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.
)
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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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 167; 240.14a-12
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AmpcoPittsburgh Corporation
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 29, 2009
T
O
THE
S
HAREHOLDERS
OF
A
MPCO
-P
ITTSBURGH
C
ORPORATION
Notice is hereby given that the Annual Meeting of the Shareholders of Ampco-Pittsburgh Corporation will be held in The Carnegie Room, 3rd
Floor, The Duquesne Club, 325 Sixth Avenue, Pittsburgh, Pennsylvania, on Wednesday, April 29, 2009 at 10:00 a.m., for the following purposes:
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1.
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To elect a class of three Directors for a term that expires in 2012.
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2.
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To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2009.
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3.
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To transact such other business as may properly come before the meeting and any adjournment thereof.
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Shareholders of record on March 6, 2009 are entitled to notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
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Rose Hoover,
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Vice President Administration
and Secretary
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Pittsburgh, Pennsylvania
March 13, 2009
Important Notice Regarding the Availability of Proxy Materials for
the Annual
Meeting of Stockholders to Be Held on April 29, 2009
The
proxy statement and the annual report of the Corporation are available at http://www.ampcopittsburgh.com.
All shareholders are cordially invited to attend the meeting in person. Your vote is important and, whether or not you expect to attend in person,
it is requested that you PROMPTLY fill in, sign, and return the enclosed proxy card or follow the internet or telephone voting instructions included on the proxy card.
TABLE OF CONTENTS
PROXY
STATEMENT
March 13, 2009
Annual Meeting of Shareholders to be held April 29, 2009
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of proxies to be used at the Annual Meeting of Shareholders of AMPCO-PITTSBURGH CORPORATION (the Corporation) to be held on
April 29, 2009. The first mailing of the proxy material to the shareholders is expected to be made on or about March 13, 2009.
The accompanying proxy is solicited on behalf of the Board of Directors of the Corporation. In addition to the solicitation of proxies by use of the
mails, proxies may be solicited by Directors and employees, in person or by telephone, and brokers and nominees may be requested to send proxy material to and obtain proxies from their principals. The Corporation will pay the costs incurred for
those solicitations of proxies and will pay Mellon Investor Services LLC, 480 Washington Blvd., Jersey City, NJ a fee of $7,500, plus reimbursement of reasonable out-of-pocket expenses, for aid in the solicitation of proxies.
Any shareholder has the power to revoke the proxy at any time prior to the
voting thereof. Revocation of the proxy will not be effective until notice thereof has been given to the Secretary of the Corporation or until a duly executed proxy bearing a later date is presented.
VOTING SECURITIES AND RECORD DATE
Only holders of record of Common Stock of the Corporation at the close of
business on March 6, 2009 will be entitled to vote at the meeting. On that date, there were 10,177,497 shares of Common Stock outstanding. The holders of those shares are entitled to one vote per share. In the election of Directors, the shares
may be voted cumulatively. Cumulative voting means that the number of shares owned by each shareholder may be multiplied by the number of Directors to be elected and that total voted for the nominees in any proportion. Shares that are not voted
cumulatively are voted on a one vote per share basis for each nominee, except for those nominees, if any, for whom the shareholder is withholding authority to vote.
REQUIRED VOTE
Under Pennsylvania law and the Corporations by-laws, the presence of a quorum is required to transact business at the 2009 Annual
Meeting of Shareholders. A quorum is defined as the presence, either in person or by proxy, of a majority of the votes that all shareholders are entitled to cast at the meeting. Abstentions, votes withheld from director nominees, and broker-dealer
non-votes (shares held by a broker or nominee as to which the broker or nominee does not have the authority to vote on a particular matter) will be counted for purposes of determining a quorum, but will have no effect on matters to be voted on.
Assuming the presence of a quorum, the three nominees for director receiving the highest number of votes will be elected directors and the affirmative vote of a majority of the votes cast at the meeting is necessary to approve any other proposal.
ELECTION OF DIRECTORS
(Proposal 1)
A class of three Directors will be elected for a term of three years to fill the class of Directors whose term expires in 2009. All nominees for election
to the Board of Directors are currently Directors. The nominees were
1
recommended by the Nominating and Governance Committee and nominated by the Board of Directors at its February 19, 2009 meeting and are willing to serve as
Directors if elected.
The Board unanimously recommends that you vote FOR the election of each of the nominees listed below.
If at the time of the Annual Meeting a nominee should be unable or unwilling to stand for election, the
proxies will be voted for the election of such person, if any, as may be selected by the Board of Directors to replace him.
Nominees for Directors for a Term of Office Expiring in 2012:
R
OBERT
J. A
PPEL
(age 77, Director since 2004); Mr. Appel has been President of Appel Associates for more than
five years.
P
AUL
A. G
OULD
(age 63, Director
since 2002). Mr. Gould has been managing director of Allen & Co., Inc., an investment banking company, for more than five years. He is also a director of Liberty Media Corporation, Liberty Global, Inc. and Discovery Holding Company.
R
OBERT
A. P
AUL
(age 71, Director since 1970). Mr. Paul has
been Chairman and Chief Executive Officer since March 2004. Prior to March 2004, he was President and Chief Executive Officer of the Corporation for more than five years. He is also the President and a director of The Louis Berkman Investment
Company.
Directors Whose Term of Office Expires in
2011:
W
ILLIAM
K. L
IEBERMAN
(age 61,
Director since 2004). Mr. Lieberman has been President of The Lieberman Companies for more than five years.
S
TEPHEN
E. P
AUL
(age 41, Director since 2002). Mr. Paul has been a managing principal of Laurel Crown Partners, a private investment company, for more than five years. He is also a
director of Mortons Restaurant Group, Inc.
C
ARL
H.
P
FORZHEIMER
, III (age 72, Director since 1982). Mr. Pforzheimer has been Managing Partner or Manager of Carl H. Pforzheimer & Co. LLC or its predecessors or related entities for more than five years.
Directors Whose Term of Office Expires in 2010:
L
EONARD
M. C
ARROLL
(age 66, Director since 1996). Mr.
Carroll has been Managing Director of Seneca Capital Management, Inc., a private investment company, for more than five years.
L
AURENCE
E. P
AUL
(age 44, Director since 1998). Mr. Paul has been a managing principal of Laurel Crown Partners, a private investment
company, for more than five years. He is also a director of Biovail Corporation.
E
RNEST
G. S
IDDONS
(age 75, Director since 1981). Mr. Siddons has been President and Chief Operating Officer since March 2004. Prior to March 2004, he was Executive Vice President and Chief Operating Officer of
the Corporation for more than five years.
Robert A. Paul is
the father of Laurence E. Paul and Stephen E. Paul. There are no other family relationships among the Directors and Officers.
The Board of Directors has adopted categorical standards to assist it in evaluating the independence of its Directors. The standards are attached to the
Corporate Governance Guidelines which are available on the Corporations website at www.ampcopittsburgh.com. After performing this evaluation in accordance with those guidelines, the Board has determined that Robert J. Appel, Leonard M.
Carroll, Paul A. Gould, William K. Lieberman and Carl H. Pforzheimer, III do not have material relationships with the Corporation (other than as
2
members of the Board of Directors) and are independent within the meaning of the Corporations independence standards and those of the New York Stock
Exchange (the NYSE).
