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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
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Dear Fellow Stockholder:
Over the course of the last year we have continued efforts to re-establish A.M. Castle & Co. as a leading metals distributor and supply chain service provider. With the completion of
an operational transformation, a realignment of our executive structure and, most recently, a significant recapitalization with the overwhelming support of our key stakeholders, we are now positioned for significant and profitable
growth in the years ahead.
Our key goals for the future continue to include improving the profitability of our core operations and efficiently deploying our working capital, while simultaneously executing long-term
growth initiatives that advance our overall objective to build shareholder value. We have always and will continue to partner with our customers and suppliers to provide best-in-class supply chain management.
Our Company’s mission, vision, and values, namely Integrity & Safety, Ownership, Service, Quality, and Inclusion, articulate the culture we want to create and form the backbone of our
goals and objectives moving forward. In the unique and challenging circumstances the coronavirus pandemic has created, that foundation is more important than ever and will give us the competitive edge to quickly and strongly recover
from the pandemic headwinds now confronting us. While the safety of our employees and their families has been and will continue to be our highest priority, we are mindful of the duty we hold to our customers and our communities as
well. Many of our customers support the critical businesses we are all so indebted to right now—power generation, medical and hospital industries, infrastructure and utilities, aerospace and defense, semiconductor, and many others.
Our geographic and market diversity make us an indispensable part of the global supply chain for our customers and the public they serve, and I am extremely proud of each and every one of our team members for their tremendous dedication
and efforts during this time.
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Marec E. Edgar
President & CEO
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Sincerely,
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Marec E. Edgar
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President & Chief Executive Officer
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Date and Time and Location
June 30, 2020, 10:00 a.m. C.D.T
Virtual meeting via webcast at
ww.virtualshareholdermeeting.com/CTAM2020
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1. |
Election of director nominees;
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2. |
Non-binding advisory vote to approve the Company’s executive compensation;
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3. |
Ratification of the appointment of the Company’s independent registered public accounting firm;
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4. |
Approval of a charter amendment to increase the authorized shares of the Company’s Common Stock; and
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5. |
Any other business that may properly come before the Annual Meeting.
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Your Vote is Important
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As of the close of business on May 8, 2020, the record date established for determining the stockholders entitled to notice of and to vote at the Annual Meeting, there were 73,910,334 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.
For more information on the Annual Meeting and voting, see the “Additional Information on Annual Meeting and Voting” section beginning on page 36.
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Vote on the internet
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Vote online at www.proxyvote.com by 11:59 P.M. ET on June 29, 2020
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Vote by telephone
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Call (800) 690-6903 and vote 24 hours a day, seven days a week by 11:59 P.M. E.T on June 29, 2020
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Vote by mail
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Mark, sign, date and return the enclosed proxy card to the address listed on the proxy card by June 16, 2020
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Vote live during the webcast
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Vote live during the webcast at the Annual Meeting. If you plan to attend the live webcast, refer to the “Additional Information About Annual Meeting and Voting” section on page 36 for important details
on admission and access requirements.
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• |
Business experience;
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• |
Integrity;
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• |
Absence of conflict or potential conflict of interest;
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Ability to make independent analytical inquiries;
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Understanding of the Company’s business environment; and
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Willingness to devote adequate time to Board duties.
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Wealth of leadership experience;
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Demonstrated business acumen and 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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Jeffrey A. Brodsky
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Age: 61
Director since 2017
Independent
Audit (Chair) and Governance Committees
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Background:
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Mr. Brodsky is a co-founder and Managing Director of Quest Turnaround Advisors, LLC where he provides advisory and interim management services to boards of directors, senior management and creditors of
companies. He also serves as a director of Her Justice (2010 – Present), a non‑profit organization that provides free legal assistance to women living in poverty in New York City. Mr. Brodsky also oversaw Quest's activities as liquidating
trust manager of the ResCap Liquidating Trust (2013 – 2015), a Liquidating Trust formed in connection with Residential Capital, LLC’s Plan of Reorganization under Chapter 11 of the United States Bankruptcy Code, where he led all activities
relating to ResCap's emergence and management of its operations, including the distribution of over $2.2 billion to beneficiaries. Previously, Mr. Brodsky has served in roles as a lead director, a non-executive chairman, or a director of
various entities.
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Current Public Company Directorships:
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None
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Other Public Company Directorships during Past Five Years:
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Broadview Networks, Inc. (2012-2017) (publicly registered debt)
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Skills and Qualifications:
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Mr. Brodsky’s individual qualifications and skills as a director include his extensive experience in financing, mergers, acquisitions, investments, strategic transactions, and turnaround/performance management.
