acme_def14a2010.htm
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
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14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive Addition
Materials
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Soliciting Material Pursuant to
§240.14a-12
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Acme United
Corporation |
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of Registrant as specified in Its Charter) |
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March 23,
2010
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 19, 2010 at 11:00 A.M., local time, at the Cornell Club, 6 East
44th Street, New York, New York. I look forward to greeting
personally those shareholders able to attend.
At the
Meeting, shareholders will be asked to elect six directors to serve for a
one-year term, to approve an amendment to the Company’s Employee Stock Option
Plan to increase the number of shares authorized to be issued under the plan,
and to ratify the appointment of our independent registered public accounting
firm for the fiscal year ending December 31, 2010. 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 card 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
Chairman
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 19, 2010
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 19, 2010, at 11:00 A.M., local time, at the Cornell Club, 6 East 44th
Street, New York, New York, for the following purposes:
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1.
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To
elect six (6) Directors of the
Company;
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2.
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To
consider and vote upon an amendment to the Company’s Employee Stock
Option Plan to increase the number of shares authorized to be issued
thereunder from 610,000 to 760,000, an increase of 150,000
shares;
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3.
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To
consider and vote upon the ratification of the appointment of our
independent registered public accounting firm for the fiscal year ending
December 31, 2010; and
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4.
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To
transact such other business as may properly come before the
Meeting.
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Shareholders
of record at the close of business on March 3, 2010 are entitled to receive
notice of and to vote at the Meeting and at any adjournment
thereof.
Please
carefully read the attached Proxy Statement for information regarding the
matters to be considered and acted upon at the Meeting. Your Board of
Directors recommends that you vote in favor of Proposals 1, 2, and 3
above. You are cordially invited to attend the Meeting and we hope that
you will do so.
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.
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By
Order of the Board of Directors, |
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Paul G.
Driscoll |
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Vice
President and Chief Financial Officer,
Secretary
and Treasurer
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March 23,
2010
Fairfield,
Connecticut
Acme
United Corporation
60
Round Hill Road
Fairfield,
Connecticut 06824
ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON
April
19, 2010
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 19, 2010, at 11:00 A.M., local time, at the
Cornell Club, 6 East 44th Street, New York, New York or at any adjournment or
postponement thereof (the “Meeting”). This Proxy Statement and the enclosed
Proxy Card are being furnished on or about March 24, 2010 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 3, 2010. A copy of the
Company’s 2009 Annual Report to Shareholders, including consolidated financial
statements for the fiscal year ended December 31, 2009, accompanies this Proxy
Statement.
At the
Meeting, shareholders will:
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elect
six (6) Directors to serve until the next annual meeting ( Proposal
1);
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consider
and vote upon a proposal to amend the Company’s Employee Stock Option Plan
to increase the number of shares authorized to be issued under the plan
from 610,000 to 760,000, an increase of 150,000 shares (Proposal 2);
and
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consider
and vote upon a proposal to ratify the appointment of the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2010 (Proposal 3).
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING
TO BE HELD ON APRIL 19, 2010.
The
Notice of Annual Meeting of Shareholders, this Proxy Statement, Proxy card, and
the 2009 Annual Report to Shareholders are available at the following website
address: www.proxy. acmeunited.com.
Voting
Securities, Record Date and Quorum
Record Date.
The Board of Directors has fixed the close of business on March 3, 2010 as the
record date (the “Record Date”) for determination of shareholders entitled to
receive notice of and to vote at the Meeting. As of the Record Date,
there were 3,174,109 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 in person or by proxy 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.
On July
1, 2009, the SEC approved the New York Stock Exchange’s (“NYSE”) proposed rule
change that eliminates broker discretionary voting in uncontested director
elections. If you hold your shares through a broker, your broker is
permitted to vote your shares on “routine” matters, even if the broker does not
receive instructions from you. However, the NYSE no longer considers
the election of directors to be routine, so your broker may not vote your shares
on those proposals without receiving instructions from you.
Amendment of the
Employee Stock Option Plan. To be approved, the proposal to
increase the number of shares which are authorized for issuance upon exercise of
options granted under the Employee Stock Option Plan must receive the
affirmative vote of a majority of the shares of Common Stock cast in person or
by proxy at the meeting. Uninstructed shares are not entitled to vote
on this proposal; accordingly, broker non-votes will not affect the outcome of
the vote on the proposal. Abstentions also will not affect the
outcome of the vote on the proposal.
Ratification of the
Appointment of Our Independent Registered Accounting Firm. To
be approved, the proposal to ratify the appointment of our independent
registered accounting firm for the fiscal year ending December 31, 2010 must
receive the affirmative vote of a majority of the shares of Common Stock cast in
person or by proxy at the meeting. Abstentions and broker non-votes
will not be taken into account in determining the outcome of the vote on this
proposal.
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.
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 (i) giving written notice of revocation to
the Secretary of the Company, (ii) submission of a proxy bearing a later date or
(iii) by attending the Meeting in person and casting a ballot.
The proxy holders, Walter C. Johnsen and Susan H.
Murphy, 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. The
Company has engaged Mackenzie Partners, Inc. to assist in the solicitation of
votes and the distribution of proxy materials for a fee of $5,000, plus
out-of-pocket expenses.
Governance
of the Company
Board
of Directors
The
By-laws of the Company provide that the Company shall have a Board of Directors
of not fewer than five or more than nine directors, as fixed by the Board from
time to time. The number of directors is presently fixed at
six. Directors serve until the next annual meeting of shareholders
and until their respective successors have been elected and
qualified.
The
Company has determined to combine the positions of its Chief Executive Officer
and Chairman of the Board. In making this determination, the Board of
Directors considered a number of factors, including the size of the Board in
relation to the scope of the Company’s operations, the efficiencies obtained by
combining the positions and the fact that the combination of the positions
facilitates the alignment of the Board’s agenda with its oversight
responsibilities relating to the business and operations of the
Company. The Company does not have a lead independent
Director.
Board
of Director Meetings and Committees
The Board
of Directors held seven meetings in 2009. All Directors attended at least 75% of
the aggregate of the total number of the Board meetings and meetings of
committees of the Board of which they were a member. The Board of
Directors has established standing Executive, Audit, Compensation and Nominating
Committees, each of which is comprised solely of independent non-employee
members of the Board of Directors.
Independence
Determinations
The Board
of Directors annually determines the independence of directors. No
director is considered independent unless the Board has determined that he or
she has no material relationship with the Company, either directly or as a
partner, shareholder, or officer of an organization that has a material
relationship with the Company or otherwise. Material relationships
can include commercial, banking, consulting, legal, accounting, charitable, and
familial relationships, among others.
Independent
directors are directors who, in the view of the Board of Directors, are free of
any relationship that would interfere with the exercise of independent judgment.