Director
Nominating Procedures
The Corporations Corporate
Governance Guidelines and its Nominating and Governance Committee Charter charge the Nominating and Governance Committee with selecting nominees for election to the Board of Directors and with reviewing at least annually the qualifications of new
and existing members of the Board of Directors, considering the extent to which such members may be considered independent within the meaning of applicable NYSE rules as well as other appropriate factors, including overall skills and
experience.
The Nominating and Governance Committee will, from
time to time, seek to identify potential candidates for director nominees and will consider potential candidates proposed by other members of the Board of Directors, by management of the Corporation or by shareholders of the Corporation.
In considering candidates submitted by shareholders of the Corporation,
the Nominating and Governance Committee will take into consideration the needs of the Board of Directors and the candidates qualifications. To have a candidate considered by the Committee, a shareholder must submit the recommendation in
writing and must include the following information:
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The name and address of the proposed candidate;
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The proposed candidates resume or a listing of his or her qualifications to be a director of the Corporation;
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A description of what would make such person a good addition to the Board of Directors;
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A description of any relationship that could affect such persons qualifying as an independent director, including identifying all other public company board
and committee memberships;
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A confirmation of such persons willingness to serve as a director if selected by the Nominating and Governance Committee;
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The name of the shareholder submitting the name of the proposed candidate, together with information as to the number of shares owned and the length of time of
ownership; and
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Any information about the proposed candidate that would, under the federal proxy rules, be required to be included in the Corporations proxy statement if such
person were a nominee.
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The shareholder
recommendation and information described above must be sent to the Corporate Secretary at 600 Grant Street, Suite 4600, Pittsburgh, PA 15219 and, in order to allow for timely consideration, must be received not less than 120 days in advance of the
anniversary date of the release of the proxy statement for the Corporations most recent annual meeting of shareholders.
Once a person has been identified by the Nominating and Governance Committee as a potential candidate, the Committee may collect and review publicly
available information regarding the person to assess whether the person should be considered further. Generally, if the person expresses a willingness to be considered and to serve on the Board of Directors and the Nominating and Governance
Committee believes that the candidate has the potential to be a good candidate, the Committee would seek to gather information from or about the candidate, including through one or more interviews as appropriate and review his or her accomplishments
and qualifications generally, including in light of any other candidates that the Committee may be considering. The Nominating and Governance Committees evaluation process does not vary based on whether the candidate is recommended by a
shareholder.
3
Non-Management Directors
The non-management directors have regularly scheduled executive sessions. On April 23, 2008 Carl H. Pforzheimer, III was
chosen to preside as the lead director at these meetings for the ensuing year. On February 19, 2009 Paul A. Gould was chosen to be the new lead director effective April 29, 2009. Mr. Gould will serve until the 2010 Annual Meeting. A new lead
director will be chosen annually. Any shareholder who wants to communicate directly with the presiding director or the non-management directors as a group can do so by following the procedure below under Shareholder Communications with
Directors.
Shareholder Communications with
Directors
The Board of Directors has established a
process to receive communications from shareholders and other interested parties. To communicate with the Board of Directors, any individual director or any group or committee of directors, correspondence should be addressed to the Board of
Directors or such individual or group or committee and sent to Ampco-Pittsburgh Corporation c/o Corporate Secretary at 600 Grant Street, Suite 4600, Pittsburgh, PA 15219. Communications sent in this manner will be reviewed by the office
of the Corporate Secretary for the sole purpose of determining whether the contents represent a message to one or more of the Corporations directors.
4
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings in 2008. The Executive Committee of
the Board of Directors met once and took action twice by written consent. The Executive Committee in 2008 was comprised of five Directors: Robert A. Paul, Ernest G. Siddons, Leonard M. Carroll, William K. Lieberman and Carl H. Pforzheimer, III.
The Compensation Committee met four times in 2008 and is
comprised of Robert J. Appel (Chairman), Paul A. Gould and William K. Lieberman. In February 2009 Carl H. Pforzheimer, III was elected to the Compensation Committee. The Nominating and Governance Committee met once in 2008 and is comprised of Paul
A. Gould (Chairman), William K. Lieberman and Carl H. Pforzheimer, III. The Investment Committee met five times in 2008 and was comprised of Robert A. Paul, Ernest G. Siddons, Robert J. Appel and Paul A. Gould. In February 2009 Leonard M. Carroll
was elected to the Investment Committee.
The Audit Committee
held eight meetings in 2008 and was comprised of Carl H. Pforzheimer, III (Chairman), Leonard M. Carroll, Paul A. Gould and Robert J. Appel. In February 2009, William K. Lieberman was elected to the Audit Committee. None of the Audit Committee
members is now, or has within the past five years been, an employee of the Corporation. The Audit Committee reviews the Corporations accounting and reporting practices, including internal control procedures, and maintains a direct line of
communication with the Directors and the independent accountants.
All members of the Audit Committee, Nominating and Governance Committee and Compensation Committee are independent as that term is defined by the applicable Securities and Exchange Commission (SEC) rules, listed company
standards of the NYSE and the categorical standards adopted by the Board of Directors. Each member of the Audit Committee is financially literate. The Board of Directors has determined that the Chairman of the Audit Committee is an audit
committee financial expert as defined in the applicable SEC rules.
All of the Directors attended at least 75% of the applicable board and committee meetings.
In 2008, each Director who was not employed by the Corporation received an annual retainer, payable quarterly, of $25,000, except for the Chairman of the
Audit Committee, who received $27,500. In April, 2008, the annual retainers for non-employee Directors and the Chairman of the Audit Committee were increased to $45,000 and $48,500, respectively. Prior to April, each non-employee Director also
received $1,000 for each Board meeting and Audit Committee meeting attended and $500 for all other committee meetings attended, whether attendance was in person or by telephonic connection. In April 2008, the fees for attendance at meetings were
changed as follows: $2,500 for each Board meeting, whether in person or by telephone; $2,000 for attendance in person at each Audit Committee meeting and $1,000 if participation is by telephone; and $1,500 for attendance in person at all other
committee meetings and $500 if participation is by telephone. In 2008, Directors did not receive a fee for either Board or committee meetings if they did not attend.
The Nominating and Governance Committee Charter, the Compensation Committee Charter, the Audit Committee Charter and the
Corporate Governance Guidelines are available on the Corporations website at www.ampcopittsburgh.com. The Corporation has also adopted a Code of Business Conduct and Ethics that applies to all of its officers, directors and employees, as well
as an additional Code of Ethics that applies to the Corporations chief executive officer and chief financial officer. Copies of both Codes are available on the Corporations website. The Corporation will provide a copy of these documents
to any shareholder who makes a request in writing to the Corporate Secretary, Ampco-Pittsburgh Corporation, 600 Grant Street, Suite 4600, Pittsburgh, PA 15219.
The Corporation encourages its Directors to attend the Annual Meeting of the Corporations shareholders. All of the Directors were in attendance
at the 2008 Annual Meeting.
5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, to the extent known by the Corporation, concerning individuals (other than Directors or Officers of the
Corporation) or entities holding more than five percent of the outstanding shares of the Corporations Common Stock. The percent of class in the table below is calculated based upon 10,177,497 shares outstanding as of March 6, 2009.
