DIRECTOR COMPENSATION
The compensation of our directors who are not employees is reviewed annually by our compensation committee. Our compensation committees
philosophy has been generally to target average cash compensation of
non-employee
directors at the 25
th
percentile of the comparative data from the peer
group of companies we benchmark against for executive compensation purposes (our peer group) and to target annual equity compensation at the 75
th
percentile of our peer group. At our 2017 annual
meeting, in connection with the approval of the amendment and restatement of our 2006 equity incentive plan, our stockholders approved a cap on total annual director compensation of $750,000 (based on the grant date fair value of equity awards for
financial reporting purposes and cash payable to any
non-employee
director in any fiscal year).
Our directors who are not employees are paid the following cash compensation for serving on our board of directors:
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An annual retainer of $50,000.
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An additional annual retainer for the
non-employee
chairman of the board of $60,000.
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An additional annual retainer for chairmen of the following committees: audit committee - $10,000; compensation committee - $7,500; nominating and corporate governance committee - $5,000; risk oversight committee -
$5,000.
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Reimbursement of
out-of-pocket
expenses incurred in attending or participating in meetings of our board of directors or its committees.
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We do not provide any meeting fees to our directors for their board service. All retainers are paid in equal monthly
installments. We do not pay any director compensation to our directors who are also employees, such as Mr. Painter who is also our chief executive officer.
Additionally, each of our
non-employee
directors receives an annual equity award, which has
historically been granted in the form of RSUs. In 2017, our compensation committee determined the appropriate size of the annual equity award for
non-employee
directors by referring to the annual benchmarking
study prepared by its compensation consultant, WillisTowersWatson, and by considering other factors, including our companys operational and financial performance, TSR for the preceding year and current stock price and value of the potential
award. In 2016, the companys financial performance was above-median for its peer compensation group and its TSR was approximately 53%. Taking these factors into consideration and the increase in our stock price, our compensation committee
recommended that the annual equity award be set at 3,000 RSUs for 2017.
Last year, our compensation committee adopted a guideline to
reevaluate the size of the annual equity award component of
non-employee
director compensation in the event our stock price changes more than 25% from February 10 of the preceding year. Our stock price
increased 60% to $100.40 at the end of our 2017 fiscal year, compared to the closing price on February 10, 2017 (which was $62.70). In the first quarter of 2018, our compensation committee conducted its review and recommended that the annual
equity award to our
non-employee
directors for 2018 be decreased to 2,700 RSUs from 3,000 RSUs and changed the vesting of the award from quarterly to 50% on June 1, 2018, and 25% at the end of each of the
third and fourth fiscal quarters of 2018. Our compensation committee determined that even though the value of the award was high compared to the peer group, the award was warranted given our performance in 2017, including having the highest total
shareholder return (TSR) of our peer group. The RSU award was approved by the board of directors, subject to stockholder approval, and is presented as Proposal 3 in this proxy statement.
In March 2018, our compensation committee approved a compensation framework for determining the annual equity component of
non-employee
director compensation for 2019 and future years. We will continue to target director cash compensation around our peer groups 25
th
percentile
and director equity compensation around our peer groups 75
th
percentile. However, with respect to equity compensation, our compensation committee will adjust up or down the value of the
award based on the 75
th
percentile by considering our performance in the last fiscal year, including our financial performance and TSR. Our compensation committee believes that this framework will
ensure that our director compensation program is never significantly out of line with market practice but will allow our performance to be factored into the calculation.
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All awards to directors are made under our stockholder-approved equity incentive plan. The
vesting of all awards accelerates in the event of a change in control of our company. Any awards, to the extent not previously vested, are forfeited if the individual is no longer a member of the board of directors on the vesting dates.
Our
non-employee
directors may also be granted stock options periodically under our
stockholder-approved equity incentive plan. In such event, the size and the terms of any grant would be determined by the compensation committee of our board of directors. No stock options were granted to directors in 2017.
Under our stock ownership guidelines adopted in March 2011, our directors are required to hold shares of our stock equivalent in value to three
times their annual cash retainer. For purposes of calculating stock ownership, we include shares beneficially held by each director and unvested RSUs. We do not include vested or unvested stock options. Compliance with the guidelines is measured
annually following the close of the fiscal year, and each director has five years from the later of the adoption of our stock ownership guidelines or their appointment as a director to attain compliance. As of March 1, 2018, all of our
directors were in compliance with our stock ownership guidelines. Our stock ownership guidelines for executive officers are described in Compensation Discussion and AnalysisStock Ownership Guidelines.
