UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
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Preliminary
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Soliciting
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ATC
Technology Corporation
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of Registrant as Specified In Its Charter)
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Dear
Stockholders:
You are
cordially invited to attend the 2009 Annual Meeting of
Stockholders of ATC Technology Corporation on Wednesday, June 3, 2009, at 8:00
a.m., Eastern time, at the Sofitel New York, 45 West 44th Street, New York, New
York 10036. Your Board of Directors and management look forward to
greeting those stockholders who attend the meeting.
At this
meeting you will be asked to elect seven directors and approve amendments to,
and the restatement of, the ATC Technology Corporation 2006 Stock Incentive
Plan. Your Board of Directors recommends a vote FOR these
proposals. The reasons for the Board’s recommendation, as well
as other important information, are contained in the accompanying Proxy
Statement. You are urged to read the Proxy Statement
carefully.
We will
again this year take advantage of the Securities and Exchange Commission rules
that allow companies to offer their stockholders the option of receiving their
proxy materials over the Internet. We believe these rules not only
allow us to provide our stockholders with the information they need but they
enable us to lower our delivery costs and reduce the environmental impact of
delivering hard copy proxy materials to our stockholders.
It is
important that your shares be represented and voted at the meeting, whether or
not you plan to attend. This year you may vote your shares via a
toll-free telephone number or over the Internet. If you receive a
paper copy of the proxy card by mail, you may sign, date and mail the proxy card
in the envelope provided. You will find instructions for all three
methods of voting on the proxy card.
Your
interest and participation in the affairs of ATC Technology Corporation are
greatly appreciated.
Donald T.
Johnson, Jr.
Chairman
of the Board
April 23,
2009
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goATC.com
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1400 Opus
Place, Suite 600, Downers Grove, IL
60515 n P 630.271.8100 n F 630.271.9999
n www.goATC.com
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ATC
TECHNOLOGY CORPORATION
1400
Opus Place, Suite 600
Downers
Grove, Illinois 60515
_____________________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
_____________________
To the
Stockholders of
ATC
Technology Corporation:
NOTICE IS
HEREBY GIVEN that the 2009 Annual Meeting of Stockholders of ATC Technology
Corporation will be held at the Sofitel New York, 45 West 44th Street, New York,
New York 10036 on Wednesday, June 3, 2009, at 8:00 a.m., Eastern time, for
the purposes of considering and acting upon the following:
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1.
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election
of seven directors to hold office until the 2010 Annual Meeting of
Stockholders and thereafter until their successors are elected and
qualified;
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2.
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approval
of amendments to, and the restatement of, the ATC Technology Corporation
2006 Stock Incentive Plan; and
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3.
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transaction
of such other business as may properly come before the meeting or any
adjournment or postponement
thereof.
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Only
stockholders of record at the close of business on April 6, 2009 will be
entitled to notice of, and to vote at, the meeting and any adjournment or
postponement thereof.
By Order of the Board
of Directors,
Joseph
Salamunovich
Secretary
Dated: April
23, 2009
Important Notice Regarding
the Availability of Proxy Materials for the Annual Meeting to be Held on June 3,
2009: Our Proxy Statement and 2008 Annual Report to Stockholders are
available at www.proxyvote.com.
PLEASE
EITHER VOTE YOUR SHARES BY TELEPHONE OR INTERNET (AS DESCRIBED IN THE ENCLOSED
MATERIALS) OR MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
ATC
TECHNOLOGY CORPORATION
1400
Opus Place, Suite 600
Downers
Grove, Illinois 60515
_____________________
PROXY
STATEMENT
Annual
Meeting of Stockholders
June
3, 2009
This
Proxy Statement is furnished in connection with the solicitation of proxies by
the Board of Directors of ATC Technology Corporation for use at its 2009 Annual
Meeting of Stockholders to be held at the Sofitel New York, 45 West 44th Street,
New York, New York 10036 on June 3, 2009 at 8:00 a.m., Eastern time, and any
adjournment or postponement thereof.
On or
about April 23, 2009, ATC Technology Corporation either mailed its proxy
materials or provided Notice of Internet Availability of Proxy Materials to its
stockholders. If you received the Notice of Internet Availability by
mail, you will not receive a printed copy of the proxy materials in the
mail. The Notice of Internet Availability instructs you on how to
access this Proxy Statement and our 2008 Annual Report on Form 10-K and how to
submit your proxy by telephone or over the Internet. If you received
the Notice of Internet Availability in the mail and would like to receive a
printed copy of our proxy materials, follow the instructions included on the
Notice.
ATC
Technology Corporation first made available the proxy solicitation materials at
www.proxyvote.com on or around April 23, 2009 to all stockholders entitled to
vote at the Annual Meeting. Our 2008 Annual Report on Form 10-K was
made available at the same time and by the same methods. You may
request a printed copy of the proxy materials and the 2008 Annual Report by any
of the following methods: via Internet at www.proxyvote.com, by
telephone at 1-800-579-1639, or by sending an e-mail to
sendmaterial@proxyvote.com.
The cost
of preparing, assembling and mailing the Notice of Internet Availability, this Proxy Statement, the
accompanying Notice of Annual Meeting of Stockholders and form of proxy and the
solicitation of proxies will be paid by ATC Technology
Corporation. Proxies may be solicited by our directors, officers and
employees, none of whom will receive any additional compensation for such
solicitation. Proxies may be solicited in person or by
telephone. We will pay brokers or other persons holding stock in
their names or the names of their nominees for the expenses of forwarding
soliciting material to their principals.
The close
of business on April 6, 2009 has been fixed as the record date for the
determination of stockholders entitled to notice of, and to vote at, the annual
meeting. On that date, there were 19,774,153 shares of our common
stock outstanding. A majority of the shares entitled to vote, present
in person or represented by proxy, will constitute a quorum at the annual
meeting. Each share of common stock is entitled to one vote on any
matter that may be presented for consideration and action by the stockholders at
the annual meeting. In all matters other than the election of
directors, the affirmative vote of a majority of the shares of common stock
present in person or represented by proxies and entitled to vote will be the act
of stockholders. Directors will be elected by a plurality of the
votes of the shares of common stock present in person or represented by proxies
and entitled to vote on the election of directors. According to
applicable state law and ATC Technology Corporation’s charter and bylaws,
abstentions will be treated as the equivalent of a negative vote for the purpose
of determining whether a proposal has been adopted and will have no effect for
the purpose of determining whether a director has been elected. With
respect to Proposal Two, if a broker indicates on the proxy that such broker
does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will be treated as present for purposes of
determining the existence of a quorum but will not be considered as present and
entitled to vote with respect to that matter and thus will have no effect on
such proposal.
Proxies
will be voted in accordance with the instructions on the proxies. In
the absence of instructions, proxies will be voted FOR ATC Technology
Corporation’s nominees for election as directors and FOR approval of amendments
to, and the restatement of, ATC Technology Corporation’s 2006 Stock Incentive
Plan. As of April 23, 2009, the Board of Directors is not aware of
any matters to be presented for action at the annual meeting other than those
specifically identified in the Notice of Meeting. However, should any
other matters come before the annual meeting, proxies will be voted in the
discretion of the persons named as proxies thereon as to any other business that
may properly come before the annual meeting or any adjournment or postponement
thereof.
Any
stockholder may revoke his or her proxy at any time before it is exercised by
(1) delivering to us a signed proxy card with a date later than the previously
delivered proxy, (2) granting a subsequent proxy through the Internet or
telephone, (3) sending a written notice of revocation to our corporate
secretary, or (4) voting in person at the annual meeting. The most
current proxy card or telephone or Internet proxy is the one that is
counted.
Our
directors are elected annually. The term of office of all present
directors expires on the date of the annual meeting. Currently we
have eight directors but Chairman of the Board Donald T. Johnson, Jr. will
retire from the Board of Directors at the annual meeting. The Board
has decided to reduce the number of authorized directors from eight to seven
effective at the annual meeting. Therefore, at the annual meeting
seven directors are to be elected to serve for the ensuing year and until their
successors are elected and qualified. The nominees for election as
directors are:
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Robert
L. Evans
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Todd
R. Peters
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Curtland
E. Fields
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S.