Mr. Brodsky holds a Bachelor of Science degree from New York University College of Business and Public Administration and a Master of Business Administration degree from New York University Graduate School of Business. He is also a Certified
Public Accountant.
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Marec E. Edgar
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Age: 44
Director since 2020
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Background:
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Mr. Edgar is the Chief Executive Officer (January 1, 2020 - Present) of the Company and President (since November, 2018). Mr. Edgar was previously Executive Vice President, General Counsel, Secretary &
Chief Administrative Officer of the Company (2015-2018). Prior to joining the Company, he held positions of increasing responsibility with Gardner Denver, Inc. (2004-2014) including serving as Assistant General Counsel, Risk Manager &
Chief Compliance Officer.
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Current Public Company Directorships:
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None
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Other Public Company Directorships during Past Five Years:
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None
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Skills and Qualifications:
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Mr. Edgar’s individual qualifications and skills as a director include his extensive experience serving as an executive of two multinational industrial companies, his significant legal expertise (including
experience advising Boards of Directors at two different multi-national public companies), and his significant experience in legal strategic transactions. He was also one of the primary leaders in the Company’s recent operational turnaround
and financial restructuring.
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Jonathan B. Mellin
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Age: 56
Director since 2014
Independent
Governance (Chair) and Audit Committees
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Background:
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Mr. Mellin is President and Chief Executive Officer of Simpson Estates, Inc., a Single Family Office, since 2013. Mr. Mellin became President of Simpson Estates, Inc. in 2012, prior to being appointed President
and Chief Executive Officer in 2013.
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Current Public Company Directorships:
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Angelo Gordon Energy Fund II (2017 – Present) (registered investment company)
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Other Public Company Directorships during Past Five Years:
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None
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Skills and Qualifications:
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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 also serves as a Director on several privately held companies.
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Jacob Mercer
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Age: 45
Director since 2017
Independent
Governance and Human Resources Committees
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Background:
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Mr. Mercer is Head of Special Situations and Restructuring for Whitebox Advisors LLC (2007 – Present), an employee-owned hedge fund sponsor. He also serves as a director of Nalpropion Pharmaceuticals (2018 –
Present), a private American pharmaceutical company, Malamute Energy, Inc. (2016 – Present), a controlling interest in the Umiat Project, director and Manager of Jerritt Canyon LLC (2015 – Present), a private mid-tier gold producer.
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Current Public Company Directorships:
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Hycroft Mining Corporation (2015 - Present) (OTCMKTS: HYCT)
SAExploration Holdings Inc. (2016-present) (NASDAQ: SAEX)
Adanac Molybdenum Corporation (2015-present) (formerly TSX Venture: AUA)
White Forest Resources, formerly Xinergy Ltd. (2016-present) (formerly TSX: XRG)
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Other Public Company Directorships during Past Five Years:
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Platinum Energy Solutions (2013-2017) (formerly NYSE: FRAC)
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Skills and Qualifications:
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Mr. Mercer’s individual qualifications and skills as a director include his extensive investment and financial expertise, particularly in public and private debt restructuring, as well as significant turnaround
and performance improvement experience. He has served on a number of public and private company boards and holds a Bachelor of Arts degree in Finance and Economics from St. John's University. Mr. Mercer is also a Chartered Financial Analyst.
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Steven W. Scheinkman
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Age: 66
Director since 2015
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Background:
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Mr. Scheinkman was the Chief Executive Officer (2018 – 2020) of the Company and Chairperson of the Board (2017 – 2020). Mr. Scheinkman was previously the President and Chief Executive Officer (2015 – 2018) of
the Company. In addition, Mr. Scheinkman previously served as President, Chief Executive Officer and director of Innovative Building Systems LLC (2010 – 2015), a leading custom modular home producer; as President, Chief Executive Officer, and
director of Transtar Metals Corp. (1999-2006), a supply chain manager/distributor of high alloy metal products for the transportation, aerospace and defense industries; and following Transtar’s acquisition by the Company in September 2006, as
President of Transtar Metals Holdings Inc. until September 2007 and thereafter served as its advisor until December 2007. Furthermore, he previously served as a director of Claymont Steel Holdings, Inc. (2006 – 2008), a private manufacturer
of custom discrete steel plate.
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Current Public Company Directorships:
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None
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Other Public Company Directorships during Past Five Years:
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None
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Skills and Qualifications:
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Mr. Scheinkman’s individual qualifications and skills as a director include his extensive experience serving as an executive of various metal products companies, his significant financial expertise, and his
significant experience in strategic transactions. He also successfully led the Company’s recent operational turnaround and financial restructuring.