Director Compensation for Fiscal 2017
The
following table provides compensation information for our
non-employee
directors in fiscal 2017. Our directors do not receive any
non-equity
incentive plan compensation,
hold deferred compensation cash balances, receive pension benefits or perquisites or other personal benefits for service on our board of directors. Mr. Painter, our chief executive officer, does not receive any compensation for his service as a
director.
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Name
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Fees Earned or
Paid in Cash
($)(1)
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Stock
Awards
($)(2)
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Total ($)
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John M. Albertine
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$
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57,500
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$
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174,120
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$
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231,620
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Thomas C. Leonard
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$
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60,000
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$
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174,120
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$
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234,120
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William A. Rainville
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$
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110,000
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$
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174,120
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$
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284,120
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William P. Tully
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$
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60,000
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$
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174,120
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$
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234,120
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(1)
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The amounts reported in this column are for annual board and chairman retainers earned in 2017.
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(2)
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Represents the grant date fair value of the 3,000 RSUs granted to each of our
non-employee
directors in 2017, which was $58.04 per share, computed in accordance with ASC Topic
718.
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AUDIT COMMITTEE REPORT
The role of the audit committee is to assist the board of directors in its oversight of our companys financial reporting process, as
stated in the charter of the committee, which is available on our website at www.kadant.com. The audit committee provided the following report.
Management is responsible for the preparation, presentation and integrity of our companys financial statements, its accounting and
financial reporting principles, and its internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Our companys independent registered public accounting firm is responsible for
auditing our companys financial statements and expressing an opinion as to their conformity with generally accepted accounting principles. The audit committee is responsible for providing independent, objective oversight of these functions.
In the performance of our oversight function, we have reviewed and discussed the audited financial statements of our company for the
fiscal year ended December 30, 2017, with management and our independent registered public accounting firm, KPMG LLP. We also discussed with KPMG LLP the reasonableness of significant judgments and the clarity of disclosures in the financial
statements, the quality, not just the acceptability, of our companys accounting principles and such other matters as are required to be discussed with the committee
38
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 16, 2018
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jonathan W. Painter, Michael J. McKenney and Sandra L. Lambert, or any one of them in the
absence of the others, as attorneys and proxies of the undersigned, with full power of substitution, for and in the name of the undersigned, to represent the undersigned at the Annual Meeting of the Stockholders of Kadant Inc., a Delaware
corporation (the Company), to be held on Wednesday, May 16, 2018 at 2:30 p.m. at the corporate office of Kadant Inc. at One Technology Park Drive, Westford, Massachusetts 01886, and at any adjournment or postponement thereof, and to
vote all shares of common stock of the Company standing in the name of the undersigned on March 19, 2018, with all of the powers the undersigned would possess if personally present at such meeting:
(Continued and to be signed on the reverse side.)
Important Notice of Availability of Proxy Materials for the Shareholder Meeting of
KADANT INC.
To
Be Held On:
May 16, 2018 at 2:30 PM
at the corporate office located at One Technology Park Drive, Westford, Massachusetts 01886
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COMPANY NUMBER
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ACCOUNT NUMBER
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CONTROL NUMBER
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This communication presents only an overview of the more complete proxy materials that are available to you
on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. To view these materials, please have your control number available.
If you want to receive a paper or e-mail copy of the proxy materials you must request one. There is no charge to you for requesting a copy.
To facilitate timely delivery, please make the request as instructed below before 5/4/18.
Please visit
http://www.astproxyportal.com/ast/11818/, where the following materials are available for view:
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Notice of Annual Meeting of Stockholders
Proxy Statement
Form of Electronic Proxy Card
2017 Annual Report to Stockholders
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TO REQUEST MATERIAL:
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TELEPHONE: 888-Proxy-NA (888-776-9962) and 718-921-8562
(for international callers)
E-MAIL: info@astfinancial.com
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WEBSITE: https://us.astfinancial.com/OnlineProxyVoting/ProxyVoting/RequestMaterials
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TO VOTE:
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ONLINE:
To access your online proxy card,
please visit
www.voteproxy.com
and follow the on-screen instructions or scan the QR code with your smartphone. You may enter your voting instructions at www.voteproxy.com up until 11:59 PM Eastern Time the day before the cut-off
or meeting date.
IN PERSON:
You may vote your shares in person by
attending the Annual Meeting.
TELEPHONE:
To vote by telephone, please
visit
www.voteproxy.com
to view the materials and to obtain the toll free number to call.
MAIL:
You may request a card by following the instructions above.
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THE BOARD OF DIRECTORS OF KADANT INC. RECOMMENDS THAT YOU VOTE
FOR
THE ELECTION OF DIRECTORS.