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Name of
beneficial owner
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Amount and nature of
beneficial ownership
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Percent
of class
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The Louis Berkman Investment Company
P. O. Box
576
Steubenville, OH 43952
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1,493,942
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(1)
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14.68
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Gabelli Funds, Inc.
(and
affiliates)
Corporate Center
Rye, NY 10580
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1,505,662
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(2)
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14.79
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Van Den Berg Management
805 Las Cimas Parkway
Austin, TX 78746
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810,998
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(3)
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7.97
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Keeley Asset Management Corp.
401 South
LaSalle Street
Chicago, IL 60605
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1,007,500
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(4)
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9.90
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Royce & Associates, LLC
1414 Avenue of the
Americas
New York, NY 10019
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661,147
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(5)
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6.50
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(1)
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Louis Berkman, Director Emeritus, is an officer and director of The Louis Berkman Investment Company and owns directly .61% of its common stock. Robert A. Paul, Chairman and Chief
Executive Officer of the Corporation, is an officer and director of The Louis Berkman Investment Company, and disclaims beneficial ownership of the 99.39% of its common stock owned by his wife.
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(2)
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Reported in an amendment to Schedule 13D filed with the SEC in March 2008.
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(3)
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Reported as of December 31, 2004 on a Schedule 13G filed with the SEC disclosing it had shared and sole voting and dispositive power of these shares.
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(4)
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Reported as of December 31, 2008 on a Schedule 13G filed with the SEC in which it disclosed it shares beneficial ownership over the same 1,000,000 shares with Keeley Small Cap Value
Fund.
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(5)
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Reported as of December 31, 2008 on a Schedule 13G filed with the SEC in which it discloses it sole voting and dispositive power of these shares.
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The following table sets forth as of March 6, 2009 information concerning the
beneficial ownership of the Corporations Common Stock by the Directors and Named Executive Officers and all Directors and Executive Officers of the Corporation as a group:
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Name of
beneficial owner
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Amount and nature of
beneficial ownership
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Percent
of class
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Robert A. Paul
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1,575,197.34
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(1)(2)
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15.48
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Ernest G. Siddons
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30,166.34
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(3)
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.30
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Terrence W. Kenny
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15,833.34
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(4)
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.16
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Rose Hoover
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14,333.34
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(5)
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.14
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Robert F. Schultz
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13,533.34
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(6)
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.13
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Marliss D. Johnson
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10,000
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(7)
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*
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Carl H. Pforzheimer, III
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2,733
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(8)
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*
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Leonard M. Carroll
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1,500
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(9)
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*
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Robert J. Appel
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1,000
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(9)
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*
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Paul A. Gould
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1,000
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(9)
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*
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Laurence E. Paul
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1,000
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(9)
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*
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Stephen E. Paul
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1,000
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(9)
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*
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William K. Lieberman
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1,000
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(10)
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*
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Directors and Executive Officers as a group
(13 persons)
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1,683,296.69
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(11)
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16.54
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(1)
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Includes 42,889 shares owned directly, 23,333.34 shares he has the right to acquire within sixty days pursuant to stock options and the following shares in which he disclaims
beneficial ownership: 1,493,942 shares owned by The Louis Berkman Investment Company, 13,767 shares owned by his wife and 1,266 shares held by The Louis and Sandra Berkman Foundation, of which he is a trustee.
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(2)
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The Louis Berkman Investment Company owns beneficially and of record 1,493,942 shares of the Corporations Common Stock. Robert A. Paul, an officer and director of The Louis
Berkman Investment Company, disclaims beneficial ownership of the 99.39% of its common stock owned by his wife.
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(3)
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Includes 6,833 shares held jointly with his wife and 23,333.34 shares he has the right to acquire within sixty days pursuant to stock options.
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(4)
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Represents shares that he has the right to acquire within sixty days pursuant to stock options.
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(5)
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Includes 1,000 shares owned directly and 13,333.34 shares she has the right to acquire within sixty days pursuant to stock options.
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(6)
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Includes 200 shares held jointly with his wife and 13,333.34 shares he has the right to acquire within sixty days pursuant to stock options.
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(7)
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Represents shares she has the right to acquire within sixty days pursuant to stock options.
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(8)
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Includes 1,000 shares owned directly, 800 shares held by a trust of which he is a trustee and principal beneficiary, and the following shares in which he disclaims beneficial
ownership: 133 shares held by his daughter and 800 shares held by a trust of which he is a trustee.
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(9)
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Represents shares owned directly.
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(10)
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Represents shares held jointly with his wife.
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(11)
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Excludes double counting of shares deemed to be beneficially owned by more than one Director.
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Unless otherwise indicated the individuals named have sole investment and voting power.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the
Corporations directors, executive officers and persons who beneficially own more than 10% of the Corporations common stock, to file reports of holdings and transactions in the Corporations common stock with the SEC and to furnish
the Corporation with copies of all Section 16(a) reports that they file. Based on those records and other information furnished, during 2008, executive officers, directors and persons who beneficially own more than 10% of the Corporations
common stock complied with all filing requirements except the Form 4s for all of the named executive officers were filed late at the time of the stock option grants in September, 2008.
7
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
In this Compensation Discussion and Analysis, we address the compensation paid or awarded to the executive officers listed
in the Summary Compensation Table that immediately follows this discussion. We refer to these executive officers as our named executive officers.
Ernest G. Siddons, a director and the Corporations President has announced his retirement as President effective April 30, 2009. Mr. Siddons will
remain a Director following his retirement as President.
Compensation decisions for Mr. Paul, our Chairman and Chief Executive Officer (CEO), are made by the recommendation of the Compensation Committee of our Board of Directors (the Committee) and approved by the
independent directors on the Board of Directors. Mr. Paul is also referred to as Principal Executive Officer or PEO. The Committee, in consultation with Mr. Paul, makes recommendations to our Board of Directors with regard to
director compensation and compensation of Mr. Siddons, our President and Chief Operating Officer and other officers and managerial employees if their salaries exceed $200,000 per year. Mr. Paul and Mr. Siddons have been delegated the
authority to determine the salaries of named executive officers (and other executive and managerial employees) below an annual level of $200,000, which, for 2008, included the salaries of two of the named executive officers other than Mr. Paul
and Mr. Siddons.
2008
COMPENSATION
Compensation Objectives
The compensation paid or awarded to our named executive officers for 2008
was designed to meet the following objectives:
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Provide compensation that is competitive with compensation for executive officers providing comparable services, taking into account the size of the Corporation,
the nature of its business, and the location of its headquarters. We refer to this objective as competitive compensation.
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Create a compensation structure under which a meaningful portion of total compensation is based on achievement of performance goals relating to the
Corporations and the individuals performance and to enhancement of shareholder value. We refer to this objective as performance incentives.
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Provide an incentive for long-term continued employment with us. We refer to this objective as retention incentives.
