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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[ ] 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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4) Date Filed:
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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, 2001 at 11:00 a.m., at the American Stock
Exchange, 86 Trinity Street New York, New York. I look forward to greeting
personally those shareholders able to attend.
At the Meeting, shareholders will be asked to elect seven directors to serve for
a one year term; approve an Amendment to the Company's Non-Salaried Director
Stock Option Plan; and approve an Amendment to the Company's Employee Stock
Option Plan. Information regarding these matters are 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 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
President and Chief Executive Officer
(1)
Acme United Corporation
1931 Black Rock Turnpike
Fairfield, Connecticut 06432
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 2001
Notice is hereby given that the Annual Meeting of Shareholders of Acme United
Corporation will be held at the American Stock Exchange, 86 Trinity Street New
York, New York, on Monday, April 23, 2001, at 11:00 A.M. for the following
purposes:
1. To elect seven Directors of the Company to serve until the next Annual
Meeting and until their successors are elected.
2. To consider and vote upon an amendment to the Non-Salaried Director Stock
Option Plan.
3. To consider and vote upon an amendment to the Employee Stock Option Plan.
4. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 5, 2001 will be
entitled to vote at the meeting and at any adjournment thereof.
March 23, 2001
--------------------------------------
Fairfield, Connecticut Ronald P. Davanzo, Vice President and
Chief Financial Officer, Secretary and
Treasurer
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return your proxy so that your shares
may be voted in accordance with your wishes and in order that the presence of a
quorum may be assured. The prompt return of your signed proxy, regardless of the
number of shares you hold, will aid the Company in reducing the expense of
additional proxy solicitation. The giving of such proxy does not affect the
right to vote in person in the event you attend the meeting.
Enclosure: The Annual Report of the Company for the year 2000.
Acme United Corporation
(2)
Acme United Corporation
1931 Black Rock Turnpike
Fairfield, Connecticut 06432
ANNUAL MEETING OF SHAREHOLDERS
April 23, 2001
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the directors of Acme United Corporation (hereinafter called the "Company")
to be used at the Annual Meeting of Shareholders of the Company, to be held
April 23, 2001, or at any adjournment thereof. The purposes are set forth in the
accompanying Notice of Annual Meeting of Shareholders and in this Proxy
Statement. Any proxy given may be revoked by a shareholder orally or in writing
at any time prior to the voting of the proxy.
The approximate date on which this Proxy Statement and the enclosed Proxy is
first sent or given to shareholders is March 23, 2001.
Only holders of Common Stock of record at the close of business on March 5, 2001
will be entitled to vote at the meeting. Each holder of the 3,508,305 issued and
outstanding shares of $2.50 par value Common Stock is entitled to one vote per
share.
Each share of Common Stock is entitled to one vote on each question to be
presented at the Annual Meeting. A plurality of the vote cast by the shares of
stock entitled to vote, in person or by proxy, at the Annual Meeting will elect
directors as long as a quorum is present. A quorum consists of a majority of the
votes entitled to be cast on a question. Once a share is represented for any
purpose at the meeting, it is deemed present for quorum purposes for the
remainder of the meeting. If a quorum exists, action on each other question to
be voted upon will be approved if votes, in person or by proxy, cast by
shareholders favoring the action exceed the vote cast by shareholders opposing
the action. In certain circumstances, a shareholder will be considered to be
present at the Annual Meeting for quorum purposes, but will not be deemed to
have voted in the election of directors or in connection with other matters
presented for approval at the Annual Meeting. Such circumstances will exist
where a shareholder is present but specifically abstains from voting, or where
shares are represented at a meeting by a proxy conferring authority to vote on
certain matters but not for the election of directors or on other matters. Under
Connecticut law, such abstentions and non-votes have a neutral effect on the
election of management's nominees for directors and on the approval or
disapproval of the other matters presented for shareholder action.
(3)
PRINCIPAL SHAREHOLDERS
The following information is given with respect to any person who, to the
knowledge of the Company's Board of Directors, owns beneficially more than 5% of
the Common Stock of the Company (exclusive of treasury shares) as of February 1,
2001:
Type of Shares Owned on Percent of
Shareholder Ownership February 1, 2001 Class
- ------------------------------- ----------- ------------------ ------------
Walter C. Johnsen Direct 276,272 (1) 7.87
1931 Black Rock Turnpike
Fairfield, CT 06432
- ------------------------------- ----------- ------------------ ------------
A. Scott Asen Direct 548,000 15.62
Asen and Co.
224 East 49th Street
New York, NY 10017
- ------------------------------- ----------- ------------------ ------------
(1) In addition, Mr. Johnsen has the right to acquire 192,500 shares issuable
upon exercise of outstanding options within 60 days of February 1, 2001.
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates, as to each named executive officer, director and
nominee, and as to all directors and executive officers as a group, the number
of shares and percentage of the Company's Common Stock beneficially owned as of
February 1, 2001. The persons shown have sole voting power in these shares
except as shown in the footnotes below.
Common Stock Beneficially Owned
as of February 1,2001
- --------------------------------------------------- ------- -------------------
Number of Shares (1) Percent
- --------------------------------------------------- ------- -------------------
James A. Benkovic....................28,010 (2) *
- --------------------------------------------------- ------- -------------------
Larry H. Buchtmann...................22,000 (3) *
- --------------------------------------------------- ------- -------------------
Ronald P. Davanzo....................38,625 (4) 1.10
- --------------------------------------------------- ------- -------------------
George R. Dunbar ....................45,122 (5) 1.29
- --------------------------------------------------- ------- -------------------
Richmond Y. Holden, Jr. .............17,972 (6) *
- --------------------------------------------------- ------- -------------------
Walter C. Johnsen...................468,772 (7) 13.36
- --------------------------------------------------- ------- -------------------
Wayne R. Moore ......................37,643 (5) 1.07
- --------------------------------------------------- ------- -------------------
Brian S. Olschan.....................76,625 (8) 2.18
- --------------------------------------------------- ------- -------------------
Gary D. Penisten ...................119,287 (5) 3.40
- --------------------------------------------------- ------- -------------------
Executive Officers and Directors
as a Group (10 persons)........855,056
- --------------------------------------------------- ------- -------------------
*Less than 1.0%
(1) Based on a total of 3,508,305 outstanding shares as of February 1, 2001 and
444,975 shares issuable upon exercise of outstanding options exercisable
within 60 days of February 1, 2001.