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THE BOARD OF DIRECTORS OF KADANT INC. RECOMMENDS THAT YOU VOTE
FOR
PROPOSALS 2, 3 and 4.
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1.
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Election of one directors to the class to be elected for a three-year term expiring in 2021.
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2.
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To approve, by non-binding advisory vote, our executive compensation.
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NOMINEE:
William P. Tully
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3.
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To approve restricted stock unit grants to our non-employee directors.
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4.
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To ratify the selection of KPMG LLP as our company's independent
registered public accounting firm for 2018.
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5.
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In their discretion on such other matters as may properly come before
the Meeting or any adjournment thereof.
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Please note that you cannot use this notice to vote by
mail.
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ANNUAL MEETING OF STOCKHOLDERS OF
KADANT INC.
May 16,
2018
GO GREEN
e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other
eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL
:
The Notice of Meeting, Proxy Statement, proxy card and 2017 Annual Report
are available at http://www.astproxyportal.com/ast/11818/
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
¯
Please detach along perforated line and mail in the envelope provided.
¯
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00003030303000000000 8
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051618
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED AND FOR PROPOSALS 2, 3 and 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
☒
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THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR THE NOMINEE LISTED AND FOR PROPOSALS 2, 3 AND 4. IF OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE
PERSONS NAMED IN THE PROXY WILL VOTE IN THEIR DISCRETION.
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1.
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Election of one director to the class to be elected for a three-year term expiring in 2021.
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Nominee:
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FOR
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AGAINST
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ABSTAIN
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Wiliam P. Tully
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☐
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☐
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☐
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FOR
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AGAINST
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ABSTAIN
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Copies of the Notice of Meeting and of the Proxy Statement have been received by the undersigned.
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2.
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To approve, by non-binding advisory vote, our executive compensation.
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☐
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☐
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☐
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PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
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FOR
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AGAINST
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ABSTAIN
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3.
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To approve restricted stock unit grants to our non-employee directors.
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☐
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☐
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☐
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FOR
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AGAINST
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ABSTAIN
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4.
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To ratify the selection of KPMG LLP as our companys independent registered public accounting firm for 2018.
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☐
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5.
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In their discretion on such other matters as may properly come before the Meeting or any adjournment thereof.
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the
registered name(s) on the account may not be submitted via this method.
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☐
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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ANNUAL MEETING OF STOCKHOLDERS OF
KADANT INC.
May 16, 2018
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PROXY VOTING INSTRUCTIONS
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INTERNET
-
Access
www.voteproxy.com
and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.
TELEPHONE
- Call toll-free
1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from foreign
countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.
Vote online/phone until
11:59 PM EST the day before the meeting.
MAIL
- Sign, date and mail your proxy card in the envelope provided as soon as
possible.
IN PERSON
- You may vote your shares in person by attending the Annual Meeting.
GO GREEN
- e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and
other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access.
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COMPANY NUMBER
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ACCOUNT NUMBER
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NOTICE OF INTERNET AVAILABILITY OF PROXY
MATERIAL
:
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The Notice of Meeting, Proxy Statement, proxy card and 2017 Annual Report
are available at http://www.astproxyportal.com/ast/11818/
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¯
Please detach along perforated line and mail in the
envelope provided
IF
you are not voting via telephone or the Internet.
¯
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00003030303000000000 8
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051618
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED AND FOR PROPOSALS 2, 3 and 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE
☒
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THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR THE NOMINEE LISTED AND FOR PROPOSALS 2, 3 AND 4. IF OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE
PERSONS NAMED IN THE PROXY WILL VOTE IN THEIR DISCRETION.
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1.
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Election of one director to the class to be elected for a three-year term expiring in
2021.
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Nominee:
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FOR
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AGAINST
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ABSTAIN
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William P. Tully
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☐
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☐
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☐
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FOR
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AGAINST
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ABSTAIN
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Copies of the Notice of Meeting and of the Proxy Statement have been received by the undersigned.
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2.
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To approve, by non-binding advisory vote, our executive compensation.
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☐
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☐
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☐
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PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
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FOR
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AGAINST
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ABSTAIN
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3.
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To approve restricted stock unit grants to our non-employee directors.
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☐
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☐
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☐
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FOR
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AGAINST
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ABSTAIN
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4.
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To ratify the selection of KPMG LLP as our companys independent registered public accounting firm for 2018.
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☐
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☐
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☐
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5.
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In their discretion on such other matters as may properly come before the Meeting or any adjournment thereof.
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the
registered name(s) on the account may not be submitted via this method.
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☐
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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