SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange act of 1934
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 Rule 14a-11(c) or Rule 14a-12
SYNALLOY CORPORATION
-----------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the approximate box):
(X) No fee required
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), or 14a6(i)(2) or Item 22(a)(2) of
Schedule 14A
( ) 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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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided
Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
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3) Filing Party:---------------------------------------
4) Date Filed:-----------------------------------------
SYNALLOY CORPORATION
Post Office Box 5627
Spartanburg, South Carolina 29304
NOTICE OF ANNUAL MEETING
April 30, 1998
TO THE STOCKHOLDERS OF SYNALLOY CORPORATION
Notice is hereby given that the Annual Meeting of Shareholders of Synalloy
Corporation will be held at the corporate offices of the Company, Croft
Industrial Park, Spartanburg, South Carolina, on Thursday, April 30, 1998, at
10:00 a.m. local time. The following important matters will be presented for
your consideration:
(1) To elect five (5) directors to serve until the next annual meeting of
shareholders and until their successors are elected and qualified;
(2) To ratify the selection of Ernst & Young LLP, independent certified public
accountants, as independent auditors for fiscal year ending January 2, 1999;
(3) To adopt the 1998 Long-Term Incentive Stock Plan;
(4) To amend the 1994 Non-Employee Directors' Stock Option Plan to increase the
number of options which may be granted and to make certain amendments
required under the federal securities laws.
(5) To act upon such other matters as may properly come before the meeting or
any adjournment or adjournments thereof.
All of the above matters are more fully described in the accompanying Proxy
Statement.
Only shareholders of record at the close of business on March 17, 1998 are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Cheryl C. Carter
Secretary
Spartanburg, South Carolina
March 31, 1998
Important: You are cordially invited to attend the meeting, but whether or not
you plan to attend, PLEASE VOTE, DATE, SIGN AND MAIL the enclosed Proxy
promptly. If you attend the meeting, you may either vote by your proxy, or
withdraw your proxy and vote in person.
The 1997 Annual Report on Form 10K is furnished herewith.
SYNALLOY CORPORATION
CROFT INDUSTRIAL PARK
POST OFFICE BOX 5627
SPARTANBURG, SOUTH CAROLINA 29304
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 30, 1998
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Synalloy Corporation (the "Company") of proxies to be
voted at the Annual Shareholders' Meeting to be held at the general offices of
the Company, Croft Industrial Park, Spartanburg, South Carolina, on Thursday,
April 30, 1998, at 10:00 a.m. local time, and at all adjournment(s) thereof.
The approximate date on which this Proxy Statement and the accompanying proxy
card are first being sent or given to stockholders is March 31, 1998.
Quorum and Vote Required. The presence, in person or by proxy, of a majority
of the outstanding shares of Common Stock of the Company is necessary to con-
stitute a quorum at the Annual Meeting.
Voting Rights. The securities which can be voted at the Annual Meeting consist
of Common Stock of the Company, $1.00 par value per share, its only class of
issued and outstanding capital stock. The record date for determining the
holders of Common Stock who are entitled to notice of and to vote at the
Annual Meeting is March 17, 1998. On February 26, 1998, the Company had
outstanding 6,813,929 (excluding 1,186,071 shares held in treasury) shares of
Common Stock having one (1) vote per share. Each shareholder of Common Stock
is entitled in respect to each matter to be voted on at the meeting to one (1)
vote per share, except that in the election of Directors shareholders have
cumulative voting rights.
Each shareholder of Common Stock entitled to vote for the election of
Directors shall have the right to cumulate his votes either (1) by giving to
one candidate as many votes as shall equal the shares owned by such holder, or
(2) by distributing his votes on the same principle among any number of
candidates. Any shareholder who intends to so vote his shares shall either (1)
give written notice of such intention to the Secretary of the Company not less
than forty-eight (48) hours before the time fixed for the Annual Meeting, or
(2) announce his intention in such meeting before the voting for Directors
shall commence. If a shareholder gives notice of his intention to cumulate his
votes, all shareholders entitled to vote at the meeting shall without further
notice be entitled to cumulate their votes.
Cost of Solicitation. The entire cost of soliciting these proxies will be
borne by the Company. The Company may make arrangements with brokerage houses,
nominees, fiduciaries and other custodians to send proxies and proxy material
to beneficial owners of the Company's stock and may reimburse them for their
expenses in so doing. Proxies may be solicited personally or by telephone,
telegram or mail by directors, officers and regular employees of the Company
without additional compensation for such services. Synalloy has engaged the
services of W. F. Doring & Company, a firm specializing in proxy solicitation,
to solicit proxies and to assist in the distribution and collection of proxy
material for a fee estimated at approximately $2,500 plus reimbursement of
out-of-pocket expenses.
Voting by Proxy. In voting by proxy with regard to the election of directors,
stockholders may vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to specific nominees. Stockholders should
specify their choices on the accompanying proxy card. All properly executed
proxy cards delivered by stockholders to the Company and not revoked will be
voted at the Annual Meeting in accordance with the directions given. If no
specific instructions are given with regard to the matters to be voted upon,
the shares represented by a signed proxy card will be voted "FOR" the election
of all directors, to approve the 1998 Long-Term Incentive Stock Plan, to amend
the 1994 Non-Employee Directors' Stock Option Plan and to ratify the
appointment of Ernst & Young LLP as independent auditors. If any other matters
properly come before the Annual Meeting, the persons named as proxies will
vote upon such matters according to their judgment.
Revocability of Proxy. Any stockholder delivering a proxy has the power to
revoke it at any time before it is voted by giving written notice to the
Secretary of the Company, by a valid proxy bearing a later date delivered to
the Company or by attending the meeting and voting in person.
