UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Soliciting Material Pursuant to Section 240.14a-12
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A.M. Castle & Co.
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Its Charter)
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Table of Contents
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2016 Proxy Statement
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Letter
to Stockholders
Steve Scheinkman, CEO
June 17, 2016
Dear Fellow Stockholder:
On behalf of A. M. Castle, we would like to thank you for
your trust and continued support over the past year. While 2015 proved to be a very challenging year across the commodities and
metals space, our management team and Board came together to effect meaningful and long-term positive change for the Company. As
a result of the strategic actions taken in 2015, we have improved the financial and competitive position of the Company, while
also reducing risk and enhancing the capital efficiency of our business.
When we announced my appointment as CEO in early 2015,
it was apparent that significant change was necessary to return the Company to profitability and to improve our long-term financial
position. Under my leadership, we reorganized and reenergized our management team and employee base and executed against an ambitious
operational restructuring and refinancing plan.
The operational restructuring plan, announced in April
2015, was implemented to right size our business to the current economic environment and allow us to better serve our customers’
needs. These activities included the optimization of our facility footprint, cost cutting activities, and the opening of a new
facility in Janesville, Wisconsin, which will serve as a center of excellence for our bar business in the Midwest. We executed
this plan on time and within budget, and we believe that we will fully realize the expected cost reductions as projected.
In
addition, over the past year we have taken significant steps to improve the capital structure of the business. Specifically, we
announced a plan to refinance our public debt in January 2016, the sale of the vast majority of our energy-related inventory in
February 2016, and the sale of the assets of our Total Plastics, Inc. (“TPI”) subsidiary in March 2016. The refinancing
activities allowed us to de-lever our balance sheet and provided the liquidity we needed to reposition the organization for long
term growth. The sale of TPI and our energy-related inventory not only added liquidity, but also helped us streamline our business
to focus on our Aerospace and Industrial end markets, where our competitive position is more robust. With this strategic refinancing
process now substantially complete, we believe we have established the financial foundation we need to grow and prosper in the
future, all while enhancing the long-term competitiveness of the business.
The Management team and I are excited about the year ahead,
but understand that the hard work is not behind us. Our job is to ensure that A.M. Castle remains focused on building long-term
stockholder value. We remain steadfast in our confidence about the future of A.M. Castle and we look forward to working together
to support our employees as they further enhance and build our brand. We look forward to reporting even more success to you in
2016.
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Sincerely,
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2016 Proxy Statement
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Q&A
with our President and
Chief Executive Officer
Steve Scheinkman was appointed as President and Chief Executive
Officer of A.M. Castle in April 2015. Steve joined with extensive background in the metals service industry and had prior leadership
history with A.M. Castle as he was the former President and Chief Executive Officer of Transtar Metals Corporation, which A. M.
Castle acquired in late 2006. Steve’s long history in the industry and knowledge of A.M. Castle made him the ideal candidate
to return the Company to long-term prosperity. Steve accepted this role with the intention of recapturing A.M. Castle’s niche
leadership position in the industry. He led the Company through a substantial restructuring initiative in 2015, as well as a recent,
successful refinancing of its public debt.
Can you talk about your first year as A.M. Castle’s CEO?
Having served in the industry for 27 years,
including as President of what is now Castle’s aerospace business, I was well aware of the Company’s strong capability
to provide metal products, services, and processing capabilities at the highest levels of quality and customer satisfaction. A.M.
Castle has a great brand and a strong reputation in our industry. It was for those reasons that I was very excited to accept the
position as President and CEO.
The Board and I had a clear vision of how to
better empower our employees, utilize their expertise and creativity, and further develop a complete and customized solution that
positions Castle as the go-to growth partner for our customers at all levels of the supply chain. That being said, I don’t
think anyone could have predicted the headwinds that our industry experienced in 2015. Commodity pricing and ongoing end market
pressures accelerated throughout the year, a trend that made my first year as CEO that much more challenging. Despite this, I am
proud of our team and the progress we made on all facets that were within our control, including the successful completion of our
restructuring and refinancing plans. With our improved financial and operational stability, we are now in a position to grow our
business and opportunistically leverage our stronger balance sheet to improve our competitive position in 2016 and beyond.
Can you elaborate on the trends you’re seeing
in Castle’s respective end markets? How will the reduced exposure to the Energy sector change the profile of A.M. Castle?
With the sale of our Total Plastics subsidiary
and the sale of the vast majority of our energy-related inventory in early 2016, A.M. Castle looks like a much different Company
than it has historically. We will now focus almost entirely on the Aerospace and Industrial end markets. These are two markets
that we know deeply and in which we enjoy a strong network of diverse customers and mill partners. This narrower focus will allow
us to better refine our service and sales organization, react faster to our customers’ needs, and to provide a more comprehensive
solution than we have in the past.
With my extensive background in Aerospace, I
feel very comfortable that we can be industry leaders in that market given the changes we’ve made internally to build out
our team and become even closer to our customers through local market empowerment. Market data and channel checks all show encouraging
signs in Aerospace, and I feel confident that we can continue the positive momentum we have built in an effort to capture market
share and continue to grow in that end market.
With regard to our Industrial end market, while
the economic data remains less optimistic in the near-term, we now have the internal structure in place to react to our customers’
demands while maintaining appropriate inventory levels and lead times. We have rightsized our branch network to reflect the current
market environment, and when we do experience a rebound in the Industrial economy, we believe we will be in a strong position to
capture new business and grow our market share.
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2016 Proxy Statement
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How do you feel about the Company’s performance?
What expectations do you have for the year ahead? Can stockholders have confidence that AM Castle will find ways to create long-term
stockholder value?
Our original restructuring plan from April 2015
had two essential thrusts – (1) improve the value proposition we provide our customers by increasing customer intimacy, service,
and support, and (2) improve the financial position of the Company through better balance sheet management and a reduced, more
efficient cost structure. Regarding the first component, we have significantly improved our value proposition by driving more resources,
capabilities, responsibility, and accountability down to our branches so they may be closer to our customers and more responsive
to the customers’ evolving needs. We have also maintained the highest level of quality, service, and safety for which we
are known. Regarding the second thrust, we have efficiently managed our inventory, sold some of our real estate and other non-core
assets, and recently sold the assets of our Total Plastics, Inc. subsidiary and the vast majority of our remaining energy-related
inventory, all with the ultimate goal of de-leveraging our balance sheet and driving to profitability. Our recent refinancing was
crucial in improving our capital structure and throughout all of the restructuring initiatives, we’ve maintained our focus
on customer satisfaction and quality. So with regard to everything in our control, we have delivered, in my opinion. However, as
with any Company, our goal is to constantly improve stockholder value. To do that, number one priority is to become EBITDA positive
as quickly as possible. All of the initiatives we’ve undertaken have created the platform to become a profitable Company,
as we continue our recovery.
Notice of
Annual Meeting of Stockholders
WHEN:
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WHERE:
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Wednesday, July 27, 2016
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1420 Kensington Road, Suite 220
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10:00 a.m., Central Time
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Oak Brook, Illinois 60523
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We are pleased to invite you to join our Board of Directors
and senior management at Castle’s 2016 Annual Meeting of Stockholders.
Items of Business:
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Election
of Class III directors;
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To approve
the Company’s executive compensation on an advisory (non-binding) basis;
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To ratify
the appointment of our independent registered public accounting firm for the fiscal year ending December 31, 2016;
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To approve
an amendment to the 2008 A.M. Castle & Co. Omnibus Incentive Plan (the “Plan”) to increase the share reserve by
two million shares, and to effect certain other changes as described herein; and
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To conduct
any other business that may properly come before the Annual Meeting.
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Record Date:
The Board of Directors of the Company has fixed the close
of business on June 6, 2016, as the record date for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting. On or about June 17, 2016, a full set of proxy materials, including a copy of the Proxy Statement, the annual report
and a proxy card, was first made available to our stockholders of record.
How to Vote:
Whether or not you plan to attend the Annual Meeting, we
hope you will vote as soon as possible. You may vote over the Internet, as well as by telephone, or by mailing a proxy card in
the enclosed envelope, which requires no postage if mailed in the United States. Please review the instructions on each of your
voting options described on the enclosed proxy card.
Meeting Admission Requirements:
If you plan to attend the meeting in person, refer to the question and answer
section on page 63 for important details on admission requirements.
By Order of the Board of Directors,
Marec E. Edgar
Executive Vice President, General Counsel,
Secretary & Chief Administrative Officer
Oak Brook, IL
June 17, 2016
The
Proxy Statement and Annual Report are available at
www.proxyvote.com
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2016 Proxy Statement
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GOVERNANCE HIGHLIGHTS
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We are committed to good corporate governance, which promotes
the long-term interests of our stockholders, strengthens our Board and Management accountability and builds trust in Castle. The
Governance section of our proxy follows, which includes the below highlights:
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Independent,
Non-Executive Board Chairman
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Regular
Executive Sessions of Independent Directors
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Active
Board Oversight of Risk Management
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Annual
Board and Committee Self-Evaluations
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Stock
Ownership Guidelines for Officers and Non-Employee Directors
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Cash
and Equity Awards with Clawback Provisions
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Anti-Hedging
and Anti-Pledging Policies
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GOVERNANCE DOCUMENT DASHBOARD
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You can access the following key governance materials
on the “
Corporate Governance
” section of Castle’s website at
https://www.castlemetals.com/investors/corporate-governance
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*
The information on our website is not part
of this proxy statement and is not deemed to be incorporated by reference herein.
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·
Corporate
Governance Guidelines & Board and Committee Charters
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Code
of Conduct for Directors
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Code
of Conduct for Officers
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Audit,
Human Resources, and Governance Committee Charters
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Related
Party Transactions & Insider Trading Policies
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2016 Proxy Statement
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Proposal 1 – Election of Class
III
Director Nominees
Proposal Snapshot What am I voting
on? Stockholders are being asked to elect three Director nominees for a three-year term. This section includes information about
the Board of Directors and each Director nominee. Voting recommendation: FOR the election of each of the Class III Director nominees.
The combination of the various qualifications, skills, and experiences of the Class III Director nominees would contribute to
an effective and well-functioning Board. The Director nominees possess the necessary qualifications to provide effective oversight
of the business and quality advice and counsel to the Company’s management.
Board
Structure
Our Board is currently comprised of eight directors who are divided into three
classes, each of whom is elected for a three-year term. The term of the Class III Directors expires at this year’s Annual
Meeting of Stockholders. If elected at the Annual Meeting, each of our Class III Directors will serve until the 2019 Annual Meeting.
In connection with the 2016 Settlement Agreement with Raging Capital Group, as described below, the nominees for Class III Directors
are Mr. Gary Masse, Mr. Richard N. Burger and Mr. Michael Sheehan. Prior to the settlement with Raging Capital, current Class III
directors Mr. Brian Anderson and Mr. Reuben Donnelley notified the Company that they would not stand for re-election at the Annual
Meeting. The Board would like to thank Mr. Anderson and Mr. Donnelley for their dedicated service to the Company.
If any of the director nominees unexpectedly become unavailable
for election, proxy holders may vote for a substitute nominee designated by the Board or, as an alternative, the Board may reduce
the number of directors to be elected at the meeting.
2015 Board Membership Changes
On March 17, 2015
, Mr. Terrence Keating and Mr.
John McCartney resigned from their positions as Class I Directors and three new directors joined our Board: Mr. Steven Scheinkman,
Mr. Kenneth Traub, and Mr. Allan Young.
On April 16, 2015
, Mr. Scott Dolan resigned as the
Company’s President and Chief Executive Officer, and as a Class II Director. Mr. Steven Scheinkman was appointed as the Company’s
President and Chief Executive Officer.
On October 30, 2015
, Mr. James Kelly resigned from
his position as a Class I Director of our Board.
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Director Nominees Qualifications
and Experience
The following biographical information is given as of the
date of this Proxy Statement for all directors. Our directors have a variety of qualifications, skills and experience that contribute
to an effective and well-functioning Board. All of our directors possess the following key characteristics:
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Wealth of leadership experience;
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Demonstrate business acumen and an ability to exercise sound
business judgment;
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Extensive board and/or financial experience; and
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Reputation for integrity, honesty and adherence to the highest
ethical standards.
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The biographies of our directors include the year in which
each individual first became a director of the Company, the Committee(s) of the Board on which the director currently serves, the
director’s age, business experience for the past five years, the names of other publicly-held companies of which he or she
currently serves as a director or has served as a director during the past five years, information regarding involvement in certain
legal or administrative proceedings, if applicable, and individual experiences, qualifications, attributes or skills that caused
the Governance Committee and the Board to determine that the person should serve as a director for the Company.
Settlement Agreement with Raging Capital
On May 27, 2016, the Company entered into a Settlement
Agreement (the “2016 Settlement Agreement”) with Raging Capital Management, LLC and certain of its affiliates (the
“Raging Capital Group”) and Mr. Kenneth H. Traub, Mr. Allan J. Young and Mr. Richard N. Burger.
Pursuant to the terms of the 2016 Settlement Agreement,
the Board of Directors of the Company agreed to nominate for election at the Annual Meeting (a) Richard N. Burger, (b) Michael
Sheehan and (c) current director Gary A. Masse to serve as Class III directors (with a term expiring at the Company’s 2019
annual meeting of stockholders). The Board also agreed to appoint Mr. Masse as Chairman, effective immediately, and to disband
the Finance Committee it had previously formed in connection with its prior settlement with Raging Capital in March 2015.
For additional information regarding the 2016 Settlement
Agreement, see “Related Parties—Related Party Transactions and Relationships” and the Company’s Current
Report on Form 8-K filed with the SEC on May 27, 2016.
Class III Directors and Director Nominees
Richard
Burger Age: 65 Background Richard Burger is the former Executive Vice President, Chief Financial Officer, Secretary and Treasurer
of Coleman Cable, Inc., which was a public company and leading provider of electrical wire and cable products in the United States
and Canada. Mr. Burger spent 17 years at Coleman Cable, 13 of which were in the EVP/CFO position where he directed numerous acquisitions
and led the Company’s accounting, finance, information technologies, human resources functions, and investor relations activities.
Qualifications Prior to Coleman Cable, Mr. Burger was the President of Accounting Advantage, the President and CEO of Burns Aerospace,
and a Vice President and Treasurer at Ferox Microsystems. His experience also includes accounting and financial roles at Fairchild
Industries, Marriot Corporation and Price Waterhouse & Co. Mr. Burger received an MBA from the University of Baltimore and
a Bachelor of Science with a Major in Accounting from Towson University.
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2016 Proxy Statement
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Gary
A. Masse Age: 54 Director since: 2012 Chairman Independent Committees Audit Human Resources Background Chief Executive
Officer of Coveris Holdings Corp., a global plastics packaging company, since April 2014. Mr. Masse previously served as Chief
Executive Officer of Precision Holding, LLC. a leading global manufacturing and engineering services company, from 2010 to April
2014. Mr. Masse served as Group President - Cooper Tools & Hardware, a business unit of Cooper Industries Plc, a diversified
manufacturer of electrical products, tools and hardware, from 2006 to 2010. Mr. Masse joined Cooper after nine years with Danaher
Corporation, a global designer, manufacturer and marketer of a wide variety of industrial products, where he most recently served
as Vice President and Group Executive of its Gilbarco/Veeder-Root business, a leading provider of equipment and integrated technology
solutions to the retail petroleum and commercial fueling industry, from 2003 to 2005. Qualifications Mr. Masse’s service as Chief
Executive Officer of Coveris Holdings Corp. and previously of Precision Holding, LLC and his other executive and management experience
well qualifies him to serve on our Board. His expertise in leading complex global organizations, as well as strong background
and experience in engineering, manufacturing (domestic and international), and business development contributes greatly to the
Board’s composition.
Michael
Sheehan Age: 55 Background Michacl Sheehan is the current Chief Executive Officer of Boston Globe Media Partners. Prior
to joining the Globe in January 2014, he spent 20 years at Hill Holliday, where he served as Chairman. Chief Executive Officer,
President, and Chief Creative Officer. During his tenure as President and CEO, Hill Holiday grew 85%. He has also served as Executive
Vice President and Executive Creative Director for DDB Chicago, another large advertising agency. Qualifications Mr. Sheehan has
served on the Board of Directors of BJ’s Wholesale Club where he chaired the Compensation Committee and was a member of the Governance
Committee. He has also served on the Board of the American Association of Advertising Agencies, and has chaired the Board of Trustees
of his alma mater, Saint Anselm College. He currently serves on the Boards of ChoiccStream, a leading programmatic advertising
firm as well as the American Repertory Theater and Catholic Charities of the Archdiocese of Boston. He attended the United States
Naval Academy and graduated from Saint Anselm College in 1982 with a B.A. in English.
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DIRECTORS NOT STANDING FOR ELECTION
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Class II Directors – Terms Expire in 2018
Pamela
Forbes Lieberman Age:
62
Director since:
2007
Independent Committees Audit (Chair) Governance Human Resources Background
Interim
Chief Operating Officer of Entertainment Resource, Inc., a video distributor, from March 2006 to August 2006. Ms. Forbes Lieberman
was Director, President, and
Chief Executive Officer of TruServ Corporation (now known
as True Value Company), a
member owned wholesaler of hardware and related merchandise,
and provider of
marketing, merchandising and other value added services, from 2001 to
2004. Ms.
Forbes Lieberman is also a director of Standard Motor Products, Inc., a leading
manufacturer, distributor, and marketer of replacement parts for motor vehicles, since
2007,
and VWR Corporation, a provider of laboratory products, services, and solutions,
since
2009. She is also a member of the Board of Directors of the Company’s Kreher
Steel joint
venture, and has served as Chairperson of the Company’s Audit Committee
since 2012.
Qualifications
Ms. Forbes Lieberman’s service as Chief Executive Officer of True Value Company
brings to the Board senior executive experience leading a public reporting wholesale/distribution business, with expertise in
turnaround management, communications, culture change, and distribution and supply chain strategies. Ms. Forbes lieberman also
possesses valuable financial expertise, including extensive experience as chief financial officer of various distribution and
manufacturing businesses, both public reporting and private, where she was directly responsible for financial and accounting issues,
acquisition and divestitures and information systems. She also possesses public accounting expertise as a former senior manager
at PricewaterhouseCoopers LLP. Through her service on the boards described above, she has valuable experience in governance, executive
compensation, and finance, including private equity, and audit issues.
Kenneth
H. Traub Age: 55 Director since: March 2015 Committees None Background
Managing partner at Ragin
Capital Management, LLC, an investment management firm,
since 2015. Mr. Traub previously
served as the President and Chief Executive Officer of
Ethos Management, LLC, an investment
advisory company, since 2009, the General
Partner of Rosemark Capital, a private equity
firm, since 2013, and the President and
Chief Executive Officer of American Bank Note
Holographies, Inc., a global supplier of
optical security devices, from 1999 until its
acquisition by JDS Uniphase Corp. in 2008.
Mr. Traub is currently a director of the following
public companies: (i) MRV
Communications, Inc., a leading provider of optical communications
network equipment and integration, since 2011, (ii) DSP Group, Inc., a leading global provider of wireless
chipset
solutions for converged communications, since 2012, (iii) Athersys, Inc., a
biotechnology
company engaged in the discovery and development of therapeutic
product candidates, since
2012, and (iv) Intermolecular. Inc (IMI), a supplier of
advanced material technologies,
since May 2016. Mr. Traub previously served as a
director of Vitesse Semiconductor Corporation,
a leading supplier of integrated circuit
solutions for next-generation carrier and enterprise
networks, since 2013.
Qualifications
Mr. Traub’s service as Chief Executive Officer of
Ethos Management, LLC and over 20 years of senior management, corporate governance, turnaround and transactional experience with
various public and private companies well qualifies him to serve on our Board. His wealth of board experience will allow him to
provide valuable advice and guidance to our Board.
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Allan
J. Young
Age:
60
Director since:
March 2015
Committees
Governance Background Managing Partner at Raging Capital Management, LLC, an investment management firm, since 2006. Mr. Young
previously served as a Director of Research at RateFinancials. Inc., an independent securities research firm, from 2003 to 2006,
and as a director of SMG Indium Resources Ltd., a company that stockpiles indium for consumer electronics manufacturing applications,
from 2013 to January 2016.
Qualifications
Mr. Young’s extensive experience in financial
analysis, accounting, public company reporting, and corporate governance well qualifies him to serve on our Board. His strong
financial background and experience with investment analysis provides the Board with valuable financial expertise.
Class
I Directors – Terms Expire in 2017
Jonathan
B. Mellin
Age:
52 Director since:
2014 Independent Committees Governance Background President
and Chief Executive Officer of Simpson Estates, Inc., a private asset management firm, since 2013. Mr. Mellin became President
of Simpson Estates, Inc. in 2012. prior to being appointed as Chief Executive Officer. Prior to joining Simpson Estates, Inc.,
Mr. Mellin served as the Chief Financial Officer for the Connors Family group of companies, from 2005 to 2012.
Qualifications
Mr. Mellin’s years of experience as the Chief Financial Officer of large private companies and subsidiaries of publicly-held
companies provides valuable financial expertise to the Board, including extensive experience in annual business planning, forecasting,
and expense reduction. His expertise in leading complex finance functions as well as strong background and experience with strategic
acquisitions and major restructuring projects contributes greatly to the Board’s composition. Mr. Mellin is also a Certified Public
Accountant.
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2016 Proxy Statement
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Steven
W. Scheinkman Age: 62 Director since: March 2015 Committees None Background President and Chief Executive Officer of the Company
since April 2015. Prior to joining the Company, Mr. Scheinkman served as President and Chief Executive Officer and a director
of Innovative Building Systems LLC, and certain of its affiliates and predecessor entities, a leading customer modular home producer,
since 2010. He served as a director of Claymont Steel Holdings, Inc., a manufacturer of custom discrete steel plate, from 2006
to 2008. He served as the President and Chief Executive Officer and a director of Transtar Metals Corp. (“Transtar”),
a supply chain manager/distributor of high alloy metal products for the transportation, aerospace and defense industries, from
1999 to 2006. Following Transtar’s acquisition by the Company in September 2006, he served as President of Transtar Metals Holdings
Inc. until September 2007 and thereafter served as its advisor until December 2007. He served in various capacities as an executive
officer of Macsteel Service Centers USA, a distributor and processor of steel products, including President, Chief Operating Officer
and Chief Financial Officer, from 1986 to 1999. Qualifications Mr. Scheinkman’s extensive experience serving as an executive of
various metal products companies coupled with his significant financial expertise makes him a valuable addition to the Board.
The Board currently separates the roles of the Chief Executive
Officer and Chairman of the Board in recognition of the differences between the two roles. The Chairman of the Board, Gary A. Masse,
is an independent director and became Chairman in 2016. Mr. Masse also currently serves as a member of the Audit and Human Resources
Committees, and also regularly attends meetings of the other standing committees of the Board. With the new Class III directors
expected to join after the Annual Meeting, the Board will re-evaluate its committee structure following the Annual Meeting.
The Chairman of the Board:
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Provides strategic leadership and guidance;
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Establishes the agendas for Board meetings, with advice from
senior management;
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Advises and consults with the Chief Executive Officer regarding
strategies, risks, opportunities, and other matters; and
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Presides over meetings of the full Board and executive sessions
of independent directors.
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The Chief Executive Officer, Steven Scheinkman, was elected
to the position of President and Chief Executive Officer in April 2015, after previous service as President and Chief Executive
Officer of Innovative Building Systems, LLC, and certain of its affiliates and predecessor entities. He is the principal management
officer of the Company, with responsibility for supervision of its executive and senior management and its day-to-day operations
and performance.
While the Board believes the Company’s leadership
model provides appropriate oversight and an effective governance structure, it recognizes that, depending on the circumstances,
other leadership models, such as combining the roles of Chief Executive Officer and Chairman of the Board, might be appropriate.
Accordingly, the Board periodically reviews its leadership structure.
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2016 Proxy Statement
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STANDING
BOARD COMMITTEES
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The Board has three standing committees: the Audit Committee,
the Governance Committee and the Human Resources Committee. Each committee has a written charter adopted by the Board, copies of
which are posted under the
“
Corporate Governance
”
section of the Company’s
website at
https://www.castlemetals.com/investors/corporate-governance
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Each Committee reviews the appropriateness of its charter
and performs a self-evaluation at least annually. The Board will review the composition of each committee in light of the expected
changes to the Board’s composition as a result of the Annual Meeting.
The following table summarizes the current membership and
responsibilities of each of our three standing Board Committees:
|
Responsibilities
|
Current Committee
Members
|
AUDIT
COMMITTEE
|
·
Oversight
of the quality and integrity of the Company’s financial statements and internal controls
·
Monitors
the Company’s compliance with legal and regulatory requirements
·
Reviews
the qualifications, performance, and independence of the Company’s independent auditors
·
Reviews
the performance of the Company’s internal audit function
·
Oversight
of annual risk management assessments
·
Monitors
reports received on the Company’s incident reporting hotline
·
Oversight
of compliance program, including an annual review of the Code of Conduct
·
Prepares
the “Report of the Audit Committee” for our stockholders on page 52
|
Ms. Forbes Lieberman (Chair)
Mr. Anderson
Mr. Masse
|
GOVERNANCE COMMITTEE
|
·
Oversight
of governance policies and practices
·
Reviews
governance-related legal and regulatory matters that could impact the Company
·
Reviews
and makes recommendations on the overall size and composition of the Board and its Committees
·
Oversight
of Board recruitment, including identification of potential director candidates, evaluating candidates, and recommending nominees
for membership to the full Board
·
Leads
the annual self-evaluation of the Board and its Committees and reports the results
|
Mr. Anderson (Chair)
Ms. Forbes Lieberman
Mr. Mellin
Mr. Young
|
|
|
|
|
8
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
Responsibilities
|
Current Committee
Members
|
HUMAN RESOURCES COMMITTEE
|
·
Determines
the composition and value of non-CEO executive officer compensation and makes recommendations with respect to CEO compensation
to the independent members of the Board who collectively have final approval authority
·
Reviews
the compensation philosophy, selection of compensation elements to balance risk, reward, and retention objectives and the alignment
of incentive compensation to the Company’s strategy
·
Oversight
of compensation plans and policies
·
Retains
authority to retain and terminate a compensation consultant
·
Reviews
and recommends changes to the Board regarding Director compensation
·
Prepares
the Human Resources Committee’s report to stockholders as provided below in the section entitled, “Report of the Human
Resources Committee,” below
|
Mr.
Anderson (Interim Chair
1
)
Ms. Forbes Lieberman
Mr. Masse
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
|
Current members of the Human Resources Committee are Brian
Anderson (Interim Chairperson), Pamela Forbes Lieberman, and Gary Masse. All members of the Human Resources Committee are independent
directors pursuant to NYSE standards, and no member is, or was during such member’s service on the Committee, an employee
or former employee of the Company. During 2015, none of the Company’s executive officers served on the compensation committee
(or its equivalent) or board of directors of another entity whose executive officer served on our Human Resources Committee.
DIRECTOR
INDEPENDENCE; FINANCIAL EXPERTS
|
The Board has affirmatively determined that each current
board member, except for Mr. Scheinkman, (i) is “independent” within the definitions contained in the current NYSE
listing standards and the standards set by the Board in the Company’s Corporate Governance Guidelines, and (ii) has no other
“material relationship” with the Company that could interfere with his or her ability to exercise independent judgment.
In addition, the Board has determined that each member of the Audit Committee is “independent” within the definition
contained in current SEC rules. Furthermore, the Board has determined that all members of the Company’s Audit Committee meet
the financial literacy requirements of the NYSE and qualify as “audit committee financial experts” as defined by the
SEC, and that Mr. Anderson’s simultaneous service on the audit committees of W.W. Grainger, Inc., PulteGroup, Inc., James
Hardie Industries Plc, and the Company does not impair his ability to serve effectively on the Company’s Audit Committee.
