UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ACME UNITED CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 27, 2007
Dear Fellow Shareholder:
On behalf of your Board of Directors and Management, I cordially invite you to
attend the Annual Meeting of Shareholders of Acme United Corporation scheduled
to be held on Monday, April 23, 2007 at 11:00 A.M., local time, at the American
Stock Exchange, 86 Trinity Place, New York, New York. I look forward to greeting
personally those shareholders able to attend.
At the Meeting, shareholders will be asked to elect eight directors to serve for
a one-year term and to approve amendments to the 2005 Non-Salaried Director
Stock Option Plan and the Company's Employee Stock Option Plan to increase the
number of shares authorized to be issued under each of the plans. Information
regarding these matters is set forth in the accompanying Notice of Annual
Meeting and Proxy Statement to which you are urged to give your prompt
attention.
It is important that your shares be represented and voted at the Meeting.
Whether or not you plan to attend, please take a moment to sign, date and
promptly mail your proxy card in the enclosed prepaid envelope. This will not
limit your right to vote in person should you attend the Meeting.
On behalf of your Board of Directors, thank you for your continued support and
interest in Acme United Corporation.
Sincerely,
Walter C. Johnsen
Chairman and Chief Executive Officer
(1)
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, APRIL 23, 2007
To our Shareholders: The Annual Meeting of Shareholders (the "Meeting") of Acme
United Corporation, a Connecticut Corporation, (the "Company") will be held on
Monday, April 23, 2007, at 11:00 A.M., local time, at the American Stock
Exchange, 86 Trinity Place, New York, New York, for the following purposes:
1. To elect eight (8) Directors of the Company;
2. To consider and vote upon an amendment to the 2005 Non-Salaried
Director Stock Option Plan to increase the number of shares
authorized to be issued thereunder from 50,000 to 90,000, an
increase of 40,000 shares;
3. To consider and vote upon an amendment to the Company's Employee
Stock Option Plan to increase the number of shares authorized to
be issued thereunder from 300,000 to 460,000, an increase of
160,000 shares; and
4. To transact such other business as may properly come before the
Meeting.
Shareholders of record at the close of business on March 6, 2007 are entitled to
receive notice of and to vote at the Meeting and at any adjournment thereof.
You are cordially invited to attend the Meeting. Please carefully read the
attached Proxy Statement for information regarding the matters to be considered
and acted upon at the Meeting. We hope that you will attend the Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
RETURN POSTAGE-PAID ENVELOPE. No additional postage need be affixed to the
return envelope if mailed in the United States. If you attend the Meeting, you
may withdraw your proxy and vote in person by ballot.
By Order of the Board of Directors,
Paul G. Driscoll
Vice President and Chief Financial
Officer, Secretary and Treasurer
March 27, 2007
Fairfield, Connecticut
(2)
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
April 23, 2007
PROXY STATEMENT
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy Card are being furnished in connection with the
solicitation of proxies by the Board of Directors of Acme United Corporation, a
Connecticut Corporation, (the "Company") to be used at the Annual Meeting of
Shareholders of the Company, to be held April 23, 2007, at 11:00 A.M., local
time, at the American Stock Exchange, 86 Trinity Place, New York, New York or at
any adjournment thereof (the "Meeting"). This Proxy Statement and the enclosed
Proxy Card are being furnished on or about March 28, 2007 to all holders of
record of the Company's Common Stock, par value $2.50 per share, (the "Common
Stock") as of the close of business on March 6, 2007. A copy of the Company's
2006 Annual Report to Shareholders, including consolidated financial statements
for the fiscal year ended December 31, 2006, accompanies this Proxy Statement.
At the Meeting, shareholders will:
o elect eight (8) Directors to serve until the next annual meeting;
o consider and vote upon a proposal to amend the 2005 Non-Salaried
Director Stock Option Plan (Proposal 2) to increase the number of
shares authorized to be issued under the plan from 50,000 to 90,000,
an increase of 40,000 shares; and
o consider and vote upon a proposal to amend the Company's Employee
Stock Option Plan (Proposal 3) to increase the number of shares
authorized to be issued under the plan from 300,000 to 460,000, an
increase of 160,000 shares.
Voting Securities, Record Date and Quorum
Record Date. The Board of Directors has fixed the close of business on
March 6, 2007, as the record date (the "Record Date") for determination of
shareholders entitled to notice of and to vote at the Meeting. As of the Record
Date, there were 3,538,833 shares of Common Stock issued and outstanding and
there were no other voting securities of the Company outstanding.
Quorum. The presence at the Meeting, in person or by proxy, of a
majority of the outstanding shares of Common Stock entitled to vote shall
constitute a quorum for the Meeting. Each outstanding share of Common Stock
entitles the record holder thereof to one vote. Abstentions and broker non-votes
are not counted as votes cast on any matter to which they relate, but are
counted in determining the presence of a quorum.
(1)
Election of Directors. Assuming the presence of a quorum, a plurality
of the votes cast at the Meeting is required to elect each of the nominees for
Director. Abstentions and broker non-votes will not be taken into account in
determining the outcome of the election of directors.
Amendment of the Stock Option Plans. To be approved, each of the
proposals to increase the number of shares which are authorized for issuance
upon exercise of options granted under the 2005 Non-Salaried Director Stock
Option Plan and under the Employee Stock Option Plan must receive the
affirmative vote of a majority of the shares of Common Stock cast in person or
by proxy at the Meeting. Uninstructed shares are not entitled to vote on these
proposals; accordingly, broker non-votes will not affect the outcome of the vote
on these proposals. Abstentions also will not affect the outcome of the vote on
these proposals.
Voting Rights and Solicitation of Proxies
Eligible shareholders of record may vote at the Meeting in person or by
means of the enclosed Proxy Card. You may specify your voting choices by marking
the appropriate boxes on the Proxy Card. The proxy solicited hereby, if properly
signed and returned to the Company and not revoked prior to or at the Meeting,
will be voted in accordance with the instructions specified thereon. If you
properly sign and return your Proxy Card, but do not specify your choices, your
shares will be voted by the proxy holders as recommended by the Board of
Directors.
The Board of Directors encourages you to complete and return the Proxy
Card even if you expect to attend the Meeting. You may revoke your proxy at any
time before it is voted at the Meeting by giving written notice of revocation to
the Secretary of the Company, by submission of a proxy bearing a later date or
by attending the Meeting in person and casting a ballot.
The proxy holders, Walter C. Johnsen and Susan H. Murphy, will vote all
shares of Common Stock represented by Proxy Cards that are properly signed and
returned by shareholders. The Proxy Card also authorizes the proxy holders to
vote the shares represented in their sole discretion with respect to any matters
not included in this Proxy Statement that may properly be presented for
consideration at the Meeting. YOU MUST RETURN A SIGNED PROXY CARD IF YOU WANT
THE PROXY HOLDERS TO VOTE YOUR SHARES OF COMMON STOCK.
The cost of soliciting proxies will be borne by the Company. Following
the mailing of proxy solicitation materials, proxies may be solicited by
directors, officers and employees of the Company and its subsidiaries
personally, by telephone or otherwise. Such persons will not receive any fees or
other compensation for such solicitation. In addition, the Company will
reimburse brokers, custodians, nominees and other persons holding shares of
Common Stock for others for their reasonable expenses in sending proxy materials
to the beneficial owners of such shares and in obtaining their proxies.
(2)
PROPOSAL 1:
ELECTION OF DIRECTORS
The By-laws provide that the Company have a Board of Directors of not less than
five or more than nine directors, with the number of directors to be fixed by
the Board from time to time. The number of directors is presently fixed at nine.
Directors serve until the next annual meeting and until their respective
successors have been elected and qualified.
The Board of Directors currently consists of nine directors. One incumbent
director, George R. Dunbar, has determined not to stand for reelection. His term
as a director will expire at the Meeting; at that time the number of directors
will be fixed at eight.
Eight Directors are to be elected at the Meeting to serve for one-year terms
until the 2008 Annual Meeting of Shareholders and until their respective
successors are elected and qualified. The Board has determined to nominate eight
individuals for election to the Board of Directors, each of whom is presently an
incumbent director. The Board of Directors knows of no reason why any nominee
would be unable to serve as Director. Each nominee has consented to being named
as a nominee for director of the Company in this Proxy Statement and to serve if
elected. If any nominee should for any reason become unable to serve, then all
valid proxies will be voted for the election of a substitute nominee designated
by the Board.
The following information about the nominees for election as our Directors is
based, in part, upon information furnished by the nominees.
------------------------- -------------------------------------------------- ----------------
Nominees Principal Occupation Director Since
------------------------- -------------------------------------------------- ----------------
Walter C. Johnsen Chairman of the Board and Chief Executive 1995
(age 56) Officer of the Company since January 1, 2007;
President and Chief Executive Officer of the
Company from November 30, 1995 to December
31, 2006. Formerly served as Vice Chairman
and a principal of Marshall Products, Inc.,
a medical supply distributor.
------------------------- -------------------------------------------------- ----------------
(3)
------------------------- -------------------------------------------------- ----------------
Gary D. Penisten Chairman Emeritus of the Board of the Company 1994
(age 75) since January 1, 2007; Chairman of the Board of
the Company from February 27, 1996 to
December 31, 2006. From 1977 to 1988, he was
Senior Vice President of Finance, Chief
Financial Officer and a Director of Sterling
Drug Inc. From 1974 to 1977 he served as
Assistant Secretary (Financial Management)
of the United States Navy. Prior to that, he
was employed by General Electric Company.