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We considered various components of our 2008 compensation payments and awards
(added to payments and awards granted in prior years) to meet these objectives as follows:
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Type of Compensation
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Objectives Addressed
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Salary
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Competitive Compensation
Performance Incentives
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Incentive Bonus Plan Awards
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Competitive Compensation
Performance Incentives
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Discretionary Bonus Awards
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Competitive Compensation
Performance Incentives
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Options
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Competitive Compensation
Performance Incentives
Retention Incentives
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Change in Control Severance Protection
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Competitive Compensation
Retention Incentives
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SERP Benefits
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Competitive Compensation
Retention Incentives
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8
Determination of Competitive Compensation
In assessing competitive compensation, we relied primarily on the general knowledge of our Committee and Board members and
our Chairman and CEO concerning the level of compensation provided by other middle market public companies headquartered in the Greater Pittsburgh area, with such knowledge derived informally from their service on other boards of
directors, their acquaintances with directors and executives of other companies and their review of public filings by such companies. We did not rely on benchmarking data or recommendations provided by outside consultants, and we did not try to set
the levels of compensation for named executive officers to correspond with levels established by benchmarking data or surveys. Rather, our goal was to provide an overall compensation package that would generally be in line with what other comparable
companies are providing to their executive officers.
Salaries
New salary levels for our named executive officers are
established on an annual basis at varying anniversary dates. The Corporations financial results are taken into account in making the adjustments.
Determinations regarding salary adjustments are made based on a number of objective and subjective factors, including cost of living increases, the
Corporations financial performance, and a qualitative analysis of each individual officers performance during the preceding year, taking into account such factors as leadership, commitment and execution of corporate initiatives and
special projects assigned by the Board or the Chairman or the President. We also consider whether there has been any material change in the officers title, duties and responsibilities in the preceding year. Where an officer has assumed
material additional duties, or has been promoted, an above-normal salary adjustment would typically be justified. Finally, in rare circumstances, we may decide to make a market adjustment in salaries, if we determine that salary levels for one or
more of our named executive officers have fallen materially below levels that we consider appropriate in order to maintain a competitive compensation package and to discourage valued executives from leaving to pursue other opportunities. Salary
adjustments for our Chairman, President and named executive officers whose salaries exceed $200,000 per year are reviewed and must be approved by the independent members of the Board of Directors, after a recommendation by the Committee. Salary
adjustments for the other named executive officers are determined by the Chairman and President.
Generally, the differences in the level of pay between the named executive officers is the result of the determination by the Committee or by the Chairman
and President over time of the level of responsibility, function, experience, and length of service that each of the officers possess. In 2008, the above normal base salary increases for some of the named executive officers reflect either
significant growth in size and complexity of the Corporation or recognition of expanded duties.
The base salary determinations for each named executive officer in 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
Name
|
|
2008 Base
Pre-Adjustment
Salary
|
|
2008 Base
Adjusted
Salary(1)
|
|
Percentage
Increase
|
|
Robert A. Paul
|
|
$
|
519,000
|
|
$
|
569,000
|
|
9.63
|
%
|
Ernest G. Siddons
|
|
$
|
497,000
|
|
$
|
547,000
|
|
10.06
|
%
|
Robert F. Schultz
|
|
$
|
196,000
|
|
$
|
206,000
|
|
5.10
|
%
|
Terrence W. Kenny
|
|
$
|
190,000
|
|
$
|
200,000
|
|
5.26
|
%
|
Rose Hoover
|
|
$
|
172,500
|
|
$
|
190,000
|
|
10.14
|
%
|
Marliss D. Johnson
|
|
$
|
155,000
|
|
$
|
165,000
|
|
6.45
|
%
|
(1)
|
The numbers in the above chart are different than the 2008 salary figures in the Summary Compensation Table which appears later in this section because those numbers represent total
salary paid during calendar 2008, and not just base salary as in the above chart.
|
9
Incentive Bonus Plan Awards
The Committee adopted in December of 2007 an Incentive Bonus Plan for 2008 for Messrs. Paul and Siddons. Incentive payments
were to be determined based on the Corporations 2008 income from operations performance as compared to the Corporations business plan for 2008. Income from operations is chosen in the belief that it is the most accurate objective measure
of performance. It eliminates charges or windfalls which are generally beyond the control of the executives. The maximum payment that could have been made as a bonus to each of the two individuals was 40% of their base salary. The plan allows for
the exclusion of costs related to asbestos litigation and related asbestos matters, pension credit and stock based compensation expense from operating income. In addition, the Committee, at its discretion, may award bonuses to the participants if it
determines that circumstances so warrant. Based on the Corporations operating income, which in 2008 exceeded the business plan, each of Messrs. Paul and Siddons earned an Incentive Bonus Award for 2008 equal to 28% of their annual salary in
effect on December 31, 2008, or $162,116 for Mr. Paul and $155,030 for Mr. Siddons. No discretionary award was made.
In February 2009, the Committee approved a similar bonus plan for Messrs. Paul and Siddons for 2009 with a maximum payment to the individuals of 40% of
annual salary based on the operating performance of the Corporation in 2009 in comparison to the approved business plan. The plan allows Mr. Siddons a prorated payment based on months of service in 2009 to the date of his retirement.
Mr. Kenny, Group Vice President and a named executive officer, is also
covered by an Incentive Bonus Plan for 2008 based on income from operations of the Air and Liquid Processing segment compared to the business plan for that segment. The Incentive Bonus Plan is established by the Chairman and President and provides
for a maximum bonus payment of 35% of base salary. In addition, the plan provides for a discretionary bonus if it is determined that circumstances so warrant. In 2008, Mr. Kenny earned an Incentive Bonus Award equal to 35% of his annual salary
in effect on December 31, 2008 or $70,000. No discretionary bonus was awarded. A similar plan was also established for Mr. Kenny by the Chairman and President for 2009.
Discretionary Bonus Awards
Each year, the Chairman and President determine the amount of discretionary bonuses paid to our named executive officers who do not participate in the
Incentive Bonus Plans described above. The bonuses are determined in a manner similar to the annual base salary adjustments, that is, based on a number of objective and subjective factors, including the Corporations financial performance, and
a qualitative analysis of each individual officers performance during the preceding year, taking into account such factors as leadership, commitment, and execution of corporate initiatives and special projects assigned by the Chairman or by
the President. The discretionary bonuses are also considered together with the base salary adjustments in ensuring that our executive officers are provided a competitive level of cash compensation each year, but the discretionary bonus portion
provides flexibility to adjust total annual cash compensation to align with current performance (whereas a base salary adjustment is carried forward from year to year). For 2008, the following discretionary bonus awards were given for our named
executive officers who did not participate in an Incentive Bonus Plan:
|
|
|
|
Name
|
|
Bonus
Amount
|
Rose Hoover
|
|
$
|
55,000
|
Marliss D. Johnson
|
|
$
|
45,000
|
Robert F. Schultz
|
|
$
|
55,000
|
ROLE OF OPTION GRANTS
In 2008, the Compensation Committee made grants of stock options under the 2008 Omnibus Incentive Plan, to the named
executive officers and certain other key employees of the Corporation as determined by the Chairman and President. The Option grants to the named executive officers were determined in a manner similar to the annual base salary adjustments and
discretionary bonus program, that is, based on a number of objective and subjective factors, including the Corporations financial performance, and a qualitative analysis of each
10
individual officers performance during the preceding year, taking into account such factors as leadership, commitment, and execution of corporate
initiatives and special projects assigned by the Chairman or by the President. The individual option grants to each named executive officer and the vesting and other terms of the grants are set forth in the Grants of Plan-Based Awards table on
page 13.