Under NYSE Amex (formerly, the American Stock Exchange) rules, the following
persons are not considered independent:
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(a)
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a
director who is or was employed by the Company or any of its affiliates
for the current year or any of the past three
years;
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(b)
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a
director who accepted or who has an immediate family member who accepted
any compensation from the Company or any of its affiliates in excess of
$120,000 during any period of twelve consecutive months within the three
years preceding the determination of independence (other than certain
specified types of compensation, including, e.g., compensation for Board
or Committee service, benefits under a tax-qualified retirement plan, or
non-discretionary compensation);
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(c)
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a
director who is a member of the immediate family of an individual who is,
or has been in any of the past three years, employed by the Company as an
executive officer;
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(d)
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a
director who is, or has an immediate family member who is, a partner in,
or a controlling shareholder or an executive officer of, any organization
to which the Company made, or from which the Company received payments
(other than those arising solely from investments in the Company’s
securities) that exceed 5% of the organization’s consolidated gross
revenues for that year, or $200,000, whichever is more, in any of the past
three years;
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(e)
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a
director who is, or has an immediate family member who is employed as an
executive of another entity where at any time during the most recent three
fiscal years, any of the Company’s executive officers serve on that other
entity’s compensation committee;
and
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(f)
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a
director who is, or has an immediate family member who is, a current
partner of the Company’s outside auditor, or was a partner or employee of
the Company’s outside auditor who worked on the Company’s audit at any
time during any of the past three fiscal
years.
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Immediate
family includes a person’s spouse, parents, children, sibling, mother-in-law,
father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, and
anyone who resides in such person’s home.
Mr.
Johnsen, Chairman of the Board, serves as Chief Executive Officer of the
Company, and Mr. Olschan, a member of the Board, serves as President and Chief
Operating Officer of the Company. The Board has determined that all of the other
current directors are “independent” within the meaning of the applicable listing
standards of the NYSE Amex. These independent directors
are: Mr. Davidson, Mr. Holden, Ms. Murphy, and Mr. Ward, each of whom
is standing for re-election.
Nominations
for Directors
The
functions of a Nominating Committee have been historically performed by the
whole Board. A majority of the Board’s independent directors (as such
term is defined in Section 803A of the NYSE Amex’s listing standards) would
recommend nominees for consideration by the full Board, including the nominees
standing for election at the Meeting.
In
February 2009, the Board of Directors organized a Nominating Committee,
described below under “Committees of the Board.” The Board continues
to be responsible for nominating director nominees to stand for election at each
annual meeting of shareholders and for filling vacancies on the Board at any
time during the year. The Nominating Committee reviews all potential director
candidates, and recommends potential director candidates to the full
Board. The Nominating Committee will also consider nominations by
shareholders, as described below. The full Board reviews and has
final approval authority on all potential director candidates being recommended
to the shareholders for election.
In
considering candidates for new membership or incumbents for continued membership
on the Board of Directors of the Company, the Nominating Committee will consider
the factors set forth below, together with any other factors the Committee deems
appropriate from time to time. The Committee generally seeks (i)
active or former senior level executives of public companies or other complex
organizations who have experience at a strategy/policy setting level or with
high level management experience; (ii) persons whose background and experience
are in areas important to the operations or management of the Company; and (iii)
qualified individuals who, taken together, represent a diversity of skills,
background and experience. Each potential nominee:
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(a)
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should
be accomplished and have recognized achievements in his or her respective
and professional field;
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(b)
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should
have relevant expertise and experience, and be able to offer advice and
guidance to senior management based on that expertise and
experience;
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(c)
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must
possess high personal and professional ethics, integrity and
values;
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(d)
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must
be inquisitive and objective, have the ability to exercise practical and
sound business judgment, and have an independent
mind;
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(e)
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must
be able and willing to devote sufficient time and effort to carrying out
his or her duties and responsibilities as a director
effectively;
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(f)
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should
be “independent” under the rules established by the NYSE Amex;
and
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(g)
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should
have the ability to work effectively with
others.
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The
Nominating Committee will commence its evaluation of candidates on the basis of
materials submitted by or on behalf of the candidate and on the basis of the
knowledge of members of the Nominating Committee and management regarding the
candidate. To the extent the Nominating Committee does not have enough
information to evaluate a candidate the Nominating Committee may send a
questionnaire to the candidate for completion in enough time for Nominating
Committee consideration. In addition, it has historically been customary for
some members of the Board to meet with the candidate individually or in small
groups, as appropriate. Members of the Nominating Committee will also interview
candidates as it deems appropriate.
The
Nominating Committee considers diversity in identifying nominees for
Director. The Nominating Committee seeks qualified individuals, who,
taken together, represent a diversity of skills, background and
experience. In considering a potential nominee’s background and
experience, the Nominating Committee will consider the individual’s race and
gender.
Any
shareholder entitled to vote for election of directors at a meeting may nominate
persons for election as directors if, as more fully provided in Section 11 of
the By-laws, the shareholder provides written notice of such shareholder’s
intent to make such nomination at least sixty (60) days prior to the annual
meeting at which the election of directors is to be held. If directors were to
be elected at a special meeting of shareholders, the written notice of the
shareholders intent to make a nomination must be provided to the Company not
later than the close of business of the seventh day following the date on which
notice of the special meeting is first given to shareholders. The
nomination must be sent in care of the Secretary of the Company at 60 Round Hill
Road, Fairfield, CT 06824, and must include, among other information, the name,
address, telephone number and resumé of the nominee’s 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.
The Board
will consider nominees for directors properly recommended by shareholders, as
described above. The Board follows the same evaluation procedures
whether a candidate is recommended by directors or shareholders.
Committees
of the Board
Executive
Committee
The
Executive Committee of the Board of Directors is composed of Mr. Holden, who
serves as Chairman, and Mr. Ward. 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 held one meeting in
2009.
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 NYSE Amex. 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 NYSE
Amex.
The
Committee consists of Mr. Ward, Chairman, and Messrs. Holden and
Davidson. The Audit Committee meets at least quarterly, and more
often as needed. The Committee met seven times in
2009. The Board of Directors has adopted a written charter for the
Audit Committee, which is reviewed annually by the Audit Committee. A
copy of the Audit Committee charter is available on the Company’s website at
www.acmeunited.com
in the Investor Relations/Corporate Governance section.
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 Compensation
Committee does not have a charter. The Board of Directors has
determined that all members of the Compensation Committee are “independent”
within the meaning of the applicable listing standards of the NYSE
Amex. The Committee consists of Mr. Holden, Chairman, Mr. Davidson
and Ms. Murphy. The Committee held two meetings during
2009.
Nominating
Committee
The
Nominating Committee assists the Board in identifying individuals qualified to
become Board members and recommends director nominees to be nominated by the
Board to stand for election as directors at each annual meeting of shareholders
of the Company and to fill vacancies on the Board and any newly created
directorships. The Nominating Committee was organized in February
2009 and consists of Mr. Holden, Chairman, Mr. Davidson and Mr.
Ward. The Board of Directors has determined that all members of the
Nominating Committee are “independent” within the meaning of the applicable
listing standards of the NYSE Amex. The Nominating Committee will
meet at least once a year and more often as needed. The Committee
held four meetings during 2009.The Board of Directors has adopted a written
charter for the Nominating Committee which will be reviewed annually by the
Nominating Committee; a copy of the charter is available on the Company’s
website at www.acmeunited.com
in the Investor Relations/Corporate Governance section.
Board’s
Role in Oversight of Risk Management.
The
Company’s Board of Directors as a whole exercises risk oversight in connection
with risk in its various forms, including credit risk, liquidity risk, and
operational risk. The Board discusses with management the steps
management will take to monitor and control the Company’s exposure to such
risks. The Board administers these functions, in part, with the
assistance of the Audit Committee of the Board, particularly with regard to
financial risk exposures.
A key
element of the Board’s risk oversight process is the Company’s annual Strategic
Planning meeting, a two day meeting held early in the third quarter of each
year. At this meeting, the Board meets with senior management of the
Company to identify both risks and opportunities facing the
Company. The senior management includes the Company’s Chief Executive
Officer, President, Chief Financial Officer and the heads of product
development, technology, production, sourcing, marketing and supply
chain. The Board and members of senior management continue their
discussions of various risk-related matters, as appropriate, throughout the year
at the regularly scheduled meetings of the Board.