------------------------- -------------------------------------------------- ----------------
Richmond Y. Holden, Jr. President and Chief Executive Officer of J.L. 1998
(age 53) Hammett Co. from 1992 to 2006. J.L. Hammett Co.
established in 1863, was a reseller of
educational products through catalogs and
retail stores; focusing on the needs of
educational institutions. From 1997-2006 he
has also served as Chairman of the Board of
Ten Corp, a computer upgrade, network
services and computer services company.
------------------------- -------------------------------------------------- ----------------
Brian S. Olschan President and Chief Operating Officer of the 2000
(age 50) Company since January 1, 2007; Executive Vice
President and Chief Operating Officer of the
Company from January 25, 1999 to December
31, 2006; Senior Vice President - Sales and
Marketing of the Company from September 12,
1996 to January 24, 1999; formerly served as
Vice President and General Manager of the
Cordset and Assembly Business of General
Cable Corporation, an electrical wire and
cable manufacturer.
------------------------- -------------------------------------------------- ----------------
Stevenson E. Ward III Vice President and Chief Financial Officer of 2001
(age 61) Triton Thalassic Technologies, Inc. since
September 2000. From 1999 thru 2000, Mr. Ward
served as Senior Vice President-Administration
of Sanofi-Synthelabo, Inc. He also served as
Executive Vice President (1996-1999) and Chief
Financial Officer (1994-1995) of Sanofi, Inc.
and Vice President, Pharmaceutical Group,
Sterling Winthrop, Inc. (1992-1994). Prior to
joining Sterling he was employed by General
Electric Company.
------------------------- -------------------------------------------------- ----------------
(4)
------------------------- -------------------------------------------------- ----------------
Susan H. Murphy Vice President for Student and Academic 2003
(age 55) Services, Cornell University since 1994; Dean of
Admissions and Financial Aid from 1985 to 1994.
Employed at Cornell since 1978. Ms. Murphy
received a Ph.D. from Cornell University.
------------------------- -------------------------------------------------- ----------------
Rex L. Davidson President and Chief Executive Officer of Goodwill 2006
(age 57) Industries of Greater New York and Northern New
Jersey, Inc. and President of Goodwill Industries
Housing Corporation since 1982. Appointed by
Mayor Bloomberg to the New York City Workforce
Investment Board in 2002. Serves on the Board of
the Better Business Bureau Education and Research
Foundation. He also serves on the advisory board
for the Stony Brook University MBA Advisory
Board.
------------------------- -------------------------------------------------- ----------------
Stephen Spinelli, Jr. Vice Provost for Entrepreneurship and Global 2006
(age 52) Management and a member of the Babson College
faculty since 1993. Founder and former Chairman
of American Oil Change Corporation (DBA Jiffy
Lube). He consults with a wide array of
businesses globally. His Ph.D. in economics is
from Imperial College, University of London
(U.K.).
------------------------- -------------------------------------------------- ----------------
Board of Director Meetings and Committees
The Board of Directors had seven meetings in 2006. All Directors attended at
least 75% of the aggregate of the total number of the Board meetings and
meetings of Committees of which they were a member. The Board of Directors has
established standing Executive, Audit, and Compensation Committees, each of
which is comprised solely of independent non-employee members of the Board of
Directors. The Board of Directors does not have a standing Nominating Committee.
(5)
Independence Determinations
The Board of Directors annually determines the independence of directors. No
director is considered independent unless the Board has determined that he or
she has no material relationship with the Company, either directly or as a
partner, shareholder, or officer of an organization that has a material
relationship with the Company or otherwise. Material relationships can include
commercial, banking, consulting, legal, accounting, charitable, and familial
relationships, among others.
Independent directors are directors who, in the view of the Board of Directors,
are free of any relationship that would interfere with the exercise of
independent judgment. Under American Stock Exchange rules, the following persons
shall not be considered independent:
(a) a director who is or was employed by the Company or any of its
affiliates for the current year or any of the past three
years;
(b) a director who accepted or who has an immediate family member
who accepted any compensation from the Company or any of its
affiliates in excess of $60,000 during any period of twelve
consecutive months within the three years preceding the
determination of independence (other than compensation for
Board service, benefits under a tax-qualified retirement plan,
or non-discretionary compensation);
(c) a director who is a member of the immediate family of an
individual who is, or has been in any of the past three years,
employed by the Company as an executive officer.
(d) a director who is, or has an immediate family member who is, a
partner in, or a controlling shareholder or an executive
officer of, any organization to which the Company made, or
from which the Company received, payments (other than those
arising solely from investments in the Company's securities)
that exceed 5% of the Company's or business organization's
consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years;
(e) a director who is, or has an immediate family member who is
employed as an executive of another entity where at any time
during the most recent three fiscal years, any of the
Company's executive officers serve on that other entity's
compensation committee.
(f) a director who is, or has an immediate family member who is, a
current partner of the Company's outside auditor, or was a
partner or employee of the Company's outside auditor who
worked on the Company's audit at any time during any of the
past three years.
Immediate family includes a person's spouse, parents, children, sibling,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's home.
(6)
Mr. Johnsen, Chairman of the Board also serves as Chief Executive Officer of the
Company, and Mr. Olschan, a member of the Board, serves as President and Chief
Operating Officer of the Company. The Board has determined that all of the other
current directors who are standing for reelection are "independent" within the
meaning of the applicable listing standards of the American Stock Exchange.
These independent directors are: Mr. Davidson, Mr. Holden, Ms. Murphy, Mr.
Penisten, Mr. Spinelli and Mr. Ward.
Executive Committee
The Executive Committee of the Board of Directors is composed of Mr. Penisten as
Chairman, and Mr. Dunbar. The function of the Executive Committee is to act for
the Board of Directors during the intervals between meetings of the Board. There
were no meetings of the Executive Committee in 2006.
Audit Committee
The Audit Committee assists the Board of Directors in overseeing (1) the audit
and integrity of our financial statements, (2) the performance of our
independent auditors, (3) the adequacy and effectiveness of our accounting,
auditing and financial reporting processes, and (4) our compliance with legal
and regulatory requirements. The duties of the Audit Committee include the
selection and appointment of our independent auditors, including evaluation of
their qualifications, performance and independence. The Board of Directors has
determined that all members of the Audit Committee are "independent" and
"financially literate" within the meaning of the applicable listing standards of
the American Stock Exchange. In addition, the Board has determined that Mr. Ward
qualifies as an "audit committee financial expert" within the meaning of
regulations adopted by the Securities and Exchange Commission and has the
financial sophistication required under the listing standards of the American
Stock Exchange.
The Committee consists of Mr. Ward, Chairman, Messrs. Davidson, Holden and
Spinelli. The Audit Committee meets at least quarterly, and more often as
needed. The Committee met six times in 2006. The Board of Directors has adopted
a written charter for the Audit Committee, which is reviewed annually by the
Audit Committee.
Nominations for Directors
The functions of the Nominating Committee are performed by the whole Board.
Board of Director nominations are recommended for the entire Board's selection
by a majority of the Board's "independent directors," as such term is defined in
Section 121A of the American Stock Exchange's listing standards.
The Board will consider nominees for directors recommended in writing by
shareholders to the Board at least sixty (60) days prior to the annual meeting
at which the election of directors is to be held (subject to certain
requirements set forth in the by-laws). The nomination should be sent in care of
the Secretary at the Company's principal executive office, and should include
the name, address, telephone number and resume of his or her business and
educational background along with a written statement by the shareholder as to
why such person should be considered for election to the Board of Directors.
(7)
The Board follows the same evaluation procedures whether a candidate is
recommended by directors or shareholders. In identifying and evaluating nominees
for director, the Board considers whether the candidate has the highest ethical
standards and integrity and sufficient education, experience and skills
necessary to understand and wisely act upon the complex issues that arise in
managing a publicly-held company. The Board commences its evaluation of
candidates on the basis of materials submitted by or on behalf of the candidate
and on the basis of the knowledge of members of the Board and management
regarding the candidate. To the extent the Board does not have enough
information to evaluate a candidate, the Board may send a questionnaire to the
candidate for completion in enough time for Board consideration. In addition, it
has historically been customary for some members of the Board to meet with the
candidate individually or in small groups.
Compensation Committee
The Compensation Committee of the Board of Directors assists the Board in
establishing the compensation policies for cash and equity compensation of our
executive officers. The duties of the Committee include evaluating and making
recommendations to the Board regarding the compensation and equity incentives
and awards for our executive officers and the administration of the Company's
Non-Salaried Director Stock Option Plan. The Committee consists of Mr. Holden,
Chairman, Messrs. Dunbar and Penisten, and Ms. Murphy. The Committee had three
meetings during 2006.
Compensation of Directors
Directors' Cash Fees
Cash Compensation
As described below, the Company provided in 2006 non-employee directors cash
compensation consisting of annual fees and fees for Board and committee meetings
attended. The Chairman of the Board and each director who chaired a committee
received additional compensation to compensate for the additional responsibility
and effort associated with the respective position. These fees consisted of:
o an annual fee of $14,000 payable quarterly;
o $800 for each Board meeting attended;
o $800 paid to the Chairman of the Board for each Board meeting;
o $600 for each committee meeting attended;
o $600 to the committee chairpersons for each committee meeting
conducted;
o an annual fee of $3,200 to the Chairperson of the Audit Committee; and
o reimbursement for customary and usual travel expenses.