STOCKHOLDERS' PROPOSALS FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS
Stockholders' proposals submitted pursuant to Rule 14a-8 of the Securities
Exchange Act of 1934 intended to be presented at the 1999 Annual Meeting of
Shareholders, tentatively scheduled for April 30,1999, must be sent certified
mail, return receipt requested and received at the Company's Executive
Offices, Post Office Box 5627, Spartanburg, South Carolina 29304, addressed to
the attention of the Secretary by December 1, 1998 in order to be included in
the Proxy Statement and form of proxy relating to such meeting.
SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT
The Company's Annual Report to Stockholders including Form 10-K for the year
ended January 3, 1998, as filed with the Securities and Exchange Commission,
accompanies this Proxy Statement and is incorporated by reference herein.
BENEFICIAL OWNERS OF MORE THAN FIVE (5%) PERCENT OF
THE COMPANY'S COMMON STOCK
The table below details certain information regarding any person who is known
by the Company to be the beneficial owner of more than five (5%) percent of
the Company's Common Stock as of February 26, 1998.
<TABLE>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
T. Rowe Price Associates, Inc. 638,850(1) 9.4
100 East Pratt Street
Baltimore, MD 21202
Wellington Management Company, LLP 615,000(2) 9.0
75 State Street
Boston, MA 02109
James G. Lane, Jr. 399,672(3) 5.9
PO Box 5627
Spartanburg, SC 29304
Equitable Asset Management 377,972(4) 5.5
Atlanta Plaza
950 East Paces Ferry Road
Suite 2400
Atlanta, GA 30326
Dimensional Fund Advisors, Inc. 356,882(5) 5.2
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
Markel Corporation 351,100(6) 5.2
Post Office Box 2009
Glen Allen, VA 23058
(1) These securities are owned by various individual and institutional inves-
tors, which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments and/or sole power to vote
the securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of
such securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities. This information was obtained
from Price Associates' Schedule 13G dated February 12, 1998.
(2) Wellington Management Company, LLP, ("WMC") is an investment adviser reg-
istered with the Securities and Exchange Commission under the Investment Ad-
visers Act of 1940, as amended. As of December 31, 1997, WMC, in its capacity
as investment adviser, may be deemed to have beneficial ownership of 615,000
shares of common stock of Synalloy Corporation that are owned by numerous
investment advisory clients, none of which is known to have such interest with
respect to more than five percent of the class. As of December 1997, WMC had
shared voting power of 257,000 shares and share dispositive power of 615,000
shares. This information was obtained from Wellington's Schedule 13G dated
January 17, 1998.
(3) The aggregate number of shares of Common Stock owned beneficially by Mr.
Lane includes direct ownership of 265,324 shares; indirect ownership of 6,198
shares held by the trustee under Synalloy's 401(k)/ESOP Plan, 1,400 shares
held in an IRA, 123,750 shares owned by his spouse of which Mr. Lane disclaims
beneficial ownership, and 3,000 options exercisable within 60 days.
(4) This is based on information supplied by Equitable Asset Management.
(5) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 356,882 shares of Synalloy
Common Stock as of December 31, 1997, all of which shares are held in port-
folios of DFA Investment Dimensions Group Inc., a registered open-end invest-
ment company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which Di-
mensional Fund Advisors, Inc. serves as investment manager. Dimensional dis-
claims beneficial ownership of all such shares.This information was obtained
from Dimensional.
(6) Pursuant to the instructions in Item 7 of Schedule 13G, Markel Gayner
Asset Management Corporation, ("Markel Gayner") 4551 Cox Road, Glen Allen,
Virginia 23060, a wholly-owned subsidiary of Markel Corporation and an in-
vestment adviser registered under the Investment Advisors Act of 1940, is the
beneficial owner of 351,000 shares or 5.2% of the outstanding common stock of
Synalloy Corporation (the "Company") as a result of acting as investment
advisor to Essex Insurance Company, Markel American Insurance Company, Evan-
ston Insurance Company (each wholly-owned subsidiaries of Markel Corporation)
and certain other investors.
Markel Corporation, through its control of Markel Gayner, Essex Insurance
Company, Markel American Insurance Company and Evanston Insurance Company, has
sole power to direct the voting and disposition of shares of common stock of
the Company held by these entities. Markel Corporation, through its control of
Markel Gayner, has shared power to direct the disposition, but not the voting,
of shares of common stock of the Company held by certain other investors
advised by Markel Gayner. This information was obtained from Markel's 13G
dated February 3, 1998.
</TABLE>
ELECTION OF DIRECTORS (Item 1 on Proxy Card)
The Certificate of Incorporation of the Company provides that the Board of
Directors shall consist of not less than three nor more than fifteen
individuals. Upon recommendation of the Nominating Committee, the Board of
Directors fixed the number of directors constituting the full Board at five
members and recommends that the five nominees listed in the table which
follows be elected as directors to serve for a term of one year until the next
succeeding Annual Meeting and until their successors are elected and
qualified. Each of the nominees has consented to be named in this Proxy
Statement and to serve as a director if elected.
If cumulative voting is not requested, the holders of the Board of Directors'
proxies will vote the proxies received by them for the election as directors
of the five persons named below. If cumulative voting is requested, the
holders of the Board of Directors' proxies will vote the proxies received by
them cumulatively for some or all of the nominees in such manner as may be
determined at the time by the proxy holders.
While the Board of Directors expects that all of the nominees will serve as
directors, if, at the time of the Annual Meeting of Shareholders, or any ad-
journment(s) thereof, a situation should arise making it impossible for one or
more of the nominees to serve, the holders of the enclosed proxy will vote for
such substitute nominee as the Board of Directors recommends.
The Board of Directors recommends that stockholders vote "FOR" the proposal to
elect the five nominees listed below as directors of the Company.
The election of directors requires the affirmative vote of the holders of a
plurality of votes given for each director to be elected.