The Board
believes that the foregoing procedures enable it to properly perform its risk
oversight, particularly since the Company is not highly leveraged and does not
utilize complex financial derivative instruments.
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. In 2009, all six then incumbent members of the
Board attended the 2009 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.
PROPOSAL
1:
ELECTION
OF DIRECTORS
Six
directors are to be elected at the Meeting to serve for one-year terms until the
2011 Annual Meeting of Shareholders and until their respective successors are
elected and qualified. A plurality of the votes cast at the Meeting is required
to elect each of the nominees for Director. The Board has determined
to nominate six individuals for election to the Board of Directors, each of whom
is presently an incumbent director. 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 as a director 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
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Principal
Occupation
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Director
Since
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Walter
C. Johnsen
(age
59)
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Chairman
of the Board and Chief Executive Officer of the Company since January 1,
2007; President and Chief Executive Officer of the Company from November
30, 1995 to December 31, 2006. He formerly served as Vice
Chairman and a principal of Marshall Products, Inc., a medical supply
distributor. Mr. Johnsen’s qualifications to serve on the Board include
the in-depth knowledge of all facets of the Company’s business which he
has gained during his more than fifteen years of service as the Company’s
Chief Executive Officer.
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1995
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Richmond
Y. Holden, Jr.
(age
56)
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Since
May 2007, President of Educators Publishing Service, a supplementary
publisher of education materials and a subsidiary of School Specialty
Inc. He served as President and Chief Executive Officer of J.L.
Hammett Co., a reseller of educational products from 1992 to 2006. The
qualifications of Mr. Holden to serve on the Board include his senior
management level experience of large complex companies in the educational
markets. In particular, as a result of his experience with
School Specialty Inc., a $1 billion reseller of educational products, Mr.
Holden has broad knowledge of educational markets and operational matters
relating to educational products, such as marketing, sourcing, pricing and
distribution.
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1998
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Brian
S. Olschan
(age
53)
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President
and Chief Operating Officer of the Company since January 1, 2007;
Executive Vice President and Chief Operating Officer of the Company from
January 1999 to December 31, 2006; Senior Vice President - Sales and
Marketing of the Company from September 1996 to January 1999. He formerly
served as Vice President and General Manager of the Cordset and Assembly
Business of General Cable Corporation, an electrical wire and cable
manufacturer. Mr. Olschan’s qualifications to serve on the
Board include his detailed knowledge of the Company’s operations which he
has gained in his capacity as a member of senior management for more than
eleven years, including as Chief Operating Officer since January 1999 and
President since January 2007.
|
2000
|
Stevenson
E. Ward III
(age
64)
|
Vice
President and Chief Financial Officer of Triton Thalassic Technologies,
Inc. since September 2000. Triton’s technology controls and inactivates
pathogens in the healthcare and industrial industries. From 1999 through
2000, Mr. Ward served as Senior Vice President-Administration of
Sanofi-Synthelabo, Inc., a major pharmaceutical company. He
also served as Executive Vice President (1996-1999) and Chief Financial
Officer (1994-1995) of Sanofi, Inc., and Vice President-Finance,
Pharmaceutical Group, Sterling Winthrop, Inc. (1992-1994). Prior to
joining Sterling he was employed
by General Electric Company with management positions in Purchasing,
Corporate Audit and Finance. Mr. Ward’s qualifications for
service on the Board include his extensive experience in senior executive
level finance positions at Fortune 100 multinational
corporations.
|
2001
|
Susan
H. Murphy
(age
58)
|
Vice
President for Student and Academic Services, Cornell University, since
1994; Dean of Admissions and Financial Aid from 1985 to 1994. Ms. Murphy
has been employed at Cornell since 1978. Ms. Murphy received a Ph.D. from
Cornell University. Ms. Murphy has broad senior management level
experience in a large, complex organization. In
particular, her experience in employee compensation matters and the
development and implementation of diversity policies is helpful to the
Company.
|
2003
|
Rex
L. Davidson
(age
60)
|
President
of Rex Davidson Associates, LLC, a management consulting service and
Executive Director of Las Cumbres Community Services which provides
developmental disability and mental health services to children,
adults and families in Northern New Mexico. Past President and Chief
Executive Officer of Goodwill Industries of Greater New York and Northern
New Jersey, Inc., and Past President of Goodwill Industries Housing
Corporation. Mr. Davidson’s qualifications to serve on the
Board include significant management experience at the highest level,
having been responsible for the management of an organization with over
2,000 employees and revenues in excess of $100 million. Mr.
Davidson’s experience in the areas of compensation of personnel at all
levels, his experience relating to retail matters, such as retail trends
and pricing, and diversity policies are of significant benefit to the
company.
|
2006 |
OWNERSHIP
OF ACME UNITED CORPORATION STOCK
PRINCIPAL
SHAREHOLDERS
The
following table sets forth certain information, as of March 1, 2010, with
respect to the beneficial ownership of shares of Common Stock by any person who,
to the knowledge of the Company, owned beneficially more than 5% of the
outstanding shares of Common Stock of the Company.
Shareholder
|
Type
of Ownership
|
Number
of Shares Beneficially Owned (1)
|
Percent
of Class
|
Walter
C. Johnsen
60
Round Hill Road
Fairfield,
CT 06824
|
Direct
|
561,722
(5)
|
17.4
|
First
Wilshire Securities Management, Inc
1124
E. Green St., Suite 200
Pasadena,
CA 91106
|
Direct
|
245,802
*
|
7.7
|
North
Star Investment Management
20
N. Wacker Dr., Suite 1416
Chicago,
Il 60606
|
Direct
|
217,110**
|
6.8
|
*Based on
the reporting person’s Schedule 13G dated February 17, 2010.
**Based
on the reporting person’s Form 13F dated January 29, 2010.
SECURITY
OWNERSHIP OF DIRECTORS AND OFFICERS
The
following table sets forth certain information, as of March 1, 2010, 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 indicated below in the notes to the table.
The
address of each person appearing in the table is 60 Round Hill Road, Fairfield,
CT 06824.
Name
of Beneficial Owner
|
Number
of Shares Beneficially Owned (1)
|
Percent
|
Rex
L. Davidson (2)
|
14,000
|
*
|
Paul
G. Driscoll (3)
|
58,395
|
1.8
|
Richmond
Y. Holden, Jr. (4)
|
32,000
|
1.0
|
Walter
C. Johnsen (5)
|
561,722
|
17.4
|
Susan
M. Murphy (6)
|
24,006
|
*
|
Brian
S. Olschan (7)
|
146,000
|
4.5
|
Stevenson
E. Ward III (8)
|
27,200
|
*
|
Executive
officers and directors
as
a group (7 persons)
|
863,323
|
26.7
|
*Less
than 1.0%
(1)
|
Based
on a total of 3,174,109 shares outstanding as of March 1,
2010. Under applicable rules promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), 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, whether by exercise of stock options or
otherwise.
|
(2)
|
Includes
14,000 shares issuable upon exercise of
options.
|
(3)
|
Includes
54,250 shares issuable upon exercise of
options.
|
(4)
|
Includes
26,500 shares issuable upon exercise of
options.
|
(5)
|
Includes
53,750 shares issuable upon exercise of
options.
|
(6)
|
Includes
20,500 shares issuable upon exercise of
options.