(8)
Directors' Stock Options
On April 24, 2006, the date of the last annual meeting of shareholders, each
non-employee director re-elected to the Board of Directors received an annual
option grant, as provided under the 2005 Non-Salaried Director Stock Option
Plan, to purchase 2,500 shares of Common Stock with an exercise price of $14.81
per share. Each option was immediately exercisable in full.
Under the Non-Salaried Director Stock Option Plan, each new director, upon
becoming a member of the Board of Directors, receives an option to purchase
5,000 shares of Common Stock. On April 24, 2006, the date of the last annual
meeting of shareholders, two new non-employee Board members received options to
purchase 5,000 shares at an exercise price of $14.81 per share. These options
vest as follows: 25% on the day after the date of the grant; 25% one day after
first year anniversary of the date of grant; 25% one day after second year
anniversary of date of grant; 25% one day after third year anniversary of date
of grant.
Attendance at Annual Meetings
While the Company has no formal policy regarding the attendance of Board members
at annual meetings of shareholders, director attendance is deemed very important
and is strongly encouraged. All eight then incumbent members of the Board
attended the 2006 Annual Meeting of Shareholders.
Shareholder Communications with Directors
The Company has established a process for shareholders to send communications to
the Board of Directors. Shareholders may send communications to the Board of
Directors to the attention of the Secretary, Acme United Corporation, 60 Round
Hill Road, Fairfield, Connecticut 06824, who will forward them to all Board
members within a reasonable time after receipt. If the shareholder wishes the
communication to be sent to one or more specific Board members only, the
addressee should be the specific Board member(s), "c/o Secretary", who will then
forward the communication to such Board member(s). If one or more specific Board
members are not designated for such other communication, the communication will
be forwarded to the entire Board.
(9)
OWNERSHIP OF ACME UNITED CORPORATION STOCK
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of March 1, 2007, with
respect to the beneficial ownership of shares of Common Stock by any person who,
to the knowledge of the Company, owns beneficially more than 5% of the
outstanding shares of Common Stock of the Company.
--------------------------- --------------------- --------------------- --------------
Number of
Beneficially Shares Percent of
Shareholder Type of Ownership Owned (1) Class
--------------------------- --------------------- --------------------- --------------
Walter C. Johnsen Direct 602,272 16.90
60 Round Hill Road
Fairfield, CT 06824
--------------------------- --------------------- --------------------- --------------
R. Scott Asen Direct 371,142 10.49
Asen and Co.
224 East 49th Street
New York, NY 10017
--------------------------- --------------------- --------------------- --------------
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information, as of March 1, 2007, with
respect to the beneficial ownership of shares of Common Stock by (i) each
director and nominee for director of the Company; (ii) each executive officer
named in the Summary Compensation Table appearing below under "Executive
Compensation"; and (iii) all executive officers and directors as a group. The
persons shown have sole voting and investment power in these shares except as
shown in the footnotes below.
The address of each person who is an officer or director of the Company is 60
Round Hill Road, Fairfield, CT 06824.
-------------------------------------- -------------------------- -----------
Name and Address of Beneficial Owner Number of Shares Percent
Beneficially Owned (1)
-------------------------------------- -------------------------- -----------
James A. Benkovic (2) 25,250 *
-------------------------------------- -------------------------- -----------
Larry H. Buchtmann (3) 56,000 1.56
-------------------------------------- -------------------------- -----------
(10)
-------------------------------------- -------------------------- -----------
Rex L. Davidson (4) 2,500 *
-------------------------------------- -------------------------- -----------
Paul G. Driscoll (5) 39,179 1.10
-------------------------------------- -------------------------- -----------
George R. Dunbar (6) 47,809 1.35
-------------------------------------- -------------------------- -----------
Richmond Y. Holden, Jr. (7) 40,772 1.14
-------------------------------------- -------------------------- -----------
Walter C. Johnsen (8) 602,272 16.90
-------------------------------------- -------------------------- -----------
Susan M. Murphy (9) 15,006 *
-------------------------------------- -------------------------- -----------
Brian S. Olschan (10) 119,750 3.30
-------------------------------------- -------------------------- -----------
Gary D. Penisten (11) 108,000 3.03
-------------------------------------- -------------------------- -----------
Stephen Spinelli, Jr. (4) 2,500 *
-------------------------------------- -------------------------- -----------
Stevenson E. Ward III (12) 18,200 *
-------------------------------------- -------------------------- -----------
Executive Officers and Directors 1,077,238 27.94
as a Group (12 persons)
-------------------------------------- -------------------------- -----------
*Less than 1.0%
(1) Based on a total of 3,538,833 outstanding shares as of March 1, 2007.
Under applicable rules promulgated under the Securities Exchange Act of
1934, as amended, a person is deemed to be the beneficial owner of
shares of Common Stock if, among other things, he or she directly or
indirectly has or shares voting power or investment power with respect
to such shares. A person is also considered to beneficially own shares
of Common Stock which he or she does not actually own but has the right
to acquire presently or within the next sixty (60) days, by exercise of
stock options or otherwise.
(2) Includes 25,250 shares issuable upon exercise of options.
(3) Includes 55,000 shares issuable upon exercise of options.
(4) Includes 2,500 shares issuable upon exercise of options.
(5) Includes 36,000 shares issuable upon exercise of options.
(6) Includes 12,500 shares issuable upon exercise of options.
(7) Includes 30,000 shares issuable upon exercise of options.
(8) Includes 25,000 shares issuable upon exercise of options.
(9) Includes 11,500 shares issuable upon exercise of options.
(11)
(10) Includes 88,750 shares issuable upon exercise of options.
(11) Includes 22,500 shares issuable upon exercise of options.
(12) Includes 5,000 shares issuable upon exercise of options.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation Policy
-----------------------------
Our compensation policies and programs for our executive officers are
designed to support the overall objective of enhancing value for our
shareholders. To achieve this objective, it is critical that we be able to
attract, motivate, reward and retain highly qualified and productive
individuals. This is to be accomplished by:
o directly relating compensation to both Company and individual
performance;
o structuring compensation levels to be externally competitive and
internally equitable;
o enabling key employees to share in the future success of the
Company by acquiring equity interests in the Company; and
o designing compensation programs to provide an optimal combination
of costs to the Company and value to our employees.
In 2006, the compensation and benefits for our executive officers
consisted of four components:
o base salary;
o a cash incentive bonus award;
o stock option awards; and
o a benefits package.
We believe that this program balances cash and equity compensation and the mix
of currently-paid and longer-term compensation in a way that furthers the
compensation objectives described above. A description of each of the elements
of our executive compensation program is set forth below, together with a
description of how each element relates to the policies and objectives outlined
above.
(12)
Base Salary
-----------
Base salary is the fixed element of our executive officers' annual cash
compensation. The base salaries for our officers are set annually and reflect
the following factors pertaining to each officer:
o performance during the prior year and historical, long-term
performance;
o skills and experience;
o the level and scope of responsibility; and
o relative pay differences among different officer levels within
the Company.
We also consider external factors in determining base salaries for our
officers. These include the following:
o cost of living in the areas in which our executives reside; and
o the significant level of competition for outstanding senior
executives.
In determining appropriate base salary levels for our Chief Executive
Officer and the other executive officers named in the Summary Compensation
Table, below, the Committee historically has reviewed the results of relevant
published studies regarding compensation of executive officers. The Committee
has also reviewed selected compensation data for similar positions published by
public companies. Based on the current and historical knowledge of the Committee
and its reviews and analyses of data which it deemed relevant, as described
above, the Committee believes that it had information available to it sufficient
for its recommendations to the Board of Directors regarding executive
compensation.
In setting base salaries for the Company's executive officers in 2006,
the Committee and the Board gave considerable weight to the Company's strong
results in 2005. The Company's net sales for the year increased by 15%.
Excluding a non-recurring charge recorded in the third quarter of 2005, earnings
per share for 2005 increased to a record $1.02 per diluted share. The Company
also had strong returns on investment and on assets.
In setting the base salary of Mr. Johnsen for 2006, the Board, upon
recommendation by the Committee, considered the Company's strong performance in
2005 and Mr. Johnsen's accomplishment of objectives which he and the Committee
had established in early 2005. The Board also recognized Mr. Johnsen's continued
strong leadership. Accordingly, Mr. Johnsen's annual base salary was increased
by 11.1 percent, effective May 1, 2006.
The Committee reviewed similar considerations for each of the other
named executive officers. As a result of its review, the Committee recommended,
and the Board approved, annual salary increases for the other named executive
officers ranging from 6.0 percent to 11.3 percent, effective May 1, 2006.
(13)
Cash Bonus Plan
---------------
Our executive officers are eligible to receive cash incentive awards
under our Officers' Cash Bonus Plan upon the achievement of both Company and
individual performance objectives. These awards are paid from a bonus pool which
is a component of the Company's annual budget established by the Board of
Directors. The Company generally makes cash awards under this Plan if the
Company achieves the minimum level of net income set for the applicable year.
However, the Company may make awards at its discretion if the minimum levels of
net income are not attained due to unusual circumstances, but where the
performance of individual executive officers merit such awards. The Company will
pay higher bonus amounts if net income exceeds various threshold levels above
the base minimum level, subject, however, to budgetary considerations which
arise as the year progresses. The net income levels are set on an annual basis.
During 2006, the Chief Executive Officer proposed bonus awards and
reviewed them with the Chairman of the Compensation Committee and subsequently
with the full Compensation Committee. The individual awards were based,
primarily, on accomplishments toward objectives established at the beginning of
the year. The Chief Executive Officer provided written summaries of
accomplishments to the members of the Compensation Committee. The individual
awards proposed by the Compensation Committee were presented to the independent
directors of the full Board for final approval.
Equity Incentives - Stock Options
---------------------------------
The Company's stock option program is administered by the Board of
Directors, which acts upon recommendations of the Compensation Committee. The
purpose of the Company's stock option program is to facilitate the acquisition
of equity interests in the Company by its key employees and thus their sharing
in the future success of the Company's business. Accordingly, the stock option
program is intended as a means not only of attracting and retaining outstanding
management personnel but also of promoting a closer identity of interests
between employees and shareholders.
Stock options align employee interests with the interests of
shareholders because employees are able to benefit from the exercise of stock
options only if the price of our stock increases over time. The options granted
by the Company to employees historically have had a term of ten years and vest
over a period presently set at four years. These characteristics encourage
employees to focus on long-term growth. In addition, the vested portions of
unexercised options are forfeited thirty (30) days after the termination of
employment if the employee leaves the Company for any reason other than death,
disability or retirement. The vesting and forfeiture requirements are intended
to help the Company retain key employees. The Company does not re-price options;
likewise, if the stock price declines after the grant date, we do not replace
options.
The Company generally seeks to award stock options annually to
executive officers and other key employees up to a total maximum amount which
the Board deems to be prudent, taking into account factors such as:
(14)
o the total number of shares of common stock outstanding;
o the total number of shares of common stock which remain available
for grant under the Company's various stock option plans; and
o the need to have an appropriate balance between currently-paid
and longer-term compensation and between cash and equity
compensation.
The Company generally grants options to employees at regularly
scheduled meetings of the Board of Directors. Special circumstances, such as
entering into new employment arrangements and making promotions may result in
grants of options from time-to-time throughout the year at the discretion of the
Board upon the recommendation of the Committee.
The Company may grant both incentive stock options (ISOs) and
non-qualified stock options. However, commencing in July 2006, the Company has
granted only non-qualified stock options to its employees.
Options granted to employees historically had a vesting period of three
years. In June 2006, the Company determined to lengthen the vesting period of
options from three to four years. This action is intended to further encourage
employees to focus on long-term growth and to enhance the retention feature of
the options.
Since the employees eligible to receive options under its stock option
plan will be those who are in a position to make important and direct
contributions to the success of the Company, the Board believes that the grant
of options under the plan has been and will continue to be in the best interests
of the Company.
Perquisites
-----------
We have not provided significant perquisites or similar personal
benefits to our executive officers. The Company historically has reimbursed its
Chief Executive Officer for a small amount of out-of-pocket health care costs.
Employee Benefits
-----------------
The Company provides core employee benefits, including medical and
dental coverage, disability insurance and life insurance. The benefits available
are the same for all executive officers.
Retirement Benefit Plans
------------------------
401(k) Plan
-----------
The Acme United Corporation 401(k) Profit Sharing Plan, or 401(k) plan,
is the primary retirement benefit offered to all United States employees of the
Company. Participants may generally contribute to the Plan annually up to the
maximum amount permitted under the Internal Revenue Code - $15,000 in 2006
($20,000 for persons over age 50). The Company provides to participants a
matching contribution equal to fifty percent of the first six percent of the
participant's eligible compensation not to exceed limits on eligible
compensation imposed by the Internal Revenue Code - $220,000 in 2006.
(15)
Pension Plan
------------
Our United States employees hired prior to July 1, 1993 are covered by
a funded defined benefit plan ("Pension Plan"). Benefits under the Pension Plan
are based on years of service and the average compensation of the highest three
consecutive years during the last ten (10) years of employment.
In December 1995, the Board of directors adopted a resolution to freeze
the Pension Plan resulting in no further benefit accruals after February 1,
1996. With the exception of James A. Benkovic, none of the Named Executive
Officers is a participant of the Pension Plan. Information regarding the annual
life benefit for Mr. Benkovic is set forth in the "Pension Benefits" table which
appears below in this proxy statement. A detailed discussion of the Pension Plan
accompanies the "Pension Benefits" table.
Compensation Committee
----------------------
The Compensation Committee, comprised of independent directors,
reviewed and discussed the above Compensation Discussion and Analysis (CD&A)
with the Company's management. Based on the review and discussions, the
Compensation and Benefits Committee recommended to the Company's Board of
Directors that the CD&A be included in these Proxy Materials.
Compensation Committee
Richard Y. Holden, Jr., Chairman
George R. Dunbar, Vice Chairman
Susan M. Murphy
Gary D. Penisten
(16)
Summary Compensation Table
The following table sets forth information concerning the compensation of the
Company's Principal Executive Officer (PEO), Principal Financial Officer (PFO),
and each of the three other most highly compensated executive officers (NEOs) of
the Company for the fiscal year ended December 31, 2006. These five officers are
referred to as named executive officers, or NEOs.
All Other
Bonus Option Awards Compensation Total
Name and Principal Position Year Salary ($) ($) (1) ($) (2) ($) ($)
Walter C. Johnsen 2006 $386,154 $100,000 $32,320 $19,619 (3) $538,093
President & Chief
Executive Officer
Brian S. Olschan 2006 $333,035 $ 75,000 $25,890 $ 8,127 (4) $442,052
Executive Vice President &
Chief Operating Officer
Paul G. Driscoll 2006 $193,177 $ 40,000 $16,960 $ 4,427 (4) $254,564
Vice President-Chief
Financial Officer
James A. Benkovic 2006 $193,177 $ 40,000 $13,162 $ 5,027 (4) $251,366
Senior Vice President of
Global Sales
Larry H. Buchtmann 2006 $174,039 $ 8,000 0 $ 6,143 (4) $188,182
Vice President-
Operations and Technology
(1) The bonus reported includes bonuses for the fiscal year reported paid
both during and after the end of the fiscal year.
(2) Represents the compensation costs of stock options for financial
reporting purposes for the year under FAS 123 (R), rather than an
amount paid to or realized by the named executive officer.
(3) Consists of reimbursement of out of pocket healthcare expenses,
payment of life insurance premiums and Company matching contribution
to the Company's 401(K) Profit Sharing Plan.
(4) Consists of reimbursement of payments of life insurance premiums and
Company matching contributions to the Company's 401(K) Profit Sharing
Plan.
(17)
Grants of Plan Based Awards
The following table provides information concerning each option granted during
the last fiscal year to each of the named executive officers and the grant date
fair value of these awards.
---------------------- -------------- ----------------- ---------------------- ------------------------
Number of
Shares
Underlying
Options Grant Date
Granted (1) Exercise or Fair Value of Option
Name Grant Date # Base Price (2) Awards (3)
---------------------- -------------- ----------------- ---------------------- ------------------------
Walter C. Johnsen 7/31/06 15,000 $15.15 per share $79,200
---------------------- -------------- ----------------- ---------------------- ------------------------
Brian S. Olschan 7/31/06 15,000 $15.15 per share $79,200
---------------------- -------------- ----------------- ---------------------- ------------------------
Paul G. Driscoll 7/31/06 10,000 $15.15 per share $52,800
---------------------- -------------- ----------------- ---------------------- ------------------------
James A. Benkovic 7/31/06 10,000 $15.15 per share $52,800
---------------------- -------------- ----------------- ---------------------- ------------------------
(1) Each option vests in four equal annual installments commencing on the
first anniversary of the date of grant and thereafter on the annual
anniversary of the grant date.
(2) The exercise price of each option is equal to 100 percent of fair
market value on the date of grant. The fair market value was
determined to be the closing price of the Common Stock on the trading
day immediately preceding the grant date.
(3) Represents the aggregate FAS 123(R) values of options granted during
the year. The per-option FAS 123(R) grant date value was $5.28 for all
options.
The Board also granted options for 41,000 shares in the aggregate to 15 other
employees with staggered vesting dates through July 31, 2010.
Outstanding Equity Awards at Fiscal Year-End
The following table shows outstanding stock option awards classified as
exercisable and unexercisable as of December 31, 2006 for the PEO, PFO and each
NEO.