ONGOING AND
POST-EMPLOYMENT AGREEMENTS
We have several plans and
agreements that enable our named executive officers to accrue retirement benefits as the executives continue to work for us and one that could provide severance benefits upon a change in control. These plans and agreements have been adopted and/or
amended at various times over many years, and they have been designed to be a part of a competitive compensation package. The plans and agreements described below do not include plans that are generally available to all of our salaried employees:
|
|
|
Supplemental Executive Retirement Plan (SERP)We maintain a supplemental executive retirement plan, which is a nonqualified deferred compensation
plan that provides benefits for executives in excess of the benefits that may be provided under our tax qualified defined benefit retirement plan (Plan) as a result of limits imposed by the Internal Revenue Code. The SERP also provides
additional payment rights and benefits in the event of a change in control. All of our named executive officers participate in the SERP. See the Retirement Benefits table and accompanying narrative for a description of the SERP.
|
|
|
|
Change in Control AgreementsWe have change in control agreements with respect to each of our named executive officers so that our officers remain focused on
the interests of the Corporation and the shareholders in the context of a potential change in control rather than their personal circumstances. Our agreements with executives provide for payments and other benefits if we terminate an
executives employment without cause or if the executive terminates employment for good reason within 24 months following a change in control. The agreements covering our Chairman and our President also provide that if the change in
control payments exceed certain threshold amounts, we will make additional payments to reimburse the executives for excise and related taxes imposed under the Internal Revenue Code. The change in control agreements are described under
Potential Payments Upon Termination or Change in Control below. See Tax Considerations below for further information regarding the excise tax reimbursement.
|
TAX CONSIDERATIONS
Under Section 162(m) of the Internal Revenue Code, a publicly held
corporation may not deduct more than $1 million in a taxable year for certain forms of compensation paid to the chief executive officer and other officers listed in the Summary Compensation Table. Our policy is generally to preserve the federal
income tax deductibility of compensation paid to our executives. Nevertheless, we retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of our Corporation. While we believe that all
compensation paid to our executives in 2008 was deductible,
a portion of compensation paid in future years may not be deductible as a result of Section 162(m).
In the event of a change in control, payments to an executive may be subject to an excise tax, and may not be deductible by us, under
Sections 280G and 4999 of the Internal Revenue Code. If change in control payments exceed certain threshold amounts, the change in control agreements with our Chairman and our President require that we may make additional payments to the executives
to reimburse them for excise tax imposed by Section 4999 of the Internal Revenue Code, as well as other taxes in respect of the additional payments. The change in control agreements were implemented in 1988 to motivate our named executives to
increase shareholder value while remaining employed by us. Our Chairman and our President are most significantly at risk of incurring a material reduction in the value of their change in control benefits as the result of this excise tax, and we
believe that the retention incentives provided to them by these agreements would be frustrated by the possible imposition of these significant excise taxes. We did not wish to have the provisions of these agreements for our Chairman and our
President serve as a disincentive to their pursuit of a change in control that might
11
otherwise be in the best interests of our Corporation and its stockholders. Accordingly, we determined to provide a payment under certain circumstances to
reimburse them for excise taxes payable in connection with change in control payments, as well as any taxes that accrue as a result of our reimbursement. We believe that, in view of their record in enhancing value for our stockholders, this
determination is appropriate.
ROLE
OF EXECUTIVE OFFICERS IN DETERMINING EXECUTIVE COMPENSATION
As discussed above, Mr. Paul and Mr. Siddons determined the appropriate salary adjustments for named executive officers whose salaries are below an annual level of $200,000 and discretionary bonuses to be provided to named
executive officers other than themselves. Salary adjustments for named executive officers whose annual salaries exceed $200,000 are determined by the Board of Directors, upon recommendation of the Compensation Committee.
SUMMARY COMPENSATION TABLE
Summary compensation information for our named executive officers for 2008 is
set forth in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
Name and Principal Position
|
|
Year
($)
|
|
Salary
($)
|
|
Bonus
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Change in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
|
|
All Other
Compensation
(1) ($)
|
|
Total ($)
|
PEORobert A. Paul,
|
|
2008
|
|
544,000
|
|
|
|
170,866
|
|
162,116
|
|
199,153
|
|
41,700
|
|
1,117,835
|
Chairman and Chief Executive Officer
|
|
2007
2006
|
|
506,500
481,500
|
|
|
|
|
|
207,600
172,900
|
|
173,688
141,363
|
|
42,155
39,317
|
|
929,943
835,080
|
|
|
|
|
|
|
|
|
|
Ernest G. Siddons(2)
|
|
2008
|
|
522,000
|
|
|
|
170,866
|
|
155,030
|
|
167,730
|
|
38,220
|
|
1,053,846
|
President and Chief Operating Officer
|
|
2007
2006
|
|
484,500
459,500
|
|
|
|
|
|
198,800
165,200
|
|
153,268
151,672
|
|
35,102
32,885
|
|
871,670
809,257
|
|
|
|
|
|
|
|
|
|
Robert F. Schultz
|
|
2008
|
|
201,000
|
|
55,000
|
|
97,637
|
|
|
|
140,221
|
|
29,230
|
|
523,088
|
Vice President and Senior Counsel
|
|
2007
2006
|
|
191,000
182,500
|
|
55,000
40,000
|
|
|
|
|
|
72,981
91,811
|
|
29,970
29,347
|
|
348,951
343,658
|
|
|
|
|
|
|
|
|
|
Terrence W. Kenny
|
|
2008
|
|
195,000
|
|
|
|
97,637
|
|
70,000
|
|
85,913
|
|
21,133
|
|
469,683
|
Group Vice President
|
|
2007
2006
|
|
185,000
176,000
|
|
|
|
|
|
66,500
49,500
|
|
31,934
42,672
|
|
18,715
21,983
|
|
302,149
290,155
|
|
|
|
|
|
|
|
|
|
Rose Hoover
|
|
2008
|
|
175,417
|
|
55,000
|
|
97,637
|
|
|
|
122,327
|
|
31,766
|
|
482,147
|
Vice President Administration and Secretary
|
|
2007
2006
|
|
162,083
143,333
|
|
55,000
40,000
|
|
|
|
|
|
84,905
41,510
|
|
21,514
23,746
|
|
323,502
248,589
|
|
|
|
|
|
|
|
|
|
PFOMarliss D. Johnson,
|
|
2008
|
|
158,333
|
|
45,000
|
|
73,228
|
|
|
|
49,659
|
|
22,469
|
|
348,689
|
Vice President, Controller and Treasurer
|
|
2007
2006
|
|
141,667
125,000
|
|
45,000
32,500
|
|
|
|
|
|
22,917
3,725
|
|
22,039
24,141
|
|
231,623
185,366
|
(1)
|
Represents a medical expense reimbursement plan, personal use of a company provided vehicle and club memberships. None of the individual perquisite values exceeded the threshold of
the greater of $25,000 or 10% of the total perquisites.
|
(2)
|
Mr. Siddons announced his retirement as President effective April 30, 2009. He will remain a Director following his retirement.