Lawrence Prendergast
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Dr.
Michael J. Hartnett
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Edward
Stewart
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Michael
D. Jordan
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All of
the nominees currently serve as directors of ATC Technology
Corporation. Mr. Peters was appointed to the Board in January 2009
when the Board was expanded from seven members to eight.
If he is
elected at the annual meeting, Edward Stewart will succeed Mr. Johnson as
Chairman of the Board.
For
information regarding each nominee, see “Management—Directors and Executive
Officers.”
Should
any nominees become unavailable to serve as a director or should any vacancy
occur before the election (which events are not anticipated), the proxies may be
voted for a substitute nominee selected by the Board of Directors or the
authorized number of directors may be reduced. If for any reason the
authorized number of directors is reduced, the proxies will be voted, in the
absence of instructions to the contrary, for the election of the remaining
nominees named in this Proxy Statement. To the best of our knowledge,
all nominees are and will be available to serve.
The
Board of Directors recommends a vote FOR each of the nominees.
Directors
and Executive Officers
Our
current directors and executive officers are as follows:
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Name
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Age
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Positions
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Donald
T. Johnson, Jr.*
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57
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Chairman
of the Board
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Todd
R. Peters
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46
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Chief
Executive Officer, President and Director
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Ashoka
Achuthan
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53
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Vice
President and Chief Financial Officer
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John
J. Machota
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57
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Vice
President, Human Resources
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John
M. Pinkerton
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51
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Vice
President and Chief Accounting Officer
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Mary
T. Ryan
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56
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Vice
President, Communications and Investor Relations
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Joseph
Salamunovich
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49
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Vice
President, General Counsel and Secretary
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F.
Antony Francis
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59
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President,
ATC Logistics
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Richard
L. Stanley
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52
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President,
ATC Drivetrain
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Robert
L. Evans
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56
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Director
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Curtland
E. Fields
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57
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Director
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Dr.
Michael J. Hartnett
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63
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Director
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Michael
D. Jordan
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62
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Director
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S.
Lawrence Prendergast
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68
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Director
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Edward
Stewart
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66
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Director
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_______________________
*Mr.
Johnson will be retiring as Chairman of the Board of Directors at the annual
meeting.
Donald T. Johnson, Jr. joined
us as President and Chief Operating Officer in January 2004. In
February 2004 Mr. Johnson became Chief Executive Officer, and became a
member of the Board of Directors in May 2004 and Chairman of the Board in June
2005. In May 2008 he ceased to be President and in January 2009 he
ceased to be Chief Executive Officer. Before joining us,
Mr. Johnson was Global Director, Parts, Supply and Logistics for Ford Motor
Company since 1999. Prior to that, Mr. Johnson spent 26 years
working for Caterpillar, Inc. and its subsidiaries, including serving as Vice
President of Caterpillar Logistics Services, Inc. from 1992 until he joined
Ford. Mr. Johnson is lead director and chairman of the
compensation committee of the board of directors of Accuride
Corporation. Mr. Johnson holds a B.A. in Management from the
University of Illinois.
Todd R. Peters joined us as
Vice President, Finance in March 2004 and was appointed Chief Financial Officer
in May 2004. He was appointed President and Chief Operating
Officer in May 2008 and became President, Chief Executive Officer and a member
of the Board of Directors in January 2009. Before joining us, Mr.
Peters served TriMas Corporation, a manufacturer of automotive accessories and
industrial products, as Executive Vice President and Chief Financial Officer
from 2002 to 2003 and as Vice President of Finance from 2001 to
2002. From 1994 to 2001, he held various positions with Dana
Corporation, a manufacturer in the automotive, commercial vehicle, and
off-highway markets, including Global Working Capital Team Leader from 2000 to
2001, Director of Operations – Long Manufacturing from 1999 to 2000 and Vice
President of Finance from 1994 to 1999. Prior to that, Mr. Peters
worked for Coopers & Lybrand for over eight years. Mr.
Peters holds a B.S. in Business Administration from Central Michigan University
and is a certified public accountant.
Ashoka Achuthan, joined us as
Vice President and Chief Financial Officer on December 8, 2008. Prior
to joining us, Mr. Achuthan served as Vice President and Chief Financial Officer
of Cooper Power Systems, Inc. (a division of Cooper Industries) from 2005 to
2008. Before that, he spent 25 years with Siemens AG in increasingly
responsible financial positions, including serving as Executive Vice President
and Chief Financial Officer of Siemens VDO Automotive Corporation from 2000 to
2005. Mr. Achuthan holds an M.B.A. from Case Western Reserve
University and is a member of the Institute of Chartered Accountants of
India.
John J. Machota joined us as
Vice President, Human Resources in 1997. From 1996 to 1997, he was a
self-employed human resources consultant. Before that he spent ten
years with Waste Management , Inc. in various human resources positions
including Vice President, Compensation from 1995 to 1996 and Vice President,
Human Resource Services from 1993 to 1995. Mr. Machota holds an
M.S. in Industrial Relations from Loyola University, Chicago.
John M. Pinkerton joined us
as Manager, Planning and Analysis in 1999, became Corporate Controller in 2000
and became an executive officer in June 2005 when he was appointed Vice
President and Controller. In December 2008 Mr. Pinkerton became Vice
President and Chief Accounting Officer. Prior to joining us, he was
an independent financial consultant during 1998 and prior to that he spent ten
years with Grimes Aerospace Company, an international engineering, manufacturing
and distribution company, where he held various financial analysis and planning
related positions, including Director, Strategic
Planning. Mr. Pinkerton holds an M.B.A. from the University of
Wisconsin-Milwaukee and is a certified public accountant
(inactive).
Mary T. Ryan joined us as
Vice President, Communications and Investor Relations in 1999. From
1996 to 1998, Ms. Ryan served as Vice President, Corporate Affairs for
American Disposal Services, Inc. From 1995 to 1996, she was a
self-employed public relations consultant. Prior to that,
Ms. Ryan was employed for more than ten years with Waste
Management, Inc. Ms. Ryan holds an M.B.A. from DePaul
University.
Joseph Salamunovich joined us
as Vice President, General Counsel and Secretary in 1997. From 1986
to 1994 Mr. Salamunovich was an associate, and from 1995 to 1997 he was a
partner, in the law firm of Gibson, Dunn & Crutcher LLP, where he
specialized in corporate and securities law
matters. Mr. Salamunovich holds a J.D. from Loyola Law School,
Los Angeles.
F. Antony Francis joined us
in July 2007 as Vice President and General Manager of OEM Services for our ATC
Logistics business and became President of ATC Logistics in June 2008. Prior to joining us, Mr.
Francis was President and Chief Operating Officer of Plan Express, Inc., a
provider of construction document management, printing, and logistics solutions,
from 2005. From 2001 to 2002 and again from 2003 to 2005
Mr. Francis was with Commerce Chain Consulting, during portions of which
time he served as interim Chief Executive Officer of MRM Fulfillment, Inc., a
third party logistics provider, and acting Chief Operating Officer of NewRoads,
Inc, a catalog and e-commerce fulfillment provider. Between 2002 and
2003, he was Vice President of worldwide customer operations for Perkin Elmer’s
Life and Analytical Sciences division. From 1999 to 2001 Mr. Francis
was Vice President of Global Operations of SciQuest.com, an e-commerce
transaction market place for scientific products. Between 1988 and
1999 Mr. Francis held increasingly responsible positions with Federal Express
Corporation, including Vice President/General Manager, Europe, Middle East and
Africa for FedEx’s Logistics, Electronic Commerce and Customer Services
division. Mr. Francis is a graduate of The City of London Polytechnic
and is a Fellow of the Institute of Chartered Accountants in England and
Wales.
Richard L. Stanley joined us
in July 2007 as President of our ATC Drivetrain business. From 1998
to 2006 Mr. Stanley was President of Remy Inc. (formerly Delco Remy America),
the largest division of Remy International, a global manufacturer/remanufacturer
of starters and alternators for both automotive/heavy duty/industrial OEMs and
the aftermarket (Remy International filed for protection under Chapter 11 of the
United States Bankruptcy Code in October 2007). From 1994 to 1998 Mr.
