<PAGE>
SCHEDULE 14A INFORMATION
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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Sypris Solutions, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF SYPRIS SOLUTIONS, INC]
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of the
Stockholders of Sypris Solutions, Inc., to be held at 101 Bullitt Lane, Lower
Level Seminar Room, Louisville, Kentucky 40222 on Tuesday, May 2, 2000, at
10:00 a.m., local time.
Matters to be considered and acted upon at the Annual Meeting include:
(i) the election of directors; and (ii) such other matters as may properly
come before the meeting.
Information concerning the matters to be considered and voted upon at
the Annual Meeting is set forth in the enclosed Proxy Statement. We encourage
you to review this material carefully.
It is important that your shares be represented at the meeting. Whether
or not you plan to attend in person, you are requested to vote, sign, date,
and promptly return the enclosed proxy in the self-addressed envelope
provided. A proxy may be revoked prior to the meeting and will not affect your
right to vote in person in the event that you decide to attend the meeting.
[SIGNATURE OF JEFFREY T. GILL] [SIGNATURE OF ROBERT E. GILL]
Jeffrey T. Gill Robert E. Gill
President and Chief Executive Officer Chairman of the Board
<PAGE>
SYPRIS SOLUTIONS, INC.
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 2, 2000
------------
To the Stockholders of Sypris Solutions, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Sypris
Solutions, Inc. (the "Company") will be held on Tuesday, May 2, 2000, at 10:00
a.m., local time, at 101 Bullitt Lane, Lower Level Seminar Room, Louisville,
Kentucky 40222, for the following purposes:
1. To elect eight (8) directors of the Company to hold office until
the next Annual Meeting of Stockholders or until their successors have been
duly elected; and
2. To transact such other business as may properly be brought before
the meeting or any adjournment thereof, including matters incident to its
conduct.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close
of business on March 8, 2000 are entitled to notice of and to vote at the
meeting and any adjournment thereof.
By Order of the Board of Directors
Richard L. Davis
Secretary
Louisville, Kentucky
March 17, 2000
PLEASE INDICATE YOUR VOTING DIRECTIONS, SIGN AND DATE THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU LATER FIND THAT YOU
MAY BE PRESENT OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO
SO AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
SYPRIS SOLUTIONS, INC.
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
(502) 585-5544
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of Sypris Solutions, Inc. (the
"Company"), for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Tuesday, May 2, 2000, at 10:00 a.m., local time, or at
any adjournment or postponement thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at 101 Bullitt Lane, Lower Level Seminar Room,
Louisville, Kentucky 40222. The Company's telephone number is (502) 585-5544.
These proxy solicitation materials were mailed on or about March 17,
2000 to all stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournment thereof. A copy of the Annual Report for the
Company for the fiscal year ended December 31, 1999, including financial
statements, was sent to the stockholders concurrently with this Proxy
Statement.
Record Date and Share Ownership
Stockholders of record at the close of business on March 8, 2000 (the
"Record Date") of the Company's common stock, par value $.01 per share (the
"Common Stock"), are entitled to notice of and to vote at the Annual Meeting
and any adjournment thereof. At the Record Date, 9,652,790 shares of Common
Stock were issued and outstanding. For information regarding security
ownership by management and by the beneficial owners of 5% or more of the
Company's Common Stock, see "Security Ownership of Certain Beneficial Owners
and Management."
Voting and Solicitation
Each stockholder of Common Stock is entitled to one vote for each share
of Common Stock on all matters presented at the Annual Meeting. Stockholders
do not have the right to cumulate their votes in the election of directors.
The holders of a majority of the outstanding shares entitled to vote will
constitute a quorum for the transaction of business at the Annual Meeting.
Shares present in person or represented by proxy (including shares which
abstain or do not vote with respect to one or more of the matters presented
for stockholder approval) will be counted for purposes of determining whether
a quorum exists.
If the enclosed form of proxy is executed, returned and not revoked, it
will be voted in accordance with the specifications, if any, made by the
stockholders, and if specifications are not made, it will be voted FOR the
election of the director nominees named herein. If any other matter, not known
or determined at the time of solicitation of proxies, properly comes before
the Annual Meeting, the proxies will be voted in accordance with the
discretion of the person or persons voting the proxies.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company
(Attention: Richard L. Davis, Secretary) a written notice of revocation or a
duly executed proxy bearing a later date, or by attending the meeting and
voting in person. If a stockholder is not attending the Annual Meeting, any
proxy or notice should be returned in time for receipt no later than the close
of business on the day preceding the Annual Meeting.
Abstentions and executed proxies returned by a broker holding shares of
the Company's Common Stock in street name which indicate that the broker does
not have discretionary authority as to certain shares to vote on one or more
matters ("broker non-votes") will be considered present at the Annual Meeting
for purposes of establishing a quorum. Abstentions will not be voted. Broker
non-votes will not be counted as votes cast on any matter to which they
relate. Except as otherwise indicated, an affirmative vote of a majority of
the number of shares
3
<PAGE>
of stock present or represented by proxy at the Annual Meeting and entitled to
vote shall decide any question brought before the Annual Meeting. The election
of the directors named in this Proxy Statement will be determined by the vote
of a plurality of the shares present in person or represented by proxy at the
Annual Meeting and abstentions and broker non-votes will have no effect on the
outcome of the vote on such election.
As of the Record Date, GFP, Ltd., Gill Family Capital Management, Inc.,
Robert E. Gill, Virginia G. Gill, Jeffrey T. Gill and R. Scott Gill
(collectively, the "Gill Family") beneficially owned an aggregate of 8,381,711
shares of the Company's Common Stock or approximately 86.5% of the shares of
the Company's Common Stock outstanding on such date. The members of the Gill
Family have indicated their intention to vote their shares of the Company's
Common Stock for the election of the director nominees named herein.
The cost of soliciting proxies will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in forwarding
solicitation materials to such beneficial owners. Proxies may be solicited by
certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone, telegram, letter or
facsimile.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to
beneficial ownership of Common Stock as of March 8, 2000, including beneficial
ownership (i) by each person who is known by the Company to own beneficially
more than 5% of each class of stock, (ii) by each of the Company's directors
who owns shares, (iii) by each of the Named Officers reflected in the Summary
Compensation Table, and (iv) by all current directors and executive officers
as a group. Except as otherwise indicated, the persons named in the table have
sole voting and investment power with respect to all shares of the Common
Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
Shares
Beneficially
Owned
-----------------
Common Stock
-----------------
Number Percent
--------- -------
<S> <C> <C>
Robert E. Gill(1)............................................. 3,275,666 33.9%
253 Canton Avenue East
Winter Park, Florida 32789
Virginia G. Gill(2)........................................... 3,275,666 33.9%
253 Canton Avenue East
Winter Park, Florida 32789
Jeffrey T. Gill(3)............................................ 6,008,006 62.1%
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
R. Scott Gill(4).............................................. 5,647,371 58.4%
1209 North Astor Street
Chicago, Illinois 60610
GFP, Ltd.(5).................................................. 3,274,666 33.9%
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
Gill Family Capital Management, Inc.(6)....................... 3,274,666 33.9%
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
Henry F. Frigon(7)............................................ 67,320 *
William L. Healey(8).......................................... 20,500 *
Roger W. Johnson(9)........................................... 46,298 *
Sidney R. Petersen(10)........................................ 67,633 *
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially
Owned
-----------------
Common Stock
-----------------
Number Percent
--------- -------
<S> <C> <C>
Robert Sroka(11)............................................. 42,949 *
John M. Kramer(12)........................................... 59,718 *
Thomas W. Lovelock(13)....................................... 25,231 *
Richard L. Davis(14)......................................... 85,646 *
David D. Johnson(15)......................................... 45,094 *
Current directors and executive officers as a group (15
persons).................................................... 8,940,823 88.1%
</TABLE>
- ------------
*less than 1%.