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Jonathan Segal
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Age: 38
Director since 2017
Lead Independent Director
Human Resources (Chair) and Audit Committees
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Background:
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Mr. Segal is managing director and portfolio manager of Highbridge Capital Management, LLC (2007 – Present), a leading global alternative investment firm. Before joining Highbridge, Mr. Segal previously worked
as a Research Analyst at Sanford C. Bernstein & Co., LLC (2005 – 2007), an indirect wholly-owned subsidiary of AllianceBernstein L.P.
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Current Public Company Directorships:
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Hycroft Mining Corporation (2015 - Present) (OTCMKTS: HYCT)
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Other Public Company Directorships during Past Five Years:
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Contura Energy (2016-2018) (OTCMKTS: CNTE)
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Skills and Qualifications:
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Mr. Segal’s individual qualifications and skills as a director include his extensive capital markets, investment, and financial expertise; his significant experience in public and private debt restructuring;
and his turnaround and performance improvement experience. He has served on a number of public and private company boards and received a Bachelor of Arts degree in Urban Studies from the University of Pennsylvania.
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Michael J. Sheehan
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Age: 59
Director since 2017
Independent
Board Chairperson
Human Resources Committee
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Background:
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Mr. Sheehan is the Managing Member of Whitecap Performance LLC (2013 – Present), a marketing consultancy, Whitecap Aviation (2013 – Present), an aircraft charter operation, and Managing Partner of Allied Sports
a division of Allied Global Marketing (2018 – Present). Mr. Sheehan is a Partner of Vermont Donut Enterprises (2013 – Present), a privately-held holding company with related interests in various food purveying businesses. He also serves on
the Board of South Shore Bank (2012 – Present), a full service mutual savings bank in Massachusetts. Mr. Sheehan is the former Chief Executive Officer of Boston Globe Media Partners (2014 – 2017), a leading media company. He previously served
as Chairman, Chief Executive Officer, President, and Chief Creative Officer of Hill Holliday (2000 – 2014), a full-service marketing and communications agency; and as Executive Vice President and Executive Creative Director for DDB Chicago
(1999 – 2000), a full-service advertising agency. He also serves on the Boards of Harvard University’s American Repertory Theater (2011 – Present), a professional not-for-profit theater; Catholic Charities of the Archdiocese of Boston (2006 –
Present), part of the Catholic Charities network; and Newport Festivals (2017 – Present), a music festival foundation.
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Current Public Company Directorships:
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None
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Other Public Company Directorships during Past Five Years:
|
None
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Skills and Qualifications:
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|
Mr. Sheehan’s individual qualifications and skills as a director include his extensive experience in managing large public and private companies and in sales and marketing leadership. He attended the United
States Naval Academy and graduated from Saint Anselm College in 1982 with a Bachelor of Arts degree in English. Mr. Sheehan previously served as a director of the Company from July 27, 2016 to August 31, 2017.
|
NO PHOTO
AVAILABLE
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Parker Tornell
|
Age: 32
Nominee
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Background:
|
|
Mr. Tornell is a Credit Analyst at Whitebox Advisors LLC (2015 – Present), an employee-owned hedge fund sponsor. Before joining Whitebox, Mr. Tornell worked as an Associate at Norwest Mezzanine Partners
(2012-2015), and as an Investment Banking Analyst at Piper Sandler (2010-2012).
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Current Public Company Directorships:
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None
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Other Public Company Directorships during Past Five Years:
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None
|
Skills and Qualifications:
|
|
Mr. Tornell’s individual qualifications and skills as a director include his capital markets, investment, and financial expertise; his experience in public and private debt restructuring; and his turnaround and
performance improvement experience. He received Bachelor of Arts degrees in Financial Management and Economics from the University of St. Thomas.
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✔ Our Board recommends that you vote FOR the proposed director nominees.
|
• |
Provides strategic leadership and guidance;
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• |
Establishes the agendas for Board meetings, with advice from executive and senior management teams;
|
• |
Advises and consults with the executive and senior management teams regarding strategies, risks, opportunities, and other matters; and
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• |
Presides over meetings of the full Board.
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Audit Committee
|
The Company’s Audit Committee reviews the Company’s audited financial statements with management; reviews the qualifications, performance and independence of the Company’s independent registered public
accountants; approves audit fees and fees for the preparation of the Company’s tax returns; reviews the Company’s accounting policies and internal control procedures; and considers and appoints the Company’s independent registered public
accountants. The Audit Committee has the authority to engage the services of independent outside experts and advisors as it deems necessary or appropriate to carry out its duties and responsibilities.
|
The Audit Committee oversees the annual risk management assessments, monitors reports received on the Company’s incident reporting hotline, oversees the Company’s compliance program, including an annual review of the Company’s Code of
Conduct, and prepares the “Report of the Audit Committee” for its stockholders on page 31.