1
As
a result of the related party transactions in February 2016 with W.B. & Co. and FOM Corporation described below in the section
entitled “Related Party Transactions and Relationships,” certain members of the Human Resources Committee were rendered
no longer eligible to serve under our governance documents. To correct this, on March 9, 2016, the Board of Directors unanimously
approved reconstitution of the Human Resources Committee to include the above-referenced Directors, for an interim period until
such time as the Company’s director elections at its Annual Meeting for 2016 are completed and the then-current Board can
re-assess its committee membership.
|
|
|
|
9
|
2016 Proxy Statement
|
|
|
|
|
|
|
BOARD
MEETINGS AND ATTENDANCE
|
During
2015, the Board held seventeen meetings. The Board’s non-employee directors met in regularly scheduled executive
sessions to evaluate the performance of the Chief Executive Officer and to discuss other corporate matters. Mr. Anderson, the
Chairman of the Board during 2015, presided as the chair at meetings or executive sessions of non-employee directors.
Additionally, during 2015, there were five meetings of the Audit Committee, four meetings of the Finance Committee, seven
meetings of the Governance Committee, and six meetings of the Human Resources Committee. All of the directors attended 75% or
more of all the meetings of the Board and the Committees on which he or she served.
All
of the directors, other than Messrs. Masse and Kelly, attended the 2015 Annual Meeting of Stockholders.
NON-EMPLOYEE
DIRECTOR COMPENSATION
|
Directors who are not employees of the Company receive
an annual $60,000 cash retainer, paid in quarterly installments. Additional annual retainers are paid to our Board Leadership,
as shown below:
Role
|
Additional Annual Retainers
|
Board Chairperson
|
$40,000
|
Audit Committee Chairperson*
|
$40,000
|
Governance Committee Chairperson
|
$5,000
|
Human Resources Committee Chairperson
|
$7,500
|
*Includes service as a director of the Company’s Kreher Steel joint venture.
|
In addition, our non-employee director compensation program
includes the following components:
|
·
|
Annual restricted stock award in an amount valued at $70,000,
based upon the 60-day trailing average stock price on the date of grant. The 2015 restricted stock grants vest upon the expiration
of three years from the date of grant, and the 2016 restricted stock grants are expected to vest upon the expiration of one year
from the date of grant;
|
|
·
|
Reimbursement for travel and accommodation expenses incurred
to attend meetings and participate in other corporate functions;
|
|
·
|
Reimbursement for the cost of attending one director continuing
education program annually; and
|
|
·
|
Company-paid personal excess liability, business travel
accident, and director and officer liability insurance policies covering each of our directors.
|
The Company also maintains a Directors Deferred Compensation
Plan (the “Directors Plan”), under which a director may elect to defer receipt of up to 100% of his or her board compensation
for the following year. A director may elect to defer board compensation into either an interest or a stock equivalent investment
option. Compensation held in the interest account is credited with interest at the rate of 6% per year compounded annually. Compensation
deferred in the stock equivalent accounts are divided by the closing price of the Company’s common stock on the day as of
which such compensation would otherwise have been paid to the director to yield a number of stock equivalent units.
Disbursement of the interest account and the stock equivalent
unit account can be made only upon a director’s resignation, retirement or death as a lump sum or in installments on one
or more distribution dates at the director’s election made at the time of the election to defer compensation.
|
|
|
|
10
|
2016 Proxy Statement
|
|
|
|
|
|
|
Director
Compensation Table - Fiscal Year 2015
The following table summarizes the compensation paid to
or earned by the non-employee directors for 2015. Employees of the Company who serve as directors receive no additional compensation
for service as a director.
|
|
|
|
|
|
Name
|
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards
($)(1)
|
Change in
Pension Value
and
Nonqualified
Deferred Compensation Earnings
($)(2)
|
All Other Compensation
($)
|
Total
($)
|
Brian Anderson
|
104,688
|
69,815
|
—
|
—
|
174,503
|
Reuben Donnelley
|
60,000
|
69,815
|
7,076
|
—
|
136,891
|
Terrence Keating
(3)
|
27,667
|
—
|
—
|
—
|
27,667
|
James Kelly
(4)
|
69,115
|
69,815
|
—
|
—
|
138,930
|
Pamela Forbes Lieberman
(5)
|
100,000
|
69,815
|
—
|
—
|
169,815
|
Gary Masse
|
60,000
|
69,815
|
—
|
—
|
129,815
|
John McCartney
(6)
|
27,667
|
—
|
—
|
—
|
27,667
|
Jonathan Mellin
|
62,708
|
69,815
|
—
|
—
|
132,523
|
Steven Scheinkman
(7)
|
2,500
|
—
|
—
|
—
|
2,500
|
Kenneth Traub
|
35,796
|
69,815
|
—
|
—
|
105,611
|
Allan Young
|
32,500
|
69,815
|
—
|
—
|
102,315
|
|
|
|
|
|
|
|
(1)
|
Stock Awards
.
On April 23, 2015, each director received
an annual restricted stock award of 18,667 shares of our common stock. The amounts shown reflect the grant date fair value computed
in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”).
As of December 31, 2015, each director held the following number of shares subject to outstanding unvested stock awards:
|
|
·
|
Mr. Anderson – 30,629 shares;
|
|
·
|
Mr. Donnelley – 27,667 shares;
|
|
·
|
Ms. Forbes Lieberman – 27,667 shares;
|
|
·
|
Mr. Masse – 27,667 shares;
|
|
·
|
Mr. Mellin – 18,667 shares;
|
|
·
|
Mr. Traub. – 18,667 shares; and
|
|
·
|
Mr. Young – 18,667 shares.
|
|
(2)
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings.
Nonqualified deferred compensation plan interest account balances earn interest at the
rate of 6% per year. The amount shown in the table above reflects that portion of the earnings that exceeds 120% of the long-term
applicable federal rate (based on the average 120% rate of 3.01% for 2015). In 2015, Mr. Donnelley deferred 100% of his annual
cash retainer into an interest bearing account.
|
|
(3)
|
Mr. Terrence Keating
resigned from the Board on March
17, 2015. In recognition of his service to the Company, the Board approved the acceleration of Mr. Keating’s unvested restricted
stock awards, in the amount of 14,804 shares. Pursuant to his deferred compensation election, Mr. Keating also received payouts
of the cash and stock equivalent units held in his account of $98,001.55 and 9,680 shares, respectively.
|
|
(4)
|
Mr. James Kelly
resigned
from the Board on October 30, 2015. In recognition of his service to the Company, the Board approved the acceleration of Mr. Kelly’s
unvested restricted stock awards, in the aggregate amount of 27,667 shares.
|
|
(5)
|
Ms. Pamela Forbes Lieberman’s
Board fees earned include $30,000 compensation received for being a member of Kreher Steel
Company’s Board of Directors.
|
|
|
|
|
11
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
(6)
|
Mr. John McCartney
resigned from the Board on March
17, 2015. In recognition of his service to the Company, the Board approved the acceleration of Mr. McCartney’s unvested restricted
stock awards, in the aggregate amount of 14,804 shares. Pursuant to his deferred compensation election, Mr. McCartney also received
payouts of the cash and stock equivalent units held in his account of $56,944.48 and 3,006 shares, respectively.
|
|
(7)
|
Mr. Steven Scheinkman
was
elected to the Company’s Board on March 17, 2015, and served as a non-employee director until his election as Chief Executive
Officer on April 16, 2015. The compensation he received for his service as Chief Executive Officer in 2015 is set forth in the
Summary Compensation Table.
|
Director
Stock Ownership Guidelines
Director stock ownership guidelines require each director
to beneficially own Company common stock with a value equivalent to four times the annual cash retainer (not including any chairperson
retainer(s)). Directors have five years from the date they are initially elected as a director in which to accumulate the required
amount. The equity components that are used to meet the director stock ownership guidelines are as follows:
|
•
|
Shares owned outright and beneficially;
|
|
•
|
Stock equivalent units; and
|
|
•
|
Unexercised, vested stock options.
|
Please see the “Stock Ownership” section below
for additional detail on the stock holdings of our directors.
OVERSIGHT
OF RISK MANAGEMENT
|
The Board is actively involved in oversight of risks that
could affect the Company. The Board implements its risk oversight function both as a whole and through delegation to Board Committees,
which meet regularly and report back to the full Board. The risk management role of each of our Board Committees is detailed further
below:
|
·
|
The Audit Committee
oversees the risk related to the
Company’s financial statements, financial reporting process and accounting and legal matters. The Audit Committee
oversees the internal audit function, the Company’s Code of Conduct program and monitors the Company’s cyber
security action plans. Additionally, the outcome of the Company’s periodic Enterprise Risk Assessment, which identifies
and evaluates potential material risks that could affect the Company and identifies appropriate mitigation measures, is
reviewed with the Audit Committee.
|
|
·
|
The Governance Committee
oversees the governance-related risk,
including development of the Company’s policies and practices, and Board succession planning.
|
|
·
|
The Human Resources Committee
oversees the risks associated with
the Company’s compensation programs. As discussed in more detail on page 32, the Human Resources Committee reviews and approves
compensation features that mitigate risk and align pay to performance with the interests of our executives and our stockholders.
|
The full Board retains responsibility for general oversight
of risks. Key risks to the Company’s business strategy are considered by the Board as part of the Company’s annual
strategy review. Additional information regarding the risks faced by the Company are included in our Annual Report on Form 10-K
for the year ended December 31, 2015, as amended.
|
|
|
|
12
|
2016 Proxy Statement
|
|
|
|
|
|
|
The Board has adopted a Code of Conduct for Directors and
a Code of Conduct for Officers. A copy of our Code of Conduct policies can be found on the “
Corporate
Governance
” section of the Company’s website at
https://www.castlemetals.com/investors/corporate-governance
.
Every Director and Officer is required to read and follow
the Code that is applicable to their role. Any waiver of either Code of Conduct requires the approval of the Governance Committee,
and must be promptly disclosed to our stockholders. We intend to disclose on the “
Corporate
Governance
” section of our website any amendments to, or waivers from, the Code of Conduct.
Any stockholder who wishes to recommend individuals for nomination to the Board
may do so in accordance with the Company’s Bylaws, which require advance notice to the Company and certain other information.
If you are interested in recommending a director candidate, you should request a copy of the Bylaw provisions by writing to the
Corporate Secretary at 1420 Kensington Road, Suite 220, Oak Brook, Illinois 60523.
The Governance Committee identifies nominees for directors from various sources,
including suggestions from Board members and management and in the past has used third party consultants to assist in identifying
and evaluating potential nominees. The Governance Committee will generally consider persons recommended by the stockholders in
the same manner as a committee-recommended nominee.
The current membership of the Board represents a diverse mix of directors in
terms of background and expertise. In considering whether to recommend persons to be nominated for directors, the Governance Committee
will apply the criteria set forth in the Company’s Corporate Governance Guidelines, which include:
|
·
|
Absence of conflict or potential conflict of interest;
|
|
·
|
Ability to make independent analytical inquiries;
|
|
·
|
Understanding of the Company’s business environment;
and
|
|
·
|
Willingness to devote adequate time to Board duties.
|
While our Corporate Governance Guidelines do not prescribe
specific diversity standards, they do provide that the Board will seek a diversified membership for the Board as a whole, in terms
of both the personal characteristics of individuals involved, their various experiences and areas of expertise. When identifying
and evaluating candidates, the Governance Committee, as a matter of practice, also considers whether there are any evolving needs
of the Board that require experience in a particular field, and may consider additional factors it deems appropriate. The Governance
Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all
prospective nominees. The Governance Committee also conducts regular reviews of current directors whose terms are nearing expiration,
but who may be proposed for re-election, in light of the considerations described above and their past contributions to the Board.
Under the Company’s Corporate Governance Guidelines, no director may be
nominated for re-election following their 72
nd
birthday. On the recommendation of the Governance Committee, the Board
may waive this requirement as to any director if it deems a waiver to be in the best interests of the Company.
|
|
|
|
13
|
2016 Proxy Statement
|
|
|
|
|
|
|
Our Related Party Transactions Policy governs the review,
approval and ratification of transactions involving the Company and related persons where the amount involved exceeds $120,000.
Related persons include:
|
·
|
Immediate family members of the above persons; and
|
|
·
|
Entities in which the above persons have a direct or indirect material interest.
|
Potential related party transactions are reviewed by the
General Counsel, and if the General Counsel determines that the proposed transaction is a related-party transaction for such purposes,
the proposed transaction is then submitted to the Governance Committee for review.
The Governance Committee considers all of the relevant
facts and circumstances available, including but not limited to:
|
·
|
whether the proposed transaction is on terms that are fair to the Company and no less favorable
to the Company than terms that could have been reached with an unrelated third party;
|
|
·
|
the purpose of, and the potential benefits to, the Company;
|
|
·
|
the impact on a director’s independence, in the event such person is a director; and
|
|
·
|
whether the proposed transaction would present an improper conflict of interest.
|
In the event that the Company becomes aware of a related-party
transaction that has not been previously approved or ratified by the Governance Committee, a similar process will be undertaken
by the Governance Committee in order to determine if the existing transaction should continue or be terminated.
A copy of our Related Party Transactions Policy can be
found on the “
Corporate Governance
” section of our website at
https://www.castlemetals.com/investors/corporate-governance
.
Related
Party Transactions and Relationships
Raging Capital Management, LLC
2015 Settlement Agreement
On March 17, 2015, the Company entered into a Settlement
Agreement (the “2015 Settlement Agreement”) with the Raging Capital Group and Mr. Steven W. Scheinkman, Mr. Kenneth
Traub and Mr. Allan Young.
Pursuant to the terms of the 2015 Settlement Agreement,
the size of the Board of Directors was expanded from 9 to 10 members, and the Company agreed to nominate three Raging Capital Group
director nominees to our Board. The Board also formed a Finance Committee to review, evaluate and make recommendations to the Board
regarding the Company’s capital structure, working capital management and other financial policies.
If the members of Raging Capital Group cease collectively
to beneficially own less than 1,762,835 shares of the Company’s common stock, then one Raging Capital Group nominee selected
by the Raging Capital Group (initially, Mr. Young) will promptly tender his resignation from the Board and any committee of the
Board on which he is a member; provided, that the Board may, but is not obligated, to accept any such resignation.
Following Mr. Dolan’s resignation and the appointment
of Mr. Scheinkman as President and Chief Executive Officer of the Company, the Company and the Raging Capital Group entered into
a First Amendment to Settlement Agreement to allow the Company to reduce the size of its current Board to nine directors. A Second
Amendment to the Settlement Agreement was entered into following Mr. Kelly’s resignation in October 2015 to allow the Company
to further reduce the size of the Board to eight directors. All other terms of the Raging Capital 2015 Settlement Agreement remain
unchanged.
|
|
|
|
14
|
2016 Proxy Statement
|
|
|
|
|
|
|
2016 Settlement Agreement
On May 27, 2016, the Company entered into the 2016 Settlement
Agreement with the Raging Capital Group and Mr. Kenneth H. Traub, Mr. Allan J. Young and Mr. Richard N. Burger.
Pursuant to the terms of the 2016 Settlement Agreement,
the Board of Directors of the Company agreed to nominate for election at the Company’s 2016 annual meeting of stockholders
(a) Richard N. Burger, (b) Michael Sheehan and (c) current director Gary A. Masse to serve as Class III directors (with a term
expiring at the Company’s 2019 annual meeting of stockholders). In addition, the Board agreed to disband the Finance Committee
it had previously formed in connection with the 2015 Settlement Agreement and to hold its 2016 Annual Meeting of stockholders no
later than July 27, 2016.
The members of the Raging Capital Group, Mr. Burger, Mr.
Traub and Mr. Young also agreed to customary standstill restrictions during the standstill period beginning on the date of execution
of the 2016 Settlement Agreement and ending on the date that is one day after the Company’s 2018 annual meeting of stockholders,
including specified prohibitions against solicitation of proxies, submission of stockholder proposals, nomination of director candidates,
formation of a group, calling a special meeting and engaging in extraordinary transactions with or involving the Company.
The standstill also restricts the members
of the Raging Capital Group from acquiring beneficial ownership of in excess of 22.5% of the Company’s total outstanding
common stock or beneficial ownership of any of the Company’s 12.75% Senior Secured Notes due 2016 (the “Old Secured
Notes”), 12.75% Senior Secured Notes due 2018 (the “New Secured Notes”), 7.0% Convertible Senior Notes due 2017
(the “Old Convertible Notes”), 5.25% Convertible Senior Secured Notes due 2019 (the “New Convertible Notes”)
or any other interests in the Company’s indebtedness such that the aggregate principal amount of all such indebtedness exceeds
$40,000,000.
Raging Capital Group’s Ownership
of Equity and Debt Securities
Two of our directors, Messrs. Young and Traub, are Managing
Partners of, and hold an economic interest in, Raging Capital Group. Raging Capital Group currently owns approximately 14.6% of
the Company’s outstanding common stock (excluding shares underlying the Company’s New Convertible Notes held by Raging
Capital), $27,500,000 principal amount of the Company’s New Secured Notes and $2,940,000 principal amount of the Company’s
New Convertible Notes.
In the first quarter of 2016, the Company entered into
separate Transaction Support Agreements (the “Support Agreements”) with holders of the Company’s Old Secured
Notes and Old Convertible Notes to refinance the Company’s public indebtedness. The Raging Capital Group is party to one
of the Support Agreements. For additional information on the terms of the Support Agreements, as amended, see the Company’s
Current Reports on Form 8-K filed with the SEC on March 22, 2016 and May 13, 2016.
As a holder of the Company’s Old Secured Notes and
Old Convertible Notes, which were exchanged through private exchanges (the “Note Exchanges”) in early 2016 for the
Company’s New Secured Notes and New Convertible Notes, respectively, pursuant to the terms of the Support Agreements (as
defined above). Raging Capital Group received interest payments in 2015 with respect to such notes, commensurate with other holders
of the Old Secured Notes and Old Convertible Notes. In connection with the exchange of its Old Secured Notes, Raging Capital Group
received a consent payment commensurate with similarly situated holders of the Old Secured Notes. Raging Capital Group will receive
interest payments with respect to the New Secured Notes and New Convertible Notes in 2016, commensurate with other holders thereof.
Simpson Estates, Inc.
Two of our current directors, Mr. Mellin and Mr. Donnelley
are general partners of, and hold an economic interest in, entities affiliated with Simpson Estates, Inc. (collectively, “Simpson”).
Simpson currently owns approximately 21.1% of the Company’s outstanding common stock and $32,496,000 principal amount of
the Company’s New Secured Notes. Simpson is also party to one of the Support Agreements described above. Simpson received
interest payments in 2015 with respect to its Old Secured Notes, and in connection with the exchange of its Old Secured Notes,
received a consent payment commensurate with similarly situated holders of the Old Secured Notes.
|
|
|
|
15
|
2016 Proxy Statement
|
|
|
|
|
|
|
Simpson will receive interest
payments with respect to the New Secured Notes in 2016, commensurate with other holders thereof.
Directors, Director
Nominees and Management
The following table sets forth the number of shares and
percentage of the Company’s common stock that was owned beneficially as of June 6, 2016, by each of the Company’s directors
and director nominees, each current or former named executive officer (“Named Executive Officer”) set forth in the
Summary Compensation Table, and by all directors, director nominees and executive officers as a group, with each person having
sole voting and dispositive power except as indicated:
|
|
|
|
Beneficial Owner
|
Shares of
Common
Stock
Beneficially
Owned
(1)
|
Percentage
of Common
Stock
|
Additional Information
|
Directors and Director Nominees
|
|
|
|
Brian Anderson
|
69,894
|
*
|
|
Richard Burger
|
—
|
—
|
|
Reuben Donnelley
|
4,261,752
|
13.3%
|
See note 2 under “Principal Stockholders” table below.
|
Pamela Forbes Lieberman
|
50,017
|
*
|
|
Gary Masse
|
35,471
|
*
|
|
Jonathan Mellin
|
5,151,938
|
16.0%
|
See note 2 under “Principal Stockholders” table below.
|
Michael Sheehan
|
—
|
—
|
|
Kenneth Traub
|
37,555
|
*
|
See note 4 under “Principal Stockholders” table below.
|
Allan Young
|
18,667
|
*
|
See note 4 under “Principal Stockholders” table below.
|
Named Executive Officers
|
|
|
|
Steven Scheinkman
|
7,500
|
*
|
|
Patrick Anderson
|
25,682
|
*
|
Includes 4,800 vested, unexercised stock options.
|
Marec Edgar
|
—
|
—
|
|
Thomas Garrett†
|
32,591
|
*
|
Includes 7,991 vested, unexercised stock options.
|
Ronald Knopp
|
16,344
|
*
|
|
Former Named Executive Officers
|
|
|
|
Scott Dolan
|
238,265
|
*
|
|
Stephen Letnich
|
—
|
—
|
|
All directors, director nominees and executive officers as a group (12 persons)
|
5,343,174
|
16.6%
|
Includes 4,800 vested, unexercised stock options.
|
|
|
|
|
*
Percentage
of shares owned equals less than 1%.
†
Mr.
Garrett separated from employment on March 15, 2016
.
|
|
|
|
16
|
2016 Proxy Statement
|
|
|
|
|
|
|
Principal Stockholders
The only persons who held of record or, to our knowledge
(based on our review of Schedules 13D, 13F and 13G, and amendments thereto), owned beneficially more than 5% of the outstanding
shares of our common stock as of March 1, 2016, are set forth below, with each person having sole voting and dispositive power
except as indicated:
|
|
|
|
Name and Address of Beneficial Owner
|
Shares of
Common
Stock Beneficially
Owned
|
|
Percentage of
Common Stock
(1)
|
Jonathan B. Mellin
Reuben S. Donnelley
W.B. & Co.
FOM Corporation
30 North LaSalle Street, Suite 1232
Chicago, Illinois 60602-2504
|
6,789,269
|
(2)
|
21.1%
|
Stone House Capital Management, LLC
SH Capital Partners, L.P.
Mark Cohen
950 Third Avenue, 17th Floor
New York, New York 10022
|
4,000,000
|
(3)
|
12.4%
|
Raging Capital Master Fund, Ltd.
c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way,
Camana Bay, Grand Cayman KY 1-9007, Cayman Islands
Raging Capital Management, LLC
William C. Martin
Kenneth H. Traub
Allan J. Young
Robert L. Lerner
Ten Princeton Avenue, P.O. Box 228
Rocky Hill, New Jersey 08553
Richard N. Burger
|
6,101,741
|
(4)
|
18.2%
|
Royce & Associates, LLC
745 Fifth Avenue
New York, New York 10151
|
2,719,632
|
(5)
|
8.5%
|
|
|
|
|
|
(1)
|
Applicable percentage ownership is based upon 32,129,911 shares of common Stock outstanding as
of June 6, 2016.
|
|
(2)
|
Based on a Schedule 13D/A filed with the SEC on March 29, 2016. W.B. & Co. shares voting power
with respect to 4,228,281 shares of common stock. Mr. Mellin has sole voting power over 54,323 shares of common stock, shared voting
power over 5,097,615 shares of common stock, sole dispositive power over 109,791 shares of common stock and shared dispositive
power over 869,334 shares of common stock. Mr. Donnelley has sole voting and dispositive power over 33,471 shares of common stock
and shared voting power over 4,228,281 shares of common stock. FOM Corporation has sole voting power over 1,594,372 shares of common
stock, shared voting and dispositive power over 572,688 shares of common stock and shared dispositive power over 572,688 shares
of common stock.
|
|
(3)
|
Based on a Schedule 13D/A filed with the SEC on March 24, 2016. Each of Stone House Capital Management,
LLC, SH Capital Partners, L.P. and Mark Cohen share voting and dispositive power with respect to the 4,000,000 shares of common
stock beneficially owned by them.
|
|
(4)
|
Based on a Schedule 13D/A filed with the SEC on May 31, 2016. Includes 1,414,724 shares underlying
the New Convertible Notes. Each of Raging Capital Management, LLC and William C. Martin share voting and dispositive power with
respect to 6,045,519 shares of common stock. Mr. Traub has sole voting power over 37,555 shares of common stock and sole dispositive
power over 18,888 shares of common stock. Mr. Young has sole voting power over 18,667 shares of common stock.
|
|
(5)
|
Based on a Schedule 13G/A filed on January 12, 2016.
|
|
|
|
|
17
|
2016 Proxy Statement
|
|
|
|
|
|
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company’s executive officers and directors and beneficial owners of more than 10% of the Company’s common stock
to file reports of ownership of the Company’s common stock with the SEC and to furnish the Company with a copy of those reports.
Based on our review of the reports and upon the written
confirmation that we received from each of our executive officers and directors, we believe that all Section 16(a) reports were
timely filed in 2015.
|
|
|
|
18
|
2016 Proxy Statement
|
|
|
|
|
|
|
Proposal
2 – Advisory Vote to Approve
Executive Compensation
Proposal
Snapshot What am I voting on? Stockholders are being asked to approve, on an advisory basis, the compensation of the Named
Executive Officers as described in the Compensation Discussion and Analysis and the Compensation Tables below. Voting recommendation: FOR
the advisory vote to approve executive compensation. The Human Resources Committee takes very seriously its responsibilities to
oversee the Company’s compensation programs and values input from stockholders. The Human Resources Committee will take into account
the outcome of the advisory vote when considering future executive compensation decisions.
We
seek to closely align the interests of our Named Executive Officers with the interests of our stockholders. Pay for performance
is an essential element of the Company’s compensation philosophy. Our compensation programs are designed to reward our Named
Executive Officers for the achievement of short-term and long-term strategic and operational goals, while at the same time avoiding
the encouragement of unnecessary or excessive risk-taking.
At our 2015 Annual Meeting of Stockholders,
our stockholders expressed continued support of our executive compensation programs with 98% of the stockholders casting votes
supporting our proposal. However, as a result of the Company’s restructuring actions in 2015, we have made a number of significant
changes to our compensation programs with the long-term interests of our stockholders in mind. We greatly value our stockholders’
feedback on our program changes. The Company currently conducts annual advisory votes on executive compensation.
2015 Compensation
Improvements:
|
·
|
Redesigned Short-Term Incentive Plan
|
|
·
|
Focused on creating an improved capital structure for the Company.
|
|
·
|
Opportunities for the Named Executive Officers tied to individual
contributions to the successful refinancing of the Company’s long-term public debt.
|
|
·
|
Redesigned Long-Term Incentive Plan
|
|
·
|
Focused on aligning executive compensation with creating shareholder
value through improved stock price performance.
|
|
·
|
For all Company participants, award mix changed from restricted
stock units and performance shares to restricted stock units and non-qualified stock options.
|
This Proposal 2, commonly known as a “say-on-pay”
proposal, is not intended to address any specific element of compensation; rather, your vote relates to the overall compensation
structure of our Named Executive Officers, as described in this Proxy Statement. We ask you to support the following resolution:
“RESOLVED, that the stockholders
APPROVE, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed pursuant to
Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion.”
|
|
|
|
19
|
2016 Proxy Statement
|
|
|
|
|
|
|
The Board of Directors recommends a vote
FOR
the advisory vote to approve executive compensation.
