UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ACME UNITED CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 28, 2006
Dear Fellow Shareholder:
On behalf of your Board of Directors and Management, I cordially invite you to
attend the Annual Meeting of Shareholders of Acme United Corporation scheduled
to be held on Monday, April 24, 2006 at 11:00 A.M., local time, at the American
Stock Exchange, 86 Trinity Place, New York, New York. I look forward to greeting
personally those shareholders able to attend.
At the Meeting, shareholders will be asked to elect nine directors to serve for
a one-year term. Information regarding these matters is set forth in the
accompanying Notice of Annual Meeting and Proxy Statement to which you are urged
to give your prompt attention.
It is important that your shares be represented and voted at the Meeting.
Whether or not you plan to attend, please take a moment to sign, date and
promptly mail your proxy in the enclosed prepaid envelope. This will not limit
your right to vote in person should you attend the Meeting.
On behalf of your Board of Directors, thank you for your continued support and
interest in Acme United Corporation.
Sincerely,
Walter C. Johnsen
President and Chief Executive Officer
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, APRIL 24, 2006
To our Shareholders: The Annual Meeting of Shareholders (the "Meeting") of Acme
United Corporation, a Connecticut Corporation, (the "Company") will be held on
Monday, April 24, 2006, at 11:00 A.M., local time, at the American Stock
Exchange, 86 Trinity Place, New York, New York, for the following purposes:
1. To elect nine (9) Directors of the Company; and
2. To transact such other business as may properly come before the
Meeting.
Shareholders of record at the close of business on March 7, 2006 are entitled to
receive notice of and to vote at the Meeting and at any adjournment thereof.
You are cordially invited to attend the Meeting. Please carefully read the
attached Proxy Statement for information regarding the matters to be considered
and acted upon at the Meeting. We hope that you will attend the Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
RETURN POSTAGE-PAID ENVELOPE. No additional postage need be affixed to the
return envelope if mailed in the United States. If you attend the Meeting, you
may withdraw your proxy and vote in person by ballot.
By Order of the Board of Directors,
Paul G. Driscoll
Vice President and Chief Financial
Officer, Secretary and Treasurer
March 28, 2006
Fairfield, Connecticut
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
April 24, 2006
PROXY STATEMENT
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy Card are being furnished in connection with the
solicitation of proxies by the Board of Directors of Acme United Corporation, a
Connecticut Corporation, (the "Company") to be used at the Annual Meeting of
Shareholders of the Company, to be held April 24, 2006, at 11:00 A.M., local
time, at the American Stock Exchange, 86 Trinity Place, New York, New York or at
any adjournment thereof (the "Meeting"). This Proxy Statement and the enclosed
Proxy Card are being furnished on or about March 29, 2006 to all holders of
record of the Company's Common Stock, par value $2.50 per share, (the "Common
Stock") as of the close of business on March 7, 2006. A copy of the Company's
2005 Annual Report to Shareholders, including consolidated financial statements
for the fiscal year ended December 31, 2005, accompanies this Proxy Statement.
At the Meeting, shareholders will elect nine Directors of the Company to
serve until the next Meeting.
Voting Securities, Record Date and Quorum
Record Date. The Board of Directors has fixed the close of business on
March 7, 2006, as the record date (the "Record Date") for determination of
shareholders entitled to notice of and to vote at the Meeting. As of the Record
Date, there were 3,484,833 shares of Common Stock issued and outstanding and
there were no other voting securities of the Company outstanding.
Quorum. The presence at the Meeting, in person or by proxy, of a majority
of the outstanding shares of Common Stock entitled to vote shall constitute a
quorum for the Meeting. Each outstanding share of Common Stock entitles the
record holder thereof to one vote. Abstentions and broker non-votes are not
counted as votes cast on any matter to which they relate, but are counted in
determining the presence of a quorum.
Election of Directors. Assuming the presence of a quorum, a plurality of
the votes cast at the Meeting is required to elect each of the nominees for
Director. Abstentions and broker non-votes will not be taken into account in
determining the outcome of the election of directors.
Voting Rights and Solicitation of Proxies
Eligible shareholders of record may vote at the Meeting in person or by
means of the enclosed Proxy Card. You may specify your voting choices by marking
the appropriate boxes on the Proxy Card. The proxy solicited hereby, if properly
signed and returned to the Company and not revoked prior to or at the Meeting,
will be voted in accordance with the instructions specified thereon. If you
properly sign and return your Proxy Card, but do not specify your choices, your
shares will be voted by the proxy holders as recommended by the Board of
Directors.
(1)
The Board of Directors encourages you to complete and return the Proxy Card
even if you expect to attend the Meeting. You may revoke your proxy at any time
before it is voted at the Meeting by giving written notice of revocation to the
Secretary of the Company, by submission of a proxy bearing a later date or by
attending the Meeting in person and casting a ballot.
The proxy holders, Gary D. Penisten and Walter C. Johnsen, will vote all
shares of Common Stock represented by Proxy Cards that are properly signed and
returned by shareholders. The Proxy Card also authorizes the proxy holders to
vote the shares represented in their sole discretion with respect to any matters
not included in this Proxy Statement that may properly be presented for
consideration at the Meeting. You must return a signed Proxy Card if you want
the proxy holders to vote your shares of Common Stock.