Stanley served as Senior Vice President and General Manager of Remy’s Automotive
Systems division. Between 1978 to 1994 he held increasingly
responsible engineering and operations management positions at the Delco Remy
division of General Motors Corporation. Mr. Stanley holds an
M.S. in Manufacturing Management from Kettering University.
Robert L. Evans became a director of ATC
Technology Corporation in December 2004. Since August 2006, Mr. Evans
has served as President, Chief Executive Officer and a member of the Board of
Directors of Churchill Downs Inc., a publicly held owner and operator of horse
racing venues. Previously, Mr. Evans was Managing Director of
Symphony Technology Group (a strategic holding company that invests primarily in
software and services firms) and a predecessor firm, the Valent Group, from 2001
until October 2004. Prior to that, he was President and Chief
Operating Officer of Aspect Development, Inc. from 1999 until its acquisition by
i2 Technologies, Inc.
in 2000, after which he served as Chief Operating Officer of i2
Technologies. Mr. Evans was employed by Accenture (formerly Andersen
Consulting) from 1993 to 1999, where he held a variety of positions, including
Managing Partner of the Americas Supply Chain practice. From 1990 to
1993 Mr. Evans served as Vice President, Customer Support (Parts &
Service) for Mazda Motor of America, and between 1975 and 1990 he held various
positions with Caterpillar Inc., including President of Caterpillar Logistics
Services. Mr. Evans
serves on our Compensation and Nominating Committee.
Curtland E. Fields became a director of ATC
Technology Corporation in December 2004. Mr. Fields is President
and Chief Executive Officer and a trustee of the Turrell Fund, a private
foundation. Prior to joining the Turrell Fund in 2003, Mr. Fields was
employed by AT&T Corporation for over 30 years, serving most recently as
President of the Consumer Transactions Services Group between 2000 and 2003, as
President of the Consumer Markets Group (Central Region) from 1999 to 2000 and
Vice President, Strategy and Marketing for the Business Markets Group from 1998
to 1999. Prior to that he held other positions with AT&T
including Financial Vice President for Investor Relations. Mr. Fields
is Chairman of our Compensation and Nominating Committee.
Dr. Michael J. Hartnett
became a director of ATC Technology Corporation in 1994. Since 1992,
Dr. Hartnett has been President and Chief Executive Officer, and since 2005
has been Chairman of the Board, of RBC Bearings Incorporated, a publicly held
manufacturer of ball and roller bearings. Prior to joining RBC in
1990 as General Manager of its Industrial Tectonics subsidiary, he spent
18 years with The Torrington Company, a subsidiary of
Ingersoll-Rand. Dr. Hartnett serves on our Audit
Committee.
Michael D. Jordan became a
director of ATC Technology Corporation in May 2004 and served as Lead Director
from June 2005 to January 2009. Prior to retirement in 2001, he was
employed by Ford Motor Company for over 30 years, serving most recently as
President of Ford’s Automotive Consumer Services Group since
1997. Prior to that he was President of the Ford Customer Service
Division—Europe for three years. Mr. Jordan serves on our
Compensation and Nominating Committee.
S. Lawrence Prendergast
became a director of ATC Technology Corporation in May 2004. Between
1999 and his retirement in June 2005, he was Executive Vice President of Finance
of LaBranche & Co. Inc., a New York Stock Exchange specialist
firm. Prior to that he spent over 30 years with AT&T Corporation,
including serving as Chairman of the Board and Chief Executive Officer of
AT&T Investment Management Corp. from 1997 to 1999 and as Vice President and
Treasurer of AT&T Corporation for 14 years before
that. Mr. Prendergast is Chairman of our Audit
Committee.
Edward Stewart became a director of ATC
Technology Corporation in December 2004 and Lead Director in January
2009. Prior to his retirement in 2002, he was employed by
General Electric Company for 37 years, serving most recently as Executive Vice
President of GE Capital and Chief Executive Officer of GE Card Services from
1997, and prior to that he was a Vice President of General Electric since
1991. Mr.
Stewart serves on our Audit Committee.
Directors
serve one-year terms and are elected annually. Executive officers
serve until they resign or replacements are appointed by the Board of
Directors.
Independence
of Directors
The Board
of Directors has determined that all of our current directors with the exception
of Messrs. Johnson and Peters (who are also employees of ATC Technology
Corporation) are independent as defined in the Nasdaq Stock Market Rules and the
regulations of the Securities and Exchange Commission. None of the
independent directors currently has or has had a material relationship with, or
is or has been employed by, ATC Technology Corporation or any of its
subsidiaries.
Committees
of the Board of Directors and Board Meetings
We have
an Audit Committee and a Compensation and Nominating Committee.
Audit
Committee
The Audit
Committee provides assistance to the Board of Directors in fulfilling its
oversight role relating to our corporate accounting and reporting practices and
the quality and integrity of our financial reports. The Audit
Committee is governed by a written charter approved by the Board of Directors,
which is available on our website at www.goATC.com. The Audit
Committee is composed of Messrs. Hartnett, Prendergast (Chairman) and
Stewart, each of whom is independent as defined in the Nasdaq Stock Market Rules
and the regulations of the Securities and Exchange Commission. The
Board of Directors has determined that Mr. Prendergast is an audit committee
financial expert for purposes of the regulations of the Securities and Exchange
Commission.
Compensation
and Nominating Committee
The
Compensation and Nominating Committee establishes our general compensation
policies, establishes the specific compensation programs that we utilize with
respect to our executive officers, establishes salaries and bonuses for our
executive officers other than the Chief Executive Officer, makes stock awards
(e.g., stock options,
restricted stock) to all eligible employees other than our Chief Executive
Officer, makes recommendations to the Board of Directors regarding the salary
and bonus for and stock awards to our Chief Executive Officer, and is
responsible for identifying, reviewing the qualifications of, and recruiting, as
appropriate, potential candidates for the Board of Directors.
For
information regarding the Compensation and Nominating Committee’s philosophy,
process and procedure in setting executive compensation policies, see “Executive
Compensation.”
In
identifying potential candidates for Board membership, the Compensation and
Nominating Committee may rely on suggestions and recommendations from the Board,
management and others. The Committee does not currently have a policy
with regard to the consideration of any director candidates recommended by
stockholders, but we expect that such a policy will be developed in the
future. The Board believes that the current absence of such a policy
is appropriate because we have never received such a stockholder
recommendation. In evaluating the suitability of individuals for
Board membership, the Compensation and Nominating Committee may take into
account many factors, including an individual’s business experience and skills,
independence, judgment, integrity, and ability to commit sufficient time and
attention to the activities of the Board of Directors. The Committee
has not established any specific minimum qualification standards for nominees to
the Board, although from time to time the Committee may identify certain skills
or attributes (e.g.,
financial experience, business experience in a particular industry) as being
particularly desirable to help meet specific Board needs that have
arisen.
The
Compensation and Nominating Committee is governed by a written charter approved
by the Board of Directors, which is available on our website at
www.goATC.com. The
Compensation and Nominating Committee is composed of Messrs. Evans, Fields
(Chairman) and Jordan, each of whom is independent as defined in the Nasdaq
Stock Market Rules and the regulations of the Securities and Exchange
Commission.
Board
and Committee Meeting Attendance
During
2008 the Audit Committee met ten times, the Compensation and Nominating
Committee met twelve times and the Board of Directors met ten
times. Each director attended at least 75% of the meetings of the
Board of Directors and the committee of the Board on which he served during the
year. We do not have a formal policy regarding director attendance at
stockholder meetings. All of our directors attended the 2008 annual
meeting of stockholders.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our officers, directors and persons who own more
than 10% of our outstanding common stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and to furnish
copies of these reports to us. Based solely on a review of the copies
of the forms that we have received, we believe that all such forms required
during 2008 were filed on a timely basis.
Compensation
Discussion and Analysis
Over the
following pages, we discuss how our Chief Executive Officer (“CEO”), Chief
Financial Officer (“CFO”) and four other most highly compensated executive
officers (our “Named Executive Officers” or “NEOs”) were compensated in 2008,
and describe how this compensation fits into our executive compensation
philosophy.