COMPENSATION
DISCUSSION AND ANALYSIS
|
Named
Executive Officers for 2015
|
|
|
Name
|
Position
|
Notes
|
Steven Scheinkman
|
President and Chief Executive Officer
|
Appointed to current role on April 16, 2015.
|
Patrick Anderson
|
Executive Vice President, Chief Financial Officer and Treasurer
|
Appointed to current expanded CFO role on May 27, 2015.
|
Marec Edgar
|
Executive Vice President, General Counsel, Secretary & Chief Administrative Officer
|
Appointed to current expanded CAO role on May 27, 2015.
|
Thomas Garrett
|
Vice President, President, Total Plastics
|
Appointed to this role on March 28, 1988. Mr. Garrett separated from employment on March 15, 2016.
|
Ronald Knopp
|
Executive Vice President, Chief Operating Officer
|
Appointed to current expanded COO role on May 27, 2015.
|
Scott Dolan
|
Former President and Chief Executive Officer
|
Resigned on April 16, 2015.
|
Stephen Letnich
|
Former Chief Commercial Officer
|
Separated from employment on June 24, 2015.
|
|
|
|
Executive
Compensation Overview
Checklist of Compensation Practices
|
WHAT WE DO
|
WHAT WE DON’T DO
|
ü
Stringent
stock ownership guidelines
ü
Align
executive compensation with stockholder returns through long-term incentives
ü
Include
“double-trigger” change in control provisions in equity awards
ü
Balance
of short- and long-term incentives
ü
Clawback
provisions in all compensation programs
ü
Annual
stockholder “say-on-pay” advisory vote
ü
Condition
grants of long-term incentive awards on execution of appropriate restrictive covenants
|
O
Limited
use of employment contracts
O
No
repricing underwater options
O
No
tax gross-ups
O
No
excessive perquisites
O
No
hedging of Company stock
O
No
pledging of Company stock
|
|
|
|
|
20
|
2016 Proxy Statement
|
|
|
|
|
|
|
Elements of
Compensation, Recent Enhancements and Link to Strategy
We have three elements of total direct compensation: base
salary, annual incentives, and long-term incentives, which are described in the following table. We also provide our Named Executive
Officers with limited perquisites and standard retirement and benefit plans (see the sections below entitled “Retirement
Benefits” and “Perquisites and Other Personal Benefits”).
CEO 2015 Target Total Direct Compensation
|
Base Salary
|
44%
|
Cash Annual Incentive
|
15%
|
Long-Term Incentive
|
41%
|
Other Named Executive Officers’ 2015 Target Total Direct Compensation*
|
Base Salary
|
63%
|
Cash Annual Incentive
|
16%
|
Long-Term Incentive
|
21%
|
*represents
average opportunity for Messrs, Anderson, Edgar, Garrett and Knopp in 2015
|
In the past year, we have made significant
enhancements to our compensation program to further align leadership performance by focusing on future stock price appreciation
to increase value to our stockholders.
Pay Element
|
Description and Purpose
|
Actions and Recent Enhancements
|
Link to Business and
Talent Retention
|
Base Salary
|
·
Fixed compensation recognizes individual performance, seniority,
scope of responsibilities, leadership skills and experience.
·
Reviewed annually.
|
·
Salary increases implemented under new consolidated management structure in May 2015 to recognize enhanced roles and responsibilities.
|
·
Competitive base salaries help attract and retain executive talent.
·
Increases are not automatic or guaranteed.
|
Annual Incentives
|
·
Variable compensation based on performance against annually established
targets and individual performance.
·
Designed to reward executives for annual performance on key operational and financial
measures, as well as individual performance.
|
·
Reduced
number of participants eligible to participate to align with short-term Company objectives; for 2015, our main focuses were
to successfully complete the Company’s refinancing and effectuate immediate improvements to our capital
structure.
|
·
Metrics and targets are evaluated each year for alignment with business strategy.
·
Consistent with strategy to focus on capital structure improvements, incentive was based
on the executive management team’s individual efforts in successfully refinancing the Company’s long-term public debt.
|
|
|
|
|
21
|
2016 Proxy Statement
|
|
|
|
|
|
|
Pay Element
|
Description and Purpose
|
Actions and Recent Enhancements
|
Link to Business and
Talent Retention
|
Long-Term Incentives
|
·
Variable equity compensation; payable in the form of restricted stock units and stock
options.
·
Designed to drive sustainable performance that delivers long-term value to stockholders
and directly ties the interests of executive to those of stockholders.
·
The Human Resources Committee reviews the equity metrics annually.
|
·
For 2015, the mix of equity was changed to 2/3 stock options and 1/3 restricted stock
units.
|
·
Our long-term incentive program is designed to focus on stock price appreciation.
·
Awards vest over multi-year periods to help encourage retention of talent.
|
Executive
Compensation Philosophy
Each year, the Human Resources Committee
reviews and approves the Company’s overall Compensation Philosophy and Strategy. Pay for performance is an essential element
of the Company’s executive compensation philosophy. The Company’s executive compensation programs are designed so that
a significant portion of an executive’s compensation is dependent upon the performance of the Company. Measures of financial
performance for short-term and long-term incentive programs, and the use of equity, are intended to align compensation with the
creation of stockholder value. Threshold, target, and maximum performance goals under incentive programs are selected so as to
generate minimum, target, or maximum payouts, commensurate with performance, respectively.
These programs are designed to provide
a total compensation opportunity for the Named Executive Officers that is competitive with the total compensation opportunity offered
to executives with similar responsibilities at comparable companies, also known as the “market median guideline.” Actual
compensation will differ from the targeted opportunity based on actual Company performance. Total compensation is the aggregate
of the following categories: (i) base salary; (ii) short-term incentive compensation; and (iii) long-term incentive compensation.
In reviewing the Named Executive Officers’ target total cash compensation and total direct compensation opportunities, the
Human Resources Committee uses the fiftieth percentile of the competitive market data (“market median,” as described
below) as a guideline. In 2015, based on Company performance and corresponding incentive plan achievement, the actual total cash
compensation and actual total direct compensation of the Named Executive Officers was below market median. Other factors considered
by the Human Resources Committee in setting each Named Executive Officer’s opportunity are experience, internal equity (rational
linkage between job responsibilities and total compensation opportunities across all jobs within the Company), individual executive
performance, and the alignment between Company performance and executive pay.
Benchmarking
In order to establish the market median
guideline, the Human Resources Committee reviews competitive market compensation data on a biennial basis, including the compensation
practices of selected similar companies (the “Compensation Peer Group”), and broader industry compensation data provided
by its executive compensation consultant.
The Compensation Peer Group consists
of publicly-traded corporations that operate either in the metals industry or in the distribution of industrial products, with
a focus on those that have similar business models to Castle. The Compensation Peer Group for 2015 remained the same as 2014, and
consisted of the following 13 companies:
Applied Industrial Tech, Inc.
|
Quanex Building Products Corporation
|
Kaman Corporation
|
Carpenter Technology Corp.
|
Schnitzer Steel Industries, Inc.
|
Lawson Products, Inc.
|
Gibraltar Industries, Inc.
|
Shiloh Industries, Inc.
|
The Timken Company
|
Global Brass and Copper Holdings
|
Haynes International, Inc.
|
Worthington Industries, Inc.
|
Olympic Steel Inc.
|
|
|
|
|
|
|
22
|
2016 Proxy Statement
|
|
|
|
|
|
|
Executive
Compensation Process
Oversight of the Executive Compensation
Programs
The Human Resources Committee oversees our executive compensation
programs, operating under a charter that is reviewed annually and approved by the Board. All members of the Human Resources Committee
are required to be independent and non-employee directors under the applicable NYSE and SEC rules. The Human Resources Committee
operates with the assistance of an executive compensation consultant, who is engaged on an annual basis and is also independent
of the Company and management.
Process for Executives other than
the CEO
We utilize a formal performance management process to establish
goals for our executive officers, including the Named Executive Officers, and to evaluate management performance. The Human Resources
Committee annually reviews the performance of the executive officers with the CEO and the CEO’s recommendation for any changes
in the executive officers’ compensation.
The CEO’s performance review of
the executive officers addresses each executive’s performance relative to established financial and personal objectives
and specific project assignments, and includes a review of the following leadership competencies:
|
•
|
Cross-functional alignment and collaboration;
|
|
•
|
Engaging and influencing others; and
|
|
•
|
Business, financial, and other relevant subject matter acumen.
|
In addition to the reviews of individual executive performance,
the Human Resources Committee takes into account the overall performance of the Company (as related to the short term and long
term incentive plans), as well as the analysis and findings of its executive compensation consultant regarding market pay levels
and practices.
The Human Resources Committee also reviews and approves
the material terms of any employment, severance, and change-in-control agreements with the Named Executive Officers, with a view
to approving terms that are competitive in the marketplace and that serve to attract, motivate and retain executives.
Process for the CEO
Early each year, the Board meets in executive session with
the CEO to discuss the CEO’s prior year performance, and to identify tentative goals for the upcoming year.
As with the process for the other Named Executive Officers,
the Human Resources Committee considers individual performance, Company performance, and the analysis of its compensation consultant
when setting the CEO’s compensation. The Human Resources Committee develops recommendations for CEO compensation for the
upcoming year for consideration by the Board.
The Board meets annually, without the CEO present, to consider
the recommendations of the Human Resources Committee, determine any compensation adjustments applicable to the CEO, and finalize
the CEO’s goals and objectives for the upcoming year. The independent members of the Board then meet with the CEO.
|
|
|
|
23
|
2016 Proxy Statement
|
|
|
|
|
|
|
Base
Salary
With the exception of the CEO, whose compensation was reviewed
and recommended by the Human Resources Committee and approved by the independent members of the Board, the Human Resources Committee
reviewed and approved the base salaries of the Named Executive Officers. In each case, the Human Resources Committee took into
account the CEO’s recommendation, as well as experience, internal equity, the performance of each Named Executive Officer
during the year, and external competitive compensation data. The Human Resources Committee made the following decisions regarding
the base pay of the Named Executive Officers in 2015:
|
•
|
No changes were made to Mr. Scheinkman’s salary due to his April 16, 2015, hire date.
|
|
•
|
Mr. Patrick Anderson received an increase of 29% on May 27, 2015, in connection with his permanent
appointment as Executive Vice President, Chief Financial Officer and Treasurer and expanded responsibilities.
|
|
•
|
Mr. Edgar received an increase of 18% on May 27, 2015, in connection with his expanded role as
Executive Vice President, General Counsel, Secretary and Chief Administrative Officer.
|
|
•
|
No changes were made to Mr. Garrett’s salary.
|
|
•
|
Mr. Knopp received an increase of 30% on May 27, 2015, in connection with his expanded role as
Executive Vice President, Chief Operating Officer.
|
Annual
Incentives
Annual incentives are awarded under the
Company’s Short-Term Incentive Program (“STIP”).
Reduction of 2015
STIP Targets
In July 2015, the Board voted to substantially
redesign the STIP to focus on the Company’s immediate priorities—the completion of the Company’s refinancing
and wholesale improvements to the financial condition of the Company. Accordingly, and as previously disclosed, the Board reduced
each Named Executive Officer’s cash STIP opportunity (other than Mr. Garrett’s opportunity, which related to the performance
of a Company subsidiary, Total Plastics, Inc. (“TPI”), and which remained unchanged) to 40% of the original target
cash award. The Board also approved stock option awards under the STIP for each Named Executive Officer (other than Mr. Garrett)
with a grant date fair value equal to approximately 18% of the original target cash award.
The original and modified 2015 STIP award opportunities
for the named executive officers who were actively employed at the time of grant are shown below in detail (Messrs. Dolan and
Letnich did not receive 2015 STIP awards because their employment with the Company terminated before such awards were granted,
and thus, they are not included in the summary below):
|
|
|
|
|
Name
|
Original Target
Bonus
Opportunity
|
July 2015
Target Cash
Bonus
Opportunity
|
July 2015
Stock Option
Award (#)
|
Stock Option
Award Grant
Date Value
|
Steven Scheinkman
(1)
|
$576,148
|
$230,459
|
50,000
|
$105,000
|
Patrick Anderson
|
$165,000
|
$66,000
|
14,100
|
$29,610
|
Marec Edgar
|
$187,000
|
$74,800
|
15,900
|
$33,390
|
Thomas Garrett
(2)
|
$99,502
|
$99,502
|
—
|
—
|
Ronald Knopp
|
$165,000
|
$66,000
|
14,100
|
$29,610
|
|
|
|
|
|
|
(1)
|
Mr. Scheinkman’s target cash award opportunity under the 2015 STIP was prorated based on
his April 16, 2015 start date as President and Chief Executive Officer.
|
|
(2)
|
The performance measures applicable to Mr. Garrett’s 2015 STIP opportunity were EBITDA, On-Time
Delivery, and Days’ Sales in Inventory for TPI for the year.
|
|
|
|
|
24
|
2016 Proxy Statement
|
|
|
|
|
|
|
2015 STIP Payouts
In February 2016, following the successful results
of the Company’s refinancing efforts, the Board approved generally enhanced payouts under the 2015 STIP, in recognition
of the significant achievements made by our Named Executive Officers in improving the Company’s overall financial health
and the substantial advancements made with respect to the operational restructuring of the Company and the divestiture of various
Company business segments (both completed and then in progress). The cash payouts ultimately approved by the Board under the 2015
STIP are provided in the table below:
|
|
Name
|
Actual 2015 STIP Cash Payout
|
Steven Scheinkman
(1)
|
$230,459
|
Patrick Anderson
|
$165,000
|
Marec Edgar
|
$187,000
|
Thomas Garrett
(2)
|
—
|
Ronald Knopp
|
$165,000
|
|
|
(1)
|
The Board determined to pay Mr. Scheinkman’s 2015 STIP award at his July 2015 target amount.
|
(2)
|
In lieu of a payout under the 2015 STIP and pursuant to the retention agreement entered into on
February 15, 2016 (described in more detail in the section below entitled, “Retention Agreements”), Mr. Garrett received
a $100,000 cash bonus, which was contingent upon his remaining employed by the Company through the earlier of April 1, 2016, or
a sale of TPI.
|
In order to illustrate the Company’s historical performance
against STIP performance measures, the following is a summary of the actual overall corporate STIP payout percentages achieved
for the Named Executive Officers as a group (other than Mr. Garrett), expressed as a percentage of target opportunity, for the
last three years:
Changes to the
STIP for 2016
To align the efforts of the Named Executive Officers (other
than Mr. Garrett, who is no longer employed by the Company following the completion of the sale of TPI in March 2016) with the
Company’s current goals, in February 2016, the Board approved the 2016 STIP with performance measures tied directly to: (1)
de-leveraging the Company’s balance sheet and reducing interest expense through strategic asset sales completed at maximized
value; and (2) improving the near-term profitability of the Company by ensuring cash-positive operating performance. Specifically,
60% of the Named Executive Officers’ 2016 STIP opportunity will be based on the total gross value delivered to the Company
(and subsequently used for debt reduction) via the sale of pre-defined strategic assets; the remaining 40% of the Named Executive
Officers’ 2016 STIP opportunity will be based on the Company’s achievement of cash-positive operating performance in
2016.
|
|
|
|
25
|
2016 Proxy Statement
|
|
|
|
|
|
|
Long-Term
Incentives
Overview
We grant long-term incentive awards under our Long-Term
Compensation Plan (“LTCP”) to our executive officers, including the Named Executive Officers, and select members of
management, to reward performance over a three-year time period. Equity-based compensation remains an important component of the
Company’s overall compensation strategy to align the interests of our Named Executive Officers with the interests of our
stockholders and serves as an important tool for the Company with respect to attracting and retaining executive talent.
Under the LTCP, awards are granted annually at the discretion
of the Human Resources Committee (or, in the case of the CEO, the Board). The Human Resources Committee approves a specific LTCP
award opportunity for each executive officer (with the exception of the CEO, whose specific opportunity under the LTCP is reviewed
and recommended by the Human Resources Committee and approved by the independent members of the Board). All LTCP awards described
below are subject to the terms of the Plan, which was previously approved by the Company’s stockholders.
2015 Long-Term
Incentive Award
The LTCP was updated in 2015 to replace grants of performance
stock units, which used to be a component of the LTCP, with non-qualified stock options, in addition to time-based restricted stock
units. Accordingly, our 2015-2017 LTCP was comprised of one-third restricted stock units and two-thirds non-qualified stock options.
Approximately 50 employees were granted awards under the 2015-2017 LTCP.
The number of restricted stock units and stock
options granted to our Named Executive Officers who were actively employed at the time of grant is provided below (Messrs. Dolan
and Letnich did not receive 2015-2017 LTCP awards because their employment with the Company terminated before such awards were
granted, and thus, they are not included in the summary below):
|
|
|
|
Name
|
Restricted Stock
Units Award
|
Stock Option
Award
|
Stock Option
Award Grant
Price
|
Steven Scheinkman
|
65,000
|
180,000
|
$3.92
|
Patrick Anderson
|
7,394
|
36,505
|
$3.92
|
Marec Edgar
|
11,454
|
41,373
|
$3.92
|
Thomas Garrett
|
7,914
|
24,216
|
$3.92
|
Ronald Knopp
|
9,147
|
36,505
|
$3.92
|
|
|
|
|
2014 Long-Term Incentive Award
The 2014-2016 LTCP remains outstanding and will vest on
December 31, 2016. The 2014-2016 LTCP consists of two-thirds performance shares and one-third time-based restricted stock units.
2014
Performance Measures
As previously disclosed, the performance measures under
the 2014-2016 LTCP consist of 50% relative total shareholder return (“RTSR”) and 50% return on invested capital (“ROIC”).
Payout of the performance shares is based on the attainment of the following goals over a three-year period.
|
·
|
RTSR
threshold is the 25
th
percentile
|
·
|
ROIC
threshold is 4.5%
|
|
·
|
RTSR
target is the 50
th
percentile
|
·
|
ROIC
target is 6.0%
|
|
·
|
RTSR
maximum is the 75
th
percentile
|
·
|
ROIC
maximum is 7.5%
|
|
|
|
|
26
|
2016 Proxy Statement
|
|
|
|
|
|
|
The Human Resources Committee approves the performance
measures, weightings, performance goals, and calibration of shares earned over the payout range between threshold, target and maximum
opportunities. The RTSR peer group was previously disclosed in our 2015 Proxy Statement.
2014 Outstanding
Awards
The outstanding awards under the 2014-2016 LTCP granted
to each Named Executive Officer, other than Mr. Scheinkman, who joined the Company in April 2015, is shown below:
|
|
|
|
|
|
|
Performance
Shares
|
Name
|
Restricted
Stock Units
|
Threshold
|
Target
|
Maximum
|
Patrick
Anderson
|
3,002
|
3,007
|
6,013
|
12,026
|
Marec
Edgar
|
4,937
|
4,944
|
9,888
|
19,776
|
Thomas
Garrett
|
3,374
|
3,380
|
6,759
|
13,518
|
Ronald
Knopp
|
3,632
|
3,638
|
7,275
|
14,550
|
Scott
Dolan
(1)
|
29,979
|
30,025
|
60,049
|
120,098
|
Stephen
Letnich
(1)
|
8,118
|
8,130
|
16,259
|
32,518
|
|
|
|
|
|
|
(1)
|
Outstanding awards forfeited upon departure from the Company.
|
2013 Long-Term
Incentive Award
The 2013-2015 LTCP vested on December 31, 2015. The 2013-2015
LTCP consisted of two-thirds performance shares and one-third time-based restricted stock units.
2013 Performance
Measures
As previously disclosed, the performance measures under
the 2013-2015 LTCP consisted of 50% RTSR and 50% Three-Year Modified ROIC. Payout of the performance shares was based on the attainment
of the following goals over a three-year period.
|
·
|
RTSR
threshold is the 25
th
percentile
|
·
|
ROIC
threshold is 10%
|
|
·
|
RTSR
target is the 50
th
percentile
|
·
|
ROIC
target is 11.5%
|
|
·
|
RTSR
maximum is the 75
th
percentile
|
·
|
ROIC
maximum is 13.5%
|
The RTSR Peer Group was previously disclosed in our 2015 Proxy Statement.
2013 Payout
Upon vesting and following the Human Resources
Committee’s review of the attainment of the performance goals under the 2013-2015 LTCP, the following awards were paid out
to the Named Executive Officers, other than Mr. Scheinkman and Mr. Edgar, who both joined the Company after the grant date for
such awards.
|
|
Name
|
Restricted Stock Units
|
Performance Shares
(1)
|
Patrick Anderson
|
2,300
|
—
|
Thomas Garrett
|
2,900
|
—
|
Ronald Knopp
|
2,700
|
—
|
Scott Dolan
(2)
|
17,342
|
—
|
Stephen Letnich
(3)
|
—
|
—
|
|
|
|
|
(1)
|
The Human Resources Committee reviewed the extent to which the performance measures were met and
determined that the Company’s RTSR performance was below the 25
th
percentile and the Modified ROIC was below 10%.
As the results were below the threshold goals, there were no performance shares paid out under the 2013-2015 LTCP.
|
|
(2)
|
Represents a prorated payout of the 2013-2015 LTCP RSUs, pursuant to Mr. Dolan’s Separation Agreement.
|
|
(3)
|
Shares were forfeited upon Mr. Letnich’s departure from the Company.
|
|
|
|
|
27
|
2016 Proxy Statement
|
|
|
|
|
|
|
Other Awards and Agreements
The Company primarily relies on the established long-term
and short-term incentives for our executive officers. In limited circumstances, the Company uses awards of restricted stock, restricted
stock units, and discretionary cash awards in connection with executive recruitment, for retention purposes, or in recognition
of executive promotions or performance. A description of each of the outstanding awards or awards granted during 2015 under these
limited circumstances is below.
Garrett Retention Agreement
On February 15, 2016, the Board entered into a retention
agreement with Mr. Garrett to incentivize his assistance and ongoing performance in effectuating the sale of TPI. The retention
agreement provided Mr. Garrett with the following benefits:
|
·
|
A retention bonus equal to 75% of his annual base salary,
which was payable within 30 days following the closing of a transaction or series of transactions in which all or substantially
all of the assets or common stock of TPI were sold, transferred, or otherwise disposed of (a “Sale of TPI”) before
the first anniversary of the effective date of the agreement. Mr. Garrett was required to remain employed by TPI or an affiliate
thereof through such a sale in order to receive the retention bonus (he was also entitled to receive the retention bonus in the
event that his employment was terminated without “cause” or for “good reason,” as such terms are defined
therein, during the term of the agreement and before a Sale of TPI).
|
|
·
|
A lump sum “enterprise value escalator” if
the gross sale price at the closing of a Sale of TPI exceeded the target price established by the Human Resources Committee. Such
enterprise value escalator was equal to $1.25 for every $100 by which the sale price realized on a Sale of TPI exceeded the target
price, provided that Mr. Garrett remained continuously employed by TPI and the successor thereto for at least 180 days following
the Sale of TPI (he was also entitled to receive the enterprise value escalator in the event that his employment was terminated
without cause or for good reason after the Sale of TPI, but before 180 days following the Sale of TPI).
|
|
·
|
Enhanced severance benefits if Mr. Garrett’s employment
was terminated (by TPI or its successor) within 24 months following the Sale of TPI without cause or for good reason, equal to
the sum of: (i) 1.5 times Mr. Garrett’s annualized base salary, and (ii) the grossed-up cost of 18 months of COBRA continuation
coverage at the same level of coverage that Mr. Garrett had elected prior to his termination, payable within 30 days following
his termination of employment. Any severance benefits payable under the retention agreement was to be reduced by base salary amounts
and COBRA benefits payable under Mr. Garrett’s severance and/or change in control agreements. Mr. Garrett would have been
required to timely execute and not revoke a waiver and release of all claims against TPI and its affiliates.
|
|
·
|
A $100,000 cash payment in lieu of any amount payable
to Mr. Garrett under the Company’s 2015 STIP (as noted above) on the earlier of April 1, 2016 or a Sale of TPI, provided
that Mr. Garrett had remained continuously employed by TPI or an affiliate thereof until the earlier of such dates.
|
New CEO Arrangements
As previously disclosed, the Company entered into an employment
offer letter dated April 16, 2015, with Mr. Scheinkman, and on April 17, 2015, the Board appointed Mr. Scheinkman to the position
of President and Chief Executive Officer. In accordance with the offer letter, Mr. Scheinkman receives an annual base salary of
$650,000 and is eligible for the annual and long-term awards described above. The Company also entered into severance and change
in control agreements with Mr. Scheinkman. Such agreements are described below in the section entitled, “Potential Payments
Upon Termination or Change in Control.”
|
|
|
|
28
|
2016 Proxy Statement
|
|
|
|
|
|
|
Mr. Dolan Resignation
As previously disclosed, in connection with the resignation
of Mr. Dolan, the Company entered into a Separation Agreement and General Release with Mr. Dolan, dated April 16, 2015. For more
information on this agreement, please see the description in the section below entitled, “Potential Payments Upon Termination
or Change in Control.”
Other Cash Awards
In February 2015, Mr. Anderson received a $20,000 cash
bonus in connection with his assumption of the Interim Chief Financial Officer role. In May 2015, Mr. Edgar received a $50,000
cash bonus in connection with his performance with respect to preparing for the 2015 Annual Meeting of Stockholders. Also in May
2015, Mr. Knopp received a $26,929 cash bonus in recognition of his promotion to Executive Vice President, Chief Operating Officer.
Severance
and Change in Control Benefits
In order to attract and retain an appropriate caliber of
talent, we provide our executive officers with the opportunity to be protected under severance and change in control agreements.
Such severance and change in control agreements are summarized below in the section entitled, “Potential Payments Upon Termination
or Change in Control.”
Retirement
Benefits
We currently maintain the following retirement
plans for our executive officers that are generally available to all non-union, salaried employees.
|
·
|
Salaried Pension Plan and Supplemental Pension Plan
|
We
maintain the Salaried Employees Pension Plan (the “Salaried Pension Plan”), a qualified, noncontributory defined benefit
pension plan covering eligible salaried employees who meet certain age and service requirements. We also maintain an unfunded supplemental
employee retirement plan (the “Supplemental Pension Plan”) for our executives and senior management, which restores
benefits lost due to compensation and benefits limitation imposed by the IRS on deferrals under the Salaried Pension Plan. As of
June 30, 2008, the benefits under the Salaried Pension Plan and the Supplemental Pension Plan were frozen. There are no enhanced
pension formulas or benefits available to the Named Executive Officers. Refer to the Pension Benefits table below for the value
of accumulated pension benefits for the Named Executive Officers.
|
·
|
401(k) Savings and Retirement Plan
|
We
maintain the 401(k) Savings and Retirement Plan (the “401(k) Plan”), a qualified defined contribution plan, for our
employees in the United States who work full-time. There are no enhanced 401(k) benefits available to the Named Executive Officers.
Refer to the All Other Compensation Table below for the Company’s contributions to each Named Executive Officer under the
401(k) Plan.
|
·
|
Supplemental 401(k) Savings and Retirement Plan
|
We
maintain an unfunded, nonqualified, deferred compensation plan, the Supplemental 401(k) Plan (the “Supplemental 401(k) Plan”),
for our executive officers and senior management. The Supplemental 401(k) Plan has investment options that mirror our 401(k) Plan
and provide participants with the ability to save for retirement with additional tax-deferred funds that otherwise would have been
limited due to IRS compensation and benefit limitations. Refer to the All Other Compensation Table below for the Company’s
contributions to each participating Named Executive Officer under the Supplemental 401(k) Plan.
Perquisites
and Other Personal Benefits
We provide the following limited perquisites
to our executive officers:
|
·
|
Automobile usage or stipends.
|
|
|
|
|
29
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
·
|
Personal Excess Liability Coverage policy.
|
|
·
|
Reimbursement of spousal travel expenses on Company business.
|
|
·
|
Medical, dental, life insurance, short-term, and long-term disability
coverage (standard benefits available to most of our employees).
|
The amount of perquisites and personal benefits paid in
2015 are shown in the footnotes to the Summary Compensation Table below.
ADDITIONAL
EXECUTIVE COMPENSATION INFORMATION AND POLICIES
|
Stock
Ownership Guidelines
Similar to the stock ownership guidelines for directors,
the Company maintains an executive stock ownership guideline for ownership of the Company’s stock by our Named Executive
Officers. The program is designed to further strengthen alignment between the interests of executive management and those of the
Company’s stockholders. The guidelines currently provide the following:
|
·
|
Named Executive Officers must reach stock ownership levels
(provided in table below) within five years of their appointment as an officer.
|
|
·
|
Until the Named Executive Officer meets the stock ownership
requirement, the Named Executive Officer must retain 100% of the after-tax shares of vested restricted stock and 100% of the net
after-tax shares of an option exercise.
|
|
·
|
After the Named Executive Officer meets the stock ownership
requirement, the Named Executive Officer must retain at least 50% of the after-tax shares of vested restricted stock and 100% of
the net after-tax shares of an option exercise for a period of six months.
|
|
·
|
Compliance reports are presented to the Human Resources
Committee on an annual basis.
|
|
·
|
Shares owned outright and beneficially, shares held in
nonqualified retirement plans, performance-based shares earned but not yet paid, time-based restricted stock and restricted stock
units, and vested stock options count toward satisfaction of the ownership guidelines. Unexercised, vested stock options are valued
at the amount recognized by the Company for financial statement reporting purposes.
|
|
·
|
Unvested stock options and unearned performance shares
do not help satisfy ownership requirements.
|
The table below describes the ownership
guidelines for each Named Executive Officer actively employed as of December 31, 2015.
|
|
|
|
|
Name
|
Ownership
Requirement as a
% of Base Salary
|
Number of
Shares
Required
(1)
|
Number of
Shares
Owned
|
Date to Meet
Requirements
|
Steven Scheinkman
|
500%
|
883,152
|
72,500
|
04/16/2018
|
Patrick Anderson
|
300%
|
244,565
|
47,961
|
09/26/2019
|
Marec Edgar
|
100%
|
92,391
|
21,479
|
04/01/2019
|
Thomas Garrett
|
100%
|
67,597
|
57,784
|
03/05/2014
|
Ronald Knopp
|
100%
|
81,522
|
29,123
|
07/02/2018
|
|
|
|
|
|
|
(1)
|
The ownership value will be calculated based on the executive’s base salary and the “fair
market value” of the stock at the time that the ownership value is measured, rather than at the time of the initial acquisition
of the stock. For purposes of this valuation, “fair market value” of the stock shall equal the average stock price
of the Company’s common stock for the 200-day period prior to the measurement date, and in the
|
|
|
|
|
30
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
|
case of vested unexercised
stock options the “fair market value” shall equal the dollar value of those awards recognized by the Company for financial
statement reporting purposes.
|
Compensation
Recovery Policy
The Company has adopted a compensation recovery (or “clawback”)
policy that requires paid incentive compensation to be recovered by the Company to the extent such compensation would have been
lower due to restated financial results. The Human Resources Committee has the authority to calculate the amount of any overpayment
and, in its sole discretion, to seek to recover amounts determined to have been inappropriately received by any current or former
executive of the Company.
The clawback policy provides that overpayments of compensation
should be recovered within twelve months after an applicable restatement of financial results.
Anti-Hedging
and Anti-Pledging Policy
Under our Insider Trading Policy, our directors and executive
officers are prohibited from (i) hedging the economic interest in our securities, and (ii) purchasing securities on margin, holding
Company securities in a margin account, or pledging Company securities as collateral for a loan.
Tax
and Accounting Implications of Executive Compensation
Code 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”), places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year
with respect to each of our Named Executive Officers, with the exception of our Chief Financial Officer. There is an exception
to the $1,000,000 limitation for performance-based compensation that meets certain requirements. To the extent deemed necessary
and appropriate by the Human Resources Committee, the Company’s short- and long-term incentive plan awards may be designed
to be performance-based to meet the requirements of Section 162(m) of the Code, so that such amounts may be excluded from the $1,000,000
cap on compensation for deductibility purposes. The following types of compensation generally do not meet the requirements of performance-based
compensation under Section 162(m) of the Code:
|
·
|
Discretionary bonuses; and
|
|
·
|
Restricted stock awards.
|
All of the Company’s incentive awards and individual
incentive awards are subject to Federal income, FICA, and other tax withholding as required by applicable law. The Human Resources
Committee has the discretion to adjust STIP and LTCP award payments. In doing so, the Human Resources Committee historically considers
the requirements of Section 162(m) of the Code. While the Human Resources Committee generally intends to provide incentive compensation
opportunities to the Company’s executives in as tax-efficient a manner as possible, the Company recognizes that from time
to time it may be in the best interests of stockholders to provide non-deductible incentive compensation, and the Company specifically
reserves the right to do so. The Company accounts for stock-based payments, including stock options, restricted stock and the performance
share awards in accordance with the requirements of ASC Topic 718.
Compensation
Consultant
The Human Resources Committee engaged Pearl Meyer &
Partners as the Company’s compensation consultant for the first three quarters of 2015. In September 2015, the Company transitioned
to a new compensation consultant, Lockton Companies. Prior to the retention of any compensation consultant, the Human Resources
Committee reviews relevant NYSE independence factors and any potential conflicts of interest.
The Human Resources Committee conducted this review regarding
its engagement of Lockton and concluded that Lockton is independent.
The Company’s compensation consultant provides advice to the Human Resources
Committee as follows:
|
·
|
Review
of the Company’s executive compensation program designs and levels, including the mix of total
|
|
|
|
|
31
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
|
compensation
elements, compared to industry peer groups and broader market practices.
|
|
·
|
Information on emerging trends and legislative developments
in executive compensation and implications for the Company.
|
|
·
|
Review of the Company’s executive and director stock
ownership guidelines, compared to industry peer groups and broader market practices.
|
|
·
|
Review of the Company’s director compensation program
compared to industry peer groups and broader market practices.
|
At the direction of the Human Resources Committee, management,
in coordination with its advisors, annually conducts a comprehensive risk assessment of the Company’s compensation policies
and practices, which included the following actions:
|
·
|
Completed an inventory of the Company’s compensation programs,
with input from the Company’s outside legal counsel as to a framework for assessing compensation risk;
|
|
·
|
Reviewed both business and compensation risk to ensure that the
Company’s compensation plans appropriately take into account key business risks and do not have design flaws which motivate
inappropriate or excessive risk taking; and
|
|
·
|
Reported its findings to the Human Resources Committee.
|
Management conducted this assessment of all compensation
policies and practices for all employees, including the Named Executive Officers, and determined that the compensation programs
are not reasonably likely to have a material adverse effect on the Company. This process included a review of the Company’s
executive and non-executive incentive compensation programs. Management reviewed the results of this risk assessment with the Human
Resources Committee. During the review, several risk mitigating factors inherent in the Company’s compensation practices
were noted, including: (i) the Human Resources Committee’s discretion in approving executive compensation and establishing
performance goals for short-term and long-term compensation plans; (ii) the Company’s use of a balanced array of performance
measures in its short-term incentive plan; (iii) stock ownership guidelines for executive officers; and (iv) the Company’s
compensation recovery policy.
REPORT
OF THE HUMAN RESOURCES COMMITTEE
|
Notwithstanding anything to the contrary set
forth in any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or
the Exchange Act that might incorporate future filings, in whole or in part, the Report of the Human Resources Committee shall
not be deemed to be “Soliciting Material,” are not deemed “filed” with the SEC and shall not be incorporated
by reference into any filings under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective
of any general incorporation language in such filing, except to the extent that the Company specifically requests that the information
be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act or
the Exchange Act.
The Human Resources Committee of the
Company’s Board of Directors has reviewed and discussed with management the disclosures contained in the section entitled
“Compensation Discussion and Analysis” of this Proxy Statement. Based upon their review and discussion, the applicable
current and former members of the Human Resources Committee recommended to the Board that the section entitled “Compensation
Discussion and Analysis” be included in the Company’s Proxy Statement relating to the 2016 Annual Meeting of Stockholders.
Human Resources Committee,
|
|
|
|
|
|
Brian P. Anderson, Chairman
|
Pamela Forbes Lieberman
|
Gary
A. Masse
|
|
|
|
|
|
|
|
|
|
|
32
|
2016 Proxy Statement
|
|
|
|
|
|
|
Summary
Compensation Table
The
table below includes the total compensation paid to or earned by each of the Chief Executive Officer, the Chief Financial Officer,
the three other most highly compensated current executive officers, and any former executive officers of the Company for the fiscal
years ended December 31, 2015, 2014, and 2013. Compensation from 2013 or 2014 is only included if the officer was a Named Executive
Officer in such prior year(s).
Mr.
Scott Dolan and Mr. Stephen Letnich are included in the following table as former Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
Name
and
Principal
Position
|
Year
|
Salary
($)(1)
|
Bonus
($)(2)
|
Stock
Awards
($)(3)
|
Option
Award
(4)
|
Non-Equity
Incentive Plan
Compensation
($)(5)
|
Change
in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(6)
|
All
Other
Compensation
($)(7)
|
Total
($)
|
Steven
Scheinkman,
President and Chief Executive Officer
|
2015
|
455,000
|
—
|
254,800
|
474,000
|
230,459
|
—
|
132,040
|
1,546,299
|
|
|
|
|
|
|
|
|
|
Scott
Dolan,
Former
President and Chief Executive Officer(8)
|
2015
|
278,750
|
—
|
—
|
—
|
—
|
—
|
1,006,779
|
1,285,529
|
2014
|
650,000
|
—
|
1,466,362
|
—
|
—
|
—
|
66,787
|
2,183,149
|
2013
|
650,000
|
—
|
1,492,372
|
—
|
201,500
|
—
|
32,956
|
2,376,828
|
Patrick
Anderson,
EVP,
Chief Financial Officer & Treasurer
|
2015
|
282,938
|
119,000
|
28,984
|
104,445
|
66,000
|
—
|
36,257
|
637,624
|
2014
|
212,513
|
20,000
|
146,851
|
—
|
—
|
1,133
|
25,210
|
405,707
|
Marec
Edgar,
EVP,
General Counsel, Secretary & CAO
|
2015
|
331,077
|
162,200
|
44,900
|
118,205
|
74,800
|
—
|
38,671
|
769,853
|
2014
|
203,815
|
100,000
|
316,463
|
—
|
—
|
—
|
69,299
|
689,577
|
Thomas
Garrett,
Former Vice President, President, Total Plastics (9)
|
2015
|
258,324
|
—
|
31,023
|
49,643
|
—
|
—
|
50,604
|
389,594
|
2014
|
247,256
|
—
|
165,061
|
—
|
94,764
|
101,737
|
33,494
|
642,312
|
2013
|
243,878
|
—
|
168,280
|
—
|
81,748
|
—
|
29,575
|
523,481
|
Ronald
Knopp,
EVP, Chief Operating Officer
|
2015
|
281,920
|
125,929
|
35,856
|
104,445
|
66,000
|
—
|
17,713
|
631,863
|
|
|
|
|
|
|
|
|
|
Stephen
Letnich,
Former
Chief Commercial Officer(10)
|
2015
|
194,986
|
—
|
—
|
—
|
—
|
—
|
355,480
|
550,466
|
2014
|
323,478
|
—
|
397,059
|
—
|
—
|
—
|
30,737
|
751,274
|
2013
|
141,539
|
25,000
|
438,188
|
—
|
44,000
|
—
|
8,527
|
657,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Salary
and bonus represents approximately 29.4%, 21.7%, 62.3%, 64.1%, 66.3%, 64.5%, and 35.4%
of total compensation for the year 2015 for Messrs. Scheinkman, Dolan, Anderson, Edgar,
Garrett, Knopp, and Letnich, respectively. The amount in this column for Mr. Scheinkman
does not include the fee ($2,500) that he received for his service as a non-employee
director on the Board for a portion of 2015 prior to becoming Chief Executive Officer
(such amount is instead reported in the Director Compensation Table).
|
|
|
|
|
33
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
(2)
|
The
amounts in this column include the following: for 2015 - discretionary bonuses for Mr.
Anderson ($20,000); Mr. Edgar ($50,000); and Mr. Knopp ($26,929); and the portion of
the 2015 STIP bonuses for Messrs. Anderson, Edgar, and Knopp in excess of their target
bonuses; for 2014 - a discretionary bonus for Mr. Anderson and a sign-on bonus for Mr.
Edgar; and for 2013 - a sign-on bonus for Mr. Letnich.
|
|
(3)
|
The
amounts reported in this column reflect the aggregate grant date fair value of stock-based
awards (other than stock options) granted in the year computed in accordance with FASB
ASC Topic 718, except that in compliance with SEC requirements, for awards that are subject
to performance conditions, we reported the value at the grant date based upon the probable
outcome of such conditions. These amounts are not paid or realized by the officer. Additional
information about these values is included in Note 8 to our audited consolidated financial
statements contained in our Annual Report on Form 10-K for the year ended December 31,
2015, as amended.
|
|
|
The
amounts in this column for 2015 reflect the grant date fair value of restricted stock
unit awards under the 2015-2017 LTCP.
|
|
|
For
Mr. Edgar, the amounts in this column for 2014 include an award of 5,088 shares of restricted
stock upon commencement of his employment with the Company.
|
|
|
For
Mr. Letnich, the amounts in this column for 2013 include an award of 6,281 shares of
restricted stock upon commencement of his employment with the Company.
|
|
(4)
|
The
amounts reported in this column reflect the aggregate grant date fair value of stock
options granted under the 2015 STIP and under the 2015-2017 LTCP, computed in accordance
with ASC Topic 718. Additional information about these values is included in Note 8 to
our audited consolidated financial statements contained in our Annual Report on Form
10-K for the year ended December 31, 2015, as amended.
|
|
(5)
|
Reflects
the cash awards under the Company’s STIP (amounts earned during the applicable
fiscal year but paid after the end of that fiscal year).
|
|
(6)
|
Reflects
the actuarial decrease in the present value of the Named Executive Officer’s benefits
under the Salaried Pension Plan and the Supplemental Pension Plan determined using assumptions
consistent with those used in the Company’s financial statements. As described
in more detail below under “Pension Benefits - Fiscal Year 2015,” pension
accruals ceased for all Named Executive Officers in 2008, and Named Executive Officers
hired after that date are not eligible for coverage under any pension plan. Accordingly,
the amounts reported for the Named Executive Officers do not reflect additional accruals
but reflect the fact that each of them is one year closer to “normal retirement
age” as defined under the terms of the Salaried Pension Plan and the Supplemental
Pension Plan as well as changes to other actuarial assumptions. For 2015, there was an
actuarial decrease in the present value of the benefits under the Salaried Pension Plan
for Mr. Anderson in the amount of $(461), for Mr. Garrett in the amount of $(8,289) and
for Mr. Knopp of $(275); and under the Supplemental Pension Plan for Mr. Garrett in the
amount of $(2,139). Because these amounts are negative, they are not reported in this
column or in the Total Compensation column in the Summary Compensation Table.
|
|
(7)
|
The
amounts shown are detailed in the supplemental “All Other Compensation Table –
Fiscal Year 2015” below.
|
|
(8)
|
Mr.
Dolan resigned on April 16, 2015.
|
|
(9)
|
Mr.
Garrett separated from employment with the Company on March 15, 2016.
|
|
(10)
|
Mr.
Letnich separated from employment with the Company on June 24, 2015.
|
|
|
|
|
34
|
2016 Proxy Statement
|
|
|
|
|
|
|
All
Other Compensation Table – Fiscal Year 2015
The
table below provides additional information about the amounts that appear in the “All Other Compensation” column in
the Summary Compensation Table above:
|
|
|
|
|
|
|
|
401(k)
Plan
Company
Matching
Contributions
($)
|
Deferred
Plan
Company
Matching
Contributions
($)
|
Severance
Payments
(1)($)
|
Relocation
Expense
Reimbursement
($)
|
Miscellaneous
($)(2)
|
Total
All Other
Compensation
($)
|
Steven
Scheinkman
|
12,600
|
11,400
|
—
|
102,334
|
5,706
|
132,040
|
Scott
Dolan
|
15,900
|
825
|
975,000
|
—
|
15,054
|
1,006,779
|
Patrick
Anderson
|
7,351
|
11,077
|
—
|
—
|
17,829
|
36,257
|
Marec
Edgar
|
15,900
|
6,965
|
—
|
—
|
15,806
|
38,671
|
Thomas
Garrett
|
27,513
|
7,287
|
—
|
—
|
15,804
|
50,604
|
Ronald
Knopp
|
13,669
|
—
|
—
|
—
|
4,044
|
17,713
|
Stephen
Letnich
|
11,699
|
—
|
325,024
|
—
|
18,757
|
355,480
|
|
|
|
|
|
|
|
|
(1)
|
Severance
payments were made to Messrs. Dolan and Letnich pursuant to their then-existing agreements.
|
|
(2)
|
Includes
the cost, including insurance, fuel and lease payments, of a Company-provided automobile
or vehicle stipend, and a cellular telephone allowance. Also includes, for Messrs. Scheinkman
and Letnich, reimbursement of travel and other event related expenses associated with
attendance at Company and industry events to which family members were invited.
|
|
|
|
|
35
|
2016 Proxy Statement
|
|
|
|
|
|
|
Grants
of Plan-Based Awards – Fiscal Year 2015
The
following table sets forth plan-based awards granted to the Named Executive Officers in 2015. Messrs. Dolan and Letnich are not
included in this table because their employment with the Company terminated before any such awards were granted, and thus, they
did not receive 2015 STIP awards or 2015-2017 LTCP awards.
|
|
|
|
|
|
|
|
|
Estimated
Possible Payouts Under
Non-Equity Incentive Plan
Awards (1)
|
All
Other
Stock
Awards:
Number
of Shares of
Stock or
Units (2)
(#)
|
All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)(4)
|
Exercise
or
Base Price
of Option
Awards
($/Sh)
|
Grant
Date Fair
Value of Stock
Awards
($)(4)
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Steven
Scheinkman
|
—
|
—
|
230,459
|
—
|
|
|
|
|
7/24/15
|
|
|
|
65,000
|
|
|
369,000
|
7/24/15
|
|
|
|
|
50,000
|
3.92
|
105,000
|
7/24/15
|
|
|
|
|
180,000
|
3.92
|
254,800
|
Patrick Anderson
|
—
|
—
|
66,000
|
—
|
|
|
|
|
7/24/15
|
|
|
|
7,394
|
|
|
28,984
|
7/24/15
|
|
|
|
|
14,100
|
3.92
|
29,610
|
7/24/15
|
|
|
|
|
36,505
|
3.92
|
74,835
|
Marec
Edgar
|
—
|
—
|
74,800
|
—
|
|
|
|
|
7/24/15
|
|
|
|
11,454
|
|
|
44,900
|
7/24/15
|
|
|
|
|
15,900
|
3.92
|
33,390
|
7/24/15
|
|
|
|
|
41,373
|
3.92
|
84,815
|
Thomas
Garrett
|
—
|
—
|
99.502
|
199.005
|
|
|
|
|
7/24/15
|
|
|
|
7,914
|
|
|
31,023
|
7/24/15
|
|
|
|
|
24,216
|
3.92
|
49,643
|
Ronald
Knopp
|
—
|
—
|
66,000
|
—
|
|
|
|
|
7/24/15
|
|
|
|
9,147
|
|
|
35,856
|
7/24/15
|
|
|
|
|
14,100
|
3.92
|
29,610
|
7/24/15
|
|
|
|
|
36,505
|
3.92
|
74,835
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These
columns show the potential cash payouts under the Company’s 2015 STIP, which is
described above in the section entitled, “Annual Incentives.”
|
|
(2)
|
Reflects
the award of restricted stock units under the 2015-2017 LTCP, which is described above
in the section entitled, “2015 Long-Term Incentive Award.” The restricted stock
unit awards vest in full on December 31, 2017, provided that the Named Executive Officer
remains employed by the Company as of such date.
|
|
(3)
|
Reflects
the award of stock options under the 2015 STIP. The 2015 STIP is described above in the
section entitled, “Annual Incentives.” The shares underlying the option awards
are subject to the following vesting schedules, provided that the Named Executive Officer
remains employed by the Company as of each vesting date:
|
|
·
|
Mr.
Scheinkman: 16,666 shares will vest and become exercisable on July 24, 2016, and 16,667
shares will vest and become exercisable on each of July 24, 2017, and July 24, 2018.
|
|
·
|
Mr.
Anderson: 4,700 shares will vest and become exercisable on each of July 24, 2016, July
24, 2017, and July 24, 2018.
|
|
·
|
Mr.
Edgar: 5,300 shares will vest and become exercisable on each of July 24, 2016, July 24,
2017, and July 24, 2018.
|
|
·
|
Mr.
Knopp: 4,700 shares will vest and become exercisable on each of July 24, 2016, July 24,
2017, and July 24, 2018.
|
|
|
|
|
36
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
(4)
|
Reflects
the award of restricted stock units under the 2015-2017 LTCP, which is described above
in the section entitled, “2015 Long-Term Incentive Award.” The shares underlying
the option awards are subject to the following vesting schedules, provided that the Named
Executive Officer remains employed by the Company as of each vesting date:
|
|
·
|
Mr.
Scheinkman: 60,000 shares vested on April 17, 2016 and will become exercisable on July
24, 2016, and 60,000 shares will vest and become exercisable on each of April 17, 2017,
and April 17, 2018.
|
|
·
|
Mr.
Anderson: 12,168 shares vested on February 25, 2016 and will become exercisable on July
24, 2016, 12,168 shares will vest and become exercisable on February 25, 2017, and 12,169
shares will vest and become exercisable on February 25, 2018.
|
|
·
|
Mr.
Edgar: 13,791 shares vested on February 25, 2016 and will become exercisable on July
24, 2016, and 13,791 shares will vest and become exercisable on each of February 25,
2017, and February 25, 2018.
|
|
·
|
Mr.
Garrett: 8,072 shares vested on February 25, 2016 and will become exercisable on July
24, 2016, and 8,072 shares will vest and become exercisable on each of February 25, 2017,
and February 25, 2018.
|
|
·
|
Mr.
Knopp: 12,168 shares vested on February 25, 2016 and will become exercisable on July
24, 2016, 12,168 shares will vest and become exercisable on February 25, 2017, and 12,169
shares will vest and become exercisable on February 25, 2018.
|
|
(5)
|
The
amounts shown do not reflect realized compensation by the Named Executive Officers. The
amounts shown represent the value of the stock options and restricted stock units granted
to the Named Executive Officers based on the grant date fair value of the awards as determined
in accordance with FASB ASC Topic 718.
|
|
|
|
|
37
|
2016 Proxy Statement
|
|
|
|
|
|
|
Outstanding
Equity Awards at 2015 Fiscal Year-End
The following table
sets forth information on the holdings of stock options and stock awards by our Named Executive Officers as of the end of 2015.
|
|
Stock Awards
|
|
Option Awards
|
|
|
Equity
|
Equity
Incentive
Plan
|
Name
|
Number
of
Securities
Underlying
Un-exercised
Options (#)
Exercisable
|
Number
of
Securities
Underlying
Un-exercised
Options (#)
Unexercisable
(1)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)
|
Market
Value
of Shares or
Units of Stock
That Have Not
Vested ($)(3)
|
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)(4)
|
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)(5)
|
Steven
Scheinkman
|
—
|
50,000
|
3.92
|
7/23/25
|
|
|
|
|
|
—
|
180,000
|
3.92
|
7/23/25
|
|
|
|
|
|
|
|
|
|
65,000
|
103,350
|
|
|
Scott
Dolan(6)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Patrick
Anderson
|
4,800
|
—
|
12.79
|
3/17/18
|
|
|
|
|
|
|
14,100
|
3.92
|
7/23/25
|
|
|
|
|
|
|
36,505
|
3.92
|
7/23/25
|
|
|
|
|
|
|
|
|
|
10,396
|
16,530
|
|
|
|
|
|
|
|
|
|
3,007
|
4,781
|
Marec
Edgar
|
—
|
15,900
|
3.92
|
7/23/25
|
|
|
|
|
|
—
|
41,373
|
3.92
|
7/23/25
|
|
|
|
|
|
|
|
|
|
21,479
|
34,152
|
|
|
|
|
|
|
|
|
|
4,944
|
7,861
|
Thomas
Garrett
|
6,300
|
—
|
12.79
|
3/17/18
|
|
|
|
|
|
—
|
24,216
|
3.92
|
7/23/25
|
|
|
|
|
|
|
|
|
|
11,288
|
17,948
|
|
|
|
|
|
|
|
|
|
3,380
|
5,374
|
Ronald
Knopp
|
—
|
14,100
|
3.92
|
7/23/25
|
|
|
|
|
|
—
|
36,505
|
3.92
|
7/23/25
|
|
|
|
|
|
|
|
|
|
12,779
|
20,319
|
|
|
|
|
|
|
|
|
|
3,638
|
5,784
|
Stephen
Letnich(7)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
vesting schedule for the shares included in this column for each of the Named Executive Officers is as follows:
|
|
○
|
16,666
shares will vest and become exercisable on July 24, 2016;
|
|
○
|
16,667
shares will vest and become exercisable on each of July 24, 2017 and July 24, 2018;
|
|
○
|
60,000
shares vested on April 17, 2016, and will become exercisable on July 24, 2016; and
|
|
○
|
60,000
shares will vest and become exercisable on each of April 17, 2017, and April 17, 2018.
|
|
○
|
4,700
shares will vest and become exercisable on each of July 24, 2016, July 24, 2017, and July 24, 2018;
|
|
○
|
12,168
shares vested on February 25, 2016, and will become exercisable on July 24, 2016;
|
|
○
|
12,168
shares will vest and become exercisable on February 25, 2017; and
|
|
○
|
12,169
shares will vest and become exercisable on February 25, 2018.
|
|
○
|
5,300
shares will vest and become exercisable on each of July 24, 2016, July 24, 2017, and July 24, 2018;
|
|
|
|
|
38
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
○
|
13,791
shares vested on February 25, 2016, and will become exercisable on July 24, 2016; and
|
|
○
|
13,791
shares will vest and become exercisable on each of February 25, 2017, and February 25, 2018.
|
|
○
|
8,072
shares vested on February 25, 2016, and will become exercisable on July 24, 2016; and
|
|
○
|
8,072
shares will vest and become exercisable on each of February 25, 2017, and February 25, 2018.
|
|
○
|
4,700
shares will vest and become exercisable on each of July 24, 2016, July 24, 2017, and July 24, 2018;
|
|
○
|
12,168
shares vested on February 25, 2016, and will become exercisable on July 24, 2016;
|
|
○
|
12,168
shares will vest and become exercisable on February 25, 2017; and
|
|
○
|
12,169
shares will vest and become exercisable on February 25, 2018.
|
|
(2)
|
The
vesting schedule for the shares included in this column for each of the Named Executive Officers is as follows:
|
|
○
|
65,000
will vest on December 31, 2017.
|
|
○
|
3,002
will vest on December 31, 2016, and
|
|
○
|
7,394
will vest on December 31, 2017.
|
|
○
|
4,937
will vest on December 31, 2016,
|
|
○
|
5,088
will vest on April 1, 2017, and
|
|
○
|
11,454
will vest on December 31, 2017.
|
|
○
|
3,374
will vest on December 31, 2016, and
|
|
○
|
7,914
will vest on December 31, 2017.
|
|
○
|
3,632
will vest on December 31, 2016, and
|
|
○
|
9,147
will vest on December 31, 2017.
|
|
(3)
|
Market
value has been computed by multiplying the closing price of the Company’s common
stock on December 31, 2015, by the number of shares of stock.
|
|
(4)
|
Reflects
performance shares at the threshold payout level under the 2014-2016 LTCP, which is described
above in the section entitled, “2014 Long-Term Incentive Award.”
|
|
(5)
|
Market
value has been computed by multiplying the closing price of the Company’s common
stock on December 31, 2015, $1.59, by the number of performance shares.
|
|
(6)
|
Pursuant
to Mr. Dolan’s resignation of employment from the Company, 56,588 shares of his
restricted stock units were vested on an accelerated basis as of April 16, 2015. All
other outstanding stock awards were forfeited.
|
|
(7)
|
Upon
Mr. Letnich’s departure from the Company, all outstanding, unvested stock awards
were forfeited.
|
|
|
|
|
39
|
2016 Proxy Statement
|
|
|
|
|
|
|
Option
Exercises and Stock Vested – Fiscal Year 2015
The table below describes
for each Named Executive Officer the amount of stock options exercised during 2015, including the number of shares acquired upon
exercise and the value realized, and the number of shares acquired upon the vesting of performance shares and restricted stock
units and the value realized by the executive before the payment of any applicable withholding tax based on the fair market value
(or closing market price) of our common stock on the date of the exercise or vesting, as applicable.