The cost of soliciting proxies will be borne by the Company. Following the
mailing of proxy solicitation materials, proxies may be solicited by directors,
officers and employees of the Company and its subsidiaries personally, by
telephone or otherwise. Such persons will not receive any fees or other
compensation for such solicitation. In addition, the Company will reimburse
brokers, custodians, nominees and other persons holding shares of Common Stock
for others for their reasonable expenses in sending proxy materials to the
beneficial owners of such shares and in obtaining their proxies.
(2)
PROPOSAL 1:
ELECTION OF DIRECTORS
The By-laws provide that the Company have a Board of Directors of not less than
five or more than nine directors, with the number of directors to be fixed by
the Board from time to time. The number of directors is presently fixed at nine.
Directors serve until the next annual meeting and until their respective
successors have been elected and qualified.
The Board of Directors currently consists of eight directors. One incumbent
director, Wayne R. Moore, has determined not to stand for reelection. His term
as a director will expire at the Meeting.
Nine Directors are to be elected at the Meeting to serve for one-year terms
until the 2007 Annual Meeting of Shareholders and until their respective
successors are elected and qualified. All of the nominees except two are
currently members of our Board of Directors. The Board of Directors knows of no
reason why any nominee would be unable to serve as Director. Each nominee has
consented to being named as a nominee for director of the Company in this Proxy
Statement and to serve if elected. If any nominee should for any reason become
unable to serve, then all valid proxies will be voted for the election of a
substitute nominee designated by the Board.
The following information about the nominees for election as our Directors is
based, in part, upon information furnished by the nominees.
------------------------ -------------------------------------------------- ----------------
Nominees Principal Occupation Director Since
------------------------ -------------------------------------------------- ----------------
Walter C. Johnsen President and Chief Executive Officer of the 1995
(age 55) Company since November 30, 1995. Formerly
served as Vice Chairman and a principal of
Marshall Products, Inc., a medical supply
distributor.
------------------------ -------------------------------------------------- ----------------
Gary D. Penisten Chairman of the Board of the Company since 1994
(age 74) February 27, 1996. From 1977 to 1988, he was
Senior Vice President of Finance, Chief
Financial Officer and a Director of Sterling
Drug Inc. From 1974 to 1977 he served as
Assistant Secretary (Financial Management)
of the United States Navy. Prior to that, he
was employed by General Electric Company.
------------------------ -------------------------------------------------- ----------------
(3)
------------------------ -------------------------------------------------- ----------------
George R. Dunbar President of The U.S. Baird Corporation, a 1977
(age 82) machine tool manufacturer, since 2001 and
President of Dunbar Associates, a municipal
management consulting firm from 1992 to 2001.
Former Chief Administrative Officer for the City
of Bridgeport. President (1972-1987), Bryant
Electric Division of Westinghouse Electric
Corporation, manufacturer of electrical
distribution and utilization products,
Bridgeport, CT.
------------------------ -------------------------------------------------- ----------------
Richmond Y. Holden, Jr. President and Chief Executive Officer of J.L. 1998
(age 52) Hammett Co. since 1992. J.L. Hammett Co. is an
online retailer of educational products,
focusing on the needs of teachers and
parents. Since 1997 he has also served as
Chairman of the Board of Ten Corp, a
computer upgrade, network services and
computer services company.
------------------------ -------------------------------------------------- ----------------
Brian S. Olschan Executive Vice President and Chief Operating 2000
(age 49) Officer of the Company as of January 25, 1999;
Senior Vice President - Sales and Marketing of
the Company from September 12, 1996 to January
24, 1999; formerly served as Vice President and
General Manager of the Cordset and Assembly
Business of General Cable Corporation, an
electrical wire and cable manufacturer.
------------------------ -------------------------------------------------- ----------------
Stevenson E. Ward III Vice President and Chief Financial Officer of 2001
(age 60) Triton Thalassic Technologies, Inc. since
September 2000. From 1999 thru 2000, Mr. Ward
served as Senior Vice President-Administration
of Sanofi-Synthelabo, Inc. He also served as
Executive Vice President (1996-1999) and Chief
Financial Officer (1994-1995) of Sanofi, Inc.
and Vice President, Pharmaceutical Group,
Sterling Winthrop, Inc. (1992-1994). Prior to
joining Sterling he was
employed by General Electric Company.
------------------------ -------------------------------------------------- ----------------
(4)
------------------------ -------------------------------------------------- ----------------
Susan H. Murphy Vice President for Student and Academic 2003
(age 54) Services, Cornell University since 1994; Dean of
Admissions and Financial Aid from 1985 to 1994.
Employed at Cornell since 1978. Ms. Murphy
received a Ph.D. from Cornell University.
------------------------ -------------------------------------------------- ----------------
The following are the newly nominated non-incumbent directors:
------------------------ -------------------------------------------------- ----------------
Rex L. Davidson President and Chief Executive Officer of Goodwill
(age 56) Industries of Greater New York and Northern New
Jersey, Inc. and President of Goodwill Industries
Housing Corporation since 1982. Appointed by
Mayor Bloomberg to the New York City Workforce
Investment Board in 2002. Serves on the Board of
the Better Business Bureau Education and Research
Foundation. He also serves on the advisory board
for the Stony Brook University MBA Advisory
Board.