The following table sets forth the names of nominees for director, their age,
the year in which they were first elected a director, a brief description of
their principal occupation and business experience during the last five years,
all directorships of publicly held companies other than the Company, and the
number of shares of the Company's Common Stock beneficially owned by them di-
rectly or indirectly, as of February 26, 1998, and certain other information.
The Board Committee assignments are as of February 26, 1998.
<TABLE>
Common Stock
Beneficially
Name, Age, Principal Occupation Owned as of
Other Directorships and Other Director 2/26/98
Information Since (Percent of Class)
<S> <C>
Sibyl N. Fishburn, age 62 1979 94,393 (1)(6)
Mrs. Fishburn is a graduate of Hollins (1.4)
College, Roanoke, VA. She serves on the
Board of the Virginia Nature Conservancy.
Mrs. Fishburn is a member of the Audit
and Nominating Committees.
Richard E. Ingram, age 56 1989 34,700 (2)(6)
Mr. Ingram has been Chairman of the *
Board of Builder Marts of America,
Inc. (BMA), Greenville, SC, a national
distributor of lumber and building
materials, since November 1988 and
was Chief Executive Officer until
November 1993. He is a director of
Ingram Enterprises, Inc., a
privately-owned company. He is also
a Director of Columbia Lumber, a
retail lumber business; and Chicago
Miniature Lamp, Inc., a manufacturer
of various lighting products. He is a
member of the Executive, Nominating
and Compensation & Long-Term Incentive
Committees.
James G. Lane, Jr., age 64 1986 399,672 (3)
Mr. Lane has served as Chief Executive (5.9)
Officer and Chairman of the Board of
the Company since 1987. He is a member of
the Executive and Nominating Committees.
Glenn R. Oxner, age 59 1989 26,000 (4)(6)
Mr. Oxner is Chairman and Chief *
Executive Officer of Edgar M. Norris Co.,
Inc., an investment securities company
in Greenville, SC. He is a member of the
Audit and Compensation & Long-Term
Incentive Committees.
Carroll D. Vinson, age 57 1987 18,925 (5)(6)
Mr. Vinson is President and a Director *
of Metropolitan Asset Enhancement Group,
a private real estate holding company
affiliated with Insignia Financial Group,
Inc. ("Insignia") in Greenville, SC.
During 1997, Mr. Vinson also served
Chief Operating Officer of Insignia
Properties Trust, a real estate
investment trust which is affiliated
with Insignia. He is also owner of C. D.
Vinson & Associates, a consulting firm.
He is a member of the Audit, Executive
and Compensation & Long-Term
Incentive Committees.
All Directors and Officers as a group 681,129 (7)
(9 including those listed above) (10.0)
*Less than one percent (1%).
(1) Includes indirect ownership of 7,065 shares by spouse; 19,000 shares held
in trust for children of which Mrs. Fishburn's spouse is trustee; and
8,000 shares held in irrevocable trust over which Mrs. Fishburn has
certain powers.
(2) Includes indirect ownership of 16,550 shares held by Donna C. Ingram Trust
and 900 shares held in an IRA.
(3) Includes indirect ownership of 6,198 shares held by the trustee under Syn-
alloy's 401(k)/ESOP Plan;1,400 shares held by an IRA; and 123,750 shares owned
by his spouse.
(4) Includes 2,000 shares held jointly by Mr. Oxner and his spouse.
(5) Includes indirect ownership by spouse of 1,575 shares and 10,000 owned by
a family partnership.
(6) Includes options to purchase 6,000 shares exercisable pursuant to the 1994
Non-Employee Directors' Stock Option Plan.
(7) Includes 71,000 shares which are currently subject to exercisable options,
and 14,062 shares allocated under the Company's 401(k)/ESOP.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
The business and affairs of the Company are under the general management of
its Board of Directors as provided by the laws of Delaware and the Bylaws of
the Company. The Company has standing Executive, Audit, Compensation & Long-
Term Incentive, and Nominating Committees of the Board of Directors.
The members of the Executive Committee are James Lane*, Richard Ingram and
Carroll Vinson. This Committee exercises the authority of the Board of
Directors in the management of the business of the Company between the
meetings of the Board of Directors. However, this Committee shall not have,
among other powers, the authority to amend the Certificate of Incorporation or
Bylaws, to adopt an agreement of merger or consolidation, to recommend to the
shareholders the sale, lease or exchange of the Company's property and assets,
to declare a dividend, or to authorize the issuance of stock. During the past
fiscal year, this Committee did not meet.
The Audit Committee members are Glenn Oxner*, Sibyl Fishburn and Carroll Vin-
son. This Committee makes recommendations to the Board of Directors regarding
the selection of independent auditors; reviews the independence of such audi-
tors; approves the scope of the annual audit activities of the independent au-
ditors; approves the rendering of any material non-audit services; approves
the audit fee payable to the independent auditors; reviews audit results; and
reviews the expense accounts of Company officers. During the past fiscal year,
this Committee held two meetings.
The Compensation & Long-Term Incentive Committee, currently comprised of Ri-
chard Ingram*, Carroll Vinson, and Glenn Oxner, is responsible for reviewing
and making recommendations to the Board related to salaries, wages, bonuses
and benefits for officers of the Company and for administering the Company's
stock option program including the granting of options thereunder. This
Committee held one meeting during the last fiscal year.
The Nominating Committee is comprised of James Lane*, Richard Ingram and Sibyl
Fishburn. This Committee is responsible for reviewing and recommending changes
in size and composition of the Board of Directors and evaluating and
recommending candidates for election to the Company's Board. This Committee
met once in 1997. The Nominating Committee will consider nominees recommended
by shareholders if the recommendations are forwarded to the Secretary of the
Company for transmission to the Nominating Committee not less than 30 days nor
more than 60 days prior to the meeting, and are otherwise in compliance with
the Company's Bylaws. The Committee routinely meets at the regular quarterly
meeting of the Board of Directors next preceding the Annual Meeting.
Nominations for election as Directors may also be made from the floor at the
Annual Meeting of Shareholders provided such nominations are in accordance
with the notice procedures set in the Company's Bylaws.
During fiscal year 1997, the Board of Directors met four times. All members of
the Board attended 75% or more of the aggregate of the total number of meet-
ings of the Board of Directors and of the committees of the Board on which
they served.
Directors who are not employees of the Company presently receive a fee of
$1,000 for attendance at each meeting of the Board of Directors, a $10,000
annual retainer fee, and reimbursement for travel and other expenses related
to attendance at meetings. Committee members presently receive a fee of $500
for each meeting attended which is not held on the same day as a Board
meeting. Each non-employee director receives an option to purchase 1,500
shares (adjusted for a three-for-two stock split on June 12, 1995) of the
Company's stock upon election or re-election (see Stock Option Plans).The
Director who is an employee is not paid extra compensation for his service on
the Board or any committee of the Board.
*Denotes chairman of respective committee.
Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10% of the
common stock of the Company to file with the Securities and Exchange
Commission and the Nasdaq National Market System reports of ownership and
changes in ownership of common stock. Officers and directors are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on review of the copies of such reports furnished to
the Company or written representation that no other reports were required, the
Company believes that, during 1997, all filing requirements applicable to its
officers and directors were met.
THE BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's cash compensation policies are intended to provide senior man-
agers, including the executive officers, with strong motivation to strive dil-
igently to produce and maintain a high level of profitability. The principal
elements of the policies are as follows. Base salaries are increased
infrequently except as a result of promotions or to establish parity among
senior managers. The intent is to provide senior managers with base salaries
lower than their peers in comparable companies. Offsetting the low salaries
are short-term incentive plans that provide cash bonuses equal to a percent of
profits before income taxes in excess of a predetermined percentage of equity.
Subsidiary and divisional senior managers participate in profit sharing pools
determined solely by the performance of their respective subsidiary or
division while the Chief Executive Officer's bonus is based on consolidated
profitability. The overall effect is to make every senior manager's cash
compensation highly dependent on the profitability of the unit for which
he/she work. Mr. Braam's salary is subject to an employment agreement
negotiated at the time Manufacturers Chemicals Corporation was purchased by
the Company. The 1997 salary increases for Messrs. Avento and Moore were the
first since 1992 and 1991, respectively. No performance criteria except
profits as related to equity were used to determine 1997 compensation for the
Chief Executive Officer and other executive officers other than the Vice
President, Finance.
The Summary Compensation Table and Notes thereto provide details of the short-
term incentives covering the Chief Executive Officer and other executive
officers other than the Vice President, Finance for each of the past three
years. It also shows for each of the past three years the portion of cash
compensation representing bonuses dependent upon profitability.
The Vice President, Finance is paid a salary believed to be toward the lower
end of the range of salaries for this position in comparable companies. He is
also eligible for a discretionary bonus based on various considerations,
including the company's financial results, compensation of other executive
employees and an evaluation of his job performance.
The Committee believes that the price of the Company's stock in the long run
will reflect the Company's growth and profitability. The short-term incentives
described above motivate senior management to strive for such growth and prof-
itability.
A long-term incentive is also provided to senior managers that links their
interests directly to those of the Company's shareholders. Options were
granted to executive officers under a qualified stock option plan adopted in
1988 that only rewards them if the price of the Company's stock increases
after the dates on which the options are granted. A proposal to adopt a new
incentive stock option plan is being submitted to the shareholders. Options
are not granted on a regular basis nor on any specific criteria. They are
granted from time to time based on the Committee's determination that they
will likely increase the long-term motivation of the recipient without an
unreasonable amount of potential dilution to shares outstanding.
The Committee believes that the incentive programs provided to senior managers
have contributed significantly to the Company's improved financial performance
since 1987. The Committee reviews the compensation of the Company's executive
officers annually and believes such compensation has been fair to both the ex-
ecutives and the Company's shareholders.
The Compensation & Long-Term Incentive Committee
Richard E. Ingram, Chairman
Glenn R. Oxner
Carroll D. Vinson
Common Stock Performance
As part of the executive compensation information presented in this Proxy
Statement, the Securities and Exchange Commission requires a five-year compar-
ison of stock performance for the Company with stock performances of a broad
equity market index and an index of appropriate similar companies. The Company
has selected as a broad equity market index comparison the S&P 500. Because
the Company is in two distinctly different businesses, there is no similar
industry "peer" group with which to compare. Thus, the Company has selected as
the most appropriate peer group the Russell 2000 which is an index of
companies with comparable market capitalizations.
Synalloy Corporation
Comparison of Five-Year Cumulative Total Return
Synalloy Corporation, S&P 500 and the Russell 2000
<TABLE>
12-92 12-93 12-94 12-95 12-96 12-97
<S> <C> <C> <C> <C> <C> <C>
Synalloy Corp 100.00 55.88 71.07 129.02 98.25 94.19
S&P 500 100.00 110.08 111.53 153.45 188.68 251.64
Russell 2000 100.00 118.83 116.66 149.79 174.50 213.65
$100 invested on 12/31/92 in stock or index including reinvestment of
dividends. Calendar Year ending December 31.
</TABLE>
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth the total annual compensation paid or accrued
by the Company and/or its subsidiaries to or for the account of each of the
executive officers of the Company whose total cash compensation for the fiscal
year ended January 3, 1998 exceeded $100,000.
<TABLE>
Summary Compensation Table
Annual Compensation
All
Name, Age and Principal Other
Position Year Salary ($) Bonus ($) Compensation ($)
<S> <C> <C> <C> <C>
James G. Lane, Jr., Age 64 1997 120,000 169,721 6,400
Chairman of the Board and 1996 120,000 291,126 4,500
Chief Executive Officer 1995 120,000 894,431(1) 4,500
since 1987.