(4)
(2) Includes 20,250 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 1, 2001.
(3) Includes 22,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 1, 2001.
(4) Includes 24,625 shares issuable upon exercise of outstanding options within
60 days of February 1, 2001.
(5) Includes 17,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 1, 2001.
(6) Includes 12,500 shares issuable upon exercise of outstanding options within
60 days of February 1, 2001.
(7) Includes 192,500 shares issuable upon exercise of outstanding options
within 60 days of February 1, 2001.
(8) Includes 70,625 shares issuable upon exercise of outstanding options within
60 days of February 1, 2001.
(5)
ELECTION OF DIRECTORS
Each of the following persons has been nominated as a director until the next
Annual Meeting of Shareholders and until his successor is chosen and qualified.
The proxies in the enclosed form which are executed and returned will be voted
(unless otherwise directed) for the election as directors of the following
nominees, all of whom are now members of the Board of Directors, except
Stevenson E. Ward III.
- ------------------------- ------------------------------------------------------
Director
Nominees Principal Occupation Since
- ------------------------- ------------------------------------------------------
Walter C. Johnsen President and Chief Executive 1995
(age 50) Officer of the Company since
November 30,1995; Executive Vice
President from January 24, 1995
to November 29, 1995. Formerly
served as Vice Chairman and a
principal of Marshall Products, Inc.,
a medical supply distributor.
- ------------------------- ------------------------------------------------------
Gary D. Penisten Chairman of the Board of the Company 1994
(age 69) since February 27, 1996. He is a
Director of D.E. Foster & Partners
L.P., an executive search firm. From
1977 to 1988, he was Senior Vice President
of Finance, Chief Financial Officer and
a Director of Sterling Drug Inc. in New
York City. From 1974 to 1977 he served
in the U.S. Government as Assistant
Secretary of the Navy for Financial
Management. Prior to that, he was
employed by General Electric.
- ------------------------- ------------------------------------------------------
Wayne R. Moore President and Chief Executive Officer 1976
(age 70) of the Moore Special Tool Company
(1974-93)and its Chairman of the
Board(1986-93). He was Chairman of the
Board of the Producto Machine Company
(1994-97). Mr. Moore was Chairman of
the Association for Manufacturing
Technology/U.S. Machine Tool Builders
(1985-86) and Committee Member of the
U.S. Eximbank (1984). He is a Trustee
of the American Precision Museum and
on the Board of Advisors of the
Fairfield University School of Engineering.
(6)
- ------------------------- ------------------------------------------------------
George R. Dunbar President of The U.S. Baird Corporation 1977
(age 77) since January 2001 and President of Dunbar
Associates, a municipal management
consulting firm. Former Chief
Administrative Officer for the City of
Bridgeport. President (1972-87),
Bryant Electric division of Westinghouse
Electric Corporation, manufacturer of
electrical distribution and utilization
products, Bridgeport, CT.
- ------------------------- ------------------------------------------------------
Richmond Y. Holden, Jr. President and Chief Executive Officer of 1998
(age 47) J.L. Hammett Co. since 1992; Executive
Vice President from 1989 to 1992. J.L.
Hammett Co. is a distributor and
retailer of educational products
throughout the United States, and
is one of the largest distributors
to the K-12 educational marketplace.
Currently Chairman of the Board of PC-Build,
a computer upgrade, network services and
computer services company.
- ------------------------- ------------------------------------------------------
Brian S. Olschan Executive Vice President and Chief 2000
(age 44) Operating Officer of the Company as
of January 25, 1999; Senior Vice
President - Sales and Marketing 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
(age 55) Officer of 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.
- ------------------------- ------------------------------------------------------
(7)
Management does not expect that any of the nominees will become unavailable
for election as a director, but, if for any reason that should occur prior
to the Annual Meeting, the persons named in the proxy will vote for such
substitute nominee, if any, as may be recommended by Management.
There were no material transactions between the Company and any 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
relative or spouse of any of the foregoing persons.
The Board of Directors had seven meetings. 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.
DIRECTORS' FEES
All directors who are not salaried employees received a fee of $2,500 per
quarter plus $500 for each Board of Directors meeting attended. The fees earned
for service on the Committees of the Board were $500 per Committee meeting and
$500 for each one-half day, or major portion thereof, devoted to Committee work.
The Chairman of each Committee earned an additional $500 per day to compensate
for the broader responsibility and related effort.
DIRECTORS STOCK OPTIONS
Under the Non-Salaried Directors Stock Option Plan, options were granted on
April 28, 1997 for 10,000 shares each to Messrs. Dunbar, Moore and Penisten, of
which 2,500 shares vested on April 28, 1997, 2,500 shares vested on April 28,
1998, 2,500 shares vested on April 28, 1999, and 2,500 shares vested on April
28, 2000. On April 27, 1998, options were granted for 2,500 shares each to
Messrs. Dunbar, Moore and Penisten, of which all shares vested immediately. On
April 27, 1998, options were granted for 10,000 shares to Richmond Y. Holden,
Jr., of which 2,500 vested April 27, 1998, 2,500 vested on April 27, 1999, 2,500
vested on April 27, 2000 and 2,500 will vest on April 27, 2001. On April 26,
1999, options were granted for 2,500 shares to Messrs. Dunbar, Holden, Moore and
Penisten, of which all shares vested immediately. On April 24, 2000, options
were granted for 2,500 shares to Messrs. Dunbar, Holden, Moore and Penisten, of
which all shares vested immediately.
Newman M. Marsilius, a former Director, had been previously been granted options
for 10,000 shares, which fully vested on April 27, 1998 upon his retirement from
the Board; the Board extended the exercise date for his options to April 27,
2002.
COMMITTEE STRUCTURE
There is an Executive Committee of the Board of Directors which 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. During 2000, the Committee did not meet.
There is an Audit Committee of the Board of Directors which is composed of Mr.
Holden as Chairman, and Messrs. Dunbar, Penisten and Moore.
(8)
The members of the Audit Committee are "independent" as such term is defined in
Section 121(B)(b)(ii) of the American Stock Exchange's listing standards. The
Board of Directors has adopted a written charter for the Audit Committee, a copy
of which is included as Appendix A to this proxy statement.
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Annual Report with management including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Company's accounting principles and
such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company, including the matters in the written disclosures received by the Audit
Committee as required by the Independence Standards Board, and has considered
the compatibility of nonaudit service with the auditors' independence.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their respective audits. The Committee meets 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. The
Committee held two meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission. The Committee and the Board have also selected the Company's
independent auditors.
NOMINATING COMMITTEE
The functions of a Nominating Committee are performed by the whole Board. The
Board will consider nominees for directors recommended by shareholders, and such
recommendations may be made by submitting in writing 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), care of the
Secretary at the Company's principal executive office, 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.
(9)
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE AND INSIDER PARTICIPATION
The Company's executive compensation program is administered by the Compensation
Committee of the Board of Directors. During 2000, the Committee was composed of
certain non-employee members of the Board of Directors, which include Mr. Dunbar
as Chairman, and Messrs. Holden, Moore and Penisten. The Committee had two
meetings during 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is committed to a strong, positive link between
business, performance and strategic goals, and compensation and benefit
programs.
OVERALL EXECUTIVE COMPENSATION POLICY
Our compensation policy is designed to support the overall objective of
enhancing value for our shareholders by:
- Attracting, developing, rewarding and retaining highly qualified and
productive individuals.
- Directly relating compensation to both Company and individual
performance.
- Ensuring compensation levels that are externally competitive and
internally equitable.
Following is a description of the elements of the Company's executive
compensation program and how each relates to the objectives and policy outlined
above.
BASE SALARY
The Committee reviews each executive officer's salary annually. In determining
appropriate salary levels, we consider level and scope of responsibility,
experience, company and individual performance, internal equity, as well as pay
practices of other companies relating to executives of similar responsibility.
By design, we strive to set executives' salaries at competitive market levels.
External surveys and resource materials are used to verify this. We believe
maximum performance can also be encouraged through the use of appropriate
incentive programs.
ANNUAL INCENTIVES
Annual incentive award opportunities are made available to executives to
recognize and reward corporate and individual performance. The plan in effect
for 2000 provided for an incentive bonus based on the achievement of corporate
profitability goals set for each individual, based upon his area of
responsibility. The bonuses would range from 5% to 50% of base salary, provided
a minimum goal were reached. The amount individual executives may earn under the
bonus plan is directly dependent upon the individual's position, responsibility
and ability to impact our financial success and corporate goals. The bonuses
awarded in 2000 to top management are listed in the Summary Compensation Table
below.
(10)
In 2001, the incentive plan criteria will be similar to the plan in 2000.
STOCK OPTION INCENTIVES
The Company's stock option compensation program is administered by the
Compensation Committee of the Board of Directors. The purpose of the Company's
Amended and Restated Stock Option Plan for Employees is to promote the interests
of the Company by enabling its key employees to acquire an increased proprietary
interest in the Company and thus to share in the future success of the Company's
business. Accordingly, the plan 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 stockholders. Since the employees
eligible to receive options under the plan will be those who are in a position
to make important and direct contributions to the success of the Company, the
Committee believes that the grant of options under the plan has been and will
continue to be in the best interests of the Company.
The following options were granted in 2000:
Options for 10,000 shares were granted to Walter C. Johnsen on January
25, 2000 of which 2,500 shares vested on January 25, 2000, 2,500 vested
on January 25, 2001, 2,500 shares will vest on January 25, 2002, and
2,500 shares on January 25, 2003. Additionally 30,000 shares were
granted on April 24, 2000 of which 7,500 shares vested on April 24,
2000 and 7,500 shares will vest on April 24, 2001, 7,500 shares will
vest on April 24, 2002 and 7,500 shares will vest on April 24, 2003.
Additionally 10,000 shares were granted on October 10, 2000 of which
2,500 shares vested on October 10, 2000 and 2,500 shares will vest on
October 10, 2001, 2,500 shares will vest on October 10, 2002 and 2,500
shares will vest on October 10, 2003.
Options for 7,500 shares were granted to Brian S. Olschan on January
25, 2000 of which 1,375 shares vested on January 25, 2000, 1,375 vested
on January 25, 2001, 1,375 shares will vest on January 25, 2002, and
1,375 shares on January 25, 2003. Additionally 17,500 shares were
granted on April 24, 2000 of which 4,375 shares vested on April 24,
2000 and 4,375 shares will vest on April 24, 2001, 4,375 shares will
vest on April 24, 2002 and 4375 shares will vest on April 24, 2003.
Additionally 5,000 shares were granted on October 10, 2000 of which
1,250 shares vested on October 10, 2000 and 1,250 shares will vest on
October 10, 2001, 1,250 shares will vest on October 10, 2002 and 1,250
shares will vest on October 10, 2003.
(11)
Options for 7,500 shares were granted to Ronald P. Davanzo on January
25, 2000 of which 1,375 shares vested on January 25, 2000, 1,375 vested
on January 25, 2001, 1,375 shares will vest on January 25, 2002, and
1,375 shares on January 25, 2003. Additionally 12,500 shares were
granted on April 24, 2000 of which 3,125 shares vested on April 24,
2000 and 3,125 shares will vest on April 24, 2001, 3,125 shares will
vest on April 24, 2002 and 3,125 shares will vest on April 24, 2003.
Additionally 5,000 shares were granted on October 10, 2000 of which
1,250 shares vested on October 10,2000 and 1,250 shares will vest on
October 10, 2001, 1,250 shares will vest on October 10, 2002 and 1,250
shares will vest on October 10, 2003.