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)
|
|
|
Threshold(2)
($)
|
|
Target
($)
|
|
|
Maximum(5)
($)
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
|
(e)
|
|
(j)
|
|
(k)
|
|
(l)
|
Robert A. Paul (PEO)
|
|
9/4/2008
|
|
56,900
|
|
128,025
|
(3)
|
|
227,600
|
|
35,000
|
|
37.89
|
|
384,448
|
Ernest G. Siddons
|
|
9/4/2008
|
|
54,700
|
|
123,075
|
(3)
|
|
218,800
|
|
35,000
|
|
37.89
|
|
384,448
|
Marliss D. Johnson (PFO)
|
|
9/4/2008
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
15,000
|
|
37.89
|
|
164,763
|
Rose Hoover
|
|
9/4/2008
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
20,000
|
|
37.89
|
|
219,684
|
Terrence W. Kenny
|
|
9/4/2008
|
|
20,000
|
|
44,000
|
(4)
|
|
70,000
|
|
20,000
|
|
37.89
|
|
219,684
|
Robert F. Schultz
|
|
9/4/2008
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
20,000
|
|
37.89
|
|
219,684
|
(1)
|
There are incentive non-equity bonus plans for 2008 covering Messrs. Paul, Siddons and Kenny as more fully described under Incentive Bonus Plan Awards on page 10 and as
reflected in the above table. The remaining named executive officers participate in a discretionary incentive plan also described on page 10.
|
(2)
|
The Threshold amounts in the above table are the minimum which could be earned under the 2008 incentive plans.
|
(3)
|
The Target is the amount payable if income from operations for the Corporation in its 2008 business plan were attained.
|
(4)
|
The Target is the amount payable if income from operations for the Corporations Air and Liquid Processing segment included in its 2008 business plan were attained.
|
(5)
|
The Maximum amounts in the above table represent the maximum payout under the respective plans.
|
GRANTS OF PLAN-BASED AWARDS TABLE
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table summarizes certain information regarding
outstanding equity awards at fiscal year-end:
|
|
|
|
|
|
|
|
|
|
|
Option Awards/Stock Awards
|
(a)
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
Robert A. Paul
|
|
11,667
|
|
23,333
|
|
$37.89/share
|
|
9/4/2018
|
Ernest G. Siddons
|
|
11,667
|
|
23,333
|
|
$37.89/share
|
|
9/4/2018
|
Rose Hoover
|
|
6,667
|
|
13,333
|
|
$37.89/share
|
|
9/4/2018
|
Terrence W. Kenny
|
|
2,500
|
|
0
|
|
$13.67/share
|
|
7/26/2015
|
|
|
6,667
|
|
13,333
|
|
$37.89/share
|
|
9/4/2018
|
Robert F. Schultz
|
|
6,667
|
|
13,333
|
|
$37.89/share
|
|
9/4/2018
|
Marliss D. Johnson
|
|
5,000
|
|
10,000
|
|
$37.89/share
|
|
9/4/2018
|
Note: there are no Equity Incentive Plan Awards or Stock Awards so those columns have been omitted
The Option Exercises During Fiscal Year tables was omitted because no options were exercised in 2008.
13
RETIREMENT BENEFITS
As discussed above, the Corporation maintains a SERP for certain officers and
key employees; that plan provides retirement benefits after completion of ten years of service and attainment of age 55. All named executive officers are participants in the SERP. The Corporation also maintains a tax-qualified defined benefit
pension plan that covers all its regular employees, included each of the named executive officers. The combined retirement benefit at age 65 or older provided by the Plan and the SERP is 50% of the highest consecutive five-year average earnings in
the final ten years of service. Participants are eligible for reduced benefits for early retirement at age 55. A benefit equal to 50% of the benefit otherwise payable at age 65 is paid to the surviving spouse of any participant who has had at least
five years of service, commencing on the later of the month following the participants death or the month the participant would have reached age 55. In addition, there is an offset for pensions from other companies. Certain provisions,
applicable if there is a change of control, are discussed below in the Potential Payments Upon Change in Control section.
The following table summarizes certain information regarding the value of the retirement benefits accrued by our named executive officers under the Plan
and the SERP:
Pension Benefits
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
Name
|
|
Plan
Name
|
|
Number
of years
credited
service (#)
|
|
Present
Value of
Accumulated
Benefit(3)(4) ($)
|
|
Payments
During
Last
Fiscal
Year ($)
|
Robert A. PaulPEO (1)(3)
|
|
Plan
SERP
|
|
44
44
|
|
$
$
|
2,383,338
592,298
|
|
165,333
0
|
Ernest G. Siddons (1)(3)
|
|
Plan
SERP
|
|
29
29
|
|
$
$
|
2,280,473
236,858
|
|
0
0
|
Robert F. Schultz (2)
|
|
Plan
SERP
|
|
27
27
|
|
$
$
|
1,141,797
36,719
|
|
0
0
|
Terrence W. Kenny
|
|
Plan
SERP
|
|
24
24
|
|
$
$
|
584,141
74,960
|
|
0
0
|
Rose Hoover
|
|
Plan
SERP
|
|
29
29
|
|
$
$
|
659,307
66,725
|
|
0
0
|
Dee Ann JohnsonPFO
|
|
Plan
SERP
|
|
9
9
|
|
$
$
|
56,030
231,610
|
|
0
0
|
(1)
|
Mr. Paul and Mr. Siddons are both past normal retirement age at December 31, 2008 and eligible for the
benefits indicated above. Federal law requires that 5% owners start receiving a pension no later than April 1 following the calendar year in which the age 70
1
/
2
is reached. Mr. Paul is currently receiving $20,667 a month from the Plan.
|
(2)
|
Mr. Schultz is eligible for early retirement as of December 31, 2008. Assuming a December 31, 2008 retirement, the present value of accumulated plan benefits is
$1,099,445 for the Plan and $35,359 for the SERP.
|
(3)
|
Benefits shown in column (d) can only be received by participants following retirement in the form of monthly pension payments. A change of control could trigger a lump sum
payment for benefits under the SERP.
|
(4)
|
The present value of accumulated retirement and SERP benefits were determined by using normal retirement age, RP 2000 mortality tables, life annuity form of payment for the
retirement plan and 50% joint and survivor for the SERP all calculated at a 6.25% discount rate.
|
14
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL
Mr. Paul and Mr. Siddons each have two-year contracts (which
automatically renew for one-year periods unless the Corporation chooses not to extend) providing for compensation equal to five times their annual compensation (with a gross-up provision to cover the cost of any federal excise tax on the benefits)
in the event their employment is terminated by the Corporation without cause or they resign for good reason within 24 months following a change of control of the Corporation, as well as the right to equivalent office space and secretarial help
for a period of one year after a change in control. All Vice Presidents, including our remaining named executive officers, and one other employee have two-year contracts (which automatically renew for one-year periods unless the Corporation chooses
not to extend) providing for three times their annual compensation in the event their employment is terminated by the Corporation without cause or for good reason by the employee within 24 months following a change of control. All of the
contracts provide for the continuation of employee benefits, for three years for the two senior executives and two years for the others, and the right to purchase the leased car used by the covered individual at the Corporations then book
value. The same provisions concerning change in control that apply to the contracts apply to the SERP and vest the right to that pension arrangement. A change of control triggers the right to a lump sum payment equal to the present value of the
vested benefit under the SERP, if applicable.