|
(7)
|
Includes
97,500 shares issuable upon exercise of
options.
|
(8)
|
Includes
14,000 shares issuable upon exercise of
options.
|
EXECUTIVE
COMPENSATION
Our
compensation policies and programs for our executive officers are designed to
support the overall objective of enhancing value for our
shareholders. To achieve this objective, it is critical that we be
able to attract, motivate, reward and retain highly qualified and productive
individuals. This is to be accomplished by:
·
|
directly
relating compensation to both Company and individual
performance;
|
·
|
structuring
compensation levels to be externally competitive and
internallyequitable;
|
·
|
enabling
key employees to share in the future success of the Company
by acquiring equity interests in the Company;
and
|
·
|
designing
compensation programs to provide an optimal combination of costs to the
Company and value to our employees.
|
In 2009,
the compensation and benefits for our executive officers consisted of four
components:
·
|
a
cash incentive bonus award;
|
·
|
stock
option awards; and
|
Base
Salaries
The base
salaries for our officers are set annually and reflect skills and experience,
level and scope of responsibility and performance during the prior year and
historical, long-term performance. The Compensation Committee also
considers external factors, such as cost of living in the areas in which our
officers reside and current market conditions. During 2009, the Chief
Executive Officer participated in discussions with the Committee regarding the
base salary amounts of the executive officers.
Cash Bonus
Plan
The
Company grants cash incentive awards under our Cash Bonus Plan based upon the
achievement of both Company and individual performance objectives. The Company
generally makes cash awards under this Plan if the Company achieves the minimum
level of net income set for the applicable year. However, the Company
may make awards at its discretion if the minimum levels of net income are not
attained due to unusual circumstances, but where the performance of individual
executive officers merit such awards.
Deferred
Compensation Plan
Under the
Company’s Deferred Compensation Plan for executives and key managers
participating in the Company’s Cash Bonus Plan, participants will be eligible to
make an irrevocable election on or before December 31st of each year as to the
percentage of his or her bonus to be awarded in the following
year. The deferral may be for all or a portion of the participant’s
payment under the Cash Bonus Plan. All deferred amounts are
non-forfeitable and earn the prime rate of interest plus 1% compounded quarterly
during the period of deferral. The Company adds 20% to the deferred
amount for each employee as a matching contribution up to a maximum of $10,000
annually. Amounts deferred are deferred until separation from service
with the Company. The plan is administered by the Deferred
Compensation Plan Committee, which consists of our Chief Executive Officer, the
Chief Operating Officer and the Chief Financial Officer.
Stock
Option Plan
The
Company's stock option program is administered by the Board of Directors, which
acts upon recommendations of the Compensation Committee. The purpose of the
Company's stock option program is to facilitate the acquisition of equity
interests in the Company by its officers and key employees and thus their
sharing in the future success of the Company's business. The Committee takes
into account factors such as: (i) the total number of shares of common stock
outstanding; (ii) the total number of shares of common stock which remain
available for grant under the Company's various stock option plans; and (iii)
the need to have an appropriate balance between currently paid and longer-term
compensation, and between cash and equity compensation.
Employee
Benefits
The
Company provides core employee benefits, including medical and dental coverage,
disability insurance and life insurance. The benefits available are
the same for all executive officers.
401(k)
Plan
The Acme
United Corporation 401(k) Profit Sharing Plan, or 401(k) plan, is the primary
retirement benefit offered to all United States employees of the
Company. Participants may generally contribute to the Plan annually
up to the maximum amount permitted under the Internal Revenue Code - $16,500 in
2009 ($22,000 for persons over age 50). The Company provides to
participants a matching contribution equal to fifty percent of the first six
percent of the participant’s eligible compensation not to exceed the limit on
eligible compensation imposed by the Internal Revenue Code – $245,000
in 2009.
Summary
Compensation Table
The
following table sets forth information concerning the compensation of the
Company’s Principal Executive Officer and each of the two other most highly
compensated executive officers of the Company for the fiscal years ended
December 31, 2009 and 2008. These three officers are referred to as
named executive officers, or NEOs.
Name
and Principal Position
|
Year
|
Salary ($)
|
Bonus
($)
(1)
|
Option
Awards
($)
(2)
|
Nonqualified
Deferred Compensation Earnings ($)
|
All
Other
Compensation
($)
|
Total
($)
|
Walter
C. Johnsen
Chairman
& Chief
Executive
Officer
|
2009
2008
|
$490,000
$472,116
|
-
$100,000
|
$82,950
$72,400
|
-
$5,000
|
$17,463
(3)
$11,192
(3)
|
$590,413
$660,708
|
Brian
S. Olschan
President
& Chief
Operating
Officer
|
2009
2008
|
$420,000
$405,692
|
-
$ 85,000
|
$59,250
$54,300
|
-
-
|
$
8,787 (4)
$
8,427 (4)
|
$488,037
$553,419
|
Paul
G. Driscoll
Vice
President-Chief
Financial
Officer
|
2009
2008
|
$242,000
$234,131
|
-
$ 57,500
|
$35,500
$36,200
|
-
$2,875
|
$
8,787 (4)
$
8,427 (4)
|
$286,287
$339,143
|
(1)
|
The
bonus reported includes bonuses for the fiscal year reported paid both
during and after the end of the fiscal
year.
|
(2)
|
Represents
the aggregate fair value of stock options on grant date rather than an
amount paid to or realized by the named executive officer. For
information on valuation assumptions, refer to the note on Stock Option
Plans in the notes to the Company’s financial statements in its Annual
Report on Form 10-K.
|
Each
option vests in four equal annual installments commencing on the first
anniversary of the grant date and thereafter on the annual anniversary of the
grant date. The exercise price of each option is equal to 100 percent
of fair market value on the grant date. The fair market value was
determined to be the closing price of the Common Stock on the trading day
immediately preceding the grant date.
The
options granted to NEOs in 2009 and 2008 had exercise prices of $7.90 per share
and $13.19 per share, respectively. The number of shares underlying
options granted to the NEOs in 2009 and 2008 are as follows:
Name
|
Number
of Shares
Underlying
Options
|
|
2009
|
2008
|
Walter
C. Johnsen
|
35,000
|
20,000
|
Brian
S. Olschan
|
25,000
|
15,000
|
Paul
G. Driscoll
|
15,000
|
10,000
|
(3)
|
Consists
of reimbursement of out-of-pocket health care expenses, payment of life
insurance premiums and Company matching contribution to the Company’s
401(k) Profit Sharing Plan.
|
(4)
|
Consists
of reimbursement of payments of life insurance premiums and Company
matching contribution to the Company’s 401(k) Profit Sharing
Plan.
|
Outstanding
Equity Awards at Fiscal Year-End
The
following table shows outstanding stock option awards classified as exercisable
and unexercisable as of December 31, 2009 for each of the NEOs.