Company
Performance and Effect of Recent Economic Volatility
During
2008, we faced many of the same challenges confronting all of American business
as we had to deal with the unprecedented economic and financial conditions
impacting the US economy and, more specifically, the automotive
sector. While our Logistics segment continued its steady
year-over-year growth with revenue increasing by 20.2% during 2008, our
Drivetrain segment was severely impacted by the economic distress being
experienced by our automotive customers and saw annual revenues decrease by
approximately 25% from their 2007 levels. While our 2008 operating
plans included significant cost reductions from lean and continuous improvement
activities, both segments took additional actions throughout the year to further
control costs in light of the changing economic environment. To more
closely reflect the declining sales of our North American automotive customers,
we initiated a restructuring and consolidation of the Drivetrain segment and
recorded charges of $9.7 million related to these
activities. Furthermore, the recent adverse changes in the North
American automotive industry that have depressed the outlook and valuations for
automotive-related businesses coupled with the significant changes in volumes
from our North American automotive customers caused us to reassess the carrying
value of the goodwill related to this business. Based on our
valuation work we recorded a goodwill impairment charge of $79.1
million. As a result, we reported a loss from continuing operations
per share for 2008 of $1.09 or adjusted earnings per share (“EPS”) of $1.91
excluding the goodwill impairment and restructuring charges.
Changes
to Named Executive Officers During 2008
During
2008, several management changes occurred, predicated by the planned retirements
of key executives. Donald T. Johnson, Jr. announced his plans to
retire at the conclusion of his current Board term in June 2009. As
part of our leadership succession process, the Board appointed Todd R. Peters,
who had been serving as Vice President and CFO, to President and Chief Operating
Officer (“COO”) in May 2008 so that he could work more closely with Mr. Johnson
on operational issues. In July 2008, William L. Conley, Jr. retired
as President of our Logistics segment and was succeeded by F. Antony Francis,
who had been serving as Vice President and General Manager of our Logistics
segment. In December 2008 we hired Ashoka Achuthan to fill the CFO
position vacated as a result of Mr. Peters’ promotion and also appointed John
Pinkerton as Chief Accounting Officer (“CAO”). To complete the
leadership transition, Mr. Peters was promoted to President and CEO and elected
to the Board of Directors as of January 1, 2009, with Mr. Johnson retaining his
Chairman position until the annual meeting.
Overview
of Compensation Program
Decisions
about the compensation of our executive officers are made by the Compensation
and Nominating Committee of our Board of Directors (the “Committee”), all the
members of which are independent of management. The Committee is appointed by
our Board of Directors and has responsibility for establishing, implementing and
monitoring adherence with our compensation philosophy. The Committee
reviews with the CEO the performance and approves the compensation of all
executive officers including the NEOs, conducts the annual performance appraisal
of our CEO, and recommends to the Board the CEO compensation package including
incentive compensation plans in which the CEO participates. The
Committee’s goal is that the total compensation paid to our executive officers
is fair, reasonable and competitive. The types of compensation and
benefits provided to the NEOs are similar to those provided to other executive
officers.
Compensation
Philosophy and Objectives
Our
executive compensation philosophy is as follows:
|
|
·
|
to
align compensation of our executive officers with stockholder value
creation;
|
|
|
·
|
to
provide market competitive compensation to attract and retain talented
executives; and
|
|
|
·
|
to
link incentive compensation to continuous improvements in strategic and
operating performance.
|
The
Committee believes the current compensation arrangements provide an appropriate
level of incentive for the CEO and our other executive officers to perform at
superior levels and in a manner directly aligned with the economic interests of
our stockholders. The Committee approves and continually evaluates
our compensation policies applicable to the executive officers so that (i) we
maintain the ability to attract and retain excellent employees in key positions,
(ii) compensation provided to executive officers remains competitive relative to
the compensation paid to similarly situated executives in the competitive
market, and (iii) compensation encourages a pay-for-performance
environment. To this end, the Committee believes that executive
compensation should include both cash and stock-based compensation that rewards
performance as measured against established goals.
Our
current executive compensation program consists of four basic
elements:
|
|
·
|
base
salary;
|
|
|
·
|
annual
performance-based incentive
compensation;
|
|
|
·
|
long-term
incentive/equity-based awards; and
|
|
|
·
|
supplemental
benefits.
|
Independent
Compensation Consultant
The
Committee periodically uses the services of an independent executive
compensation consulting firm (the “independent compensation consultant”),
currently Watson Wyatt Worldwide, which reports directly to the Committee and
works with management on behalf of the Committee as the Committee determines is
necessary. During 2008, the independent compensation consultant provided the
Committee with relevant market data and alternatives to consider when making
compensation decisions for the CEO and the other executive officers.
Additionally, the independent compensation consultant provided the Committee
with input on executive compensation items such as executive employment
agreements and change-in-control, along with providing market data on
independent director compensation programs.
2008
Compensation
Competitive Benchmarking –
Definition of Market
The
Committee periodically reviews compensation data for comparable executive
positions in the competitive market. The independent compensation
consultant assists with this analysis. During 2008, the consultant
provided competitive compensation analysis relating to the CEO position that the
Committee and the Board used to establish the 2009 compensation level for our
new CEO. Additionally, the independent compensation consultant
conducted and provided similar compensation data for all other executive
officers, which was to be used in the 2009 compensation review
process.
For
purposes of competitive market analysis, the Committee reviews market data for
comparable executive positions as provided by the independent compensation
consultant. For purposes of executive compensation benchmarking, our
executive officers are matched based on job functions and
responsibilities. During 2008, we compared compensation at similarly
sized companies in general industry (the “comparator group”) as we feel this is
the industry segment in which we compete for executive talent, especially in
light of the increasing importance of our Logistics segment. All
compensation data is size-adjusted to reflect our business size.
In
addition to reviewing general market data for the purpose of evaluating the
CEO’s total compensation, the Committee also reviewed market data for specific
logistics and manufacturing companies representing our business
mix. This group of companies was originally selected and is modified
from time to time with assistance from the independent
compensation
consultant. The 2008 peer group is slightly different than the 2007
group, with increased emphasis on logistics businesses, reflecting the growing
importance of our Logistics segment. The named companies used for
benchmarking in 2008 include:
|
· Accuride
Corporation
|
· Landstar System,
Inc.
|
|
· Brightpoint,
Inc.
|
· LKQ
Corporation
|
|
· Dorman Products,
Inc.
|
· ModusLink Global
Solutions, Inc.
|
|
· Dynamex,
Inc.
|
· Pacer International,
Inc.
|
|
· Forward Air
Corporation
|
· Park-Ohio Holdings
Corp.
|
|
· Fuel Systems
Solutions, Inc.
|
· Proliance
International, Inc.
|
|
· Gentex
Corporation
|
· Standard Motor
Products, Inc.
|
|
· Hawk CP
CLA
|
· Stoneridge,
Inc.
|
|
· Hub Group,
Inc.
|
· UTi Worldwide,
Inc.
|
|
· InfoSonics
Corporation
|
· Velocity Express
Corporation
|
Competitive Compensation
Objectives
Our
executive compensation is based on a pay-for-performance philosophy, emphasizing
performance against measures that historically have correlated with increases in
stockholder value. It is the policy of the Committee to set
compensation targets for fixed pay (base salary and benefits) at approximately
the 50th percentile of the market as defined by the comparator group, while
variable compensation is targeted at the 50th percentile for annual incentives
and the 75th percentile for long-term incentives.
We
believe that in order to emphasize a long-term perspective directly tied to
stockholder value, a significant portion of the executive’s compensation should
be in the form of incentive awards and long-term equity awards, or
“pay-at-risk.” The percentage of pay-at-risk increases as the level
of business responsibility increases. This provides additional upside potential
and downside risk for senior positions, recognizing that these roles have
greater influence on our overall performance.