The membership of the Audit Committee as of May 8, 2020 includes:
• Jeffrey Brodsky, Chair and Committee Member since October 2017
• Jonathan Mellin, Committee Member since October 2017
• Jonathan Segal, Committee Member since October 2017
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Governance Committee
|
The Company’s Governance Committee oversees all corporate governance matters, including acting as an independent committee evaluating transactions between the Company and directors and officers of the Company;
reviewing governance policies and practices; reviewing governance-related legal and regulatory matters that could impact the Company; reviewing and making recommendations on the overall size and composition of the Board and its committees;
overseeing Board recruitment, including identification of potential director candidates, evaluating candidates, and recommending nominees for membership to the full Board; and leading the annual self-evaluation of the Board and its
committees. The Governance Committee has the authority to engage the services of outside consultants and advisors as it deems necessary or appropriate to carry out its duties and responsibilities.
The membership of the Governance Committee as of May 8, 2020 includes:
• Jonathan Mellin, Chair and Committee Member since July 2016
• Jeffrey Brodsky, Committee Member since October 2017
• Jacob Mercer, Committee Member since October 2017
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Human Resources
Committee
|
The Company’s Human Resources Committee assists the Board in the discharge of its responsibilities with respect to employee and non-employee director compensation, including the
adoption, periodic review and oversight of the Company’s compensation strategy, policies and plans. The Human Resources Committee approves and administers the incentive compensation and equity-based plans of the Company. The Human Resources
Committee has the authority to engage the services of independent outside experts and advisors as it deems necessary or appropriate to carry out its duties and responsibilities.
The membership of the Human Resources Committee as of May 8, 2020 includes:
• Jonathan Segal, Chair and Committee Member since October 2017
• Jacob Mercer, Committee Member since October 2017
• Michael Sheehan, Committee Member since October 2017
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Role
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Annual Retainers*
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Director
|
$60,000
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Non-Employee Board Chairperson
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$40,000
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Audit Committee Chairperson
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$10,000
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Governance Committee Chairperson
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$5,000
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Human Resources Committee Chairperson
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$7,500
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*Retainers are paid in quarterly installments.
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Name
|
Fees Earned or
Paid in Cash
($)
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Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
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Total
($)
|
||||||
Jeffrey A. Brodsky(1)
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70,000
|
-
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-
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-
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–
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–
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70,000
|
||||||
Jonathan Mellin(2)
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62,500
|
-
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-
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-
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–
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–
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62,500
|
||||||
Jacob Mercer(3)
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60,000
|
–
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–
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–
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–
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–
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60,000
|
||||||
Jonathan Segal(4)
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67,500
|
–
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–
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–
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–
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–
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67,500
|
||||||
Michael Sheehan
|
60,000
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-
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-
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-
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–
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–
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60,000
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(1) |
Mr. Brodsky elected to have his cash compensation paid to Jeffrey Brodsky & Associates, of which he is Managing Director.
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(2)
|
Mr. Mellin waived his retainer as Governance Committee Chairperson in the fourth quarter of 2019.
|
(3) |
Mr. Mercer elected to have his cash compensation paid to various funds related to Whitebox Advisors LLC.
|
(4) |
Mr. Segal elected to have his cash compensation paid to Highbridge Capital Management, LLC.
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Board of Directors
|
|||||||
Audit Committee
|
Governance Committee
|
Human Resources Committee
|
|||||
Oversees risk related to the Company’s financial statements, financial reporting process and accounting and legal matters; internal audit function; the Company’s compliance program and the
Company’s cyber security action plan.; Also reviews 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
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Oversees governance-related risk, including development of the Company’s policies and practices, and Board succession planning
|
Oversees risks associated with the Company’s compensation programs; reviews and approves compensation features that mitigate risk and align pay to performance with the interests of its
executives and its stockholders; and oversees the Company’s succession-planning process for key executive and managerial roles
|
• |
Directors;
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• |
Director nominees;
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• |
Executive officers;
|
• |
5% stockholders;
|
• |
Immediate family members of the above persons; and
|
• |
Entities in which the above persons have a direct or indirect material interest.
|
• |
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 of entering into the proposed transaction;
|
• |
the impact on a director’s independence, in the event such person is an outside director; and
|
• |
whether the proposed transaction would present an improper conflict of interest.
|
Beneficial Owner
|
Shares of Common Stock
Beneficially Owned
|
Percentage of
Common Stock(1)
|
Directors and Director Nominees
|
||
Jeffrey A. Brodsky
|
22,910
|
*
|
Jonathan Mellin
|
24,806
|
*(2)
|
Jacob Mercer
|
0
|
0.0%
|
Steven Scheinkman(3)
|
971,976
|
1.3%(4)
|
Jonathan Segal
|
0
|
*
|
Michael Sheehan
|
24,576
|
*
|
Parker Tornell
|
0
|
0.0%
|
Management
|
||
Marec Edgar, Director, President & Chief Executive Officer(3)
|
513,864
|
* (5)
|
Patrick Anderson, Executive Vice President, Finance & Administration
|
513,938
|
* (5)
|
All directors, director nominees
and executive officers as a group
(9 persons)
|
2,072,070
|
2.8%(6)
|
*
|
Percentage of shares owned equals less than 1%.
|
(1) |
Based on 73,910,334 shares of common stock issued and outstanding as of May 8, 2020.
|
(2) |
Represents 24,806 shares held by Mr. Mellin individually. Excludes 10,950,420 shares Mr. Mellin may be deemed to beneficially own in his capacity as trustee, officer or general
partner of certain trusts and other entities established for the benefit of members of the Simpson Estate / SGF. See Note (4) under the “Principal Stockholders” table below. Also excludes 32,130,135 shares of common stock, which may be
acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain shares is therefore subject to a material contingency beyond his
control.
|
(3) |
Mr. Scheinkman served as Chief Executive Officer and Chairperson of the Board until his retirement effective as of January 1, 2020, at which time Mr. Edgar was appointed President & Chief Executive Officer.
Following his retirement as Chief Executive Officer, Mr. Scheinkman remained a director of the Company.
|
(4) |
Excludes 1,083,851 shares of common stock that may be acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to
obtain shares is therefore subject to a material contingency beyond his control.
|
(5) |
Excludes 572,890 shares of common stock that may be acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to
obtain shares is therefore subject to a material contingency beyond his control.
|
(6) |
Excludes 2,229,630 shares of common stock that may be acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and each beneficial owner’s right to
obtain shares is therefore subject to a material contingency beyond such beneficial owner’s control.
|
Name and Address of Beneficial Owner
|
Shares of Common
Stock Beneficially
Owned
|
Percentage of
Outstanding
Common Stock (1)
|
||
Highbridge Capital Management, LLC/
Highbridge MSF International Ltd./
Highbridge Tactical Credit Master Fund, L.P.
277 Park Avenue, 23rd Floor
New York, New York 10172
|
23,028,848(2)(7)
|
31.2%
|
||
Whitebox Advisors LLC/Whitebox General Partner LLC/
Whitebox Multi-Strategy Partners, L.P./
Whitebox Asymmetric Partners, LLC/Whitebox Caja Blanca, LP/
Whitebox Credit Partners, L.P./Whitebox GT Fund, LP/
Pandora Select Partners, L.P./Whitebox Institutional Partners, L.P.
3033 Excelsior Boulevard, Suite 500
Minneapolis, Minnesota 55416
|
21,346,747(3)(7)
|
28.9%
|
||
SGF, LLC/W.B. & Co/FOM Corporation/
Jonathan B. Mellin/Reuben S. Donnelley
The Northern Trust Company
30 North LaSalle Street, Suite 1232
Chicago, Illinois 60602-2504
|
11,161,436(4)(7)
|
15.1%
|
||
Corre Opportunities Qualified Master Fund, LP/
Corre Partners Advisors, LLC/Corre Partners Management, LLC/
John Barrett/Eric Soderlund
12 East 49th Street, 40th Floor
New York, New York 10017
|
10,702,564(5)(7)
|
14.5%
|
||
Wolverine Asset Management, LLC/Wolverine Holdings, L.P./
Wolverine Trading Partners, Inc./
Wolverine Flagship Fund Trade Limited/
Christopher L. Gust/Robert R. Bellick
175 W. Jackson, Suite 340
Chicago, IL 60064
|
3,757,145(6)(7)
|
5.1%
|
(1) |
Based on 73,910,334 shares of common stock issued and outstanding as of May 8, 2020.
|
(2) |
Based on information provided by Highbridge Capital Management, LLC (“HCM”) on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) HCM, the trading manager of Highbridge MSF International Ltd. (formerly
known as 1992 MSF International Ltd.) and 1992 Tactical Credit Master Fund, L.P. (together, the “1992 Funds”), may be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 23,028,848 shares held by
the 1992 Funds; and (ii) Highbridge MSF International Ltd. may be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 18,715,636 of the shares beneficially owned by the 1992 Funds.
|
(3) |
Based on information provided by Whitebox Advisors LLC (“Whitebox Advisors”) on Schedule 13-D/A filed with the SEC on April 1, 2020, (i) Whitebox Advisors, as the investment manager of the Private Funds (as defined below), may be
deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 21,346,747 shares held by the Private Funds; (ii) Whitebox General Partner LLC (“Whitebox GP”), as the general partner of the Private Funds,
may be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, 20,610,221 of the shares held by the Private Funds; (iii) Whitebox Multi-Strategy Partners, L.P. (“WMP”) may be deemed the beneficial
owner of, and has shared voting and dispositive power with respect to, the 10,613,180 shares held by WMP; and (iv) Whitebox Asymmetric Partners, LP (“WAP”) may be deemed the beneficial owner of, and has shared voting and dispositive power
with respect to, the 5,859,882 shares held by WAP. Shares are directly owned by WMP, WAP, Pandora Select Partners, L.P., Whitebox Credit Partners, L.P., Whitebox GT Fund, LP, Whitebox Institutional Partners, L.P., Whitebox Multi-Strategy
Partners, L.P. and Whitebox Caja Blanca Fund, L.P. (together, the “Private Funds”).
|
(4) |
Based on information provided by SGF, LLC (“SGF”) on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) SGF may be deemed the beneficial owner of, and has sole voting and dispositive power with respect to,
the 11,022,296 shares held by SGF; (ii) W.B. & Co. may be deemed the beneficial owner of, and has shared voting power (and no dispositive power) with respect to, 107,888 of the shares held by the Simpson Estate Members (as defined
below); (iii) Mr. Mellin, acting in various capacities with respect to, and deputized by, certain of the Simpson Estate Members, may be deemed the beneficial owner of 10,975,226 of the shares held by the Simpson Estate Members, of which he
holds sole voting power with respect to 10,840,584 shares, shared voting power with respect to 118,554 shares, sole dispositive power with respect to 40,933 shares and shared dispositive power with respect to 10,826,443 shares; and (iv) Mr.
Donnelly, as a general partner in certain Simpson Estate Members, may be deemed the beneficial owner of 108,443 of the shares held by the Simpson Estate Members, of which he holds sole voting and dispositive power with respect to 412
shares, shared voting power with respect to 107,931 shares, and shared dispositive power with respect to 181 shares (he disclaims beneficial ownership of the 181 shares held by an immediate family member who shares Mr. Donnelley’s
household); and (v) FOM Corporation may be deemed the beneficial owner of 122,730 of the shares held by the Simpson Estate Members, of which he holds sole voting power with respect to 23,516 shares, shared voting and dispositive power with
respect to 7,052 shares and shared dispositive power with respect to 115,678 shares. Shares are held by SGF and other entities on behalf of certain members of an extended family group and various trusts, estates and estate planning vehicles
established by certain deceased and surviving family members (together, the “Simpson Estate Members”).
|
(5) |
Based on information provided by Corre Partners Management, LLC (the “Corre Investment Advisor”) on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) Corre Opportunities Qualified Master Fund, LP
(“Qualified Master Fund”), (ii) Corre Partners Advisors, LLC (the “Corre GP”) as the general partner of Qualified Master Fund, (iii) Corre Investment Advisor with delegated investment authority over fund assets, (iv) Mr. Barrett as a
managing member of Corre GP, and (v) Mr. Soderlund as a managing member of Corre GP, may each be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 10,702,564 shares held by Qualified Master
Fund.
|
(6) |
Based on information provided by Wolverine Asset Management, LLC (“WAM”) on Schedule 13-D/A filed with the SEC on March 31, 2020, (i) Wolverine Flagship Fund Trade Limited (“Flagship”), (ii) WAM as the investment
manager of Flagship, (iii) Wolverine Holdings, L.P. (“WH”) as the sole member and manager of WAM, (iv) Wolverine Trading Partners, Inc. (“WTP”) as the sole general partner of WH, (v) Mr. Gust as a controlling shareholder of WTP, and (vi)
Mr. Bellick as a controlling shareholder of WTP, may each be deemed the beneficial owner of, and has shared voting and dispositive power with respect to, the 3,757,145 shares held by Flagship.
|
(7) |
Excludes shares of common stock which may be acquired upon conversion of the New Notes, because the mode of payment is determined in the sole discretion of the Company and the beneficial owner’s right to obtain
shares is therefore subject to a material contingency beyond its control. Because of the relationship between the beneficial owner and the other stockholders of the Company party to the Stockholders Agreement, the beneficial owner may be
deemed, pursuant to Rule 13d-3 under the Securities Act, to beneficially own a total of 72,340,487 shares of common stock, which represents the aggregate number of shares of common stock beneficially owned by the parties to the Stockholders
Agreement.
|
✔ Our Board unanimously recommends that you vote FOR Proposal No. 2, the
advisory vote to approve executive compensation.
|
• |
Reviews the Company's executive compensation program designs and levels, including the mix of total compensation elements, compared to industry peer groups and broader market practices.
|
• |
Provides information on emerging trends and legislative developments in executive compensation and implications for the Company.
|
• |
Reviews the Company's executive stock ownership guidelines, compared to industry peer groups and broader market practices.
|
• |
Reviews the Company's director compensation program compared to industry peer groups and broader market practices.
|
Name and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)(1)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)(2)
|
Total
($)
|
|||||||||
Marec Edgar,
President & Chief Executive Officer (3)
|
2019
|
475,000
|
―
|
―
|
―
|
516,701
|
―
|
92,371
|
1,084,072
|
|||||||||
2018
|
431,923
|
―
|
―
|
―
|
377,815
|
―
|
74,969
|
884,707
|
||||||||||
Steven Scheinkman,
Retired Chief Executive
Officer (3)
|
2019
|
650,000
|
―
|
―
|
―
|
225,000
|
―
|
258,128
|
1,133,128
|
|||||||||
2018
|
650,000
|
―
|
―
|
―
|
646,263
|
―
|
238,347
|
1,534,610
|
||||||||||
Patrick Anderson,
EVP, Finance & Administration
|
2019
|
330,000
|
―
|
―
|
―
|
222,757
|
―
|
76,078
|
628,835
|
|||||||||
2018
|
312,000
|
―
|
―
|
―
|
196,861
|
―
|
67,800
|
576,111
|
(1) |
Reflects the cash awards under the Company’s 2019 and 2018 STIP (amounts earned during the applicable fiscal year but paid after the end of that fiscal year) and a one-time discretionary supplemental cash
short-term incentive award related to 2018 and 2019 performance that was paid in 2019.
|
(2) |
The amounts shown are detailed in the supplemental “All Other Compensation Table – Fiscal Year 2019” below.
|
(3) |
Mr. Edgar was appointed President and Chief Executive Officer effective January 1, 2020 upon Mr. Scheinkman’s retirement.
|
Name
|
Note
Award
($)(1)
|
401(k) Plan
Company
Matching
Contributions
($)
|
Deferred Plan
Company
Matching
Contributions
($)
|
Housing
Reimbursement
($)
|
Miscellaneous
($)(2)
|
Total All Other
Compensation
($)
|
|||||||
Marec Edgar
|
35,000
|
11,200
|
29,563
|
―
|
16,608
|
92,371
|
|||||||
Steven Scheinkman
|
66,215
|
9,219
|
54,007
|
116,763
|
11,924
|
258,128
|
|||||||
Patrick Anderson
|
35,000
|
5,007
|
19,463
|
―
|
16,608
|
76,078
|
(1) |
Represents amounts paid in PIK interest pursuant to the terms of the Second Lien Notes during 2019.
|
(2) |
Includes the cost, including insurance, fuel and lease payments, of a Company-provided automobile or vehicle stipend, a cellular telephone allowance, and personal excess liability insurance premiums paid by the
Company.
|
• |
Salaried Pension Plan. The Company maintains 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. As of June 30, 2008, the benefits under the Salaried Pension Plan were frozen. There are no enhanced pension formulas or benefits available to the Named Executive Officers. Of the
current Named Executive Officers, only Mr. Anderson is eligible to receive benefits under the Salaried Pension Plan.
|
• |
401(k) Savings and Retirement Plan. The Company maintains the 401(k) Savings and Retirement Plan (the “401(k) Plan”), a qualified defined contribution plan, for its 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” above for the Company’s contributions to each Named Executive Officer under the 401(k) Plan.
|
• |
Supplemental 401(k) Savings and Retirement Plan. The Company maintains an unfunded, nonqualified, deferred compensation plan, the Supplemental 401(k) Plan (the “Supplemental 401(k) Plan”), for its
executive officers and senior management. The Supplemental 401(k) Plan has investment options that mirror the Company’s 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” above for the Company’s contributions to each participating Named Executive Officer under the Supplemental 401(k)
Plan.
|
• |
Strategic leadership;
|
• |
Driving execution;
|
• |
Cross-functional alignment and collaboration;
|
• |
Decision making;
|
• |
Talent management;
|
• |
Engaging and influencing others; and
|
• |
Business, financial, and other relevant subject matter acumen.