Name
|
Number
of Securities Underlying Unexercised Options
(#) Exercisable
|
Number
of Securities Underlying Unexercised Options
(#) Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
(1)
|
Walter
C. Johnsen
|
10,000
20,000
11,250
7,500
5,000
|
-
-
3,750
7,500
15,000
35,000
|
$ 4.00
$ 15.65
$ 15.15
$ 14.93
$ 13.19
$ 7.90
|
6/23/13
4/28/15
7/31/16
6/12/17
8/06/18
6/08/19
|
Brian
S. Olschan
|
7,500
5,000
20,000
20,000
15,000
15,000
11,250
7,500
3,750
|
-
-
-
-
-
-
3,750
7,500
11,250
25,000
|
$ 1.63
$ 3.56
$ 2.75
$ 3.05
$ 4.00
$ 15.65
$ 15.15
$ 14.93
$ 13.19
$ 7.90
|
1/25/10
10/10/10
5/07/11
11/12/11
6/23/13
4/28/15
7/31/16
6/12/17
8/06/18
6/08/19
|
Paul
G. Driscoll
|
10,000
1,000
10,000
7,500
10,000
7,500
5,750
2,500
|
-
-
-
-
-
2,500
5,750
7,500
15,000
|
$
3.55
$
3.05
$
3.75
$
4.00
$
15.65
$
15.15
$
14.93
$
13.19
$
7.90
|
3/19/11
11/12/11
9/23/12
6/23/13
4/28/15
7/31/16
6/12/17
8/06/18
6/08/19
|
(1)
|
Each
option with an expiration date in 2015 or earlier vests in four equal
parts commencing on the day after the grant date and on each of the three
anniversary dates of the grant date. Options with an expiration
date after 2015 vest in four equal parts beginning on the first
anniversary of grant date and thereafter on each of the three anniversary
dates of the grant date. Each option has a ten-year
term.
|
Pension
Benefits
In
December 1995, the Board of directors adopted a resolution to freeze the
Retirement Plan resulting in no further benefit accruals after February 1, 1996.
None of the NEOs is a participant in the Pension Plan.
Change
in Control Arrangements—Salary Continuation Plan
The
Company has a Salary Continuation Plan that covers officers of the Company at
the level of Corporate Vice President or above, under the age of sixty-five
(65). The Plan 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. A covered officer would receive payment under
the Plan if there is a disposition of the Company and, within one year (or if
such employee is also a director, within two years) after such change in
control, one of the following triggering events occurs:
•
|
involuntary
termination;
|
•
|
a
reduction in responsibility, status or
compensation;
|
•
|
transfer
to a location unreasonably distant from his or her current location;
or
|
A
disposition of the Company shall include (i) a sale of substantially all the
assets of the Company or a successor, or of a Division with more than 50% of the
sales of the Company in the preceding full year of operations, such that
shareholder approval is required and (ii) the acquisition by any such person or
group of persons acting in concert, of legal or beneficial ownership of fifty
percent (50%) or more of the voting stock of the Company, or its
successor.
The
compensation provided to a covered officer upon disposition of the Company would
consist of the following:
•
|
monthly
salary rate being paid at the date of the change in control multiplied by
the number of months payable;
|
•
|
average
monthly incentive bonus payments for the prior three taxable years
multiplied by the number of months payable;
and
|
•
|
medical,
life and other insurance in effect at the date of disposition to continue
into the future for the number of months compensation is
payable.
|
Payment
of the first two items would be in a lump sum, payable no later than thirty (30)
days after the date on which the officer submits notice to the Board that the
officer wishes to exercise his or her rights under the Plan.
A
Director of the Company who is also an officer of the Company at the level of
Executive Vice President or above would be entitled to the value of thirty-six
(36) months’ compensation and benefits for thirty-six (36)
months. Officers at the level of Senior Vice President and Vice
President would be entitled to the value of twenty-four (24) months’
compensation and benefits for twenty-four (24) months.
The Plan
presently covers Walter C. Johnsen, Brian S. Olschan, Larry H. Buchtmann and
Paul G. Driscoll. Walter C. Johnsen and Brian S. Olschan would be
entitled to the value of thirty-six (36) months of compensation and
benefits. Larry H. Buchtmann and Paul G. Driscoll would be entitled
to the value of twenty-four (24) months of compensation and
benefits.
Severance
Pay Plan
The
Severance Pay Plan covers officers of the Company employed in the United States
at the level of Corporate Vice President or above, under the age of sixty-five
(65). The Plan is designed to enable the Company to attract and
retain key employees. A covered officer would receive payments under
the Plan if one of the following triggering events occurs:
• involuntary
termination for any reason other than gross misconduct;
• death;
• reduction
of responsibility, status or compensation reduced; or
• transfer
to a location unreasonably distant from his or her current
location.
This Plan
would only apply if the Salary Continuation Plan would not
apply. Payment under this Plan, except in the event of termination by
death, would be equivalent to one month’s salary multiplied by each year of
service to the Company based upon the level of his or 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. The Plan would also provide death benefits to covered
officers’ beneficiaries.
A
Director of the Company who is also an Officer of the Company at the level of
Executive Vice President or above would be entitled to a minimum of nine (9)
months’ compensation and a maximum of thirty (30) months’
compensation. In the event of such officer’s death, his or her
beneficiaries would be entitled to nine (9) months’
compensation. Officers at the level of Senior Vice President or
Vice President would be entitled to a minimum of six (6) months’ compensation
and a maximum of eighteen (18) months’ compensation. In the event of
such officer’s death, his or her beneficiaries would be entitled to six (6)
months’ compensation. Payments would be made in a single lump
sum.
This Plan
covers Walter C. Johnsen, Brian S. Olschan, Larry H. Buchtmann and Paul G.
Driscoll. Walter C. Johnsen and Brian S. Olschan would be entitled to
a minimum of nine (9) months’ compensation and a maximum of thirty (30) months’
compensation. Larry H. Buchtmann and Paul G. Driscoll would be
entitled to a minimum of six (6) months’ compensation and a maximum of eighteen
(18) months’ compensation. In the event of termination by death,
beneficiaries of Walter C. Johnsen and Brian S. Olschan would be entitled to a
minimum of nine (9) months’ compensation and beneficiaries of Larry H. Buchtmann
and Paul G. Driscoll would be entitled to a minimum of six (6) months’
compensation.
Director
Compensation
Cash
Compensation
As
described below, in 2009 the Company paid as compensation to non-employee
directors cash consisting of annual fees and fees for Board and committee
meetings attended. Each director who chaired a committee received
additional compensation to compensate for the additional responsibility and
effort associated with the director’s respective position. These fees
consisted of:
·
|
an
annual fee of $16,000, payable
quarterly;
|
·
|
$1,500
for each Board meeting attended;
|
·
|
$700
for each committee meeting
attended;
|
·
|
$700
to committee chairpersons for each committee meeting conducted;
and
|
·
|
an
annual fee of $3,500 to the Chairperson of the Audit
Committee.
|
In
addition, the Company provided reimbursement to each director for customary and
usual travel expenses incurred in connection with attendance at Board and
committee meetings.
Stock
Options
On April
20, 2009, the date of the Company’s 2009 annual meeting of shareholders, each
non-employee director re-elected to the Board of Directors received an annual
option grant, as provided under the 2005 Non-Salaried Director Stock Option
Plan, to purchase 4,000 shares of Common Stock.
Under the
Non-Salaried Director Stock Option Plan, each new director, upon becoming a
member of the Board of Directors, receives an option to purchase 5,000 shares of
Common Stock. These options vest as follows: 25% on the day after the
date of the grant; 25% one day after the first year anniversary of the date of
grant; 25% one day after the second year anniversary of the date of grant; and
25% one day after the third year anniversary of the date of grant.
The
following table discloses the cash, equity awards and other compensation earned,
paid or awarded, as the case may be, to each of the Company’s non-employee
directors during the fiscal year ended December 31, 2009.