The 2008
mix of total compensation for the NEOs is described in the table
below. Variable compensation represents 79% of CEO total target
compensation, and between 50%-70% of total target compensation for all other
NEOs. The Committee believes this compensation structure aligns the
financial interests of the NEOs and other executive officers with the interests
of our stockholders because it rewards management for the achievement of
long-term financial results and stockholder value creation.
|
Name
|
Base
Salary
|
Annual
Incentive
Target |
Long-Term
Incentive
Target
|
Total
|
||||
|
Donald
T. Johnson, Jr.
|
21%
|
18%
|
61%
|
100%
|
||||
|
Todd
R. Peters
|
31%
|
23%
|
46%
|
100%
|
||||
|
Ashoka
Achuthan
|
35%
|
21%
|
44%
|
100%
|
||||
|
F.
Antony Francis
|
35%
|
21%
|
44%
|
100%
|
||||
|
John
M. Pinkerton
|
46%
|
20%
|
34%
|
100%
|
||||
|
Richard
L. Stanley
|
35%
|
21%
|
44%
|
100%
|
The Base
Salary percentage included in the table above was calculated using the amounts
disclosed in the Summary Compensation Table appearing below. The
Annual Incentive Target and Long-Term Incentive Target percentages were
calculated using amounts disclosed in the Grants of Plan-Based Awards Table
appearing below. The elements of our executive compensation program
are described in more detail below.
Base
Salary
We
provide NEOs and other executive officers with a base salary to compensate them
for services rendered during the fiscal year. For each position, the
Committee establishes a base salary range that takes into consideration the
position and its responsibility, level of experience and knowledge, the market
data on salaries, internal comparability, individual performance, and
recommendations provided by the independent compensation
consultant.
Within
that range a specific base salary is then determined. It is our
policy to provide a base salary for a given position that is between 75% and
125% of the market value established for that position.
Each
year, the individual performance of the executive officers is reviewed by the
CEO. These performance assessments and the salary recommendations, if
any, are then reviewed with the Committee which, utilizing the provided market
data and existing officer salary data, either approves the recommendations or
revises them as it deems appropriate.
In the
case of the CEO, his performance is evaluated annually by the Committee against
a detailed list of performance objectives that have been mutually agreed upon by
the Committee and the CEO at the beginning of the year. These
objectives include specific measurable financial performance metrics, business
strategy implementation milestones, and leadership development/succession
planning goals. The Committee utilizes the performance review and the
competitive market data to determine the appropriate salary level for the
CEO. The salary for the CEO is then recommended by the Committee and
reviewed and approved by the full Board of Directors.
For 2008,
the Committee recommended and the Board concurred that Mr. Johnson’s base salary
be maintained at its 2007 level of $560,000. The Committee based this
decision on its evaluation of compensation data provided by the independent
compensation consultant showing that Mr. Johnson’s salary was reflective of the
competitive market. The average salary increase granted as of January
1, 2008 for the other executive officers, excluding Antony Francis and John
Pinkerton, was 3.4%, which closely reflected the average salary movement within
the comparator group. Messrs. Peters, Francis and Pinkerton received
promotional increases during the course of 2008, commensurate with their new
responsibilities, and are noted in the footnotes to the Summary Compensation
Table appearing below.
With his
appointment as CEO, effective January 1, 2009, Mr. Peters and the Board agreed
to a new employment agreement that set Mr. Peters’ base salary at $450,000 based
on his experience and competitive market data. Future increases, if
any, for Mr. Peters will be based on the Board’s assessment of his performance
and competitive compensation data.
While we
would have recommended 2009 merit increases and salary adjustments for the other
executive officers during the December 2008 Committee meeting, we decided to
freeze base salaries at 2008 levels until more is known about the impact of the
current economic environment on our businesses.
Performance-Based Incentive
Compensation
We
provide annual incentive opportunities through our Management Incentive
Compensation Plan (the “IC Plan”), which rewards executive officers and other
senior management for the achievement of annual financial results. We
believe this focuses the executives on achieving annual financial goals that are
indicative of improved year-over-year performance. The IC Plan
constitutes at-risk compensation that is tied to business
results. All of the performance measures in the IC Plan reflect our
business strategy and key financial metrics that we believe will drive
stockholder value while rewarding the executive officers for exceptional
individual and corporate performance. Furthermore, under the terms of
the IC Plan, the Committee (or the Board in the case of the CEO) has the
discretion to evaluate the business results and exercise judgment to determine
the appropriate incentive payments.
Performance
Measures. We believe EPS and earnings before interest and
taxes (“EBIT”) are key indicators of financial
performance. Therefore, the primary corporate financial measure in
the IC Plan for 2008 was EPS while EBIT served as the primary financial metric
for the business segment leadership. Corporate officer
positions are measured entirely on EPS while business segment leadership is
measured 70% on such segment’s EBIT and 30% on EPS. For business
segment leadership, we believe this weighting provides the appropriate incentive
to drive business segment performance. For each of these metrics, a
minimum performance level must be achieved before any payment can be made for
that metric. For 2008, the threshold levels were as
follows:
|
|
·
|
EPS
– 93% of target
|
|
|
·
|
EBIT
– 85% of target (both Drivetrain and
Logistics)
|
In
addition, we believe all employees must be fully committed to customer quality
and service. Therefore, the IC Plan includes a “quality and service”
component pursuant to which the Committee may reduce plan awards by up to 20% if
we or a business segment do not achieve established quality and service
objectives. The quality and service objectives include items such as
service levels required by customer contracts, failure rates and warranty costs,
and are reviewed regularly by the CEO with the appropriate business
team. At the conclusion of the year, the Committee (or the Board of
Directors in the case of the CEO) reviews the quality and service performance
and, based on the recommendations from the CEO (or the Committee in the case of
the CEO), determines whether any bonus reduction is to be
implemented.
Target Award
Opportunities. The target awards under the IC Plan have been
established based on recommendations from the independent compensation
consultant to reflect the 50th percentile of annual target incentive awards for
similar positions within the market. For 2008, the target incentive
award was 90% of base salary for the CEO, 75% of base salary for the COO, and
45% to 60% of base salary for the other NEOs, in each case with a minimum
“cut-off” award equal to 25% of the target award and a maximum “stretch” award
equal to 300% of the target award.
Actual 2008 results. The
financial performance targets and results for 2008 were as follows:
|
Financial
Measure
|
2008
IC Goal
|
2008
Actual Results
|
2008
Adjusted Results(1)
|
|||
|
Corporate
EPS
|
$1.86
|
$(1.09)
|
$1.91
|
|||
|
Drivetrain
EBIT(2)
|
$28.6
million
|
$(81.3)
million
|
$7.5
million
|
|||
|
Logistics
EBIT(2)
|
$49.8
million
|
$56.2
million
|
$56.2
million
|
_______________________
|
|
(1)
|
Excludes
$88.8 million of restructuring and goodwill impairment charges incurred in
the Drivetrain segment.
|
|
|
(2)
|
EBIT
is the operating income (loss) for the
segment.
|
Our
reported loss from continuing operations per share of $1.09 for 2008 included
(i) $9.7 million of restructuring charges in our Drivetrain segment and
(ii) $79.1 million of goodwill impairment charge based on a revaluation of
goodwill related to the Drivetrain business. These charges are
directly related to the economic conditions faced by our automotive customers
and are considered by the Committee and the Board not to be indicative of normal
operations. As noted in the table above, if these charges were
excluded, we achieved adjusted EPS from continuing operations of $1.91, which
exceeded the $1.86 performance target for the IC Plan. The Committee
and the Board believe that the adjusted results are a more accurate reflection
of our 2008 performance.
In
addition to the adjusted EPS, other management achievements in 2008 included
completion of a $50 million stock repurchase program, ending the year with
approximately $17.2 million in cash and cash equivalents, and Logistics segment
growth of 20.2% over 2007.
In light
of the various actions taken by Management during 2008 to achieve the adjusted
EPS of $1.91 and the other 2008 achievements, the Committee determined that it
was appropriate to provide a bonus award for the EPS
component. Accordingly, the Committee (or the Board of Directors in
the case of the CEO) approved an incentive payment equal to 70% of target award
for the EPS component. In the judgment of the Committee and the
Board, this payment reflects the appropriate incentive reward for the strong
operating results and the strategic decisions made to reposition the
business. As a result, 2008 IC Plan payments to the NEOs were as
follows:
|
Name
|
Payout
Related to Adjusted EPS
|
Payout
Related to Drivetrain EBIT
|
Payout
Related to Logistics
EBIT
|
Total
2008
Payout
under
the IC Plan
|
|||||||
|
Donald
T. Johnson, Jr.
|
$ | 352,800 |
NA
|
NA
|
$ | 352,800 | |||||
|
Todd
R. Peters
|
$ | 176,158 |
NA
|
NA
|
$ | 176,158 | |||||
|
Ashoka
Achuthan
|
NA
|
NA
|
NA
|
NA
|
|||||||
|
F.