The following
circumstances would trigger payments under these agreements if, following these events, the individuals employment is terminated within 24 months following these events and if the termination was not for cause or because of death, disability
or by the individuals without good reason:
|
|
|
If a person, other than persons currently in control, becomes an owner, directly or indirectly, of 50% or more of the combined voting power of the
Corporations outstanding voting securities;
|
|
|
|
If for two consecutive years there ceases to be a majority of the Board of individuals who at the beginning of the period were Board members, other than a new
director whose election was approved by a vote of 2/3 of directors then still in office who were directors at beginning of the period or whose election or nomination for election was previously approved;
|
|
|
|
If the shareholders approve a merger or consolidation in which the Corporations common stock is converted into shares of another corporation or cash or other
property or the Corporations common stock is not converted but 40% of the surviving corporation in the merger is owned by shareholders other than those who owned the Corporations common stock prior to merger;
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If there occurs any transaction which results in the Corporations common stock no longer being publicly traded; or
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If the shareholders of the Corporation approve a plan of complete liquidation or agreement for sale or disposition of substantially all assets followed by
distribution of proceeds to shareholders.
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These thresholds for triggering payments under these contracts were selected because the corporation wanted to cover all reasonable circumstances that could be considered a change of control.
15
If one of the above events took place on December 31, 2008, the estimated payments and benefits that
would be payable by the Corporation to the named executive officers would be as summarized in the following table:
Potential Payments upon Termination following a Change in Control
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Name
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Compensation(1)
$
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Gross up for
Excise Tax
$
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Office
and
Secretary
$
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Benefit
Continuation(2)
$
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SERP(3)
$
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Accelerated
Option
Vesting(4)
$
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Total
$
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Robert A. Paul
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3,883,000
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1,761,445
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47,250
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85,533
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492,098
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0
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6,269,326
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Ernest G. Siddons
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3,729,000
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1,423,634
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47,250
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85,100
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200,552
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0
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5,485,536
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Robert F. Schultz
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783,000
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N/A
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N/A
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32,663
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280,007
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0
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1,095,670
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Terrence W. Kenny
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799,000
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N/A
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N/A
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52,254
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462,688
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20,075
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1,334,517
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Rose Hoover
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735,000
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N/A
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N/A
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52,131
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510,121
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0
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1,297,252
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Dee Ann Johnson
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630,000
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N/A
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N/A
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51,811
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350,427
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0
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1,032,238
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(1)
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The amount of compensation for Mr. Paul and Mr. Siddons represents five times their base salary and bonus paid for the prior year. The compensation amount for the
remaining named executive officers is three times their base salary and bonus paid for the prior year.
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(2)
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The amounts in the table for Benefit Continuation represent the value of 36 months of company provided health, dental, disability, life insurance and other similar benefits for
Mr. Paul and Mr. Siddons and 24 months for the remaining named executive officers.
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(3)
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Represents the acceleration in the vesting of the retirement benefit (from the required 55/10 to 5 years of service with no age requirement). In addition, the value of retirement
benefits is paid in the form of a lump sum.
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(4)
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Except for 2,500 options granted to Mr. Kenny at an exercise price of $13.67 pursuant to a prior plan, all named executive officers have options outstanding with an exercise
price greater than the market value on December 31, 2008. Therefore those options have no value upon a Change of Control.
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DIRECTORS COMPENSATION
In the beginning of 2008, our non-employee directors were compensated by payment of an annual $25,000 retainer, a meeting fee of $1,000 for each Board
meeting and Audit Committee meeting attended and a meeting fee of $500 for all other committee meetings attended. In recognition of his additional required service and responsibility, the chairman of our Audit Committee, Mr. Pforzheimer, received an
additional annual retainer of $2,500. In April, 2008, the annual retainer for non-employee directors and the Chairman of the Audit Committee were increased to $45,000 and 48,500, respectively. The meeting fees were increased to $2,500 for each Board
meeting attended; $2,000 for attendance in person at each Audit Committee meeting and $1,000 if participation is by telephone; and $1,500 for attendance in person at all other committee meetings and $500 if participation is by telephone. Each
non-employee director is also entitled to reimbursement for his reasonable out-of-pocket expenses incurred in connection with travel and attendance at Board and Board committee meetings.
The following table sets forth certain information regarding the compensation earned by each non-employee director and one
employee director who served on our Board of Directors in 2008. Other directors who are employed by the Corporation are not given additional compensation for their services as Directors.
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(a)
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(b)
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(g)
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(h)
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Name
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Fees earned
or paid in
cash(1) ($)
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All Other
Compensation ($)
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Total ($)
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Robert J. Appel
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58,500
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58,500
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Leonard M. Carroll
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51,500
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51,500
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Paul A. Gould
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59,000
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59,000
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William K. Lieberman
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46,000
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46,000
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Laurence E. Paul
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42,000
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42,000
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Stephen E. Paul
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42,000
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42,000
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Carl H. Pforzheimer, III
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56,875
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56,875
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16
(1)
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The primary reason why certain Directors received more fees in 2008 than others is because of their membership on various committees which resulted in additional meeting fees being
paid to those Directors.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on the review and
discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Corporations annual report on Form 10-K and, as applicable, the Corporations proxy or information
statement.
Robert J. Appel, Chairman
Paul A. Gould
William K. Lieberman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2008, the Compensation Committee was comprised of Robert J. Appel
(Chairman), Paul A. Gould and William K. Lieberman. None of those individuals have ever been an officer or employee of the Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 2008, the Corporation bought industrial supplies from a subsidiary of The Louis Berkman Investment Company in
transactions in the ordinary course of business amounting to approximately $1,721,695. Additionally, The Louis Berkman Investment Company paid the Corporation $225,000 for certain administrative services. Louis Berkman was an officer, director and
shareholder and Robert A. Paul was an officer and director, of that company. These transactions and services were at prices generally available from outside sources. Transactions between the parties will also take place in 2009.
The purchase of industrial supplies from a wholly-owned subsidiary of The
Louis Berkman Investment Company follows a competitive bid process which includes several non-related vendors after which annual contract awards are made to the lowest bidder by the purchasing executive at each of the Corporations subsidiary
companies. The administration services are provided under an agreement to provide such services for fees which are subject to annual review including an increase to cover inflation in the costs of the Corporation.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the audited financial
statements with management and has discussed with the independent accountants the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU 380), as may be modified or supplemented.
The Audit Committee has received the written disclosures and the letter from
the independent accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants communications with the audit committee concerning independence, and has discussed with the
independent accountants their independence.
Based on the
review and discussions referred to in the preceding paragraphs, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Corporations Annual Report on Form 10-K for the last fiscal year
for filing with the SEC.
17
The following table summarizes the aggregate fees to the Corporation by Deloitte & Touche LLP:
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2008
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2007
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Audit fees (a)
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$
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692,250
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$
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598,458
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Audit-related fees (b)
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26,613
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27,590
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Tax fees (c)
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1,960
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All other fees
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Total (d)
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$
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718,863
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$
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628,008
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(a)
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Fees for audit services related primarily to the audit of the Corporations annual consolidated financial statements and its internal control over financial reporting.
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(b)
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Fees for audit-related services related primarily to the audits of the Corporations employee benefit plans.
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(c)
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Fees for tax services were primarily for assistance with inquiries from taxing authorities.
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(d)
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The Audit Committee approved all fees in the years reported.
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In considering the nature of the services provided by Deloitte & Touche LLP, the Audit Committee determined that such services are compatible with the
provision of independent audit services. The Audit Committee discussed these services with Deloitte & Touche LLP and the Corporations management to determine that they are permitted under the rules and regulations concerning auditor
independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.
The Audit Committee has adopted a Policy for Approval of Audit and Non-Audit Services (the Policy) provided by the Corporations
independent auditor. According to the Policy, the Corporations independent auditor may not provide the following prohibited services to the Corporation:
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maintain or prepare the Corporations accounting records or prepare the Corporations financial statements that are either filed with the SEC or form the
basis of financial statements filed with the SEC;
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provide appraisal or valuation services when it is reasonably likely that the results of any valuation or appraisal would be material to the Corporations
financial statements, or where the independent auditor would audit the results;
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provide certain management or human resource functions;
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serve as a broker-dealer, promoter or underwriter of the Corporations securities;
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provide any service in which the person providing the service must be admitted to practice before the courts of a U.S. jurisdiction;
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provide any internal audit services relating to accounting controls, financial systems, or financial statements; or
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design or implement a hardware or software system that aggregates source data underlying the financial statements or generates information that is significant to
the Corporations financial statements, taken as a whole.
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18
In addition, in connection with its adoption of the Policy, the Audit Committee pre-approved certain
audit-related and other non-prohibited services. Any services not prohibited or pre-approved by the Policy must be pre-approved by the Audit Committee in accordance with the Policy. The Policy will be reviewed and approved annually by the Board of
Directors.
Carl H. Pforzheimer, III
(Chairman)
Robert J. Appel
Leonard M. Carroll
Paul A. Gould
William K. Lieberman
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL 2)
The Audit
Committee, comprised of independent members of the Board of Directors, has appointed Deloitte & Touche LLP (D&T) as its independent registered public accounting firm for 2009, subject to ratification by the shareholders.
Even if the shareholders ratify the Audit Committees appointment of independent accountants, the Audit Committee in its discretion may change the appointment at any time if it determines that such change would be in the best interests of the
Corporation and its shareholders. If the shareholders do not ratify the appointment of D&T, the selection of the independent registered public accounting firm will be reconsidered by the Audit Committee, but D&T may still be retained.
Representatives of D&T will be in attendance at the Annual
Meeting, will have the opportunity to make a statement if they wish to do so and will respond to appropriate questions.
The Board of Directors unanimously recommends that you vote FOR the proposal to ratify the selection of D&T as the independent
registered public accounting firm for 2009.
SHAREHOLDER PROPOSALS FOR 2010
Any shareholder who wishes to place a proposal before the next Annual Meeting of Shareholders must submit the proposal to the
Corporations Secretary, at its executive offices, not less than 120 calendar days in advance of the anniversary date of the release of this proxy statement to have it considered for inclusion in the proxy statement for the Annual Meeting in
2010.
OTHER MATTERS
The Board of Directors does not know of any other business
that will be presented for action at the Annual Meeting. Should any other matter come before the meeting, however, action may be taken thereon pursuant to proxies in the form enclosed unless discretionary authority is withheld.
19
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-PROXY-
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-PROXY-
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This Proxy is Solicited on Behalf of the Board of Directors
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The undersigned hereby appoints Ernest G. Siddons and Rose Hoover as proxies with full power of substitution,
to vote as specified on the reverse side the shares of stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders of AMPCO-PITTSBURGH CORPORATION, to be held at The Duquesne Club, in The Carnegie Room, 3rd Floor, 325 Sixth
Avenue, Pittsburgh, PA, on Wednesday, April 29, 2009, at 10:00 a.m., and any adjournments thereof.
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WHEN PROPERLY EXECUTED THIS PROXY WILL BE
VOTED IN THE MANNER DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1 (OR, IN THE DISCRETION OF THE PROXIES, THE SHARES MAY BE VOTED CUMULATIVELY) AND FOR PROPOSAL 2. THE PROXIES NAMED ABOVE ARE
AUTHORIZED TO VOTE IN THEIR DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
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PLEASE SIGN ON REVERSE SIDE and mail in the enclosed, postage prepaid envelope.
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BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3529
SOUTH HACKENSACK, NJ 07606-9229
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Address Change/Comments (Mark the corresponding box on the reverse side)
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p
FOLD AND DETACH HERE
p
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone
voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
However, if you choose to cumulate votes for directors you must vote by mail.
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INTERNET
http://www.proxyvoting.com/ap
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
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OR
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TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
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If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
|
Choose
MLink
SM
for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more.
Simply log on to
Investor ServiceDirect
®
at
www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through enrollment.
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Please mark
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X
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your votes
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as indicated in
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this example
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1. CUMULATIVE VOTING
Insert
your vote for the nominees named below in the designated space provided. The Directors will be elected by cumulative voting. If you chose to cumulate your votes, multiply the number of shares held by you by three and vote the result for the nominees
listed below in any proportion. Stockholders may withhold authority to vote for a nominee by entering zero in the space following the nominees name.
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FOR
all nominees listed to the left, cumulative votes to be
divided equally between nominees
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WITHHOLD
AUTHORITY
to vote for all nominees listed to the left
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FOR
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AGAINST
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ABSTAIN
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2.
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A proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2009.
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¨
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¨
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¨
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Nominees
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Votes
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OR
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¨
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OR
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¨
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All proxies heretofore given or executed with respect to the shares of stock represented by this proxy are by the filing
of this proxy, expressly revoked.
PLEASE DO NOT FOLD, STAPLE OR DAMAGE.
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01 Robert J. Appel
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02 Paul A. Gould
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03 Robert A. Paul
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Note: The total number of votes you cast in the election of directors should not exceed the number of shares shown above times three.
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Mark Here for Address Change or Comments
SEE REVERSE
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¨
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Signature
Signature if
held jointly
Date
, 2009
NOTE: Signature should conform exactly to name as stenciled hereon. Executors, administrators, guardians, trustees, attorneys and officers signing for a corporation
should give full title. For joint accounts each owner must sign.
p
FOLD AND DETACH HERE
p
CALCULATION OF NUMBER OF VOTES YOU MAY CAST
IN THE ELECTION OF DIRECTORS
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Fill in the number of shares you own:
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Multiply by 3:
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X3
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Total votes:
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The number in the box is the total number of votes you may cast in the election of directors. The total number of votes you may cast must be less than or equal to the number in the
box, and it cannot exceed the number in the box.
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YOUR VOTE IS IMPORTANT!
Mark, sign and date your proxy card and return it promptly in the enclosed envelope.
PLEASE VOTE
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Important notice regarding the Internet availability of proxy materials for the Annual Meeting of shareholders
The Proxy Statement and the
2008 Annual Report to Stockholders are available at:
http://www.ampcopgh.com
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