UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ACME UNITED CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 24, 2009
Dear Fellow Shareholder:
On behalf of your Board of Directors and Management, I cordially invite you to
attend the Annual Meeting of Shareholders of Acme United Corporation scheduled
to be held on Monday, April 20, 2009 at 11:00 A.M., local time, at the Cornell
Club, 6 East 44th Street, New York, New York. I look forward to greeting
personally those shareholders able to attend.
At the Meeting, shareholders will be asked to elect six directors to serve for a
one-year term, to approve an amendment to the Company's Employee Stock Option
Plan to increase the number of shares authorized to be issued under the plan,
and to ratify the appointment of our independent registered public accounting
firm for the fiscal year ending December 31, 2009. Information regarding these
matters is set forth in the accompanying Notice of Annual Meeting and Proxy
Statement to which you are urged to give your prompt attention.
It is important that your shares be represented and voted at the Meeting.
Whether or not you plan to attend, please take a moment to sign, date and
promptly mail your proxy card in the enclosed prepaid envelope. This will not
limit your right to vote in person should you attend the Meeting.
On behalf of your Board of Directors, thank you for your continued support and
interest in Acme United Corporation.
Sincerely,
Walter C. Johnsen
Chairman and Chief Executive Officer
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, APRIL 20, 2009
To our Shareholders: The Annual Meeting of Shareholders (the "Meeting") of Acme
United Corporation, a Connecticut Corporation, (the "Company") will be held on
Monday, April 20, 2009, at 11:00 A.M., local time, at the Cornell Club, 6 East
44th Street, New York, New York, for the following purposes:
1. To elect six (6) Directors of the Company;
2. To consider and vote upon an amendment to the Company's Employee Stock
Option Plan to increase the number of shares authorized to be issued
thereunder from 460,000 to 610,000, an increase of 150,000 shares;
3. To consider and vote upon the ratification of the appointment of our
independent registered public accounting firm for the fiscal year
ending December 31, 2009; and
4. To transact such other business as may properly come before the
Meeting.
Shareholders of record at the close of business on March 4, 2009 are entitled to
receive notice of and to vote at the Meeting and at any adjournment thereof.
Please carefully read the attached Proxy Statement for information regarding the
matters to be considered and acted upon at the Meeting. Your Board of Directors
recommends that you vote in favor of Proposals 1, 2, and 3 above. You are
cordially invited to attend the Meeting and we hope that you will do so.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
RETURN POSTAGE-PAID ENVELOPE. No additional postage need be affixed to the
return envelope if mailed in the United States. If you attend the Meeting, you
may withdraw your proxy and vote in person by ballot.
By Order of the Board of Directors,
Paul G. Driscoll
Vice President and Chief Financial Officer,
Secretary and Treasurer
March 24, 2009
Fairfield, Connecticut
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
April 20, 2009
PROXY STATEMENT
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy Card are being furnished in connection with the
solicitation of proxies by the Board of Directors of Acme United Corporation, a
Connecticut Corporation (the "Company"), to be used at the Annual Meeting of
Shareholders of the Company, to be held April 20, 2009, at 11:00 A.M., local
time, at the Cornell Club, 6 East 44th Street, New York, New York or at any
adjournment thereof (the "Meeting"). This Proxy Statement and the enclosed Proxy
Card are being furnished on or about March 25, 2009 to all holders of record of
the Company's Common Stock, par value $2.50 per share (the "Common Stock"), as
of the close of business on March 4, 2009. A copy of the Company's 2008 Annual
Report to Shareholders, including consolidated financial statements for the
fiscal year ended December 31, 2008, accompanies this Proxy Statement.
At the Meeting, shareholders will:
o elect six (6) Directors to serve until the next annual meeting (
Proposal 1);
o consider and vote upon a proposal to amend the Company's Employee
Stock Option Plan to increase the number of shares authorized to be
issued under the plan from 460,000 to 610,000, an increase of 150,000
shares (Proposal 2); and
o consider and vote upon a proposal to ratify the appointment of the
Company's independent registered public accounting firm for the fiscal
year ending December 31, 2009 (Proposal 3).
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE SHAREHOLDER MEETING TO BE HELD ON APRIL 20, 2009.
The Notice of Annual Meeting, this Proxy Statement, and the Annual
Report to Shareholders are available at the following website address:
www.acmeunited.proxy.com.
VOTING SECURITIES, RECORD DATE AND QUORUM
Record Date. The Board of Directors has fixed the close of business on
March 4, 2009 as the record date (the "Record Date") for determination of
shareholders entitled to receive notice of and to vote at the Meeting. As of the
Record Date, there were 3,353,368 shares of Common Stock issued and outstanding
and there were no other voting securities of the Company outstanding.
(1)
Quorum. The presence at the Meeting, in person or by proxy, of a
majority of the outstanding shares of Common Stock entitled to vote shall
constitute a quorum for the Meeting. Each outstanding share of Common Stock
entitles the record holder thereof to one vote. Abstentions and broker non-votes
are not counted as votes cast on any matter to which they relate, but are
counted in determining the presence of a quorum.
Election of Directors. Assuming the presence of a quorum, a plurality
of the votes cast at the Meeting is required to elect each of the nominees for
Director. Abstentions and broker non-votes will not be taken into account in
determining the outcome of the election of directors.
Amendment of the Employee Stock Option Plan. To be approved, the
proposal to increase the number of shares which are authorized for issuance upon
exercise of options granted under the Employee Stock Option Plan must receive
the affirmative vote of a majority of the shares of Common Stock cast in person
or by proxy at the meeting. Uninstructed shares are not entitled to vote on this
proposal; accordingly, broker non-votes will not affect the outcome of the vote
on the proposal. Abstentions also will not affect the outcome of the vote on the
proposal.
Ratification of the Appointment of Our Independent Registered
Accounting Firm. To be approved, the proposal to ratify the appointment of our
independent registered accounting firm for the fiscal year ending December 31,
2009 must receive the affirmative vote of a majority of the shares of Common
Stock cast in person or by proxy at the meeting. Abstentions and broker
non-votes will not be taken into account in determining the outcome of the vote
on this proposal.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Eligible shareholders of record may vote at the Meeting in person or by
means of the enclosed Proxy Card. You may specify your voting choices by marking
the appropriate boxes on the Proxy Card. The proxy solicited hereby, if properly
signed and returned to the Company and not revoked prior to or at the Meeting,
will be voted in accordance with the instructions specified thereon. If you
properly sign and return your Proxy Card, but do not specify your choices, your
shares will be voted by the proxy holders as recommended by the Board of
Directors.
The Board of Directors encourages you to complete and return the Proxy
Card even if you expect to attend the Meeting. You may revoke your proxy at any
time before it is voted at the Meeting by giving written notice of revocation to
the Secretary of the Company, by submission of a proxy bearing a later date or
by attending the Meeting in person and casting a ballot.
The proxy holders, Walter C. Johnsen and Susan H. Murphy, will vote all
shares of Common Stock represented by Proxy Cards that are properly signed and
returned by shareholders. The Proxy Card also authorizes the proxy holders to
vote the shares represented in their sole discretion with respect to any matters
not included in this Proxy Statement that may properly be presented for
consideration at the Meeting. YOU MUST RETURN A SIGNED PROXY CARD IF YOU WANT
THE PROXY HOLDERS TO VOTE YOUR SHARES OF COMMON STOCK.
(2)
The cost of soliciting proxies will be borne by the Company. Following
the mailing of proxy solicitation materials, proxies may be solicited by
directors, officers and employees of the Company and its subsidiaries
personally, by telephone or otherwise. Such persons will not receive any fees or
other compensation for such solicitation. In addition, the Company will
reimburse brokers, custodians, nominees and other persons holding shares of
Common Stock for others for their reasonable expenses in sending proxy materials
to the beneficial owners of such shares and in obtaining their proxies. The
Company has engaged Mackenzie Partners, Inc. to assist in the solicitation of
votes and the distribution of proxy materials for a fee of $10,000, plus
out-of-pocket expenses.