Antony Francis
|
$ | 27,953 |
NA
|
$ | 128,174 | $ | 156,127 | ||||
|
John
M. Pinkerton
|
$ | 98,507 |
NA
|
NA
|
$ | 98,507 | |||||
|
Richard
L. Stanley
|
$ | 42,210 |
$0
|
NA
|
$ | 42,210 | |||||
There
were no discretionary adjustments to the bonus amounts made during 2008 for
quality and service performance.
Long-Term
Incentives
Our
long-term incentive program is a key element of our total compensation
program. Long-term incentives are the largest component of variable
compensation and provide the strongest tie to long-term stockholder value by
linking a significant portion of executive compensation directly to stock price
performance. Our long-term incentive plan (“LTIP”), which was
approved and implemented in 2007, includes a stock component (both options and
restricted stock) and a cash component that rewards management for achieving
specific financial targets over a three-year performance period.
LTIP Award Opportunities. The
target LTIP incentive opportunities have been established based on the
independent compensation consultant’s review of the comparator group’s long-term
incentive practices and our compensation philosophy described
above. For 2008, the economic value of the total LTIP incentive award
was set at 300% of salary for the CEO, 150% of salary for the COO, 125% of
salary for the CFO and business segment Presidents, and 75% of salary for the
Vice President and CAO. These award sizes are consistent with the
75th
percentile of LTIP awards within the competitive marketplace.
The
current value mix in the LTIP provides approximately 70% of the value through
the stock component and 30% of the value through the cash
component. Each of these components is discussed in more detail
below, and the Grants of Plan-Based Award Table appearing below contains the
long-term awards for each of the NEOs.
Stock Options. Stock options
reward management for increases in our stock price above the price at the time
the options are granted and thus provide a direct link to stockholder value
creation. The annual awards of stock options for 2008 for the NEOs,
other than Messrs. Johnson and Achuthan, took place at the Committee’s regularly
scheduled meeting on June 3, 2008. These stock options have an
exercise price of $22.02. Mr. Johnson’s grant was approved by the
Board on February 6, 2008, concurrent with the signing of his new employment
agreement and his options have an exercise price of $24.19. The
Committee granted options to Mr. Achuthan at the time of his hiring on December
8, 2008 with an exercise price of $16.98. In each of these cases the
exercise price was equal to the closing stock price on the date of
grant. The Committee and the Board have never granted options with an
exercise price that is less than the closing price of our common stock on the
grant date, nor have they granted options that are priced on a date other than
the grant date. Since the end of 1998, we have maintained a policy
against repricing stock options without stockholder approval. All
awards of stock options require approval of the Committee (or the Board of
Directors in the case of an award to the CEO).
All stock
option grants are granted in the form of nonqualified stock options and vest at
the rate of 33.3% per year over the first three years of the ten-year option
term. In the case of NEOs other than Mr. Johnson, vesting rights
cease in connection with termination of employment except in the case of the
NEO’s death, disability or termination without cause within 18 months after a
change in control, in which cases vesting is accelerated. For
Mr. Johnson, vesting may continue post-employment pursuant to a provision
of his employment agreement that provides for continued vesting under
certain circumstances. See “Potential Payments Upon Termination or
Change-In-Control” below.
Restricted
Stock. Restricted stock grants build executive stock ownership
and focus executives on long-term company performance. Furthermore,
awards of restricted stock are consistent with current market
practice. Restricted shares were granted to the NEOs, other than
Messrs. Johnson and Achuthan, on June 3, 2008 when the stock price was
$22.02. These restricted stock awards are nontransferable and will
vest at the rate of 33.3% per year. Mr. Johnson, in conjunction with
the signing of his new employment agreement, was granted a restricted stock
award on February 6, 2008 when the stock price was $24.19. On
December 8, 2008, when the stock price was $16.98, the Committee granted Mr.
Achuthan a restricted stock award based upon his employment and Mr. Pinkerton a
restricted stock award in recognition of his appointment as CAO. All
restricted stock awards have voting and dividend rights (although we do not pay
dividends). Awards of all restricted stock require approval of the
Committee (or the Board of Directors in the case of an award to the
CEO).
It is the
Committee’s intent to generally grant stock awards at approximately the same
time each year – at the time of our annual meeting, which typically takes place
in late May or early June. We do not have a formal policy
with regards to the timing of stock option or restricted stock grants and the
release of material non-public information.
Long-Term Cash. The cash
component of the LTIP is intended to focus the executives on financial and
strategic goals important to us over a three-year period. The
target opportunities for the cash component range from 90% of base salary for
the CEO to an average of 25% of base salary for the other NEOs. In
each case there is a “cut-off” award equal to 90% of the target award and a
“stretch” award equal to 150% of the target award.
The
financial performance metrics for the 2006-2008 LTIP performance period and the
2008-2010 LTIP performance period (we do not have a cash component of the LTIP
with respect to 2007-2009) are compounded annual growth rate (“CAGR”) for both
revenue and operating income, and return on invested capital
(“ROIC”). These three financial metrics all have equal
weight. These metrics were selected because we believe that they are
key indicators and drivers of long-term stockholder value. Utilizing
the same approach as the annual plan, corporate officer positions are measured
entirely on our results while business segment leadership is measured 70% on
such segment’s results and 30% on our results.
Actual results for the 2006-2008
Performance Period. The financial
performance targets and results for the three years ended 2008 were as
follows:
|
Financial
Measure
|
3-Year
Goal
|
3-Year
Actual
|
||||
|
ATC
|
||||||
|
CAGR
– Revenue
|
12.4 | % | 8.1 | % | ||
|
CAGR
– Net Income
|
12.9 | % | -164.9 | % | ||
|
ROIC
|
16.1 | % | -7.0 | % | ||
|
Drivetrain
|
||||||
|
CAGR
– Revenue
|
4.8 | % | -12.7 | % | ||
|
CAGR
– Net Income
|
3.5 | % | -225.5 | % | ||
|
ROIC
|
11.8 | % | -42.0 | % | ||
|
Logistics
|
||||||
|
CAGR
– Revenue
|
23.5 | % | 31.9 | % | ||
|
CAGR
– Net Income
|
28.2 | % | 46.8 | % | ||
|
ROIC
|
26.1 | % | 36.0 | % | ||
Based on
three-year financial results, the LTIP 2006-2008 performance period payments to
the NEOs were as follows:
|
Name
|
Payout
Related
to
Corporate
Results
|
Payout
Related
to
Drivetrain
Results
|
Payout
Related
to
Logistics
Results
|
Total
2008
Payout
for the 2006-
2008
LTIP
Performance
Period
|
||||
|
Donald
T. Johnson, Jr.
|
$0
|
NA
|
NA
|
$0
|
||||
|
Todd
R. Peters
|
$0
|
NA
|
NA
|
$0
|
||||
|
Ashoka
Achuthan
|
NA
|
NA
|
NA
|
NA
|
||||
|
F.
Antony Francis
|
$0
|
NA
|
$18,555
|
$18,555
|
||||
|
John
M. Pinkerton
|
$0
|
NA
|
NA
|
$0
|
||||
|
Richard
L. Stanley
|
$0
|
$0
|
NA
|
$0
|
Retirement
and Other Benefits
Retirement Savings Plan and
Deferral Plan
Unlike
many of our competitors, we do not offer a defined benefit retirement
plan. Executive officers may participate in our Retirement Savings
Plan, a tax-qualified 401(k) plan pursuant to which all our U.S.-based
employees, including the NEOs, are able to contribute the lesser of (i) up
to 75% of their annual compensation (salary and bonus) or (ii) the limit
prescribed by the Internal Revenue Service. We match 50% on the first
6% of compensation that is contributed by an employee to the
plan. However, due to the legal contribution limits on defined
contribution retirement plans, the actual benefit to executive officers under
the plan is severely limited. All employee contributions are fully
vested upon contribution, while the matching contribution vests at the rate of
20% per year from the date of hire.