Name
|
Fees
Earned or Paid in Cash ($)
|
Option
Awards
($)(1)
|
Total
|
Rex
L. Davidson
|
$33,600
|
$8,320
|
$41,920
|
Richmond
Y. Holden, Jr.
|
$36,400
|
$8,320
|
$44,720
|
Susan
M. Murphy
|
$28,000
|
$8,320
|
$36,320
|
Stevenson
E. Ward III
|
$39,900
|
$8,320
|
$48,220
|
(1)
|
Represents
the aggregate fair value of stock options on grant date rather than an
amount paid to or realized by the director. For information on the
valuation assumptions, refer to the note on Stock Option Plans in the
notes to the Company’s financial statements in its Annual Report on Form
10-K.
|
The
exercise price of each option is equal to 100 percent of fair market value on
the date of grant. The fair market value was determined to be the average price
of the Common Stock on the trading day of the grant date. Each option had an
exercise price of $7.30 per share, and was immediately exercisable in
full.
The
following table shows the aggregate number of option awards outstanding for each
non-employee director as of December 31, 2009.
Name
|
Aggregate
Option Awards Outstanding as of December 31, 2009
|
Rex
L. Davidson
|
14,000
|
Richmond
Y. Holden, Jr.
|
26,500
|
Susan
M. Murphy
|
20,500
|
Stevenson
E. Ward III
|
14,000
|
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 fiscal year ended December
31, 2009, with management and with representatives of UHY LLP, our independent
auditors, including discussions 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 does
not provide any expert or special assurance as to our financial
statements. UHY 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 does not provide
any professional certification as to UHY LLP’s work product.
The Audit
Committee has discussed with representatives of UHY LLP the matters required to
be discussed by professional standards. The Audit Committee has
received and reviewed the written disclosures and letter from UHY LLP required
by applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the Audit Committee
concerning independence, and has discussed the independence of UHY LLP 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 statements for
the year ended December 31, 2009 be included in our Annual Report on Form 10-K
for the year ended December 31, 2009 for filing with the Securities and Exchange
Commission.
|
Stevenson E.
Ward, III, Chair |
|
Richmond Y.
Holden, Jr., Member |
|
Rex
L. Davidson,
Member |
Transactions
with Related Persons
There
were no material transactions between the Company and any “related
person.” The term related person includes any executive 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 immediate
family member of any of the foregoing persons.
Policy
The Board
of Directors has determined that transactions involving the Company and related
persons shall be reviewed and approved by the Audit Committee. The
Charter of the Audit Committee requires that related person transactions must be
reviewed and approved by the Audit Committee of the Board, which consists solely
of independent directors. This requirement covers any such
transaction and is not limited to transactions which meet the minimum threshold
for disclosure in the proxy statement under the relevant rules under the
Exchange Act (generally, with respect to smaller reporting companies
transactions which involve an amount equal to the lesser of $120,000 or one
percent of the average of the company’s total assets at year-end for the last
two completed fiscal years, and in which a related person has a direct or
indirect material interest).
Procedures
Management
or the affected director or executive officer will bring the transaction to the
attention of the Audit Committee. The transaction must be approved in
advance whenever practicable, and if not practicable, must be reviewed as
promptly as practicable. Although the Audit Committee has not adopted
formal procedures for the review and approval of transactions with related
persons, the Audit Committee will approve the transaction only if it determines
that it is in the best interests of the Company.
If the
Audit Committee were to approve a related party transaction, the Audit Committee
would periodically monitor the transaction to ensure that there are no changed
circumstances that would render it advisable for the Company to amend or
terminate the transaction.
Compliance
with Section 16(a) of the Securities Exchange Act of 1934
Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who own more than 10% of the Common Stock (collectively
referred to herein as “Reporting Persons”), to file with the SEC and the NYSE
Amex 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 the Exchange Act 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 and written representations from Reporting Persons, the
Company believes that, during the 2009 fiscal year, all Reporting Persons
complied with all applicable filing requirements under Section
16(a).
Equity
Compensation Plan Information
The
following table sets forth information regarding compensation payable under 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,
2009. The Company’s shareholders have approved each equity
compensation plan.
Plan
Category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
(a)
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
(b)
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans,
(excluding
securities
reflected
in
column
(a))
(c)
|
Equity
compensation
plans
approved by
security
holders
|
722,500
|
$9.96
|
98,938
|
Equity
compensation
plans
not approved by security holders
|
-0-
|
-0-
|
-0-
|
Total
|
722,500
|
$9.96
|
98,938
|
PROPOSAL
2:
AMENDMENT
TO EMPLOYEES’ STOCK OPTION PLAN
On
February 23, 2010, the Board of Directors, subject to approval of the
Shareholders, amended the Employee Stock Option Plan effective February 26, 2002
(the “Plan”) to increase the number of shares subject to options from 610,000 to
760,000. The Company proposes that the number of shares of Common
Stock reserved for issuance under the Plan be so increased in order to enable
the Company to continue to attract and retain highly qualified personnel. The
following description of the Plan as amended is qualified in its entirety by
reference to the text of the Plan and its prior amendments, copies of which have
been filed with the SEC.
Purpose
The
purpose of the Plan is to advance the interests of the Company and its
shareholders by strengthening the ability of the Company to attract, retain and
reward highly qualified key employees, to motivate key employees to achieve
business objectives established to promote the long-term growth, profitability
and success of the Company, and to encourage ownership of the Common Stock of
the Company by participating key employees.
Administration
of the Plan
The Plan
is administered by the Board of Directors of the Company. In
administering the Plan, the Board acts upon recommendations of the Compensation
Committee, which consists of members of the Board who are not employees of the
Company. Subject to the provisions of the Plan, the Board determines
the employees who will receive options under the Plan, the number of shares
subject to each option and the terms of those options, and interprets the Plan
and makes such rules of procedure as the Board may deem proper.
Shares
of Stock Subject to the Plan
The Plan
presently permits the granting of 610,000 shares of Common Stock (760,000 shares
after approval of amendment).
Eligibility
Based on
current staffing, under the Plan, approximately 25 to 30 key employees of the
Company (including directors and officers who are employees) may be granted
options to purchase shares of Common Stock.
Options
Options
granted under the Plan may be either incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options. The exercise price with respect to an option
awarded under the plan will be one hundred percent (100%) of the fair market
value of the Common Stock on the date that the option is granted provided,
however, that the price shall not be less than the par value of the Common Stock
which is subject to the option. If incentive stock options are
granted to an employee owning Common Stock having more than ten (10%) of the
voting power of the Company, the exercise price must be at least one hundred ten
percent (110%) instead of one hundred percent (100%) of the fair market value of
the Common Stock on the date that the option is granted, and the option by its
terms may not be exercisable after the expiration of five (5) years from the
date of grant. No option may be granted under the Plan after the
tenth anniversary of the adoption of the Plan. The options granted by
the Company to employees historically have had a term of ten years and vest over
a period presently set at four years. The Company may grant both
incentive stock options (ISOs) and non-qualified stock
options. However, commencing in July 2006, the Company has granted
only non-qualified stock options to its employees.
Terms
of Exercise of Options
Upon the
granting of any option, the optionee must enter into a written agreement with
the Company setting forth the terms upon which the option may be
exercised. Such an agreement sets forth the length of the term of the
option and the timing of its vesting and may provide arrangements for income and
employment tax withholding. Under terms of the Plan, options are exercisable in
accordance with the following schedule: twenty-five percent (25%) one day after
first year anniversary of the date of grant; twenty-five percent (25%) one day
after second year anniversary of date of grant; twenty-five percent (25%) one
day after third year anniversary of date of grant; twenty-five percent (25%) one
day after fourth year anniversary of date of grant. In no event shall the length
of an option extend beyond ten years from the date of its grant. An
optionee may exercise an option by delivering payment to the Company in
cash.