------------------------ -------------------------------------------------- ----------------
Stephen Spinelli, Jr. Vice Provost for Entrepreneurship and Global
(age 51) Management and a member of the Babson College
faculty since 1993. Founder and former Chairman
of American Oil Change Corporation (DBA Jiffy
Lube). He consults with a wide array of
businesses globally. His Ph.D. in economics is
from Imperial College, University of London
(U.K.).
------------------------ -------------------------------------------------- ----------------
Board of Director Meetings and Committees
The Board of Directors had seven meetings in 2005. All Directors attended at
least 75% of the aggregate of the total number of the Board meetings and
meetings of Committees of which they were a member. Board members are expected
to attend annual meetings. All eight then-incumbent Board members attended the
Annual Meeting held in 2005. The Board of Directors has established standing
Executive, Audit, and Compensation committees, each of which is comprised solely
of independent non-employee members of the Board of Directors. The Board of
Directors does not have a standing Nominating Committee.
(5)
The Board has determined that each of its current directors who are standing for
reelection and each of the two non-incumbent nominees for director is
"independent" within the meaning of the applicable listing standards of the
American Stock Exchange, with the exception of Mr. Johnsen, President and Chief
Executive Officer and Mr. Olschan, Executive Vice President and Chief Operating
Officer.
Executive Committee
The Executive Committee of the Board of Directors is composed of Mr. Penisten as
Chairman, and Mr. Dunbar. The function of the Executive Committee is to act for
the Board of Directors during the intervals between meetings of the Board. The
Executive Committee had two meetings in 2005.
Audit Committee
The Audit Committee assists the Board of Directors in overseeing (1) the audit
and integrity of our financial statements, (2) the performance of our
independent auditors, (3) the adequacy and effectiveness of our accounting,
auditing and financial reporting processes, and (4) our compliance with legal
and regulatory requirements. The duties of the Audit Committee include the
selection and appointment of our independent auditors, including evaluation of
their qualifications, performance and independence. The Board of Directors has
determined that all members of the Audit Committee are "independent" and
"financially literate" within the meaning of the applicable listing standards of
the American Stock Exchange. In addition, the Board has determined that Mr. Ward
qualifies as an "audit committee financial expert" within the meaning of
regulations adopted by the Securities and Exchange Commission and has the
financial sophistication required under the listing standards of the American
Stock Exchange.
The Committee consists of Mr. Ward, Chairman, Messrs. Holden and Moore. The
Audit Committee meets at least quarterly, and more often as needed. The
Committee met five times in 2005. The Board of Directors has adopted a written
charter for the Audit Committee, which is reviewed annually by the Audit
Committee.
Nominations for Directors
The functions of the Nominating Committee are performed by the whole Board.
Board of Director nominations are recommended for the entire Board's selection
by a majority of the Board's "independent directors," as such term is defined in
Section 121A of the American Stock Exchange's listing standards.
The Board will consider nominees for directors recommended in writing by
shareholders to the Board at least sixty (60) days prior to the annual meeting
at which the election of directors is to be held (subject to certain
requirements set forth in the by-laws). The nomination should be sent in care of
the Secretary at the Company's principal executive office, and should include
the name, address, telephone number and resume of his or her business and
educational background along with a written statement by the shareholder as to
why such person should be considered for election to the Board of Directors.
(6)
The Board follows the same evaluation procedures whether a candidate is
recommended by directors or shareholders. In identifying and evaluating nominees
for director, the Board considers whether the candidate has the highest ethical
standards and integrity and sufficient education, experience and skills
necessary to understand and wisely act upon the complex issues that arise in
managing a publicly-held company. To the extent the Board does not have enough
information to evaluate a candidate; the Board may send a questionnaire to the
candidate for completion in enough time for Board consideration.
Board Oversight Committee
On November 3, 2003, a temporary Board Oversight Committee was established to
evaluate and make recommendations to the Board regarding the structure and
composition of the Board. The specific responsibilities of the Committee
included developing a transition plan in anticipation of the retirement of older
members of the Board and making recommendations as to the size of the Board and
the experience of potential new candidates for membership on the Board. The
Committee is composed of Mr. Holden, Chairman, Mr. Dunbar and Ms. Murphy. The
Committee met once in 2004. Although the Committee did not meet in 2005, during
2005 the Committee engaged in discussions regarding these matters with other
members of the Board both individually and at meetings of the Board. As a result
of these discussions, the Board increased the size of the Board from eight to
nine directors and has nominated two non-incumbent individuals for election to
the Board at the Meeting.
Compensation Committee
The Compensation Committee of the Board of Directors assists the Board in
establishing the compensation policies for cash and equity compensation of our
executive officers. The duties of the Committee include evaluating and making
recommendations to the Board regarding the compensation and equity incentives
and awards for our executive officers and the administration of the Company's
Non-Salaried Director Stock Option Plan. The Committee consists of Mr. Holden,
Chairman, Messrs. Dunbar and Penisten, and Ms. Murphy. The Committee had two
meetings during 2005.
Compensation of Directors
Directors' Fees
In 2005, each Director who was not a salaried employee of the Company received
an annual fee of $14,000, payable quarterly plus $800 for each Board of
Directors meeting attended. The Chairman of the Board earned an additional $800
per meeting to compensate for the broader responsibility and related effort
associated with that position. Each member of a Committee of the Board received
$600 per Committee meeting. The Chairman of each Committee earned an additional
$600 per meeting to compensate for the broader responsibility and related
effort. The Chairman of the Audit Committee of the Board also received an annual
fee of $3,200, payable quarterly. Directors also receive reimbursement of travel
and other reasonable out-of-pocket expenses incurred in connection with
attendance at meetings.
(7)
Directors' Stock Options
On April 25, 2005, the date of the last annual meeting of shareholders, each
non-employee director re-elected to the Board of Directors received an annual
option grant, as provided under the 2005 Non-Salaried Director Stock Option
Plan, to purchase 2,500 shares of Common Stock with an exercise price of $15.15
per share. Each option was immediately exercisable for all of the shares
underlying the option.
Under the Non-Salaried Director Stock Option Plan each director upon becoming a
member of the Board of Directors receives an option to purchase 5,000 shares of
Common Stock.
Attendance at Annual Meetings
While the Company has no formal policy regarding the attendance of Board members
at annual meetings of shareholders, director attendance is deemed very important
and is strongly encouraged. All eight members of the Board attended the 2005
Annual Meeting of Shareholders.
Shareholder Communications with Directors
The Company has established a process for shareholders to send communications to
the Board of Directors. Shareholders may send communications to the Board of
Directors to the attention of the Secretary, Acme United Corporation, 60 Round
Hill Road, Fairfield, Connecticut 06824, who will forward them to all Board
members within a reasonable time after receipt. If the shareholder wishes the
communication to be sent to one or more specific Board members only, the
addressee should be the specific Board member(s), "c/o Secretary", who will then
forward the communication to such Board member(s). If one or more specific Board
members are not designated for such other communication, the communication will
be forwarded to the entire Board.
(8)
OWNERSHIP OF ACME UNITED CORPORATION STOCK
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of March 1, 2006, with
respect to the beneficial ownership of shares of Common Stock by any person who,
to the knowledge of the Company, owns beneficially more than 5% of the
outstanding shares of Common Stock of the Company.
---------------------------- ------------------------ ---------------------- ----------------
Number of
Beneficially Shares Percent of
Shareholder Type of Ownership Owned (1) Class
---------------------------- ------------------------ ---------------------- ----------------
Walter C. Johnsen (7) Direct 594,772 16.98
60 Round Hill Road
Fairfield, CT 06824
---------------------------- ------------------------ ---------------------- ----------------
R. Scott Asen Direct 403,790 11.59
Asen and Co.
224 East 49th Street
New York, NY 10017
---------------------------- ------------------------ ---------------------- ----------------
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information, as of March 1, 2006, with
respect to the beneficial ownership of shares of Common Stock by (i) each
director and nominee for director of the Company; (ii) each executive officer
named in the Summary Compensation Table appearing below under "Executive
Compensation"; and (iii) all executive officers and directors as a group. The
persons shown have sole voting and investment power in these shares except as
shown in the footnotes below.
The address of each person who is an officer or director of the Company is 60
Round Hill Road, Fairfield, CT 06824.
-------------------------------------- -------------------------- -----------
Name and Address of Beneficial Owner Number of Shares Percent
Beneficially Owned (1)
-------------------------------------- -------------------------- -----------
James A. Benkovic (2) 34,250 *
-------------------------------------- -------------------------- -----------
Larry H. Buchtmann (3) 56,000 1.58
-------------------------------------- -------------------------- -----------
Paul G. Driscoll (4) 34,798 *
-------------------------------------- -------------------------- -----------
(9)
-------------------------------------- -------------------------- -----------
George R. Dunbar (5) 55,309 1.58
-------------------------------------- -------------------------- -----------
Richmond Y. Holden, Jr. (6) 38,272 1.09
-------------------------------------- -------------------------- -----------
Walter C. Johnsen (7) 594,772 16.98
-------------------------------------- -------------------------- -----------
Wayne R. Moore (8) 46,643 1.33
-------------------------------------- -------------------------- -----------
Susan M. Murphy (9) 12,506 *
-------------------------------------- -------------------------- -----------
Brian S. Olschan (10) 129,750 3.64
-------------------------------------- -------------------------- -----------
Gary D. Penisten (8) 115,500 3.29
-------------------------------------- -------------------------- -----------
Stevenson E. Ward III (11) 15,700 *
-------------------------------------- -------------------------- -----------
Executive Officers and Directors 1,133,500 29.72
as a Group (11 persons)
-------------------------------------- -------------------------- -----------
Nominees for Director:
-------------------------------------- -------------------------- -----------
Rex L. Davidson -0-
-------------------------------------- -------------------------- -----------
Stephen Spinelli, Jr. -0-
-------------------------------------- -------------------------- -----------
*Less than 1.0%
(1) Based on a total of 3,484,833 outstanding shares as of March 1, 2006.
Under applicable rules promulgated under the Securities Exchange Act of
1934, as amended, a person is deemed to be the beneficial owner of
shares of Common Stock if, among other things, he or she directly or
indirectly has or shares voting power or investment power with respect
to such shares. A person is also considered to beneficially own shares
of Common Stock which he or she does not actually own but has the right
to acquire presently or within the next sixty (60) days, by exercise of
stock options or otherwise.
(2) Includes 34,250 shares issuable upon exercise of options.
(3) Includes 55,000 shares issuable upon exercise of options.
(4) Includes 31,625 shares issuable upon exercise of options.