|
Option Awards
|
|||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity Incentive
Plan Awards: # of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise Price
($)
|
Option
Expiration
Date
|
Marec Edgar
|
―
|
―
|
―
|
―
|
―
|
Steven Scheinkman
|
―
|
―
|
―
|
―
|
―
|
Patrick Anderson
|
―
|
―
|
―
|
―
|
―
|
Stock Awards
|
|||||
Name
|
Number of
Shares or Units
of Stock That
Have Not Vested
(#) (1)
|
Market Value of
Shares or Units
of Stock That
Have Not Vested
($) (2)
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#) (3)
|
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($) (4)
|
|
Marec Edgar
|
320,861
|
529,421
|
138,502
|
228,528
|
|
Steven Scheinkman
|
607,035
|
1,001,608
|
262,031
|
432,351
|
|
Patrick Anderson
|
320,861
|
529,421
|
138,502
|
228,528
|
(1) |
Mr. Scheinkman owns 607,035 shares of restricted stock that will vest on August 31, 2020. Messrs. Edgar and Anderson each own 320,861 shares of restricted stock that will vest on August 31, 2020.
|
(2) |
Market value has been computed by multiplying the closing price of the Company’s common stock on December 31, 2019, $ 1.65, by the number of shares of restricted stock.
|
(3) |
Represents shares of the Company’s common stock that may be acquired upon conversion of restricted Second Lien Notes issued pursuant to the MIP as described in the above section entitled, “Grant of 2017 MIP,” and
the amounts paid in PIK interest pursuant to the terms of the Second Lien Notes as of December 31, 2019. The restricted Second Lien Notes owned by Messrs. Scheinkman, Edgar and Anderson will vest on August 31, 2020. The Second Lien Notes
were exchanged for New Notes on March 27, 2020 pursuant to the terms of the Exchange Offer.
|
(4) |
Market value has been computed by multiplying the closing price of the Company’s common stock on December 31, 2019, $1.65, by the number of shares convertible from restricted Second Lien Notes (and accompanying
PIK interest paid pursuant to their terms as of December 31, 2019). The Second Lien Notes were exchanged for New Notes on March 27, 2020 pursuant to the terms of the Exchange Offer.
|
Plan Category
|
(a)
Number of Securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights ($)
|
(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
|
682,754(1)
|
3.77(2)
|
1,886,910
|
||
Equity compensation plans not approved by security holders
|
N/A
|
N/A
|
N/A
|
(1) |
This number represents the gross number of underlying shares of common stock associated with the Second Lien Notes issued under the MIP, and the amounts paid in PIK interest as of December 31, 2019. This does not
include 1,428,308 shares of unvested restricted stock issued under the MIP and outstanding as of December 31, 2019. The Second Lien Notes were exchanged for New Notes on March 27, 2020 pursuant to the terms of the Exchange Offer.
|
(2) |
Based on an initial conversion rate of 0.2654 shares of common stock per $1.00 principal amount of the Company’s the Second Lien Notes. The conversion rate is subject to adjustment from time to time pursuant to
the terms of the indenture governing the Second Lien Notes. Because the conversion price of the Second Lien Notes is subject to downward adjustment, the Second Lien Notes may be convertible, including in connection with a Fundamental Change
(as defined in the indenture governing the Second Lien Notes), into a greater number of shares in the future. In addition, the Company may, in certain circumstances, pay interest on the Second Lien Notes in kind, which would result in
additional Second Lien Notes outstanding and available for conversion.
|
✔ Our Board unanimously recommends that you vote FOR Proposal No. 3, the
ratification of the appointment of Deloitte & Touche LLP as independent auditors.
|
Fee Category
|
2019
|
2018
|
||
Audit Fees
|
821,885
|
$864,497
|
||
Audit-Related Fees
|
3,790
|
47,390
|
||
Tax Fees
|
76,401
|
108,038
|
||
All Other Fees
|
--
|
―
|
||
Total Fees
|
902,076
|
1,019,925
|
• |
The Company’s management team is responsible for the preparation, presentation, and integrity of its consolidated financial statements, accounting and financial reporting principles, internal controls over financial reporting, and
disclosure controls.
|
• |
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 the Company’s compliance program and regularly received status reports on compliance and incident hotline reporting matters.
|
• |
Received regular updates from internal audit regarding the process to assess the adequacy of the Company’s 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 audited financial statements, 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 applicable requirements of the Public Company Accounting Oversight Board and the SEC.
|
Jeffrey Brodsky, Chairman
|
Jonathan Mellin
|
Jonathan Segal
|
✔ Our Board recommends that you vote FOR Proposal No. 4, the Charter Amendment to
increase the authorized shares of Common Stock.
|
ATTEST:
|
A. M. CASTLE & CO.
|
|||||
By:
|
||||||
Name:
|
Jeremy T. Steele
|
Name:
|
Marec E. Edgar
|
|||
Title:
|
Secretary
|
Title:
|
President & Chief Executive Officer
|
A.M. Castle: Our Mission, Vision, and Values
|
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