Joseph N. Avento, Age 56 1997 120,000 22,924 6,400
President, Bristol Metals, 1996 72,000 190,621 4,500
L.P., wholly owned by the 1995 72,000 729,786 4,251
Company, since
January 1992.
Herbert B. Moore, Jr., 1997 100,000 49,030 6,285
Age 52 1996 67,000 57,129 4,500
President, Blackman Uhler 1995 67,000 124,120 4,500
Chemical, a Division of
the Company, since September
1986.
Gregory M. Bowie, Age 48 1997 100,000 35,818 5,819
Vice President, Finance 1996 83,200 45,478 4,500
since May 1994. From 1989 1995 80,000 92,346 1,208
to 1994, he was Vice
President, Finance,
Lowndes Corporation,
a fabricator of concrete
products primarily for
industrial and governmental
construction projects.
Ronald H. Braam, Age 54 1997 156,500 22,533 16,933
President, Manufacturers 1996 25,500 0 2,822
Chemicals, L.P., wholly-owned
by the Company, since October
1996. From 1976 to 1996, he
was President of Manufacturers
Soap and Chemical Co., Inc.
and Manufacturers Chemicals
Corp., the acquired companies.
(1) $715,000 deferred under Deferred Compensation Agreement.
</TABLE>
NOTES
Employment Contracts - The Company has a written employment agreement with
James G. Lane, Jr. pursuant to which he is entitled to receive an annual base
salary of $120,000 until December 31, 1998. In addition to his salary, he is
entitled to "bonus-compensation" equal to a percentage (4.5% for 1995 and 4%
for 1996, 1997 and 1998) of net earnings before income taxes in excess of a
predetermined percent (10% for 1995, 1996, 1997 and 1998) of average
shareholders' equity. This agreement also provides certain fringe benefits and
contains provisions for salary continuation benefits in the event of Mr.
Lane's disability or death, under specified conditions, during the term of his
employment by the Company.
The Company has a written employment agreement with Mr. Braam that provides an
annual salary of $156,000 and participation in the Management Incentive Plan,
if any, for Manufacturers Chemicals Corporation through November 25, 1999.
Bonuses - Cash bonuses based on a short-term incentive plan provide for
bonuses to be paid to senior divisional managers in an aggregate amount equal
to 10% of the net earnings before income taxes in excess of a predetermined
percentage (10% in 1995 and 1996 and 15% in 1997 and 1998 for Messrs. Avento
and Moore; and 10% in 1997 and 1998 for Mr. Braam) of average shareholders'
equity for the applicable division or subsidiary. Mr. Lane and Mr. Bowie do
not participate in these bonus plans.
Other Annual Compensation - No executive officer named in the cash compensa-
tion table nor the executive officers of the Company as a group received from
the Company or any of its subsidiaries personal benefits or any other
compensation which is the lesser of either $50,000 or 10% of the compensation
reported in the cash compensation table above.
Long-Term Compensation - There were 100,500 options granted in the last fiscal
year. The Company's only long-term incentive plan is its qualified stock
option plans.
All Other Compensation - This item was comprised of the following items during
1997: (a) Company contributions allocated to each named individual pursuant to
the 401(k)/Employee Stock Ownership Plan: J. G. Lane, Jr. - $6,400 in 1997 and
$4,500 annually in 1996 and 1995; J. N. Avento - $6,400 in 1997 and $4,500 in
1996 and 1995; H. B. Moore, Jr. - $6,285 in 1997 and $4,500 annually in 1996
and 1995; and G. M. Bowie - $5,819 in 1997, $4,500 in 1996 and $1,208 in 1995;
(b) the full dollar value of the entire premiums paid by the Company on behalf
of the named individuals for split dollar life insurance policies: R. H. Braam
- - $5,683. A significant portion of the insurance premiums reported for Mr.
Braam is for life insurance policies and such premiums are recovered by the
Company from the proceeds of the policies.
Stock Option Plans
Currently, there are options outstanding under the 1988 and 1994 Stock Option
Plans and available to grant under the 1994 Plan which have been approved by
stockholders. The 1988 Plan provides for such options to be granted to
officers and key employees of the Company, its subsidiaries and divisions to
provide them with an opportunity to obtain an equity interest in the Company
and to increase their stake in the future growth and prosperity of the
Company. The 1994 Plan provides for such options to be granted to non-employee
directors. The option price for options granted under these plans is 100% of
the fair market value of the Company's Common Stock on the date the option is
granted. Certain restrictions exist as to the time in which options can be
exercised. With regard to the 1988 Plan, approved at the May 26, 1988 Annual
Meeting, options may be exercised beginning one year after date of grant at a
rate of 20% annually on a cumulative basis. In the event that (a) all or
substantially all of the assets or Common Stock of the Company (or a
subsidiary or division of the Company in which he/ she is employed) is sold to
an entity not affiliated with the Company, or (b) a merger or share exchange
with an unaffiliated party occurs in which the Company is not the surviving
entity, an option holder may exercise in addition to the above, 50% of the
options not otherwise exercisable because of the holding period requirement
subject to certain limitations. No options may be exercised under the 1988
Plans after 10 years from date of grant. The incentive stock options are not
transferable other than by death and can only be exercised during the
employee's lifetime by the employee. The grant period expired in January 1998.
In no event shall options under all Plans having an aggregate fair market
value in excess of $100,000 at the dates of grants become exercisable by an
optionee for the first time during a calendar year. Under the 1994 Plan,
approved at the April 29, 1994 Annual meeting, non-employed directors as of
his or her election or re-election as a member of the Board will automatically
receive an option for 1,500 common shares (adjusted for a three-for-two stock
split on June 12, 1995). In the event a person ceases to be a non-employee
director for reasons other than death, the unexpired options must be exercised
within three years not to exceed 10 years after date of grant. At February 26,
1998, there were 235,500 options outstanding under all plans of which 99,000
were exercisable.
Option/SAR Grants in Last Fiscal Year
Options were granted to the named executive officers in 1997 as indicated in
the following table.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Table
The following table summarizes options granted and exercised during 1997 and
presents the value of unexercised options held by the named executives at
fiscal year end.
<TABLE>
Number of Value of
Unexercised Unexercised
Options at Fiscal In-the-Money
Shares Shares Value Year-End Options at
Acquired Acquired On Realized Exercisable (E) Fiscal Year End
Name On Grant Exercise (1) (2) Unexercisable (U) Exercisable (E)
Unexercisable (U)
<S> <C> <C> <C> <C> <C>
J.G. Lane, Jr. 15,000 6,000 $36,375 18,000(U) $17,250(U)
J.N. Avento 7,500 0 12,000(E) 65,250(E)
10,500(U) 16,781(U)
H.B. Moore, Jr. 5,000 0 8,000(E) 43,500(E)
8,000(U) 16,625(U)
G.M. Bowie 7,500 0 18,000(E) 54,369(E)
19,500(U) 36,715(U)
R.H. Braam 10,000 0 10,000(U) 625(U)
(1) Values are calculated by subtracting the exercise price from the average
of the high and low prices as quoted on NASDAQ National Market Listing on
the date prior to exercise or at year end, as appropriate.
(2) Shares acquired in 1997 on exercise of options have not been registered
and cannot be freely traded in the open market for one year after the exercise
date.
</TABLE>
RETIREMENT PLANS
Salary Continuation Agreements
The Company has a salary continuation agreement with R. H. Braam which
provides for payments of $15,000 per annum in the event of pre-retirement
death or $40,000 per annum following retirement for 10 years. The Company also
has salary continuation agreements with six former officers, which provide for
payments at retirement or death ranging from $9,750 to $28,500 per annum for
10 years in the event of pre-retirement death or the longer of 10 years or
life following retirement. The present value of the future payments which will
be due at retirement are accrued annually through the retirement date. The
Company is the owner and beneficiary of life insurance policies on the lives
of these persons. Based upon reasonable assumption as to mortality, dividends
and other factors, the Company expects to recover the cost of paying said
benefits, including a factor for the use of corporate funds, through keyman
life insurance proceeds. The present value of the above agreements are
accrued. The cumulative amount of this accrual is $549,017.
401(k)/ESOP Plan
The Company has a 401(k)/Employee Stock Ownership Plan (the "Plan"). All em-
ployees (except those employees who are entitled to participate in Union-spon-
sored plans) who are 21 years or older will be eligible to participate on any
January 1 or July 1 following one year of service with the Company.
Employees are permitted to contribute up to 20% of earnings not to exceed a
dollar amount set by the Internal Revenue Service on a pretax basis through
payroll deduction. Employees are permitted to change the election daily and
can revoke the election at any time. Employee contributions are 100% vested at
all times. The employee can invest his deferred contribution in any of the
investment funds offered; however, employee contributions cannot be invested
in Company stock.
Contributions by the Company are made primarily in Company Stock. For each
plan year, the Company contributes on behalf of each participant who is
eligible to share in matching contribution for the plan year, a discretionary
matching contribution equal to a percentage which is determined each year by
the Board of Directors subject to a maximum of 4% in 1997 and 1998. The
matching contribution is allocated on June 30 and December 31 of each plan
year. In addition to the matching contribution, the Company may make a
discretionary contribution which shall be distributed to all eligible
participants regardless of whether they contribute to the Plan. No
discretionary contributions have been made to the Plan. Participants must be
actively employed on June 30 and December 31 in order to share in the matching
contribution and discretionary contribution for the respective valuation
periods.
Distributions are not permitted before age 59 1/2 except in the event of
death, disability, termination of employment or reason of proven financial
hardship as defined according to IRS guidelines. The Plan provides for payment
of the participant's account balance upon death, disability or retirement in
the form of cash or Company stock or both. If employment terminates for
reasons other than retirement, disability or death (e.g. resignation or
termination), the discretionary portion of a participant's account balance
will be vested based as follows: Zero to four years services - 0% vested; five
or more years - 100% vested.
Unvested amounts are forfeited and allocated to participants eligible to share
for a plan year. The Plan permits rollovers from qualified plans at the
discretion of the Company. The ESOP is permitted to borrow money to purchase
Company stock. All Company stock acquired by the Plan with the proceeds of a
loan are maintained in a suspense account and are withdrawn and allocated to
participant's accounts as the loan is paid. While a participant in the Plan,
employees may direct the trustee to vote shares allocated to their account in
accordance with their wishes.
All Plan assets are held by an independent trustee. The trustee invests all
assets and makes payment of Plan benefits. The Plan is managed and
administered by an independent administrator and a Pension Committee comprised
of the corporate officers of the Company. Expenses incurred for the
administration of the Plan are paid by the Company. The Plan reserves to the
Board of Directors of the Company the right to amend the Plan in any manner or
terminate the Plan at any time. The Plan may be amended to preserve the
qualifications of the Plan under the applicable provisions of the Internal
Revenue Code, as amended from time to time. For the year ended 1997, the
Company's total matching contribution was $294,114.
APPROVAL OF INDEPENDENT AUDITORS
(Item 2 on Proxy Card)
The Board of Directors, at the recommendation of its Audit Committee, elected
Ernst & Young LLP to conduct the annual examination of the financial
statements of the Company and its consolidated subsidiaries for the fiscal
year ended January 3, 1998. The selection of this firm for fiscal year ending
January 2, 1999, will be submitted for ratification by the shareholders at the
Annual Meeting. Ernst & Young LLP has no financial interest, direct or
indirect, in the Company or any of its subsidiaries, and they do not have any
connection with the Company or any of its subsidiaries except in their
professional capacity as independent auditors.
The ratification by the shareholders of the selection of Ernst & Young LLP as
independent auditors is not required by law or by the Bylaws of the Company.
The Board of Directors consistent with previous practices is, nevertheless,
submitting this selection to the shareholders to ascertain their views. If
this selection is not ratified at the Annual Meeting, the Board of Directors
intends to reconsider its selection of independent auditors for fiscal year
ending January 2, 1999.
The Audit Committee, which is comprised of Directors who are not employees of
the Company, approves in advance all non-audit services to be provided by
Ernst & Young LLP and believes they have no effect on audit independence.
Representatives of Ernst & Young LLP will be present at the Annual Meeting
with an opportunity to make statements, if they so desire, and to respond to
appropriate questions with respect to that firm's examination of the Company's
financial statements for the fiscal year ended January 3, 1998.
The Board of Directors recommends a vote "FOR" ratification of the selection
of Ernst & Young LLP as independent auditors for the fiscal year ending
January 2, 1999.
APPROVAL OF THE 1998 LONG-TERM INCENTIVE PLAN
(Item 3 on the Proxy Card)
The Board of Directors is submitting to the shareholders for their approval
the 1998 Long-Term Incentive Stock Plan (the "Plan"). The Plan was adopted by
the Board of Directors but will not become effective unless approved by the
shareholders at the April 30, 1998, Annual Meeting. The vote of the majority
of the shares of Common stock present at the Annual Meeting is required.
The Plan authorizes incentive options for key executive employees of the Com-
pany to provide them with an opportunity to obtain an equity interest in the
Company and to increase their stake in the future growth and prosperity of the
Company. The Plan is also intended to induce continued employment of key
employees and to enable the Company to attract new key personnel when needed.
Presently, approximately twenty (20) executives will be eligible to
participate in the Plan.
Summary of the Plan
The following is a summary of the principal provisions of the Plan and is in
all respects subject to the actual provisions of the Plan, a copy of which is
available to any stockholder upon written request to the Company.
Administration. The Plan shall be administered by the Compensation and Long-
Term Incentive Committee (the "Committee"), comprised of three (3) members of
the Company's Board of Directors who are not Non-Employee Directors of the
Company (as such term is defined in the Plan).
Any salaried employee of the Company, or any of its subsidiaries or affiliated
entities, who, in the judgment of the Committee, occupies a management
position in which his efforts contribute to the profit and growth of the
Company may be granted one or more options under the Plan. The Committee will
designate employees to whom options are to be granted and will specify the
number of shares subject to each option.
The Committee shall have complete authority to interpret all provisions of the
Plan consistent with law, to prescribe the form of instruments evidencing the
stock options granted under the Plan, to adopt, amend, and rescind general and
special rules and regulations for its administration, and to make all other
determinations necessary or advisable for the administration of the Plan.
Shares. The shares covered by the Plan shall be the Company's Common Stock of
the par value of $1.00 per share and may be either authorized and unissued
shares or shares held in the treasury of the Company. The total amount of
stock on which options may be granted shall not exceed 350,000 shares, subject
to adjustment in the event of certain changes in the Company's capitalization.
If any option is terminated, in whole or in part, for any reason other than
the exercise thereof, the shares allocated to the option or portion thereof so
terminated may be reallocated to another option or options to be granted under
this Plan.
Option Price. The option price for options granted under this Plan will be
100% of the fair market value on the date the option is granted. As of March
5, 1998, the fair market of the Company's Common Stock was $14.375 per share.
Fair market value is determined by averaging the bid and ask prices for the
stock for the previous date to the option grant date as reported by the NASDAQ
National market System (or such other exchange or market on which such value
is being determined), or if closed, on the last preceding date on which the
System was open.
Exercise of Options. Options may be exercised beginning one (1) year after the
date granted at the rate of twenty percent (20%) annually on a cumulative
basis. In the event that (a) all or substantially all of the assets or common
stock of the Company (or a subsidiary or division of the Company in which he
is employed) is sold to an entity not affiliated with the Company, or (b) a
merger or share exchange with an unaffiliated party occurs in which the
Company is not the surviving entity, an optionholder may exercise in addition
to the above, fifty percent (50%) of the options not otherwise exercisable
because of the holding period requirement subject to the following
limitations.
In no event shall options under this and all other Plans having an aggregate
fair market value in excess of $100,000 at the dates of grants become
exercisable by an optionee for the first time during a calendar year.
Except for special provisions covering retirement, disability and death of an
optionee, options can only be exercised by an employee who has been in the
continuous employment of the Company since the date the option was granted.
Adjustments. Appropriate adjustments shall be made in the price of the shares
and the number allotted or subject to allotment if there is any change in the
Common Stock as a result of a stock dividend, stock split, recapitalization,
merger, reorganization or otherwise.
Method of Exercise. An option may be exercised by notifying the Company's
secretary in writing, together with full payment in cash or through delivery
of previously owned shares of the Company's Common Stock or by a combination
of cash and Common Stock; provided the Committee may impose other reasonable
requirements on exercise under the Plan.
Amendment and Termination of the Plan. No option may be granted after
April 30, 2008. The Board of Directors has authority to alter, amend or
terminate the Plan with the exception of the following which require
shareholder approval: (a) increase the total number of shares of stock on
which options may be granted (other than as specified in the Plan); (b) change
the manner of determining the option price; (c) assign the administration of
the Plan otherwise than to a committee of the Board of Directors; (d) permit
any person while a member of the Committee administering the Plan to be
eligible to receive or hold options under the Plan; (e) permit a person who is
a member of the Committee administering the Plan to receive Options while so
administering the Plan or permit a person who is not a key employee of the
Company at the time of grant to be granted an option; or (f) extend the term
of this Plan.
Federal Tax Consequences. Options granted under the Plan are intended to
qualify as incentive stock options for federal income tax purposes and should
generally be treated as follows:
There are no tax consequences to the Company or the optionee when an option is
granted or exercise. If stock acquired under an option is sold no sooner than
two (2) years after the date of grant and no sooner than one (1) year after
the exercise date, any gain will be a capital gain. If either of these holding
periods is not met, a portion of any gain representing the lesser of (i) the
difference between the option price and the fair market value on the date of
exercise and (ii) the amount realized on disposition of the stock over the
adjusted basis, or is taxed as ordinary income. The Company is entitled to a
deduction for any such amount.
Options Granted. No options under this Plan have been granted as of the date
of this proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
PROPOSAL TO AMEND THE 1994 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(Item 4 on the Proxy Card)
At the April 29, 1994, Annual Meeting, the Company's shareholders approved the
Company's 1994 Directors' Stock Option Plan (the "Plan"). Under the Plan, a
non-employee director automatically receives an option to purchase 1,500
shares (adjusted for a three-for-two stock split) of the Company's Common
Stock, $1.00 par value, on his election or re-election to the Company's Board
of Directors. Each such option has a ten (10) year term. The exercise price is
one hundred (100%) percent of the fair market value of the shares on the date
of grant. The options are not transferable except by will or the laws of
descent and distribution and may be exercised during an option holder's
lifetime only by the non-employee director. The Company receives no
consideration upon the grant of options under the Plan. The exercise price of
the option must be paid in full upon exercise. Payment may be made in cash,
check, or, in whole or part, in common shares of the Company already owned by
the person exercising the option, valued at fair market value. The total
number of commons shares of the Company subject to options issued pursuant to
this Plan is 37,500 (adjusted for a three-for-two stock split). This number
and the terms of outstanding options are subject to automatic adjustment in
the event of reorganization, merger, consolidation, recapitalization, stock
splits, combination or exchange of shares, stock dividends or other similar
events. The Plan has a 10-year term and is administered by the Board of
Directors.
The Company believes that the number of common shares subject to options
issued pursuant to this Plan should be increased to 67,500 (adjusted for a
three-for-two stock split). The Company also proposes to amend the Plan to
conform to certain changes in federal securities laws which define a non-
employee director as a director who (1) is not currently an officer of the
Company (as defined in 17 CFR paragraph 240.16a-1(f)) or a parent or
subsidiary of the
Company or otherwise currently employed by the Company or a parent or
subsidiary of the Company; (2) does not receive compensation, either directly
or indirectly, from the Company or a parent or subsidiary of the Company, for
services rendered as a consultant or in any capacity other than as a director,
except for an amount that does not exceed the dollar amount for which
disclosure would be required pursuant to 17 CFR paragraph 229.404(a);
(3) does not
possess an interest in any other transaction for which disclosure would be
required pursuant to 17 CFR paragraph 229.404(a); and (4) is not
engaged in a business
relationship for which disclosure would be required pursuant to 17 CFR para-
graph 229.404(b). No other provisions of the Plan will be affected. A copy of
the Plan, as amended, is available upon request from the Company's Secretary.
Approval by the affirmative vote of a majority of the common shares of the
Company present at the Annual Meeting is required to approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters do properly come before the
meeting, it is the intention of the persons named as proxies to vote upon them
in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Cheryl C. Carter
Secretary
APPENDIX
SYNALLOY CORPORATION
POST OFFICE BOX 5627. SPARTANBURG, SC 29304
This proxy is Solicited by The Board of Directors for the Annual Meeting of
Shareholders on April 30, 1998.
The undersigned hereby appoints James G. Lane, Jr., Carroll D. Vinson and
Glenn R. Oxner, or any one or more of them, each with power of substitution,
as lawful proxy, to vote all the shares of Common Stock of Synalloy
Corporation which the undersigned would be entitled to vote if personally
present at the Annual Shareholders' Meeting of Synalloy Corporation to be held
at Spartanburg, S.C. on Thursday, April 30, 1998, at 10:00 a.m. local time,
and at any adjournment thereof, upon such business as may properly come before
the meeting.
Said proxies will vote on the items set forth in the Notice of Annual Meeting
and Proxy Statement (receipt of which is hereby acknowledged) as specified on
this card, and are authorized to vote in their discretion when a vote is not
specified. If no specification is made, it is the intention of said proxies to
vote the shares represented by the proxy in favor of the proposals.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted for proposals 1, 2, 3 and 4.
Please sign on reverse side and return in the enclosed postage-paid envelope.
Please sign exactly as your name appears hereon. Joint owners should each
sign. Trustees, executors, administrators and others signing in a
representative capacity should indicate that capacity. An authorized officer
may sign on behalf of a corporation and should indicate the name of the
corporation and his capacity.
(1) Election of Directors
- ---- For ----Withhold ----or All Except
Sibyl N. Fishburn, Richard E. Ingram, James G. Lane, Jr., Glenn R. Oxner and
Carroll D. Vinson
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s') names(s).
Your shares will be voted for the remaining nominee(s).
(2) Proposal to approve the selection of Ernst & Young LLP as auditors for the
fiscal year ending January 2, 1999.
- ----FOR ----AGAINST ----ABSTAIN
(3) To adopt the 1998 Long-Term Incentive Stock Plan
- ----FOR ----AGAINST ----ABSTAIN
(4) To amend the 1994 Non-Employee Directors' Stock Option Plan to increase
the number of options which may be granted and to make certain amendments
required under the federal securities laws.
- ----FOR ----AGAINST ----ABSTAIN
(5) Upon any other matter that may properly come before the meeting or any ad-
journment thereof, as the proxies in their discretion may determine.