(5) Includes 20,000 shares issuable upon exercise of options.
(6) Includes 27,500 shares issuable upon exercise of options.
(10)
(7) Includes 17,500 shares issuable upon exercise of options.
(8) Includes 30,000 shares issuable upon exercise of options.
(9) Includes 9,000 shares issuable upon exercise of options.
(10) Includes 81,250 shares issuable upon exercise of options.
(11) Includes 2,500 shares issuable upon exercise of options.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following sets forth information concerning the compensation of the
Company's Chief Executive Officer and each of the four other most highly
compensated officers of the Company at the end of the last completed fiscal
year. No information is given as to any person for any fiscal year during which
such person was not an officer of the Company.
Long Term
Annual Compensation
Compensation Awards
--------------------- --------------
Name and Principal Position Year Salary($) Bonus(1)($) Securities
Underlying
Options (#)
Walter C. Johnsen 2005 $357,308 $100,000 20,000
President & Chief 2004 $325,000 $300,000 0
Executive Officer 2003 $307,365 $150,000 20,000
Brian S. Olschan 2005 $307,692 $ 75,000 15,000
Executive Vice President & Chief 2004 $280,000 $235,000 0
Operating Officer 2003 $264,632 $110,000 15,000
(11)
Paul G. Driscoll 2005 $178,250 $ 40,000 10,000
Vice President-Chief 2004 $161,635 $100,000 0
Financial Officer 2003 $147,442 $ 60,000 7,500
James A. Benkovic 2005 $180,000 $ 40,000 7,000
Senior Vice President of 2004 $171,250 $100,000 0
Global Sales 2003 $153,683 $ 60,000 5,000
Larry H. Buchtmann 2005 $166,500 $ 10,000 0
Vice President- 2004 $157,116 $ 30,000 0
Operations and Technology 2003 $152,600 $ 10,000 0
(1) The bonus reported includes bonuses for the fiscal year reported paid both
during and after the end of the fiscal year.
Option Grants in Last Fiscal Year
The following table provides information concerning each option granted during
the last fiscal year to each of the named executive officers and the potential
realizable value of such options at certain assumed rates of stock appreciation.
Individual Grants
------------------- ------------------- ---------------- ---------------------- ------------------ ---------------------------------
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of
Shares Granted to Stock Price
Underlying Employees in Appreciation for
Options Fiscal Exercise or Expiration Option Term
Name Granted (1) Year Base Price Date 5% 10%
------------------- ------------------- ---------------- ---------------------- ------------------ ---------------- ----------------
Walter C. Johnsen 20,000 20.7% $15.65 per share April 28, 2015 $173,000 $425,000
------------------- ------------------- ---------------- ---------------------- ------------------ ---------------- ----------------
Brian S. 15,000 15.5% $15.65 per share April 28, 2015 $148,000 $374,000
Olschan
------------------- ------------------- ---------------- ---------------------- ------------------ ---------------- ----------------
Paul G. 10,000 10.4% $15.65 per share April 28, 2015 $ 98,000 $249,000
Driscoll
------------------- ------------------- ---------------- ---------------------- ------------------ ---------------- ----------------
James A. 7,000 7.3% $15.65 per share April 28, 2015 $ 69,000 $175,000
Benkovic
------------------- ------------------- ---------------- ---------------------- ------------------ ---------------- ----------------
(1) Each option vests in four equal installments commencing on the date of grant
and thereafter on the annual anniversary of the grant date.
(12)
The Board also granted options for 44,500 shares in the aggregate to 12 other
employees with staggered vesting dates through August 15, 2008.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table provides information concerning each option exercised during
the last fiscal year by each of the named executive officers and the value of
unexercised options held by such executive officers at the end of the fiscal
year.
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
Name Shares Acquired Value Realizedd Number of Securities Value of
on Exercise (#) ($)(1) Underlying Unexercised Unexercised In-the-Money
Options at Fiscal Year Options at Fiscal Year End
End (#) Exercisable/ ($)(2) Exercisable/
Unexercisable Unexercisable
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
Walter C. Johnsen 150,000 $2,232,000 17,500/12,500 $75,000/$25,000
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
Brian S. Olschan 82,500 $1,346,000 81,250/11,250 $766,000/$38,000
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
Paul G. Driscoll -0- $0 31,625/6,875 $273,000/$19,000
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
Larry H. Buchtmann -0- $0 55,000/-0- $611,000/$0
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
James A. Benkovic 18,000 $281,000 34,250/4,750 $335,000/$12,000
-------------------------- ------------------ ----------------- --------------------------- --------------------------------
(1) Values stated are based on the closing price per share of the Company's
Common Stock on the American Stock Exchange on the exercise date.
(2) Values stated are based on the closing price per share of the Company's
Common Stock on the American Stock Exchange on December 31, 2005, the
last trading day of the fiscal year.
(13)
Retirement Plans
In December 1995, the Board of Directors adopted a resolution to freeze the
defined benefit pension plan resulting in no further benefit accruals after
February 1, 1996. The life annuity annual benefit at age 65 was zero for Walter
C. Johnsen, Brian S. Olschan, Paul G. Driscoll and Larry H. Buchtmann and $3,985
for James A. Benkovic. Amounts earned by others under this plan are not subject
to a deduction for estimated Social Security benefits, and do not include
benefits which would result from the transfer by a retiring employee of his
accrued profit-sharing account balance to the pension plan.
Change in Control Arrangements--Salary Continuation Plan
The company has a Salary Continuation Plan in effect covering officers of the
Company at the level of Corporate Vice President or above, under the age of 65.
This plan covers Walter C. Johnsen, Brian S. Olschan, James A. Benkovic, Larry
H. Buchtmann and Paul G. Driscoll and is designed to retain key employees and
provide for continuity of management in the event of an actual or threatened
change in control of the Company. The Plan provides that in the event of such a
change in control, each such key employee would have specific rights and receive
certain benefits if, within one year (or if such employee is also a director,
within two years) after such change in control, the employee is terminated
involuntarily, the employee's responsibility, status or compensation is reduced,
the employee is transferred to a location unreasonably distant from his/her
current location or the employee voluntarily resigns. In such circumstances, the
compensation which the employee would be entitled to receive would be a lump sum
payment equal to a specific number of months' compensation. Compensation
includes the employee's monthly salary rate being paid at the date of the change
in control times the number of months payable and the average monthly incentive
bonus payments for the prior three taxable years times the number of months
payable. Also, medical, life and other insurance that was in effect at the date
of disposition will continue into the future for the number of months
compensation is payable. Under the Plan, Messrs. Johnsen and Olschan would be
entitled to thirty-six (36) months benefits and Messrs. Benkovic, Buchtmann and
Driscoll would be entitled to twenty-four (24) months benefits.
Severance Pay Plan
The Company has a Severance Pay Plan covering officers of the Company employed
in the United States at the level of Corporate Vice President or above who are
under the age of 65. This Plan presently covers Messrs. Johnsen, Olschan,
Benkovic, Buchtmann and Driscoll and is designed to enable the Company to
attract and retain key employees. The Plan provides that an officer will be paid
compensation if: (i) such officer's employment is terminated by the Company
involuntarily for any reason other than gross misconduct (ii) such officer's
responsibility, status or compensation is reduced, or (iii) such officer is
transferred to a location unreasonably distant from his/her current location. In
such circumstances, the compensation which the employee would be entitled to
receive would be a lump sum payment equal to one months' compensation for each
year of service to the Company based upon the level of his/her compensation in
effect immediately preceding such termination. The Plan sets out a minimum and
maximum number of months' compensation payable to each such employee upon such
severance. Under the Plan Messrs. Johnsen and Olschan would be entitled to a
minimum of (9) months' compensation and a maximum of thirty (30) months'
compensation. Messrs. Benkovic, Buchtmann and Driscoll would be entitled to a
minimum of six (6) months' compensation and a maximum of eighteen (18) months'
compensation. This plan applies only if the Salary Continuation Plan does not
apply. Death benefits are also covered by this Plan. Under the Plan, the
beneficiaries of Messrs. Johnsen and Olschan would receive nine (9) months'
compensation and the beneficiaries of the other officers would receive six (6)
months' compensation.
(14)
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. The Audit Committee has reviewed and discussed our
audited consolidated financial statements for the year ended December 31, 2005,
with management and with representatives of Ernst & Young LLP, our independent
auditors, including a discussion of the applicability and quality of accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
Management has the primary responsibility for the financial statements and our
accounting, auditing and financial reporting processes. The Audit Committee is
not providing any expert or special assurance as to our financial statements.
Ernst & Young LLP is responsible for expressing an opinion on the conformity of
our financial statements with generally accepted accounting principles in the
United States. The Audit Committee is not providing any professional
certification as to Ernst & Young's work product.
The Audit Committee has discussed with representatives of Ernst & Young the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Audit Committee has received and
reviewed the written disclosures and letter from Ernst & Young required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and has discussed the independence of Ernst & Young with
representatives of the firm.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plan for their respective audits. The Audit Committee met with
the independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting.
Based on the reviews and discussion referred to above, the Audit Committee
recommended to the Board of Directors that our audited consolidated financial
statement for the year ended December 31, 2005 be included in our Annual Report
on Form 10-K for the year ended December 31, 2005 for filing with the Securities
and Exchange Commission.
Stevenson E. Ward, III, Chair
Richmond Y. Holden, Jr., Member
Wayne R. Moore, Member
(15)
Compensation Committee Report on Executive Compensation
The Compensation Committee is committed to a strong, positive link between
business, performance and strategic goals, and compensation and benefit
programs.
Overall Executive Compensation Policy
-------------------------------------
Our compensation policy is designed to support the overall objective of
enhancing value for our shareholders by:
- Attracting, developing, rewarding and retaining highly qualified and
productive individuals.
- Directly relating compensation to both Company and individual
performance.
- Ensuring compensation levels that are externally competitive and
internally equitable.
Following is a description of the elements of the Company's executive
compensation program and how each relates to the objectives and policy outlined
above.
Base Salary
-----------
The Committee reviews each executive officer's salary annually. In determining
appropriate salary levels, we consider level and scope of responsibility,
experience, company and individual performance, internal equity, as well as pay
practices of other companies relating to executives of similar responsibility.
By design, we strive to set executives' salaries at competitive market levels.
Annual Incentives
-----------------
Annual incentive cash award opportunities are made available to executives to
recognize and reward corporate and individual performance. The plan in effect
for 2005 provided for an incentive bonus based on the achievement of corporate
profitability goals and objectives set for each individual, based upon his/her
area of responsibility. The amount individual executives may earn under the
bonus plan is directly dependent upon the individual's position, responsibility
and ability to impact our financial success and corporate goals. The bonuses
awarded in 2005 to top management are listed in the Summary Compensation Table.