Under the
Plan, if the employment of any person to whom an option has been granted is
terminated for any reason other than the death, disability or retirement of the
optionee, the optionee may exercise within thirty (30) days of such termination
such options as the optionee could have exercised if his or her employment had
continued for such 30-day period, subject to the ten (10) year
limitation. If the termination is by reason of retirement, the
optionee may exercise the option, in whole or in part, at any time within one
(1) year following such termination of employment, subject to the ten (10) year
limitation, but if the option is exercised later than three (3) months from the
date of retirement the option shall not constitute an ISO. If the
optionee dies while employed by the Company or its subsidiaries, or during a
period after termination of employment in which the optionee could exercise an
option, the optionee’s beneficiary may exercise the option within one (1) year
of the date of the optionee’s death but in no event may the option be exercised
later than the date on which the option would have expired if the optionee had
lived. If the termination is by reason of disability, the optionee
may exercise the option, in whole or in part, at any time within one (1) year
following such termination of employment or within such other period, not
exceeding three (3) years after the date of disability, as is set forth in the
option agreement with respect to such options, provided, however, that if the
option is exercised later than one (1) year after the date of disability, it
shall not constitute an ISO, and in no event may the option be exercised after
ten (10) years from grant.
In
addition, if an optionee ceases to be employed by the Company and becomes, or
continues to be, a member of the Board of Directors prior to the time the
optionee’s option(s) would have otherwise expired, the optionee’s option(s)
shall continue to vest in accordance with the terms of the Plan and shall
continue to be exercisable for the remainder of the term of the option(s). Any
option which is not exercised by the optionee within the three-month period
immediately following the optionee’s termination of employment, or, in the case
of termination of employment on account of disability, within one (1) year after
the date of disability, shall cease to be an Incentive Stock Option. If an
optionee described in the preceding two sentences ceases to be a member of the
Board of Directors for any reason, the optionee’s option(s) shall terminate in
accordance with the provisions of Section 2.4(a) of the Acme United Corporation
Non-Salaried Director Stock Option Plan, which section (i) cancels any unvested
options at that time; (ii) permits a twelve-month period for exercise of vested
options in the event of termination due to death or disability; and (iii)
permits a thirty-day period for exercise of vested options in the event of
termination due to any other reason, except that the Board may in its discretion
extend the period of exercise.
Notwithstanding
the above, no option may be exercised after the expiration date specified in the
option agreement.
Amendment
to the Plan
The Plan
may be terminated, suspended, or modified at any time by the Board of Directors,
but no amendment increasing the maximum number of shares for which options may
be granted (except to reflect a stock split, stock dividend or other
distribution), reducing the option price of outstanding options, extending the
period during which options may be granted, otherwise materially increasing the
benefits accruing to optionees or changing the class of persons eligible to be
optionees shall be made without first obtaining approval of the shareholders of
the Company. No termination, suspension or modification of the Plan
shall adversely affect any right previously acquired by the optionee or other
beneficiary under the Plan.
Options
granted under the Plan may not be transferred other than by will or by the laws
of descent and distribution and, during the optionee’s lifetime may be exercised
only by the optionee.
All of
the Options previously issued under the prior plan remain unchanged and
outstanding.
Federal
Income Tax Consequences
Granting
of Non-Qualified Stock Options
With
respect to the tax effects of non-qualified stock options, since the options
granted under the Plan do not have a “readily ascertainable fair market value”
within the meaning of the Federal income tax laws, an optionee of an option will
realize no taxable income at the time the option is granted.
Exercise
of Non-Qualified Stock Options
When a
non-qualified stock option is exercised, the optionee will generally be deemed
to have received compensation, taxable at ordinary income tax rates, in an
amount equal to the excess of the fair market value of the shares of Common
Stock of the Company on the date of exercise of the option over the exercise
price. The Company will withhold income and employment taxes in connection with
the optionee’s recognition of ordinary income as a result of the exercise by an
employee/optionee of a non-qualified stock option, and arrangements must be made
with the Company for the source of such withholding. The Company
generally can claim a deduction in the fiscal year of the Company which includes
the last day of the taxable year of the optionee which includes the exercise
date or the date on which the optionee recognizes income. The amount
of such deduction will be equal to the ordinary income recognized by the
optionee.
Granting
of Incentive Stock Options and Exercise of Incentive Stock Options
With
respect to the tax effects of Incentive Stock Options, the optionee does not
recognize any regular taxable income when the option is granted or exercised;
however, the excess of the fair market value of the stock on the date of
exercise over the exercise price must be included in the optionee’s alternative
minimum taxable income. Depending on the optionee’s other income and
deductions, all or a portion or this excess could be subject to alternative
minimum tax of as much as twenty-eight percent (28%).
Sale
of the Stock
When
stock acquired through the exercise of a non-qualified stock option is sold, the
difference between the optionee’s basis in the shares and the sale price will be
taxable to the optionee as a capital gain (or loss).
If no
disposition of shares issued to an optionee pursuant to the exercise of an ISO
is made by the optionee within two (2) years after the date the option was
granted or within one (1) year after the shares were transferred to the
optionee, then (a) upon sale of such shares, any amount realized in excess of
the exercise price (the amount paid for the shares) will be taxed to the
optionee as long-term capital gain and any loss sustained will be a long-term
capital loss and (b) no deduction will be allowed to the Company for federal
income tax purposes. The tax basis of the stock for alternative
minimum tax purposes shall be the fair market value of the stock on the date of
exercise of the option, and the optionee may be entitled to a credit if its
alternative minimum tax is less than its regular tax in the year of
sale.
If shares
of Common Stock acquired upon the exercise of an ISO are disposed of prior to
the expiration of the two-year and one-year holding periods described above (a
“Disqualifying Disposition”) generally (a) the optionee will realize ordinary
income in the year of disposition in an amount equal to the excess (if any) of
the fair market value of the shares at exercise (or, if less, the amount
realized upon the sale of such shares) over the option price thereof, and (b)
the Company will be entitled to deduct such amount. Any further gain
realized will be taxed as short-term or long-term capital gain and will not
result in any deduction by the Company. A Disqualifying Disposition
in the same year as exercise will eliminate the alternative minimum tax
adjustment associated with the exercise of the Incentive Stock
Option.
Plan
Benefits
Awards
under the Plan are granted at the discretion of the Board of Directors, which
acts upon recommendations of the Compensation Committee. The Board
determines the key employees who will receive options under the Plan and the
terms of those options. Accordingly, the nature and amounts of any
future awards to be made to participants in the Plan are not presently
determinable.
Vote
Required
The
approval of the amendment to the Employee Stock Option Plan requires the
affirmative vote of a majority of the shares of Common Stock of the Company
voting in person or by proxy on the amendment. If the amendment is
not approved by shareholders, it will not become effective.
The
Board of Directors recommends a vote FOR approval of the amendment to the
Employee Stock Option Plan.
PROPOSAL
3:
RATIFICATION
OF THE APPOINTMENT OF UHY LLP AS OUR
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2010
The Audit
Committee of the Board of Directors has appointed UHY LLP as our independent
registered public accounting firm for the fiscal year ending December 31,
2010.
Representatives
of UHY LLP will be present at the Annual Meeting and will have the opportunity
to make a statement if they desire to do so. They will also be available to
respond to appropriate questions.