GOVERNANCE OF THE COMPANY
BOARD OF DIRECTOR MEETINGS AND COMMITTEES
The Board of Directors held eight meetings in 2008. All Directors attended at
least 75% of the aggregate of the total number of the Board meetings and
meetings of committees of the Board of which they were a member. The Board of
Directors has established standing Executive, Audit, Compensation and Nominating
Committees, each of which is comprised solely of independent non-employee
members of the Board of Directors.
INDEPENDENCE DETERMINATIONS
The Board of Directors annually determines the independence of directors. No
director is considered independent unless the Board has determined that he or
she has no material relationship with the Company, either directly or as a
partner, shareholder, or officer of an organization that has a material
relationship with the Company or otherwise. Material relationships can include
commercial, banking, consulting, legal, accounting, charitable, and familial
relationships, among others.
Independent directors are directors who, in the view of the Board of Directors,
are free of any relationship that would interfere with the exercise of
independent judgment. Under NYSE Alternext U.S., LLC (formerly, the American
Stock Exchange) rules, the following persons are not considered independent:
(a) a director who is or was employed by the Company or any of its
affiliates for the current year or any of the past three years;
(b) a director who accepted or who has an immediate family member who
accepted any compensation from the Company or any of its affiliates in
excess of $120,000 during any period of twelve consecutive months
within the three years preceding the determination of independence
(other than certain specified types of compensation, including, e.g.,
compensation for Board or Committee service, benefits under a
tax-qualified retirement plan, or non-discretionary compensation);
(3)
(c) a director who is a member of the immediate family of an individual
who is, or has been in any of the past three years, employed by the
Company as an executive officer;
(d) a director who is, or has an immediate family member who is, a partner
in, or a controlling shareholder or an executive officer of, any
organization to which the Company made, or from which the Company
received payments (other than those arising solely from investments in
the Company's securities) that exceed 5% of the organization's
consolidated gross revenues for that year, or $200,000, whichever is
more, in any of the past three years;
(e) a director who is, or has an immediate family member who is employed
as an executive of another entity where at any time during the most
recent three fiscal years, any of the Company's executive officers
serve on that other entity's compensation committee; and
(f) a director who is, or has an immediate family member who is, a current
partner of the Company's outside auditor, or was a partner or employee
of the Company's outside auditor who worked on the Company's audit at
any time during any of the past three years.
Immediate family includes a person's spouse, parents, children, sibling,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's home.
Mr. Johnsen, Chairman of the Board, serves as Chief Executive Officer of the
Company, and Mr. Olschan, a member of the Board, serves as President and Chief
Operating Officer of the Company. The Board has determined that all of the other
current directors are "independent" within the meaning of the applicable listing
standards of the NYSE Alternext. These independent directors are: Mr. Davidson,
Mr. Holden, Ms. Murphy, and Mr. Ward, each of whom is standing for reelection.
NOMINATIONS FOR DIRECTORS
The functions of a Nominating Committee have been historically performed by the
whole Board. A majority of the Board's independent directors (as such term is
defined in Section 803A of the NYSE Alternext's listing standards) would
recommend nominees for consideration by the full Board, including the nominees
standing for election at the Meeting.
In February 2009, the Board of Directors organized a Nominating Committee,
described below under "Committees of the Board." The Board continues to be
responsible for nominating director nominees to stand for election at each
annual meeting of shareholders and for filling vacancies on the Board at any
time during the year. The Nominating Committee reviews all potential director
candidates, and recommends potential director candidates to the full Board. The
Nominating Committee will also consider nominations by shareholders, as
described below. The full Board reviews and has final approval authority on all
potential director candidates being recommended to the shareholders for
election.
(4)
In identifying and evaluating nominees for director, the Nominating Committee
will consider whether the candidate has the highest ethical standards and
integrity, and sufficient education, experience and skills necessary to
understand and wisely act upon the complex issues that arise in managing a
publicly held company. The Nominating Committee will commence its evaluation of
candidates on the basis of materials submitted by or on behalf of the candidate
and on the basis of the knowledge of members of the Nominating Committee and
management regarding the candidate. To the extent the Nominating Committee does
not have enough information to evaluate a candidate; the Nominating Committee
may send a questionnaire to the candidate for completion in enough time for
Nominating Committee consideration. In addition, it has historically been
customary for some members of the Board to meet with the candidate individually
or in small groups, as appropriate. Members of the Nominating Committee will
also interview candidates as it deems appropriate.
Any shareholder entitled to vote for election of directors at a meeting may
nominate persons for election as directors if, as more fully provided in Section
11 of the By-laws, the shareholder provides written notice of such shareholder's
intent to make such nomination at least sixty (60) days prior to the annual
meeting at which the election of directors is to be held. If directors were to
be elected at a special meeting of shareholders, the written notice of the
shareholders intent to make a nomination must be provided to the Company not
later than the close of business of the seventh day following the date on which
notice of the special meeting is first given to shareholders. The nomination
must be sent in care of the Secretary of the Company at 60 Round Hill Road,
Fairfield, CT 06824, and must include, among other information, the name,
address, telephone number and resume of the nominee's business and educational
background, along with a written statement by the shareholder as to why such
person should be considered for election to the Board of Directors.
The Board will consider nominees for directors properly recommended by
shareholders, as described above. The Board follows the same evaluation
procedures whether a candidate is recommended by directors or shareholders.
COMMITTEES OF THE BOARD
EXECUTIVE COMMITTEE
The Executive Committee of the Board of Directors is composed of Mr. Holden, who
serves as Chairman, and Mr. Ward. The function of the Executive Committee is to
act for the Board of Directors during the intervals between meetings of the
Board. The Executive Committee held one meeting in 2008.
AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in overseeing (1) the audit
and integrity of our financial statements, (2) the performance of our
independent auditors, (3) the adequacy and effectiveness of our accounting,
auditing and financial reporting processes, and (4) our compliance with legal
and regulatory requirements. The duties of the Audit Committee include the
selection and appointment of our independent auditors, including evaluation of
their qualifications, performance and independence. The Board of Directors has
determined that all members of the Audit Committee are "independent" and
"financially literate" within the meaning of the applicable listing standards of
the NYSE Alternext. In addition, the Board has determined that Mr. Ward
qualifies as an "audit committee financial expert" within the meaning of
regulations adopted by the Securities and Exchange Commission and has the
financial sophistication required under the listing standards of the NYSE
Alternext.
(5)
The Committee consists of Mr. Ward, Chairman, and Messrs. Holden and Davidson.
The Audit Committee meets at least quarterly, and more often as needed. The
Committee met eight times in 2008. The Board of Directors has adopted a written
charter for the Audit Committee, which is reviewed annually by the Audit
Committee. A copy of the Audit Committee charter is available on the Company's
website at www.acmeunited.com in the Investor Relations/Corporate Governance
section.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors assists the Board in
establishing the compensation policies for cash and equity compensation of our
executive officers. The duties of the Committee include evaluating and making
recommendations to the Board regarding the compensation and equity incentives
and awards for our executive officers and the administration of the Company's
Non-Salaried Director Stock Option Plan. The Compensation Committee does not
have a charter. The Board of Directors has determined that all members of the
Compensation Committee are "independent" within the meaning of the applicable
listing standards of the NYSE Alternext. The Committee consists of Mr. Holden,
Chairman, Mr. Davidson and Ms. Murphy. The Committee held three meetings during
2008.
NOMINATING COMMITTEE
The Nominating Committee assists the Board in identifying individuals qualified
to become Board members and recommends director nominees to be nominated by the
Board to stand for election as directors at each annual meeting of shareholders
of the Company, commencing with the Annual Meeting of Shareholders to be held in
2010, and to fill vacancies on the Board and any newly created directorships.
The Nominating Committee was organized in February 2009 and consists of Mr.
Holden, Chairman, Mr. Davidson and Mr. Ward. The Board of Directors has
determined that all members of the Nominating Committee are "independent" within
the meaning of the applicable listing standards of the NYSE Alternext. The
Nominating Committee will meet at least once a year and more often as needed.
The Board of Directors has adopted a written charter for the Nominating
Committee which will be reviewed annually by the Nominating Committee; a copy of
the charter is available on the Company's website at www.acmeunited.com in the
Investor Relations/Corporate Governance section.
(6)
PROPOSAL 1:
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Company have a Board of Directors of
not fewer than five or more than nine directors, with the number of directors to
be fixed by the Board from time to time. The number of directors is presently
fixed at six. Directors serve until the next annual meeting and until their
respective successors have been elected and qualified.
Six directors are to be elected at the Meeting to serve for one-year terms until
the 2010 Annual Meeting of Shareholders and until their respective successors
are elected and qualified. A plurality of the votes cast at the meeting is
required to elect each of the nominees for Director. The Board has determined to
nominate six individuals for election to the Board of Directors, each of whom is
presently an incumbent director. The Board of Directors knows of no reason why
any nominee would be unable to serve as director. Each nominee has consented to
being named as a nominee for director of the Company in this Proxy Statement and
to serve as a director if elected. If any nominee should for any reason become
unable to serve, then all valid proxies will be voted for the election of a
substitute nominee designated by the Board.
The following information about the nominees for election as our directors is
based, in part, upon information furnished by the nominees.
------------------------- ------------------------------------ ---------------
Nominees Principal Occupation Director Since
------------------------- ------------------------------------ ---------------
Walter C. Johnsen Chairman of the Board and Chief 1995
(age 58) Executive Officer of the Company
since January 1, 2007; President and
Chief Executive Officer of the
Company from November 30, 1995 to
December 31, 2006. He formerly served
as Vice Chairman and a principal of
Marshall Products, Inc., a medical
supply distributor.
------------------------- ------------------------------------ ---------------
Richmond Y. Holden, Jr. Since May, 2007, President of 1998
(age 55) Educators Publishing Service, a
supplementary publisher of education
materials and a subsidiary of School
Specialty Inc. He served as
President and Chief Executive
Officer of J.L. Hammett Co., a
reseller of educational products
from 1992 to 2006.
------------------------- ------------------------------------ ---------------
(7)
------------------------- ------------------------------------ ---------------
Brian S. Olschan President and Chief Operating 2000
(age 52) Officer of the Company since
January 1, 2007; Executive Vice
President and Chief Operating
Officer of the Company from
January 1999 to December 31, 2006;
Senior Vice President - Sales and
Marketing of the Company from
September 1996 to January 1999. He
formerly served as Vice President
and General Manager of the Cordset
and Assembly Business of General
Cable Corporation, an electrical
wire and cable manufacturer.
------------------------- ------------------------------------ ---------------
Stevenson E. Ward III Vice President and Chief Financial 2001
(age 63) Officer of Triton Thalassic
Technologies, Inc. since September
2000. Triton's technology controls
and inactivates pathogens in the
healthcare and industrial industries.
From 1999 through 2000, Mr. Ward
served as Senior Vice
President-Administration of
Sanofi-Synthelabo, Inc., a major
pharmaceutical company. He also
served as Executive Vice President
(1996-1999) and Chief Financial
Officer (1994-1995) of Sanofi, Inc.,
and Vice President, Pharmaceutical
Group, Sterling Winthrop, Inc.
(1992-1994). Prior to joining
Sterling he was employed by General
Electric Company with assignments in
Purchasing, Corporate Audit and
Financial Management.
------------------------- ------------------------------------ ---------------
Susan H. Murphy Vice President for Student and 2003
(age 57) Academic Services, Cornell
University, since 1994; Dean of
Admissions and Financial Aid from
1985 to 1994. Ms. Murphy has been
employed at Cornell since 1978.
Ms. Murphy received a Ph.D. from
Cornell University.
------------------------- ------------------------------------ ---------------
Rex L. Davidson President and Chief Executive 2006
(age 59) Officer of Goodwill Industries of
Greater New York and Northern New
Jersey, Inc., and President of
Goodwill Industries Housing
Corporation since 1982. He was
appointed by Mayor Bloomberg to the
New York City Workforce Investment
Board in 2002. He serves on the
Board of the Better Business Bureau
Education and Research Foundation
and also serves on the Stony Brook
University MBA Advisory Board.
------------------------- ------------------------------------ ---------------
(8)
ATTENDANCE AT ANNUAL MEETINGS
While the Company has no formal policy regarding the attendance of Board members
at annual meetings of shareholders, director attendance is deemed very important
and is strongly encouraged. In 2008, all seven then incumbent members of the
Board attended the 2008 Annual Meeting of Shareholders.
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
The Company has established a process for shareholders to send communications to
the Board of Directors. Shareholders may send communications to the Board of
Directors to the attention of the Secretary, Acme United Corporation, 60 Round
Hill Road, Fairfield, Connecticut 06824, who will forward them to all Board
members within a reasonable time after receipt. If the shareholder wishes the
communication to be sent to one or more specific Board members only, the
addressee should be the specific Board member(s), "c/o Secretary," who will then
forward the communication to such Board member(s). If one or more specific Board
members are not designated for such other communication, the communication will
be forwarded to the entire Board.
OWNERSHIP OF ACME UNITED CORPORATION STOCK
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of March 1, 2009, with
respect to the beneficial ownership of shares of Common Stock by any person who,
to the knowledge of the Company, owned beneficially more than 5% of the
outstanding shares of Common Stock of the Company.
--------------------------- --------------------- --------------------- --------------
Number of
Type of Beneficially Percent of
Shareholder Ownership Shares Owned (1) Class
--------------------------- --------------------- --------------------- --------------
Walter C. Johnsen Direct 549,222 (5) 16.18
60 Round Hill Road
Fairfield, CT 06824
--------------------------- --------------------- --------------------- --------------
J. Carlo Cannell Direct 246,419* 7.35
240 E. Deloney Ave.
Jackson, WY 83001
--------------------------- --------------------- --------------------- --------------
*Based on the reporting person's Schedule 13G dated February 17, 2009.
(9)
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information, as of March 1, 2009, with
respect to the beneficial ownership of shares of Common Stock by (i) each
director and nominee for director of the Company; (ii) each executive officer
named in the Summary Compensation Table appearing below under "Executive
Compensation"; and (iii) all executive officers and directors as a group. The
persons shown have sole voting and investment power in these shares except as
indicated below in the notes to the table.
The address of each person appearing in the table is 60 Round Hill Road,
Fairfield, CT 06824.
-------------------------------------- -------------------------- -----------
Name of Beneficial Owner Number of Shares Percent
Beneficially Owned (1)
-------------------------------------- -------------------------- -----------
Rex L. Davidson (2) 8,750 *
-------------------------------------- -------------------------- -----------
Paul G. Driscoll (3) 50,415 1.48
-------------------------------------- -------------------------- -----------
Richmond Y. Holden, Jr. (4) 35,001 1.04
-------------------------------------- -------------------------- -----------
Walter C. Johnsen (5) 549,222 16.18
-------------------------------------- -------------------------- -----------
Susan M. Murphy (6) 20,006 *
-------------------------------------- -------------------------- -----------
Brian S. Olschan (7) 134,750 3.91
-------------------------------------- -------------------------- -----------
Stevenson E. Ward III (8) 23,200 *
-------------------------------------- -------------------------- -----------
Executive officers and directors 821,344 22.85
as a group (7 persons)
-------------------------------------- -------------------------- -----------
*Less than 1.0%
(1) Based on a total of 3,353,368 shares outstanding as of March 1, 2009. Under
applicable rules promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a person is deemed to be the beneficial owner
of shares of Common Stock if, among other things, he or she directly or
indirectly has or shares voting power or investment power with respect to
such shares. A person is also considered to beneficially own shares of
Common Stock which he or she does not actually own but has the right to
acquire presently or within the next sixty (60) days, whether by exercise
of stock options or otherwise.
(2) Includes 8,750 shares issuable upon exercise of options.
(10)
(3) Includes 46,375 shares issuable upon exercise of options.
(4) Includes 25,000 shares issuable upon exercise of options.
(5) Includes 41,250 shares issuable upon exercise of options.
(6) Includes 16,500 shares issuable upon exercise of options.
(7) Includes 93,750 shares issuable upon exercise of options.
(8) Includes 10,000 shares issuable upon exercise of options.
EXECUTIVE COMPENSATION
Our compensation policies and programs for our executive officers are
designed to support the overall objective of enhancing value for our
shareholders. To achieve this objective, it is critical that we be able to
attract, motivate, reward and retain highly qualified and productive
individuals. This is to be accomplished by:
o directly relating compensation to both Company and individual
performance;
o structuring compensation levels to be externally competitive and
internally equitable;
o enabling key employees to share in the future success of the
Company by acquiring equity interests in the Company; and
o designing compensation programs to provide an optimal combination
of costs to the Company and value to our employees.
In 2008, the compensation and benefits for our executive officers
consisted of four components:
o base salary;
o a cash incentive bonus award;
o stock option awards; and
o a benefits package.
Base Salaries
-------------
The base salaries for our officers are set annually and reflect skills and
experience, level and scope of responsibility and performance during the prior
year and historical, long-term performance. The Compensation Committee also
considers external factors, such as cost of living in the areas in which our
officers reside and current market conditions. During 2008, the Chief Executive
Officer participated in discussions with the Committee regarding the base salary
amounts of the executive officers.
(11)
Cash Bonus Plan
---------------
The Company grants cash incentive awards under our Cash Bonus Plan based upon
the achievement of both Company and individual performance objectives. The
Company generally makes cash awards under this Plan if the Company achieves the
minimum level of net income set for the applicable year. However, the Company
may make awards at its discretion if the minimum levels of net income are not
attained due to unusual circumstances, but where the performance of individual
executive officers merit such awards.
During 2008, the Chief Executive Officer proposed bonus awards and reviewed the
proposals, and the basis for the proposals, with the Compensation Committee. The
Committee subsequently proposed bonus awards to the independent directors of the
full Board for final review and approval.
Deferred Compensation Plan
--------------------------
Under the Company's Deferred Compensation Plan for executives and key managers
participating in the Company's Cash Bonus Plan, participants will be eligible to
make an irrevocable election on or before December 31st of each year as to the
percentage of his or her bonus to be awarded in the following year. The deferral
may be for all or a portion of the participant's payment under the Cash Bonus
Plan. All deferred amounts are non-forfeitable and earn the prime rate of
interest plus 1% compounded quarterly during the period of deferral. The Company
adds 20% to the deferred amount for each employee as a matching contribution up
to a maximum of $10,000 annually. Amounts deferred are deferred until separation
from service with the Company. The plan is administered by the Deferred
Compensation Plan Committee, which consists of our Chief Executive Officer, the
Chief Operating Officer and the Chief Financial Officer.
Stock Option Plan
-----------------
The Company's stock option program is administered by the Board of Directors,
which acts upon recommendations of the Compensation Committee. The purpose of
the Company's stock option program is to facilitate the acquisition of equity
interests in the Company by its officers and key employees and thus their
sharing in the future success of the Company's business. The Committee takes
into account factors such as: (i) the total number of shares of common stock
outstanding; (ii) the total number of shares of common stock which remain
available for grant under the Company's various stock option plans; and (iii)
the need to have an appropriate balance between currently paid and longer-term
compensation, and between cash and equity compensation.
(12)
Employee Benefits
-----------------
The Company provides core employee benefits, including medical and dental
coverage, disability insurance and life insurance. The benefits available are
the same for all executive officers.
401(k) Plan
-----------
The Acme United Corporation 401(k) Profit Sharing Plan, or 401(k) plan, is the
primary retirement benefit offered to all United States employees of the
Company. Participants may generally contribute to the Plan annually up to the
maximum amount permitted under the Internal Revenue Code - $15,500 in 2008
($20,500 for persons over age 50). The Company provides to participants a
matching contribution equal to fifty percent of the first six percent of the
participant's eligible compensation not to exceed limits on eligible
compensation imposed by the Internal Revenue Code - $230,000 in 2008.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of the
Company's Principal Executive Officer and each of the two other most highly
compensated executive officers of the Company for the fiscal year ended December
31, 2008. These three officers are referred to as named executive officers, or
NEOs.
Nonqualified
Deferred
Compensation All Other
Name and Bonus Option Awards Earnings Compensation Total
Principal Position Year Salary ($) ($) (1) ($) (2) ($) ($) ($)
Walter C. Johnsen 2008 $ 472,116 $ 100,000 $ 44,676 $ 5,516 $ 11,192 (3) $ 633,500
Chairman & Chief 2007 $ 424,615 $ 150,000 $ 47,929 $ 25,202 (3) $ 647,746
Executive Officer
Brian S. Olschan 2008 $ 405,692 $ 85,000 $ 41,226 $ 8,427 (4) $ 540,344
President & Chief 2007 $ 375,962 $ 150,000 $ 42,099 $ 8,277 (4) $ 576,338
Operating Officer
Paul G. Driscoll 2008 $ 234,131 $ 57,500 $ 28,987 $ 3,171 $ 8,427 (4) $ 332,215
Vice President-Chief 2007 $ 212,308 $ 110,000 $ 28,943 $ 7,192 (4) $ 358,442
Financial Officer
(13)
(1) The bonus reported includes bonuses for the fiscal year reported paid both
during and after the end of the fiscal year.
(2) Represents the compensation costs of stock options for financial reporting
purposes for 2008 under FAS 123 (R), rather than an amount paid to or
realized by the named executive officer.
Each option vests in four equal annual installments commencing on the first
anniversary of the grant date and thereafter on the annual anniversary of
the grant date. The exercise price of each option is equal to 100 percent
of fair market value on the grant date. The fair market value was
determined to be the closing price of the Common Stock on the trading day
immediately preceding the grant date.
The options granted to NEOs in 2008 and 2007 had exercise prices of $13.19
per share and $14.93 per share, respectively. The number of shares
underlying options granted to the NEOs in 2008 and 2007 are as follows:
Number of Shares
Name Underlying Options
---- ------------------
2008 2007
---- ----
Walter C. Johnsen 20,000 15,000
Brian S. Olschan 15,000 15,000
Paul G. Driscoll 10,000 11,500
(3) Consists of reimbursement of out-of-pocket health care expenses, payment of
life insurance premiums and Company matching contribution to the Company's
401(k) Profit Sharing Plan.
(4) Consists of reimbursement of payments of life insurance premiums and
Company matching contribution to the Company's 401(k) Profit Sharing Plan.
(14)
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table shows outstanding stock option awards classified as
exercisable and unexercisable as of December 31, 2008 for each of the NEOs.
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Option
Number of Securities Number of Securities Exercise Option
Underlying Unexercised Underlying Unexercised Price Expiration
Name Options (#) Exercisable Options (#) Unexercisable ($) Date (1)
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Walter C. Johnsen 10,000 $ 4.00 6/23/13
20,000 $ 15.65 4/28/15
7,500 7,500 $ 15.15 7/31/16
3,750 11,250 $ 14.93 6/12/17
20,000 $ 13.19 8/06/18
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Brian S. Olschan 7,500 $ 1.63 1/25/10
5,000 $ 3.56 10/10/10
20,000 $ 2.75 5/07/11
20,000 $ 3.05 11/12/11
15,000 $ 4.00 6/23/13
15,000 $ 15.65 4/28/15
7,500 7,500 $ 15.15 7/31/16
3,750 11,250 $ 14.93 6/12/17
15,000 $ 13.19 8/06/18
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Paul G. Driscoll 10,000 $ 3.55 3/19/11
1,000 $ 3.05 11/12/11
10,000 $ 3.75 9/23/12
7,500 $ 4.00 6/23/13
10,000 $ 15.65 4/28/15
5,000 5,000 $ 15.15 7/31/16
2,875 8,625 $ 14.93 6/12/17
10,000 $ 13.19 8/06/18
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
(1) Each option with an expiration date in 2015 or earlier vests in four equal
parts commencing on the day after the grant date and on each of the three
anniversary dates of the grant date. Options with an expiration date after
2015 vest in four equal parts beginning on the first anniversary of grant
date and on each of the three anniversary dates of the grant date. Each
option has a ten-year term.
(15)
PENSION BENEFITS
In December 1995, the Board of directors adopted a resolution to freeze the
Retirement Plan resulting in no further benefit accruals after February 1, 1996.
None of the NEOs is a participant of the Pension Plan.
CHANGE IN CONTROL ARRANGEMENTS--SALARY CONTINUATION PLAN
The Company has a Salary Continuation Plan that covers officers of the Company
at the level of Corporate Vice President or above, under the age of sixty-five
(65). The Plan is designed to retain key employees and provide for continuity of
management in the event of an actual or threatened change in control of the
Company. A covered officer would receive payment under the Plan if there is a
disposition of the Company and, within one year (or if such employee is also a
director, within two years) after such change in control, one of the following
triggering events occurs:
o involuntary termination;
o a reduction in responsibility, status or compensation;
o transfer to a location unreasonably distant from his or her current
location; or
o voluntary resignation.
A disposition of the Company shall include (i) a sale of substantially all the
assets of the Company or a successor, or of a Division with more than 50% of the
sales of the Company in the preceding full year of operations, such that
shareholder approval is required and (ii) the acquisition by any such person or
group of persons acting in concert, of legal or beneficial ownership of fifty
percent (50%) or more of the voting stock of the Company, or its successor.
The compensation provided to a covered officer upon disposition of the Company
would consist of the following:
o monthly salary rate being paid at the date of the change in control
multiplied by the number of months payable;
o average monthly incentive bonus payments for the prior three taxable
years multiplied by the number of months payable; and
o medical, life and other insurance in effect at the date of disposition
to continue into the future for the number of months compensation is
payable.
Payment of the first two items would be in a lump sum, payable no later than
thirty (30) days after the date on which the officer submits notice to the Board
that the officer wishes to exercise his or her rights under the Plan.
A Director of the Company who is also an officer of the Company at the level of
Executive Vice President or above would be entitled to the value of thirty-six
(36) months' compensation and benefits for thirty-six (36) months. Officers at
the level of Senior Vice President and Vice President would be entitled to the
value of twenty-four (24) months' compensation and benefits for twenty-four (24)
months.
(16)
The Plan presently covers Walter C. Johnsen, Brian S. Olschan, Larry H.
Buchtmann and Paul G. Driscoll. Walter C. Johnsen and Brian S. Olschan would be
entitled to the value of thirty-six (36) months of compensation and benefits.
Larry H. Buchtmann and Paul G. Driscoll would be entitled to the value of
twenty-four (24) months of compensation and benefits.
SEVERANCE PAY PLAN
The Severance Pay Plan covers officers of the Company employed in the
United States at the level of Corporate Vice President or above, under the age
of sixty-five (65). The Plan is designed to enable the Company to attract and
retain key employees. A covered officer would receive payments under the Plan if
one of the following triggering events occurs:
o involuntary termination for any reason other than gross
misconduct;
o death;
o reduction of responsibility, status or compensation reduced; or
o transfer to a location unreasonably distant from his or her
current location.
This Plan would only apply if the Salary Continuation Plan would not
apply. Payment under this Plan, except in the event of termination by death,
would be equivalent to one month's salary multiplied by each year of service to
the Company based upon the level of his or her compensation in effect
immediately preceding such termination. The Plan sets out a minimum and maximum
number of months' compensation payable to each such employee upon such
severance. The Plan would also provide death benefits to covered officers'
beneficiaries.
A Director of the Company who is also an Officer of the Company at the
level of Executive Vice President or above would be entitled to a minimum of
nine (9) months' compensation and a maximum of thirty (30) months' compensation.
In the event of such officer's death, his or her beneficiaries would be entitled
to nine (9) months' compensation. Officers at the level of Senior Vice President
or Vice President would be entitled to a minimum of six (6) months' compensation
and a maximum of eighteen (18) months' compensation. In the event of such
officer's death, his or her beneficiaries would be entitled to six (6) months'
compensation. Payments would be made in a single lump sum.
This Plan covers Walter C. Johnsen, Brian S. Olschan, Larry H.
Buchtmann and Paul G. Driscoll. Walter C. Johnsen and Brian S. Olschan would be
entitled to a minimum of nine (9) months' compensation and a maximum of thirty
(30) months' compensation. Larry H. Buchtmann and Paul G. Driscoll would be
entitled to a minimum of six (6) months' compensation and a maximum of eighteen
(18) months' compensation. In the event of termination by death, beneficiaries
of Walter C. Johnsen and Brian S. Olschan would be entitled to a minimum of nine
(9) months' compensation and beneficiaries of Larry H. Buchtmann and Paul G.
Driscoll would be entitled to a minimum of six (6) months' compensation.
(17)
DIRECTOR COMPENSATION
DIRECTORS' CASH FEES
CASH COMPENSATION
As described below, in 2008 the Company paid as compensation to non-employee
directors cash consisting of annual fees and fees for Board and committee
meetings attended. Each director who chaired a committee received additional
compensation to compensate for the additional responsibility and effort
associated with the director's respective position. These fees consisted of:
o an annual fee of $16,000, payable quarterly;
o $1,500 for each Board meeting attended;
o $700 for each committee meeting attended;
o $700 to committee chairpersons for each committee meeting conducted;
and
o an annual fee of $3,500 to the Chairperson of the Audit Committee.
In addition, the Company provided reimbursement to each director for customary
and usual travel expenses incurred in connection with attendance at Board and
committee meetings.
DIRECTORS' STOCK OPTIONS
On April 21, 2008, the date of the last annual meeting of shareholders, each
non-employee director re-elected to the Board of Directors received an annual
option grant, as provided under the 2005 Non-Salaried Director Stock Option
Plan, to purchase 2,500 shares of Common Stock.
Under the Non-Salaried Director Stock Option Plan, each new director, upon
becoming a member of the Board of Directors, receives an option to purchase
5,000 shares of Common Stock. These options vest as follows: 25% on the day
after the date of the grant; 25% one day after the first year anniversary of the
date of grant; 25% one day after the second year anniversary of the date of
grant; and 25% one day after the third year anniversary of the date of grant.
The following table discloses the cash, equity awards and other compensation
earned, paid or awarded, as the case may be, to each of the Company's directors
during the fiscal year ended December 31, 2008.
(18)
------------------------ ---------------------- ----------------- --------------
Fees Earned or Option Awards
Name Paid in Cash ($) ($)(1) Total
------------------------ ---------------------- ----------------- --------------
Rex L. Davidson $31,300 $ 9,650 $40,950
------------------------ ---------------------- ----------------- --------------
Richmond Y. Holden, Jr. $34,400 $ 9,650 $44,500
------------------------ ---------------------- ----------------- --------------
Susan M. Murphy $29,900 $ 9,650 $39,550
------------------------ ---------------------- ----------------- --------------
Gary D. Penisten (2) $ 8,700 $ 8,700
------------------------ ---------------------- ----------------- --------------
Stephen Spinelli, Jr.(3) $10,200 $ 9,650 $19,850
------------------------ ---------------------- ----------------- --------------
Stevenson E. Ward III $36,625 $ 9,650 $46,275
------------------------ ---------------------- ----------------- --------------
(1) Represents the compensation costs of stock options for financial reporting
purposes for the year under FAS 123 (R), rather than an amount paid to or
realized by the named executive officer.
The exercise price of each option is equal to 100 percent of fair market
value on the date of grant. The fair market value was determined to be the
average price of the Common Stock on the trading day of the grant date.
Each option had an exercise price of $13.61 per share, and was immediately
exercisable in full.
The following table shows the aggregate number of option awards outstanding
for each director as of December 31, 2008.
----------------------------------------- ----------------------------------
Aggregate Option
Awards Outstanding as of
Name December 31, 2008
----------------------------------------- ----------------------------------
Rex L. Davidson 10,000
----------------------------------------- ----------------------------------
Richmond Y. Holden, Jr. 25,000
----------------------------------------- ----------------------------------
Susan M. Murphy 16,500
----------------------------------------- ----------------------------------
Stevenson E. Ward III 10,000
----------------------------------------- ----------------------------------
(2) Mr. Penisten retired from the Board in 2008. Accordingly, his term as a
director expired on April 21, 2008.
(3) Mr. Spinelli resigned from the Board on June 10, 2008 due to a potential
conflicting business interest.
(19)
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. The Audit Committee has reviewed and discussed our
audited consolidated financial statements for the year ended December 31, 2008,
with management and with representatives of UHY LLP, our independent auditors,
including a discussion of the applicability and quality of accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
Management has the primary responsibility for the financial statements and our
accounting, auditing and financial reporting processes. The Audit Committee is
not providing any expert or special assurance as to our financial statements.
UHY LLP is responsible for expressing an opinion on the conformity of our
financial statements with generally accepted accounting principles in the United
States. The Audit Committee is not providing any professional certification as
to UHY LLP's work product.
The Audit Committee has discussed with representatives of UHY LLP the matters
required to be discussed by professional standards. The Audit Committee has
received and reviewed the written disclosures and letter from UHY LLP required
by applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant's communications with the Audit Committee
concerning independence, and has discussed the independence of UHY LLP with
representatives of the firm.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plan for their respective audits. The Audit Committee met with
the independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting.
Based on the reviews and discussion referred to above, the Audit Committee
recommended to the Board of Directors that our audited consolidated financial
statement for the year ended December 31, 2008 be included in our Annual Report
on Form 10-K for the year ended December 31, 2008 for filing with the Securities
and Exchange Commission.
Stevenson E. Ward, III, Chair
Richmond Y. Holden, Jr., Member
Rex L. Davidson, Member
(20)
TRANSACTIONS WITH RELATED PERSONS
There were no material transactions between the Company and any "related
person". The term related person includes any executive officer of the Company,
any director or nominee for election as director, any security holder holding
more than 5% of the Common Stock of the Company or any immediate family member
of any of the foregoing persons.
Policy
------
The Board of Directors has determined that transactions involving the Company
and related persons shall be reviewed and approved by the Audit Committee. The
Charter of the Audit Committee requires that related person transactions must be
reviewed and approved by the Audit Committee of the Board, which consists solely
of independent directors. This requirement covers any such transaction and is
not limited to transactions which meet the minimum threshold for disclosure in
the proxy statement under the relevant rules under the Exchange Act (generally,
with respect to smaller reporting companies transactions which involve an amount
equal to the lesser of $120,000 or one percent of the average of the company's
total assets at year-end for the last two completed fiscal years, and in which a
related person has a direct or indirect material interest).
Procedures
----------
Management or the affected director or executive officer will bring the
transaction to the attention of the Audit Committee. The transaction must be
approved in advance whenever practicable, and if not practicable, must be
reviewed as promptly as practicable. Although the Audit Committee has not
adopted formal procedures for the review and approval of transactions with
related persons, the Audit Committee will approve the transaction only if it
determines that it is in the best interests of the Company.
If the Audit Committee were to approve a related party transaction, the Audit
Committee would periodically monitor the transaction to ensure that there are no
changed circumstances that would render it advisable for the Company to amend or
terminate the transaction.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company Common Stock (collectively referred to
herein as "Reporting Persons"), to file with the SEC and the NYSE Alternext
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Reporting Persons are required by
the Exchange Act to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on review of copies of such forms received by the
Company and written representations from Reporting Persons, the Company believes
that, during the 2008 fiscal year, all Reporting Persons complied with all
applicable filing requirements under Section 16(a).
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information regarding compensation payable under
the Company's equity compensation plans (the Non-Salaried Director Stock Option
Plan and the Employee Stock Option Plan) in effect as of December 31, 2008. The
Company's shareholders have approved each equity compensation plan.
(21)
------------------------ -------------------------- -------------------------- --------------------------
Number of securities
remaining available
for future issuance
Number of securities under equity
to be issued upon Weighted-average compensation plans,
exercise of exercise price of (excluding securities
outstanding options, outstanding options, reflected in
warrants and rights warrants and rights column (a))
Plan Category (a) (b) (c)
------------------------ -------------------------- -------------------------- --------------------------
Equity compensation 608,500 $10.38 82,938
plans approved by
security holders
------------------------ -------------------------- -------------------------- --------------------------
Equity compensation
plans not approved by -0- -0- -0-
security holders
------------------------ -------------------------- -------------------------- --------------------------
Total 608,500 $10.38 82,938
------------------------ -------------------------- -------------------------- --------------------------
PROPOSAL 2:
AMENDMENT TO EMPLOYEES' STOCK OPTION PLAN
On February 24, 2009, the Board of Directors, subject to approval of the
Shareholders, amended the Employee Stock Option Plan effective February 26, 2002
(the "Plan") to increase the number of shares subject to options from 460,000 to
610,000. The Company proposes that the number of shares of Common Stock reserved
for issuance under the Plan be so increased in order to enable the Company to
continue to attract and retain highly qualified personnel. The following
description of the Plan as amended is qualified in its entirety by reference to
the text of the Plan and its prior amendments, copies of which have been filed
with the SEC.
PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
shareholders by strengthening the ability of the Company to attract, retain and
reward highly qualified key employees, to motivate key employees to achieve
business objectives established to promote the long-term growth, profitability
and success of the Company, and to encourage ownership of the Common Stock of
the Company by participating key employees.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Board of Directors of the Company. In
administering the Plan, the Board acts upon recommendations of the Compensation
Committee, which consists of members of the Board who are not employees of the
Company. Subject to the provisions of the Plan, the Board determines the
employees who will receive options under the Plan, the number of shares subject
to each option and the terms of those options, and interprets the Plan and makes
such rules of procedure as the Board may deem proper.
(22)
SHARES OF STOCK SUBJECT TO THE PLAN
The Plan presently permits the granting of 460,000 shares of Common Stock
(610,000 shares after approval of amendment).
ELIGIBILITY
Based on current staffing, under the Plan, approximately 25 to 30 key employees
of the Company (including directors and officers who are employees) may be
granted options to purchase shares of Common Stock.
OPTIONS
Options granted under the Plan may be either incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options. The exercise price with respect to an option
awarded under the plan will be one hundred percent (100%) of the fair market
value of the Common Stock on the date that the option is granted provided,
however, that the price shall not be less than the par value of the Common Stock
which is subject to the option. If incentive stock options are granted to an
employee owning Common Stock having more than 10% of the voting power of the
Company, the exercise price must be at least one hundred ten percent (110%)
instead of one hundred percent (100%) of the fair market value of the Common
Stock on the date that the option is granted, and the option by its terms may
not be exercisable after the expiration of five (5) years from the date of
grant. No option may be granted under the Plan after the tenth anniversary of
the adoption of the Plan. The options granted by the Company to employees
historically have had a term of ten years and vest over a period presently set
at four years. The Company may grant both incentive stock options (ISOs) and
non-qualified stock options. However, commencing in July 2006, the Company has
granted only non-qualified stock options to its employees.
TERMS OF EXERCISE OF OPTIONS
Upon the granting of any option, the optionee must enter into a written
agreement with the Company setting forth the terms upon which the option may be
exercised. Such an agreement sets forth the length of the term of the option and
the timing of its and may provide arrangements for income and employment tax
withholding. Under terms of the Plan, options are exercisable in accordance with
the following schedule: 25% one day after first year anniversary of the date of
grant; 25% one day after second year anniversary of date of grant; 25% one day
after third year anniversary of date of grant; 25% one day after fourth year
anniversary of date of grant. In no event shall the length of an option extend
beyond ten years from the date of its grant. An optionee may exercise an option
by delivering payment to the Company in cash.
(23)
Under the Plan, if the employment of any person to whom an option has been
granted is terminated for any reason other than the death, disability or
retirement of the optionee, the optionee may exercise within thirty (30) days of
such termination such options as the optionee could have exercised if his or her
employment had continued for such 30 day period, subject to the ten year
limitation. If the termination is by reason of retirement, the optionee may
exercise the option, in whole or in part, at any time within one year following
such termination of employment, subject to the ten year limitation, but if the
option is exercised later than three (3) months from the date of retirement the
option shall not constitute an ISO. If the optionee dies while employed by the
Company or its subsidiaries, or during a period after termination of employment
in which the optionee could exercise an option, the optionee's beneficiary may
exercise the option within one year of the date of the optionee's death but in
no event may the option be exercised later than the date on which the option
would have expired if the optionee had lived. If the termination is by reason of
disability, the optionee may exercise the option, in whole or in part, at any
time within one year following such termination of employment or within such
other period, not exceeding three years after the date of disability, as is set
forth in the option agreement with respect to such options, provided, however,
that if the option is exercised later than one year after the date of
disability, it shall not constitute an ISO, and in no event may the option be
exercised after ten years from grant.
In addition, if an optionee ceases to be employed by the Company and becomes, or
continues to be, a member of the Board of Directors prior to the time the
optionee's option(s) would have otherwise expired, the optionee's option(s)
shall continue to vest in accordance with the terms of the Plan and shall
continue to be exercisable for the remainder of the term of the option(s). Any
option which is not exercised by the optionee within the three month period
immediately following the optionee's termination of employment, or, in the case
of termination of employment on account of disability, within one year after the
date of disability, shall cease to be an Incentive Stock Option. If an optionee
described in the preceding two sentences ceases to be a member of the Board of
Directors for any reason, the optionee's option(s) shall terminate in accordance
with the provisions of Section 2.4(a) of the Acme United Corporation
Non-Salaried Director Stock Option Plan, which section (i) cancels any unvested
options at that time; (ii) permits a twelve-month period for exercise of vested
options in the event of termination due to death or disability; and (iii)
permits a thirty-day period for exercise of vested options in the event of
termination due to any other reason, except that the Board may in its discretion
extend the period of exercise.
Notwithstanding the above, no option may be exercised after the expiration date
specified in the option agreement.
AMENDMENT TO THE PLAN
The Plan may be terminated, suspended, or modified at any time by the Board of
Directors, but no amendment increasing the maximum number of shares for which
options may be granted (except to reflect a stock split, stock dividend or other
distribution), reducing the option price of outstanding options, extending the
period during which options may be granted, otherwise materially increasing the
benefits accruing to optionees or changing the class of persons eligible to be
optionees shall be made without first obtaining approval of the shareholders of
the Company. No termination, suspension or modification of the Plan shall
adversely affect any right previously acquired by the optionee or other
beneficiary under the Plan.
(24)
Options granted under the Plan may not be transferred other than by will or by
the laws of descent and distribution and, during the optionee's lifetime may be
exercised only by the optionee.
All of the Options previously issued under the prior plan remain unchanged and
outstanding.
FEDERAL INCOME TAX CONSEQUENCES
GRANTING OF NON-QUALIFIED STOCK OPTIONS
With respect to the tax effects of non-qualified stock options, since the
options granted under the Plan do not have a "readily ascertainable fair market
value" within the meaning of the Federal income tax laws, an optionee of an
option will realize no taxable income at the time the option is granted.
EXERCISE OF NON-QUALIFIED STOCK OPTIONS
When a non-qualified stock option is exercised, the optionee will generally be
deemed to have received compensation, taxable at ordinary income tax rates, in
an amount equal to the excess of the fair market value of the shares of Common
Stock of the Company on the date of exercise of the option over the exercise
price. The Company will withhold income and employment taxes in connection with
the optionee's recognition of ordinary income as a result of the exercise by an
employee/optionee of a non-qualified stock option, and arrangements must be made
with the Company for the source of such withholding. The Company generally can
claim a deduction in the fiscal year of the Company which includes the last day
of the taxable year of the optionee which includes the exercise date or the date
on which the optionee recognizes income. The amount of such deduction will be
equal to the ordinary income recognized by the optionee.
GRANTING OF INCENTIVE STOCK OPTIONS AND EXERCISE OF INCENTIVE STOCK OPTIONS
With respect to the tax effects of Incentive Stock Options, the optionee does
not recognize any regular taxable income when the option is granted or
exercised; however, the excess of the fair market value of the stock on the date
of exercise over the exercise price must be included in the optionee's
alternative minimum taxable income. Depending on the optionee's other income and
deductions, all or a portion or this excess could be subject to alternative
minimum tax of as much as twenty-eight percent (28%).
SALE OF THE STOCK
When stock acquired through the exercise of a non-qualified stock option is
sold, the difference between the optionee's basis in the shares and the sale
price will be taxable to the optionee as a capital gain (or loss).
If no disposition of shares issued to an optionee pursuant to the exercise of an
ISO is made by the optionee within two years after the date the option was
granted or within one year after the shares were transferred to the optionee,
then (a) upon sale of such shares, any amount realized in excess of the exercise
price (the amount paid for the shares) will be taxed to the optionee as
long-term capital gain and any loss sustained will be a long-term capital loss
and (b) no deduction will be allowed to the Company for federal income tax
purposes. The tax basis of the stock for alternative minimum tax purposes shall
be the fair market value of the stock on the date of exercise of the option, and
the optionee may be entitled to a credit if its alternative minimum tax is less
than its regular tax in the year of sale.
(25)
If shares of Common Stock acquired upon the exercise of an ISO are disposed of
prior to the expiration of the two year and one year holding periods described
above (a "Disqualifying Disposition") generally (a) the optionee will realize
ordinary income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares at exercise (or, if less, the amount
realized upon the sale of such shares) over the option price thereof, and (b)
the Company will be entitled to deduct such amount. Any further gain realized
will be taxed as short-term or long-term capital gain and will not result in any
deduction by the Company. A Disqualifying Disposition in the same year as
exercise will eliminate the alternative minimum tax adjustment associated with
the exercise of the Incentive Stock Option.
PLAN BENEFITS
The benefits or amounts that will be received by or allocated to any
participants are not now determinable.
VOTE REQUIRED
The approval of the amendment to the Employee Stock Option Plan requires the
affirmative vote of a majority of the shares of Common Stock of the Company
voting in person or by proxy on the amendment. If the amendment is not approved
by shareholders, it will not become effective.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
EMPLOYEE STOCK OPTION PLAN.
PROPOSAL 3:
RATIFICATION OF THE APPOINTMENT OF UHY LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009
UHY LLP has served as our independent registered public accounting firm since
September 18, 2008, when the Audit Committee of the Company's Board of Directors
approved their engagement to audit the Company's financial statements for the
fiscal year ending December 31, 2008. The Audit Committee of the Board of
Directors has appointed UHY LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2009.
Representatives of UHY LLP will be present at the Annual Meeting and will have
the opportunity to make a statement if they desire to do so. They will also be
available to respond to appropriate questions.
The Audit Committee is not aware of any disagreements between management and our
current auditors, UHY LLP, regarding accounting principles and their application
or otherwise.
(26)
CHANGE IN AUDITORS
On September 15, 2008, Acme United Corporation (the "Company"), based on its
Audit Committee's recommendation and approval, dismissed Ernst & Young LLP
("E&Y") as the Company's independent registered public accountants. The Audit
Committee took this action after consultation with management to enable the
Company to obtain audit and related services at a lower annual cost.
E&Y's reports on the Company's financial statements for the years ended December
31, 2007 and 2006 did not contain an adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles.
During the years ended December 31, 2007 and 2006 and through the date of
dismissal of E&Y, there were no disagreements with E&Y on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to E&Y's satisfaction, would have
caused them to make reference to the subject matter in connection with their
report on the Company's consolidated financial statements for such years; and
there were no reportable events, as listed in Item 304(a)(1)(v) of Regulation
S-K.
On September 18, 2008, the Audit Committee of the Company's Board of Directors
approved the engagement of UHY LLP as its independent registered public
accounting firm to audit the Company's financial statements for the fiscal year
ending December 31, 2008.
During the years ended December 31, 2007 and 2006 and through the date of the
Audit Committee's decision, the Company did not consult UHY LLP with respect to
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, or any other matter or
reportable events listed in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Through and as of March 24, 2009, UHY LLP and UHY Advisors, Inc. (Advisors), as
separate legal entities, collectively provide attest, accounting, tax and
business consulting services through an alternative practice structure which is
necessitated by most State statues that prohibit corporate ownership of firms
that provide attest services. UHY LLP is a licensed CPA firm and provides attest
services only, whereas Advisors provides the other services. UHY LLP leases
auditing staff who are full time, permanent employees of Advisors. UHY LLP has
only a few full time employees; however, the Partners of UHY LLP are also
Managing Directors of Advisors. While few of the audit services performed were
provided by permanent, full time employees of UHY LLP, for the most part, the
leased staff are CPA qualified and satisfy the continuing education and other
professional requirements. UHY LLP trains, manages and supervises the audit
services and audit staff, and is exclusively responsible for the opinion
rendered in connection with its examination. During 2008, Advisors provided
certain permitted tax and business consulting services as described below.
(27)
AUDIT COMMITTEE PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES
The Audit Committee pre-approves all audit and permissible non-audit services
provided by the independent auditors. These services may include audit services,
audit-related services, tax services and other services. The Audit Committee has
adopted policies and procedures for the pre-approval of services provided by the
independent auditors. The policies and procedures provide that management and
the independent auditors jointly submit to the Audit Committee a schedule of
audit and non-audit services for approval as part of the annual plan for each
year. In addition, the policies and procedures provide that the Audit Committee
may also pre-approve particular services not in the annual plan on a
case-by-case basis. For each proposed service, management must provide a
detailed description of the service and the projected fees and costs (or a range
of such fees and costs) for the service.
FEES TO AUDITORS
Set forth below is a description of the fees for professional audit services
rendered by Ernst & Young LLP and UHY LLP and affiliates for the audit of our
annual financial statements and review of our interim financial statements for
2008 and 2007, and fees for other services rendered by Ernst & Young LLP, UHY
LLP, and UHY Advisors, Inc. for 2008 and E&Y for 2007.
Fee Category
------------ Fiscal 2008 Fees Fiscal 2007 Fees
----------------- -----------------
Audit Fees $193,000 $231,000
Audit Related Fees 14,000 17,000
Tax Fees 110,000 87,000
Other Fees 6,000
----------------- -----------------
Total Fees $323,000 $334,000
================= =================
Audit Fees. 2008 audit fees include $43,000 paid to E&Y for services provided
prior to the appointment of UHY LLP.
Audit Related Fees. These fees were for audit of the Company's post retirement
defined pension plan in 2008 (UHY LLP) and assistance related to various
financial reporting matters (E&Y).
Tax Fees. Tax services included tax compliance, tax advice, and tax planning
provided by UHY Advisors, Inc in 2008 ($59,000) and 2007($58,000) and E&Y in
2008 ($51,000) and 2007 ($29,000).
Other Fees. General business consulting provided by UHY Advisors, Inc.
The Audit Committee has determined that the provision of non-audit services
described above is compatible with maintaining UHY LLP's independence.
(28)
VOTE REQUIRED
The ratification of the appointment by our Audit Committee of UHY LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2009 requires the affirmative vote of a majority of the shares of
Common Stock of the Company voting in person or by proxy on such ratification.
Although shareholder approval of the appointment is not required by law and is
not binding on the Audit Committee, the Committee will take the appointment
under advisement if such appointment is not approved by the affirmative vote of
a majority of the votes cast at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.
(29)
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE 2010 ANNUAL MEETING
If you intend to present a proposal at our 2010 Annual Meeting, you must submit
it to us by no later than November 28, 2009, to receive consideration for
inclusion in our 2010 proxy materials. If you intend to present a proposal at
our 2010 Annual Meeting that is not to be included in our 2010 proxy materials,
you should send the proposal to us in writing by February 13, 2010. Any such
proposal should be sent to the Secretary of the Company at 60 Round Hill Road,
Fairfield, Connecticut, 06824.
OTHER BUSINESS
Management does not know of any matters to be presented, other than those
described herein, at the Annual Meeting. If any other business should come
before the meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies in accordance with their best
judgment.
By Order of the Board of Directors,
Paul G. Driscoll, Vice President and
Chief Financial Officer, Secretary
and Treasurer
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
March 24, 2009
(30)
PROXY
ACME UNITED CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ACME UNITED CORPORATION FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 20, 2009
The undersigned hereby appoints Walter C. Johnsen and Susan H. Murphy,
and each of them, with full powers of substitution, to act as attorneys and
proxies of the undersigned, to vote all shares of the Common Stock of ACME
UNITED CORPORATION, held of record by the undersigned on March 4, 2009 at the
Annual Meeting of Shareholders, to be held at the Cornell Club, 6 East 44th
Street, New York, New York on Monday, April 20, 2009, at 11:00 a.m. and at any
adjournment(s) or postponement(s) thereof, with all the powers the undersigned
would have if personally present. Without limiting the general authorization
hereby given, said proxies are, and each of them hereby is, instructed to vote
or act as follows on the reverse side hereof on the proposals set forth in said
Proxy Statement. In their discretion, the proxies are authorized to vote upon
such other matters, if any, as may properly come before the Annual Meeting.
SEE REVERSE CONTINUED AND TO BE COMPLETED, SIGNED AND SEE REVERSE
SIDE DATED ON REVERSE SIDE SIDE
================================================================================
ANNUAL MEETING OF SHAREHOLDERS OF
ACME UNITED CORPORATION
April 20, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
--------------------------------------------------
The Notice of Meeting, proxy statement and proxy card
are available at www.acmeunited.proxy.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
-- Please detach along perforated line and mail in the envelope provided. --
--------------------------------------------------------------------------------
THIS PROXY WHEN EXECUTED WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL SIX NOMINEES LISTED
BELOW AND FOR PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
1. Election of Directors:
Nominees:
[ ] FOR ALL NOMINEES [ ] Walter C. Johnsen
[ ] Richmond Y. Holden, Jr.
[ ] WITHHOLD AUTHORITY [ ] Brian S. Olschan
FOR ALL NOMINEES [ ] Stevenson E. Ward III
[ ] Susan H. Murphy
[ ] FOR ALL EXCEPT [ ] Rex L. Davidson
(See instructions below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark
------------ "FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: [X]
--------------------------------------------------------------------------------
2. Approval of the Amendment to the Employee FOR AGAINST ABSTAIN
Stock Option Plan [ ] [ ] [ ]
3. Ratification of the appointment of our FOR AGAINST ABSTAIN
independent registered public accounting [ ] [ ] [ ]
firm for the fiscal year ending
December 31, 2009
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned acknowledges receipt of the Company's Notice of Annual Meeting
of Shareholders, a Proxy Statement dated March 24, 2009 and the 2008 Annual
Report to Stockholders.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
--------------------------------------------------------------------------------
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that [ ]
changes to the registered name(s) on the account may not be submitted via
this method.
--------------------------------------------------------------------------------
Signature: Date:
-------------------------------------- --------------------------
Signature: Date:
-------------------------------------- --------------------------
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.