Stock Option Incentives
-----------------------
The Company's stock option compensation program is administered by the Board of
Directors, which acts upon recommendations of the Compensation Committee. The
purpose of the Company's Employee Stock Option Plan is to promote the interests
of the Company by enabling its key employees to acquire an increased proprietary
interest in the Company and thus to share in the future success of the Company's
business. Accordingly, the plan is intended as a means not only of attracting
and retaining outstanding management personnel but also of promoting a closer
identity of interests between employees and shareholders. Since the employees
eligible to receive options under the plan will be those who are in a position
to make important and direct contributions to the success of the Company, the
Board believes that the grant of options under the plan has been and will
continue to be in the best interests of the Company.
(16)
The Company's Amended and Restated Employee Stock Option Plan terminated on
February 24, 2002 and options granted under that Plan continue to vest and to be
exercisable in accordance with their terms; however, no new options may be
granted under the Plan after February 24, 2002.
The Company adopted a new stock option plan, the Employee Stock Option Plan,
effective February 26, 2002 authorizing the grant of options to purchase up to a
total of 150,000 shares of Common Stock. The Plan was further amended on April
25, 2005 to authorize the grant of options to purchase a total of 300,000 shares
of Common Stock.
Rationale for CEO Compensation
------------------------------
Walter C. Johnsen was designated President and Chief Executive Officer of the
Company effective on November 30, 1995. His compensation package was designed to
encourage performance in line with the interests of our shareholders. We believe
Mr. Johnsen's total compensation was competitive in the external marketplace and
reflective of Company and individual performance.
Compensation Committee
----------------------
Richmond Y. Holden, Jr, Chairman
George R. Dunbar, Vice Chairman
Susan M. Murphy
Gary D. Penisten
The Compensation Committee Report on Executive Compensation shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
Certain Transactions
There were no material transactions between the Company and any officer of the
Company, any director or nominee for election as director, any security holder
holding more than 5% of the Common Stock of the Company or any relative or
spouse of any of the foregoing persons.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company Common Stock (collectively referred to herein as
"Reporting Persons"), to file with the SEC and the American Stock Exchange
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Reporting Persons are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on review of copies of such forms received by the
Company or written representations from Reporting Persons, the Company believes
that, during the 2005 fiscal year, all Reporting Persons complied with all
applicable filing requirements under Section 16(a).
(17)
Equity Compensation Plan Information
The following table sets forth the aggregate information of the company's equity
compensation plans (the Non-Salaried Director Stock Option Plan and the Employee
Stock Option Plan) in effect as of December 31, 2005.
--------------------------- -------------------------------- ---------------------------- ----------------------------
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity compensation plans,
exercise of exercise price of (excluding securities
outstanding options, outstanding options, reflected in
warrants and rights warrants and rights column (a))
Plan Category (a) (b) (c)
--------------------------- -------------------------------- ---------------------------- ----------------------------
--------------------------- -------------------------------- ---------------------------- ----------------------------
Equity compensation 471,450 $6.56 151,188
plans approved by
security holders
--------------------------- -------------------------------- ---------------------------- ----------------------------
Equity compensation
plans not approved by -0- -0- -0-
security holders
--------------------------- -------------------------------- ---------------------------- ----------------------------
Total 471,450 $6.56 151,188
--------------------------- -------------------------------- ---------------------------- ----------------------------
No equity compensation plans have been adopted without security holder approval.
Performance Graph
The following Performance Graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
The graph compares the yearly cumulative total shareholder return on the
Company's Common Stock with the yearly cumulative total return of (a) the AMEX
Market Index and (b) a peer group of companies that, like the Company, (i) are
currently listed on the American Stock Exchange, and (ii) have a market
capitalization of $45 million to $55 million.
(18)
The Company does not believe it can reasonably identify a peer group of
companies on an industry or line-of-business basis for the purpose of developing
a comparative performance index. While the Company is aware that some other
publicly-traded companies market products in the Company's line-of-business,
none of these other companies provide most or all of the products offered by the
Company, and many offer other products or services as well. Moreover, some of
these other companies that engage in the Company's line-of-business do so
through divisions or subsidiaries that are not publicly-traded. Furthermore,
many of the other companies are substantially more highly capitalized than the
Company. For these reasons, any such comparison would not, in the opinion of the
Company, provide a meaningful index of comparative performance.
The comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, the possible future performance of the
Company's Common Stock.
(Printer: Insert Graph)
COMPARISON OF CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND
AMEX MARKET INDEX
--------------------------------FISCAL YEAR ENDING------------------------------
2000 2001 2002 2003 2004 2005
ACME UNITED CORP 100.00 138.64 133.67 191.97 560.95 502.05
PEER GROUP 100.00 65.64 48.19 70.30 69.80 63.45
AMEX MARKET INDEX 100.00 95.39 91.58 124.66 142.75 157.43
SELECTION OF AUDITORS
Audit Committee Pre-Approval of Independent Auditor Services
The Audit Committee pre-approves all audit and permissible non-audit services
provided by the independent auditors. These services may include audit services,
audit-related services, tax services and other services. The Audit Committee has
adopted policies and procedures for the pre-approval of services provided by the
independent auditors. The policies and procedures provide that management and
the independent auditors jointly submit to the Audit Committee a schedule of
audit and non-audit services for approval as part of the annual plan for each
year. In addition, the policies and procedures provide that the Audit Committee
may also pre-approve particular services not in the annual plan on a
case-by-case basis. For each proposed service, management must provide a
detailed description of the service and the projected fees and costs (or a range
of such fees and costs) for the service.