(1) Includes 500 shares beneficially owned by Virginia G. Gill, his wife.
Robert E. Gill shares voting and investment power with his spouse with
respect to these shares. Also includes 3,274,666 shares of the Common
Stock of the Company owned by GFP, Ltd., a Kentucky limited partnership,
of which Robert E. Gill is a limited partner holding a 47.52916%
ownership interest and of which Virginia G. Gill is a limited partner
holding a 48.42763% ownership interest. On the basis of certain
provisions of the limited partnership agreement of GFP, Ltd. (the
"Partnership Agreement"), Robert E. Gill and Virginia G. Gill may be
deemed to beneficially own shares of Common Stock that are attributable
to such limited partnership interests. Mr. Gill is also a director and
executive officer of the Company.
(2) Includes 500 shares beneficially owned by Robert E. Gill, her husband.
Virginia G. Gill shares voting and investment power with her spouse with
respect to these shares. Also includes 3,274,666 shares held by GFP, Ltd.
See footnote (1) above for certain information concerning GFP, Ltd.
(3) Includes 6,717 shares owned by Patricia G. Gill, his wife, and 17,258
shares issuable under currently exercisable options owned by Patricia G.
Gill. Jeffrey T. Gill shares voting and investment power with his spouse
with respect to these shares. Also includes 3,274,666 shares held by GFP,
Ltd., of which Jeffrey T. Gill is a limited partner holding a 0.36274%
ownership interest, of which Patricia G. Gill is a limited partner
holding a 0.36274% ownership interest, and of which trusts for the
benefit of Jeffrey T. Gill's children, of which Jeffrey T. Gill is
trustee, are limited partners holding an aggregate of 1.08822% ownership
interest. Gill Family Capital Management, Inc., a Kentucky corporation
(the "General Partner"), is the general partner of GFP, Ltd., with a
0.95974% ownership interest in GFP, Ltd. Jeffrey T. Gill is the Co-
President and Treasurer of the General Partner, is one of two directors
of the General Partner, and is a 50% shareholder of the General Partner.
On the basis of Jeffrey T. Gill's positions with the General Partner, and
pursuant to certain provisions of the Partnership Agreement, Jeffrey T.
Gill may be deemed to beneficially own shares of Common Stock
attributable to the General Partner. Mr. Gill is also a director and
executive officer of the Company and was a Named Officer during the
fiscal year ended December 31, 1999.
(4) Includes 20,000 shares issuable under currently exercisable stock
options. Includes 3,274,666 shares owned by GFP, Ltd., of which R. Scott
Gill is a limited partner holding a 1.26977% ownership interest. R. Scott
Gill is the Co-President and Secretary of the General Partner, is one of
two directors of the General Partner, and is a 50% shareholder of the
General Partner. On the basis of R. Scott Gill's positions with the
General Partner, and pursuant to certain provisions of the Partnership
Agreement, R. Scott Gill may be deemed to beneficially own shares of
Common Stock attributable to the General Partner. Mr. Gill is also a
director of the Company.
(5) Voting power is exercised through the General Partner. See footnotes (3)
and (4).
(6) In its capacity as General Partner. See footnotes (3) and (4).
(7) Includes 66,070 shares issuable under currently exercisable stock
options.
(8) Includes 20,000 shares issuable under currently exercisable stock
options.
(9) Includes 46,298 shares issuable under currently exercisable stock
options.
(10) Includes 67,008 shares issuable under currently exercisable stock
options, and 625 shares held by a family trust of which Mr. Petersen is a
trustee. Mr. Petersen shares voting and investment power with respect to
the shares held by the family trust.
5
<PAGE>
(11) Includes 41,949 shares issuable under currently exercisable stock options.
(12) Includes 27,139 shares issuable under currently exercisable stock
options. Mr. Kramer was a Named Officer during the fiscal year ended
December 31, 1999.
(13) Includes 18,750 shares issuable under currently exercisable stock
options. Mr. Lovelock was a Named Officer during the fiscal year ended
December 31, 1999.
(14) Includes 71,032 shares issuable under currently exercisable stock
options. Mr. Davis was a Named Officer during the fiscal year ended
December 31, 1999.
(15) Includes 33,000 shares issuable under currently exercisable stock
options. Mr. Johnson was a Named Officer during the fiscal year ended
December 31, 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors, executive officers and persons who beneficially owned
more than ten percent (10%) of the Company's Common Stock file certain reports
with the Securities and Exchange Commission ("SEC") with regard to their
beneficial ownership of the Common Stock. The Company is required to disclose
in this Proxy Statement any failure to file or late filings of such reports.
Based solely upon its review of reports furnished to the Company of ownership
on Form 3 and changes in ownership on Forms 4 and 5 filed with the SEC by the
Company's officers, directors and certain beneficial owners, or written
representations furnished to the Company by such persons, the Company believes
that all filing requirements applicable to its directors, executive officers
and ten percent (10%) beneficial owners were satisfied.
PROPOSAL ONE
ELECTION OF DIRECTORS
A board of eight directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them for the Company's eight nominees named below. In the event that any
nominee of the Company is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the vacancy. It
is not expected that any nominee will be unable or will decline to serve as a
director. The term of office of each person elected as a director will
continue until the next annual meeting of stockholders or until a successor
has been elected and qualified.
The following table contains certain information, which has been
furnished to the Company by the individuals named, concerning the nominees,
all of whom are currently serving as directors.
<TABLE>
<CAPTION>
Name Age Position and Principal Occupation
---- --- ---------------------------------
<C> <C> <S>
Robert E. Gill....... 74 Director; Chairman of the Board of the Company
Jeffrey T. Gill...... 44 Director; President and Chief Executive Officer
of the Company
R. Scott Gill........ 41 Director; Associate, Koenig & Strey, Inc.
Henry F. Frigon...... 65 Director; Chairman and Chief Executive Officer
of CARSTAR, Inc.; Former President and Chief
Executive Officer of BATUS, Inc.; Former
Executive Vice President and Chief Financial
Officer of Hallmark Cards, Inc.
William L. Healey.... 55 Director; Private Investor and Consultant;
Former Chairman, President and Chief Executive
Officer of Smartflex Systems, Inc.
Roger W. Johnson..... 65 Director; Private Investor, Consultant and
Educator; Former Chief Executive Officer of YPO
International; Former Administrator of U.S.
General Services Administration; Former
Chairman and Chief Executive Officer of Western
Digital Corporation
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name Age Position and Principal Occupation
---- --- ---------------------------------
<C> <C> <S>
Sidney R. Petersen... 69 Director; Retired; Former Chairman and Chief
Executive Officer of Getty Oil, Inc.
Robert Sroka......... 50 Director; Managing Partner, Lighthouse
Holdings, LLC; Former Managing Director of J.P.
Morgan
</TABLE>
The following is a brief summary of the business experience of each of
the nominees.
Robert E. Gill has served as a director and Chairman of the Board of the
Company since September 1997. Mr. Gill served as a director of Group
Technologies Corporation ("GroupTech"), a Florida corporation and wholly-owned
subsidiary of the Company, from 1989 until its merger with the Company in
March 1998. After the merger, a new Florida corporation succeeded to the name
and business of GroupTech and is also referred to herein as GroupTech. He also
served as Chairman of the Board of GroupTech from 1989 to 1992 and as its
President and Chief Executive Officer from October 1996 until February 1997.
Mr. Gill served as President and Chief Executive Officer of Bell Technologies,
Inc. ("Bell"), a Florida corporation, from February 1997 until its
reorganization as a wholly-owned subsidiary of the Company in March 1998. Mr.
Gill co-founded Group Financial Partners, Inc. ("GFP"), the former parent
corporation of the Company, and served as Chairman of the Board of GFP from
its inception in 1983 until its merger with GroupTech in March 1998 and as its
President and Chief Executive Officer from 1983 through 1992. Robert E. Gill
is the father of Jeffrey T. Gill and R. Scott Gill.
Jeffrey T. Gill has served as a director, President and Chief Executive
Officer of the Company since September 1997. Mr. Gill also served as a
director of GroupTech from 1989 and as Chairman of the Board of GroupTech from
1992 until its merger with the Company in March 1998. Mr. Gill co-founded GFP
and served as a director of GFP from its inception in 1983 and as its
President and Chief Executive Officer from 1992 until its merger with
GroupTech in March 1998. Jeffrey T. Gill is the son of Robert E. Gill and the
brother of R. Scott Gill.
R. Scott Gill has served as a director of the Company since September
1997. Mr. Gill served as Senior Vice President and Secretary of the Company
from September 1997 until June 1998. Mr. Gill co-founded GFP and served as a
director of GFP from its inception in 1983 and as its Vice President and
Secretary from 1983 until its merger with GroupTech in March 1998. From 1998
to 1999, Mr. Gill served as a Project Manager with IA Chicago, P.C., an
architectural design firm. He is currently an Associate at Koenig & Strey,
Inc., a residential real estate firm. R. Scott Gill is the son of Robert E.
Gill and the brother of Jeffrey T. Gill.
Henry F. Frigon has served as a director of the Company since September
1997. Mr. Frigon served as a director of GroupTech from 1994 until its merger
with the Company in March 1998. From 1994 to the present, he has been a
private investor and business consultant. Mr. Frigon also currently serves as
Chairman and Chief Executive Officer of CARSTAR, Inc., a national provider of
collision repair services. He served as Executive Vice President-Corporate
Development and Strategy and Chief Financial Officer of Hallmark Cards, Inc.
from 1990 through 1994. He retired as President and Chief Executive Officer of
BATUS, Inc. in March 1990, after serving with that company for over 10 years.
Mr. Frigon currently serves as a director of H & R Block, Inc., Buckeye
Technologies Inc., Dimon, Inc., Tuesday Morning, Inc. and Packaging
Corporation of America.
William L. Healey has served as a director of the Company since
September 1997 and from 1996 to 1998 was a director of Bell. He is currently a
private investor and consultant. From 1993 to 1999, Mr. Healey served as a
director of Smartflex Systems, Inc. and served as its Chairman of the Board
from 1996 to 1999. He also served as the President and Chief Executive Officer
of Smartflex from 1989 to 1999. Prior to joining Smartflex, Mr. Healey served
in several executive positions with Silicon Systems, Inc., including Senior
Vice President of Operations.
Roger W. Johnson has served as a director of the Company since September
1997. Mr. Johnson served as a director of GroupTech from 1996 until its merger
with the Company in March 1998. He is currently a private investor, business
consultant and educator. From September 1998 to January 2000, Mr. Johnson
served as Chief Executive Officer of YPO International (the Young Presidents
Organization). He served as Administrator of the United States General
Services Administration from 1993 through 1996. Mr. Johnson served as Chairman
and Chief Executive Officer of Western Digital Corporation, a manufacturer of
computer hard drives, from 1982 through 1993. He currently serves as a
director of Array Microsystems, Needham, Inc. Growth Fund, Insulectro,
Collectors Universe Inc. and Maxtor Corporation.
7
<PAGE>
Sidney R. Petersen has served as a director of the Company since
September 1997. Mr. Petersen served as a director of GroupTech from 1994 until
its merger with the Company in March 1998. In 1984, Mr. Petersen retired as
Chairman of the Board and Chief Executive Officer of Getty Oil, Inc. where he
served in a variety of increasingly responsible management positions since
1955. Mr. Petersen currently serves as a director of Avery Dennison
Corporation, UnionBanCal Corporation and its subsidiary, Union Bank of
California, and NICOR, Inc. and its subsidiary, NICOR Gas Company.
Robert Sroka has served as a director of the Company since September
1997 and from 1995 to 1998 he served as a director of Bell. Since April 1998,
Mr. Sroka has served as the Managing Partner of Lighthouse Holdings, LLC, a
private investment and business consulting company. From 1994 to 1998, Mr.
Sroka served as Managing Director of Investment Banking-Mergers and
Acquisitions for J.P. Morgan. From 1985 to 1998, he held several senior
executive positions at J.P. Morgan, including Vice President-Investment
Banking and Vice President-Corporate Finance.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE
Board of Directors and Committees of the Board
The Board of Directors held a total of seven regularly scheduled and
special meetings during the fiscal year ended December 31, 1999. All incumbent
directors attended at least 75% of the meetings of the Board of Directors and
the respective committees of which they are members. The Board of Directors
currently has four standing committees as described below.
The Audit and Finance Committee of the Board currently consists of Roger
W. Johnson, William L. Healey and Robert Sroka. The Audit and Finance
Committee has responsibility for: (i) consultation with Company officers
regarding the retention or replacement of independent auditors and making
recommendations to the Board of Directors for any such retention or
replacement; (ii) establishing, reviewing and evaluating activities of the
independent auditors and the Company's internal audit function; (iii)
reviewing annual financial statements and quarterly financial results with
management; (iv) consulting with independent auditors regarding the conduct of
audits and reviews; (v) reviewing recommendations of the independent auditors;
(vi) reviewing the Company's financial reporting, loss exposure and asset
control; (vii) discussing the auditor's independence from management; (viii)
overseeing special investigations; (ix) reviewing debt-equity ratios, coverage
of fixed charges and other financial ratios; (x) reviewing Company debt and
credit arrangements; (xi) assisting with the development of financing
strategies; (xii) reviewing investment banking relationships; (xiii) preparing
required Securities and Exchange Commission reports; and (xiv) annually
reviewing and assessing its charter. The Audit and Finance Committee held four
meetings during the fiscal year ended December 31, 1999.
The Compensation Committee of the Board of Directors currently consists
of Henry F. Frigon, William L. Healey and Sidney R. Petersen. The functions
performed by the Compensation Committee include: (i) overseeing executive
compensation (including compensation for the chief executive officer); (ii)
reviewing the Company's overall compensation programs and administering
certain of the Company's incentive compensation programs; (iii) overseeing
director compensation, Company benefit plans and any loans to executive
officers of the Company; and (iv) overseeing Company programs for attraction
and retention of senior management. The Compensation Committee held three
meetings during the fiscal year ended December 31, 1999.
The Executive Committee of the Board of Directors currently consists of
Robert E. Gill, Jeffrey T. Gill, R. Scott Gill and Henry F. Frigon. Except for
certain powers which under Delaware law may only be exercised by the full
Board of Directors, the Executive Committee has and exercises the powers of
the Board in monitoring the management of the business of the Company between
meetings of the Board of Directors. The Executive Committee held no meetings
during the fiscal year ended December 31, 1999.
The Nominating and Governance Committee of the Board of Directors
currently consists of Sidney R. Petersen, Roger W. Johnson and Robert Sroka.
The Nominating and Governance Committee has responsibility for: (i)
establishing the criteria for and reviewing the effectiveness of the Board of
Directors and the executive officers of the Company; and (ii) providing
oversight with regard to the Company's various programs regarding
8
<PAGE>
management succession, business ethics and other governance issues. The
Nominating and Governance Committee held two meetings during the fiscal year
ended December 31, 1999. The Nominating and Governance Committee will not
consider nominations recommended by security holders.
Compensation of Directors
Independent directors (currently Henry F. Frigon, R. Scott Gill, William
L. Healey, Roger W. Johnson, Sidney R. Petersen and Robert Sroka) are paid an
annual retainer of $15,000, a fee of $1,000 for attending each Board meeting
($300 if attendance is by phone), a fee of $1,250 for acting in the capacity
of chairman for each Committee meeting ($300 if attendance is by phone) and a
fee of $1,000 for attending each Committee meeting ($300 if attendance is by
phone). Committee fees are only earned if the Committee meetings are held on a
date other than a Board meeting date. Independent directors may elect to
receive their annual retainer and meeting fees in the form of stock options
granted pursuant to the Sypris Solutions, Inc. Independent Directors' Stock
Option Plan in lieu of cash. During 1999, Mr. Frigon, Mr. Johnson, Mr.
Petersen and Mr. Sroka elected to receive their annual retainer and meeting
fees in the form of stock options, and a total of 30,852 options were granted
to those independent directors in payment of director fees. Independent
directors also receive initial and annual grants of stock options for each
elected term as a director under the Company's Independent Directors' Stock
Option Plan. Each independent director was granted an option to purchase
10,000 shares upon his election to the Board on April 29, 1999. No director
exercised stock options in 1999. All directors are reimbursed for travel and
related expenses incurred by them in attending Board and Committee meetings.
Directors who are employees of the Company or any of its affiliates are not
eligible to receive compensation for services rendered as a director.
Executive Officers
The executive officers of the Company, their ages and their positions
with the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<C> <C> <S>
Robert E. Gill....... 74 Chairman of the Board
Jeffrey T. Gill...... 44 President and Chief Executive Officer
John M. Kramer....... 57 President and Chief Executive Officer of Tube
Turns Technologies, Inc.
Thomas W. Lovelock... 57 President and Chief Executive Officer of Group
Technologies Corporation
G. Darrell Robertson. 57 President and Chief Executive Officer of
Metrum-Datatape, Inc.
Henry L. Singer II... 54 President and Chief Executive Officer of Bell
Technologies, Inc.
Richard L. Davis..... 46 Senior Vice President and Secretary
David D. Johnson..... 44 Vice President, Chief Financial Officer and
Treasurer
Anthony C. Allen..... 41 Vice President, Controller and Assistant
Secretary
</TABLE>
Robert E. Gill has served as a director and Chairman of the Board of the
Company since September 1997. Mr. Gill served as a director of GroupTech from
1989 until its merger with the Company in March 1998. He also served as
Chairman of the Board of GroupTech from 1989 to 1992 and as its President and
Chief Executive Officer from October 1996 until February 1997. Mr. Gill served
as President and Chief Executive Officer of Bell from February 1997 until its
reorganization as a wholly-owned subsidiary of the Company in March 1998. Mr.
Gill co-founded GFP, the former parent corporation of the Company, and served
as Chairman of the Board of GFP from its inception in 1983 until its merger
with GroupTech in March 1998, and as its President and Chief Executive Officer
from 1983 through 1992. Robert E. Gill is the father of Jeffrey T. Gill and R.
Scott Gill.
Jeffrey T. Gill has served as a director, President and Chief Executive
Officer of the Company since September 1997. Mr. Gill served as a director of
GroupTech from 1989 and as Chairman of the Board of GroupTech from 1992 until
its merger with the Company in March 1998. Mr. Gill co-founded GFP and served
as a director of GFP from its inception in 1983 and as its President and Chief
Executive Officer from 1992 until its merger with GroupTech in March 1998.
Jeffrey T. Gill is the son of Robert E. Gill and the brother of R. Scott Gill.
9
<PAGE>
John M. Kramer has served as President and Chief Executive Officer of
Tube Turns Technologies, Inc. ("Tube Turns"), a Kentucky corporation and
wholly-owned subsidiary of the Company, since 1985 and as a director from 1985
to March 1998. From 1977 to 1985, he served in various executive positions at
Tube Turns.
Thomas W. Lovelock has served as President and Chief Executive Officer
of GroupTech since February 1997 and as a director of GroupTech from March
1997 until its merger with the Company in March 1998. He also served as Vice
President of Operations of GroupTech from 1989 to 1993. From 1995 to 1997, Mr.
Lovelock served as President and Chief Executive Officer of Bell and from 1993
to 1995, Mr. Lovelock served as its Executive Vice President and Chief
Operating Officer.
G. Darrell Robertson has served as President and Chief Executive Officer
of Metrum-Datatape, Inc. ("Metrum-Datatape"), a Delaware corporation and a
wholly-owned subsidiary of the Company, since February 2000. From 1998 to
February 2000, he served as an Executive Consultant for Atlantic Management
Associates, Inc., a small business consulting company, and as a private
executive consultant. Mr. Robertson served as President of Aydin Telemetry, a
division of Aydin Corporation, an electronics instrumentation and products
company, from 1997 to 1998. From 1994 to 1996, he served as Vice President of
Controlotron Corporation, an electronics instrumentation company. Prior
thereto, Mr. Robertson served as President of Republic Electronics Company and
President of Aeroflex Laboratories, Inc., an electronics components company.
Henry L. Singer II has served as President and Chief Executive Officer
of Bell since March 1998. From 1991 to 1998, he served as President of the
Powers Process Controls Unit of Crane Co., a manufacturer of specialty
commercial and institutional plumbing products. From 1975 to 1991, Mr. Singer
served in various other management positions at the Powers Process Controls
Unit of Crane Co.
Richard L. Davis has served as Senior Vice President of the Company
since September 1997 and as Secretary of the Company since June 1998. From
September 1997 to March 1998, Mr. Davis served as Senior Vice President of
GFP. From 1985 to September 1997, he served as Vice President and Chief
Financial Officer of GFP. From 1986 to 1994, he served as a director of Bell,
from 1988 to 1998, he served as a director of Tube Turns, and from 1989 to
1994, he served as a director of GroupTech. Prior to 1985, Mr. Davis served as
Corporate Controller for Armor Elevator Company and as an Audit Supervisor for
Coopers and Lybrand.
David D. Johnson has served as Vice President, Chief Financial Officer
and Treasurer of the Company since September 1997. Mr. Johnson served as Vice
President and Chief Financial Officer of GroupTech from March 1996 until its
merger with the Company in March 1998. From 1993 to 1996, Mr. Johnson served
as Financial Director, Far East South for Molex Incorporated, which
manufactures electronic components and application tooling. He served in
various other management positions for Molex since 1984. Prior to 1984, Mr.
Johnson served as a senior manager for KPMG Peat Marwick in San Francisco,
California.
Anthony C. Allen has served as Vice President, Controller and Assistant
Secretary of the Company since September 1997. From 1987 to 1994, he served as
Vice President and Controller of GFP and from 1994 to 1998, he served as Vice
President of Finance of GFP. Mr. Allen served as a director and Treasurer of
Bell from 1994 to March 1998. From 1991 to 1997, he served as a director of
Unison Commercial Group, Inc., a subsidiary of GFP.
Officers are appointed by the Board of Directors and serve at the
discretion of the Board.
10
<PAGE>
Executive Compensation
The following table sets forth the remuneration paid during the last
three (3) fiscal years by the Company to (i) Jeffrey T. Gill, the President
and Chief Executive Officer of the Company, and (ii) each of the Company's
four (4) most highly compensated executive officers in fiscal year 1999
(collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
------------------------------------- --------------------------
Other Restricted Securities All
Annual Stock Underlying Other
Name and Principal Salary Bonus Compensation Award(s) Options/SARs Compensation
Position Year ($) ($) ($) ($) (#) ($)
- ------------------------- ---- -------- -------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey T. Gill 1999 $274,327 0 0 0 100,000(1) $ 7,492(2)
President and Chief 1998 223,269 $135,960 0 0 0 8,000(3)
Executive
Officer 1997 218,750 300,000(4) 0 0 0 6,719(5)
Thomas W. Lovelock 1999 $210,962 $ 60,000 0 0 0 $10,804(2)(6)
President and Chief 1998 200,000 115,000 0 0 40,000(7) 10,543(3)(8)
Executive
Officer of Group 1997 166,893(9) 70,181(10) 0 $14,208(11) 100,000(12) 25,479(5)(13)(14)
Technologies Corporation
John M. Kramer 1999 $168,269 $ 52,834 0 0 0 $ 711(6)
President and Chief 1998 148,096 122,533(15) $60,000(16) $73,125(17) 45,000(7)(18) 896(8)
Executive
Officer of Tube Turns 1997 145,750 65,153(19) 0 0 0 862(13)
Technologies, Inc.
David D. Johnson 1999 $177,308 $ 29,248 0 0 0 $ 7,314(2)
Vice President, Chief 1998 167,526 74,160 0 0 55,000(7)(20) 36,617(3)(8)(21)
Financial
Officer and Treasurer 1997 157,308 10,000 0 0 15,000(22) 46,289(5)(13)(14)(23)
Richard L. Davis 1999 $174,077 $ 29,248 0 0 0 $ 8,000(2)
Senior Vice President 1998 164,336 124,160(24) 0 0 50,000(7)(25) 8,571(3)(8)
and
Secretary 1997 150,000 75,650(26) 0 0 0 7,969(5)(13)
</TABLE>
- ------------
(1) Options pursuant to 1994 Stock Option Plan for Key Employees.
(2) Includes contributions to 401(k) Retirement Plan ($7,492 for Mr. Gill,
$7,123 for Mr. Lovelock, $7,314 for Mr. Johnson, and $8,000 for Mr.
Davis).
(3) Includes contributions to 401(k) Retirement Plan ($8,000 for Mr. Gill,
$8,000 for Mr. Lovelock, $6,893 for Mr. Johnson, and $8,000 for Mr.
Davis).
(4) Represents a one-time bonus of $300,000 related to the liquidation of
certain real estate operations in connection with the March 1998
reorganization of the Company.
(5) Includes contributions to 401(k) Retirement Plan ($6,719 for Mr. Gill,
$7,567 for Mr. Lovelock, $6,909 for Mr. Johnson, and $7,500 for Mr.
Davis).
(6) Includes amounts paid on Group Term Life Insurance policies ($1,123 for
Mr. Lovelock and $711 for Mr. Kramer) and amounts paid on Executive Life
Insurance policies ($2,558 for Mr. Lovelock).
(7) Represents eight (8) performance-based options to purchase 5,000 shares
of Common Stock each at the higher of the target share price ("Target
Share Price") of $15, $20, $25, $30, $35, $40, $45 and $50, the fair
market value of the Common Stock on the date the performance-based
options are granted, or the fair market value of the Common Stock on the
first business day following the calendar quarter in which the average
daily fair market value of the Common Stock equals or exceeds the Target
Share Price for the preceding calendar quarter. The options vest in
equal annual amounts of 20%, commencing with the second anniversary of
the date the Target Share Price is achieved.
11
<PAGE>
(8) Includes amounts paid on Group Term Life Insurance policies ($1,355 for
Mr. Lovelock, $896 for Mr. Kramer, $714 for Mr. Johnson, and $571 for
Mr. Davis) and amounts paid on Executive Life Insurance policies ($1,188
for Mr. Lovelock).
(9) Includes salary reimbursed to GroupTech from Bell of $15,578.
(10) Earned at Bell prior to Mr. Lovelock's joining GroupTech.
(11) Pursuant to a Stock Purchase Agreement dated April 7, 1997, on September
30, 1997, Mr. Lovelock, in connection with his exercise of a one-time
right and option to purchase shares of Common Stock, was awarded the
right to receive 947 shares of bonus stock at no cost to him, subject to
a three-year vesting period which expires September 30, 2000. The dollar
value for the restricted shares awarded to Mr. Lovelock in fiscal year
1997 of $14,208 was determined based upon the closing market price for
the Common Stock on September 30, 1997. The number and value of
aggregate restricted stock holdings at the end of the last completed
fiscal year are 947 and $8,523, respectively, based upon the closing
market price of the Common Stock on December 31, 1999. Any dividends
paid on the Company's Common Stock will be paid on these restricted
shares once the vesting requirement is fulfilled and the shares are
issued.
(12) Includes options for 75,000 shares granted pursuant to the 1994 Stock
Option Plan for Key Employees and an option for 25,000 shares pursuant
to a one-time right and option to purchase shares of Common Stock
granted on April 7, 1997 and which was exercisable by Mr. Lovelock
between July 1, 1997 and September 30, 1997. On September 30, 1997, Mr.
Lovelock exercised his right to purchase 3,158 shares of Common Stock at
fair market value.
(13) Includes amounts paid on Group Term Life Insurance policies ($1,200 for
Mr. Lovelock, $862 for Mr. Kramer, $218 for Mr. Johnson, and $469 for
Mr. Davis) and Executive Life Insurance policies ($1,888 for Mr.
Lovelock (earned at Bell prior to Mr. Lovelock's joining GroupTech)).
(14) Includes reimbursed relocation costs of $14,824 for Mr. Lovelock and
$37,812 for Mr. Johnson, of which $34,888 was paid by GFP.
(15) Includes $29,014 in bonus paid in Common Stock.
(16) Amount reimbursed for payment of taxes on restricted share grant.
(17) Grant of 9,000 shares, vesting in increments of 3,000 shares on June 23,
1999, June 23, 2000 and June 23, 2001. The dollar value for the
restricted shares awarded to Mr. Kramer in fiscal year 1998 of $73,125
was determined based on the closing market price for the Common Stock on
June 23, 1998. The number and value of aggregate restricted stock
holdings for Mr. Kramer at the end of the last completed fiscal year are
9,000 and $81,000, respectively, based upon the closing market price of
the Common Stock on December 31, 1999. Any dividends paid on the
Company's Common Stock will be paid on these restricted shares. If
dividends are paid on such restricted shares in Common Stock, such
Common Stock dividends will likewise be subject to the vesting
requirements set forth above.
(18) Includes options for 5,000 shares of Common Stock pursuant to 1994 Stock
Option Plan for Key Employees.
(19) Includes $22,337 in bonus paid in Common Stock.
(20) Includes options for 15,000 shares of Common Stock pursuant to 1994
Stock Option Plan for Key Employees.
(21) Includes reimbursed relocation costs of $29,010.
(22) Options pursuant to 1994 Stock Option Plan for Key Employees.
(23) Includes $1,350 imputed interest on Company loan of $90,000 to Mr.
Johnson which was made on September 15, 1997 and repaid in full on
December 22, 1997.
(24) Includes a one-time bonus of $50,000 related to the March 1998
reorganization of the Company.
(25) Includes options for 10,000 shares of Common Stock pursuant to 1994
Stock Option Plan for Key Employees.
(26) Includes $50,000 related to the liquidation of certain real estate
operations in connection with the March 1998 reorganization of the
Company and $650 in bonus paid in Common Stock.
12
<PAGE>
The following table provides information with respect to the Named
Officers concerning options granted during 1999:
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
---------------------------------------------------- -----------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/sh) Date 5%($) 10%($)
---- ------------ ---------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey T. Gill 100,000 44.18% $7.375 (1) $352,123(2) $843,397(2)
Thomas W. Lovelock 0 -- -- -- -- --
John M. Kramer 0 -- -- -- -- --
David D. Johnson 0 -- -- -- -- --
Richard L. Davis 0 -- -- -- -- --
</TABLE>
- ------------
(1) This option, pursuant to the Sypris Solutions, Inc. 1994 Stock Option
Plan for Key Employees, is exercisable in five equal annual
installments, commencing February 23, 2001, and expires on February 23,
2007.
(2) Potential realizable value calculated based upon the market price of the
underlying securities on the date of grant of $7.375.
The following table provides information with respect to the Named
Officers concerning option exercises and unexercised options in 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised in-
Shares Acquired Value Options/SARs at Fiscal the-money Options/SARs
Name on Exercise (#) Realized($) Year-End(#) at Fiscal Year-End ($)(1)
------------------ --------------- ----------- ------------------------- -------------------------
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- -------------------------
<S> <C> <C> <C> <C>
Jeffrey T. Gill 0 0 0/100,000 0/$162,500
Thomas W. Lovelock 3,125 $10,188 15,625/96,250 $64,875/$239,250
John M. Kramer 20,354 $49,766 27,139/51,785 $54,549/$11,703
David D. Johnson 0 0 21,250/78,750 $47,600/$27,550
Richard L. Davis 0 0 69,032/50,000 $502,553/$2,500
</TABLE>
- ------------
(1) Based on a market value of the underlying securities of $9.00 at
December 31, 1999 minus the exercise price of the options.
Employment Contracts and Termination, Severance and Change of Control
Arrangements
Metrum-Datatape entered into an employment agreement in February 2000
with G. Darrell Robertson, its President and Chief Executive Officer. Subject
to certain conditions, the term of the employment agreement extends from
February 28, 2000 through February 27, 2001. During the term of the agreement,
Mr. Robertson is to receive a base salary of $185,000, which amount may be
adjusted by Metrum-Datatape at its sole discretion. The agreement also
provides that if Metrum-Datatape terminates Mr. Robertson without cause or for
other than certain specified reasons, Mr. Robertson shall receive pay
continuance for a period of one year from the date of termination, along with
customary medical and dental benefits and life insurance coverage for a period
of one year from the date of termination. Mr. Robertson agreed to certain
nonsolicitation and noncompetition provisions which are subject to the term of
the agreement, and he also agreed to certain confidentiality provisions which
shall remain in force beyond the term of the agreement and shall survive any
termination thereof.
13
<PAGE>
COMPENSATION COMMITTEE REPORT
Executive Compensation
Executive Compensation Philosophy. The Company's executive compensation
policy is based on principles designed to insure that an appropriate
relationship exists between executive pay and corporate performance, while at
the same time motivating and retaining executive officers. The Compensation
Committee of the Board of Directors (the "Compensation Committee") is composed
entirely of outside directors. The Compensation Committee is responsible for
setting and administering the policies and programs that govern both annual
compensation and stock option programs for the executive officers of the
Company.
Executive Compensation Components. The key components of the Company's
compensation program are (i) base salary, (ii) an annual cash incentive award,
and (iii) long-term incentives by means of equity participation through stock
options. These components are administered with the goals of providing total
compensation that is competitive in the marketplace, rewarding successful
financial performance and aligning the interests of executive officers with
those of stockholders. The Compensation Committee reviews each component of
executive compensation on an annual basis.
Base Salary. Base salaries for executive officers are set near the
average levels believed by the Compensation Committee to be sufficient to
attract and retain qualified executive officers. Base salary adjustments are
provided to executive officers based upon an evaluation of each executive's
performance, as well as the performance of the Company as a whole. While the
Compensation Committee does not establish a specific formula or target to
determine base salaries, the Compensation Committee does review detailed
survey data from a number of independent sources and services regarding the
base salaries of executive officers in companies of similar size and in
similar industries. In this regard, the Compensation Committee also considers
the relative financial performance of these companies, especially with regard
to growth in earnings and return on equity. The Compensation Committee also
considers the success of the executive officers in developing and executing
the Company's strategic plans, developing management employees and
demonstrating leadership.
Annual Incentive Award. The Compensation Committee believes that a
significant proportion of total cash compensation for executive officers
should be subject to the attainment of specific Company objectives, as well as
the attainment of specific individual objectives that are established annually
with each of the executive officers. This approach creates a direct incentive
for executive officers to achieve desired performance goals and places a
significant percentage of each officer's compensation at risk. Consequently,
at the beginning of each year, the Compensation Committee establishes
potential bonuses for executive officers based upon their ability to increase
earnings and the achievement of specific operational objectives.
For 1999, the Compensation Committee established a bonus target of
approximately 15% to 60% of base salaries for the Company's executive
officers. The Compensation Committee established the potential bonuses based
upon its judgment regarding the appropriate percentage of compensation which
should be based on the attainment of such results. For 1999, the bonuses
awarded to executive officers by the Compensation Committee ranged from 13% to
25% of base salary based upon the growth in the Company's earnings as compared
to the prior year.
Equity Participation Through Stock Options. The Compensation Committee
believes that equity participation through stock options (including
performance-based options) is a key component of its executive compensation
program. The use of such awards provides a long-term link between the results
achieved for the Company's stockholders and the reward provided to executive
officers. Stock options are granted to executive officers primarily based on
the officer's actual and potential contribution to the Company and the
practices of other companies of similar size and in similar industries. Option
grants are designed to retain executive officers and motivate them to enhance
stockholder value by aligning the financial interests of the executive
officers with those of the Company's stockholders. Stock options also provide
an effective incentive for management to create stockholder value over the
long term since the full benefit of the compensation package cannot be
realized unless an appreciation in the price of the Company's stock occurs
over a number of years.
Options to purchase a total of 100,000 shares of Company Common Stock
were granted to the Company's President and Chief Executive Officer in 1999,
with an exercise price equal to the fair market value of the
14
<PAGE>
underlying Company Common Stock on the date of grant. No other stock options
were granted to executive officers in 1999. No performance-based options were
granted either to the President and Chief Executive Officer or other executive
officers in 1999.
Compensation of Chief Executive Officer. Consistent with the executive
compensation policy and components described above, the Compensation Committee
determined the salary, bonus and stock options received by Jeffrey T. Gill,
the President and Chief Executive Officer of the Company, for services
rendered in 1999. Mr. Gill received a base salary of $274,327 for 1999. Mr.
Gill's salary, as increased in 1999, was not tied to specific performance
criteria, but the Compensation Committee determined such salary to be
appropriate based upon its survey of salaries paid to peers, attainment of
non-financial corporate objectives and other factors. Mr. Gill qualified for,
but elected not to receive, a bonus in 1999. The Compensation Committee
granted 100,000 stock options to Mr. Gill in 1999 based on its belief that
equity participation is a key component of executive compensation and its
comparison of Mr. Gill's compensation package with that of other chief
executive officers of companies of similar size and in similar industries.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code generally limits the corporate deduction for
compensation paid to certain executive officers to one million dollars
($1,000,000), unless the compensation is performance-based. It is the
Compensation Committee's intention that, so long as it is consistent with its
overall compensation objectives, virtually all executive compensation shall be
deductible for federal income tax purposes. It is the Compensation Committee's
opinion that the stockholders' interest will be better served over the longer
term by preserving the deductibility of its executive officers' compensation.
Members of the Compensation Committee
Henry F. Frigon
William L. Healey
Sidney R. Petersen
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is composed of Henry F. Frigon, William L.
Healey and Sidney R. Petersen. None of the current members of the Compensation
Committee are employees of the Company. The Company is unaware of any
relationships among its officers and directors which would require disclosure
under this caption.
AUDIT AND FINANCE COMMITTEE REPORT
The responsibilities of the Audit and Finance Committee, which are set
forth in the Audit and Finance Committee Charter adopted by the Board of
Directors (a copy of which is attached to this Proxy Statement as Appendix A),
include providing oversight of the Company's financial reporting process
through periodic meetings with the Company's independent auditors, internal
auditors and management to review accounting, auditing, internal controls and
financial reporting matters. The management of the Company is responsible for
the preparation and integrity of the financial reporting information and
related systems of internal controls. The Audit and Finance Committee, in
carrying out its role, relies on the Company's senior management, including
senior financial management, and its independent auditors.
The Audit and Finance Committee reviewed and discussed with management
the Company's audited financial statements included in the 1999 Annual Report
to Stockholders. Management has confirmed to the Audit and Finance Committee
that such financial statements (i) have been prepared with integrity and
objectivity and are the responsibility of management, and (ii) have been
prepared in conformity with generally accepted accounting principles.
15
<PAGE>
The Audit and Finance Committee discussed with Ernst & Young LLP, the
Company's independent auditors, the matters required to be discussed by
Statement on Auditing Standards No. 61 ("SAS 61") (Communications with Audit
Committees). SAS 61 requires the Company's independent auditors to provide the
Audit and Finance Committee with additional information regarding the scope
and results of their audit of the Company's financial statements, including
with respect to (i) their responsibility under generally accepted auditing
standards, (ii) significant accounting policies, (iii) management judgments
and estimates, (iv) any significant audit adjustments, (v) any disagreements
with management, and (vi) any difficulties encountered in performing the
audit.
The Audit and Finance Committee received from Ernst & Young LLP a letter
providing the disclosures required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) with respect to any
relationships between Ernst & Young LLP and the Company that, in their
professional judgment, may reasonably be thought to bear on independence.
Ernst & Young LLP has discussed its independence with the Audit and Finance
Committee, and has confirmed in such letter that, in its professional
judgment, it is independent of the Company within the meaning of the federal
securities laws.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 1999 Annual
Report to Stockholders, the Audit and Finance Committee recommended to the
Board of Directors that such financial statements be included in the Company's
Annual Report on Form 10-K.
As specified in the Audit and Finance Committee Charter, it is not the
duty of the Audit and Finance Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate
and in accordance with generally accepted accounting principles. That is the
responsibility of management and the Company's independent auditors. In giving
its recommendation to the Board of Directors, the Audit and Finance Committee
relied on (i) management's representation that such financial statements have
been prepared with integrity and objectivity and in conformity with generally
accepted accounting principles, and (ii) the report of the Company's
independent auditors with respect to such financial statements.
Members of the Audit and Finance Committee
Roger W. Johnson
William L. Healey
Robert Sroka
16
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of the cumulative total
shareholder return, calculated on a dividend reinvestment basis, from December
31, 1994 through December 31, 1999. Since March 30, 1998, the Company's Common
Stock has been traded on The Nasdaq Stock Market under the symbol "SYPR."
Prior to that date, the common stock of GroupTech was traded on The Nasdaq
Stock Market under the symbol "GRTK." In the performance graph, the cumulative
total shareholder return of the Company is compared to the Russell 2000 Index
and the S&P SmallCap 600 Index. The S&P SmallCap 600 Index has been selected
as a basis of comparison since the Company believes the S&P SmallCap 600 Index
appropriately tracks the performance of multi-industry businesses at the
Company's level of market capitalization.
[PERFORMANCE GRAPH APPEARS HERE]
Sypris Solutions, Inc.
Proxy Performance Graph
Year Ended 12/31/99
<TABLE>
<CAPTION>
12/94 12/95 12/96 12/97 3/98 12/98 12/99
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SYPRIS SOLUTIONS, INC.......... 100.00 41.67 16.67 46.88 43.75 24.74 37.50
S&P SMALLCAP 600............... 100.00 129.96 157.67 198.01 219.92 203.41 228.64
RUSSELL 2000................... 100.00 127.49 154.73 203.91 220.94 190.75 187.92
</TABLE>
17
<PAGE>
Certain Relationships and Related Transactions
During 1999, the Company did not engage in any transactions in which any
director, officer or 5% stockholder of the Company had any material interest,
except as described below.
G. Darrell Robertson, President and Chief Executive Officer of Metrum-
Datatape, is currently indebted to the Company in the principal amount of
$100,000, represented by his promissory note bearing interest at 8% per annum,
the principal and accrued interest on which will be forgiven in five equal
annual installments of $20,000 each, beginning February 28, 2001, so long as
Mr. Robertson remains employed by the Company. This indebtedness arose in
connection with Mr. Robertson's initial employment, pursuant to the terms of
which he was granted a loan by the Company for relocation purposes.
INDEPENDENT AUDITORS
At its meeting held on February 22, 2000, the Board of Directors adopted
the recommendation of the Audit and Finance Committee and selected Ernst &
Young LLP to serve as the Company's independent public accountants and
auditors for the fiscal year ending December 31, 2000. Ernst & Young LLP has
served as the Company's independent public accountants and auditors since and
including the Company's fiscal year ended December 31, 1989. Representatives
of Ernst & Young LLP are expected to be present at the Annual Meeting, will be
available to respond to appropriate questions and will have the opportunity to
make a statement if they desire to do so.
OTHER MATTERS
The Board of Directors does not intend to bring any other matter before
the Annual Meeting and has not been informed that any other matter is to be
presented by others. If any other matter properly comes before the Annual
Meeting, the proxies will be voted in accordance with the discretion of the
person or persons voting the proxies.
You are cordially invited to attend the Annual Meeting. Regardless of
whether you plan to attend the Annual Meeting, you are urged to complete,
date, sign and return the enclosed proxy in the accompanying envelope at your
earliest convenience.
DEADLINE FOR RECEIPT OF AND NOTICE OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's Annual Meeting for the fiscal
year ending December 31, 2000 must be received by the Company no later than
November 17, 2000, in order to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
Stockholder proposals received after January 31, 2001 will be considered
untimely, and the proxies solicited by the Company for next year's Annual
Meeting may confer discretionary authority to vote on any such matters without
a description of them in the proxy statement for that Meeting.
By Order of the Board of Directors
[SIGNATURE OF RICHARD L. DAVIS]
Richard L. Davis
Secretary
Louisville, Kentucky
March 17, 2000
18
<PAGE>
Appendix A
SYPRIS SOLUTIONS, INC.
AUDIT AND FINANCE COMMITTEE
CHARTER
The Audit and Finance Committee of the Board of Directors (the "Audit
and Finance Committee") shall be composed of three or more Directors and shall
meet the independence and financial expertise requirements of The Nasdaq Stock
Market. The Audit and Finance Committee shall provide assistance to the Board
of Directors in fulfilling its responsibility to shareholders, potential
shareholders and the investment community with regard to accounting, reporting
practices, and the quality and integrity of the Company's financial
statements. The Audit and Finance Committee shall maintain free and open
communications between the Board of Directors, the independent auditors, any
internal auditors and the executive officers of the Company.
The Audit and Finance Committee shall be responsible for consulting with
the Company's executive officers regarding the appointment of independent
auditors and recommending such appointment to the Board of Directors as set
forth below, discussing the scope of the auditor's examination, reviewing
annual financial statements and consulting with the independent auditors on
the adequacy of internal controls. The ultimate accountability of the
independent auditors is to the Audit and Finance Committee and to the Board of
Directors as representatives of the Company's stockholders. The Audit and
Finance Committee shall also be responsible for providing oversight with
regard to the Company's debt and credit arrangements, acquisitions,
divestitures and proposals for changes in the Company's capitalization and
financing strategies.
The Audit and Finance Committee shall meet at least three times during
the year for the purposes of performing its duties. The purpose and duties of
the Audit and Finance Committee shall include, but not be limited to, the
following:
. To recommend to the Board of Directors, after consultation with
the executive officers of the Company, the retention or
replacement of the independent auditors;
. To establish, review and evaluate the activities of the
independent auditors and the internal audit function;
. To review the annual audited financial statements of the Company
with management and the independent auditors, prior to
publication, and recommend to the Board of Directors that the
audited financial statements be included in the Company's Annual
Report on Form 10-K;
. To review the quarterly financial results of the Company with
management and the independent auditors prior to the earnings
release and filing of the Quarterly Report on Form 10-Q;
. To discuss with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61 relating to
the conduct of the audit and quarterly reviews;
. To review recommendations of the independent auditors and
responses of management;
. To review and discuss the Company's financial reporting, loss
exposures and asset control with management and the independent
auditors;
. To discuss the auditor's independence from management and the
Company and the matters included in the written disclosures
required by the Independence Standards Board;
. To direct and supervise any special investigations the Committee
deems necessary;
A-1
<PAGE>
. To review the financial constraints within which the Company will
operate, such as debt-equity ratio, coverage of fixed charges, and
other financial ratios;
. To review Company debt and credit arrangements;
. To assist management with the development of appropriate financing
strategies, including the review of proposals for obtaining
additional capital funds or other changes in the capitalization of
the Company;
. To review investment banker relationships and investor relations
activities;
. To prepare a report of the Finance and Audit Committee required by
the rules of the Securities and Exchange Commission to be included
in the proxy statement for each annual meeting; and
. To review and assess the adequacy of and update, if necessary,
this Audit and Finance Committee Charter annually.
The Vice President and Chief Financial Officer will have a dotted line
reporting relationship to the Audit and Finance Committee and will be
responsible for providing the Audit and Finance Committee with data, analysis,
special reports and other forms of assistance as may be requested by the Audit
and Finance Committee from time-to-time. The Audit and Finance Committee shall
report the results of its deliberations, actions and observations to the Board
of Directors of the Company.
While the Audit and Finance Committee has the responsibilities and
powers set forth in this Charter, it is not the duty of the Audit and Finance
Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. This is the responsibility of
management and the independent accountants. Nor is it the duty of the Audit
and Finance Committee to conduct investigations, to resolve disagreements, if
any, between management and the independent accountants or to assure
compliance with laws and regulations and the Company's corporate policies.
The following individuals currently serve as members of the Audit and
Finance Committee of the Company's Board of Directors:
Roger W. Johnson, Chairman
William L. Healey
Robert Sroka
A-2
<PAGE>
SYPRIS SOLUTIONS, INC.
Suite 450
101 Bullitt Lane
Louisville, Kentucky 40222
Revocable Proxy for Annual Meeting of Stockholders to be Held on May 2, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SYPRIS SOLUTIONS, INC.
The undersigned hereby appoints Robert E. Gill and Jeffrey T. Gill, and
each of them, as proxies for the undersigned, with full power of substitution to
vote all shares the undersigned is entitled to vote at the Annual Meeting of
Stockholders of Sypris Solutions, Inc. (the "Company") to be held at 101 Bullitt
Lane, Lower Level Seminar Room, Louisville, Kentucky on Tuesday, May 2, 2000, at
10:00 a.m. local time, or any adjournment thereof, as follows, hereby revoking
any proxy previously given.
<PAGE>
[_] Please mark your votes as in this example.
Shares represented by this proxy will be voted as directed by the stockholder.
If no direction is supplied, the proxy will be voted "FOR" all the nominees
listed in proposal 1. Please sign, date and return this proxy promptly in the
enclosed envelope.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" PROPOSAL 1
1. Election of directors. (Proposal 1) Unless authority is withheld, this
proxy will be voted for the election of all nominees.
[_] FOR [_] WITHHELD
NOMINEES:
Henry F. Frigon Jeffrey T. Gill R. Scott Gill Robert E. Gill
William L. Healey Roger W. Johnson Sidney R. Petersen Robert Sroka
For, except vote withheld from the following nominee(s):
________________________________
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED ABOVE.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly be brought before the meeting or any adjournment
thereof.
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign full corporate name by president or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.
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SIGNATURE(S) DATE