To
provide somewhat more competitive retirement benefits, we offer our executive
officers and other selected U.S.-based employees the opportunity to participate
in a nonqualified deferred compensation plan. Under this plan, key
employees are eligible to defer up to 75% of annual base salary and 100% of
annual cash incentive compensation and/or commission awards. For
2008, the Committee (and the Board of Directors in the case of the CEO) approved
a matching contribution of 50% of the first 10% of base salary deferred during
the year. The matching contribution vests at the rate of 20% per year
from the date of hire and is in addition to any matching contributions the NEO
receives under our Retirement Savings Plan. Outside directors are
also eligible to defer up to 100% of their annual retainer but without a
matching contribution.
All of
the compensation associated with these plans for 2008 is included in the “Other
Compensation” column of the Summary Compensation Table appearing
below.
Perquisites and Other
Personal Benefits
We
provide a car allowance of $24,000 per year for the CEO and $9,600 per year for
the other executive officers, except for one executive officer who has the use
of a drive audit vehicle (i.e., a vehicle provided to an employee, without
charge, for the purpose of testing our remanufactured products). The
Committee believes this auto allowance is consistent with typical market
practice for company car programs and is part of offering a market-competitive
total compensation program.
Each
executive officer, other than the CEO, also receives an annual allowance equal
to 2% of base salary for expenses related to financial counseling, tax and legal
services, club dues, home office and the like. Our former CEO
received $20,000 annually while our new CEO receives an annual allowance equal
to 3% of base salary for such expenses. This flexible structure
enables executives to select benefits based on their individual circumstances,
thereby raising the perceived value of the program.
These
perquisites and benefits are offered in order to (i) provide executives
with certain conveniences so that they can focus more on our business matters,
and (ii) offer a market-competitive total compensation
package. The Committee periodically reviews the levels of perquisites
and other personal benefits to the NEOs and believes they are reasonable and
consistent with our overall compensation program.
All of
the compensation to the NEOs associated with these perquisites and other
personal benefits for 2008 is included in the “Other Compensation” column of the
Summary Compensation Table appearing below.
Executive
Compensation Employment Agreements
We have
entered into written employment agreements with each of our executive officers,
which provide for various benefits, including severance payable under certain
circumstances. These employment agreements are designed to promote
stability and continuity among our senior management team. For
information regarding these agreements for the NEOs, see “Summary Compensation
Table” and “Potential Payments Upon Termination or Change-in-Control” appearing
below.
Tax
and Accounting Implications
Deductibility of Executive
Compensation - Section 162(m) Compliance
Section
162(m) of the Internal Revenue Code generally disallows the corporate tax
deduction for certain compensation paid in excess of $1 million annually to
each of the chief executive officer and the four other most highly compensated
executive officers of publicly-held companies. There is an exception
to this rule for “performance-based compensation.”
The
Committee’s long-term objective is that our compensation programs qualify as
performance-based compensation for purposes of Section 162(m) in order to
maximize our corporate tax deduction. Therefore, as required by
Section 162(m) both the annual incentive plans and long-term incentive plans
were approved by stockholders to qualify applicable compensation as “performance
based.” Furthermore, the incentive plans are administered by the
Committee in order to be compliant with Section 162(m). Since May
2004, the Committee has been composed solely of outside directors for purposes
of Section 162(m). While the Committee’s general policy is to
preserve the deductibility of most compensation paid to our covered executives,
it may from time to time authorize payments that might not be deductible if the
Committee believes that those payments are in the best interests of
stockholders.
Compensation
and Nominating Committee Report
The
Compensation and Nominating Committee of our Board of Directors has reviewed and
discussed the Compensation Discussion and Analysis appearing above with our
management and, based on such review and discussions, the Compensation and
Nominating Committee has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the Annual Report on
Form 10-K for the year ended December 31, 2008 and this Proxy
Statement.
Compensation
and Nominating Committee
Curtland E. Fields,
Chairman
Robert L.
Evans
Michael D.
Jordan
The
foregoing report of the Compensation and Nominating Committee shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or under the Exchange Act, except to the extent that we specifically incorporate
this information by reference, and shall not otherwise be deemed filed under
such Acts.
Summary
Compensation Table
The
following table sets forth the compensation for 2006, 2007 and 2008, for
services to us in all capacities, of the NEOs:
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)(1)
|
Non-Equity
Incentive Plan Compensation
($)(2)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
|
All
Other Compen-
sation
($)
|
Total
($)
|
|||||||||||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||||||||||
|
Donald
T. Johnson Jr.
Chairman
(and CEO prior to 1/1/09)
|
2008
|
$ | 560,000 | (3) | $ | 0 | $ | 614,594 | $ | 536,113 | $ | 352,800 | $ |
0
|
$ | 82,327 | (4) | $ | 2,145,834 | |||||||||||
|
2007
|
$ | 560,000 | (5) | $ | 0 | $ | 618,324 | $ | 501,860 | $ | 1,512,000 | (6) | $ | 0 | $ | 79,443 | (7) | $ | 3,271,627 | |||||||||||
|
2006
|
$ | 535,000 | (5) | $ | 0 | $ | 330,557 | $ | 281,421 | $ | 0 | $ | 0 | $ | 66,178 | (8) | $ | 1,213,156 | ||||||||||||
|
Todd
R. Peters
President
and CEO (since 1/1/09)
|
2008
|
$ | 366,377 | (9) | $ | 0 | $ | 163,059 | $ | 157,872 | $ | 176,158 | $ | 0 | $ | 19,011 | (10) | $ | 882,477 | |||||||||||
|
2007
|
$ | 337,500 | $ | 0 | $ | 138,567 | $ | 120,864 | $ | 607,500 | $ | 0 | $ | 17,620 | (11) | $ | 1,222,051 | |||||||||||||
|
2006
|
$ | 324,500 | $ | 0 | $ | 151,876 | $ | 125,404 | $ | 0 | $ | 0 | $ | 17,009 | (12) | $ | 618,789 | |||||||||||||
|
Ashoka
Achuthan
Vice
President and
CFO
|
2008
|
$ | 18,173 | (13) | $ | 75,000 | (14) | $ | 13,618 | $ | 6,797 | $ | 0 | $ |
0
|
$ | 914 | (15) | $ | 114,502 | ||||||||||
|
F.
Antony Francis
President,
ATC Logistics
|
2008
|
$ | 252,123 | (16) | $ | 0 | $ | 91,456 | $ | 86,058 | $ | 174,682 | (17) | $ |
0
|
$ | 343,918 | (18) | $ | 948,237 | ||||||||||
|
2007
|
$ | 108,461 | (19) | $ | 0 | $ | 15,509 | $ | 13,826 | $ | 127,924 | $ | 0 | $ | 168,493 | (20) | $ | 434,213 | ||||||||||||
|
John
M. Pinkerton
Vice
President and CAO
|
2008
|
$ | 247,459 | (21) | $ | 0 | $ | 66,160 | $ | 58,396 | $ | 98,507 | $ | 0 | $ | 36,144 | (22) | $ | 506,666 | |||||||||||
|
2007
|
$ | 219,373 | (23) | $ | 0 | $ | 61,013 | $ | 51,674 | $ | 296,595 | $ | 0 | $ | 33,286 | (24) | $ | 661,941 | ||||||||||||
|
2006
|
$ | 210,961 | (23) | $ | 0 | $ | 54,683 | $ | 35,640 | $ | 0 | $ | 0 | $ | 33,696 | (25) | $ | 334,980 | ||||||||||||
|
Richard
L. Stanley
President,
ATC
Drivetrain
|
2008
|
$ | 335,000 | (26) | $ | 0 | $ | 433,220 | $ | 178,630 | $ | 42,210 | $ | 0 | $ | 41,718 | (27) | $ | 1,030,778 | |||||||||||
|
2007
|
$ | 162,346 | (28) | $ | 50,000 | $ | 247,907 | $ | 82,354 | $ | 118,181 | $ | 0 | $ | 52,510 | (29) | $ | 713,298 | ||||||||||||
_______________________
|
(1)
|
The
assumptions used in the computation of our stock and option award fair
values are set forth in Note 2 – Stock-Based
Compensation to our consolidated financial statements set forth in
Item 8 of our Annual Report on Form 10-K for the year ended December 31,
2008.
|
|
(2)
|
Bonuses
are paid under our annual and long-term (3-year) incentive compensation
plans for a particular year/period if we achieve or exceed specified
financial targets for the year/period, and are paid during the first
quarter of the following year.
|
|
(3)
|
Mr.