Fees to Auditors
Set forth below is a description of the fees for professional audit services
rendered by Ernst & Young LLP for the audit of our annual financial statements
and review of our interim financial statements for 2004 and 2005, and fees for
other services rendered by Ernst & Young LLP for 2004 and 2005.
Fee Category Fiscal 2005 Fees Fiscal 2004 Fees
------------ ---------------------- ----------------------
Audit Fees $183,000 $186,000
Audit Related Fees $ 31,000 $ 5,000
Tax Fees $ 28,000 $ 35,000
All Other Fees $ 0 $ 0
---------------------- ----------------------
Total Fees $242,000 $226,000
====================== ======================
(19)
Audit Related Fees. These fees were for pension audits and financial reporting
consultation.
Tax Fees. Tax services included tax compliance, tax advice, and tax planning.
The Audit Committee has determined that the provision of non-audit services
described above is compatible with maintaining Ernst & Young's independence.
Appointment of Auditors
The Company's Audit Committee has not yet appointed an independent auditor to
audit the financial statements of the Company for the fiscal year ending
December 31, 2006 because the Audit Committee is currently reviewing proposed
fees for audit and related work. The Audit Committee is not aware of any
disagreements between management and the Company's current auditors regarding
accounting principles and their application or otherwise.
Representatives of Ernst & Young LLP are expected to be present at the 2006
Annual Meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions. The
Company knows of no direct or material indirect financial interest in the
Company or of any connection with the Company by this accounting firm except the
professional relationship between auditor and client.
(20)
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE 2007 ANNUAL MEETING
If you intend to present a proposal at our 2007 Annual Meeting, you must submit
it to us by no later than November 28, 2006, to receive consideration for
inclusion in our 2007 proxy materials. If you intend to present a proposal at
our 2007 Annual Meeting that is not to be included in our 2007 proxy materials,
you should send the proposal to us in writing by February 9, 2007. Any such
proposal should be sent to the Corporate Secretary of the Company at 60 Round
Hill Road, Fairfield, Connecticut, 06824.
OTHER BUSINESS
Management does not know of any matters to be presented, other than those
described herein, at the Annual Meeting. If any other business should come
before the meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies in accordance with their best
judgment.
By Order of the Board of Directors
Paul G. Driscoll, Vice President and
Chief Financial Officer, Secretary
and Treasurer
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824
March 28, 2006
(21)
PROXY
ACME UNITED CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ACME
UNITED CORPORATION FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON APRIL 24, 2006
The undersigned, hereby appoints Gary D. Penisten and Walter Johnsen,
and each of them, with full powers of substitution, to act as attorneys and
proxies of the undersigned, to vote all shares of the Common Stock of ACME
UNITED CORPORATION, held of record by the undersigned on March 7, 2006 at the
Annual Meeting of Shareholders, to be held at the American Stock Exchange at 86
Trinity Place, New York, New York on Monday, April 24, 2006, at 11:00 a.m. and
at any adjournment(s) or postponement(s) thereof, with all the powers the
undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them hereby is,
instructed to vote or act as follows on the reverse side hereof on the proposals
set forth in said Proxy Statement. In their discretion, the proxies are
authorized to vote upon such other matters, if any, as may properly come before
the Annual Meeting.
SEE REVERSE CONTINUED AND TO BE COMPLETED, SIGNED AND SEE REVERSE
SIDE DATED ON REVERSE SIDE SIDE
--------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NINE NOMINEES
FOR DIRECTORS LISTED BELOW.
1. Election of Directors
Nominees:
Walter C. Johnsen Stevenson E. Ward III
Gary D. Penisten Susan H. Murphy
George R. Dunbar Rex L. Davidson
Richmond Y. Holden, Jr. Stephen Spinelli, Jr.
Brian S. Olschan
[ ] FOR all nominees listed above (except as stricken out above).
(To withhold authority to vote for any specific nominee(s), check
the foregoing box and strike out or line through such nominee's
name on the list above.)
[ ] WITHHELD for all nominees listed above
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
Signature: Date:
---------------------------------------------- -----------------
Signature: Date:
---------------------------------------------- -----------------
Detach above card, sign, date and mail in postage paid envelope provided.
ACME UNITED CORPORATION
60 Round Hill Road
Fairfield, Connecticut 06824
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| THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS |
| |
| The above signed acknowledges receipt from the Company prior to the |
| execution of this proxy a Notice of Annual Meeting of Shareholders, a |
| Proxy Statement dated March 28, 2006 and the 2005 Annual Report to |
| Stockholders. |
| |
| Please sign exactly as your name appears of this Proxy. When signing |
| as an attorney, executor, administrator, trustee or guardian, please |
| give your full title. If shares are held jointly, each holder should |
| sign. |
| |
| PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE |
| ENCLOSED POSTAGE-PREPAID ENVELOPE |
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