Options for 5,000 shares were granted to Larry H. Buchtmann on January
25, 2000 of which 1,250 shares vested on January 25, 2000, 1,250 vested
on January 25, 2001, 1,250 shares will vest on January 25, 2002, and
1,250 shares on January 25, 2003. Additionally 5,000 shares were
granted on April 24, 2000 of which 1,250 shares vested on April 24,
2000 and 1,250 shares will vest on April 24, 2001, 1,250 shares will
vest on April 24, 2002 and 1,250 shares will vest on April 24, 2003.
Additionally 5,000 shares were granted on October 10, 2000 of which
1,250 shares vested on October 10,2000 and 1,250 shares will vest on
October 10, 2001, 1,250 shares will vest on October 10, 2002 and 1,250
shares will vest on October 10, 2003.
Options for 5,000 shares were granted to James A. Benkovic on January
25, 2000 of which 1,250 shares vested on January 25, 2000, 1,250 vested
on January 25, 2001, 1,250 shares will vest on January 25, 2002, and
1,250 shares on January 25, 2003. Additionally 5,000 shares were
granted on April 24, 2000 of which 1,250 shares vested on April 24,
2000 and 1,250 shares will vest on April 24, 2001, 1,250 shares will
vest on April 24, 2002 and 1,250 shares will vest on April 24, 2003.
Additionally 5,000 shares were granted on October 10, 2000 of which
1,250 shares vested on October 10,2000 and 1,250 shares will vest on
October 10, 2001, 1,250 shares will vest on October 10, 2002 and 1,250
shares will vest on October 10, 2003.
The Committee also granted options for 42,900 shares in the aggregate
to fourteen other employees with staggered vesting dates through August
1, 2003.
RATIONALE FOR CEO COMPENSATION
Walter C. Johnsen was designated President and Chief Executive Officer of the
Company effective on November 30, 1995. His compensation package was designed to
encourage performance in line with the interests of our shareholders. We believe
Mr. Johnsen's total compensation was competitive in the external marketplace and
reflective of Company and individual performance. Mr. Johnsen's annual
compensation during 2000 was $230,000 per annum.
COMPENSATION COMMITTEE
George R. Dunbar, Chairman
Richmond Y. Holden, Jr.
Wayne R. Moore
Gary D. Penisten
(12)
The Compensation Committee Report on Executive Compensation shall not be deemed
incorporated by reference by any general statement incorporating by reference in
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation of the
Company's Chief Executive Officer and each of the four other most highly
compensated officers of the Company at the end of the last completed fiscal
year. No information is given as to any person for any fiscal year during which
such person was not an officer of the Company.
ANNUAL COMPENSATION
- ---------------------------- ---- --------- ------- --------------- ------------
Other Annual All Other
Name and Principal Position Year Salary(1) Bonus Compensation(2) Compensation
- ---------------------------- ---- --------- ------- --------------- ------------
Walter C. Johnsen 2000 $228,224 $30,000 $ 0 $ 0
President & Chief 1999 $194,679 $25,000 $ 0 $11,666 (3)
Executive Officer (3) 1998 $158,885 $ 0 $ 0 $30,000 (3)
- ---------------------------- ---- --------- ------- --------------- ------------
Brian S. Olschan 2000 $193,385 $25,000 $ 0 $ 0
Executive Vice President 1999 $173,467 $25,000 $ 0 $ 0
and Chief Operating 1998 $160,962 $ 0 $ 0 $ 0
Officer (4)
- ---------------------------- ---- --------- ------- --------------- ------------
Ronald P. Davanzo 2000 $128,384 $25,000 $ 0 $ 0
Vice President-Chief 1999 $109,621 $10,000 $ 0 $ 0
Financial Officer (5) 1998 $105,577 $ 0 $ 0 $ 0
- ---------------------------- ---- --------- ------- --------------- ------------
James A. Benkovic 2000 $114,193 $10,000 $ 0 $ 0
Vice President- 1999 $104,621 $ 0 $ 0 $ 0
Consumer Sales (6) 1998 $104,231 $ 0 $ 0 $ 0
- ---------------------------- ---- --------- ------- --------------- ------------
Larry H. Buchtmann 2000 $126,692 $10,000 $ 0 $ 0
Vice President- 1999 $116,928 $10,000 $ 0 $ 0
Manufacturing (7) 1998 $38,077 $ 0 $ 0 $ 0
- ---------------------------- ---- --------- ------- --------------- ------------
(1) Effective 1997, the Company changed its payroll payment cycle from monthly
to bi-weekly. The salary reported is gross wages paid, which varies
slightly from annual compensation.
(2) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or ten (10%) percent of the total amount of annual
salary and bonus for any named individual.
(3) Walter C. Johnsen received $11,666 in deferred compensation in 1999 and
$30,000 in deferred compensation for 1998 paid in treasury shares.
(13)
(4) Brian S. Olschan joined Acme as Senior Vice President-Sales and Marketing
on September 12, 1996. He was promoted to Executive Vice President and
Chief Operating Officer on January 25, 1999.
(5) Ronald P. Davanzo joined Acme as Director, International Finance and
Planning on May 19, 1997. He was promoted to Vice President - International
on April 27, 1998 and continues in that capacity. He was named Vice
President and Chief Financial Officer, Secretary and Treasurer on March 18,
1999.
(6) James A. Benkovic joined Acme as Western Regional Sales Manager on June 18,
1990. He was promoted to Vice President of Sales-Consumer Products on
October 1, 1991.
(7) Larry H. Buchtmann joined Acme as Vice President Manufacturing on March 17,
1998.
OPTION GRANTS IN LAST FISCAL YEAR
AND POTENTIAL REALIZABLE VALUES
The following table provides information concerning each option granted during
the last fiscal year to each of the named executive officers and the potential
realizable value of such options at certain assumed rates of stock appreciation.
Individual Grants
-------------------- ----------- ------------ ----------- ----------------- ----------------
Potential
Realizable
Value at
Assumed Annual
% of Total Rates of Stock
Number of Options Price
Shares Granted to Appreciation
Underlying Employees in for Option
Options Fiscal Exercise or Term
Name Granted (1) Year Base Price Expiration Date 5% 10%
-------------------- ----------- ------------ ----------- ----------------- ----------------
Walter C. Johnsen 10,000 5.6% 1.625 per January 25,2010 $10,000 $26,000
share
30,000 16.9% 2.375 per April 24, 2010 46,000 114,000
share
10,000 5.6% 3.56 per October 10, 2010 22,000 57,000
share
-------------------- ----------- ------------ ----------- ----------------- ----------------
Brian S. 7,500 4.2% 1.625 per January 25, $8,000 $19,000
Olschan share 2010
17,500 9.8% 2.375 per April 24, 2010 26,000 66,000
share
5,000 2.8% 3.56 per October 10, 2010 11,000 28,000
share
-------------------- ----------- ------------ ----------- ----------------- ----------------
Ronald P. 7,500 4.2% 1.625 per January 25, 2010 $8,000 $19,000
Davanzo share
12,500 7.0% 2.375 per April 24, 2010 19,000 47,000
share
5,000 2.8% 3.56 per October 10, 2010 11,000 28,000
share
-------------------- ----------- ------------ ----------- ----------------- ----------------
James A. 5,000 2.8% 1.625 per January 25,2010 $ 5,000 $13,000
Benkovic share
5,000 2.8% 2.375 per April 24, 2010 7,000 19,000
share
5,000 2.8% 3.56 per October 10, 2010 11,000 28,000
share
-------------------- ----------- ------------ ----------- ----------------- ----------------
Larry H. 5,000 2.8% 1.625 per January 25, 2010 $ 5,000 $13,000
Buchtmann share
5,000 2.8% 2.375 per April 24, 2010 7,000 19,000
share
5,000 2.8% 3.56 per October 10, 2010 11,000 28,000
share
-------------------- ----------- ------------ ----------- ----------------- ----------------
(1) The dates on which the shares vest are summarized under the heading Stock
Option Incentives in the preceding pages.
(14)
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table provides information concerning each option exercised during
the last fiscal year by each of the named executive officers and the value of
unexercised options held by such executive officers at the end of the fiscal
year.
- ---------------------------- ------------------ ------------------- ------------------------------ ------------------------------
Value of
Number of Securities Unexercised In-the-Money
Underlying Unexercised Options/SARs at Fiscal Year
Options/SARs at Fiscal Year End
Shares Acquired End (#) (1) Exercisable/ ($)(1)(2) Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ---------------------------- ------------------ ------------------- ------------------------------ ------------------------------
Walter C. Johnsen -0- $0 182,500/57,500 $20,000/$33,000
- ---------------------------- ------------------ ------------------- ------------------------------ ------------------------------
Brian S. Olschan -0- $0 62,500/42,500 $17,000/$25,000
- ---------------------------- ------------------ ------------------- ------------------------------ ------------------------------
Ronald P. Davanzo -0- $0 19,500/27,500 $9,000/$16,000
- ---------------------------- ------------------ ------------------- ------------------------------ ------------------------------
Larry H. Buchtmann -0- $0 16,500/20,500 $7,000/$11,000
- ---------------------------- ------------------ ------------------- ------------------------------ ------------------------------
James A. Benkovic -0- $0 17,250/15,750 $5,000/$9,000
- ---------------------------- ------------------ ------------------- ------------------------------ ------------------------------
(1) The Company has no unexercised SARs.
(2) Values stated are based on the closing price per share of the Company's
Common Stock on the American Stock Exchange on December 31, 2000, the last
trading day of the fiscal year.
(15)
ACME UNITED CORPORATION RETIREMENT PLANS
In December 1995, the Board of Directors adopted a resolution to freeze the
defined benefit pension plan resulting in no further benefit accruals after
February 1, 1996. The life annuity annual benefit at age 65 was zero for Walter
C. Johnsen, Brian S. Olschan, Ronald P. Davanzo and Larry H. Buchtmann and
$3,188 for James A. Benkovic. Amounts earned by others under this plan are not
subject to a deduction for estimated Social Security benefits, and do not
include benefits which would result from the transfer by a retiring employee of
his accrued profit-sharing account balance to the pension plan.
CHANGE-IN-CONTROL ARRANGEMENTS AND SEVERANCE PAY PLAN
The Company has a Salary Continuation Plan in effect covering officers of the
Company employed in the United States at the level of Vice President or above,
under the age of 65 and having at least one (1) year of Company service. This
plan covers Walter C. Johnsen, Brian S. Olschan, Ronald P. Davanzo, James A.
Benkovic and Larry H. Buchtmann and 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. First, the plan provides that in the event of
such a change in control each such key employee would have specific rights and
receive certain benefits if, within one year after such change in control (two
years for officers who like Mr. Johnsen and Mr. Olschan are also directors),
either the employee's employment is terminated by the Company involuntarily,
his/her responsibility, status or compensation is reduced, or if he/she is
transferred to a location unreasonably distant from his/her current location. In
such circumstances the compensation which the employee would be entitled to
receive would be a lump sum payment equal to a specific number of months'
compensation based upon the level of his/her non-deferred compensation in effect
immediately preceding such disposition. Secondly, any such key employee
resigning within six (6) months after the disposition of the Company (one year
for certain officers who like Mr. Johnsen and Mr. Olschan are also directors)
would be entitled to a similar payment. Under the first scenario Messrs. Johnsen
and Olschan would be entitled to thirty (30) months' compensation, respectively
and Messrs. Davanzo, Benkovic and Buchtmann eighteen (18) months compensation.
Under the second scenario, Messrs. Johnsen and Olschan would be entitled to
twenty-four (24) months', and Messrs. Davanzo, Buchtmann and Benkovic would be
entitled to six (6) months' compensation.
The Company has a Severance Pay Plan in effect covering officers of the Company
employed in the United States at the level of Vice President or above, under the
age of 65 and having at least one (1) year of Company service. This Plan covers
Messrs. Johnsen, Olschan, Davanzo, Benkovic and Buchtmann and is designed to
enable the Company to attract and retain key employees. The Plan provides that
in the event the key employee's employment is terminated by the Company
involuntarily, his/her responsibility, status or compensation is reduced, or if
he/she is transferred to a location unreasonably distant from his/her current
location, he/she shall be entitled to benefits under the Plan. In such
circumstances the compensation which the employee would be entitled to receive
would be a lump sum payment equal to a specific number of months compensation
based upon the level of his/her non-deferred compensation in effect immediately
preceding such termination. Under the Plan Messrs. Johnsen and Olschan would be
entitled to nine (9) months' compensation, and Messrs. Davanzo, Benkovic and
Buchtmann six (6) months' compensation, upon such severance. This plan applies
only if the Salary Continuation Plan does not apply.
PERFORMANCE GRAPH
The following Performance Graph 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 the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
(16)
The graph compares the yearly cumulative total stockholder return on the
Company's Common Stock with the yearly cumulative total return of (a) the AMEX
Market Index and (b) a peer group of companies that, like the Company, (i) are
currently listed on the American Stock Exchange, and (ii) have a market
capitalization of $10 million to $20 million. The peer group includes the
following companies: Ablest Incorporated, Advanced Photonix CL A, Advantage
Marketing Sys, Amcon Distributing Co, American Shared Hosp SVC, Amerivest
Properties Inc, Ampex Corp CL A, Anworth Mtg Asset Corp, Arizona Land Income
Corp, ARV Assisted Living Inc, Assisted Living Concepts, Avalon Holdings Corp,
AXS-One Inc, Balanced Care Corp, Bayou Steel Corp, Blackrock CA Inv QMT,
Blackrock FL IQMT, Blackrock NJ IQMT, Blackrock NY IQMT, Blimpie Internat Inc,
Brilliant Digital Ent, Cabletel Communications, Calton Inc, Canyon Resources
Corp, Cardiotech Internat Inc, Carmel Container System, Cold Metal Products Inc,
Commodore Applied Tech, Congoleum Corp, Core Materials Corp, Cornerstone
Bancorp, Cybex Internat, Darling International, Diasys Corp, Diversified Corp
Res Inc, Dixon Ticonderoga Co, Earl Scheib Inc, Eaton Vance MA MUNI INCM,
Electrochemical Ind Ltd, Emeritus Corp, Empire Resources Inc., Endorex
Corporation, Engex Inc, Environmental Elements, Espey Mfg & Electronics,
Falmouth Bancorp Inc, FFP Marketing Co Inc, Foodarama Supermarkets, Friendly Ice
Cream Corp, Frontier Adjustr of Amer, Furr's Restaurants Inc, General Employment
Ent, Global Income Fund Inc, Global Technovations Inc, Goldfield Corp,
Gouverneur Bancorp Inc., Graham Corp, Harold's Stores Inc, Hearx Ltd, Hersha
Hospitality Trust, Hi-Shear Technology Corp, Horizon Medical Products, ICH Corp,
Income Opportun Rlty Inv, Intelligent Systems Corp, Internat Remote Imag Sys,
IPI Inc, J Alexander's Corp, KBK Capital Corp, Kentucky First Bancorp, LCM
Internet Growth Fund, Leather Factory Inc, Medical Advisory Systems, Meritage
Hospitality GRP, Michael Anthony Jewelers, Milestone Scientific Inc, Morgan
Group Inc, Movie Star Inc., Northeast Penn Fincl CP, Northern Technology,
Pelican Financial Inc, Pinnacle Bancshares Inc, Pittsbgh & WV Railroad, Plastic
Surgery Company, Polyair Inter Pack Inc, Polyphase Corp, Polyvision Corp,
Questcor Pharmaceuticals, Reeds Jewelers Inc, REFAC, Richmont Mines Inc,
Rotonics Manufacturing, Security Assoc Intl Inc, Selas Corp of America, Sherwood
Brands Inc, Sonus Corporation, Southfirst Bancshares, Spinnaker Industries Inc,
Sterling Cap CP, Stratesec Inc, Sussex Bancorp, Tab Products Co, Thackeray Corp,
Tofutti Brands Inc., The Southern Banc Co, The Stephan Company, Trio-Tech
Internat, Uni-Marts Inc, Versar Inc, Vicon Industries Inc, Vista Gold Corp,
Vornado Operating Co, Webco Industries Inc, Wellco Enterprises Inc, Well-
Gardner Electronic, Westminster Capital, Inc.
The Company does not believe it can reasonably identify a peer group of
companies on an industry or line-of-business basis for the purpose of developing
a comparative performance index. While the Company is aware that some other
publicly-traded companies market products in the Company's line-of-business,
none of these other companies provide most or all of the products offered by the
Company, and many offer other products or services as well. Moreover, some of
these other companies that engage in the Company's line-of-business do so
through divisions or subsidiaries that are not publicly-traded. Furthermore,
many of the other companies are substantially more highly capitalized than the
Company. For these reasons, any such comparison would not, in the opinion of the
Company, provide a meaningful index of comparative performance.
The comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, the possible future performance of the
Company's Common Stock.
(17)
(Printer: Insert Graph)
COMPARISON OF CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND
AMEX MARKET INDEX
- --------------------------------FISCAL YEAR ENDED-------------------------------
1995 1996 1997 1998 1999 2000
ACME UNITED CORP 100.00 141.94 154.84 58.06 29.03 72.59
PEER GROUP 100.00 96.09 87.21 61.60 54.29 33.35
AMEX MARKET INDEX 100.00 105.52 126.97 125.25 156.15 154.23
PROPOSAL FOR AMENDMENT TO THE NON-SALARIED DIRECTOR STOCK OPTION PLAN
On February 27, 2001, the Board of Directors, subject to approval of the
Shareholders, amended the Non-Salaried Director Stock Option Plan (the "Plan")
to increase the number of shares subject to options from 120,000 to 160,000. 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 who are not salaried
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 such directors have served other companies and their
shareholders well by directly relating incentive compensation to the building of
long-term shareholder values. In 1996 a plan was proposed for the first time for
Acme United directors to provide equity-related compensation for this important
group as well. Such plans are increasingly common throughout American industry
and are found in other companies with which the Company competes for the
services of qualified individuals to serve as directors.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Compensation Committee of the Board of Directors
composed of certain non-employee directors (the "Committee"). The Committee,
however, has no discretion affecting the timing, price or amount of any grants,
all of which are determined in the Plan.
SHARES OF STOCK SUBJECT TO THE PLAN
As amended in 1997, the aggregate number of shares subject to options during the
term of the Plan was limited to 60,000 shares of the Common Stock of the
Company. In 1998 the number of shares subject to option was increased from
60,000 to 120,000. It is now proposed that the number of shares subject to
options be increased from 120,000 to 160,000. This limit may not be increased
during the term of the Plan, except by the shareholders or 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 Plan
amendment, additional shares (which can be authorized but unissued shares, or
treasury shares, or a combination thereof) will be set aside for the award of
options.
ELIGIBILITY
Directors of the Company who are not salaried employees of the Company are
eligible to receive benefits under the Plan.
(18)
DURATION OF THE PLAN
No awards of stock options may be made after May 31, 2006, but termination will
not affect the rights of any participants with respect to any grants made prior
to termination.
OPTIONS
The Plan as adopted in 1996 provided that an option to purchase 10,000 shares of
the Common Stock of the Company be granted to each new director on April 22,
1996, and for each additional new director added each year thereafter (beginning
with 1997) on the date of the Annual Meeting for the calendar year (or on the
date of the meeting of the Board of Directors at which such director was elected
to fill a vacancy) to each director who, at the adjournment of that meeting, is
an eligible director. On April 28, 1997, the Plan was amended to grant an option
for 10,000 shares to directors elected for the first time in earlier years,
vesting of which occurred over a four-year period. The amendment also provided
that options of up to 10,000 shares per director may be granted to each director
who is first elected after April 28, 1997.
The Plan was amended on April 27, 1998 to provide that directors elected at an
annual meeting but not receiving an initial option grant for 10,000 shares will
receive an option grant of 2,500 shares each year. These options vest
immediately. The Plan Amendment further provided that upon a termination as a
result of death, disability or retirement, any outstanding options may be
exercised by the Participant or the Participant's legal representative within
twelve months after such death, disability or retirement; provided, however,
that in no event shall the period extend beyond the expiration of the option
term.
The options which have already been granted pursuant to this Plan are outlined
above under "Directors Stock Options". If the proposed amendment increasing
shares is adopted so that there are sufficient shares to do so, all directors
under the Plan, except for Mr. Ward, will receive option grants for 2,500
shares, and Mr. Ward will receive an option grant for 10,000 shares upon
election at the 2001 Annual Meeting.
EXERCISE PRICE
The exercise price with respect to an option awarded under the Plan is 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.
PROVISIONS RELATING TO OPTIONS
Options may not be exercised until vested as described and not after ten years
from the date of the grant. The Committee may make provision for exercises
within the 10-year terms of a grant but following termination of Board
membership. Except in the case of death or disability, any unvested options
expire immediately if a participant ceases to be a director of the Company.
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 and in certain other instances as provided
by the Plan or by law.
(19)
AMENDMENT TO THE PLAN
The Board of Directors on recommendation of the Committee may amend or terminate
the Plan, except that no amendment shall affect the time, price or amount of any
grants to eligible directors. In addition, shareholders must approve any change
(i) increasing the numbers of shares subject to the Plan (except as described
under "Shares Of Stock Subject To The Plan") or (ii) changing the eligibility
for grant. Provisions of the Plan may not be amended more than once every six
months, other than to comply with provision of applicable law.
FEDERAL INCOME TAX CONSEQUENCES
A recipient of options incurs no income tax liability as a result of having been
granted those options or rights.
The exercise by an individual of a stock option normally results in the
immediate realization of income by the individual of the difference between the
market value of the stock which is being purchased on the date of exercise and
the price being paid for such stock. The amount of such income also is
deductible by the Company.
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, on gain or loss 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
Upon approval of the amendment to the Plan by the shareholders and upon their
election as directors at the 2001 Annual Meeting, there will be sufficient
shares for all re-elected directors who are not salaried employees of the
Company to receive an option grant for 2,500 shares which will vest immediately,
and for Mr. Ward to receive an initial option grant for 10,000 shares, which
vests as specified by the Compensation Committee.
VOTE REQUIRED
The approval of the amendment to the Non-Salaried Director 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 amendments to the
Non-Salaried Director Stock Option Plan.
(20)
PROPOSAL FOR AMENDMENT TO EMPLOYEES' STOCK OPTION PLAN
DESCRIPTION OF AMENDED AND RESTATED STOCK OPTION PLAN
The Company adopted a non-qualified stock option plan, the 1988 Stock Option
Plan effective February 22, 1988, which was amended effective January 29, 1991
and further amended and restated as the 1992 Amended and Restated Stock Option
Plan (the "Plan") effective February 25, 1992. A further amendment of the Plan
on April 22, 1996 increased the number of shares available under the Plan to
400,000. A further amendment of the Plan on April 27, 1998 increased the number
of shares available under the Plan to 520,000. A further amendment of the Plan
on April 24, 2000 increased the number of shares available under the Plan to
670,000. Under the Plan, which is administered by the Compensation Committee of
the Board of Directors (the "Committee"), key employees of the Company
(including directors and officers who are employees) have been granted options
to purchase shares of Common Stock.
The Plan permits the granting of an aggregate of 670,000 shares of Common Stock
(proposed to be increased to 790,000 shares) at a price equal to 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. Further no
Incentive Stock Option may be granted to an employee owning Common Stock having
more than 10% of the voting power of the Company unless the option price for
such employee's option is at least 110% of the fair market value of the Common
Stock subject to the option at the time the option is granted and the option is
not exercisable after five years from the date of granting. The par value of the
Company's Common Stock is presently $2.50 per share. No option may be granted
under the Plan after the tenth anniversary of the adoption of the Plan. As a
result of the amendment and restatement of the Plan in 1992, options may be
granted until February 24, 2002. Unless otherwise specified by the Committee,
options granted under the Plan are Incentive Stock Options under the provisions
and subject to the limitations of Section 422 of the Internal Revenue Code.
Options granted prior to the 1992 amendment and restatement are non-qualified
stock options and any shares issued under these options would be included in the
670,000 share total proposed to be increased to 790,000.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Committee, which consists of members of the
Board who are not employees of the Company. The Committee is authorized, subject
to the provisions of the Plan, to determine the employees who will receive
options under the Plan, the number of shares subject to each option and the
terms of those options, and to interpret the Plan and to make such rules of
procedure as the Committee may deem proper.
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 exercise as determined by the Committee. 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.
(21)
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
(three months for options granted prior to June 2, 1996) of such termination
such options as the optionee could have exercised if his or her employment had
continued for such 30 day or three month period. 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, 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.
Notwithstanding the above, no option may be exercised after the expiration date
specified in the option agreement.
FEDERAL INCOME TAX CONSEQUENCES
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. 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
optionee of a non-qualified stock option. The Company generally can claim an
ordinary 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. 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 taxed to
the optionee as a capital gain (or loss).
With respect to the tax effects of Incentive Stock Options, the optionee does
not recognize any taxable income when the option is granted or exercised. 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 exercise of an Incentive Stock Option will give rise to
an item of tax preference that may result in alternative minimum tax liability
for the optionee.
(22)
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, subject to applicable withholding requirements. 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 will
eliminate the item of tax preference associated with the exercise of the
Incentive Stock Option.
CHANGES IN 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
option 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 by a majority 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 will remain unchanged and outstanding after
the 2001 amendment to the Plan.
AMENDMENT TO THE AMENDED AND RESTATED STOCK OPTION PLAN
On February 27, 2001, the Board of Directors adopted, subject to the approval of
the shareholders, an amendment to the Plan. The only change adopted is an
increase in the aggregate number of shares of Common Stock available under the
Plan from 670,000 shares to 790,000 shares. The foregoing description of the
Plan is qualified in its entirety by reference to the text of the Plan
(excluding the 2000 and the proposed amendment), a copy of which has been filed
with the Securities and Exchange Commission ("SEC"). The purpose of the proposed
amendment is to provide shares for managers who will be instrumental in
improving the operating results of the Company.
VOTES REQUIRED
The approval of the amendment to the Amended and Restated 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
Amended and Restated Stock Option Plan.
SELECTION OF AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as independent auditors
to audit the financial statements of the Company for the current fiscal year.
(23)
Representatives of Ernst & Young LLP are expected to be present at the 2001
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.
FEES TO AUDITORS
A. Audit Fees
Fees for the last annual audit were $140,000 for professional
services rendered in connection with review of the most recent fiscal
year end.
B. All other Fees
All other fees were $22,000, including audit related services.
Audit related services generally include fees for pension and statutory
audits, business acquisitions, accounting consultations and SEC
registration statements.
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's common stock, to file with the SEC and the
American Stock Exchange reports of ownership and changes in ownership of common
stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders 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 reports furnished to the Company or
written representations that no other reports were required, the Company
believes that, during the 2000 fiscal year, all filing requirements applicable
to its officers, directors and greater than 10% beneficial owners were complied
with.
SHAREHOLDER PROPOSALS
To allow sufficient time for preparation of the proxy and proxy statement,
shareholder proposals for presentation at the Annual Meeting scheduled for April
22, 2002 must be received by the Secretary of the Company no later than November
24, 2001.
In addition, the Company's by-laws provide that any shareholder wishing to make
a nomination for the office of director at the 2002 Annual Meeting must give the
Company at least sixty (60) days' advance notice, and that notice must meet
certain requirements set forth in the by-laws. Shareholders may request a copy
of the by-laws from the Secretary of the Company.
Notices and requests should be addressed to Secretary, Acme United Corporation,
1931 Black Rock Turnpike, Fairfield, Connecticut 06432.
(24)
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.
Solicitation of proxies is being made by management through the mail, in person
and by telephone. The Company will be responsible for costs associated with this
solicitation.
By Order of the Board of Directors
Ronald P. Davanzo, Vice President and
Chief Financial Officer, Secretary
and Treasurer
Acme United Corporation
1931 Black Rock Turnpike
Fairfield, Connecticut 06432
March 19, 2001
(25)
APPENDIX A
Acme United Corporation
Audit Committee Charter
Organization
This charter governs the operations of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
charter by the board of directors. The committee shall be appointed by the board
of directors and shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company. All committee
members shall be financially literate, (or shall become financially literate
within a reasonable period of time after appointment of the committee,) and at
least one member shall have accounting or related financial management
expertise.
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, and management of the
Company. In discharging its oversight role, the committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business practices, and ethical behavior.
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
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o The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of the
Company's shareholders. The committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, recommend to the board
and to management the replacement of the independent auditors. The
committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written
disclosures required by the Independence Standards Board. Annually, the
committee shall review and recommend to the board the selection of the
Company's independent auditors, and notify the shareholders of the boards'
decision.
o The committee shall discuss with the independent auditors the overall scope
and plans for their respective audits including the adequacy of staffing
and compensation. Also, the committee shall discuss with management, and
the independent auditors the adequacy and effectiveness of the accounting
and financial controls, including the Company's system to monitor and
manage business risk, and legal and ethical compliance programs. Further,
the committee shall meet separately with the independent auditors, with and
without management present, to discuss the results of their examinations.
o The committee shall review the interim financial statements and the
Company's Quarterly Report on Form 10-Q with management and the independent
auditors. Also, the committee shall discuss the results of the quarterly
review and any other matters required to be communicated to the committee
by the independent auditors under generally accepted auditing standards.
The chair of the committee may represent the entire committee for the
purposes of this review.
o The committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on From
10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
Also, the committee shall discuss the results of the annual audit and any
other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards.
(27)