(18)
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Number of Securities Option
Underlying Unexercised Number of Securities Underlying Exercise Option
Options at Fiscal Year End Unexercised Options at Fiscal Price Expiration
Name (#) Exercisable Year End (#) Unexercisable ($) Date (1)
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Walter C. Johnsen 10,000 $ 4.00 6/23/13
10,000 10,000 $ 15.65 4/28/15
15,000 $ 15.15 7/31/16
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Brian S. Olschan 10,000 $ 7.25 9/23/07
7,500 $ 1.63 1/25/10
5,000 $ 3.56 10/10/10
20,000 $ 2.75 5/07/11
20,000 $ 3.05 11/12/11
15,000 $ 4.00 6/23/13
7,500 7,500 $ 15.65 4/28/15
15,000 $ 15.15 7/31/16
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Paul G. Driscoll 10,000 $ 3.55 3/19/11
1,000 $ 3.05 11/12/11
10,000 $ 3.75 9/23/12
7,500 $ 4.00 6/23/13
5,000 5,000 $ 15.65 4/28/15
10,000 $ 15.15 7/31/16
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
James A. Benkovic 5,000 $ 2.75 5/07/11
10,000 $ 3.05 11/12/11
5,000 $ 4.00 6/23/13
3,500 3,500 $ 15.65 4/28/15
10,000 $ 15.15 7/31/16
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
Larry H. Buchtmann 7,000 $ 5.00 3/17/08
10,000 $ 2.13 1/26/09
5,000 $ 2.13 6/22/09
5,000 $ 1.63 1/25/10
5,000 $ 2.38 4/24/10
5,000 $ 3.56 10/10/10
8,000 $ 2.75 5/07/11
10,000 $ 3.05 11/12/11
-------------------- ------------------------------- ---------------------------------- ------------- ---------------
(1) Each option with an expiration date of 2015 or earlier vests in four equal
parts commencing on the day after the date of grant and on each of the
three anniversary dates of the date of grant. Options with an expiration
date of 2016 vests as to one-fourth of the option grant beginning on the
first anniversary of grant date. Each option grant has a ten year term.
Option Exercises
The following table provides information concerning each option exercised during
the last fiscal year by each of the named executive officers.
(19)
-------------------------- ------------------ -----------------
Name Shares Acquired Value Realized
on Exercise (#) ($)(1)
-------------------------- ------------------ -----------------
James A. Benkovic 12,000 $136,900
-------------------------- ------------------ -----------------
(1) Values stated are based on the closing price per share of the Company's
Common Stock on the American Stock Exchange on the exercise date.
Pension Benefits
The following table provides information concerning the years of credited
service of, present value of the accrued benefits for, and payments during the
last fiscal year to the named executive officer under the Pension Plan.
------------------------- --------------- ---------------- ------------------------- -----------------
Name Plan Name Number of Years Present Value of Payments
Credited Service Accumulated Benefit During Last
(#) ($) Fiscal Year
------------------------- --------------- ---------------- ------------------------- -----------------
James A. Benkovic Pension 6 $49,016 $0
Plan
------------------------- --------------- ---------------- ------------------------- -----------------
The Company's Notes to Consolidated Financial Statements, Note 6, "Pension and
Profit Sharing," discusses assumptions applied in quantifying the present value
of the current accrued benefit.
United States employees hired prior to July 1, 1993 are covered by a funded,
defined benefit plan ("Retirement Plan"). Under the Plan, the Company would pay
an annual retirement income for the life of the eligible employee. Benefits
under the Retirement Plan are based on years of service and the average
compensation of the highest three consecutive years during the last ten (10)
years of employment. The Company uses a December 31 measurement date for the
Retirement Plan.
In December 1995, the Board of directors adopted a resolution to freeze the
Retirement Plan resulting in no further benefit accruals after February 1, 1996.
With the exception of James A. Benkovic, none of the Named Executive Officers is
a participant of the Pension Plan. The annual life benefit at age sixty-five
(65) was $3,985 for James A. Benkovic.
(20)
Change in Control Arrangements--Salary Continuation Plan
--------------------------------------------------------
The Company has a Salary Continuation Plan that covers officers of the Company
at the level of Corporate Vice President or above, under the age of sixty-five
(65). The Plan is designed to retain key employees and provide for continuity of
management in the event of an actual or threatened change in control of the
Company. A covered officer would receive payment under the Plan if there is a
disposition of the Company and, within one year (or if such employee is also a
director, within two years) after such change in control, one of the following
triggering events occurs:
o involuntary termination;
o a reduction in responsibility, status or compensation;
o transfer to a location unreasonably distant from his or her current
location; or
o voluntary resignation.
A disposition of the Company shall include (i) a sale of substantially all the
assets of the Company or a successor or of a Division with more than 50% of the
sales of the Company in the preceding full year of operations, such that
shareholder approval is required and (ii) the acquisition by any such person or
group of persons acting in concert, of legal or beneficial ownership of fifty
percent (50%) or more of the voting stock of the Company, or its successor.
The compensation provided to a covered officer upon disposition of the Company
would consist of the following:
o monthly salary rate being paid at the date of the change in control
multiplied by the number of months payable;
o average monthly incentive bonus payments for the prior three taxable
years multiplied by the number of months payable; and
o medical, life and other insurance in effect at the date of disposition
to continue into the future for the number of months compensation is
payable.
Payment of the first two items would be in a lump sum, payable no later than
thirty (30) days after the date on which the officer submits notice to the Board
that the officer wishes to exercise his or her rights under the Plan.
A Director of the Company who is also an officer of the Company at the level of
Executive Vice President or above would be entitled to the value of thirty-six
(36) months' compensation and benefits for thirty-six (36) months. Officers at
the level of Senior Vice President and Vice President would be entitled to the
value of twenty-four (24) months' compensation and benefits for twenty-four (24)
months.
The Plan presently covers Walter C. Johnsen, Brian S. Olschan, James A.
Benkovic, Larry H. Buchtmann and Paul G. Driscoll. Walter C. Johnsen and Brian
S. Olschan would be entitled to the value of thirty-six (36) months of
compensation and benefits. James A. Benkovic, Larry H. Buchtmann and Paul G.
Driscoll would be entitled to the value of twenty-four (24) months of
compensation and benefits.
(21)
The table below estimates amounts payable in connection with a triggering event
as if the event occurred on December 31, 2006.
----------------- --------------- ------------------- -------------------- ------------------ --------------
Aggregate Incentive Bonus Continuation of Accelerated Total
Severance Payments Welfare Benefits Vesting of Stock
Payment Options
----------------- --------------- ------------------- -------------------- ------------------ --------------
Walter C. $1,200,000 $500,000 $72,567 0 $1,772,567
Johnsen
----------------- --------------- ------------------- -------------------- ------------------ --------------
Brian S. $1,035,000 $385,000 $52,427 0 $1,472,427
Olschan
----------------- --------------- ------------------- -------------------- ------------------ --------------
Paul G. $ 400,000 $120,000 $25,374 0 $ 545,374
Driscoll
----------------- --------------- ------------------- -------------------- ------------------ --------------
James A. $ 400,000 $120,000 $13,734 0 $ 533,734
Benkovic
----------------- --------------- ------------------- -------------------- ------------------ --------------
Larry H. $ 355,000 $ 32,000 $35,765 0 $ 422,765
Buchtmann
----------------- --------------- ------------------- -------------------- ------------------ --------------
(22)
Severance Pay Plan
------------------
The Severance Pay Plan covers officers of the Company employed in the
United States at the level of Corporate Vice President or above, under the age
of sixty-five (65). The Plan is designed to enable the Company to attract and
retain key employees. A covered officer would receive payments under the Plan if
one of the following triggering events occurs:
o involuntary termination for any reason other than gross misconduct;
o death;
o reduction of responsibility, status or compensation reduced; or
o transfer to a location unreasonably distant from his or her current
location.
This Plan would only apply if the Salary Continuation Plan would not apply.
Payment under this Plan, except in the event of termination by death, would be
equivalent to one month's salary multiplied by each year of service to the
Company based upon the level of his or her compensation in effect immediately
preceding such termination. The Plan sets out a minimum and maximum number of
months' compensation payable to each such employee upon such severance. The Plan
would also provide death benefits to covered officers' beneficiaries.
A Director of the Company who is also an Officer of the Company at the
level of Executive Vice President or above would be entitled to a minimum of
nine (9) months' compensation and a maximum of thirty (30) months' compensation.
In the event of such officer's death, his or her beneficiaries would be entitled
to nine (9) months' compensation. Officers at the level of Senior Vice President
or Vice President would be entitled to a minimum of six (6) months' compensation
and a maximum of eighteen (18) months' compensation. In the event of such
officer's death, his or her beneficiaries would be entitled to six (6) months'
compensation. Payments would be made in a single lump sum.
This Plan covers Walter C. Johnsen, Brian S. Olschan, James A. Benkovic,
Larry H. Buchtmann and Paul G. Driscoll. Walter C. Johnsen and Brian S. Olschan
would be entitled to a minimum of nine (9) months' compensation and a maximum of
thirty (30) months' compensation. James A. Benkovic, Larry H. Buchtmann and Paul
G. Driscoll would be entitled to a minimum of six (6) months' compensation and a
maximum of eighteen (18) months' compensation. In the event of termination by
death, beneficiaries of Walter C. Johnsen and Brian S. Olschan would be entitled
to a minimum of nine (9) months' compensation and beneficiaries of James A.
Benkovic, Larry H. Buchtmann and Paul G. Driscoll would be entitled to a minimum
of six (6) months' compensation.
(23)
The table below estimates amounts payable in connection with a triggering
event as if the event occurred on December 31, 2006.
------------------- ------------------ ------------------ --------------------
Number of Present Total
Months' Monthly Cash Severance
Compensation Compensation Payment
------------------- ------------------ ------------------ --------------------
Walter C. Johnsen 11.1 $33,333 $369,444
------------------- ------------------ ------------------ --------------------
Brian S. Olschan 10.3 $28,750 $297,083
------------------- ------------------ ------------------ --------------------
Paul G. Driscoll 6.0 $16,667 $100,000
------------------- ------------------ ------------------ --------------------
James A. Benkovic 16.6 $16,667 $276,389
------------------- ------------------ ------------------ --------------------
Larry H. Buchtmann 8.8 $14,792 $130,660
------------------- ------------------ ------------------ --------------------
Director Compensation
The following table discloses the cash, equity awards and other compensation
earned, paid or awarded, as the case may be, to each of the Company's directors
during the fiscal year ended December 31, 2006.
------------------------ ---------------------- ----------------- --------------
Fees Earned or Paid Option Awards
Name in Cash ($) ($)(1) Total
------------------------ ---------------------- ----------------- --------------
Rex L. Davidson $17,900 $ 3,933 $21,833
------------------------ ---------------------- ----------------- --------------
George R. Dunbar $22,800 $11,800 $34,600
------------------------ ---------------------- ----------------- --------------
Richmond Y. Holden, Jr. $25,000 $11,800 $36,800
------------------------ ---------------------- ----------------- --------------
Wayne R. Moore (2) $ 5,700 $ 0 $ 5,700
------------------------ ---------------------- ----------------- --------------
Susan M. Murphy $21,600 $11,800 $33,400
------------------------ ---------------------- ----------------- --------------
Gary D. Penisten $28,000 $11,800 $39,800
------------------------ ---------------------- ----------------- --------------
Stephen Spinelli, Jr. $17,900 $ 3,933 $21,833
------------------------ ---------------------- ----------------- --------------
Stevenson E. Ward III $27,600 $11,800 $39,400
------------------------ ---------------------- ----------------- --------------
(1) Represents the compensation costs of stock options for financial reporting
purposes for the year under FAS 123 (R), rather than an amount paid to or
realized by the named executive officer.
(24)
The exercise price of each option is equal to 100 percent of fair market
value on the date of grant. The fair market value was determined to be the
closing price of the Common Stock on the trading day immediately preceding
the grant date.
(2) Mr. Moore declined to stand for re-election to the Board in 2006.
Accordingly, his term as a director expired on April 24, 2006.
The following table shows the aggregate number of option awards outstanding for
each director as of December 31, 2006 as well as the grant date fair value of
option grants made during 2006.
-------------------------------- ----------------------- ----------------------
Grant Date
Aggregate Option Fair Value of Option
Awards Outstanding as Awards
Name of December 31, 2006 made during 2006 (1)
-------------------------------- ----------------------- ----------------------
Rex L. Davidson 5,000 $23,600
-------------------------------- ----------------------- ----------------------
George R. Dunbar 22,500 $11,800
-------------------------------- ----------------------- ----------------------
Richmond Y. Holden, Jr. 30,000 $11,800
-------------------------------- ----------------------- ----------------------
Wayne R. Moore (2) 25,000 $ 0
-------------------------------- ----------------------- ----------------------
Susan M. Murphy 11,500 $11,800
-------------------------------- ----------------------- ----------------------
Gary D. Penisten 32,500 $11,800
-------------------------------- ----------------------- ----------------------
Stephen Spinelli, Jr. 5,000 $23,600
-------------------------------- ----------------------- ----------------------
Stevenson E. Ward III 5,000 $11,800
-------------------------------- ----------------------- ----------------------
(1) Represents the aggregate FAS 123(R) values of options granted during the
year. The per-option FAS 123(R) grant date value was $4.72 for all options.
(2) Mr. Moore declined to stand for re-election to the Board in 2006.
Accordingly, his term as a director expired on April 24, 2006.
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. The Audit Committee has reviewed and discussed our
audited consolidated financial statements for the year ended December 31, 2006,
with management and with representatives of Ernst & Young LLP, our independent
auditors, including a discussion of the applicability and quality of accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
(25)
Management has the primary responsibility for the financial statements and our
accounting, auditing and financial reporting processes. The Audit Committee is
not providing any expert or special assurance as to our financial statements.
Ernst & Young LLP is responsible for expressing an opinion on the conformity of
our financial statements with generally accepted accounting principles in the
United States. The Audit Committee is not providing any professional
certification as to Ernst & Young's work product.
The Audit Committee has discussed with representatives of Ernst & Young the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Audit Committee has received and
reviewed the written disclosures and letter from Ernst & Young required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and has discussed the independence of Ernst & Young with
representatives of the firm.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plan for their respective audits. The Audit Committee met with
the independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting.
Based on the reviews and discussion referred to above, the Audit Committee
recommended to the Board of Directors that our audited consolidated financial
statement for the year ended December 31, 2006 be included in our Annual Report
on Form 10-K for the year ended December 31, 2006 for filing with the Securities
and Exchange Commission.
Stevenson E. Ward, III, Chair
Rex L. Davidson., Member
Richmond Y. Holden, Jr., Member
Stephen Spinelli Jr., Member
Transactions with Related Persons
There were no material transactions between the Company and any "related
person". The term related person includes any executive officer of the Company,
any director or nominee for election as director, any security holder holding
more than 5% of the Common Stock of the Company or any immediate family member
of any of the foregoing persons.
Policy
------
The Board of Directors has determined that transactions involving the
Company and related persons shall be reviewed and approved by the Audit
Committee. The Charter of the Audit Committee requires that related person
transactions must be reviewed and approved by the Audit Committee of the Board,
which consists solely of independent directors. This requirement covers any such
transaction and is not limited to transactions which meet the minimum threshold
for disclosure in the proxy statement under the relevant SEC rules (generally,
transactions involving amounts exceeding $120,000 in which a related person has
a direct or indirect material interest).
(26)
Procedures
----------
Management or the affected director or executive officer will bring the
transaction to the attention of the Audit Committee. The transaction must be
approved in advance whenever practicable, and if not practicable, must be
reviewed as promptly as practicable. Although the Audit Committee has not
adopted formal procedures for the review and approval of transactions with
related persons, the Audit Committee will approve the transaction only if it
determines that it is in the best interests of the Company.
The Audit Committee would periodically monitor the transaction to
ensure that there are no changed circumstances that would render it advisable
for the Company to amend or terminate the transaction.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company Common Stock (collectively referred to herein as
"Reporting Persons"), to file with the SEC and the American Stock Exchange
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Reporting Persons are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on review of copies of such forms received by the
Company or written representations from Reporting Persons, the Company believes
that, during the 2006 fiscal year, all Reporting Persons complied with all
applicable filing requirements under Section 16(a).
Equity Compensation Plan Information
The following table sets forth the aggregate information of the company's equity
compensation plans (the Non-Salaried Director Stock Option Plan and the Employee
Stock Option Plan) in effect as of December 31, 2006.
------------------------ -------------------------- -------------------------- --------------------------
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity compensation plans,
exercise of exercise price of (excluding securities
outstanding options, outstanding options, reflected in
warrants and rights warrants and rights column (a))
Plan Category (a) (b) (c)
------------------------ -------------------------- -------------------------- --------------------------
Equity compensation 543,950 $8.27 47,688
plans approved by
security holders
------------------------ -------------------------- -------------------------- --------------------------
Equity compensation
plans not approved by -0- -0- -0-
security holders
------------------------ -------------------------- -------------------------- --------------------------
Total 543,950 $8.27 47,688
------------------------ -------------------------- -------------------------- --------------------------
(27)
No equity compensation plans have been adopted without security holder approval.
PROPOSAL TWO:
AMENDMENT TO THE 2005 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On February 27, 2007, the Board of Directors, subject to approval of
Shareholders, amended the 2005 Non-Salaried Director Stock Option Plan ("Plan")
to increase the number of shares subject to options from 50,000 to 90,000. The
following description of the Plan as amended is qualified in its entirety by
reference to the text of the Plan and its prior amendments, copies of which have
been filed with the SEC.
Purpose
The purpose of the Plan is to provide long-term incentive supplemental
compensation for members of the Board of Directors of the Company who are not
employees of the Company through the ownership of the Company's Common stock,
thereby further aligning their interest with the interests of shareholders.
Stock option plans for non-employee directors have served Acme United and its
shareholders well by directly relating incentive compensation to the building of
long term shareholder values.
Administration of the Plan
The plan is administered by the Compensation Committee of the Board of Directors
composed of non-employee directors (the "Committee").
Shares of Stock Subject to the Plan
The aggregate number of shares that may be issued upon exercise of options
granted during the term of the Plan is presently limited to 50,000 shares of the
Common Stock of the Company (90,000 shares after approval of amendment). This
limit may not be increased during the term of the Plan except by equitable
adjustment following recapitalization, stock splits, stock dividends or any
similar adjustment in the number of shares subject to outstanding options, and
in the related option exercise price. If the shareholders approve this
amendment, additional shares (which can be authorized but un-issued shares or
treasury shares or a combination thereof) will be reserved for the award of
options.
Eligibility
All Non-Salaried Directors of the Company are eligible to participate in the
Plan.
(28)
Duration of the Plan
No awards of stock options may be made under the Plan after May 31, 2015.
Applicable provisions will continue in effect thereafter with respect to all
unexercised options outstanding prior to that date.
Options
Under the terms of the Plan, each Non-Employee Director is annually granted an
option to purchase 2,500 shares of Common Stock. Each newly appointed or elected
Non-Employee Director receives an initial option to purchase 5,000 shares of
common stock, and thereafter would annually, along with the other Non-Employee
Directors, receive an option to purchase 2,500 shares of Common Stock. Under the
Plan, the Board of Directors has the authority to increase or decrease the
number of shares of Common Stock which are the subject of such annual or initial
option grants.
The terms of the options shall, at the time of the grant, provide that the
options will not be treated as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), as amended.
The exercise price with respect to an option awarded under the Plan will be 100%
of the fair market value of the Common Stock as of the date the option is
granted. It will be paid for in full, in cash or in any other medium and manner
satisfactory to the Company at the time the option is exercised. The optionee
must satisfactorily provide for the payment of any taxes which the Company is
obligated to collect or withhold before the Common Stock is transferred to the
optionee.
Terms of Exercise of Options
Options granted on an annual basis to directors vest and are exercisable in full
upon grant. Options which are granted to newly elected or appointed directors
are exercisable in accordance with the following schedule:25% on the day after
the date of the grant; 25% one day after first year anniversary of the date of
grant; 25% one day after second year anniversary of date of grant; 25% one day
after third year anniversary of date of grant.
Options may not be exercised until they vest (ranges from immediately to three
years) and not after ten years from the date of the grant, except in the case of
death or disability of the grantee, in which case the option may be exercised
within 12 months of the death or disability. The Committee may make provision
for exercises within the 10-year term of a grant. Recipients will have no rights
as stockholders until the date of exercise in the case of an exercise involving
receipt of stock. Options may not be transferred except upon the death of the
grantee.
Amendment to the Plan
Without further approval of the shareholders, the Board may discontinue the Plan
at any time and may amend it from time to time in such respect as the Board may
deem advisable including the initial and annual numbers of options granted,
unless shareholder or regulatory approval is required by law or regulation and
subject to any conditions established by the terms of such amendment; provided,
however, that the Plan may not be amended more than once every six (6) months
other than to comport with changes in the Code, the Employee Retirement Income
Security Act or the rules thereunder.
(29)
Federal Income Tax Consequences
Granting of Options
-------------------
A recipient of options incurs no income tax liability as a result of having been
granted those options or rights.
Exercise of Options
-------------------
The exercise by an individual of a stock option normally results in the
immediate realization of ordinary income subject to self-employment tax by the
individual in an amount equal to the excess of (i) the fair market value of the
stock which is being purchased on the date of exercise over (ii) the price being
paid for such stock.
Sale of the Stock
-----------------
Under current law an individual who sells stock which was acquired upon the
exercise of options will receive long-term capital gains or loss treatment, if
he or she has held such stock for longer than one year following the date of
such exercise. The gain or loss from the sale will be equal to the difference
between the price for which such stock was sold and the market value of the
stock on the date of the exercise. If the individual has held the stock for one
year or less the gain or loss will be treated as short-term capital gain or
loss.
Plan Benefits
On February 27, 2007, the Board of Directors voted to issue stock options to
Non-Salaried Board members in the amount of the regular annual grant as follows:
#Shares
Name Underlying Options
---- -------------------
Rex L. Davidson 2,500
Richmond Y. Holden, Jr. 2,500
Susan H. Murphy 2,500
Gary D. Penisten 2,500
Stephen Spinelli, Jr. 2,500
Stevenson E. Ward III 2,500
Non-Executive Director
Group 15,000
Vote Required
The plan described requires the affirmative vote of a majority of the shares of
Common Stock of the Company voting in person or by proxy on the amendment. If
the amendment is not approved by shareholders, it will not become effective.
(30)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF AN AMENDMENT TO THE
2005 NON-SALARIED DIRECTOR STOCK OPTION PLAN.
PROPOSAL THREE:
AMENDMENT TO EMPLOYEES' STOCK OPTION PLAN
On February 27, 2007, the Board of Directors, subject to approval of the
Shareholders, amended the Employee Stock Option Plan effective February 26, 2002
(the "Plan") to increase the number of shares subject to options from 300,000 to
460,000. The Company proposes that the number of shares of Common Stock reserved
for issuance under the Plan be so increased in order to enable the Company to
continue to attract and retain highly qualified personnel. The following
description of the Plan as amended is qualified in its entirety by reference to
the text of the Plan and its prior amendments, copies of which have been filed
with the SEC.
Purpose
The purpose of the Plan is to advance the interests of the Company and its
shareholders by strengthening the ability of the Company to attract, retain and
reward highly qualified key employees, to motivate key employees to achieve
business objectives established to promote the long-term growth, profitability
and success of the Company, and to encourage ownership of the Common Stock of
the Company by participating key employees.
Administration of the Plan
The Plan is administered by the Board of Directors of the Company. In
administering the Plan, the Board acts upon recommendations of the Compensation
Committee, which consists of members of the Board who are not employees of the
Company. Subject to the provisions of the Plan, the Board determines the
employees who will receive options under the Plan, the number of shares subject
to each option and the terms of those options, and interprets the Plan and makes
such rules of procedure as the Board may deem proper.
Shares of Stock Subject to the Plan
The Plan presently permits the granting of 300,000 shares of Common Stock
(460,000 shares after approval of amendment).
Eligibility
Based on current staffing, under the Plan, approximately 25 to 30 key employees
of the Company (including directors and officers who are employees) may be
granted options to purchase shares of Common Stock.
(31)
Options
Options granted under the Plan may be either incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options. The exercise price with respect to an option
awarded under the plan will be one hundred percent (100%) of the fair market
value of the Common Stock on the date that the option is granted provided,
however, that the price shall not be less than the par value of the Common Stock
which is subject to the option. If incentive stock options are granted to an
employee owning Common Stock having more than 10% of the voting power of the
Company, the exercise price must be at least one hundred ten percent (110%)
instead of one hundred percent (100%) of the fair market value of the Common
Stock on the date that the option is granted, and the option by its terms may
not be exercisable after the expiration of five (5) years from the date of
grant. No option may be granted under the Plan after the tenth anniversary of
the adoption of the Plan. The Company may grant both incentive stock options
(ISOs) and non-qualified stock options. However, commencing in July 2006, the
Company has granted only non-qualified stock options to its employees.
Terms of Exercise of Options
Upon the granting of any option, the optionee must enter into a written
agreement with the Company setting forth the terms upon which the option may be
exercised. Such an agreement sets forth the length of the term of the option and
the timing of its and may provide arrangements for income and employment tax
withholding. Under terms of the Plan, options are exercisable in accordance with
the following schedule: 25% one day after first year anniversary of the date of
grant; 25% one day after second year anniversary of date of grant; 25% one day
after third year anniversary of date of grant; 25% one day after fourth year
anniversary of date of grant. In no event shall the length of an option extend
beyond ten years from the date of its grant. An optionee may exercise an option
by delivering payment to the Company in cash.
Under the Plan, if the employment of any person to whom an option has been
granted is terminated for any reason other than the death, disability or
retirement of the optionee, the optionee may exercise within thirty (30) days of
such termination such options as the optionee could have exercised if his or her
employment had continued for such 30 day period, subject to the ten year
limitation. If the termination is by reason of retirement, the optionee may
exercise the option, in whole or in part, at any time within one year following
such termination of employment, subject to the ten year limitation, but if the
option is exercised later than three (3) months from the date of retirement the
option shall not constitute an Incentive Stock Option. If the optionee dies
while employed by the Company or its subsidiaries, or during a period after
termination of employment in which the optionee could exercise an option, the
optionee's beneficiary may exercise the option within one year of the date of
the optionee's death but in no event may the option be exercised later than the
date on which the option would have expired if the optionee had lived. If the
termination is by reason of disability, the optionee may exercise the option, in
whole or in part, at any time within one year following such termination of
employment or within such other period, not exceeding three years after the date
of disability, as is set forth in the option agreement with respect to such
options, provided, however, that if the option is exercised later than one year
after the date of disability, it shall not constitute an Incentive Stock Option,
and in no event may the option be exercised after ten years from grant.
(32)
In addition, if an optionee ceases to be employed by the Company and becomes, or
continues to be, a member of the Board of Directors prior to the time the
optionee's option(s) would have otherwise expired, the optionee's option(s)
shall continue to vest in accordance with the terms of the Plan and shall
continue to be exercisable for the remainder of the term of the option(s). Any
option which is not exercised by the optionee within the three month period
immediately following the optionee's termination of employment, or, in the case
of termination of employment on account of disability, within one year after the
date of disability, shall cease to be an Incentive Stock Option. If an optionee
described in the preceding two sentences ceases to be a member of the Board of
Directors for any reason, the optionee's option(s) shall terminate in accordance
with the provisions of Section 2.4(a) of the Acme United Corporation
Non-Salaried Director Stock Option Plan, which section (i) cancels any unvested
options at that time; (ii) permits a twelve-month period for exercise of vested
options in the event of termination due to death or disability; and (iii)
permits a thirty-day period for exercise of vested options in the event of
termination due to any other reason, except that the Board may in its discretion
extend the period of exercise.
Notwithstanding the above, no option may be exercised after the expiration date
specified in the option agreement.
Amendment to the Plan
The Plan may be terminated, suspended, or modified at any time by the Board of
Directors, but no amendment increasing the maximum number of shares for which
options may be granted (except to reflect a stock split, stock dividend or other
distribution), reducing the option price of outstanding options, extending the
period during which options may be granted, otherwise materially increasing the
benefits accruing to optionees or changing the class of persons eligible to be
optionees shall be made without first obtaining approval of the shareholders of
the Company. No termination, suspension or modification of the Plan shall
adversely affect any right previously acquired by the optionee or other
beneficiary under the Plan.