The Audit
Committee is not aware of any disagreements between management and our current
auditors, UHY LLP, regarding accounting principles and their application or
otherwise.
Change
in Auditors
On
September 15, 2008, the Company, based on its Audit Committee’s recommendation
and approval, dismissed Ernst & Young LLP (“E&Y”) as the Company’s
independent registered public accountants. The Audit Committee took this action
after consultation with management to enable the Company to obtain audit and
related services at a lower annual cost.
E&Y’s
reports on the Company’s financial statements for the years ended
December 31, 2007 and 2006 did not contain an adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope
or accounting principles.
During
the years ended December 31, 2007 and 2006 and through the date of
dismissal of E&Y, there were no disagreements with E&Y on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to E&Y’s satisfaction, would have
caused them to make reference to the subject matter in connection with their
report on the Company’s consolidated financial statements for such years; and
there were no reportable events, as listed in Item 304(a)(1)(v) of
Regulation S-K.
On
September 18, 2008, the Audit Committee of the Company’s Board of Directors
approved the engagement of UHY LLP as its independent registered public
accounting firm to audit the Company’s financial statements for the fiscal year
ending December 31, 2008.
During
the years ended December 31, 2007 and 2006 and through the date of the
Audit Committee’s decision, the Company did not consult UHY LLP with respect to
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company’s consolidated financial statements, or any other matter or
reportable events listed in Items 304(a)(2)(i) and (ii) of Regulation
S-K.
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 and the auditors 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
UHY LLP and affiliates and Ernst & Young LLP (E&Y), the predecessor
audit firm, for the audit of our annual financial statements and review of our
interim financial statements, and fees for other services rendered by UHY LLP,
UHY Advisors, Inc. and E&Y.
Fee
Category
|
Fiscal
2009 Fees
|
|
Fiscal
2008 Fees
|
Audit
Fees
|
$192,000
|
|
$193,000
|
Audit
Related Fees
|
11,000
|
|
11,000
|
Tax
Fees
|
65,000
|
|
110,000
|
Other
Fees
|
-
|
|
6,000
|
Total
Fees
|
$268,000
|
|
$320,000
|
Audit Fees.
2008 audit fees include $43,000 paid to E&Y for services provided
prior to the appointment of UHY LLP.
Audit Related
Fees. These fees were for audit of the Company’s post retirement defined
pension plan in 2009 and 2008, and for services rendered in connection with the
filing of a registration statement in 2009.
Tax
Fees. Tax
services included tax compliance, tax advice, and tax planning provided by UHY
Advisors, Inc. in 2009 ($49,000) and 2008 ($59,000) and E&Y in 2009
($16,000) and 2008 ($51,000).
Other
Fees. General
business consulting provided by UHY Advisors, Inc. in
2008.
The Audit
Committee has determined that the provision of non-audit services described
above is compatible with maintaining UHY LLP’s independence.
Through
and as of March 23, 2010, UHY LLP and UHY Advisors, Inc. (Advisors), as separate
legal entities, collectively provide attest, accounting, tax and business
consulting services through an alternative practice structure which is
necessitated by most State statues that prohibit corporate ownership of firms
that provide attest services. UHY LLP is a licensed CPA firm and provides attest
services only, whereas Advisors provides the other services. UHY LLP
leases auditing staff who are full-time, permanent employees of Advisors. UHY
LLP has only a few full-time employees; however, the Partners of UHY LLP are
also Managing Directors of Advisors. While few of the audit services performed
were provided by permanent, full-time employees of UHY LLP, for the most part,
the leased staff are CPA qualified and satisfy the continuing education and
other professional requirements. UHY LLP trains, manages and supervises the
audit services and audit staff, and is exclusively responsible for the opinion
rendered in connection with its examination. During 2009 and 2008, Advisors
provided certain permitted tax and business consulting services as described
above.
Vote
Required
The
ratification of the appointment by our Audit Committee of UHY LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2010 requires the affirmative vote of a majority of the shares of
Common Stock of the Company voting in person or by proxy on such
ratification. Although shareholder approval of the appointment is not
required by law and is not binding on the Audit Committee, the Committee will
take the appointment under advisement if such appointment is not approved by the
affirmative vote of a majority of the votes cast at the Meeting.
The
Board of Directors recommends a vote FOR the ratification of our independent
registered public accounting firm for the fiscal year ending December 31,
2010.
SUBMISSION
OF SHAREHOLDER PROPOSALS FOR THE 2011 ANNUAL MEETING
If you
intend to present a proposal at our 2011 Annual Meeting, you must submit it to
us by no later than November 23, 2010, to receive consideration for inclusion in
our 2011 proxy materials. If you intend to present a proposal at our 2011 Annual
Meeting that is not to be included in our 2011 proxy materials, you should send
the proposal to us in writing by February 12, 2011. Any such proposal
should be sent to the 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 23,
2010
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 19,
2010
The undersigned hereby appoints Walter
C. Johnsen and Susan H. Murphy, 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 3, 2010 at the Annual Meeting of Shareholders,
to be held at the Cornell Club, 6 East 44th
Street, New York, New York on Monday, April 19, 2010, 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
1, 2 and 3. In their discretion, the proxies are authorized to vote upon such
other matters, if any, as may properly come before the Annual
Meeting.
The
undersigned acknowledges receipt of the Company’s Notice of Annual Meeting of
Shareholders, a Proxy Statement dated March 23, 2010 and the 2009 Annual Report
to Stockholders.
SEE REVERSE
SIDE |
CONTINUED AND
TO BE COMPLETED, SIGNED AND
DATED ON
REVERSE SIDE
|
SEE REVERSE
SIDE |
NOTICE OF
INTERNET AVAILABILITY OF PROXY MATERIAL:
The
Company’s Notice of Annual Meeting, Proxy Statement and Proxy card are available
at
proxy.acmeunited.com
[X] |
PLEASE MARK VOTES AS IN THIS EXAMPLE |
|
THIS PROXY WHEN EXECUTED WILL BE VOTED AS DIRECTED
HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF ALL SIX NOMINEES LISTED IN PROPOSAL 1 BELOW AND FOR PROPOSALS 2
AND 3.
1. |
Election of Directors |
|
|
|
Nominees: |
|
|
|
|
Walter C. Johnsen |
Susan H. Murphy |
|
|
Richmond Y. Holden, Jr. |
Rex L. Davidson |
|
|
Brian S. Olschan |
|
|
|
Stevenson E. Ward III |
|
|
[ ] FOR ALL
NOMINEES |
|
|
|
[ ] WITHHELD AUTHORITY
FOR ALL NOMINEES |
|
|
|
[ ] FOR ALL EXCEPT (See
Instructions below) |
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each
nominee you wish to withhold, as shown here:
2. |
Approval of the Amendment to the Employee
Stock Option Plan |
FOR
[ ]
|
AGAINST
[ ]
|
ABSTAIN
[ ]
|
|
|
|
|
|
3. |
Ratification of the appointment of UHY LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2010 |
FOR
[ ]
|
AGAINST
[ ]
|
ABSTAIN
[ ]
|
MARK HERE FOR ADDRESS CHANGE AND NOTE
BELOW
|
[ ]
|
|
|
NEW ADDRESS:
Please sign exactly as your name or names appear on this
Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name by
authorized person.
Signature: |
|
Date: |
|
|
|
|
|
Signature: |
|
Date: |
|
PLEASE COMPLETE, SIGN, DATE AND MAIL YOUR PROXY CARD
PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE