and fiscal year 2008.
Generally
the Compensation Committee evaluates executive officer compensation (including
base salaries and annual incentive plans) during the later part of the first
fiscal quarter. Following the August 2007 award of restricted shares
to key employees described in the previous paragraph, the Committee postponed
considering and approving the
next
round of restricted share awards to key employees until December 15, 2008, which
was late in the first quarter of fiscal year 2009. At this time, the
Compensation Committee also considered the base salaries and incentive plan
components of the named executive officers’ compensation plans. As a
result of this timing, no restricted share awards to named executive officers
occurred during fiscal year 2008.
While the
Compensation Committee has no formal commitment to award equity incentive
compensation to any employee on an annual basis, the Committee anticipates that
restricted share awards may be made to key employees, including our named
executive officers, on an annual basis. In the future, the
Compensation Committee anticipates that annual equity incentive compensation
awards to key employees will generally be made during the later part of the
first fiscal quarter when the Committee reviews the other elements of key
employees’ compensation. However, the Compensation Committee does
expect that occasional equity incentive compensation awards may be approved by
the Committee other than on the annual basis when it considers broad-based
awards. For example, a one-off award of equity incentive compensation
may be approved during the fiscal year when a new key employee joins the Company
or an employee is promoted to a key position, or as a retention tool and to
recognize performance for employees who have demonstrated exceptional
performance during the fiscal year, especially for employees who did not receive
a restricted share award earlier in the year at the time when other employees
may have received awards.
Retirement
Plans – Company Matching
We do not
provide retirement benefits to our named executive officers, other than through
our standard defined contribution plans to the same extent applicable to all
employees. We maintain several defined contribution plans that cover
employees who meet certain eligibility requirements related to age and period of
service with the Company. The plan in which an employee is eligible to
participate depends upon the subsidiary for which the employee
works. Our U.S. employees who meet certain eligibility requirements
may participate in our 401(k) plan, under which the Company matches employee
salary deferrals with shares of our common stock. Many of our foreign
plans, including the plan applicable to Mr. Bristow described below, require the
Company to match employees’ contributions in cash; however, the Company does not
match any employee contributions in foreign plans with common
stock.
Messrs.
Knapp, Leuschner and Parsons, each of whom are employed by domestic subsidiaries
of the Company, are eligible to participate in our 401(k) plan. Until
his resignation on January 11, 2008, Jon C. Biro was employed by a domestic
subsidiary of the Company and eligible to participate in our 401(k)
plan. Under the 401(k) plan, the Company makes matching contributions
in the form of common stock in an amount equal to a maximum of 4% of a
participating employee’s base salary. The Company’s matching
contributions in the 401(k) plan related to fiscal year 2008 salary deferrals
were mandatory and vested immediately. The 401(k) plan also includes
a discretionary matching feature pursuant to which we may elect to distribute a
share of our profits pro-rata to employees in cash, although we have had no
obligation to make a profit sharing contribution in the past, and have not, as
of the date of this Proxy Statement, made any commitment to do so in the
future.
Other
Benefits
We
provide our named executive officers with other benefits, as reflected in the
“All Other Compensation” column in the Summary Compensation Table for 2008 shown
on page 26. The Compensation Committee believes that these benefits
are reasonable. Most of the benefits are consistent with the
Company’s compensation program that applies to all of our employees, including
employees who are not executive officers. The cost of these benefits
constitutes a relatively small percentage of each named executive officer’s
total compensation.
Compensation
for Named Executive Officers in Fiscal Year 2008 and Compensation Arrangements
for Fiscal Year 2009
The
annual incentive bonus payouts for each of the named executive officers for
fiscal year 2008 reflect the Company’s performance in fiscal year 2008 against
financial and operational measurements. A more detailed analysis of
our financial and operational performance in fiscal year 2008 is contained in
the Management’s Discussion & Analysis section of the Company’s Annual
Report on Form 10-K for the fiscal year ended 2008, which was filed with the SEC
on December 10, 2008.
Compensation
of the Chief Executive Officer
Fiscal Year
2008
: For fiscal year 2008, the three key elements of the
compensation for our CEO were:
1.
Base Salary
: Mr.
Knapp earned a base salary of $250,000.
2.
Fiscal Year 2008 Annual
Incentive Bonus
: Mr. Knapp was entitled to be paid a fiscal
year 2008 cash bonus, calculated pursuant to his fiscal year 2008 incentive
bonus plan. Mr. Knapp’s annual incentive bonus was calculated based
on the average of the fiscal year 2008 annual incentive bonuses paid to the
Business Unit Presidents, as follows:
The sum
of the annual incentive bonuses paid to the Business Unit Presidents based on
fiscal
year 2008
performance, in accordance with their respective annual incentive bonus
plans
divided
by:
The sum
of the fiscal year 2008 base salaries of Business Unit Presidents
multiplied
by:
Mr.
Knapp’s fiscal year 2008 annual base salary ($250,000)
Mr. Knapp
earned $57,661 pursuant to the formula. As noted above, following the
end of fiscal year 2008 the Compensation Committee offered each ELT member the
option to cancel all or a portion of their respective cash bonus awards in
exchange for an equivalent award of restricted shares (calculated based on the
fair market value of the shares as of December 15, 2008). Mr. Knapp
elected to cancel $30,000 of his $57,661 cash bonus in exchange for an award of
restricted shares. Therefore, Mr. Knapp received: (a) a cash bonus of
$27,661 and (b) 11,539 restricted shares. The referenced restricted
shares vest on December 15, 2011, and are subject to forfeiture if Mr. Knapp’s
employment terminates prior to the end of the three-year vesting
period.
3.
Restricted
Shares
: Mr. Knapp (along with the other ELT members) did
not
receive a restricted
share award during fiscal year 2008. However, Mr. Knapp was awarded
36,000 restricted shares on August 17, 2007, late in fiscal year 2007. The
referenced restricted shares vest on August 17, 2010, and are subject to
forfeiture if Mr. Knapp’s employment terminates prior to the end of the
three-year vesting period. While this restricted share award was
recognized as an element of Mr. Knapp’s fiscal year 2007 compensation, the
Compensation Committee considered it to be an element of Mr. Knapp’s fiscal year
2008 compensation, given the Committee’s philosophy regarding restricted share
awards. Please see the discussion on page 16, under “Equity
(Long-Term) Compensation,” regarding the timing of the restricted share awards
for fiscal years 2007 and 2008.
Fiscal Year
2009
:
For fiscal year
2009, the three key elements of Mr. Knapp’s compensation consist of the
following:
1.
Base
Salary
: Mr. Knapp will continue to earn a base salary of
$250,000. In light of the Company’s focus on cost control and savings
due to the current challenging global economic climate, Mr. Knapp’s base salary
has not been increased for fiscal year 2009, consistent with a general freeze on
the base salaries of all ELT members and other key management for fiscal year
2009.
2.
Fiscal Year 2009 Annual
Incentive Bonus
: Mr. Knapp is entitled to be paid a fiscal
year 2009 cash bonus, calculated pursuant to his fiscal year 2009 incentive
bonus plan. Mr. Knapp’s annual incentive bonus will be calculated
based on the average of the fiscal year 2009 annual incentive bonuses paid to
the ELT members (as adjusted due to the current vacancy in the ELT position of
President of the Company’s Asia Pacific division). The formula is set
forth in the Company’s Form 8-K that was filed with the SEC on December 11,
2008, and summarized as follows:
The sum
of the annual incentive bonuses paid to the Company’s other
ELT
members based on FY 2009 performance,
in
accordance with their respective annual incentive bonus plans
divided
by:
The sum
of the fiscal year 2009 base salaries of the Company’s other ELT
members
multiplied
by:
Mr.
Knapp’s fiscal year 2009 annual base salary ($250,000)
The
Compensation Committee believes that the fiscal year 2009 cash bonus formula, as
discussed above, is an appropriate means to incentivize Mr. Knapp to assist the
business units and ELT members to achieve their performance targets and
strategic initiatives, which efforts should be a primary focus of the
CEO.
3.
Restricted
Shares
: Mr. Knapp received an award of 30,000 restricted
shares on December 15, 2008, on the same date when restricted shares were
awarded to other key employees, including the named executive
officers. The referenced restricted shares vest on December 15, 2011,
and are subject to forfeiture if Mr. Knapp’s employment terminates prior to the
end of the three-year vesting period. The December 15, 2008
restricted share award to Mr. Knapp (as well as to the other key employees who
received awards on that date) was made pursuant to the philosophy described
under “Equity (Long-Term) Compensation” on page 16.
Compensation of the Business Unit
Presidents who are Named Executive Officers
Fiscal Year
2008
:
In fiscal year
2008, the key elements of our Business Unit Presidents’ compensation (including
named executive officers Messrs. Barkmann, Bristow and Parsons)
were:
1.
Base
Salary
: Fiscal year 2008 base salaries paid to our Business
Unit Presidents who are also named executive officers were:
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Stephen
E. Barkmann: $250,480;
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Derek
R. Bristow: $257,127; and
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Eric
Parsons: $212,868.
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Mr.
Bristow’s base salary was set in Euros at €162,800 per year for the first three
months of fiscal year 2008, although he was paid in New Zealand dollars in
October and November 2007 and in U.S. dollars in December 2007. For
the first three months of fiscal year 2008, Mr. Bristow received the equivalent
of U.S. $60,723 in base salary. From January 1, 2008 to the end of
fiscal year 2008, Mr. Bristow’s base salary was set in Australian dollars (AUD)
at AUD $286,001 per year and he was paid an aggregate of AUD $214,496, or the
equivalent of U.S. $196,404, during this period. The actual aggregate
amount paid to Mr. Bristow as base salary over the course of fiscal year 2008,
converted to U.S. Dollars, was $257,127.
During
the first quarter of fiscal year 2007, Mr. Parsons was paid, pro-rata, a base
salary of U.S. $197,400. Effective January 1, 2008, Mr. Parsons’ base
salary was increased to U.S. $218,000. The actual aggregate amount
paid to Mr. Parsons as base salary over the course of fiscal year 2008 was
$212,868.
2.
Fiscal Year 2008 Annual
Incentive Bonus
: Pursuant to the Business Unit Presidents’
fiscal year 2008 annual incentive bonus plans, which are filed as Exhibit 10.2
to the Company’s Form 8-K filed with the SEC on January 23, 2008, Messrs.
Barkmann, Bristow and Parsons were eligible to earn a cash bonus of up to 100%
of their respective base salaries, depending on actual performance during the
2008 fiscal year against the following key performance measures (weighted as
indicated in parenthesis):
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Business
Unit operating income (20%);
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Business
Unit return on invested capital
(20%);
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Business
Unit investment turnover (25%);
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Company
consolidated return on equity (15%);
and
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Subjective
factors (20%).
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Based on
performance against the above measures, as more specifically described below,
Messrs. Barkmann, Bristow and Parsons were entitled to be paid fiscal year 2008
cash bonuses in the amounts of U.S. $59,970, U.S. $91,294 (AUD $140,825) at the
median rate on December 8, 2008), and $49,608, respectively, representing 23.9%,
35.5% and 25.1%, of their respective fiscal year 2008 base
salaries.
The
Compensation Committee selected the measurements of business unit operating
income, business unit return on invested capital, and business unit investment
turnover in the Business Unit Presidents’ plans because the Board of Directors
is of the opinion that these are key measurements that the Business Unit
Presidents should use to evaluate their respective business unit performance,
and the Board desires that the Business Unit Presidents stay keenly focused on
these metrics throughout the year. The Committee believes that the
Company’s consolidated return on equity should also
be a
measurement for the Business Unit Presidents’ annual incentive bonus because the
Board believes that the success of the Company depends on the collaborative
efforts of the Business Unit Presidents despite their geographic
differences. By making a component of the annual incentive bonus to
the Business Unit Presidents based on the success of the entire entity, there is
an ongoing emphasis on team building, team spirit and contributions between our
business units. Finally, the Compensation Committee believes that a
component of the annual incentive bonus should be subjective, based primarily on
input from the CEO, who works day-to-day with the Business Unit Presidents and
is, therefore, most well-suited to lead the evaluation of subjective performance
factors. Subjective factors may include items such as one Business
Unit President’s significant contributions during the fiscal year to the efforts
of another Business Unit President’s division’s key initiatives, or, having a
negative impact, might consist of acknowledgement that an executive failed to
execute a key initiative (not necessarily reflected in the financial results)
for the fiscal year at the level of the performance that was
expected.
For each
measurement, the bonus amount payable is calculated as the result achieved for
each measurement (i.e., a 0%, 50% or 100% of base salary payout) multiplied by
the weighting percentage, the result of which is then multiplied by the relevant
Business Unit President’s base salary. Results for each measurement
falling between the targeted amounts adjust the payout targets by interpolating
the percentage of: (i) the result achieved minus the lower threshold divided by
(ii) the difference between the higher and lower target multiplied by (iii) the
higher payout target percentage.
In the
fiscal year 2008 annual incentive bonus plans of the Business Unit Presidents,
consolidated return on equity was weighted at 25% of the total potential bonus
payout. The consolidated return on equity targets in the plans were
15%, 20% and 25%, pursuant to which the payout targets were 0%, 50% and 100% (of
25% of each Business Unit President’s base salary), respectively. The
Company achieved a consolidated return on equity of 14.9% in fiscal year 2008,
so Messrs. Barkmann, Bristow and Parsons received a 0% payout on that portion of
their annual incentive bonus.
For the
measurements of business unit operating income, business unit return on invested
capital and business unit investment turnover, the weightings were 20%, 20% and
15% of the total potential bonus payout respectively, again with payout targets
of 0%, 50% and 100% of base salary (multiplied by the weighting). We are unable
to disclose the specific targets and actual results for each business unit
because this information would result in competitive harm. The
Committee considered the fiscal year 2008 50% and 100% payout targets on these
business unit measurements to be challenging when established. None
of the Business Unit Presidents received a 100% payout on any of the business
unit-specific measurements.
The
subjective component of each Business Unit President’s incentive plan was
weighted at 20% of the total potential bonus payout, again with payout targets
of 0%, 50% and 100% of base salary (multiplied by the
weighting). Messrs. Barkmann, Bristow and Parsons received a payout
of 80%, 100% and 35% respectively on the subjective portion of their
plans. We are unable to disclose the subjective performance factors
as we believe this information would result in competitive
harm.
As noted
above, following the end of fiscal year 2008, the Compensation Committee offered
each ELT member the option to cancel all or a portion of their respective cash
bonus awards in exchange for an equivalent award of restricted shares
(calculated based on the fair market value of the shares as of the grant date,
December 15, 2008). Mr. Barkmann elected to cancel $37,661 of the
$59,970 cash bonus in exchange for an award of restricted
shares. Therefore, Mr. Barkmann received: (a) a cash bonus of $22,309
and (b) 14,485 restricted shares. The referenced restricted shares
vest on December 15, 2011, and are subject to forfeiture if Mr. Barkmann’s
employment terminates prior to the end of the three-year vesting
period. Neither Mr. Bristow nor Mr. Parsons elected to cancel any
portion of their fiscal year 2008 cash bonuses in exchange for restricted
shares.
3.
Restricted Shares
:
Messrs. Barkmann, Bristow and Parsons (along with the other ELT members) did
not
receive a
restricted share award during fiscal year 2008. However, on August
13, 2007, which was late in fiscal year 2007, Messrs. Barkmann, Bristow and
Parsons received awards of 36,000, 20,000 and 16,000 restricted shares,
respectively. The referenced restricted shares vest on August 13,
2010, and are subject to forfeiture if the employee’s employment terminates
prior to the end of the three-year vesting period. While these
restricted share awards were recognized as an element of the named executive
officers’ fiscal year 2007 compensation, in theory the Compensation Committee
considered the awards to be, to some extent, also an element of fiscal year 2008
compensation, given the Committee’s philosophy regarding restricted share
awards. Please see the discussion on page 16, under “Equity
(Long-Term) Compensation,” regarding the timing of the restricted share awards
for fiscal years 2007 and 2008.
Fiscal Year
2009
:
For fiscal year
2009, the three key elements of the compensation of our Business Unit Presidents
who are also named executive officers consist of the
following:
1.
Base Salary
: With the
exception of Mr. Bristow, the Business Unit Presidents who are also named
executive officers will continue to earn the base salaries that they earned as
of the end of fiscal year 2008, set forth above, without increases, consistent
with a general freeze on the base salaries of all ELT members and other key
management for fiscal year 2009, given the Company’s focus on cost control and
savings due to the current challenging global economic climate.
Effective
January 1, 2009, Mr. Bristow’s base salary changed from AUD $286,001 per annum
to U.S. $250,000 per annum, payable in monthly installments, in Australian
currency, as more specifically described in the amendment to Mr. Bristow’s
employment filed as Exhibit 10.3 to the Company’s Form 8-K filed with the SEC on
January 22, 2009. This revision to Mr. Bristow’s base salary does not
represent a material increase or decrease in the amount paid to Mr.
Bristow.
2.
Fiscal Year 2009 Annual
Incentive Bonus
: Pursuant to the Business Unit Presidents’
fiscal year 2009 annual incentive bonus plans, which are filed as Exhibit 10.2
to the Company’s Form 8-K filed with the SEC on January 22, 2009, Messrs.
Barkmann, Bristow and Parsons are eligible to earn a cash bonus of up to 100% of
their respective base salaries, depending on actual performance during the 2009
fiscal year against the following key performance measures (weighted as
indicated in parenthesis):
|
·
|
Business
Unit operating income (20%);
|
|
·
|
Business
Unit return on invested capital
(15%);
|
|
·
|
Business
Unit investment turnover (10%);
|
|
·
|
Business
Unit cash flow from operations
(10%);
|
|
·
|
Company
consolidated return on equity (25%);
and
|
|
·
|
Subjective
factors (20%).
|
With
regard to the Business Unit Presidents’ fiscal year 2009 annual incentive bonus
plans, the Committee continues to maintain the compensation philosophy described
under “
Fiscal Year
2008 Annual Incentive Bonus
” on page 19. The performance
measures in the 2009 plans are identical to the performance measures in the 2008
plans, with the exception of the addition of one performance measure, business
unit cash flow from operations, as the Board desires that the Business Unit
Presidents also devote special focus to this measurement, especially given the
current economic environment.
3.
Restricted
Shares
: On December 15, 2008, Messrs. Barkmann, Bristow and
Parsons received awards of 34,000, 36,000 and 20,000 restricted shares,
respectively. The referenced restricted shares vest on December 15,
2011, and are subject to forfeiture if the employee’s employment terminates
prior to the end of the three-year vesting period. The December 15,
2008 restricted share awards to the named executive officers were made pursuant
to the philosophy described under “Equity (Long-Term) Compensation” on page
16.
Compensation of the Chief Financial
Officer
Jon C.
Biro served as our CFO during the first quarter of fiscal year 2008 until his
resignation effective January 11, 2008. During this period, Mr. Biro
received a pro rata portion of his annual fiscal year 2008 base salary of
$235,000. Mr. Biro, however, did not receive an annual incentive
bonus or equity incentive compensation for fiscal year 2008. Mr. Biro
did receive a restricted share award on August 13, 2007, when the named
executive officers and other key employees received restricted share awards
(which were intended, in part, to constitute an element of the employees’ fiscal
year 2008 compensation package), but Mr. Biro’s restricted shares were forfeited
because they had not vested as of his resignation date.
Bradley
T. Leuschner was appointed as our CFO effective January 11, 2008 and continues
to serve in that position. The following discussion relates to Mr.
Leuschner’s compensation as CFO for fiscal years 2008 and
2009.
Fiscal Year
2008
:
In fiscal year
2008, key elements of the compensation of our current CFO, Mr. Leuschner,
were:
1.
Base
Salary
: During calendar year 2007, prior to his promotion from
Chief Accounting Officer to CFO,
Mr.
Leuschner earned a base salary of USD $184,000. Effective January 1,
2008, Mr. Leuschner’s base salary was increased to USD $216,000.
2.
Fiscal Year 2008 Annual
Incentive Bonus
: Pursuant to the CFO’s fiscal year 2008 annual
incentive bonus plan, which is filed as Exhibit 10.1 to the Company’s Form 8-K
filed with the SEC on January 23, 2008, Mr. Leuschner was eligible to earn a
cash bonus of up to 52% of his base salary, depending on actual performance
during the 2008 fiscal year against the following key performance measures
(weighted as indicated in parenthesis):
|
·
|
Corporate
Expense (33%);
|
|
·
|
Company
consolidated return on equity (33%);
and
|
|
·
|
Subjective
factors (33%).
|
Based on
performance against the above measures, as more specifically described below,
Mr. Leuschner was entitled to be paid a fiscal year 2008 cash bonus in the
amount of U.S. $44,194, representing 20.5%, of his fiscal year 2008 base
salary. As noted above, following the end of fiscal year 2008 the
Compensation Committee offered each ELT member the option to cancel all or a
portion of their respective cash bonus awards in exchange for an equivalent
award of restricted shares (calculated based on the fair market value of the
shares as of December 15, 2008). Mr. Leuschner elected to cancel
$9,000 of the $44,194 cash bonus in exchange for an award of restricted shares.
Therefore, Mr. Leuschner received: (a) a cash bonus of $35,194 and (b) 3,462
restricted shares. The referenced restricted shares vest on December
15, 2011, and are subject to forfeiture if Mr. Leuschner’s employment terminates
prior to the end of the three-year vesting period.
The
measurement of corporate expense in the CFO’s plan was selected by the
Compensation Committee because the CFO has primary oversight responsibility for
corporate office budgeting and expenses, and significant management
responsibility at the corporate office, and the CFO’s job responsibilities
include focusing on controlling corporate expenses. The above
comments regarding the Compensation Committee’s philosophy for including the
Company’s consolidated return on equity and subjective factors in the Business
Unit Presidents’ annual incentive bonus plans apply equally to the inclusion of
these measurements in the CFO’s plan.
For each
measurement, the bonus amount payable is calculated as the result achieved for
each measurement (i.e., a 0%, 26% or 52% of base salary payout) multiplied by
the weighting percentage, the result of which is then multiplied by the CFO’s
base salary. Results for each measurement falling between the
targeted amounts adjust the payout targets by interpolating the percentage of:
(i) the result achieved minus the lower threshold divided by (ii) the difference
between the higher and lower target multiplied by (iii) the higher payout target
percentage.
In the
fiscal year 2008 annual incentive bonus plan of the CFO, consolidated return on
equity was weighted at 33% of the total potential bonus payout. As in
the 2008 annual incentive plans of our Business Unit Presidents, the
consolidated return on equity targets in the CFO’s plan were 15%, 20% and 25%,
pursuant to which the payout targets were 0%, 26% and 52% (of 33% of the CFO’s
base salary). The Company achieved a consolidated return on equity of
14.9% in fiscal year 2008, so Mr. Leuschner received a 0% payout on that portion
of his annual incentive bonus.
We are
unable to disclose the specific targets and actual results related to the
Corporate Expense measurement in the CFO’s plan as we believe this information
would result in competitive harm. Based on the actual corporate
expenses in fiscal year 2008, Mr. Leuschner received 100% payout on this
measurement (i.e. 52% of his base salary multiplied by 33%).
The
subjective component of Mr. Leuschner’s annual incentive plan was weighted at
33% of the total potential bonus payout, pursuant to which the payout targets
were 0%, 26% and 52% (of 33% of the CFO’s base salary). Mr. Leuschner
received a 19% payout on this measurement (i.e. 10% of his base salary
multiplied by 33%). We are unable to disclose the subjective
performance factors in Mr. Leuschner’s plan as we believe this information would
result in competitive harm.
3.
Restricted Shares
: On
August 13, 2007, which was late in fiscal year 2007, when other named executive
officers and key employees received restricted share awards, Mr. Leuschner (at
that time the Company’s Chief Accounting Officer) received an award of 3,000
restricted shares. As noted above, the Compensation Committee
considered the restricted share awards to key employees made in August 2007 to
be an element of compensation for both fiscal year 2007 and fiscal year
2008. On January 11, 2008, Mr. Leuschner received an additional award
of 6,000 restricted shares in connection with his promotion from Chief
Accounting Officer to CFO. Both restricted share
awards
to Mr.
Leuschner described in this paragraph vest on the third anniversary of the date
of grant, and are subject to forfeiture if Mr. Leuschner’s employment terminates
prior to the end of the three-year vesting period.
Fiscal Year
2009
:
For fiscal year
2009, the three key elements of the compensation of the CFO, Mr. Leuschner, will
consist of the following:
1.
Base Salary
: In light
of the Company’s focus on cost control and savings due to the current
challenging global economic climate, Mr. Leuschner will continue to earn a base
salary of $216,000, without increase. This is consistent with a
general freeze on the base salaries of all ELT members and other key management
for fiscal year 2009.
2.
Fiscal Year 2009 Annual
Incentive Bonus
: Pursuant to the CFO’s fiscal year 2009 annual
incentive bonus plans, which is filed as Exhibit 10.1 to the Company’s Form 8-K
filed with the SEC on January 22, 2009, Mr. Leuschner is eligible to earn a cash
bonus of up to 54% of his base salary, depending on actual performance during
the 2009 fiscal year against the following key performance measures (weighted as
indicated in parenthesis):
|
·
|
Corporate
Expense (25%);
|
|
·
|
Company
consolidated return on equity
(25%);
|
|
·
|
Company
consolidated cash flow from operations (25%);
and
|
|
·
|
Subjective
factors (25%).
|
With
regard to the CFO’s fiscal year 2009 annual incentive bonus plan, the
Compensation Committee continues to maintain the compensation philosophy
described under “
Fiscal Year 2008 Annual
Incentive Bonus
” on page 22. The performance measures in the
2009 annual incentive bonus plan are identical to the performance measures in
the 2008 annual incentive bonus plan, with the exception of the addition of one
performance measure, Company consolidated cash flow from operations, as the
Board desires that the CFO devote special focus to this measurement, especially
given the current economic environment.
3.
Restricted
Shares
: On December 15, 2008, Mr. Leuschner received an award
of 8,000 restricted shares. The referenced restricted shares vest on
December 15, 2011, and are subject to forfeiture if Mr. Leuschner’s employment
terminates prior to the end of the three-year vesting period. The
December 15, 2008 restricted share award to Mr. Leuschner was made pursuant to
the philosophy described under “Equity (Long-Term) Compensation” on page
16.
Termination
and Change-in-Control Provisions in Equity Plans and Agreements
Employment Agreements
Among the
named executive officers, we currently maintain employment agreements with
Messrs. Knapp, Leuschner and Bristow. Messrs. Barkmann and Parsons do
not have current employment agreements, and each is an employee
at-will.
Mr. Biro
resigned as CFO effective January 11, 2008, and Mr. Masutti resigned as the
President of our ICO Asia Pacific division effective December 31,
2008. The resignations of Messrs. Biro and Masutti did not trigger
any termination or other enhanced severance payments under their employment
agreements, and accordingly, the employment termination and change-in-control
provisions in Messrs. Biro and Masutti’s employment agreements are not
discussed.
A. John Knapp,
Jr
. Pursuant to Mr. Knapp’s October 1, 2005 employment
agreement, as amended, Mr. Knapp is an at-will employee, employed for an
indefinite term. If Mr. Knapp’s employment terminates with us for any
reason, including without cause, he will be entitled to receive compensation and
benefits through the termination date, but no enhanced severance
payment. Mr. Knapp does not have a change-in-control agreement with
the Company, nor does his employment agreement contain any change-in-control
provisions.
Bradley T.
Leuschner
. Mr. Leuschner’s February 28, 2001 employment
agreement, as amended, provides for certain payments in the event of the
termination of his employment or a change-in-control.
|
·
|
Payments
for Termination of Employment – If Mr. Leuschner is terminated “for
cause,” he will be entitled to a severance payment equal to thirty days
pro-rata base salary beyond the date of his termination. If Mr.
Leuschner’s employment is terminated without cause, he will be entitled to
compensation equal to his annual base salary beyond the date of his
termination. If Mr. Leuschner resigns, he is not entitled to
any
|
additional
compensation beyond the date of his resignation. As defined in Mr.
Leuschner’s agreement, termination “for cause” means the termination of Mr.
Leuschner’s employment due to personal dishonesty, willful misconduct, failure
or inability to perform his stated duties, willful violation of law, rule or
similar violation (other than traffic violations or similar offenses), a
material breach of his employment agreement that is not remedied within ten days
after notification of such breach, his death or a physical or mental disability
that renders him fully unable to perform his duties for a period of two
months.
|
·
|
Payments
for Change-in-Control – Mr. Leuschner has the right to certain termination
benefits in his employment agreement if certain circumstances occur after
a change-in-control, as follows: If Mr. Leuschner’s employment
is terminated within twelve months following a change-in-control, he will
be entitled to compensation equal to his then current annual base
salary. In connection with a change-in-control, Mr. Leuschner’s
employment is considered terminated when: (i) his employment terminates
for any reason other than “for cause” (as defined above); (ii) he is
required to relocate outside the Houston, Texas metropolitan area in order
to continue his employment and elects to resign rather than relocate;
(iii) he is required to commute to a location outside the Houston, Texas
metropolitan area and elects to resign rather than so commute; (iv) his
annual base salary is materially reduced or any other material benefit of
his employment is materially reduced and he elects to resign rather than
to continue employment with such compensation and benefits; or (v) there
is any material diminution of his job description, job role,
responsibilities, and/or scope of position and he elects to resign rather
than to continue employment in such position. As defined in Mr.
Leuschner’s agreement, a “change-in-control” (referred to as a “change of
control” in the agreement) means any of the following events: (i) a
merger, share exchange or consolidation in which the Company will not be
the surviving entity (or survives only as a subsidiary of an entity), (ii)
the sale or exchange by the Company all or substantially all of its assets
to any other person or entity, or (iii) the acquisition of ownership or
control (including, without limitation, power to vote) by any person or
entity, including a "group" as contemplated by Section 13(d)(3) of the
1934 Act, of more than 50% of the outstanding shares of the Company's
voting stock (based upon voting
power).
|
Derek R.
Bristow
. Mr. Bristow’s employment agreement (effective as of
January 1, 2008) provides for certain payments in the event of the termination
of his employment. His employment agreement does not provide for
payments in connection with a change-in-control.
|
·
|
Payments
for Termination of Employment – Mr. Bristow’s employment agreement
expires on September 30, 2012. In the event that Mr. Bristow’s
employment with us is terminated during this term as a result of his death
or permanent disability resulting from any accident or incident beyond his
control that occurs while he is traveling on Company business or is in the
course and scope of employment, or his employment is terminated during the
term for any other reason other than “for cause,” he will be entitled to:
(i) his pro rata annual base salary through the date of termination of his
employment, (ii) his prior fiscal year annual incentive cash bonus to the
extent it has been earned and declared to him, and (iii) a severance
payment equal to nine months (i.e. 75%) of his annual base
salary. In the event that Mr. Bristow’s employment terminates
during the term as a result of his voluntary resignation, termination by
the Company “for cause,” or death or permanent disability resulting from
circumstances other than those described in the preceding clause, he will
be entitled to compensation through the date of termination, and no
enhanced severance payment. As defined in Mr. Bristow’s
agreement, termination “for cause” means: (i) an act of dishonesty or
fraud in relation to the Company or any Company entity; (ii) a knowing and
material violation of the Company’s Code of Business Ethics or any other
written policy of the Company or applicable to the Company’s operations;
(iii) a knowing and material violation of an applicable law, rule or
regulation that exposes the Company to damages or liability (other than
for reasonable business purposes); (iv) a material breach of fiduciary
duty; or (v) conviction of a
felony.
|
Change-in-Control Provisions in Equity
Incentive Compensation Plans
The
Company maintains five equity incentive compensation plans. The
change-in-control provisions applicable to each equity incentive compensation
plan, if any, are described below:
ICO, Inc. 1994 Stock Option
Plan
(the “1994 Employee Plan”). The 1994 Employee Plan
contains provisions for accelerated vesting of non-vested stock options when
certain change-in-control events occur. All stock options awarded
under this plan have vested, and therefore, the change-in-control provisions
under this plan are no longer relevant.
ICO, Inc. First Amended and Restated
1995 Stock Option Plan
(the “1995 Employee Plan”). The 1995
Employee Plan contains provisions for accelerated vesting of non-vested stock
options when certain change-in-control events occur. All stock
options awarded under this plan have vested, and therefore, the
change-in-control provisions under this plan are no longer
relevant.
ICO, Inc. First Amended and Restated
1996 Stock Option Plan
(the “1996 Employee Plan”). The 1996
Employee Plan contains provisions for accelerated vesting of non-vested stock
options when certain change-in-control events occur. The specific
change-in-control provisions provide, in pertinent part, as
follows:
In the
event of a merger or similar transaction in which the Company is not the
surviving corporation or in which the outstanding shares of the Company’s common
stock are converted into cash, other securities or other property, outstanding
stock options awarded under the 1996 Employee Plan that are not exercisable will
terminate as of a date fixed by the committee that administers the plan (the
Compensation Committee). Written notice of the date of expiration of
the stock options will be provided to each option holder at least twenty days
before such expiration date, and option holders will have the right during such
period following notice to exercise those stock options exercisable at the time
of such notice. The committee administering the plan, in its sole
discretion, may provide that stock options in such circumstances may be
exercised to an extent greater than the number of shares for which they were
exercisable at the time of the notice.
Second Amended and Restated ICO,
Inc. 2007 Equity Incentive Plan
(the “2007 Employee
Plan”). The 2007 Employee Plan contains provisions for accelerated
vesting of non-vested stock options and unvested restricted shares when certain
change-in control events occur. The specific change-in-control
provisions provide, in pertinent part, as follows:
In the
event that ICO, Inc. shall, pursuant to action by its Board of Directors, at any
time propose to merge into, consolidate with, or sell or transfer substantially
all of its assets, or otherwise enter into a transaction pursuant to which ICO,
Inc. is not the surviving corporation (other than a corporate restructuring
among Company affiliates), or in which the outstanding shares of ICO, Inc.
common stock are converted to cash, other securities or other property (any such
circumstances referred to in the 2007 Employee Plan as a “Change of Control”)
and provision is not made pursuant to the terms of the transaction(s) relating
to such Change of Control (the “Transaction”) for the assumption by the
surviving, resulting or acquiring corporation of any outstanding category of
awards of stock options or restricted shares under the plan, or for the
substitution of new awards therefor, with regard for awards for which no
provision is made, the following shall apply:
Options
. The
committee administering the plan (the Compensation Committee) shall cause
written notice of the proposed Transaction to be given to each option holder not
more than twenty (20) days prior to the anticipated effective date of the
proposed Transaction, and participants’ stock options, unless otherwise provided
for under the terms of the option award agreement, shall become fully (100%)
vested and, prior to a date specified in such notice, which shall not be more
than ten days prior to the anticipated effective date of the proposed
Transaction, each participant shall have the right to exercise his or her
options to purchase any or all shares of common stock then subject to such
options (unless otherwise provided under the terms of the option award
agreement), including those, if any, which by reason of other provisions of the
plan have not then become available for purchase. Each participant,
by so notifying the Company in writing, may, in exercising his or her options,
condition such exercise upon, and provide that such exercise shall become
effective at the time of, but immediately prior to, the consummation of the
Transaction, in which event such participant need not make payment for the
shares to be purchased upon exercise of such option until five days after
written notice by the Company to such participant that the Transaction has been
consummated. If the transaction is consummated, each option, to the
extent not previously exercised prior to the date specified in the foregoing
notice, shall terminate on the effective date of the Transaction. If
the Transaction is abandoned (i) any shares not purchased upon exercise of such
options shall continue to be available for purchase in accordance with the other
provisions of the plan, and (ii) to the extent that any option not exercised
prior to such abandonment shall have vested solely by operation of this
paragraph, such vesting shall be deemed annulled, and the original vesting
schedule set forth shall be reinstituted, as of the date of such
abandonment.
Restricted
Shares
. The committee administering the plan (the Compensation
Committee) shall cause written notice of the proposed Transaction to be given to
each participant holding restricted shares not more than twenty (20) days prior
to the anticipated effective date of the proposed Transaction, and unless
provided for under the terms of the restricted share award agreement, all
restrictions imposed on restricted shares shall lapse
and such
restricted shares shall become fully (100%) vested as of a date specified in the
notice, which shall not be more than ten (10) days prior to the anticipated
effective date of the proposed Transaction.
2008 Equity Incentive Plan for
Non-Employee Directors of ICO, Inc.
(the “Director Plan”). The
Director Plan provides for, among other things, change-in-control provisions
identical to those found in the 2007 Employee Plan discussed
above. None of our named executive officers is currently eligible to
participate and receive awards under the Director Plan.
As of
January 15, 2009, our named executive officers held non-vested stock options to
acquire an aggregate total of 109,000 shares of our common stock under the
various equity incentive compensation plans described above, and an aggregate
total of 274,486 non-vested restricted shares under the 2007 Employee
Plan. Assuming the conditions for a change-in-control were satisfied
as of January 15, 2009, the aggregate cash value of such stock options and
restricted shares on such date would have been approximately $1,296,183 (based
upon the closing price of the common stock of the Company on January 15,
2009). The referenced aggregate cash value figure does not include
the cash value of stock options held by the named executive officers that are
vested as of January 15, 2009.
The
following table provides information about total compensation received for
services rendered to the Company by our named executive officers during fiscal
year 2008.
Summary
Compensation Table for 2008
Name
and Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock Awards
(1)
($)
|
Option Awards
(2)
($)
|
Non-Equity
Incentive
Plan
Compensation
(3)
($)
|
All
Other
Compensation
($)
(4)
|
Total
($)
|
A.
John Knapp, Jr., CEO
|
2008
|
250,000
|
|
--
|
91,494
|
|
4,130
|
|
27,661
|
(5)
|
19,232
|
(6)
|
392,517
|
Jon
C. Biro, CFO†
|
2008
|
95,322
|
(7)
|
--
|
--
|
|
4,575
|
|
--
|
|
5,737
|
(8)
|
105,634
|
Stephen
E. Barkmann,
Pres.,
Bayshore Industrial
|
2008
|
250,480
|
|
--
|
104,856
|
|
52,224
|
|
22,309
|
(9)
|
19,232
|
(10)
|
449,101
|
Eric
Parsons, Pres.,
IPNA
|
2008
|
212,868
|
|
--
|
46,603
|
|
22,157
|
|
49,608
|
|
18,624
|
(11)
|
349,860
|
Derek
Bristow, Pres.,
ICO
Europe
|
2008
|
257,127
|
(12)
|
--
|
58,253
|
|
26,794
|
|
91,294
|
(13)
|
26,264
|
(14)
|
459,732
|
Bradley
T. Leuschner,
CFO†
|
2008
|
207,387
|
(15)
|
--
|
26,274
|
|
2,179
|
|
35,194
|
(16)
|
18,527
|
(17)
|
289,561
|
__________________
† During fiscal year 2008, Mr.
Biro served as CFO from October 1, 2007 to January 11, 2008. Mr. Leuschner
was appointed CFO on January 11, 2008 and continues to serve in that
position.
(1) Represents the dollar amount of
restricted share compensation cost recognized for financial statement reporting
purposes during fiscal year 2008 based on the fair value, as of the date of
grant, of restricted shares awarded in fiscal year 2008 and prior fiscal years,
in accordance with FAS No. 123R. The fair value was calculated using the
closing market price of the common stock on the date of award. Assumptions
used in the valuation of equity incentive compensation awards are included in
Note 12 of the Company’s audited financial statements for the year ended
September 30, 2008, included in the Company’s Annual Report on Form 10-K filed
with the SEC on December 10, 2008. See the Grants of Plan-Based Awards
Table for 2008 on page 28 for information on restricted share awards made in
fiscal year 2008. These amounts reflect the Company’s accounting expense
for these restricted share awards, and do not correspond to the actual value
that will be recognized by the named executive officers.
(2) Represents the dollar amount of stock
option compensation cost recognized for financial statement reporting purposes
during fiscal year 2008 for the fair value, as of the date of grant, of stock
options awarded in fiscal year 2008 and prior fiscal years, in accordance with
FAS No. 123R. The fair value was estimated using the Black-Scholes
model. Assumptions made in the valuation of equity incentive compensation
awards are discussed in Note 12 of the Company’s audited financial statements
for the year ended September 30, 2008, included in the Company’s Annual Report
on Form 10-K filed with the SEC on December 10, 2008. These amounts
reflect the Company’s accounting expense for these stock option awards, and do
not correspond to the actual value that will be recognized by the named
executive officers.
(3) The amounts reported in this column
reflect cash payments earned in fiscal year 2008 by the named executive officers
under the Company’s annual incentive bonus plans, which are discussed under
“Annual Cash Compensation” on page 15. Messrs. Barkmann, Knapp and
Leuschner elected to cancel a portion of their respective annual incentive
bonuses in exchange for an equivalent amount of restricted shares.
(4) All eligible employees of the Company,
including the named executive officers, are entitled to participate in standard
health, welfare and retirement savings plans applicable to the subsidiary for
which the employee works. Under these plans, the Company makes certain
premium payments and contributions to or on behalf of each of its named
executive officers, just as it does for each of its eligible employees.
The amounts set forth in this column include the payments and contributions made
to or on behalf of each of the named executive officers during fiscal year
2008.
(5) Mr. Knapp elected to cancel $30,000 of
his $57,661 fiscal year 2008 annual incentive
bonus
in exchange for 11,539 restricted shares. The dollar
amount of restricted share compensation cost for these restricted shares will be
recognized for financial reporting purposes in fiscal year 2009.
(6) Consists of 401(k) Plan matching
contributions valued at $9,000, payment of the premium on a life insurance
benefit policy for the benefit of Mr. Knapp of $132 and payment of $10,100
toward the premium on a health insurance policy for the benefit of Mr.
Knapp.
(7) Mr. Biro’s base salary at the beginning
of fiscal year 2008 was $250,480. The actual dollar value paid to Mr. Biro
as base salary during fiscal year 2008 and prior to his resignation from the
Company on January 11, 2008 was $95,322.
(8) Consists of 401(k) Plan matching
contributions valued at $1,927, payment of the premium on a life insurance
benefit policy for the benefit of Mr. Biro of $44 and payment of $3,367 toward
the premium on a health insurance policy for the benefit of Mr.
Biro.
(9) Mr. Barkmann elected to cancel $37,661 of
his $59,970 fiscal year 2008 annual incentive bonus in exchange for 14,485
restricted shares. The dollar amount of restricted share compensation cost for
these restricted shares will be recognized for financial reporting purposes in
fiscal year 2009.
(10) Consists of 401(k) Plan matching contributions
valued at $9,000, payment of the premium on a life insurance benefit policy for
the benefit of Mr. Barkmann of $132 and payment of $10,100 toward the premium on
a health insurance policy for the benefit of Mr. Barkmann.
(11) Consists of 401(k) Plan matching contributions
valued at $8,392, payment of the premium on a life insurance benefit policy for
the benefit of Mr. Parsons of $132 and payment of $10,100 toward the premium on
a health insurance policy for the benefit of Mr. Parsons.
(12) Mr. Bristow’s base salary was set at €162,800 for
fiscal year 2008, although he was paid in New Zealand dollars (NZD) from October
2007 to November 2007, U.S. dollars in December 2007 and in Australian dollars
(AUD) from January 1, 2008 to the end of the fiscal year. The portion of his
base salary paid in NZD and AUD has been converted to U.S. dollars as of the
date of payment.
(13) Represents AUD $140,825 converted to U.S. dollars at
the median rate on December 8, 2008.
(14) Consists of superannuation (retirement) benefits of
$17,651 (AUD $19,305 converted to U.S. dollars as of the date of payment),
payment of the premium on a life insurance benefit policy for the benefit of Mr.
Bristow of $687 (AUD $1,060 converted to U.S. dollars at the median rate on
December 8, 2008) and payment of the premium on a health insurance policy for
the benefit of Mr. Bristow of $3,466 (AUD $5,346 converted to U.S. dollars at
the median rate on December 8, 2008). Also includes aggregate cash
payments totaling $4,460 (consisting of NZD $3,888 converted to U.S. dollars as
of the date of payment and a payment of U.S. $1,476) in lieu of superannuation
(retirement) benefits that otherwise would have been paid to Mr. Bristow during
the time period from October 1, 2007 to December 31, 2007.
(15) Mr. Leuschner’s salary at the beginning of fiscal
year 2008 was $184,008. Effective January 1, 2008, his base salary was
increased by $31,992 to $216,000. The actual dollar value of Mr. Leuschner’s
base salary for fiscal year 2008 was $207,387.
(16) Mr. Leuschner elected to cancel $9,000 of his
$44,194 fiscal year 2008 annual incentive bonus in exchange for 3,462 restricted
shares. The dollar amount of restricted share compensation cost for these
restricted shares will be recognized for financial reporting purposes in fiscal
year 2009.
(17) Consists of 401(k) Plan matching contributions
valued at $8,295, payment of the premium on a life insurance benefit policy for
the benefit of Mr. Leuschner of $132 and payment of $10,100 toward the premium
on a health insurance policy for the benefit of Mr. Leuschner.
Grants of Plan-Based
Awards
The
following table provides information about equity and non-equity awards to our
named executive officers during fiscal year 2008.
Grants
of Plan-Based Awards for 2008
Name
|
Grant
Date
|
Estimated
Possible Payouts Under
Non-Equity
Incentive Plan Awards
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
($)
(1)
|
|
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(k)
|
(l)
|
A.
John Knapp, Jr.
|
--
|
--
|
250,000
|
(2)
|
--
|
|
--
|
--
|
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon C. Biro
(3)
|
--
|
--
|
--
|
(4)
|
--
|
(4)
|
--
|
--
|
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
E. Barkmann
|
--
|
--
|
125,240
|
(4)
|
250,480
|
(4)
|
--
|
--
|
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derek
R. Bristow
|
--
|
--
|
113,028
|
(4)
|
226,055
|
(4)
|
--
|
--
|
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
Parsons
|
--
|
--
|
109,000
|
(4)
|
218,000
|
(4)
|
--
|
--
|
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
T. Leuschner
|
01/11/2008
|
--
|
|
|
|
|
--
|
6,000
|
(5)
|
--
|
--
|
72,840
|
|
|
|
56,160
|
(4)
|
112,320
|
(4)
|
|
|
|
|
|
|
____________________
(1) Represents the dollar amount of the grant
date fair value recognized in accordance with FAS No. 123R for each award of
restricted shares to each named executive officer that was awarded during fiscal
year 2008. The fair value of restricted share awards was calculated using
the closing market price of the common stock on the date of award. The
fair value of each of the restricted shares awarded to Mr. Leuschner on January
11, 2008 was $12.14. Assumptions used in the calculation of these amounts
are included in footnote 12 of the Company’s audited financial statements for
fiscal year 2008, included in the Company’s Annual Report on Form 10-K filed
with the SEC on December 10, 2008.
(2) Represents the maximum fiscal year 2008
annual incentive bonus that potentially could have been earned under Mr. Knapp’s
employment agreement during fiscal year 2008, calculated by applying the formula
discussed under “Compensation of the Chief Executive Officer” above. Based
on the performance of the Business Unit Presidents, Mr. Knapp’s fiscal year 2008
annual incentive bonus could have ranged from $0 to $250,000.
(3) Mr. Biro resigned as CFO of the Company
on January 11, 2008. He received no awards under the Company’s equity and
non-equity incentive plans during fiscal year 2008.
(4) Represents the annual incentive bonus that
potentially could have been earned during fiscal year 2008 under the Company’s
annual incentive bonus plan applicable to the named executive officer based upon
the achievement of certain pre-determined performance measures. Messrs.
Barkmann, Bristow and Parsons could have earned, based on performance against
established performance measures, between 0% and 100% of their respective base
salaries for fiscal year 2008. Mr. Leuschner could have earned, based on
performance against established performance measurements, between 0% and 52% of
his fiscal year 2008 base salary. The annual incentive bonuses earned in
fiscal year 2008 have been determined and were paid in December 2008. The
amounts paid are included in the “Non-Equity Incentive Compensation” column of
the Summary Compensation Table for 2008 on page 26, and are discussed under
“Compensation of the Business Unit Presidents who are Named Executive Officers”
on page 19 and “Compensation of the Chief Executive Officer,” on page 18.
(5) Represents the number of restricted
shares awarded to Mr. Leuschner in connection with his promotion to CFO on
January 11, 2008.
Outstanding
Equity Awards
The
following table provides information on the current holdings of stock option and
restricted share awards by our named executive officers at September 30,
2008.
Outstanding
Equity Awards at Fiscal Year-End for 2008
|
Options
Awards
|
Stock
Awards
|
Name
|
Number
of Securities Underlying Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercisable
Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration
Date
|
Number
of Shares of Units That Have Not Vested
(#)
|
Market
Value of Shares of Units of Stock That Have Not Vested
($)
(8)
|
Equity
Incentive Plan Awards:
Number
of Unearned Shares, Units or Other Rights That Have Not
Vested
(#)
|
Equity
Incentive Plan Awards:
Market
or Payout Value of Unearned Shares, Units or Other Rights That Have Not
Vested
($)
|
A.
John Knapp, Jr.
|
5,000
|
|
--
|
2.05
|
5/3/2011
|
36,000
|
201,960
|
--
|
--
|
|
5,000
|
|
|
1.35
|
3/18/2012
|
|
|
|
|
|
5,000
|
|
|
1.195
|
3/3/2013
|
|
|
|
|
|
5,000
|
|
|
2.32
|
3/8/2014
|
|
|
|
|
|
5,000
|
|
|
3.41
|
3/8/2015
|
|
|
|
|
|
120,000
|
|
|
2.89
|
10/3/2012
|
|
|
|
|
|
120,000
|
|
|
2.40
|
11/18/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon C. Biro
(1)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Stephen
E. Barkmann
|
16,250
|
|
--
|
5.40
|
5/3/2013
|
36,000
|
201,960
|
--
|
--
|
|
|
32,500
(2)
|
|
5.40
|
5/3/2013
|
|
|
|
|
|
10,000
|
|
|
2.45
|
5/25/2015
|
|
|
|
|
|
|
10,000
(3)
|
|
2.45
|
5/25/2015
|
|
|
|
|
|
20,000
|
|
|
2.39
|
8/9/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
Parsons
|
2,000
|
|
--
|
1.45
|
2/18/2012
|
36,000
|
201,960
|
--
|
--
|
|
4,000
|
|
|
2.99
|
1/21/2015
|
|
|
|
|
|
4,000
|
|
|
2.45
|
5/25/2015
|
|
|
|
|
|
4,000
|
|
|
2.45
|
5/25/2015
|
|
|
|
|
|
4,000
|
|
|
2.45
|
5/25/2015
|
|
|
|
|
|
4,000
|
|
|
2.45
|
5/25/2005
|
|
|
|
|
|
|
4,000
(4)
|
|
2.45
|
5/25/2008
|
|
|
|
|
|
7,500
|
|
|
5.40
|
5/3/2013
|
|
|
|
|
|
7,500
|
|
|
5.40
|
5/3/2013
|
|
|
|
|
|
|
15,000
(5
|
|
5.40
|
5/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derek
R. Bristow
|
6,000
|
|
--
|
2.39
|
8/9/2014
|
20,000
|
112,200
|
--
|
--
|
|
6,000
|
|
|
2.45
|
5/25/2015
|
|
|
|
|
|
|
6,000
(6)
|
|
2.45
|
5/25/2015
|
|
|
|
|
|
10,000
|
|
|
4.79
|
6/15/2013
|
|
|
|
|
|
|
20,000
(7)
|
|
4.79
|
6/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley
T. Leuschner
|
5,000
|
|
--
|
1.45
|
2/18/2012
|
9,000
|
50,490
|
--
|
--
|
|
10,000
|
|
|
3.03
|
12/1/2014
|
|
|
|
|
|
20,000
|
|
|
2.40
|
11/18/2015
|
|
|
|
|
__________________
(1) Mr. Biro resigned as CFO of the Company
on January 11, 2008. As of September 30, 2008, Mr. Biro did not hold any
outstanding stock options or restricted shares awards.
(2) The stock options vest ratably over a
three-year period commencing on May 3, 2008.
(3) The stock options vest ratably over a
two-year period commencing on May 25, 2008.
(4) The stock options vest May 25,
2009.
(5) The stock options vest ratably over a
one-year period commencing on May 3, 2009.
(6) The stock options vest ratably over a
two-year period commencing on May 25, 2008.
(7) The stock options vest ratably over a
three-year period commencing on June 15, 2008.
(8) Based on the closing market price of
$5.61 as of September 30, 2008, the last trading day of September 2008.
All restricted shares will fully vest three years after the date of
award.
Option
Exercises and Stock Vested
The
following table provides information on the stock option and restricted share
awards that vested during fiscal year 2008.
Option Exercises and Stock Vested During Fiscal Year 2008
|
|
Option
Awards
|
Stock
Awards
|
|
Name
|
Number
of
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
on
Exercise
($)
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
Value
Realized
on
Vesting
($)
|
|
A. John Knapp, Jr.
(1)
|
120,000
|
669,600
|
--
|
--
|
|
Jon C. Biro
(2)
|
108,000
|
1,023,565
|
--
|
--
|
|
Stephen E.
Barkmann
|
--
|
--
|
--
|
--
|
|
Derek R. Bristow
(3)
|
22,000
|
207,203
|
--
|
--
|
|
Eric
Parsons
|
--
|
--
|
--
|
--
|
|
Bradley
T. Leuschner
(4)
|
10,000
|
142,500
|
--
|
--
|
__________________
(1) Mr. Knapp exercised 120,000 stock options
on February 13, 2008, with an exercise price of $2.40 and a market price on the
date of exercise of $7.98, and continues to hold the shares resulting from this
exercise.
(2) Mr. Biro exercised 26,500 stock options
on December 13, 2007, with an exercise price of $2.40 and market price of
$12.85; 15,500 stock options on December 14, 2007, with an exercise price of
$2.40 and market price of $13.03; 41,000 stock options on December 14, 2007,
with an exercise price of $2.49 and market price of $13.03; 10,000 stock options
on February 15, 2008, with an exercise price of 1.27 and market price of $7.58;
10,000 stock options of February 15, 2008, with an exercise price of $1.45 and
market price of $7.58; and 5,000 stock options on February 15, 2008, with an
exercise price of $2.49 and market price of $7.58.
(3) Mr. Bristow exercised 6,000 stock options
on December 13, 2007, with an exercise price of $2.39 and market price of
$12.92; 6,000 stock options on December 13, 2007, with an exercise price of
$2.45 and market price of $12.92; and 10,000 stock options on December 13, 2007,
with an exercise price of $4.79 and market price of $12.92.
(4) Mr. Leuschner exercised 10,000 stock
options on October 11, 2007, with an exercise price of $1.75 and market price of
$16.00.
COMPENSATION
COMMITTEE REPORT
The
following report of the Compensation Committee of the Board of Directors shall
not be deemed to be “soliciting material” or to be “filed” with the SEC or
subject to the SEC’s proxy rules, except for the required disclosure in this
Proxy Statement, or subject to the liabilities of Section 18 of the Securities
and Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates by reference into any filing made by the Company under
the Securities Act of 1933, as amended, or the Securities and Exchange Act of
1934.
The
Compensation Committee of the Company has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) off Regulation S-K
with management, and based on such review and discussions, the Compensation
Committee recommends to the Board of Directors that the Compensation Discussion
and Analysis be included in this Proxy Statement.
|
COMPENSATION COMMITTEE
|
|
David E. K. Frischkorn, Jr., Chairman
Eugene R. Allspach
Eric O. English
|
|
|
AUDIT
COMMITTEE REPORT
The Audit
Committee currently consists of Messrs. Gaubert (Chairman), Barmore, Frischkorn
and Shah. The Board of Directors has determined that each member of
the Audit Committee is independent, as defined in Rule 4200(a) of the NASDAQ
Marketplace Rules and as set forth in Rule 10A-3(b)(1) of the Securities
Exchange Act of 1934, as amended. In addition, the Board of Directors
has determined that Messrs. Gaubert, Frischkorn and Barmore each qualify as an
"audit committee financial expert" (as defined in the rules of the
SEC). All current members of the Audit Committee are able to read and
understand fundamental financial statements, and none has participated in the
preparation of financial statements of the Company or its subsidiaries during
the past three years.
The Audit
Committee’s responsibilities include the appointment, compensation and retention
of the Company’s independent registered public accounting firm, as well as
review of the professional services provided by the Company’s independent
registered public accounting firm and the independence of such accountants from
management of the Company. The Audit Committee’s responsibilities
also include review, appraisal and oversight with regard to: the performance of
the Company’s internal audit function; the preparation of the Company’s
quarterly and annual financial statements; the Company’s accounting and
financial reporting process and internal control system (including oversight
with respect to management’s documentation, testing and evaluation of the
Company’s internal control over financial reporting in accordance with the
requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and
related regulations); and policies and procedures relating to legal compliance
and ethics. The Audit Committee also reviews such other matters with
respect to the Company’s accounting, auditing and financial reporting practices
and procedures as it may find appropriate, or as may be brought to its
attention.
The Audit
Committee’s Charter can be found on the Company’s website located at
www.icopolymers.com
. The
Charter provides further information regarding the Audit Committee and its
authority, responsibility and duties.
During
the course of fiscal year 2008, management updated documentation and conducted
testing and evaluation of the Company’s internal control over financial
reporting in accordance with the requirements set forth in Section 404 of the
Sarbanes-Oxley Act of 2002 and related regulations. The Audit
Committee reviewed the progress of the documentation, testing and evaluation,
and provided oversight during the process. The Audit Committee
received periodic updates from each of management, internal audit and
PricewaterhouseCoopers LLP. At the conclusion of the process, the
Audit Committee reviewed and discussed management’s report on the effectiveness
of the Company’s internal control over financial reporting and the related
attestation report of PricewaterhouseCoopers LLP. The Audit Committee
also discussed with management and the Company’s independent registered public
accounting firm certain matters including the Company’s annual and quarterly
financial statements; the Company’s financial reporting process and internal
control system; the Company’s significant accounting and financial reporting
principles, practices and procedures; and such other matters with respect to the
Company’s accounting, auditing and financial reporting practices and procedures
as it found appropriate, or as were brought to the Audit Committee’s
attention.
In
connection with the preparation of the Company’s Annual Report on Form 10-K for
the fiscal year ended September 30, 2008, the Audit
Committee:
|
(i)
|
reviewed
and discussed the audited financial statements with the Company’s
management, internal audit, and PricewaterhouseCoopers LLP, the Company’s
independent registered public accounting
firm;
|
|
(ii)
|
discussed
with PricewaterhouseCoopers LLP the matters required to be discussed by
the Public Company Accounting Oversight Board (“PCAOB”) auditing
standards, including the matters required to be discussed by SAS 61 (as
modified or supplemented);
|
|
(iii)
|
received
and discussed with PricewaterhouseCoopers LLP the written disclosures and
the letter from PricewaterhouseCoopers LLP required by applicable
requirements of the PCAOB for independent auditor communications with the
Audit Committee concerning
independence;
|
|
(iv)
|
discussed
with the Company’s management and PricewaterhouseCoopers LLP the process
used for the Chief Executive Officer and Chief Financial Officer to make
the certifications required by the SEC and the Sarbanes-Oxley Act of 2002
in connection with the Company’s Annual Report on Form 10-K for the fiscal
year ended September 30, 2008 and other periodic filings with the SEC;
and
|
|
(v)
|
discussed
with PricewaterhouseCoopers LLP its independence (including reviewing the
non-audit services provided to the Company by PricewaterhouseCoopers
LLP).
|
The
charter of the Audit Committee provides that the Audit Committee is responsible
for the pre-approval of all auditing services and permissible non-audit services
(including the fees and terms of these services) to be performed for the Company
by the independent registered public accounting firm, subject to the
requirements of applicable law. In addition to pre-approving specific
services as the needs for such services arise, the Audit Committee has adopted
and implemented a formal pre-approval policy with procedures for pre-approving
audit and other fees (which procedures are sufficiently detailed as to the
particular service such that they do not constitute a delegation of the Audit
Committee’s authority to management). Details regarding the fees paid
to PricewaterhouseCoopers LLP for audit services, audit-related services, tax
services and all other services in the fiscal year 2008 are set forth under the
caption “Appointment of Independent Registered Public Accounting Firm”
below.
Based on
the review and discussions referred to above, the Audit Committee recommended to
the Board that the audited financial statements be included in the Company’s
Annual Report on Form 10-K for the fiscal year ended September 30, 2008 filed
with the SEC.
Notwithstanding
the foregoing actions and the responsibilities set forth in the Audit Committee
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company’s financial statements are complete and accurate
and in accordance with generally accepted accounting principles. Management is
responsible for the Company’s financial reporting process including its system
of internal controls, and for the preparation of consolidated financial
statements in accordance with accounting principles generally accepted in the
United States. The independent registered public accounting firm is
responsible for expressing an opinion on those financial
statements. Therefore, the Committee has relied, without
independent verification, on management’s representation that the financial
statements have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States, and on the
representations of the independent registered public accounting firm included in
their report on the Company’s financial statements.
The Audit
Committee meets regularly with management and the independent registered public
accounting firm, and receives the communications described above. The
Audit Committee has also established procedures for (a) the receipt, retention
and treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and (b) the confidential,
anonymous submission by the Company’s employees of concerns regarding
questionable accounting or auditing matters. However, this oversight
does not provide the Committee with an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or policies, or appropriate internal controls and procedures designed
to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Committee’s considerations and
discussions with management and the independent registered public accounting
firm do not assure that the Company’s financial statements are presented in
accordance with generally accepted accounting principles or that the audit of
the Company’s financial statements has been carried out in accordance with
generally accepted auditing standards.
The
information contained in this Audit Committee Report shall not be deemed to be
"soliciting material" to be "filed" with the SEC, nor shall such information be
incorporated by reference into any future filings with the SEC, or subject to
the liabilities of Section 18 of the Securities and Exchange Act of 1934, as
amended, except to the extent that the Company specifically incorporates it by
reference into a document filed under the Securities Act of 1933, as amended, or
the Securities and Exchange Act of 1934, as amended.
|
AUDIT
COMMITTEE
|
|
Daniel
R. Gaubert, Chairman
|
|
Gregory
T. Barmore
|
|
David
E. K. Frischkorn, Jr.
|
|
Kumar
Shah
|
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our Board
of Directors has adopted a written policy that requires that all relationships
and transactions in which the Company and our directors and executive officers
or their immediate family members are or will be participants be reported to our
General Counsel and our Chairman of the Board. Related party
transactions may be consummated or may continue only if the Board of Directors
approves or ratifies such transactions. Our Board of Directors may
approve or ratify a related party transaction only (i) if the Board determines
that the transaction is conducted on terms and in a manner that does not
conflict with the best interests of the Company, and (ii) the transaction is
conducted at “arms length,” i.e. in the same manner as the transaction would be
with an independent third party.
Warren W.
Wilder, a director and member of our Compensation Committee, was appointed in
July 2008 as the Managing Director of Titan Chemicals Corp. Bhd., a
petrochemical corporation based in Kuala Lumpur, Malaysia
(“Titan”). ICO Polymers (Malaysia) Sdn. Bhd., a subsidiary of
our Asia Pacific division (“ICO Malaysia”), maintains an ongoing business
relationship with Titan Petchem (M) Sdn. Bhd., a wholly-owned subsidiary of
Titan (“Petchem”), pursuant to which ICO Malaysia purchases from Petchem certain
resin materials for use in ICO Malaysia’s business. Petchem currently
does not purchase any services or products ICO Malaysia, although such
transactions may occur in the future. The relationship between ICO
Malaysia and Petchem has existed since before Mr. Wilder was appointed as
Managing Director of Titan in July 2008. ICO Malaysia does not
consider Petchem to be a competitor.
In fiscal
year 2008, ICO Malaysia purchased approximately $400,000 worth of resin
materials from Petchem. ICO Malaysia expects to purchase a similar amount of
materials from Petchem in fiscal year 2009. Mr. Wilder does not
directly participate in any transactions between ICO Malaysia and Petchem nor
does he have a direct financial interest in these transactions. Our
Board of Directors has adopted and follows a written policy covering conflicts
of interest in circumstances where a director changes jobs or is offered an
appointment to the board of directors of another entity. Our Board of
Directors has evaluated the relationship between ICO Malaysia and Petchem and
determined that no conflict of interest exists as a result of Mr. Wilder’s
concurrent service as a director of our Company and as the Managing Director of
Titan.
We know
of no other related party transactions in fiscal year 2008.
BENEFICIAL
OWNERSHIP OF COMMON STOCK BY MANAGEMENT OF THE COMPANY AND PRINCIPAL
SHAREHOLDERS
The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of January 15, 2009 by (i) each person who is
known by us to own beneficially more than 5% of the common stock, (ii) each
director and nominee for director, (iii) each of our named executive officers
and other select executive officers and (iv) all directors, director nominees
and executive officers as a group.
Name of Beneficial
Owner
(1)
|
Number
of Shares
Beneficially Owned
|
Percent
of Shares
Beneficially Owned
(2)
|
|
|
|
Principal
Shareholder(s)
|
|
|
J.
Carlo Cannell
|
1,409,579
|
(3)
|
5.1%
|
|
|
|
|
Directors
|
|
|
|
A.
John Knapp, Jr.
|
1,438,503
|
(4)
|
5.2%
|
Gregory
T. Barmore
|
268,081
|
(5)
|
*
|
David
E.K. Frischkorn, Jr.
|
52,300
|
(6)
|
*
|
Eric
O. English
|
24,300
|
(7)
|
*
|
Daniel
R. Gaubert
|
22,900
|
(8)
|
*
|
Warren
W. Wilder
|
22,900
|
(9)
|
*
|
Eugene
R. Allspach
|
10,900
|
(10)
|
*
|
Max
W. Kloesel
|
65,171
|
(11)
|
*
|
Kumar
Shah
|
12,900
|
(12)
|
*
|
|
|
|
Executive
Officers Who Are Not Directors
|
|
|
Stephen
E. Barkmann
|
152,488
|
(13)
|
*
|
Jon
C. Biro†
|
--
|
(14)
|
*
|
Dario
E. Masutti†
|
12,750
|
(15)
|
*
|
Bradley
T. Leuschner
|
72,768
|
(16)
|
*
|
Derek
R. Bristow
|
78,000
|
(17)
|
*
|
D.
Eric Parsons
|
95,827
|
(18)
|
*
|
Charlotte
Fischer Ewart
|
46,750
|
(19)
|
*
|
|
|
|
|
All
directors and executive officers as a group
(16
persons)
|
2,376,538
|
|
8.5%
|
|
|
|
____________
* Indicates ownership does
not exceed 1.0%.
† Mr. Biro served as Chief
Financial Officer of the Company until his resignation on January 11, 2008.
Mr. Masutti served as President of the Company’s ICO Asia Pacific
division until his resignation on December 31, 2008.
(1) The address for each of the Company’s
directors and named executive officers is 1811 Bering Drive, Suite 200, Houston,
Texas 77057.
(2) The percentage of shares beneficially
owned was calculated based on 27,560,092 shares of common stock outstanding as
of January 13, 2009. The percentage assumes the exercise and retention, by
the shareholder named in each row, of all stock options for the purchase of
common stock held by such shareholder and exercisable currently or within 60
days.
(3) The information concerning J. Carlo
Cannell is based solely on the information provided in its Schedule 13G filed
with the SEC on March 26, 2008. Anegada Master Fund Limited, Tonga
Partners, L.P. and Tristan Partner’s, L.P. own the shares. Cannell Capital
LLC acts as the investment advisor to Anegada Master Fund Limited and is the
general partner of and the investment advisor to Tonga Partners, L.P. and
Tristan Partner’s, L.P. J. Carlo Cannell is the sole managing member of
Cannel Capital LLC, and is deemed to beneficially own all of the shares. Mr.
Cannell’s address is P.O. Box 3459, 240 E. Deloney Avenue, Jackson, Wyoming
83001.
(4) Includes 25,000 shares that may be
acquired currently or within 60 days upon exercise of stock options awarded
under the Director Plan; 240,000 shares that may be acquired currently or
within 60 days upon exercise of stock options awarded under the 2007 Employee
Plan; 269,015 shares held of record by Mr. Knapp, which includes 77,539 shares
of restricted common stock; 513,643 shares held of record by an IRA controlled
by Mr. Knapp; 2,625 equivalent shares held in the unitized stock fund in the
Company’s 401(k) Plan; 10,000 shares held of record by Mr. Knapp’s spouse;
278,655 shares held of record by Andover Group, Inc., of which Mr. Knapp is the
President and has voting and investment control; 39,500 shares held of record by
Andover Real Estate Service, Inc., of which Mr. Knapp is the President and has
voting and investment control; 42,000 shares held of record by the Knapp
Children’s Trust, of which Mr. Knapp is a trustee; 10,000 shares held of record
by the Lykes Knapp Family Foundation, of which Mr. Knapp has voting and
investment control; and 8,065 shares held of record by the Estate of Robert W.
Ohnesorge, over which Mr. Knapp has voting control in his capacity as executor
of the estate. Mr. Knapp disclaims beneficial ownership of the 42,000
shares held of record by the Knapp Children’s Trust and the 8,065 shares held of
record by the Estate of Robert W. Ohnesorge.
(5) Includes 17,600 shares of restricted
common stock.
(6) Includes 9,300 shares of common stock
held of record by Mr. Frischkorn, which includes 4,300 shares of restricted
common stock; 7,000 shares held of record in an IRA controlled by Mr.
Frischkorn; 30,000 shares that may be acquired currently or within 60 days upon
exercise of stock options awarded under the Company’s 1993 Director Plan; 3,000
shares held of record by the 1987 Present Interest Trust for Anne
Eloise Frischkorn, the daughter of Mr. Frischkorn and of
which Mr. Frischkorn is the trustee; and 3,000 shares held of record by the 1987
Present Interest Trust for David Frischkorn, III, the son of Mr. Frischkorn and
of which Mr. Frischkorn is the trustee. Mr. Frischkorn disclaims
beneficial ownership of any securities held by either of the two referenced
trusts.
(7) Includes 4,300 shares of restricted
common stock held of record by Mr. English and 20,000 shares that may be
acquired currently or within 60 days upon exercise of stock options awarded
under the Director Plan.
(8) Consists of 22,900 shares held of record
by Mr. Gaubert which include 12,900 restricted shares of common
stock.
(9) Includes 17,900 shares of common stock
held of record by Mr. Wilder which include 12,900 shares of restricted common
stock and 5,000 shares that may be acquired currently or within 60 days upon
exercise of stock options awarded under the Director Plan.
(10) Consists of 10,900 shares of restricted common stock
held of record by Mr. Allspach.
(11) Includes 28,000 shares held of record by Mr.
Kloesel, 34,671 equivalent shares of common stock held in the unitized stock
fund in the Company’s 401(k) Plan and 2,500 shares that may be acquired
currently or within 60 days upon exercise of stock options awarded under the
2007 Employee Plan.
(12) Consists of 12,900 restricted shares of common stock
held of record by Mr. Shah.
(13) Includes 84,485 shares of restricted common stock
held of record by Mr. Barkmann, 21,753 equivalent shares of common stock held in
the unitized stock fund in the Company’s 401(k) Plan and 46,250 shares that may
be acquired currently or within 60 days upon exercise of stock options awarded
under the 2007 Employee Plan.
(14) Based on communications between the Company’s
management and Mr. Biro, he holds no shares of the Company’s common
stock.
(15) Includes 12,750 shares that may be acquired
currently or within 60 days upon exercise of stock options awarded under the
1994 Employee Plan, the 1995 Employee Plan, the 1996 Employee Plan and the 2007
Employee Plan.
(16) Includes 22,592 shares of restricted common stock
and 430 shares of common stock held of record by Mr. Leuschner; 35,000 shares
that may be acquired currently or within 60 days upon exercise of stock options
awarded under the 1996 Employee Plan and the 2007 Employee Plan; and 15,176
equivalent shares of common stock held in the unitized stock fund in the
Company’s 401(k) Plan.
(17) Includes 56,000 shares of restricted common stock
held of record by Mr. Bristow and 22,000 shares that may be acquired currently
or within 60 days upon exercise of stock options awarded under the 1996 Employee
Plan and the 2007 Employee Plan.
(18) Includes 36,000 shares of restricted common stock
held of record by Mr. Parsons; 22,827 equivalent shares of common stock held in
the unitized stock fund in Company’s 401(k) Plan; and 37,000 shares that may be
acquired currently or within 60 days upon exercise of stock options awarded
under the 1996 Employee Plan and the 2007 Employee Plan.
(19) Includes 13,000 shares held of record by Ms. Ewart,
which include 11,000 shares of restricted common stock; 500 shares held of
record by Ms. Ewart’s spouse; 13,250 equivalent shares of common stock held in
the unitized stock fund in the Company’s 401(k) Plan and 20,000 shares that may
be acquired currently or within 60 days upon exercise of stock options awarded
under the 1994 Employee Plan, 1996 Employee Plan and the 2007 Employee Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our directors and executive officers and
persons who own more than 10% of a registered class of the Company’s equity
securities, to file reports of ownership and reports of changes in ownership of
such with the SEC. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To our
knowledge, based solely on the Company’s review of the copies of such reports
furnished to it and representations from certain reporting persons that they
have complied with the relevant filing requirements, during the year ended
September 30, 2008, all Section 16(a) reporting requirements applicable to the
Company’s officers, directors and greater than 10% shareholders were timely met,
except that on one occasion Gregory Barmore, the Chairman of the Board, did not
timely file a Form 4 to report the purchase of shares of common
stock. The transaction was subsequently reported to the SEC on Form 4
on the day following the reporting deadline. In addition, David E. K.
Frischkorn, Jr., a director of the Company, did not timely file a Form 4 to
report the purchase of shares of common stock. The transaction was
subsequently reported to the SEC on Form 4 within three weeks of the date of
purchase.
PROPOSAL
2
APPROVAL
OF INCREASE IN SHARES ISSUABLE UNDER THE
SECOND
AMENDED AND RESTATED ICO, INC. 2007 EQUITY INCENTIVE PLAN
On December 8, 2008, our
Board of Directors approved an amendment to the Second Amended and Restated ICO,
Inc. 2007 Equity Incentive Plan (the “2007 Employee Plan”), increasing the
number of shares of common stock issuable under the 2007 Employee Plan by
350,000, from 1,960,000 shares to 2,310,000 shares, and recommended that the
2007 Employee Plan, as so amended, be submitted to our shareholders for approval
at the annual meeting. The 2007 Employee Plan was originally approved
by our shareholders at the 1998 annual meeting of shareholders. The
shareholders of the Company subsequently approved the amendment of the 2007
Employee Plan in 2002, 2004, 2005, 2006 and 2007. The 2007 Employee
Plan provides for discretionary awards of stock options (incentive and
non-qualified stock options) and restricted shares of common stock to employees
of the Company and its subsidiaries, including our named executive officers
listed in the Summary Compensation Table for 2008 on page
26. The termination date of the 2007
Employee
Plan is
January 25, 2017. The only change proposed to be made to the 2007
Employee Plan is the increase in the number of shares issuable under the 2007
Employee Plan from 1,960,000 shares to 2,310,000 shares.
The
NASDAQ Marketplace Rules require shareholder approval of the amendment to the
2007 Employee Plan is required because the proposed amendment, if approved, will
materially increase the number of shares issuable under the 2007 Employee
Plan. Accordingly, our Board of Directors is seeking the approval of
the amendment to the 2007 Employee Plan by the holders of a majority of the
outstanding shares of common stock represented at the annual
meeting. Proxies will be voted for or against the proposal in
accordance with the specification marked thereon, and, if no specification is
made, will be voted FOR the proposal (except in the case of a broker
non-vote).
The
following summary of the material features of the 2007 Employee Plan, as
proposed to be amended, is qualified in its entirety by reference to the copy of
the 2007 Employee Plan, as proposed to be amended, filed as Exhibit 10.1 to this
Proxy Statement.
Purpose
of the Amendment
The
Company believes that it has been able to attract, motivate and retain highly
qualified individuals to serve as employees of the Company and its subsidiaries,
in part, through the use of equity incentive compensation
awards. Equity incentive compensation, in the form of stock options
and restricted shares, aligns the interests of the recipient with the interests
of our shareholders, and ties a portion of employee compensation directly to
shareholder value because the value of such awards depends on the appreciation
of the shares of our common stock. We also believe that the ability
to provide equity incentive compensation to our employees is a favorable method
for the Company to compensate these individuals for past contributions to the
Company’s success, as well as for anticipated contributions in the
future. As of January 15, 2009, stock options to purchase a total of
681,553 shares of common stock were outstanding and 441,326 shares of restricted
stock had been awarded under the 2007 Employee Plan.
Our Board
of Directors approved this amendment of the 2007 Employee Plan to increase the
number of shares of common stock issuable under the 2007 Employee Plan by
350,000 shares in order to maintain the 2007 Employee Plan as a continuing
source of long-term incentive compensation to our employees.
Administration
The
Compensation Committee of our Board of Directors currently administers the 2007
Employee Plan, has sole authority to select employees to whom equity incentive
compensation may be awarded and determines the vesting terms and other terms of
the agreements representing such equity incentive compensation
awards.
Stock
Options
The
Compensation Committee may designate stock options awarded under the 2007
Employee Plan as either incentive stock options or non-qualified stock
options. However, the Compensation Committee has followed an informal
policy beginning in fiscal year 2006 of designating all stock options awarded
under the 2007 Employee Plan as non-qualified stock options. Stock
options may be awarded alone or in addition to restricted share awards, although
the Compensation Committee has followed an informal policy beginning in fiscal
year 2007 of awarding equity incentive compensation in the form of restricted
shares rather than stock options (except to employees residing in certain
countries outside of the U.S. where tax or legal considerations warrant
otherwise), in part, because restricted share awards result in less dilution to
our existing shareholders.
The
exercise price of stock options awarded under the 2007 Employee Plan is
determined by the Compensation Committee, but the exercise price may not be less
than the “fair market value” of our common stock (defined in the 2007 Employee
Plan) on the date the stock option is awarded. No person may receive
an incentive stock option if, at the time of grant, such person owns directly or
indirectly more than 10% of the total combined voting power of the Company
unless the option price is at least 110% of the fair market value of the common
stock and such incentive stock option is by its terms not exercisable after the
expiration of five years from the date of grant. There is also a $100,000 limit
on the value of stock (determined at the time of grant) covered by incentive
stock options that first became exercisable by an optionee in any calendar
year. Each stock option expires on the earlier of the termination
date specified in the agreement awarding the stock option or the tenth
anniversary of the date of the stock option award. The vesting period
for each stock option, if any, is set forth in the agreement awarding such
options. The maximum number of shares of common stock with respect to
which an equity incentive compensation award (in any combination of stock
options or restricted
stock)
may be granted to any one employee during each fiscal year is
400,000. Stock option awards designated as incentive stock options
are subject to additional conditions.
Stock
options generally are not transferable other than by will or the laws of descent
or distribution. Shares covered by awards of stock options under the
2007 Employee Plan may be issued by the Company from authorized and unissued
stock or from shares previously issued and reacquired by the
Company. In the event that previously awarded stock options terminate
or expire, new stock options may be awarded covering the same shares of common
stock.
Restricted
Shares
Restricted
shares may be awarded alone or in addition to stock option
awards. Restricted shares awarded under the 2007 Employee Plan are
subject to a vesting period and/or certain performance measures designated by
the Compensation Committee. The period of time in which a vesting
period and/or a performance measure has not been satisfied is referred to as a
“restricted period.” Restricted shares may not be sold, assigned,
transferred, pledged or otherwise encumbered during the restricted period
applicable to each particular award of restricted shares. The
restricted period for each award of restricted shares will be for a period of
between one year and ten years, as determined by the Compensation
Committee. Holders of restricted shares have all the rights of a
shareholder of the Company; however, in most cases if an employee does not
continue to be employed by the Company until the end of the vesting period, or
satisfy applicable performance measures, then the employee’s right to the
restricted shares shall be forfeited. Holders may receive dividends
on and vote their restricted shares.
Amendment
and Termination
Our Board
of Directors may amend, suspend or discontinue the 2007 Employee Plan at any
time, except that without the approval of the Company’s shareholders the Board
may not make any amendment which would (i) change the class of employees
eligible under the 2007 Employee Plan, (ii) increase the maximum number of
shares of common stock that may be awarded pursuant to the provisions of the
2007 Employee Plan, or (iii) cause the 2007 Employee Plan or any award
thereunder to fail to (a) qualify for exemption from Section 16(b) of the
Securities Exchange Act of 1934, as amended, (b) be excluded from the $1 million
deduction limitation imposed under Section 162(m) of the Internal Revenue Code
of 1986, as amended, or (c) qualify as an “incentive stock option” as defined by
Section 422 of the Internal Revenue Code.
Recapitalization
and Change-in-control
The 2007
Employee Plan includes customary provisions providing for proportionate
adjustments in the number of shares and price per share for each outstanding
award of stock options or restricted shares in the event of stock dividends,
stock splits and other events.
The 2007
Employee Plan also contains provisions related to changes-in-control (as defined
in the 2007 Employee Plan) of the Company. In the event of a
change-in-control of the Company, and the acquiring corporation does not assume
the outstanding stock options and restricted shares or substitute new awards
therefor or unless otherwise provided for by the Compensation Committee at the
time of award, any stock option that is not then vested and exercisable will
become fully vested and exercisable and any restrictions on shares of restricted
stock will lapse at least ten days prior to the proposed
change-in-control.
Tax
Effects of Participation in the 2007 Employee Plan
The
discussion below summarizes the expected U.S. federal income tax treatment of
stock options and restricted shares that may be awarded under the 2007 Employee
Plan, as proposed to be amended, under currently applicable laws and
regulations. It is only a summary of the effect of U.S. federal
income taxation upon recipients of such awards and the Company with respect to
the award and exercise of such awards under the 2007 Employee
Plan. It does not purport to be complete, and does not discuss the
tax consequences arising in the context of a recipient’s death or the income tax
laws of any municipality, state or foreign county in which the recipient’s
income or gain may be taxable.
Incentive Stock
Options
. No federal income tax is imposed on an optionee upon
the grant or exercise of an incentive stock option. However, the
difference between the exercise price and the fair market value of the shares on
the exercise date will be included in the calculation of the optionee’s
alternative minimum tax liability, if any. If the optionee does not
dispose of shares acquired pursuant to the exercise of an incentive stock option
within two years from the date
the
option was awarded or within one year after the shares were transferred to the
optionee, no income is recognized by the optionee by reason of the exercise of
the option, and the difference between the amount realized upon a subsequent
disposition of the shares and the option price of the shares would be treated as
long-term capital gain or loss. In such event, the Company would not be entitled
to any deduction in connection with the award or exercise of the option or the
disposition of the shares so acquired. If an optionee disposes of
shares acquired pursuant to the optionee’s exercise of an incentive stock option
prior to the end of the two-year or one-year holding periods noted above, the
disposition would be treated as a disqualifying disposition and the optionee
would be treated as having received, at the time of disposition, compensation
taxable as ordinary income equal to the excess of the fair market value of the
shares at the time of exercise (or, in the case of a sale in which a loss would
be recognized, the amount realized on such sale, if less) over the stock option
price paid for such shares. Any amount realized in excess of the fair market
value of the shares at the time of exercise would be treated as long-term or
short-term capital gain, depending on the holding period of the shares. In such
event, the Company may claim a deduction for compensation paid at the same time
and in the same amount as compensation is treated as received by the
optionee.
Nonqualified Stock
Options
. Non-qualified stock options do not qualify for any
special federal income tax treatment. As a general rule, no federal
income tax is imposed on the optionee upon the award of a nonqualified stock
option, and the Company is not entitled to a tax deduction by reason of such
award. Upon the exercise of a nonqualified stock option, the optionee
will be treated as receiving compensation taxable as ordinary income in the year
of exercise, in an amount equal to the excess of the fair market value of the
shares at the time of exercise over the stock option price paid for such shares,
with the Company entitled to a corresponding deduction.
Upon a
subsequent disposition of the shares received upon exercise of a nonqualified
stock option, any difference between the amount realized on the disposition and
the basis of the shares (option price plus any ordinary income recognized) would
be treated as long-term or short-term capital gain or loss, depending on the
holding period of the shares. However, the Company will not be
entitled to any deduction in connection with any loss to the optionee or a
portion of any gain that is taxable to the optionee as short-term or long-term
gain.
Restricted
Shares
. A recipient generally does not recognize taxable
income on the award of restricted shares, but does recognize ordinary income on
the vesting date, or the date the recipient’s interest in the shares of common
stock is freely transferable or is no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of the shares on that
date. Any dividends paid on the restricted shares before the vesting
date are also taxable as compensation income upon receipt.
A
recipient of restricted shares may elect to recognize income upon the award of
restricted shares, rather than when the recipient’s interest is freely
transferable or no longer subject to a substantial risk of forfeiture, equal to
the fair market value of the shares on the date of award. If the
recipient makes this election, dividends paid with respect to the restricted
shares that are paid currently (rather than held subject to forfeiture) are not
treated as compensation. Instead, these dividends are treated as
dividend income. The recipient will not be entitled to any deduction,
if after making this election, he or she forfeits any of the restricted
shares. If restricted shares are forfeited after this election is
made, the recipient will not be entitled to a refund of the ordinary income tax
paid on the shares. The recipient may, however, be entitled to
receive a capital loss deduction upon forfeiture.
Withholding
. The
Company retains the right to deduct or withhold, or require the recipient to
remit to the Company, an amount sufficient to satisfy federal, state and local
taxes, required by law or regulation to be withheld with respect to any taxable
event resulting under the 2007 Employee Plan.
Change-in-control and Excess
Parachute Payments
. The accelerated vesting of stock options
or restricted shares upon a change-in-control could result in a participant
being considered to receive “excess parachute payments” (as defined in Section
280G of the Internal Revenue Code of 1986, as amended). Such payments
are subject to a 20% excise tax imposed on the participant. The
Company cannot deduct excess parachute payments.
2007
Employee Plan Benefits
Equity-based
compensation under the 2007 Employee Plan is awarded at the discretion of the
Compensation Committee. As such, it is not possible for the Company
to determine and disclose the amount of future equity incentive compensation
that may be awarded to our employees, including our named executive officers and
other executives as a whole, if the amendment to the 2007 Employee Plan is
approved. Information with respect to equity incentive
compensation
awarded under the 2007 Employee Plan to the named executive officers for fiscal
year 2008 and prior fiscal years is included in the Summary Compensation Table
for 2008 on page 26.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “
FOR
” THE PROPOSAL TO
AMEND THE SECOND AMENDED AND RESTATED ICO, INC. 2007 EQUITY INCENTIVE
PLAN
PROPOSAL
3
APPROVAL
OF INCREASE IN SHARES ISSUABLE UNDER THE 2008 EQUITY INCENTIVE PLAN
FOR
NON-EMPLOYEE DIRECTORS OF ICO, INC.
On
December 8, 2008, our Board of Directors approved an amendment to the 2008
Equity Incentive Plan for Non-Employee Directors of ICO, Inc. (the “Director
Plan”), increasing the number of shares of common stock issuable under the
Director Plan by 150,000 shares, from 410,000 shares to 560,000 shares, and
recommended that the Director Plan, as so amended, be submitted to our
shareholders for approval at the annual meeting. The Director Plan
was originally approved by our shareholders at the 1993 annual meeting of
shareholders. The shareholders of the Company subsequently approved
the amendment and restatement of the Director Plan in 1996, 1999, 2001, 2005 and
2008. The Director Plan provides for discretionary awards to
non-employee directors of restricted shares of common stock and non-qualified
stock options to purchase shares of our common stock. The
termination date of the Director Plan is currently January 23,
2018. The Director Plan is the only equity incentive compensation
plan of the Company that provides for awards to non-employee
directors. The only change proposed to be made to the Director Plan
is the increase in shares issuable under the Director Plan from 410,000 shares
to 560,000 shares.
The
NASDAQ Marketplace Rules require shareholder approval of the amendment to the
Director Plan is required because the proposed amendment, if approved by our
shareholders, will materially increase the number of shares issuable under the
Director Plan. Accordingly, the Board of Directors is seeking the
approval of the amendment to the Director Plan by the holders of a majority of
the outstanding shares of common stock represented at the annual
meeting. Proxies will be voted for or against the proposal in
accordance with the specification marked thereon, and, if no specification is
made, will be voted FOR of the proposal (except in the case of a broker
non-vote).
The
following summary of the material features of the Director Plan, as proposed to
be amended, is qualified in its entirety by reference to the copy of the
Director Plan, as proposed to be amended, filed as Exhibit 10.2 to this Proxy
Statement.
Purpose
of the Amendment
Our Board
of Directors believes that it has been able to attract, motivate and retain
highly qualified individuals to serve as non-employee members of the Board in
part through the use of equity incentive compensation awards. Equity
incentive compensation aligns the interests of the recipients with the interests
of our shareholders, and ties a portion of non-employee director compensation
directly to shareholder value because the value of such awards depends on the
appreciation of the shares of our common stock. The Board of
Directors also believes that the ability to provide equity incentive
compensation to non-employee directors is a favorable method to compensate these
individuals for past contributions to the Company’s success, as well as for
anticipated contributions in the future. As of January 15, 2009, no
stock options were outstanding and 83,700 shares of restricted stock had been
awarded under the Director Plan. Our Board of Directors
approved this amendment of the Director Plan to increase the number of shares of
common stock issuable thereunder by 150,000 to maintain the Director Plan as a
continuing source of long-term compensation to our non-employee
directors.
Administration
A
committee comprised of the full Board of Directors currently administers the
Director Plan, has sole authority to select non-employee directors to whom
equity incentive compensation awards may be awarded, and determines the vesting
terms and other terms of the agreements representing such equity incentive
compensation awards.
Stock
Options
Stock
options may be awarded alone or in addition to restricted share
awards. Beginning in fiscal year 2008, our Board of Directors has
followed an informal policy of awarding equity incentive compensation in the
form of restricted stock only, in part because restricted stock awards result in
less dilution to our existing shareholders. All stock options awarded
under the Director Plan are non-qualified stock options. The exercise
price of stock options awarded under the Director Plan is determined by our
Board of Directors, but the exercise price may not be less than the “fair market
value” of the common stock (defined in the Director Plan) on the date the stock
option is awarded. Each stock option expires on the earlier of the
termination date specified in the agreement awarding the stock option or the
tenth anniversary of the date of the stock option award. The vesting
period for each stock option, if any, is set forth in the agreement awarding
such options. Stock options generally are not transferable other than
by will or the laws of descent or distribution. Shares covered by
awards of stock options under the Director Plan may be issued by the Company
from authorized and unissued stock or from shares previously issued and
reacquired by the Company. In the event that previously awarded stock
options terminate or expire, new stock options may be awarded covering the same
shares of common stock.
Restricted
Shares
Restricted
shares may be awarded alone or in addition to stock option
awards. Restricted shares awarded under the Director Plan are subject
to a vesting period and/or certain performance measures designated by our Board
of Directors. The period of time in which a vesting period and/or a
performance measure has not been satisfied is referred to as a “restricted
period.” Restricted shares may not be sold, assigned, transferred,
pledged or otherwise encumbered during the restricted period applicable to each
particular award of restricted shares. The restricted period for each
award of restricted shares will be for a period of between six months and ten
years, as determined by the Board. Holders of restricted shares have
all the rights of a shareholder of the Company; however, in most cases if a
non-employee director does not continue to serve as a director of the Company
until the end of the vesting period, or satisfy applicable performance measures,
then the director’s right to the restricted shares shall be
forfeited. Holders may receive dividends on and vote their restricted
shares.
Amendment
and Termination
Our Board
of Directors may amend, modify, suspend or terminate the Director Plan at any
time, except that it may not make any amendment without the approval of the
Company’s shareholders which would (i) increase the maximum number of shares of
common stock that may be issued pursuant to the provisions of the Director Plan,
(ii) increase the benefit accruing to non-employee directors to whom stock
options or restricted shares have been awarded or (iii) modify the eligibility
requirements for participation in the Director Plan.
Recapitalization
and Change-in-control
The
Director Plan includes customary provisions providing for proportionate
adjustments in the number of shares and exercise price per share for each
outstanding award of stock options or restricted shares in the event of stock
dividends, stock splits and other events.
The
Director Plan also contains provisions related to changes-in-control (as defined
in the Director Plan) of the Company. In the event of a
change-in-control of the Company, and the acquiring corporation does not assume
the outstanding stock options and restricted shares or substitute new awards
therefor or unless otherwise provided for by the Compensation Committee at the
time of award, any stock option that is not then vested and exercisable will
become fully vested and exercisable and any restrictions on shares of restricted
stock will lapse at least ten days prior to the proposed
change-in-control.
Tax
Effects of Participation in the Director Plan
The
discussion below summarizes the expected U.S. federal income tax treatment of
stock options and restricted shares that may be awarded under the Director Plan,
as proposed to be amended, under currently applicable laws and
regulations. It is only a summary of the effect of U.S. federal
income taxation upon recipients of such awards and the Company with respect to
the award and exercise of such awards under the Director Plan, as proposed to be
amended. It does not purport to be complete, and does not discuss the
tax consequences arising in the context of a recipient’s death or the income tax
laws of any municipality, state or foreign county in which the recipient’s
income or gain may be taxable.
Stock
Options
. Under the Director Plan, only nonqualified stock
options may be awarded, which do not qualify for any special federal income tax
treatment. As a general rule, no federal income tax is imposed on the
optionee upon the award of a nonqualified stock option, and the Company is not
entitled to a tax deduction by reason of such award. Upon the
exercise of a nonqualified stock option, the optionee will be treated as
receiving compensation taxable as ordinary income in the year of exercise, in an
amount equal to the excess of the fair market value of the shares at the time of
exercise over the stock option price paid for such shares, with the Company
entitled to a corresponding deduction.
Upon a
subsequent disposition of the shares received upon exercise of a nonqualified
stock option, any difference between the amount realized on the disposition and
the basis of the shares (option price plus any ordinary income recognized) would
be treated as long-term or short-term capital gain or loss, depending on the
holding period of the shares. However, the Company will not be
entitled to any deduction in connection with any loss to the optionee or a
portion of any gain that is taxable to the optionee as short-term or long-term
gain.
Restricted
Shares
. A recipient generally does not recognize taxable
income on the award of restricted shares, but does recognize ordinary income on
the vesting date, or the date the recipient’s interest in the shares of common
stock is freely transferable or is no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of the shares on that
date. Any dividends paid on the restricted shares before the vesting
date are also taxable as compensation income upon receipt.
A
recipient of restricted shares may elect to recognize income upon the award of
restricted shares, rather than when the recipient’s interest is freely
transferable or no longer subject to a substantial risk of forfeiture, equal to
the fair market value of the shares on the date of award. If the
recipient makes this election, dividends paid with respect to the restricted
shares that are paid currently (rather than held subject to forfeiture) are not
treated as compensation. Instead, these dividends are treated as
dividend income. The recipient will not be entitled to any deduction,
if after making this election, he or she forfeits any of the restricted
shares. If restricted shares are forfeited after this election is
made, the recipient will not be entitled to a refund of the ordinary income tax
paid on the shares. The recipient may, however, be entitled to
receive a capital loss deduction upon forfeiture.
Withholding
. The
Company retains the right to deduct or withhold, or require the recipient to
remit to the Company, an amount sufficient to satisfy federal, state and local
taxes, required by law or regulation to be withheld with respect to any taxable
event resulting under the Director Plan.
Change-in-control and Excess
Parachute Payments
. The accelerated vesting of stock options
or restricted shares upon a change-in-control could result in a participant
being considered to receive “excess parachute payments” (as defined in Section
280G of the Internal Revenue Code of 1986, as amended). Such payments
are subject to a 20% excise tax imposed on the participant. The
Company cannot deduct excess parachute payments.
Director
Plan Benefits
Our Board
of Directors intends to continue its practice of awarding restricted shares to
our newly-elected non-employee directors soon after the date of each annual
meeting of shareholders (or on the date when a non-employee director is first
elected or appointed if other than at an annual meeting of
shareholders). These periodic restricted share awards and all other
grants and awards under the Director Plan will be subject to the discretion of
our Board of Directors. The terms of the fiscal year 2009 restricted
share awards have not yet been determined, although it is currently anticipated
that periodic restricted share awards will be made to the non-employee director
nominees, Messrs. English and Frischkorn, upon their election provided that they
are so elected, consistent with the informal policy described under “Equity
Incentive Plan for Non-Employee Directors” on page 9. Information
with respect to equity incentive compensation awarded under the Director Plan to
non-employee directors for fiscal year 2008 and prior fiscal years is included
in the Director Compensation Table for 2008 on page 11.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
THE PROPOSAL
TO
AMEND THE 2008 EQUITY INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS OF ICO,
INC.
EQUITY
PLAN COMPENSATION INFORMATION
The Company currently maintains five
equity incentive compensation plans that provide for the award of stock options
(although awards currently may only be made under the 2007 Employee Plan and the
Director Plan). Each of these equity incentive compensation plans was
approved by our shareholders. The following table sets forth
information as of September 30, 2008 regarding outstanding options and shares
available for issuance under our equity incentive compensation
plans.
Plan
Category
|
Number
of securities to
be
issued
upon
exercise
of outstanding options,
warrants
and
rights
(a)
|
Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
(b)
|
Number
of securities remaining
available
for
future
issuance under equity incentive compensation
plans
(excluding
securities
reflected
in
column
(a))
(c)
|
Equity
incentive compensation plans approved by
shareholders
|
1,013,000
|
$3.27
|
445,608
|
Equity
incentive compensation plans not approved by
shareholders
|
--
|
--
|
--
|
Total
|
1,013,000
|
$3.27
|
445,608
|
PROPOSAL
4
APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee has appointed PricewaterhouseCoopers LLP as the independent registered
public accounting firm of the Company for the fiscal year 2009. At
the annual meeting, the shareholders will be asked to consider and act upon a
proposal to ratify the appointment of PricewaterhouseCoopers LLP. The
ratification of such appointment will require the affirmative vote of the
holders of a majority of the outstanding shares of common stock entitled to vote
and present in person or represented by proxy at the annual
meeting. PricewaterhouseCoopers LLP has served as the Company’s
independent registered public accounting firm since 1981.
A
representative of PricewaterhouseCoopers LLP will be present at the annual
meeting, with the opportunity to make a statement if the representative desires
to do so, and such representative is expected to be available to respond to
appropriate questions at the annual meeting.
The Audit
Committee pre-approves all services provided by our independent registered
public accounting firm to the Company and its subsidiaries. The
following table sets forth fees billed to the Company by PricewaterhouseCoopers
LLP for the fiscal years 2007 and 2008:
Fees
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Audit
Fees
(1)
|
|
$
|
1,102,000
|
|
|
$
|
1,150,000
|
|
Tax
Fees
(2)
|
|
|
--
|
|
|
|
2,000
|
|
All
Other Fees
(3)
|
|
|
--
|
|
|
|
--
|
|
Total
|
|
$
|
1,102,000
|
|
|
$
|
1,152,000
|
|
|
|
|
|
|
|
|
|
|
__________________
(1)
Audit
Fees
. Audit fees consist primarily of the audit and quarterly
reviews of the financial statements, audits of subsidiaries, statutory audits of
subsidiaries required by governmental or regulatory bodies, attestation services
required by statute or regulation, comfort letters, consents,
assistance with and review of documents filed with the
SEC, work performed by tax professionals in connection with the audit and
quarterly reviews, and accounting and financial reporting consultations and
research work necessary to comply with generally accepted auditing
standards. Audit fees also include fees for procedures including
information systems reviews and testing performed in order to understand and
place reliance on the system of internal control, and procedures to support the
independent registered public accounting firm’s report on management’s report on
internal controls for financial reporting consistent with Section 404 of the
Sarbanes-Oxley Act of 2002.
(2)
Tax
Fees
. Tax fees include professional services provided for tax
compliance, tax advice, and tax planning.
(3)
All Other
Fees
. The Company paid no other fees to PricewaterhouseCoopers LLP
in fiscal years 2007 and 2008.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
“
FOR”
THE RATIFICATION OF
THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR 2009.
DATE FOR SUBMISSION OF SHAREHOLDER
PROPOSALS FOR 2010 ANNUAL MEETING
In order
for shareholder proposals submitted pursuant to Rule 14a-8 of the Exchange Act
to be presented at our 2010 annual meeting of shareholders and included in our
related Proxy Statement and form of proxy related to such meeting, such
proposals must be submitted to our Corporate Secretary at our principal
executive offices not later than September 30, 2009. Shareholder
proposals should be submitted to the Corporate Secretary at: ICO,
Inc., 1811 Bering Drive, Suite 200, Houston, Texas 77057, Attention: Corporate
Secretary.
If a
shareholder desires to bring a matter before an annual meeting and the proposal
is submitted outside the process of Rule 14a-8 of the Exchange Act, the
shareholder must follow the procedures set forth in our Amended and Restated
Bylaws, which are filed as Exhibit 3.2 to Form 8-K dated December 3,
2007. Our Amended and Restated Bylaws provide generally that
shareholders who wish to nominate directors or to bring business before an
annual meeting must notify us at our principal executive offices and provide
certain pertinent information at least 90 but no more than 120 days prior to the
anniversary date of the immediately preceding annual meeting of
shareholders. Therefore, shareholders who wish to nominate directors
or to bring business before the 2010 annual meeting of shareholders must notify
the Company, in the form required by our Amended and Restated Bylaws, no later
than December 9, 2009.
WHERE YOU CAN FIND MORE
INFORMATION
We file
annual, quarterly and current reports with the SEC. You may read and
copy such reports, statements and other information that is contained in the
SEC’s public reference rooms located in Washington, D.C., New York, New York,
and Chicago, Illinois. Please call the SEC at 1 (800) 732-0330 for
further information. The Company’s public filings are also available
from commercial document retrieval services and via the SEC’s Internet website
located at
www.sec.gov
.
As
allowed by the SEC rules, we can “incorporate by reference” certain information
into this Proxy Statement, which means this document can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be
part of this document, except for any information that contradicts information
contained directly in this document, or in later filed documents incorporated by
reference in this Proxy Statement.
This
Proxy Statement incorporates by reference the Annual Report on Form 10-K for the
fiscal year ended September 30, 2008, which we filed with the SEC on December
10, 2008. That document contains important information about the
Company and its financial condition that is not included in this Proxy
Statement. You may obtain the Form 10-K from the SEC’s website
described above, or directly from the Company, without charge, by written
request to the Office of the General Counsel, ICO, Inc., 1811 Bering Drive,
Suite 200, Houston, Texas 77057 or by telephone at 1 (713)
351-4100.
If you
would like to request additional copies of this document or any of the documents
incorporated by reference, please do so at least five business days before the
date of the annual meeting in order to receive timely delivery of such
documents.
You
should rely only on the information contained or incorporated by reference in
this Proxy Statement to vote your shares of common stock at the annual
meeting. We have not authorized anyone to provide you with
information that is different from what is contained in this Proxy
Statement. This Proxy Statement is dated January 23,
2009. You should not assume that the information contained in this
document is accurate as of any date other than the date indicated, and you
should not assume that the mailing of this document creates any implication to
the contrary.
OTHER
MATTERS
The Board
of Directors does not intend to bring any other matter before the annual meeting
and does not know of other matters to be presented for action at the annual
meeting. However, if any other matter does properly come before the
annual meeting, or any adjournment thereof, the proxies will be voted in
accordance with the discretion of the person or persons voting the
proxies.
You are
cordially invited to attend the annual meeting. Regardless of whether
you plan to attend the annual meeting, you are urged to complete, date, sign and
return the enclosed proxy, or vote by telephone or the Internet as described
above.
By Order
of the Board of Directors
/s/
Gregory T. Barmore
|
|
/s/
A. John Knapp, Jr.
|
Gregory
T. Barmore
|
|
A.
John Knapp, Jr.
|
Chairman
of the Board
|
|
President
and Chief Executive Officer
|
Houston,
Texas
January
23, 2009
44
This Proxy is
solicited on behalf of the Board of Directors
ANNUAL MEETING OF
SHAREHOLDERS – MARCH 9, 2009
The undersigned
hereby appoints A. John Knapp, Jr. and Bradley T. Leuschner, or any one of them,
proxies of the
undersigned, each
with the power of substitution, to vote all shares of common stock which the
undersigned would be
entitled to vote at
the Annual Meeting of Shareholders of ICO, Inc. to be held in Houston, Texas on
March 9, 2009 (the
“Annual Meeting”),
and any adjournment of the Annual Meeting, on the matters specified on the
reverse side, and in their
discretion with
respect to such other business as may properly come before the Annual Meeting or
any adjournment
thereof, hereby
revoking any proxy heretofore given. The undersigned hereby acknowledges receipt
of the Notice of the
Annual Meeting and
the Proxy Statement for the Annual Meeting.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED HEREIN. IF NO
SPECIFICATION IS
MADE,
IT IS THE INTENTION OF THE PROXIES TO VOTE FOR THE NOMINEES AND FOR PROPOSALS 2,
3 AND
4.
PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SEE
REVERSE SIDE
|
Annual
Meeting Proxy
Card
|
A.
Proposals — The Board of Directors recommends a vote
FOR
all the nominees listed and
FOR
Proposals 2, 3
and
4.
1. Election
of Directors:
|
For
|
Withhold
|
|
|
For
|
Withhold
|
|
|
For
|
Withhold
|
01 – Eric O.
English*
|
o
|
o
|
|
02 – David
E.K. Frischkorn, Jr.*
|
|
o
|
|
03 – Max W.
Kloesel*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*The terms of
nominees Eric O. English, David E.K. Frischkorn, Jr. and Max W.
Kloesel
are set to expire at
the Annual Meeting of Shareholders to be held in 2012.
|
For
|
Against
|
Abstain
|
2.
Approval of the amendment to the Second Amended and Restated ICO, Inc.
2007 Equity Incentive Plan to increase the number of shares of common
stock issuable thereunder from1,960,000 to 2,310,000
shares.
|
|
|
|
|
For
|
Against
|
Abstain
|
3.
Approval of the amendment to the 2008 Equity Incentive Plan for
Non-Employee Directors of ICO, Inc. to increase the number of shares of
common stock issuable thereunder from 410,000 to 560,000
shares.
|
|
|
|
|
For
|
Against
|
Abstain
|
4. Ratification
of the appointment of PricewaterhouseCoopers LLP as the independent
registered public accounting firm of ICO, Inc. for the fiscal year ending
September 30,
2009.
|
o
|
|
|
5. WITH
DISCRETIONARY AUTHORITY WITH RESPECT TO ALL OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
B.
Non-Voting Items
Change
of Address ―
Please print new address
below.
|
Meeting
Attendance
Mark
box to the right if
You
plan to attend the
Annual
Meeting
|
|
C.
Authorized Signatures ― This section must be completed for your vote to
be counted. ― Date and Sign
Below
INSTRUCTIONS: This
proxy, signed and dated, must be returned for your shares to be represented at
the Annual Meeting. To vote, please mark the appropriate box for each
proposal in blue or black ink, date and sign this proxy exactly as your name
appears hereon. If stock is held jointly, signature should include
both names. Executors, administrators, trustees, guardians and others
signing in a representative capacity should give their full title.
Date
(mm/dd/yyyy) ― Please print date below.
|
|
Signature
1 — Please keep signature within the box.
|
|
Signature
2 ― Please keep signature with the box.
|
/ /
|
|
|
|
|