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
Name
|
Number
of Shares
Acquired on
Exercise
(#)
|
|
Value
Realized on
Exercise
($)
|
|
Number
of Shares
Acquired on
Vesting
(#)(1)
|
|
Value
Realized
on Vesting
($)
|
|
Steven
Scheinkman
|
—
|
|
—
|
|
—
|
|
—
|
|
Scott
Dolan
|
—
|
|
—
|
|
56,588
|
|
225,220
|
|
Patrick
Anderson
|
—
|
|
—
|
|
2,300
|
(2)
|
3,657
|
|
Marec
Edgar
|
—
|
|
—
|
|
—
|
|
—
|
|
Thomas
Garrett
|
—
|
|
—
|
|
2,900
|
(3)
|
4,611
|
|
Ronald
Knopp
|
—
|
|
—
|
|
2,700
|
(4)
|
4,293
|
|
Stephen
Letnich
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
(1)
|
Amounts
in this column include restricted stock units that vested and/or were surrendered to
the Company in satisfaction of tax withholdings due upon receipt of restricted stock
units that vested in 2015. The shares reported vested on December 31, 2015, other than
for Mr. Dolan, whose shares vested on April 16, 2015.
|
No
performance shares were earned with respect to the 2013-2015 LTCP.
The
market price of our common stock was $1.59 on December 31, 2015, and $3.98 on April 16, 2015.
|
(2)
|
Includes
715 shares withheld from Mr. Anderson to satisfy tax withholdings at a value of $1,137.
Mr. Anderson has not sold any of the remaining shares he acquired upon this vesting.
|
|
(3)
|
Includes
916 shares withheld from Mr. Garrett to satisfy tax withholdings at a value of $1,456.
Mr. Garrett has not sold any of the remaining shares he acquired upon this vesting.
|
|
(4)
|
Includes
839 shares withheld from Mr. Knopp to satisfy tax withholdings at a value of $1,334.
Mr. Garrett has not sold any of the remaining shares he acquired upon this vesting.
|
|
|
|
|
40
|
2016 Proxy Statement
|
|
|
|
|
|
|
Pension
Benefits – Fiscal Year 2015
The
table below describes for each Named Executive Officer the number of years of credited service and the estimated present value
of the accumulated benefit under the Salaried Pension Plan and the Supplemental Pension Plan. Contributions and benefits under
the Company’s Salaried Pension Plan and Supplemental Pension Plan were frozen as of June 30, 2008.
Only
Messrs. Anderson, Garrett, and Knopp are eligible to receive benefits under the Salaried Pension Plan, and only Mr. Garrett is
eligible to receive benefits under the Supplemental Pension Plan, as the Company ceased benefit accruals under these plans prior
to the commencement of employment with the Company by the other current Named Executive Officers.
Under
the Salaried Pension Plan and the Supplemental Pension Plan, the benefits are computed on the basis of straight-life annuity amounts.
No payments of pension benefits were made to any of the Named Executive Officers in 2015. The Company does not have a policy of
granting extra pension service. For a description of the Company’s Salaried Pension Plan and Supplemental Pension Plan,
see the section above entitled, “Retirement Benefits.”
|
|
|
|
Name
|
Plan
Name
|
Number
of
Years Credited
Service
(#)
|
Present
Value of Accumulated Benefit
($)(1)
|
Patrick
Anderson
|
Salaried
Employees Pension Plan
|
0.75
|
8,955
|
Thomas
Garrett
|
Salaried
Employees Pension Plan
|
12.5
|
349,297
|
|
Supplemental
Pension Plan
|
12.5
|
90,157
|
Ronald
Knopp
|
Salaried
Employees Pension Plan
|
0.75
|
5,780
|
|
|
|
|
|
(1)
|
The
material assumptions used for this calculation are as described in Note 9 to the Company’s
audited consolidated financial statements contained in our Annual Report on Form 10-K
for the year ended December 31, 2015, as amended.
|
Nonqualified
Deferred Compensation - Fiscal Year 2015
The
table below provides information on the Supplemental 401(k) Plan, the nonqualified deferred compensation plan in which our Named
Executive Officers, other than Mr. Knopp, participated during 2015. For a description of the Company’s Supplemental 401(k)
Plan, see the section above entitled, “Retirement Benefits.”
|
|
|
|
|
|
Name
|
Executive
Contributions in
Last Fiscal
Year
($)(1)
|
Company
Contributions
in Last Fiscal
Year
($)(2)
|
Aggregate
Earnings in
Last Fiscal
Year
($)
|
Aggregate
Withdrawals /
Distributions
($)
|
Aggregate
Balance at
Last Fiscal
Year End
($)(3)
|
Steven
Scheinkman
|
11,400
|
11,400
|
(891)
|
—
|
22,625
|
Scott
Dolan
|
825
|
825
|
4,093
|
(78,001)
|
—
|
Patrick
Anderson
|
27,441
|
11,077
|
(18,423)
|
—
|
174,894
|
Marec
Edgar
|
6,965
|
6,965
|
(911)
|
—
|
19,099
|
Thomas
Garrett
|
11,305
|
7,287
|
(20,479)
|
—
|
186,929
|
Stephen
Letnich
|
—
|
—
|
512
|
(6,905)
|
—
|
|
|
|
|
|
|
|
(1)
|
Executive
contributions represent deferral of base salary and bonus paid during 2015, which amounts
are also disclosed in the 2015 Salary column and the 2015 Non-Equity Incentive Plan Compensation
column of the Summary Compensation Table.
|
|
(2)
|
All
Company contributions to the Supplemental 401(k) Plan in 2015 are included as compensation
in the
|
|
|
|
|
41
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
|
2015
Other Compensation column of the Summary Compensation Table.
|
|
(3)
|
Represents
vested balance as of December 31, 2015.
|
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
|
General
To
assure stability and continuity of management, we entered into severance and change in control agreements with each of our executive
officers. In consideration of the payments that the executive officers may be entitled to receive under these agreements, the
executive officers agree to comply with restrictive covenants, such as confidentiality, non-disparagement, non-compete, and non-solicit,
during employment and for 12 months following any termination (five years with respect to confidentiality). In addition, the executive
officers are required to sign a waiver and release at the time of termination in order to receive any separation benefits.
Voluntary/Involuntary
For Cause Termination
An
executive officer may terminate their employment at any time and we may terminate an executive officer’s employment at any
time pursuant to our “at will” employment arrangements. We are not obligated to provide any special benefits or compensation
upon a voluntary termination by the executive or upon an involuntary termination by the Company for “Cause.” The table
below summarizes the termination benefits in either such termination:
Benefit
|
Termination
Provision
|
Salary
|
Base
salary paid through date of termination and the value of any accrued unused vacation
|
Short-Term
Incentive Plan:
Stock Options
|
Forfeiture
of unvested stock options, and the right to exercise vested stock options for three months following termination
|
Short-Term
Incentive Plan:
Cash
Bonus
|
Not
eligible for payment
|
Long-Term
Incentive Plan:
Stock Options
|
Forfeiture
of unvested stock options, and the right to exercise vested stock options for three months following termination
|
Long-Term
Incentive Plan:
Restricted
Stock/Stock Units
|
Forfeiture
of unvested time-based restricted stock and stock units
|
Long-Term
Incentive Plan:
Performance Shares/Units
|
Forfeiture
of any unvested performance shares
|
As
defined in the executive severance agreements, “Cause” generally means the reason for the executive’s involuntary
termination of employment was: (i) conviction of, or entry of a plea of guilty or nolo contendere to, a felony; (ii) engagement
in egregious misconduct involving serious moral turpitude to the extent that, in the reasonable judgment of the Company, the executive’s
credibility and reputation no longer conform to the standard of the Company’s executives; (iii) willful misconduct that,
in the reasonable judgment of the Company, results in a demonstrable and material injury to the Company or its affiliates; (iv)
willful and continued failure (other than a failure due to mental or physical illness) to perform assigned duties, provided that
such assigned duties are consistent with the job duties of the executive and such failure is not cured within 30 days after notice
from the Company; or (v) material breach of the severance agreement, provided that such breach is not cured within 30 days after
notice of such breach from the Company.
|
|
|
|
42
|
2016 Proxy Statement
|
|
|
|
|
|
|
Involuntary
Not for Cause or for Good Reason
If
the employment of an executive officer is terminated due to either an involuntary termination by the Company without Cause or
by the executive for “Good Reason,” then the executive would generally be eligible to receive the following:
Benefit
|
Termination
Provision
|
Salary
|
An
amount equal to one hundred percent (100%) of the executive’s annual base salary in effect at the time of termination
|
Short-Term
Incentive Plan:
Stock Options
|
Forfeiture
of unvested stock options, and the right to exercise vested stock options for three months following termination
|
Short-Term
Incentive Plan:
Cash Bonus
|
Pro-rata
annual award for the number of days of the fiscal year of eligible participation, based on actual results, which will only
be paid if and at the same time that the Company pays awards to active employees.
|
Long-Term
Incentive Plan:
Stock Options
|
Forfeiture
of unvested stock options, and the right to exercise vested stock options for three months following termination
|
Long-Term
Incentive Plan:
Restricted
Stock/Stock Units
|
Forfeiture
of unvested time-based restricted stock and stock units; no effect on vested restricted stock or restricted stock units
|
Long-Term
Incentive Plan:
Performance Shares/Units
|
For
unvested performance shares for which the date of termination precedes the end of the performance period by less than one
year, pro-rata payout for the number of days of performance period eligible participation, based on actual results and will
only be paid if and at the same time that the Company pays LTCP awards to active employees; no effect on vested performance
shares
|
Auto
Benefit
|
Continued
use of the Company-owned or leased automobile or payment of any alternative automobile stipend for the 12-month period following
termination
|
Outplacement
Services
|
Company-paid
outplacement services for a 6-month period following termination (not to exceed $12,500 in total value)
|
Health
and Welfare Benefits
|
Company-paid
health insurance continuation coverage for the 12-month period following termination
|
As
defined in the executive severance agreement, “Good Reason” generally means the executive officer’s termination
of their employment as a result of any of the following events: (i) the Company reduces the executive officer’s base salary
by ten percent (10%) or more (either upon one reduction or during a series of reductions over a period of time); provided, that
such reduction neither comprises a part of a general reduction for all of the Company’s executive officers as a group (determined
as of the date immediately before the date on which the executive officer becomes subject to such material reduction) nor results
from a deferral of the executive officer’s base salary; (ii) a material diminution in the executive’s authority (including,
but not limited to, the budget over which the executive retains authority), duties, or responsibilities within the Company; (iii)
a material change by more than fifty (50) miles in the geographic location at which the executive must perform services for the
Company; or (iv) any other action or inaction that constitutes a material breach by the Company of the executive severance agreement.
|
|
|
|
43
|
2016 Proxy Statement
|
|
|
|
|
|
|
Change
in Control Termination
If
the employment of an executive officer is involuntarily terminated for any reason other than for Cause or if a Good Reason termination
occurs after a change in control, the executive officer would generally be eligible to receive the following:
Benefit
|
Termination
Provision
|
Salary
|
An
amount equal to one hundred percent (100%) (or two hundred percent (200%), for Messrs. Scheinkman and Edgar) of the executive’s
annual base salary in effect at the time of termination
|
Short-Term
Incentive Plan:
Stock Options
|
Accelerated
vesting of unvested stock options, and the right to exercise vested stock options for three months following termination
|
Short-Term
Incentive Plan:
Cash Bonus
|
Pro-rata
annual award for the number of days of the fiscal year of eligible participation, based on actual results, which will only
be paid if and at the same time that the Company pays awards to active employees
|
Long-Term
Incentive Plan:
Stock Options
|
Accelerated
vesting of unvested stock options, and the right to exercise vested stock options for three months following termination
|
Long-Term
Incentive Plan:
Restricted
Stock/Stock Units
|
Accelerated
vesting of unvested time-based restricted stock and stock units
|
Long-Term
Incentive Plan:
Performance Shares/Units
|
Acceleration
of the vesting of unvested performance shares under the LTCP, and pro-rata payout immediately upon a change in control for
the number of days of performance period eligible participation which is based upon actual results as of the end of the completed
calendar month immediately preceding the change in control, and payment to be made in cash
|
Auto
Benefit
|
Continued
use of the Company-owned or leased automobile or payment of any alternative automobile stipend for the 12-month period following
termination
|
Outplacement
Services
|
Company-paid
outplacement services for a 6-month period following termination (not to exceed $12,500 in total value)
|
Health
and Welfare Benefits
|
Company-paid
health insurance continuation coverage for the 12-month period following termination
|
As
defined in the executive severance agreement, “Good Reason” in connection with a termination related to a change in
control generally means the executive officer’s termination of his or her employment as a result of any of the following
events: (i) the Company reduces the executive officer’s base salary by ten percent (10%) or more (either upon one reduction
or during a series of reductions over a period of time); provided, that such reduction neither comprises a part of a general reduction
for all of the Company’s executive officers as a group (determined as of the date immediately before the date on which the
executive officer becomes subject to such material reduction) nor results from a deferral of the executive officer’s base;
(ii) the Company fails to continue in effect any plan in which the executive participates immediately prior to the change in control
which is material to the executive’s total compensation, unless an applicable arrangement (embodied in an ongoing substitute
plan) has been made, or the Company fails to continue the executive’s participation therein (or in such substitute plan)
on a basis no less favorable to the executive’s then-current peers as a group (determined as of the date immediately prior
to the change in control); (iii) a demotion in position (including a decrease in organizational level) or a material diminution
in the executive’s authority (including, but not limited to, the budget over which the executive retains authority), duties,
or responsibilities within the Company; (iv) a material change by more than fifty (50) miles in the geographic location at which
the executive must perform services for the Company; or (v) any other action or inaction that constitutes a material breach by
the Company of the executive severance agreement.
|
|
|
|
44
|
2016 Proxy Statement
|
|
|
|
|
|
|
Change
in Control Without Termination
Upon
a change in control without termination of employment an executive officer would generally be eligible to receive the following:
Benefit
|
Payment
|
Retention
Awards
|
Accelerated
vesting of retention awards, subject to the terms of such awards
|
Stock
Options; Time-Based Restricted Stock/Stock Units
|
Accelerated
vesting of unvested stock options and time-based restricted stock and restricted stock unit awards, if, and to the extent
such awards are not converted into common stock of the acquirer (or if such common stock of the acquirer is not listed on
a national securities exchange); payment in respect of the awards made in cash, based on the value of the Company’s
common stock provided to shareholders generally in connection with the change in control
|
Performance
Shares/Units
|
Accelerated
vesting of unvested performance shares under the LTCP, and pro-rata payout immediately upon a change in control for the number
of days of the performance period eligible participation, which is based upon actual results as of the end of the completed
calendar month immediately preceding the change in control, to be paid in cash
|
Death,
Disability and Retirement
If
an executive officer terminates employment due to retirement, death, or disability, then the officer would generally be entitled
to the following benefits.
Event
|
Benefit
|
Termination
Provision
|
Retirement
|
Salary
|
Paid
through termination date
|
Annual
Incentive
|
Unvested
awards are forfeited
|
Equity
Awards
|
Unvested
awards are forfeited; vested options are exercisable for three years following retirement
|
Death
|
Salary
|
Payment
to beneficiary through termination date
|
Annual
Incentive
|
Beneficiary
eligible to receive a pro-rata annual STIP award for the number of days of fiscal year eligible participation, based on actual
results, to be paid only if and at the same time that the Company pays STIP awards to active employees
|
Equity
Awards
|
Vested
and outstanding options exercisable by beneficiary through the normal expiration of such option
|
Disability
|
Salary
|
60%
of salary, reduced by other sources of income, up to a maximum payment of $10,000 per month
|
Annual
Incentive
|
Forfeited
|
Equity
Awards
|
All
unvested restricted stock and performance stock are forfeited. Vested and outstanding incentive options can be exercised within
one year after becoming disabled, and non-qualified options can be exercised within three years after becoming disabled.
|
Former
CEO Departure
In
connection with the resignation of Mr. Dolan, the Company entered into a Separation Agreement and General Release with Mr. Dolan
dated April 16, 2015. In accordance with the Separation Agreement, Mr. Dolan received the following:
|
•
|
$1.3
million in cash with $650,000 to be paid within 14 days after the effective date of the
Separation Agreement and the remaining $650,000 to be paid in four equal installments
of $162,500 each on July 1, 2015, October 1, 2015, January 1, 2016, and March 1, 2016;
|
|
•
|
Immediate
vesting of 56,588 outstanding restricted stock units;
|
|
|
|
|
45
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
·
|
Up to 12 months of health, dental and vision coverage for himself and any eligible dependents;
|
|
·
|
Up to $30,000 for executive outplacement services for up to 18 months following the date of the Separation Agreement; and
|
|
·
|
Continued use of a Company issued vehicle for up to one year following the date of the Separation Agreement.
|
Former
Chief Commercial Officer Departure
Mr. Letnich separated from employment with the Company on June 24, 2015. In connection with his separation of employment, and
pursuant to an existing severance agreement, Mr. Letnich received a severance payment of $325,024.
Payments
Upon Termination or Change in Control Tables
The tables below show the estimated payments that our current
Named Executive Officers would receive if their employment were terminated under various circumstances, based on the terms of the
plans and agreements that were in effect as of December 31, 2015.
|
|
|
|
|
|
|
|
|
|
Benefit
|
Steven
Scheinkman
|
Death
|
Disability
|
For
Cause/
Voluntary
|
Without
Cause /
Good
Reason
|
Change
in
Control Termination
|
Change
in
Control (No Termination)
(1)
|
Cash
Severance
|
—
|
$120,000
|
—
|
$650,000
|
$1,300,000
|
—
|
Annual
Incentive
|
$230,459
|
—
|
—
|
$230,459
|
$230,459
|
—
|
Unvested
Equity
|
RSUs
|
—
|
—
|
—
|
—
|
$103,350
|
$103,350
|
Options
(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
Performance
Equity
(3)
|
—
|
—
|
—
|
—
|
—
|
—
|
Subtotal
|
$230,459
|
$120,000
|
—
|
$880,459
|
$1,633,809
|
$103,350
|
Other
Benefits:
|
Health
& Welfare
|
—
|
—
|
—
|
$21,232
|
$21,232
|
—
|
Outplacement
|
—
|
—
|
—
|
$12,500
|
$12,500
|
—
|
Company
Auto
|
—
|
—
|
—
|
$10,920
|
$10,920
|
—
|
Subtotal
|
—
|
—
|
—
|
$44,652
|
$44,652
|
—
|
Total
|
$230,459
|
$120,000
|
—
|
$925,111
|
$1,678,461
|
$103,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
PATRICK ANDERSON
|
Death
|
Disability
|
For
Cause/
Voluntary
|
Without
Cause /
Good
Reason
|
Change
in
Control Termination
|
Change in
Control (No Termination)
(1)
|
Cash Severance
|
—
|
$120,000
|
—
|
$300,000
|
$300,000
|
—
|
Annual Incentive
|
$165,000
|
—
|
—
|
$165,000
|
$165,000
|
—
|
Unvested Equity
|
RSUs
|
—
|
—
|
—
|
—
|
$20,187
|
$20,187
|
Options
(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
Performance Equity
(3)
|
—
|
—
|
—
|
—
|
—
|
—
|
Subtotal
|
$165,000
|
$120,000
|
—
|
$465,000
|
$485,187
|
$20,187
|
Other Benefits:
|
Health & Welfare
|
—
|
—
|
—
|
$21,016
|
$21,016
|
—
|
Outplacement
|
—
|
—
|
—
|
$12,500
|
$12,500
|
—
|
Company Auto
|
—
|
—
|
—
|
$14,400
|
$14,400
|
—
|
Subtotal
|
—
|
—
|
—
|
$47,916
|
$47,916
|
—
|
Total
|
$165,000
|
$120,000
|
—
|
$512,916
|
$533,103
|
$20,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
MAREC EDGAR
|
Death
|
Disability
|
For
Cause/
Voluntary
|
Without
Cause /
Good
Reason
|
Change
in
Control Termination
|
Change in
Control (No Termination)
(1)
|
Cash Severance
|
—
|
$120,000
|
—
|
$340,000
|
$680,000
|
—
|
Annual Incentive
|
$187,000
|
—
|
—
|
$187,000
|
$187,000
|
—
|
Unvested Equity
|
RSUs
|
—
|
—
|
—
|
—
|
$34,152
|
$34,152
|
Options
(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
Performance Equity
(3)
|
—
|
—
|
—
|
—
|
—
|
—
|
Subtotal
|
$187,000
|
$120,000
|
—
|
$527,000
|
$901,152
|
$34,152
|
Other Benefits:
|
Health & Welfare
|
—
|
—
|
—
|
$13,142
|
$13,142
|
—
|
Outplacement
|
—
|
—
|
—
|
$12,500
|
$12,500
|
—
|
Company Auto
|
—
|
—
|
—
|
$14,402
|
$14,402
|
—
|
Subtotal
|
—
|
—
|
—
|
$40,044
|
$40,044
|
—
|
Total
|
$187,000
|
$120,000
|
—
|
$567,044
|
$941,196
|
$34,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
THOMAS
GARRETT
(5)
|
Death
|
Disability
|
For
Cause/
Voluntary
|
Without
Cause /
Good
Reason
|
Change in
Control Termination
|
Change in
Control (No Termination)
(1)
|
Cash Severance
|
—
|
$120,000
|
—
|
$248,756
|
$248,756
|
—
|
Annual Incentive
|
—
|
—
|
—
|
—
|
—
|
—
|
Unvested Equity
|
RSUs
|
—
|
—
|
—
|
—
|
$22,559
|
$22,559
|
Options
(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
Performance Equity
(3)
|
—
|
—
|
—
|
—
|
—
|
—
|
Subtotal
|
—
|
$120,000
|
—
|
$248,756
|
$271,315
|
$22,559
|
Other Benefits:
|
Health & Welfare
(4)
|
—
|
—
|
—
|
—
|
—
|
—
|
Outplacement
|
—
|
—
|
—
|
$12,500
|
$12,500
|
—
|
Company Auto
|
—
|
—
|
—
|
$14,400
|
$14,400
|
—
|
Subtotal
|
—
|
—
|
—
|
$26,900
|
$26,900
|
—
|
Total
|
—
|
$120,000
|
—
|
$275,656
|
$298,215
|
$22,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
RONALD KNOPP
|
Death
|
Disability
|
For
Cause/
Voluntary
|
Without
Cause /
Good
Reason
|
Change
in
Control Termination
|
Change in
Control (No Termination)
(1)
|
Cash Severance
|
—
|
$120,000
|
—
|
$300,000
|
$300,000
|
—
|
Annual Incentive
|
$165,000
|
—
|
—
|
$165,000
|
$165,000
|
—
|
Unvested Equity
|
RSUs
|
—
|
—
|
—
|
—
|
$24,612
|
$24,612
|
Options
(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
Performance Equity
(3)
|
—
|
—
|
—
|
—
|
—
|
—
|
Subtotal
|
$165,000
|
$120,000
|
—
|
$465,000
|
$489,612
|
$24,612
|
Other Benefits:
|
Health & Welfare
|
—
|
—
|
—
|
$21,232
|
$21,232
|
—
|
Outplacement
|
—
|
—
|
—
|
$12,500
|
$12,500
|
—
|
Company Auto
|
—
|
—
|
—
|
$17,016
|
$17,016
|
—
|
Subtotal
|
—
|
—
|
—
|
$50,748
|
$50,748
|
—
|
Total
|
$165,000
|
$120,000
|
—
|
$515,748
|
$540,360
|
$24,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
(1)
|
The amounts in this column attributable to accelerated vesting of outstanding and unvested RSUs
assume that such awards were not assumed by the acquirer in a change in control.
|
|
(2)
|
The exercise price of the outstanding and unvested stock options held by Named Executive Officers
as of December 31, 2015 ($3.92 per share) was greater than the closing price of a share our common stock as of such date ($1.59
per share); thus, no amount attributable to the acceleration of unvested stock options upon certain terminations of employment
is shown in these tables.
|
|
(3)
|
Based on performance to date and the Company’s projected payout levels as of December 31,
2015, these tables assume payouts of $0 for the 2014-2016 LTCP performance share awards.
|
|
(4)
|
Mr. Garrett did not participate in our health and welfare benefit plans as of December 31, 2015
and thus, no amount attributable to Company-paid health insurance continuation coverage is shown in this table.
|
|
(5)
|
Mr. Garrett separated from employment on March 15, 2016.
|
|
|
|
EQUITY
COMPENSATION PLAN INFORMATION
|
This table provides information regarding the equity authorized for issuance
under our equity compensation plans as of December 31, 2015. Note that our equity authorized for issuance under our 401(k) Plan
is not included below.
|
|
|
|
|
|
Plan Category
|
(a)
Number of
securities to
be issued
upon
exercise
of
outstanding
options,
warrants and
rights
|
|
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
(c)
Number of
securities
remaining
available for
future issuances
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
|
Equity compensation plans approved by security holders
|
1,131,238
|
(1)
|
$4.43
|
(2)
|
1,339,540
|
Equity compensation plans not approved by security holders
(3)
|
0
|
|
N/A
|
(4)
|
N/A (5)
|
Total
|
1,131,238
|
|
N/A
|
|
1,339,540
|
|
|
|
|
|
|
|
(1)
|
This number represents the gross number of underlying shares of common stock associated with outstanding
stock options, restricted stock units and equity performance share award units granted under the Company’s 2008 Omnibus Incentive
Plan. This does not include 169,631 shares of non-vested restricted stock issued under the 2008 Omnibus Incentive Plan and outstanding
as of December 31, 2015. As of December 31, 2015, the following equity remains outstanding and reserved for issuance:
|
|
·
|
210,290 restricted stock units
|
|
·
|
229,702 equity performance shares
|
The number of equity performance shares outstanding represents
the maximum number of shares to be awarded under the Company’s Long-Term Compensation Plans for the 2013-2015 and 2014-2016
performance periods.
(2) Equity performance share awards and restricted stock
units granted under the Plan do not have an exercise price and are settled for shares of the Company’s common stock on a
one-for-one basis based on actual performance compared to target goals or upon vesting. These awards have been disregarded for
purposes of computing the weighted-average exercise price.
|
|
|
|
49
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2016 Proxy Statement
|
|
|
|
|
|
|
(3) The 1986 Directors Deferred Compensation Plan (“Directors
Plan”) was not approved by the stockholders. A brief description of the material features of the Directors Plan is included
above in the section entitled, “Non-Employee Director Compensation.” As of December 31, 2015, there were no shares
subject to outstanding deferrals under the Directors Plan.
The Company also granted 78,492 restricted stock units
to Mr. Scott Dolan upon his appointment as President and Chief Executive Officer of the Company on October 15, 2012. As of December
31, 2015, all of Mr. Dolan’s 78,492 restricted stock units had vested. These restricted stock units were a non-plan grant
made under NYSE inducement grant rules.
(4) The stock equivalent units granted under the Directors
Plan do not have an exercise price and are settled for shares of the Company’s common stock on a one-for-one basis or in
cash. These awards have been disregarded for purposes of computing the weighted-average exercise price.
(5) There is no limit on the number of securities representing
stock equivalent units remaining available for issuance under the Directors Plan.
|
|
|
|
50
|
2016 Proxy Statement
|
|
|
|
|
|
|
Proposal 3 – Ratification of Appointment
of Auditors
Proposal
Snapshot What am I voting on?
Stockholders
are being asked to ratify the appointment of Deloitte & Touche LP, a registered public accounting firm, to serve as the
Company’s Independent Auditors for the fiscal year ending December 31, 2016. Although the Audit Committee has the sole authority
to appoint the independent auditors, as a matter of good corporate governance, the Board submits
its
selection of
the
independent auditors to our stockholders for ratification.
If the stockholders should not ratify the appointment of Deloitte & Touche, LLP, the Audit Committee will reconsider the
Voting recommendation:
FOR the ratification of the appointment of Deloitte & Touche LLP as independent auditors.
|
Deloitte & Touche LLP (“Deloitte”) has
been the Company’s independent auditor since 2002 and has been appointed by the Audit Committee as our independent registered
public accounting firm for the fiscal year ending December 31, 2016. If the appointment of Deloitte as auditor for 2016 is not
approved by our stockholders, the Audit Committee will consider whether it is appropriate to select another independent registered
public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent
registered public accounting firm at any time during 2016 if it determines that such a change would be in the best interests of
the Company and its stockholders.
A representative from Deloitte will be
present at the Annual Meeting and will have the opportunity to make a statement. The representative will also be available to
respond to appropriate questions.
Audit
and Non-Audit Fees
The following table sets forth the aggregate fees billed
or expected to be billed by Deloitte for professional services incurred for the years ended December 31, 2015, and 2014, on our
behalf:
|
|
|
Fee Category
|
2015
|
2014
|
Audit Fees
|
$1,461,400
|
$1,240,400
|
Audit-Related Fees
|
—
|
—
|
Tax Fees
|
95,200
|
204,400
|
All Other Fees
|
—
|
—
|
Total Fees
|
$1,556,600
|
$1,444,800
|
|
|
|
A description of the type of services provided in each
category is as follows:
|
|
|
|
51
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2016 Proxy Statement
|
|
|
|
|
|
|
Audit Fees
Consists of fees billed for professional services rendered
for the audits of the Company’s annual financial statements on Form 10-K and internal controls over financial reporting,
review of the interim financial statements included in the Company’s quarterly reports on Form 10-Q, and other services normally
provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees
Consists of fees billed for professional services rendered
for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s
financial statements.
Tax Fees
Consists of fees billed for professional services rendered for tax compliance,
tax advice, and tax planning. These services include assistance with the preparation of various tax returns.
Pre-Approval
Policy for Audit and Non-Audit Services
The Audit Committee has adopted a policy for the pre-approval
of all audit and permitted non-audit services to be provided by the Company’s independent auditor. Also, specific pre-approval
by the Audit Committee is required for any proposed services exceeding pre-approved cost levels. The Audit Committee periodically
reviews reports summarizing all services provided by the independent auditor. In 2015, the Audit Committee pre-approved all audit
and non-audit services provided to the Company in accordance with the Audit Committee pre-approval policy.
Report of
the Audit Committee
The Audit Committee assists the Board in fulfilling its
oversight responsibilities. The Board has determined that each of the members of the Audit Committee is “independent”,
as that term is defined in the independence requirements for audit committee members contained in the applicable rules of the SEC
and the listing standards of the NYSE. The Audit Committee acts under a written charter that is reviewed by the Audit Committee
at least annually.
Responsibilities
|
·
|
Our management team is responsible for the preparation, presentation,
and integrity of our consolidated financial statements, accounting and financial reporting principles, internal controls over financial
reporting, and disclosure controls.
|
|
·
|
Deloitte, our independent auditor, is responsible for performing
an independent audit of our most recent consolidated financial statements and expressing an opinion on the conformity of those
financial statements with accounting principles generally accepted in the United States of America, as well as expressing an opinion
on (i) the fairness of the presentation of the Company’s consolidated financial statements for the year ended December 31,
2015, and (ii) the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015.
|
2015 Audit Committee Actions
|
·
|
Held private meetings following its regularly scheduled meeting
with the company’s management team, internal audit lead, and Deloitte, during which candid discussions regarding financial
management, legal, accounting, auditing, and internal control issues took place.
|
|
·
|
Met with the General Counsel to discuss the effectiveness of
our compliance program and regularly received status reports on compliance and incident hotline reporting matters.
|
|
|
|
|
52
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2016 Proxy Statement
|
|
|
|
|
|
|
|
·
|
Received regular updates from internal audit regarding the process
to assess the adequacy of our internal control over financial reporting, the framework used to make the assessment, and management’s
conclusions of the effectiveness of the internal controls over financial reporting.
|
|
·
|
Reviewed and discussed with management and Deloitte, the Company’s
earnings releases and quarterly and annual reports on Form 10-Q and Form 10-K prior to filing with the SEC.
|
|
·
|
Reviewed the internal audit function performance and upcoming
year’s plan.
|
|
·
|
Reviewed with management, internal audit, and Deloitte, the overall
audit scope and plans, the results of internal and external audit examinations, evaluations by management and Deloitte, and the
Company’s internal controls over financial reporting and the quality of the Company’s financial reporting.
|
|
·
|
Reviewed with management and internal audit the significant risks
and exposures identified by internal audit, the overall adequacy and effectiveness of the Company’s compliance programs,
the Company’s code of conduct, and cyber security initiatives.
|
|
·
|
Discussed with Deloitte matters required to be discussed by the
Statement on Auditing Standards No. 61, as amended (AICPA,
Professional Standards,
Vol. 1 AU, Section 380), as adopted by
the Public Company Accounting Oversight Board in Rule 3200T.
|
Independent Auditor Independence
Deloitte also provided to the Audit Committee the letter
and written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent
registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee
discussed the independence of the independent registered public accounting firm with management and Deloitte. The Audit Committee
concluded that Deloitte’s independence had not been impaired.
Based on the review and discussions described above, the
Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in its
Annual Report on Form 10-K for the year ended December 31, 2015, for filing with the SEC.
Audit Committee,
Pamela Forbes Lieberman, Chairman
|
Brian Anderson
|
Gary
Masse
|
|
|
|
|
|
|
|
|
|
|
53
|
2016 Proxy Statement
|
|
|
|
|
|
|
Proposal 4 – Approval of Amendment
to 2008
Omnibus Incentive Plan
Proposal
Snapshot What am I voting on?
Stockholders
are being asked to approve the proposed increase of 2,000,000 shares to the number of shares authorized under our 2008 Omnibus
Incentive Plan and the other changes in the terms of the Plan described below.
Voting
recommendation:
FOR the approval
of the amendment to the 2008 Omnibus Incentive Plan.
|
Introduction
Our 2008 A.M. Castle & Co. Omnibus Incentive Plan (the
“Plan”) was originally adopted by the Board of Directors on December 13, 2007, and was approved by the Company’s
stockholders at our 2008 annual stockholders meeting held on April 24, 2008. The Plan was thereafter amended and restated on March
5, 2009, December 9, 2010, April 28, 2011, and April 25, 2013. An aggregate of 3,350,000 shares of the Company’s common stock
has previously been authorized for issuance under the Plan.
As of March 1, 2016, approximately
185,000 shares remained available for future issuance under the Plan, and 2,124,921 shares were subject to outstanding awards
under the Plan (not including restricted stock awards, which number remained unchanged from the amount reported as of December 31, 2015 in the Equity Compensation
Plan Information Table set forth above). The awards outstanding as of such date consisted of 1,865,782
shares subject to stock options, with a weighted average exercise price of $2.84, 196,553 restricted stock units, and 62,586
equity performance shares.
On February 25, 2016, the Board of Directors approved an
amendment to the Plan to, among other things, (1) increase the number of shares reserved for issuance under the Plan by an additional
2,000,000 shares (from 3,350,000 to 5,350,000), subject to stockholder approval, effective as of July 27, 2016, (2) extend the
term of the Plan through July 27, 2026, and (3) reapprove the material terms of the performance goals under the Plan in order to
preserve the ability to grant awards to covered executives under the Plan that may qualify as performance-based compensation that
would be deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). We must seek
your approval of the performance goals at least every five years under the Code Section 162(m) requirements for performance-based
compensation.
Purpose of the Amendment
Because we only have approximately 185,000 shares available
for future issuance under the Plan, we believe that an increase in the number of shares of our common stock authorized for issuance
under the Plan is important to enable the Company to continue to grant equity-based awards. Further, we believe that the increase
is consistent with market practices and is important to allow us to continue to attract, motivate, reward, and retain the broad-based
talent critical to achieving our business goals.
|
|
|
|
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|
2016 Proxy Statement
|
|
|
|
|
|
|
The last time management requested shareholder approval
for additional share authorization the Plan was on April 25, 2013, which was for 600,000 shares. Based on the projected rate of
share usage, we believe that the 2,000,000 additional shares being requested, together with the shares currently available for
issuance, will be sufficient to fund future equity grants to employees and directors over the next two years. The estimated total
potential dilution from the Plan is 13.41%, which is calculated by dividing (i) the sum of the number of shares subject to outstanding
awards (2,124,921 as of March 1, 2016), number of shares remaining available for future awards (185,000 as of March 1, 2016), and
number of new shares being requested in this Proposal 4 (2,000,000) by (ii) the number of issued and outstanding shares of the
Company as of the record date (32,129,911).
If this Proposal 4 is not approved, the Company will be
unable to grant additional equity-based awards under the Plan in excess of the number of shares currently remaining available for
future issuance under the Plan, which the Company believes would adversely affect its ability to offer effective incentives to
participants that are consistent with market practices.
In addition, the Board of Directors believes that it is
in the best interests of the Company and our stockholders to continue providing a long-term incentive plan under which the Company
may, at the discretion of the Human Resources Committee, grant equity-based compensation awards to executive officers that are
intended to be deductible by the Company for federal income tax purposes under Code Section 162(m). The Plan has been structured
in a manner such that certain awards granted under it may satisfy the requirements for “performance-based compensation”
within the meaning of Code Section 162(m). Under Code Section 162(m), the federal income tax deductibility of compensation paid
to our CEO and the next three most highly compensated executive officers other than the Chief Financial Officer (the “covered
employees”) may be limited to the extent that such compensation exceeds $1 million in any fiscal year. However, compensation
that satisfies the requirements for “performance-based compensation” as defined in Code Section 162(m) is not subject
to this limit and, therefore, is generally deductible in full by the Company. The Human Resources Committee generally considers
the preservation of federal income tax deductions when granting awards, but specifically retains the discretion to approve awards
that do not meet the “performance-based compensation” exception to Code Section 162(m).
For purposes of Code Section 162(m), the material terms
that must be approved by the stockholders include the employees eligible to receive compensation, a description of business criteria
on which the performance measures are based, and the maximum amount of compensation that could be paid to any employee. Stockholder
approval of this Proposal 4 is intended to constitute approval of each of these aspects of the Plan for purposes of the stockholder
approval requirements of Code Section 162(m). The following is a description of such aspects of the Plan and is qualified in its
entirety by reference to the full copy of the Plan, which is attached as Appendix A to this proxy statement. Capitalized terms
used herein but not otherwise defined shall have the meaning assigned to such terms in the Plan, unless the context clearly dictates
otherwise.
Summary of Changes
The Plan, as amended, is substantially identical to the
Plan that was previously approved by stockholders on April 25, 2013, with the following exceptions:
|
·
|
The term of the Plan is being extended to July 27, 2026.
|
|
·
|
The pool of shares available for grants of awards under the Plan
is being increased by 2,000,000 shares, from 3,350,000 to 5,350,000.
|
|
·
|
Awards made under the Plan to a non-employee director may not
exceed $750,000 in value in any calendar year, when taken together with any cash fees paid to such director.
|
|
·
|
The Plan limits grants of options or stock appreciation rights
to no more than 800,000 shares in a calendar year.
|
|
·
|
The Plan limits grants of all other awards that are intended
to qualify for the “performance-based compensation” exception to Code Section 162(m) to 800,000 shares in a calendar
year (compared to the previous limit of 400,000 shares).
|
|
·
|
The Plan allows for an option expiration date to be extended
in the event that exercise thereof on its expiration date would violate securities laws or the Company’s insider trading
policy.
|
|
·
|
The Plan reduces the minimum vesting period for restricted stock
or RSU awards granted to non-employee directors (that are not subject to the attainment of any performance criteria) from three
years to one year.
|
|
·
|
The Plan imposes a statute of limitations of one year on all
actions brought by participants arising under the Plan.
|
|
|
|
|
55
|
2016 Proxy Statement
|
|
|
|
|
|
|
|
·
|
The amendment updates the Plan for technical regulatory and accounting
changes that have or will, in the near future, become necessary.
|
|
·
|
The reference to the clawback policy under the Plan is expanded
to be compliant with eventual regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
|
Key Corporate Governance Practices
|
|
Practices
|
Description
|
Plan Provisions and Our Practices
|
Individual Limits
|
·
No
more than 800,000 shares of stock subject to options and stock appreciation rights, and 800,000 shares of stock subject to all
other awards intended to qualify for the performance-based compensation exception in Code Section 162(m), may be awarded to any
participant in one calendar year.
·
No
cash performance award may be paid to a participant in excess of $2 million dollars for any single calendar year. Any amount earned
in excess of $2 million will be automatically deferred in accordance with the terms of the Plan.
|
Director Limits
|
·
Awards made under the Plan to a non-employee director may not exceed $750,000 in value in any calendar year, when taken together with any cash fees paid to such director.
|
Minimum Vesting Requirements
|
·
Restricted
stock and restricted stock units (that are not subject to the attainment of performance criteria) have minimum three-year vesting
periods (one year for non-employee directors).
·
Options
do not become exercisable prior to one year of continuous employment following the grant date.
|
Clawback Policy
|
·
In accordance with Company’s Compensation Recovery Policy
|
No Repricing or Buyouts
|
·
Prohibited under Plan
|
No Evergreen Features
|
·
Prohibited under Plan
|
Fixed Ten-Year Term
|
·
The Plan will be limited in duration to ten years.
|
|
|
Summary of Plan Features
The following is a summary of the principal features of
the Plan. This summary is subject to, and qualified in its entirety by, the complete text of the Plan, a copy of which (as it is
proposed to be amended pursuant to this Proposal 4) is attached to this proxy statement as Appendix A. The following summary includes
the proposed modifications to the Plan for which the Company is seeking stockholder approval.
The Plan provides for the granting of awards to directors
and key employees of the Company at the Human Resources Committee’s discretion. Awards under the Plan may be made in the
form of:
|
·
|
Incentive stock options,
|
|
·
|
Non-qualified stock options,
|
|
·
|
Restricted stock units,
|
|
·
|
Equity performance awards, including, but not limited to, stock
appreciation rights,
|
|
·
|
Performance cash awards, and
|
|
·
|
Other stock or cash awards that the Human Resources Committee
determines to be in the best interests of the Company.
|
Currently, approximately 40 employees and 7 non-employee
directors are eligible to participate in the Plan.
|
|
|
|
56
|
2016 Proxy Statement
|
|
|
|
|
|
|
The Plan limits the maximum amount of
awards that may be granted to participants. The maximum number of shares that may be delivered to participants and their
beneficiaries under the Plan is 5,350,000 (plus any shares subject to awards that lapse, expire, terminate, are forfeited or
canceled, or are settled in cash), which includes the 2,000,000 shares added pursuant to the proposed amendment to the Plan.
The maximum number of shares that may be granted during any calendar year under the Plan to any participant will not exceed:
(i) 800,000 shares subject to options or stock appreciation rights; and (ii) 800,000 shares with respect to any awards (other
than stock options and stock appreciation rights) that are designed to comply with the qualified performance-based
compensation exception from Code Section 162(m). The maximum number of shares subject to awards that may be granted during
any calendar year to any non-employee director of the Company, when taken together with any cash fees paid to such director
during the calendar year, may not exceed $750,000 in total value.
Shares available for issuance under the Plan are authorized
and unissued shares or issued and outstanding shares reacquired by the Company.
Administration
The Human Resources Committee will administer the Plan.
The Human Resources Committee will select the employees to whom awards will be granted from among those eligible and, determine
the type, size and terms and conditions applicable to each award. The Human Resources Committee is also authorized, among other
things, to construe, interpret and implement the provisions of the Plan. Any awards recommended by the Human Resources Committee
for the CEO or any director will be subject to the approval of the Board of Directors.
Awards Under the Plan
Stock Options
The Human Resources Committee shall establish the option
exercise price of a stock option awarded under the Plan at the time of the grant. The exercise price may not be less than one hundred
percent of the fair market value of a share of the Company’s common stock on the date on which the option is granted.
|
·
|
Options will be exercisable not earlier than one year from the
date of grant.
|
|
·
|
Options will expire not later than ten years from the date of
grant.
|
|
·
|
Reload options are not permitted under the Plan.
|
|
·
|
Option re-pricing is not permitted under the Plan.
|
Restricted Stock
The Human Resources Committee may grant to participants
shares of the Company’s common stock in such amounts and subject to such terms and conditions (including forfeiture of shares
if the participant does not complete a required period of employment) not inconsistent with the Plan as the Human Resources Committee
may determine in its sole discretion.
|
·
|
Restricted stock granted will be restricted for a period
not less than one year, if subject to attainment of performance criteria, or three years, if subject to time-based vesting and
a continuous service requirement (for non-employee directors, the minimum vesting period for any restricted stock awards, whether
or not subject to the attainment of performance criteria, will be one year).
|
|
·
|
A participant who receives a restricted stock award will
have all of the rights of a stockholder, including the right to vote and receive any dividends.
|
|
·
|
Stock grants not subject to the attainment of any performance
criteria will require that a participant continuously be employed with the Company for a period of at least three years.
|
|
·
|
The Human Resources Committee has discretion to accelerate
vesting.
|
Restricted Stock Units
Restricted stock units are similar to restricted stock,
except that the shares of the Company’s common stock are not issued to the participant until after the end of the restriction
period or the attainment of specified performance objectives and upon satisfaction of any other applicable conditions.
|
|
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2016 Proxy Statement
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|
|
|
|
|
|
|
·
|
Participants who receive restricted stock units have no
voting rights, and the Human Resources Committee has discretion to provide dividend equivalent credits.
|
|
·
|
Restricted stock unit awards that are subject to the attainment
of performance criteria shall be subject to a performance period of at least one year (for non-employee directors, the minimum
vesting period for any restricted stock unit awards, whether or not subject to the attainment of performance criteria, will be
one year).
|
|
·
|
Restricted stock unit grants not subject to the attainment
of any performance criteria will require that a participant continuously be employed with the Company for a period of at least
three years.
|
|
·
|
The Human Resources Committee has discretion to accelerate
vesting.
|
Equity Performance Awards
The Plan provides for the Human Resources Committee and
the Board of Directors to structure a performance share award (an “Equity Performance Award”) as performance-based
compensation, such that the Equity Performance Award will not be paid unless designated performance measures are satisfied.
|
·
|
The performance period for Equity Performance Awards may
not be less than three years.
|
|
·
|
Performance measures may vary by participant, may be established
for the Company as a whole or for its various groups and may be measured relative to a peer group or index.
|
|
·
|
Performance measures may include or exclude charges for
restructuring, discontinued operations and other unusual or non-recurring items and the cumulative effect of tax or accounting
changes, each to be done on a GAAP basis.
|
|
·
|
If the applicable performance objective is achieved, a
participant will receive an amount equal to the then market value of one share of the Company’s common stock multiplied by
the number of performance shares held.
|
|
·
|
Payment may be made in shares of common stock or cash
or any combination, as determined by the Human Resources Committee.
|
|
·
|
The Human Resources Committee, at the time of establishing
performance objectives, may establish a minimum performance target and provide for reduced payment if the performance objective
is not achieved but the minimum performance target is met, and may prescribe adjustments to the otherwise applicable performance
objective in the event of certain changes in the beneficial ownership of the Company’s common stock or other corporate transaction.
|
|
·
|
Performance shares may also be in the form of stock appreciation
rights (“SARs”) or some other equity based measure.
|
Performance Measures
The Human Resources Committee may designate performance
measures from any or a combination of the following criteria to determine the level of payout or vesting of any awards designed
to qualify for the performance-based compensation exception to Code Section 162(m):
·
Material gross profit
|
·
Earnings per share
|
·
Operating income
|
·
Net earnings
|
·
DSO (days sales outstanding on receivables)
|
·
Pre-tax earnings
|
·
DSI (days sales outstanding on inventory)
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·
Net operating profit after taxes
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·
Working capital employed
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·
Return on assets
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·
Purchase variance
|
·
Return on net assets
|
·
Delivery variance
|
·
Gross profit on sales
|
·
Sales
|
·
Total shareholder return
|
·
Return on capital
|
·
Relative total shareholder return
|
·
Return on invested capital
|
·
Other measures of shareholder value creation
|
·
Earnings
|
·
Return on equity
|
·
Earnings before interest and taxes (EBIT)
|
·
Return on investments
|
·
Earnings before interest, taxes, depreciation and amortization (EBITDA)
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·
Asset management
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The Human Resources Committee may also utilize certain
quantitatively and objectively determinable non-financial performance measures, including, but not limited to:
Performance Cash Awards
Performance cash awards are payments to participants (excluding
non-employee directors) based on the attainment of performance objectives specified by the Human Resources Committee, as described
above. The Plan also provides the following:
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·
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The performance period shall not be less than one year.
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·
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Awards are generally calculated as a percentage of salary,
based on the extent to which the performance objectives are attained during the performance period.
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·
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Performance cash awards may be designed to comply with
the exception to the tax deductibility limit under Code Section 162(m) for performance-based compensation.
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·
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No performance cash award may be paid to a participant
in excess of $2 million for any single year, with any amount earned in excess of $2 million being automatically deferred in accordance
with the terms of the Plan.
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·
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Participant whose employment with the Company terminates
prior to the end of the vesting period or who fails to achieve the applicable performance criteria shall forfeit all performance
cash awards.
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Other Stock or Cash Awards
In addition to the incentives described above, the Human
Resources Committee may grant other stock or cash awards under the Plan as it determines to be in the best interests of the Company
and subject to such other terms and conditions as it deems appropriate; provided an outright grant of shares will not be made unless
it is offered in exchange for cash that has otherwise already been earned by the grantee.
Modification of Benefits
The Human Resources Committee may permit or require a participant
to have amounts or shares of our common stock that otherwise would be paid or delivered to the participant as a result of the exercise
or settlement of an award under the Plan credited to a deferred compensation or stock unit account established for the participant
by the Committee on the Company’s books of account in compliance with all existing laws and regulations.
Neither the Board of Directors nor the Human Resources
Committee may cancel any outstanding stock option for the purpose of reissuing the option to the participant at a lower exercise
price, or to reduce the option price of an outstanding option, in each case, without obtaining prior stockholder approval.
Other Features of the Plan
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·
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Awards granted under the Plan shall be subject to such
change of control provisions, including, but not limited to, accelerated vesting of all equity performance awards upon termination
of employment following a change in control.
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·
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Participants must repay to the Company or forfeit, as
appropriate, any and all awards granted under the Plan to the extent required by applicable law or the “clawback” provisions
of any policy adopted by the Human Resources Committee or the Board of Directors (including any such policy adopted to comply with
the Dodd-Frank Wall Street Reform and Consumer Protection Act), as each may be amended from time to time.
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·
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No award under the Plan or rights or interests therein
may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of except by will or the laws of descent and distribution.
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The Plan will remain in effect until July 27, 2026 or
until terminated by the Board of Directors, if earlier.
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·
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The Board of Directors may at any time terminate, suspend
or amend the Plan, except that stockholder approval must be obtained to increase the total number of shares subject to the Plan
and to the extent otherwise required under the Plan, including to comply with applicable laws, regulations, or stock exchange rules,
and no such action may, without the consent of a participant, except to the extent required to comply with changes in law, adversely
affect the participant’s rights under any outstanding award.
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Material Federal Income Tax Consequences
The following summary is a brief overview of the principal
U.S. Federal income tax consequences relating to awards that may be granted under the Plan, based on current tax laws. This summary
is not intended to be exhaustive and does not describe state, local, or foreign tax consequences.
Non-Qualified Stock Options
A participant will realize no taxable income at the time
a non-qualified option is granted or vests, but generally at the time the option is exercised, the participant will realize ordinary
income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the option exercise
price. Upon a disposition of those shares, the difference between the amount received and the fair market value on the date of
exercise will be treated as a long-term or short-term capital gain or loss, depending on the holding period. We would generally
be entitled to a deduction for Federal income tax purposes at the same time and in the same amount as the participant is considered
to have realized ordinary income in connection with the exercise of a non-qualified option.
Incentive Stock Options
A participant will realize no taxable income, and we will
not be entitled to any related deduction, at the time any incentive stock option is granted or vests. If certain employment and
holding period conditions are satisfied, then no taxable income will result upon the exercise of such option and we will not be
entitled to any deduction in connection with that exercise. Upon disposition of the shares after expiration of the statutory holding
periods, any gain realized by a participant will be taxed as long-term capital gain and any loss sustained will be long-term capital
loss, and we will not be entitled to a deduction in respect to such disposition. While no ordinary taxable income is recognized
at exercise (unless there is a “disqualifying disposition”, as described below), the excess of the fair market value
of the shares over the option exercise price is a preference item that is recognized for alternative minimum tax purposes.
Except in the event of death, if shares acquired by a participant
upon the exercise of an incentive stock option are disposed of by the participant before the expiration of the statutory holding
period (i.e., a “disqualifying disposition”), such participant will be considered to have realized as compensation
taxed as ordinary income in the year of such disposition an amount, not exceeding the gain realized on such disposition, equal
to the difference between the option price and the fair market value of such shares on the date of exercise of such option. If
a participant makes a “disqualifying disposition”, the Company will be allowed a deduction for Federal income tax purposes
in an amount equal to the compensation realized by such participant.
Stock Appreciation Rights
A grant of SARs has no federal income tax consequences
at the time of grant. Upon the exercise of SARs, the value of the shares and cash received is generally taxable to the grantee
as ordinary income, and the Company generally will be entitled to a corresponding tax deduction.
Restricted Stock
A participant receiving restricted stock may be taxed in
one of two ways: the participant (a) pays tax when the restrictions lapse, or (b) makes a special election to pay tax in the year
the grant is made. At either time, the value of the award for tax purposes is the excess of the fair market value of the shares
at that time over the amount (if any) paid for the shares. This value is taxed as ordinary income and is subject to income tax
withholding. The Company receives a tax deduction at the same time and for the same amount taxable to the participant. If a participant
elects to be taxed at grant, then, when the restrictions lapse, there will be no further tax consequences attributable to the awarded
stock until disposition of the stock.
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Restricted Stock Units
In general, no taxable income is realized by a participant
upon the grant of a restricted stock unit. The participant would include in ordinary income the fair market value of the award
of stock at the time shares of stock are delivered to the participant. We generally will be entitled to a tax deduction at the
time and in the amount that the participant recognizes ordinary income.
Performance Shares and Performance
Share Units
The participant will not realize income when a performance
share is granted, but will realize ordinary income when shares and cash are transferred to the participant. The amount of such
income will be equal to the fair market value of such transferred shares on the date of transfer and the cash received in lieu
of shares. We will be entitled to a deduction for Federal income tax purposes at the same time and in the same amount as the participant
is considered to have realized ordinary income as a result of the transfer of shares and cash to the participant.
Code Section 409A
Code Section 409A addresses federal income tax treatment
of all amounts that are nonqualified deferred compensation. The Company intends that awards granted under the Plan comply with,
or otherwise are exempt from, Code Section 409A, but makes no representation or warranty to that effect.
Code Section 162(m)
The Plan may provide certain forms of performance-based
compensation to executive officers that may meet the requirements for tax deductibility under Code Section 162(m), at the sole
discretion of the Human Resources Committee. Code Section 162(m) provides that, subject to certain exceptions, we may not deduct
compensation paid to any one of certain executive officers in excess of $1 million in any one year. Code Section 162(m) excludes
certain performance-based compensation from the $1 million limitation.
New Plan Benefits
Future awards under the Plan will be made at the discretion
of the Human Resources Committee; therefore, it is not currently possible to determine the benefits or amounts that may be received
by such persons or groups pursuant to the Plan in the future. Grants under the Plan in 2015 to our Named Executive Officers are
shown in the 2015 Grants of Plan-Based Awards table above. The following table shows option awards made to our Named Executive
Officers in 2016. Awards to non-executive employees have not yet been finalized for 2016, but the projected grant amounts are shown
below, assuming approval of the proposed amendment to the Plan.
|
|
|
Name and Position
|
Number of Shares
|
Dollar Value or
Exercise Price
|
Steven Scheinkman
President and Chief Executive Officer
|
727,000
|
$1.98
|
Patrick Anderson
EVP, Chief Financial Officer &
Treasurer
|
152,000
|
$1.98
|
Marec Edgar
EVP, General Counsel & Chief
Administrative Officer
|
172,000
|
$1.98
|
Thomas Garrett
Vice President, President, Total
Plastics
|
N/A
|
N/A
|
Ronald Knopp
EVP, Chief Operating Officer
|
152,000
|
$1.98
|
Executive Officers as a Group
|
1,203,000
|
$1.98
|
Non-Executive Directors as
a Group
|
*
|
$490,000 (1)
|
Non-Executive Officer Employees
as a Group
|
750,000 (2)
|
* (3)
|
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(1)
|
The amount disclosed is equal to the total dollar value of all annual restricted stock grants to be issued to our non-employee
directors following our 2016 Annual Meeting. Such figures will be determined based upon the 60-day trailing average stock price
on the date of grant.
|
|
(2)
|
Estimated aggregate amount to be awarded following the approval of the Plan amendment, based on prior years’ grant values.
|
|
(3)
|
The exercise price of the option awards will depend on the price of our common stock on the date of grant.
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Why
did I receive these materials?
The
Board of Directors of A. M. Castle & Co. is soliciting the enclosed proxy for use at our 2016 Annual Meeting of stockholders
and any adjournments or postponements thereof.
Who
may vote at the Annual Meeting?
As of the close of business on June 6, 2016, the record
date established for determining the stockholders entitled to notice of and to vote at the Annual Meeting, there were 32,129,911
outstanding shares of the Company’s common stock. Each share of common stock outstanding on the record date is entitled to
one vote on all matters submitted at the Annual Meeting.
What
shares are included on the proxy card?
If your shares are registered directly in your name with
the Company’s transfer agent, American Stock Transfer and Trust Company, you are considered a stockholder of record with
respect to those shares. If your shares are held in a bank or brokerage account, you are considered the beneficial owner of those
shares.
If you are a shareholder of record, you will receive only
one notice or proxy card for all the shares you hold in certificate form, book-entry form, and in any Company benefit plan.
If you are a participant in any of the Company’s
401(k) or employee benefit plans, your proxy card will represent the number of shares allocated to your account under the plans
and will serve as a direction to the plan’s trustee as to how the shares in your account are to be voted. To allow sufficient
time for voting by the plan’s trustee, your voting instructions must be received by July 25, 2016.
If you are a beneficial owner, you will receive voting
instruction information from the bank, broker or other nominee through which you own your shares of Common Stock.
What
if I am a beneficial owner and do not give voting instructions to my broker?
If you are a beneficial owner and do not provide voting
instructions to your bank, broker or other nominee, the following applies:
Non-Discretionary Items
. The election of directors,
the advisory approval of the Company’s executive Compensation, the approval of an amendment to the Plan, and the approval
of the issuance of additional shares of common stock upon conversion of the Company’s New Convertible Notes are nondiscretionary
items and may not be voted on by brokers, banks or other nominees who have not received specific voting instructions from beneficial
owners. This is called a “broker non-vote.”
Discretionary Items
. The ratification of the appointment
of the Company’s independent registered public accounting firm is a discretionary item. Generally, banks, brokers and other
nominees that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.
How
are abstentions and broker non-votes counted?
Abstentions will not be included in vote totals and will
have no effect on Items 1, 2 and 3 to be voted on at the 2016 Annual Meeting. Pursuant to NYSE rules, abstentions will count as
a vote against Items 4 and 5 to be voted on at the 2016 Annual Meeting. Broker non-votes will not be included in vote totals and
will have no effect on the outcome of any of the Items to be voted on at the 2016 Annual Meeting. A proxy marked “WITHHOLD”
will have the same effect as an abstention.
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How
do I vote?
Via Internet:
visit
www.proxyvote.com
By Phone:
call 1-800-690-6903
By Mail:
sign, date and return your proxy card to the address listed
on the proxy card.
In Person:
All stockholders of record may vote in person at the annual
meeting.
All shares entitled to vote and represented by properly
executed and unrevoked proxies will be voted at the Annual Meeting in accordance with the instructions given therein. If no instructions
are indicated on a properly executed proxy (other than broker non-votes), the shares represented by that proxy will be voted as
recommended by the Board.
What
is required for a quorum at the Annual Meeting?
The presence, in person or by proxy, of the holders of
a majority of the outstanding shares of common stock of the Company entitled to vote at the Annual Meeting is necessary to constitute
a quorum at the Annual Meeting. Abstentions and broker non-votes will also be considered as present for purposes of determining
the presence or absence of a quorum at the Annual Meeting.
What
do I need in order to attend the Annual Meeting?
|
·
|
Proof that you own shares of the Company as of June 6, 2016.
|
Attendance is limited to stockholders of record
as of June 6, 2016. Please note that cameras, sound or video recording equipment, cellular telephones, or similar electronic devices,
large bags, briefcases or packages will not be allowed in the meeting room.
|
·
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Proxy Card or Legal Proxy from Broker.
|
You will need to bring your legal proxy and hand
it in with a signed ballot that will be provided to you at the meeting. You will not be able to vote your shares at the meeting
without a legal proxy.
Who will tabulate
and count the votes?
We retain an independent inspector of election from our
Transfer Agent, American Stock Transfer and Trust Company, to attend our Annual Meeting and to certify the results of the vote.
What can I
do if I change my mind after I vote my shares?
Any proxy given pursuant to this solicitation may be revoked
by the person giving it at any time before it is voted. A proxy may be revoked in writing to the Company’s Corporate Secretary,
at or before taking of the vote at the Annual Meeting. A written notice of revocation or a duly executed proxy, in either case
later dated than the prior proxy relating to the same shares will be treated as the final vote.
A proxy may also be revoked by attending the Annual Meeting
and voting in person, although attendance at the Annual Meeting will not itself revoke a proxy. Any written notice of revocation
or subsequent proxy should be sent so as to be delivered to A. M. Castle & Co., 1420 Kensington Road, Suite 220, Oak Brook,
Illinois 60523, Attention: Corporate Secretary, or hand delivered to the Corporate Secretary, at or before the taking of the vote
at the Annual Meeting.
When will
the Company announce the voting results?
We will announce the preliminary voting results at the
2016 Annual Meeting of Stockholders. The Company will report the final results on a Current Report on Form 8-K, to be filed with
the SEC within four business days following the Annual Meeting.
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How
are proxies solicited and what is the cost?
All of the expenses involved in preparing, assembling,
and mailing this Proxy Statement and the material enclosed herewith will be paid by the Company, including, upon request, expenses
incurred in forwarding proxies and proxy statements to beneficial owners of stock held in the name of another. The Company has
retained Innisfree M&A Incorporated to assist in the solicitation of proxies. Innisfree’s fees are estimated to be $25,000,
plus out-of-pocket expenses, to assist with the solicitation. Officers, directors, and employees of the Company may also solicit
proxies from certain stockholders; however, no additional compensation will be paid to those individuals for these activities.
What are my
voting choices for each of the proposals to be voted on at the 2016 Annual Meeting of Stockholders and what are the voting standards?
Proposal
|
Voting Choices and Board Recommendation
|
Voting Standard
|
Proposal 1:
Election of Class III Director Nominees
|
·
Vote
FOR all nominees
·
Vote
FOR specific nominees
·
Vote
WITHHOLD all nominees
·
Vote
WITHHOLD specific nominees
·
Abstain
from voting with respect to all nominees
·
Abstain
from voting with respect to specific nominees
The Board recommends
a vote
FOR
each of the Class III Director Nominees
|
Plurality of votes cast
|
Proposal 2: Advisory Vote to Approve Executive Compensation
|
·
Vote
FOR the advisory proposal
·
Vote
AGAINST the advisory proposal
·
Abstain
from voting on the advisory proposal
The Board recommends
a vote
FOR
the advisory vote to approve executive compensation.
|
Majority of votes cast
|
Proposal 3: Ratification of the Appointment of Deloitte & Touche, LLP
as Independent Auditors
|
·
Vote
FOR the ratification
·
Vote
AGAINST the ratification
·
Abstain
from voting on the ratification
The Board recommends a vote
FOR
the ratification of independent auditors.
|
Majority of votes cast
|
Proposal 4: Approval of 2008 Omnibus Incentive Plan Amendment
|
·
Vote
FOR the Plan Amendment
·
Vote
AGAINST the Plan Amendment
·
Abstain
from voting on the Plan Amendment
The Board recommends
a vote
FOR
the 2008 Plan Amendment.
|
Majority of votes cast
|
If any other matters are properly presented at the Annual
Meeting for consideration, the persons named in the enclosed form of proxy will have discretion to vote on those matters to the
same extent as the person signing the proxy would be entitled to vote. It is not currently anticipated that any other matters will
be raised at the Annual Meeting.
What is Householding?
The SEC has adopted rules that permit companies and intermediaries,
such as brokers, to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders
sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
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If you receive notice from your broker
that it will be householding communications to your address, householding will continue until you are notified otherwise or until
you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate
proxy statement and annual report, please notify your broker directly or direct your written request to: Corporate Secretary,
A. M. Castle & Co., 1420 Kensington Road, Suite 220, Oak Brook, Illinois 60523, or by phone at (847) 455-7111.
AVAILABILITY
OF FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS
|
The Company will provide a copy of its
Annual Report to any stockholder requesting a copy in writing. The Company will also provide copies of the Annual Report to brokers,
dealers, banks, voting trustees, and their nominees for the benefit of their beneficial owners of record. Additional copies of
the Annual Report, which also contains the Company’s Form 10-K for the fiscal year ended December 31, 2015, are available
without charge to stockholders upon written request to the Company at 1420 Kensington Road, Suite 220, Oak Brook, Illinois 60523,
Attention: Corporate Secretary.
In order for proposals by stockholders
to be considered for inclusion in the Company’s Proxy Statement and form of proxy for the Company’s 2017 annual meeting
of stockholders, Maryland Law, the Company’s Bylaws, SEC rules and NYSE rules require that any stockholder proposals must
be received no later than February 17, 2017. In addition, the Company’s Bylaws require a stockholder who wishes to propose
a nominee for election as a director or any other business matter for consideration at the 2017 annual meeting of stockholders
to give advance written notice to the Company between March 29, 2017, and April 28, 2017.
COMMUNICATION
WITH DIRECTORS
|
Stockholders and others who are interested in communicating
directly with our chairman, any individual director, the Board or non-management directors as a group may do so by writing to the
directors at the following address:
A. M. Castle & Co.
Board Communication
1420 Kensington Road,
Suite 220
Oak Brook, Illinois
60523
Attn: Corporate Secretary
All written communications are received and processed by
the Company prior to being forwarded to the chairman of the board or other appropriate members of the Board. Directors generally
will not be forwarded communications that are primarily commercial in nature, relate to improper or irrelevant topics, or request
general information about the Company.
In addition, the Audit Committee has established both a
telephonic voice call-in and electronic communication method on an independent website (
www.mysafeworkplace.com
) entitled
“MySafeWorkplace” which also can be accessed from the Company’s website. The system provides for electronic communication,
either anonymously or identified, for employees, vendors, and other interested parties to communicate concerns, including concerns
with respect to our accounting, internal controls or financial reporting, to the Audit Committee. Concerns may be reported via
telephone at 1-800-461-9330 or via the link to MySafeWorkplace which can be found on the “Corporate Governance” section
of the Company’s website at:
https://www.castlemetals.com/investors/corporate-governance
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Appendix A
2008 A.M. CASTLE & CO. OMNIBUS INCENTIVE
PLAN
(As Amended and Restated as of July 27, 2016)
1. Purpose and Effective
Date.
The purposes of the Plan are (a) to strengthen the ability of the Corporation and its Subsidiaries to attract and retain
directors, key executives, and other key managerial, supervisory and professional employees, (b) to attract and align the interests
of Participants with the long-term interests of the Corporation, its Subsidiaries and its stockholders, (c) to motivate Participants
to put forth their maximum effort for the continuing growth of the Corporation and its Subsidiaries, (d) to provide a means to
encourage Stock ownership and proprietary interest by Participants in the Corporation, and (e) to provide incentive compensation
opportunities that are competitive with those of other corporations in the same industries as the Corporation and its Subsidiaries,
and thereby to promote the interests of the Corporation, its Subsidiaries and its stockholders. The Plan may provide Participants
with forms of long-term incentive compensation that are not subject to the deduction limitation rules prescribed under Code Section
162(m), and, as applicable, should be construed to the maximum extent possible as providing for remuneration that is “qualified
performance-based compensation” within the meaning of Code Section 162(m).
The Plan became effective upon
the ratification by the holders of the majority of those shares present in person or by proxy at the Corporation’s 2008 annual
meeting of its stockholders on April 24, 2008, and was thereafter amended and restated on March 5, 2009, on December 9, 2010, on
April 28, 2011 and on April 25, 2013. The Plan shall be further amended and restated in the form provided herein, effective as
of July 27, 2016, subject to approval by the Corporation’s stockholders.
2. Definitions.
Where
the context of the Plan permits, words in the masculine gender shall include the feminine gender, the plural form of a word shall
include the singular form, and the singular form of a word shall include the plural form. Unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
|
(a)
|
Award
means the grant of incentive compensation under this Plan to a Participant.
|
|
(b)
|
Award Agreement
means any documentation of an Award, including, without limitation, an employment
agreement, notice, certificate, letter or a Board or Committee resolution, in any event, in such form (whether written or electronic)
as determined by the Committee.
|
|
(c)
|
Board
means the board of directors of the Corporation.
|
|
(d)
|
Code
means the Internal Revenue Code of 1986, as amended. Any reference in the Plan to a
specific Section of the Code shall include such Section and any comparable provision of any future legislation amending, supplementing,
or superseding such Section, and any valid regulation and other applicable authorities promulgated thereunder.
|
|
(e)
|
Committee
means the Human Resources Committee of the Board and its subcommittee, or such
other committees and subcommittees designated from time to time by the Board.
|
|
(f)
|
Corporation
means A.M. Castle & Co., a Maryland corporation, or any successor thereto.
|
|
(g)
|
Covered Employee
means a “covered employee” within the meaning of Code Section
162(m).
|
|
(h)
|
Equity Performance Award
means an Award subject to the satisfaction of Performance Criteria
and granted pursuant to Section 10 below.
|
|
(i)
|
Exchange Act
means the Securities Exchange Act of 1934, as amended. Any reference in
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2016 Proxy Statement
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the
Plan to a specific Section of the Exchange Act shall include such Section and any comparable provision of any future legislation
amending, supplementing, or superseding such Section, and any valid regulation and other applicable authorities promulgated thereunder.
|
|
(j)
|
Fair Market Value
means the fair market value of Stock determined at any time in such manner
as the Committee may deem equitable, including, without limitation, the closing market composite price of Stock as reported for
the New York Stock Exchange-Composite Transaction as of the applicable date or, if Stock is not traded on that date, on the next
preceding date on which Stock was so traded, except as otherwise specified in the Plan or as required by applicable law or regulation.
|
|
(k)
|
Incentive Stock Option
means a Stock Option designed to meet the requirements of Code Section
422. Notwithstanding any provision in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered, nor shall any discretion or authority granted under the Plan be exercised so as to disqualify
the Plan under Code Section 422, or, without the consent of the affected Participant, to cause any Incentive Stock Option previously
granted to fail to qualify for the federal income tax treatment afforded under Code Section 421.
|
|
(l)
|
Nonqualified Stock Option
means a Stock Option that is not an Incentive Stock Option.
|
|
(m)
|
Participant
means (i) an employee of the Corporation or its Subsidiaries or (ii) an individual
who is a member of the Board and who is not an employee of the Corporation or any of its Related Companies, who, in each case,
has been designated by the Committee as eligible to receive an Award under the Plan.
|
|
(n)
|
Performance Cash Award
means a cash incentive Award subject
to the satisfaction of Performance Criteria and granted pursuant to Section 11 below.
|
|
(o)
|
Performance Criteria
means
one (1) or more business criteria (within the meaning of Code Section 162(m)) designated by the Committee, based in whole or in
part on any or a combination of the following: gross profit on sales, material gross profit (gross profit on material portion
of sales), operating income, DSO (days sales outstanding on receivables), DSI (days sales outstanding on inventory), working capital
employed, purchase variance, delivery variance, sales, earnings, earnings per share, pre-tax earnings, earnings before interest
and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA), net earnings, net operating profit
after taxes, return on assets or net assets, return on capital (including return on total capital or return on invested capital),
share price (including, but not limited to, total shareholder return, relative total shareholder return and other measures of
shareholder value creation), return on equity, return on investments, asset management, and the achievement of certain quantitatively
and objectively determinable non-financial performance measures (including, but not limited to, strategic initiatives, customer
service, safety, corporate development, and leadership development) and may include or exclude specified items of an unusual or
non-recurring nature including, without limitation, changes in accounting methods, changes in inventory methods, changes in corporate
taxation, changes in applicable laws or regulations, accounting gains and losses determined to be unusual in nature, infrequent
in occurrence or unusual in nature and infrequent in occurrence, changes in financial accounting standards or other unusual or
non-recurring events causing dilution or diminution in the Corporation’s earnings. Performance Criteria need not be the
same for all Participants, may be established for the Corporation as a whole or for its various groups, divisions, Subsidiaries
and affiliates, and may be measured relative to a peer group or index. The Committee at the time of establishing Performance Criteria
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may prescribe adjustments to the otherwise applicable Performance Criteria in the event of
certain changes in the beneficial ownership of Stock or other corporate transaction, establish a minimum performance target for
the applicable Performance Criteria (including adjustments thereto in the event of certain changes in the beneficial ownership
of Stock or other corporate transaction), and provide for reduced payment if the applicable Performance Criteria is not achieved
but the minimum performance target is met.
In addition, measurement
of the attainment of Performance Criteria may exclude, if the Committee provides in an Award Agreement, impact of charges for restructurings,
discontinued operations, and other unusual, infrequent and/or non-recurring items, and the cumulative effects of tax or accounting
changes, each as defined by Generally Accepted Accounting Principles and as identified in the financial statements, in the notes
to the financial statements, in the Management’s Discussion and Analysis section of the financial statements, or in other
U.S. Securities and Exchange Commission filings.
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(p)
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Performance Period
means the period during which the Performance Criteria must be attained,
as designated by the Committee, with a minimum of one (1) year (or, in the case of an Equity Performance Award, a minimum of three
(3) years), subject to acceleration as determined by the Committee in its sole discretion.
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(q)
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Plan
means this
2008
A.M. Castle & Co. Omnibus Incentive Plan, as amended (formerly known as the A.M. Castle & Co. 2008 Restricted Stock, Stock
Option and Equity Compensation Plan immediately prior to April 28, 2011).
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(r)
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Qualified Retirement
means, with respect to an employee, a termination from employment from
the Corporation and all of its Related Companies that occurs after the employee attains at least age 65 and completes at least
five (5) years of continuous service as a full-time employee.
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(s)
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Related Company
means any corporation during any period in which it is a Subsidiary or during
any period in which it, directly or indirectly, owns fifty percent (50%) or more of the total combined voting power of all classes
of stock of the Corporation that are entitled to vote.
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(t)
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Restricted Stock
means Stock subject to a vesting condition specified by the Committee in
an Award in accordance with Section 9 below.
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(u)
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RSU
means a restricted stock unit granting a Participant with the right to receive Stock
at a date on or after vesting in accordance with the terms of such grant and/or upon the attainment of Performance Criteria specified
by the Committee in the Award in accordance with Section 9 below.
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(v)
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SAR
means a stock appreciation right granted pursuant to Section 8 below.
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(w)
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Stock
means a share of common stock of the Corporation that, by its terms, may be voted
on all matters submitted to stockholders of the Corporation generally.
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(x)
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Stock Option
means the right to acquire shares of Stock at a certain price that is granted
pursuant to Section 7 below. The term Stock Option includes both Incentive Stock Options and Nonqualified Stock Options.
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(y)
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Subsidiary
means any corporation or entity during any period in which the Corporation owns,
directly or indirectly, at least fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote
or in which it has at least a fifty percent (50%) economic interest, and which is authorized to participate in the Plan.
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3. Administration.
The Plan will be administered by the Committee, which will consist of three (3) or more directors of the Corporation as the Board
may designate from time to time, each of whom shall satisfy such requirements as:
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(a)
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the U.S. Securities and Exchange Commission may establish for administrators acting under plans
intended to qualify for exemption under Rule 16b-3 or its successor under the Exchange Act;
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(b)
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the New York Stock Exchange may establish pursuant to its rule-making authority; and
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(c)
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the U.S. Internal Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Code Section 162(m).
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The Committee shall have the
discretionary authority to manage and control the operation and administration of the Plan, to construe and interpret the Plan
and any Awards granted hereunder, to establish and amend rules for Plan administration, to establish the terms and conditions of
Awards, to change the terms and conditions of Awards at or after grant (subject to the provisions of Sections 19 and 20 below),
to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award granted under the Plan,
and to make all other determinations that it deems necessary or advisable for the administration of the Plan.
Awards under the Plan to a
Covered Employee may be made subject to the satisfaction of one (1) or more Performance Criteria. Performance Criteria shall be
established by the Committee for a Participant (or group of Participants) no later than ninety (90) days after the commencement
of each Performance Period (or the date on which twenty-five percent (25%) of the Performance Period has elapsed, if earlier).
The Committee may select one (1) or more Performance Criteria and may apply those Performance Criteria on a corporate-wide, division,
or business segment basis, or any combination thereof; provided, however, that the Committee may not increase the amount of compensation
payable to a Covered Employee upon the satisfaction of Performance Criteria.
The determinations of the Committee
shall be made in accordance with their judgment as to the best interests of the Corporation and its stockholders and in accordance
with the purposes of the Plan. Any determination of the Committee under the Plan may be made without notice or meeting of the Committee,
if in writing signed by all the Committee members. Any interpretation or determination made by the Committee under the Plan shall
be final and binding on all persons.
4. Participants.
Participants may consist of all employees of the Corporation and its Subsidiaries and all non-employee directors of the Corporation;
provided, however, that the following individuals shall be excluded from participation in the Plan: (a) contract labor; (b) employees
whose base wage or base salary is not processed for payment by the payroll department of the Corporation or any Subsidiary; and
(c) any individual performing services under an independent contractor or consultant agreement, a purchase order, a supplier agreement
or any other agreement that the Corporation enters into for service. Designation of a Participant in any year shall not require
the Committee to designate that person to receive an Award in any other year or to receive the same type or amount of Award as
granted to the Participant in any other year or as granted to any other Participant in any year. Except as otherwise agreed to
by the Corporation and the Participant, any Award under the Plan shall not affect any previous Award to the Participant under the
Plan or any other plan maintained by the Corporation or its Subsidiaries. The Committee shall consider all factors that it deems
relevant in selecting Participants and in determining the type and amount of their respective Awards.
5. Shares Available under
the Plan.
There is hereby reserved for issuance under the Plan an aggregate of 3,350,000 shares of Stock.
Effective
July 27, 2016, and subject to stockholder approval, an additional 2,000,000 shares of Stock are reserved for issuance under the
Plan.
Stock covered by an Award granted under the Plan shall not be counted as used unless and until actually issued
and delivered to a Participant. Accordingly, if there is (a) a lapse, expiration, termination or cancellation of any Stock Option
or other Award outstanding under the Plan prior to the issuance of Stock thereunder or (b) a forfeiture of any shares of Restricted
Stock or Stock subject to Awards granted under this Plan prior to vesting, then the Stock subject to these Stock
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Options or other
Awards shall be added to the Stock available for Awards under the Plan. In addition, any Stock covered by an SAR (including an
SAR settled in Stock, which the Committee, in its discretion, may substitute for an outstanding Stock Option) shall be counted
as used only to the extent Stock is actually issued to the Participant upon exercise of the SAR. Finally, any Stock exchanged
by an optionee as full or partial payment of the exercise price under any Stock Option exercised under the Plan, any Stock retained
by the Corporation to comply with applicable income tax withholding requirements, and any Stock covered by an Award that is settled
in cash, shall be added to the Stock available for Awards under the Plan. All Stock issued under the Plan may be either authorized
and unissued Stock or issued and outstanding Stock reacquired by the Corporation (including, in the discretion of the Board, Stock
purchased in the market). All of the available Stock may, but need not, be issued pursuant to the exercise of Incentive Stock
Options.
Subject to adjustment as provided
in Section 14 below, the aggregate Awards granted during any calendar year to any one Participant shall not exceed: (i) 800,000
shares of Stock subject to Options or SARs; and (ii) 800,000 shares of Stock with respect to any Awards (other than Options or
SARs) that are designed to comply with the qualified performance-based compensation exception from the tax deductibility limitation
of Code Section 162(m), except as otherwise provided in Sections 10 and 11 below. Notwithstanding anything in the Plan to the contrary,
the maximum number of shares of Stock subject to Awards granted during any single calendar year to any non-employee director of
the Corporation, taken together with any cash fees paid to such non-employee director during the calendar year, shall not exceed
$750,000 in total value (calculating the value of any such Awards based on the Fair Market Value at the time of grant for financial
reporting purposes).
The Stock reserved for issuance
and the other limitations set forth above shall be subject to adjustment in accordance with Section 14 below.
6. Types of Awards, Payments,
and Limitations.
Awards under the Plan shall consist of Stock Options, SARs, Restricted Stock, RSUs, Equity Performance Awards,
Performance Cash Awards, and other Stock or cash Awards, all as described below. Payment of Awards may be in the form of cash,
Stock, other Awards or combinations thereof as the Committee shall determine, and with the expectation that any Award of Stock
shall be styled to preserve such restrictions as it may impose. The Committee, either at the time of grant or by subsequent amendment,
and subject to the provisions of Sections 19 and 20 below, may require or permit Participants to elect to defer the issuance of
Stock or the settlement of Awards in cash under such rules and procedures as the Committee may establish under the Plan.
The Committee may provide that
any Awards under the Plan earn dividends or dividend equivalents and interest on such dividends or dividend equivalents. Such dividends
or dividend equivalents may be paid currently or may be credited to a Participant’s Plan account and are subject to the same
vesting or Performance Criteria as the underlying Award. Any crediting of dividends or dividend equivalents may be subject to such
restrictions and conditions as the Committee may establish, including reinvestment in additional Stock or Stock equivalents.
Awards shall be evidenced by
an Award Agreement, in such form and manner prescribed by the Committee in its discretion, that sets forth the terms, conditions
and limitations of such Award. Such terms may include, but are not limited to, the term of the Award, the provisions applicable
in the event the Participant’s employment terminates, and the Corporation’s authority to unilaterally or bilaterally
amend, modify, suspend, cancel or rescind any Award, including, without limitation, the ability to amend such Awards to comply
with changes in applicable law. An Award may also be subject to other provisions (whether or not applicable to similar Awards granted
to other Participants) as the Committee determines appropriate, including, without limitation, provisions intended to comply with
federal or state securities laws and stock exchange requirements, understandings or conditions as to the Participant’s employment,
requirements or inducements for continued ownership of Stock after exercise or vesting of Awards, or forfeiture of Awards in the
event of termination of employment shortly after exercise or vesting or breach of noncompetition or confidentiality agreements
following termination of employment. The Committee may, but need not, require the execution of any such Award Agreement by a Participant
and/or a duly authorized representative of the Corporation. Acceptance of the Award by the respective Participant shall constitute
agreement by the Participant to the terms, conditions and limitations of the Award.
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7. Stock Options.
Stock Options may be granted to Participants, at any time as determined by the Committee; provided, however, that each Stock Option
granted to non-employee Participants shall be a Nonqualified Stock Option. The Committee shall determine the number of shares subject
to each Stock Option and whether the Stock Option is an Incentive Stock Option; provided, however, that notwithstanding a Stock
Option’s designation, to the extent that Incentive Stock Options are exercisable for the first time by the Participant during
any calendar year with respect to Stock whose aggregate Fair Market Value exceeds $100,000, the portion of such Stock Options in
excess of the $100,000 limit shall be treated as Nonqualified Stock Options. The exercise price for each Stock Option shall be
determined by the Committee but shall not be less than one-hundred percent (100%) of the Fair Market Value of the Stock (or, in
the case of an Incentive Stock Option granted to a Participant who is a ten percent (10%) shareholder within the meaning of Code
Section 422, one-hundred ten percent (110%) of the Fair Market Value of the Stock) on the date the Stock Option is granted unless
the Stock Option is a substitute or assumed Stock Option granted pursuant to Section 15 below or unless otherwise approved by stockholders
as described below.
Each Stock Option shall expire
at such time as the Committee shall determine at the time of grant. Stock Options shall be exercisable at such time and manner
and subject to such terms and conditions as the Committee shall determine, including, but not limited to, the following:
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(a)
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No Stock Option may be exercised by a Participant (i) prior to the date on which the Participant
completes one (1) continuous year of employment with the Corporation or any Related Company after the date of the award thereof
(or, in the case of a Participant who is a non-employee director, prior to the first anniversary of the date of the award thereof);
or (ii) after the applicable date on which the Stock Option expires and is no longer exercisable.
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(b)
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An Incentive Stock Option shall expire and shall no longer be exercisable after the earliest of:
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(i)
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the date that is the tenth (10
th
) anniversary (or, in the case of an Incentive Stock
Option granted to a Participant who is a ten percent (10%) shareholder within the meaning of Code Section 422, the fifth (5
th
)
anniversary) of its grant;
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(ii)
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the date that is three (3) months after the Participant’s continuous employment with the
Corporation and all of its Related Companies terminates (for any reason other than the Participant’s death), except in the
case of disability (within the meaning of Code Section 22(e)(3)), the first (1
st
) anniversary of the date of such disability;
or
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(iii)
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the date established by the Committee, or the date determined under a method established by the
Committee, at the time of the Award.
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(c)
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A Nonqualified Stock Option shall expire and shall no longer be exercisable after the earliest
of:
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(i)
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the date that is the tenth (10
th
) anniversary
of its grant;
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(ii)
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in the case of a Participant who is an employee, the date, if any, on which the Participant’s
continuous employment with the Corporation and all of its Related Companies terminates, except (A) in the case of a Qualified Retirement
or a total and permanent disability (as defined by the Corporation’s long term disability programs), the third (3
rd
)
anniversary of the date of such Qualified Retirement or total and permanent disability, or (B) to the extent otherwise provided
in an
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enforceable agreement between a Participant and the Corporation, the date that is three (3) months after the Participant’s
continuous employment with the Corporation and all of its Related Companies terminates;
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(iii)
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in the case of a Participant who is a non-employee director, the date the Participant resigns from
the Board, or in the event the Participant retires at or after attaining retirement age (as determined under the applicable policy
established by the Board) or becomes totally and permanently disabled (as defined by the Corporation’s long term disability
programs), the third (3
rd
) anniversary of the date of such retirement or total and permanent disability; or
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(iv)
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the date established by the Committee, or the date determined under a method established by the
Committee, at the time of the Award.
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(d)
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All rights to purchase shares of Stock pursuant to a Stock Option shall cease as of the date on
which such Stock Option expires and is no longer exercisable.
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The exercise price, upon exercise
of any Stock Option, shall be payable to the Corporation in full by: (a) cash payment or its equivalent; (b) tendering previously
acquired Stock purchased on the open market having a Fair Market Value at the time of exercise equal to the exercise price or certification
of ownership of such previously-acquired Stock; (c) to the extent permitted by applicable law, delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to promptly deliver to the Corporation the amount of sale proceeds
from the Stock Option shares or loan proceeds to pay the exercise price and any withholding taxes due to the Corporation (“cashless”
exercise); and (d) such other methods of payment as the Committee, in its discretion, deems appropriate, including, but not limited
to, by a “net exercise” arrangement (pursuant to which the number of shares of Stock issuable upon exercise of the
Stock Option shall be reduced by the largest whole number of shares of Stock having an aggregate Fair Market Value that does not
exceed the aggregate exercise price of the Stock Option, plus any tax withholdings, if applicable). In no event shall the Committee,
without stockholder approval, cancel any outstanding Stock Option with an exercise price greater than the then current Fair Market
Value of the Stock for the purpose of reissuing any other Award to the Participant at a lower exercise price, cancel any outstanding
Stock Option for the purpose of cashing out a Stock Option unless such cash-out occurs in conjunction with a change of control
(but only to the extent otherwise provided in an enforceable agreement between a Participant and the Corporation), nor reduce the
exercise price of an outstanding Stock Option. Reload options are not permitted.
Notwithstanding any contrary
provision of this Section 7, if, on the date an outstanding Stock Option would expire, the exercise of such Stock Option, including
by a “net exercise” or “cashless” exercise, would violate applicable securities laws or any insider trading
policy maintained by the Corporation from time to time, the expiration date applicable to such Stock Option will be extended to
a date that is thirty (30) calendar days after the date on which the exercise of such Stock Option would no longer violate applicable
securities laws or any such insider trading policy.
8. Stock Appreciation
Rights.
SARs may be granted to Participants at any time as determined by the Committee. Notwithstanding any other provision
of the Plan, the Committee may, in its discretion, substitute SARs that can be settled only in Stock for outstanding Stock Options.
The grant price of a substitute SAR shall be equal to the exercise price of the related Stock Option and the substitute SAR shall
have substantive terms (e.g., duration) that are equivalent to the related Stock Option. The grant price of any other SAR shall
be equal to the Fair Market Value of the Stock on the date of its grant unless the SARs are substitute or assumed SARs granted
pursuant to Section 15 below. A SAR may be exercised upon such terms and conditions and for the term the Committee in its sole
discretion determines; provided, however, that the term shall not exceed the Stock Option term in the case of a substitute SAR
or ten (10) years in the case of any other SAR, and the terms and conditions applicable to a substitute SAR shall be substantially
the same as those applicable to the Stock Option that it replaces. Upon exercise of a SAR, the Participant shall be entitled to
receive payment from the Corporation in an amount determined by multiplying (a) the difference between the Fair Market Value of
a share of Stock on the
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date of exercise
and the grant price of the SAR by (b) the number of shares with respect to which the SAR is exercised. The payment may be made
in cash or Stock, at the discretion of the Committee, except in the case of a substitute SAR payment, which may be made only in
Stock. In no event shall the Committee, without stockholder approval, cancel any outstanding SAR with an exercise price greater
than the then current Fair Market Value of the Stock for the purpose of reissuing any other Award to the Participant at a lower
grant price, cancel any outstanding SAR for the purpose of cashing out a SAR unless such cash-out occurs in conjunction with a
change of control (but only to the extent otherwise provided in an enforceable agreement between a Participant and the Corporation),
nor reduce the grant price of an outstanding SAR.
9. Restricted Stock and
RSUs.
Restricted Stock and RSUs may be awarded or sold to Participants under such terms and conditions as shall be established
by the Committee. Restricted Stock and RSUs shall be subject to such restrictions as the Committee determines, including, without
limitation, any of the following:
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(a)
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a prohibition against sale, assignment, transfer, pledge, hypothecation or other encumbrance for
a specified period;
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(b)
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a requirement that the holder forfeit (or in the case of Restricted Stock or RSUs sold to the Participant,
resell to the Corporation at cost) such Restricted Stock or RSUs in the event of termination of employment or service with the
Corporation and all of its Related Companies during the period of restriction; and
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(c)
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the attainment of Performance Criteria.
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Restricted Stock and RSU Awards
that are subject to the attainment of Performance Criteria shall be subject to a Performance Period of at least one (1) year and
Restricted Stock and RSU Awards that are not subject to the attainment of any Performance Criteria shall be subject to the requirement
that the Participant continuously be employed or perform service with the Corporation or any of its Related Companies for at least
three (3) years (with such three (3) year employment or service requirement generally determined beginning with the first day of
the calendar year in which such Awards were granted to the Participant), subject in each case to acceleration as determined by
the Committee in its sole discretion. Notwithstanding the foregoing, a service requirement of one (1) year shall apply to any Restricted
Stock or RSU Awards (not subject to the attainment of any Performance Criteria) granted to non-employee directors of the Corporation,
subject to acceleration as determined by the Committee in its sole discretion. All restrictions shall otherwise expire at such
times as the Committee shall specify.
Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be registered in the name of the Participant and, at the discretion
of the Committee, each such certificate may be deposited in a bank designated by the Committee. Each such certificate shall bear
the following (or a similar) legend:
“The transferability of this certificate
and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the 2008
A.M. Castle & Co. Omnibus Incentive Plan and an agreement entered into between the registered owner and A. M. Castle &
Co. A copy of such Plan and agreement is on file in the office of the Secretary of A. M. Castle & Co., 1420 Kensington Road,
Suite 220, Oak Brook, Illinois 60523.”
10. Equity Performance
Awards.
The Committee shall designate the Participants to whom Equity Performance Awards are to be awarded and determine the
number of shares or units of Stock, the length of the Performance Period and the other terms and conditions of each such Award;
provided the stated Performance Period will not be less than three (3) years, subject to acceleration as determined by the Committee
in its sole discretion, and, to the extent the Award is designed to constitute qualified performance-based compensation under Code
Section 162(m), Performance Criteria shall be established within ninety (90) days of the beginning of the period of service to
which the Performance Criteria relate. Each Equity Performance Award shall entitle the Participant to a payment in the form of
Stock upon the attainment of Performance Criteria and other terms and conditions specified by the Committee. The Committee may,
in its discretion, at any time after the date of the
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Equity
Performance Award adjust the length of the designated period a Participant must hold any Stock delivered in accordance with the
vesting of such Award to account for individual circumstances of a Participant or group of Participants, but in no case shall
the length of such period be less than one (1) year. No Equity Performance Award may be paid to a Participant with a Fair Market
Value in excess of $2,000,000 for any single year.
Notwithstanding satisfaction
of any Performance Criteria, the number of shares or units of Stock issued under an Equity Performance Award may be adjusted by
the Committee on the basis of such further consideration as the Committee in its sole discretion shall determine. However, the
Committee may not, in any event, increase the number of shares or units of Stock earned upon satisfaction of any Performance Criteria
by any Participant who is a Covered Employee. The Committee may, in its discretion, make a payment in the form of cash, Stock,
or other equity based property, or any combination thereof, equal to the Fair Market Value of Stock otherwise required to be issued
to a Participant pursuant to an Equity Performance Award.
Except as otherwise determined
by the Committee in its sole discretion, a Participant who fails to achieve the applicable Performance Criteria or, subject to
Section 13 below, whose employment or service with the Corporation and all of its Related Companies terminates prior to the end
of any vesting period, for any reason, shall forfeit all Equity Performance Awards remaining subject to any such applicable Performance
Criteria or vesting period.
11. Performance Cash
Awards.
The Committee shall designate the Participants
(excluding non-employee directors) to whom Performance Cash Awards are to be awarded and determine the amount of the Award and
the terms and conditions of each such Award; provided that the Performance Period will not be less than one (1) year, subject to
acceleration as determined by the Committee in its sole discretion, and, to the extent the Award is designed to constitute qualified
performance-based compensation under Code Section 162(m), Performance Criteria shall be established within ninety (90) days of
the beginning of the period of service to which the Performance Criteria relate. Each Performance Cash Award shall entitle the
Participant to a payment in cash upon the attainment of Performance Criteria and other terms and conditions specified by the Committee.
No Performance Cash Award may be paid to a Participant in excess of $2,000,000 for any single year. If a Performance Cash Award
is earned in excess of $2,000,000, the amount of such Award in excess of this amount shall be deferred until the earlier of (a)
the date on which the Participant ceases to be covered by Code Section 162(m), or (b) the first date on which the Committee anticipates
or reasonably should anticipate that, if the payment of such excess amount were made on such date, the Corporation’s deduction
with respect to such payment would no longer be restricted due to the application of Code Section 162(m). Payment of a Performance
Cash Award will be made to the Participant during the period beginning January 1 and ending March 15 of the calendar year following
the end of the calendar year to which the Performance Cash Award relates, subject to any acceleration or delay in payment permitted
under Code Section 409A.
Notwithstanding
the satisfaction of any Performance Criteria, the amount to be paid under a Performance Cash Award may be adjusted by the Committee
on the basis of such further consideration as the Committee in its sole discretion shall determine. However, the Committee may
not, in any event, increase the amount earned under Performance Cash Awards upon satisfaction of any Performance Criteria by any
Participant who is a Covered Employee. The Committee may, in its discretion, substitute actual Stock for the cash payment otherwise
required to be made to a Participant pursuant to a Performance Cash Award.
Except
as otherwise determined by the Committee in its sole discretion, a Participant whose employment or service with the Corporation
and all of its Related Companies terminates prior to the end of any vesting period or who fails to achieve the applicable Performance
Criteria for any reason shall forfeit all Performance Cash Awards remaining subject to any such vesting period or applicable Performance
Criteria.
12. Other Stock or Cash
Awards.
In addition to the incentives described in Sections 6 through 11 above, the Committee may grant other incentives payable
in cash or in Stock under the Plan as it determines to be in the best interests of the Corporation and subject to such other terms
and conditions as it deems appropriate; provided that an outright grant of Stock will not be made unless it is offered in exchange
for cash compensation
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that
has otherwise already been earned by the recipient.
13.
Change
of Control.
Notwithstanding any provision in the Plan to the contrary, Awards granted hereunder shall be subject to such change
in control provisions, if any, specified in an enforceable agreement between a Participant and the Corporation.
If and to the extent an Award is subject to Code Section 409A and any such enforceable agreement
requires a payment or delivery of such Award following a change of control that would not be a permissible distribution event,
as defined in Code Section 409A(a)(2), then the payment or delivery of such Award shall be made on the earlier of: (a) the date
of payment or delivery originally provided for such Award; or (b) the date of termination of the Participant’s employment
or service with the Corporation or six (6) months after such termination (other than by reason of death) in the case of a “specified
employee” (as defined in Code Section 409A).
14. Adjustment Provisions
.
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(a)
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In the event of any change affecting the number, class, market price or terms of the Stock by reason
of share dividend, share split, reverse share split, recapitalization, reorganization, merger, consolidation, spin-off, disaffiliation
of a Subsidiary, combination of Stock, exchange of Stock, Stock rights offering, or other similar event, or any distribution to
the holders of Stock other than a regular cash dividend, the Committee shall equitably substitute or adjust the number or class
of Stock that may be issued under the Plan in the aggregate or to any one Participant in any calendar year and the number, class,
price or terms of shares of Stock subject to outstanding Awards granted under the Plan.
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(b)
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In the event of any merger, consolidation or reorganization of the Corporation with or into another
corporation that results in the outstanding Stock of the Corporation being converted into or exchanged for different securities,
cash or other property, or any combination thereof, there shall be substituted, on an equitable basis, for each share of Stock
then subject to an Award granted under the Plan, the number and kind of shares of stock, other securities, cash or other property
to which holders of Stock will be entitled pursuant to the transaction.
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(c)
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Notwithstanding the foregoing, any adjustments made pursuant to this Section 14 shall be made in
a manner as to ensure that after such adjustment, the Awards continue not to be subject to the provisions of Code Section 409A
(or, if such Awards are already subject to Code Section 409A, so as not to give rise to liability under Code Section 409A).
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15. Substitution and
Assumption of Awards.
The Board or the Committee may authorize the issuance of Awards under this Plan in connection with the
assumption of, or substitution for, outstanding awards previously granted to individuals who become employees of the Corporation
or any Subsidiary as a result of any merger, consolidation, acquisition of property or stock, or reorganization, upon such terms
and conditions as the Committee may deem appropriate. Any substitute Awards granted under the Plan shall not count against the
Stock limitations set forth in Section 5 above, to the extent permitted by Section 303A.08 of the Corporate Governance Standards
of the New York Stock Exchange.
16. Nontransferability.
Each Award granted under the Plan shall not be transferable other than by will or the laws of descent and distribution, and each
Stock Option and SAR shall be exercisable during the Participant’s lifetime only by the Participant or, in the event of disability,
by the Participant’s personal representative. In the event of the death of a Participant, exercise of any Award or payment
with respect to any Award shall be made only by or to the beneficiary, executor or administrator of the estate of the deceased
Participant or the person or persons to whom the deceased Participant’s rights under the Award shall pass by will or the
laws of descent and distribution. Subject to the approval of the Committee in its sole discretion, Stock Options may be transferable
to charity or to members of the immediate family of the Participant and to one or more trusts for the benefit of such family members,
partnerships in which such family members are the only
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partners,
or corporations in which such family members are the only stockholders. Members of the immediate family means the Participant’s
spouse, children, stepchildren, grandchildren, parents, grandparents, siblings (including half brothers and sisters), and individuals
who are family members by adoption.
17. Taxes.
The Corporation
shall be entitled to withhold the amount of any tax attributable to any amounts payable or Stock deliverable under the Plan, after
giving notice to the person entitled to receive such payment or delivery, and the Corporation may defer making payment or delivery
as to any Award, if any such tax is payable, until indemnified to its satisfaction. A Participant may pay all or a portion of any
withholding arising in connection with the exercise of a Stock Option or SAR or the receipt or vesting of Stock hereunder by electing
to have the Corporation withhold Stock having a Fair Market Value equal to the amount required to be withheld; provided, that the
number of such shares of Stock withheld may not have a Fair Market Value greater than the minimum required statutory withholding
liability unless determined by the Committee not to result in adverse accounting consequences.
18. Duration of the Plan.
The Plan shall be limited in duration to ten (10) years and shall expire on July 27, 2026. In the event of the termination of the
Plan, the Plan shall remain in effect with respect to any Awards granted hereunder on or before the date of termination, to the
extent such Awards remain outstanding.
19. Amendment and Termination.
The Board may amend the Plan from time to time or terminate the Plan at any time. However, unless expressly provided in an Award
or the Plan, no such action shall reduce the amount of any existing Award or materially and adversely change the terms and conditions
thereof without the Participant’s consent; provided, however, that the Committee may, in its discretion, substitute SARs
that can be settled only in Stock for outstanding Stock Options, and may require an Award be deferred pursuant to Section 6 hereto,
without a Participant’s consent; and further provided that the Committee may amend or terminate an Award to comply with changes
in applicable law, regulations or accounting principles without a Participant’s consent. Notwithstanding any provision of
the Plan to the contrary, the provisions in each of Section 7 and Section 8 of the Plan (regarding the cancellation, reissuing
at a relatively reduced price, or cash-out of Stock Options and SARs, respectively) shall not be amended without stockholder approval.
Notwithstanding any provision of the Plan to the contrary, if and to the extent that Awards under the Plan are subject to the provisions
of Code Section 409A, then the Plan as applied to those amounts shall be interpreted and administered so that it is consistent
with Code Section 409A.
The Corporation shall obtain
stockholder approval of any Plan amendment to the extent necessary to comply with applicable laws, regulations, or stock exchange
rules.
20. Other Provisions
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(a)
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In the event any Award under this Plan is granted to an employee who is employed or providing services
outside the United States and who is not compensated from a payroll maintained in the United States, the Committee may, in its
sole discretion: (i) modify the provisions of the Plan as they pertain to such individuals to comply with applicable law, regulation
or accounting rules consistent with the purposes of the Plan; and (ii) cause the Corporation to enter into an agreement with any
local Subsidiary pursuant to which such Subsidiary will reimburse the Corporation for the cost of such equity incentives.
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(b)
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Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing
the Participant’s employment or service with the Corporation; nor interfere in any way with the Participant’s right
or the Corporation’s right to terminate such relationship at any time, with or without cause, to the extent permitted by
applicable laws and any enforceable agreement between the Participant and the Corporation.
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(c)
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No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award, and
the Committee, in its discretion, shall determine whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional shares of
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Stock, or whether such fractional shares or any rights thereto shall be canceled, terminated,
or otherwise eliminated.
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(d)
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In the event any provision of the Plan shall be held to be illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if such
illegal or invalid provision had never been contained in the Plan (but only to the extent that such provision cannot be appropriately
reformed or modified).
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(e)
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Payments and other benefits received by a Participant under an Award made pursuant to the Plan
generally shall not be deemed a part of a Participant’s compensation for purposes of determining the Participant’s
benefits under any other employee benefit plans or arrangements provided by the Corporation or a Subsidiary, unless the Committee
expressly provides otherwise in writing or unless expressly provided under any such plan or arrangement.
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(f)
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Notwithstanding any other provision of the Plan, the Corporation shall have no liability to issue
any shares of Stock under the Plan unless such issuance would comply with all applicable laws and the applicable requirements of
the U.S. Securities Exchange Commission and the New York Stock Exchange or a similar entity. Prior to the issuance of any shares
of Stock under the Plan, the Corporation may require a written statement that the recipient is acquiring the shares for investment
and not for the purpose or with the intention of distributing the shares. In the case of a Participant who is subject to Section
16(a) and 16(b) of the Exchange Act, the Committee may, at any time, add such conditions and limitations to any election to satisfy
tax withholding obligations through the withholding or surrender of shares of Stock as the Committee, in its sole discretion, deems
necessary or desirable to comply with Section 16(a) or 16(b) of the Exchange Act or to obtain any exemption therefrom.
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(g)
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Payments and benefits under the Plan are intended to be exempt from Code Section 409A. If and to
the extent any such payment or benefit is determined to be subject to Code Section 409A, such payment or benefit shall comply with
Code Section 409A, including, without limitation, the six (6) month payment delay applicable to a specified employee (within the
meaning of Code Section 409A), and, accordingly, to the maximum extent permitted, such payment or benefit shall be paid or provided
under such other conditions determined by Committee that cause such payment or benefit to be in compliance with, or not be subject
to, Code Section 409A and the Plan shall be construed and administered accordingly to achieve that objective. To the extent that
any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall,
to the maximum extent reasonably possible, maintain the original economic benefit to the Participant of the applicable provision
without violating the provisions of Code Section 409A. The Corporation makes no representation that any or all of the payments
or benefits provided under the Plan will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code
Section 409A from applying to any such payments or benefits. In no event whatsoever shall the Corporation be liable for any additional
tax, interest or penalty that may be imposed on a Participant by Code Section 409A or damages for failing to comply with Code Section
409A.
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(h)
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A Participant and each other person entitled to receive a payment with respect to any Award granted
hereunder shall cooperate with the Committee by furnishing any and all information requested by the Committee and take such other
actions as may be required in order to facilitate the administration of the Plan and payments hereunder.
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(i)
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To the extent permitted by applicable law, the Corporation may deliver by email or other
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electronic
means (including posting on a website maintained by the Corporation or by a third party under contract with the Corporation) all
documents relating to the Plan or any Award Agreement thereunder (including, without limitation, any prospectuses required by applicable
securities law) and all other documents that the Corporation is required to deliver to its security holders (including, without
limitation, annual reports and proxy statements). To the extent permitted by applicable law, a Participant’s execution of
an Award Agreement may be made by electronic facsimile or other method of recording the Participant’s signature in a manner
that is acceptable to the Committee.
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21. Governing Law; Choice
of Forum.
The Plan and any actions taken in connection herewith shall be governed by and construed in accordance with the laws
of the State of Maryland, without regard to the conflict of laws principles of any jurisdiction. Any legal action related to this
Plan shall be brought only in a federal or state court located in Illinois.
22. Indemnification.
The Corporation shall indemnify the Committee and its members and any individuals to whom administrative duties have been properly
delegated under the Plan to the maximum extent permitted under the law, against any and all claims, losses, damages, expenses and
liabilities arising from their responsibilities in connection with the Plan, unless the same is determined to be due to gross negligence
or willful misconduct of the Committee, its members or such individuals.
23. Statute of Limitations
for Disputes and Claims Involving the Plan or Awards.
If a Participant or any other person entitled to receive a payment with
respect to any Award granted under the Plan disputes any action, omission, interpretation, or other issue arising under or related
to the Plan or an Award Agreement, or such person believes that he or she has a claim against the Plan, the Corporation, the Board,
the Committee, or any officer, employee, or agent of any of the foregoing under the terms of the Plan or any applicable Award Agreement,
any action relating to such dispute must be brought in federal or state court within twelve (12) months after the dispute arises.
24. Incentive Compensation
Recoupment Policy.
Notwithstanding any provision in the Plan or any Award Agreement to the contrary, the Plan and all Awards
issued thereunder shall be subject to any compensation recovery and/or recoupment policy adopted and amended from time to time
by the Corporation to comply with applicable law, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer
Protection Act, or to comport with good corporate governance practices.
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A.M. CASTLE & CO.
ATTN: MAREC E. EDGAR
1420 KENSINGTON ROAD, SUITE 220
OAK BROOK, ILLINOIS 60523
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic
voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company
in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically
via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions
up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends you vote FOR the following:
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☐
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☐
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☐
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1.
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Election of Directors
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Nominees
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01
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Gary A. Masse
02 Michael Sheehan 03 Richard
N. Burger
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For
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Against
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Abstain
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The Board of Directors recommends you vote FOR proposals 2, 3 and 4.
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2.
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To approve the Company's executive compensation on an advisory (non-binding) basis.
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☐
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☐
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☐
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3.
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To ratify the appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2016.
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☐
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☐
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☐
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4.
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To approve amendment of the Company's 2008 Omnibus Incentive Plan to increase the number of shares authorized there under and effect such other changes as described in the Proxy Statement.
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☐
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☐
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☐
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NOTE:
This proxy confers discretionary authority for the proxy holders to vote on any other matter that may properly come before the meeting or any adjournments or postponements thereof.
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Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, or other fiduciary, please give full
title as such. Joint owners should each sign personally. All holders must
sign. If a corporation or partnership, please sign in full corporate or
partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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0000295178_1
R1.0.1.25
Important Notice Regarding
the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available
at
www.proxyvote.com
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
A.M. CASTLE & CO.
Annual Meeting of Stockholders on
July 27, 2016
The undersigned, revoking all prior proxies,
hereby constitutes and appoints Marec E. Edgar and Steven W. Scheinkman, true and lawful agents and proxy with full power of substitution
in each, to attend the Annual Meeting of Stockholders of A.M. Castle & Co. to be held at the office of the Company, 1420 Kensington
Road, Suite 220, Oak Brook, Illinois at 10:00 a.m., Central Daylight Savings Time, on Wednesday, July 27, 2016, and at any adjournments
or postponements thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting,
and otherwise represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the
meeting.
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED
WILL BE CAST AS INSTRUCTED ON THE REVERSE SIDE HEREOF. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED
TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR" ELECTION OF EACH OF THE NOMINEES FOR DIRECTORS IN PROPOSAL 1 AND "FOR"
PROPOSALS 2, 3 and 4. THIS PROXY WILL BE VOTED IN THE DISCRECTION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Continued and to be signed on reverse
side
0000295178_1
R1.0.1.25