Options granted under the Plan may not be transferred other than by will or by
the laws of descent and distribution and, during the optionee's lifetime may be
exercised only by the optionee.
All of the Options previously issued under the prior plan remain unchanged and
outstanding.
Federal Income Tax Consequences
Granting of Non-Qualified Stock Options
---------------------------------------
With respect to the tax effects of non-qualified stock options, since the
options granted under the Plan do not have a "readily ascertainable fair market
value" within the meaning of the Federal income tax laws, an optionee of an
option will realize no taxable income at the time the option is granted.
Exercise of Non-Qualified Stock Options
---------------------------------------
When a non-qualified stock option is exercised, the optionee will generally be
deemed to have received compensation, taxable at ordinary income tax rates, in
an amount equal to the excess of the fair market value of the shares of Common
Stock of the Company on the date of exercise of the option over the option
price. The Company will withhold income and employment taxes in connection with
the optionee's recognition of ordinary income as a result of the exercise by an
employee/optionee of a non-qualified stock option, and arrangements must be made
with the Company for the source of such withholding. The Company generally can
claim a deduction in the fiscal year of the Company which includes the last day
of the taxable year of the optionee which includes the exercise date or the date
on which the optionee recognizes income. The amount of such deduction will be
equal to the ordinary income recognized by the optionee.
(33)
Granting of Incentive Stock Options and Exercise of Incentive Stock Options
---------------------------------------------------------------------------
With respect to the tax effects of Incentive Stock Options, the optionee does
not recognize any regular taxable income when the option is granted or
exercised; however, the excess of the fair market value of the stock on the date
of exercise over the exercise price must be included in the optionee's
alternative minimum taxable income. Depending on the optionee's other income and
deductions, all or a portion or this excess could be subject to alternative
minimum tax of as much as twenty-eight percent (28%).
Sale of the Stock
-----------------
When stock acquired through the exercise of a non-qualified stock option is
sold, the difference between the optionee's basis in the shares and the sale
price will be taxable to the optionee as a capital gain (or loss).
If no disposition of shares issued to an optionee pursuant to the exercise of an
Incentive Stock Option is made by the optionee within two years after the date
the option was granted or within one year after the shares were transferred to
the optionee, then (a) upon sale of such shares, any amount realized in excess
of the option price (the amount paid for the shares) will be taxed to the
optionee as long-term capital gain and any loss sustained will be a long-term
capital loss and (b) no deduction will be allowed to the Company for Federal
income tax purposes. The tax basis of the stock for alternative minimum tax
purposes shall be the fair market value of the stock on its date of exercise,
and the optionee may be entitled to a credit if its alternative minimum tax is
less than its regular tax in the year of sale.
If shares of Common Stock acquired upon the exercise of an Incentive Stock
Option are disposed of prior to the expiration of the two year and one year
holding periods described above (a "Disqualifying Disposition") generally (a)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of the shares at
exercise (or, if less, the amount realized upon the sale of such shares) over
the option price thereof, and (b) the Company will be entitled to deduct such
amount. Any further gain realized will be taxed as short-term or long-term
capital gain and will not result in any deduction by the Company. A
Disqualifying Disposition in the same year as exercise will eliminate the
alternative minimum tax adjustment associated with the exercise of the Incentive
Stock Option.
Plan Benefits
The benefits or amounts that will be received by or allocated to any
participants are not now determinable.
(34)
Vote Required
The approval of the amendment to the Employee Stock Option Plan requires the
affirmative vote of a majority of the shares of Common Stock of the Company
voting in person or by proxy on the amendment. If the amendment is not approved
by shareholders, it will not become effective.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
EMPLOYEE STOCK OPTION PLAN.
SELECTION OF AUDITORS
Audit Committee Pre-Approval of Independent Auditor Services
The Audit Committee pre-approves all audit and permissible non-audit services
provided by the independent auditors. These services may include audit services,
audit-related services, tax services and other services. The Audit Committee has
adopted policies and procedures for the pre-approval of services provided by the
independent auditors. The policies and procedures provide that management and
the independent auditors jointly submit to the Audit Committee a schedule of
audit and non-audit services for approval as part of the annual plan for each
year. In addition, the policies and procedures provide that the Audit Committee
may also pre-approve particular services not in the annual plan on a
case-by-case basis. For each proposed service, management must provide a
detailed description of the service and the projected fees and costs (or a range
of such fees and costs) for the service.
Fees to Auditors
Set forth below is a description of the fees for professional audit services
rendered by Ernst & Young LLP for the audit of our annual financial statements
and review of our interim financial statements for 2005 and 2006, and fees for
other services rendered by Ernst & Young LLP for 2005 and 2006.
Fee Category Fiscal 2006 Fees Fiscal 2005 Fees
------------ ---------------------- ----------------------
Audit Fees $220,000 $198,000
Audit Related Fees $ 21,000 $ 31,000
Tax Fees $ 58,000 $ 28,000
---------------------- ----------------------
Total Fees $299,000 $257,000
====================== ======================
Audit Related Fees. These fees were for assistance related to financial
reporting pronouncements and internal control reporting that will be required in
2007 and later.
Tax Fees. Tax services included tax compliance, tax advice, and tax planning.
The Audit Committee has determined that the provision of non-audit services
described above is compatible with maintaining Ernst & Young's independence.
(35)
Appointment of Auditors
The Company's Audit Committee has not yet appointed an independent auditor to
audit the financial statements of the Company for the fiscal year ending
December 31, 2007 because the Audit Committee is currently reviewing proposed
fees for audit and related work. The Audit Committee is not aware of any
disagreements between management and the Company's current auditors regarding
accounting principles and their application or otherwise.
Representatives of Ernst & Young LLP are expected to be present at the 2007
Annual Meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions. The
Company knows of no direct or material indirect financial interest in the
Company or of any connection with the Company by this accounting firm except the
professional relationship between auditor and client.
(36)
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE 2008 ANNUAL MEETING
If you intend to present a proposal at our 2008 Annual Meeting, you must submit
it to us by no later than November 28, 2007, to receive consideration for
inclusion in our 2008 proxy materials. If you intend to present a proposal at
our 2008 Annual Meeting that is not to be included in our 2008 proxy materials,
you should send the proposal to us in writing by February 9, 2008. Any such
proposal should be sent to the Corporate Secretary of the Company at 60 Round
Hill Road, Fairfield, Connecticut, 06824.
OTHER BUSINESS
Management does not know of any matters to be presented, other than those
described herein, at the Annual Meeting. If any other business should come
before the meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies in accordance with their best
judgment.
By Order of the Board of Directors
Paul G. Driscoll, Vice President and
Chief Financial Officer, Secretary
and Treasurer
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
March 27, 2007
(37)
PROXY
ACME UNITED CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ACME
UNITED CORPORATION FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON APRIL 23, 2007
The undersigned hereby appoints Walter C. Johnsen and Susan H. Murphy,
and each of them, with full powers of substitution, to act as attorneys and
proxies of the undersigned, to vote all shares of the Common Stock of ACME
UNITED CORPORATION, held of record by the undersigned on March 6, 2007 at the
Annual Meeting of Shareholders, to be held at the American Stock Exchange at 86
Trinity Place, New York, New York on Monday, April 23, 2007, at 11:00 a.m. and
at any adjournment(s) or postponement(s) thereof, with all the powers the
undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them hereby is,
instructed to vote or act as follows on the reverse side hereof on the proposals
set forth in said Proxy Statement. In their discretion, the proxies are
authorized to vote upon such other matters, if any, as may properly come before
the Annual Meeting.
The undersigned acknowledges receipt of the Company's Notice of Annual Meeting
of Shareholders, a Proxy Statement dated March 27, 2007 and the 2006 Annual
Report to Stockholders.
SEE REVERSE CONTINUED AND TO BE COMPLETED, SIGNED AND SEE REVERSE
SIDE DATED ON REVERSE SIDE SIDE
--------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THIS PROXY WHEN EXECUTED WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1, i.e., FOR THE ELECTION OF ALL
EIGHT NOMINEES LISTED BELOW, AND FOR PROPOSALS 2 AND 3.
1. Election of Directors
Nominees:
Walter C. Johnsen Susan H. Murphy
Gary D. Penisten Rex L. Davidson
Richmond Y. Holden, Jr. Stephen Spinelli, Jr.
Brian S. Olschan
Stevenson E. Ward III
[ ] FOR all nominees listed above (except as stricken out above).
(To withhold authority to vote for any specific nominee(s), check
the foregoing box and strike out or line through such nominee's
name on the list above.)
[ ] WITHHELD for all nominees listed above
2. Approval of the Amendment of the 2005 FOR AGAINST ABSTAIN
Non-Salaried Director Stock Option Plan [ ] [ ] [ ]
3. Approval of the Amendment to the Employee FOR AGAINST ABSTAIN
Stock Option Plan [ ] [ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
Please sign exactly as your name appears above. Joint owners should each sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title.
Signature: Date:
-------------------------------------- --------------------------
Signature: Date:
-------------------------------------- --------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE
Detach above card, sign, date and mail in postage paid envelope provided.
ACME UNITED CORPORATION
60 Round Hill Road
Fairfield, Connecticut 06824
-------------------------------------------------------------------------
| |
| When signing as an attorney, executor, administrator, trustee or |
| guardian, please give your full title. If shares are held jointly, |
| each holder should sign. |
| |
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