Johnson deferred 50% of his annual base salary pursuant to our executive
deferred compensation plan.
|
|
(4)
|
Consists
of $6,900 company matching contribution under our 401(k) Plan, $28,000
company matching contribution under our executive deferred compensation
plan, $24,000 automobile allowance, $20,000 personal financial planning
and club dues allowance, and $3,427 in company-paid life insurance
premiums.
|
|
(5)
|
Mr.
Johnson deferred 75% of his annual base salary pursuant to our executive
deferred compensation plan.
|
|
(6)
|
Mr.
Johnson deferred 100% of this amount pursuant to our executive deferred
compensation plan.
|
|
(7)
|
Consists
of $4,200 company matching contribution under our 401(k) Plan, $28,876
company matching contribution under our executive deferred compensation
plan, $24,000 automobile allowance, $18,939 in reimbursement for club dues
and personal financial planning costs, and $3,427 in company-paid life
insurance premiums.
|
|
(8)
|
Consists
of $6,442 company matching contribution under our 401(k) Plan, $28,076
company matching contribution under our executive deferred compensation
plan, $20,000 automobile allowance, $10,700 in reimbursement for club dues
and personal financial planning costs, and $960 in company-paid life
insurance premiums.
|
|
(9)
|
Mr.
Peters' base salary was $344,500 for the period January 1, 2008 - May 12,
2008 while he served as Vice President and CFO. Upon his
promotion to President and COO on May 13, 2008, Mr. Peters' base salary
was increased to $378,000. Mr. Peters was promoted to President
and CEO effective January 1, 2009 and his base salary was increased to
$450,000.
|
|
(10)
|
Consists
of $9,600 automobile allowance, $7,302 personal financial planning and
club dues allowance, and $2,108 in company-paid life insurance
premiums.
|
|
(11)
|
Consists
of $9,600 automobile allowance, $5,954 in reimbursement for club dues and
financial planning costs, and $2,067 in company-paid life insurance
premiums.
|
|
(12)
|
Consists
of $9,600 automobile allowance, $6,490 in reimbursement for club dues and
financial planning costs, and $919 in company-paid life insurance
premiums.
|
|
(13)
|
Mr.
Achuthan was hired December 8, 2008. Mr. Achuthan deferred 20%
of this amount pursuant to our executive deferred compensation
plan. His full year annual base salary is
$315,000.
|
|
(14)
|
Mr.
Achuthan deferred 75% of this amount pursuant to our executive deferred
compensation plan.
|
|
(15)
|
Consists
of $303 company matching contribution under our executive deferred
compensation plan, $369 automobile allowance, and $242 personal financial
planning and club dues allowance.
|
|
(16)
|
Mr.
Francis' base salary was $238,600 until July 15, 2008 when he was promoted
to President of ATC Logistics and his base salary was increased to
$270,000. Mr. Francis deferred 3% of his 2008 base salary
pursuant to our executive deferred compensation
plan.
|
|
(17)
|
Consists
of $156,127 payable under our annual incentive compensation plan for 2008
and $18,555 payable under the company's long-term incentive plan for the
2006-08 period. Mr. Francis deferred 15% of his annual
incentive bonus award pursuant to our executive deferred compensation
plan.
|
|
(18)
|
Consists
of $6,211 company matching contribution under our 401(k) Plan, $3,762
company matching contribution under our executive deferred compensation
plan, $7,523 automobile allowance, $2,077 personal financial planning and
club dues allowance, $999 in company-paid life insurance premiums, and
$323,347 in relocation-related
costs.
|
|
(19)
|
Mr.
Francis was hired July 2, 2007 and his full year annual base salary was
$235,000.
|
|
(20)
|
Consists
of $542 company matching contribution under our 401(k) Plan, $2,769
automobile allowance, $160 in company-paid life insurance premiums, and
$145,438 in relocation-related
costs.
|
|
(21)
|
Mr.
Pinkerton's base salary was increased to $256,500, effective December 8,
2008 upon his appointment as Vice President and CAO. Mr.
Pinkerton deferred 10% of his 2008 base salary pursuant to our executive
deferred compensation plan.
|
|
(22)
|
Consists
of $6,900 company matching contribution under our 401(k) Plan, $13,613
company matching contribution under our executive deferred compensation
plan, $9,600 automobile allowance, $4,620 personal financial planning and
club dues allowance, and $1,412 in company-paid life insurance
premiums.
|
|
(23)
|
Mr.
Pinkerton deferred 10% of his base salary pursuant to our executive
deferred compensation plan.
|
|
(24)
|
Consists
of $5,923 company matching contribution under our 401(k) Plan, $12,023
company matching contribution under our executive deferred compensation
plan, $9,600 automobile allowance, $4,394 in reimbursement for club dues
and personal financial planning costs, and $1,346 in company-paid life
insurance premiums.
|
|
(25)
|
Consists
of $6,600 company matching contribution under our 401(k) Plan, $12,433
company matching contribution under our executive deferred compensation
plan, $9,600 automobile allowance, $4,224 in reimbursement for club dues
and personal financial planning costs, and $839 in company-paid life
insurance premiums.
|
|
(26)
|
Mr.
Stanley deferred 10% of his base salary pursuant to our executive deferred
compensation plan.
|
|
(27)
|
Consists
of $5,285 company matching contribution under our 401(k) Plan, $16,750
company matching contribution under our executive deferred compensation
plan, $6,958 personal financial planning and club dues allowance $2,050 in
company-paid life insurance premiums, and $10,675 in relocation-related
costs.
|
|
(28)
|
Mr.
Stanley was hired July 9, 2007. Mr. Stanley deferred 10% of
this amount pursuant to our executive deferred compensation
plan. His full year annual base salary was
$335,000.
|
|
(29)
|
Consists
of $1,392 company matching contribution under our 401(k) Plan, $7,087
company matching contribution under our executive deferred compensation
plan $3,350 in reimbursement for club dues and personal financial planning
costs, $2,050 in company-paid
life insurance premiums, and $38,632 in relocation
costs.
|
We have a
written employment agreement with each of our NEOs. The agreement
with Mr. Johnson expires at our annual meeting in June 2009 while the agreement
with each of the other NEOs has a three-year term with unlimited automatic
annual renewals.
Each
agreement provides for a base salary, participation in our various incentive and
benefit plans, and various perquisites, including an annual car allowance (for
2009: $10,126 for Mr. Johnson, $24,000 for Mr. Peters and $9,600 for
other executive officers except for Mr. Stanley, who is provided a drive-audit
vehicle), and reimbursement of the executive’s expenses for financial planning,
club dues and similar matters (for 2009: capped at $8,438 for Mr.
Johnson and a percentage of annual base salary for other executives (3% in the
case of Mr. Peters and 2% in the case of other executive
officers)).
Each
agreement includes a noncompetition provision that runs for a specified period
after the executive ceases to be employed by ATC Technology
Corporation. The period is 24 months in the case of Messrs. Johnson
and Peters and 18 months in the case of the other executive
officers. Each agreement also contains a confidentiality provision
and a provision that prohibits the executive officer from soliciting our
employees for employment by other companies during a specified period after
leaving ATC Technology Corporation.
Each of
the employment agreements provides for severance payments to the executive
officer in certain circumstances. See “Potential Payments Upon
Termination or Change-in-Control” below.
Grants
of Plan-Based Awards Table
The
following table sets forth information regarding each grant of an award made in
2008 to the NEOs under our various incentive plans: