UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by the Registrant
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x
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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PROLIANCE INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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March 25, 2009
Dear Fellow Stockholder:
We will hold our 2009 annual meeting of stockholders at
11:00 a.m. on Thursday, May 7, 2009 at The Quinnipiack
Club, 221 Church Street, New Haven, Connecticut.
The Notice of Annual Meeting, Proxy Statement and proxy card
accompanying this letter describe in detail the matters to be
acted upon at the meeting.
It is important that your shares be represented at the meeting.
Whether or not you plan to attend, please sign, date and return
your proxy card in the enclosed envelope as soon as possible.
Stockholders of record also have the option of voting by
telephone or internet, as described on the proxy card.
We look forward to seeing you at the meeting.
Sincerely yours,
Chairman of the Board
TABLE OF CONTENTS
PROLIANCE
INTERNATIONAL, INC.
The annual meeting of stockholders of Proliance International,
Inc. will be held on Thursday, May 7, 2009, at
11:00 a.m. at The Quinnipiack Club, 221 Church Street, New
Haven, Connecticut.
The items of business at the annual meeting are:
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1.
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Election of six directors.
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2.
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Approval of an increase in our authorized common stock from
47,500,000 shares to 125,000,000 shares.
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3.
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Appointment of independent accountants for 2009.
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4.
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Such other matters as may properly come before the meeting,
including any continuation of the meeting caused by any
adjournment or any postponement of the meeting.
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March 17, 2009 is the record date for the meeting.
This Proxy Statement and accompanying proxy card are being
distributed on or about March 27, 2009.
Secretary
THIS PROXY STATEMENT AND THE 2008 ANNUAL REPORT ON
FORM 10-K
ARE AVAILABLE AT WWW.PLIII.COM.
PROLIANCE
INTERNATIONAL, INC.
100 Gando Drive
New Haven, CT 06513
PROXY
STATEMENT
The
Annual Meeting and Voting
Our board of directors is soliciting proxies to be used at the
annual meeting of stockholders to be held on Thursday,
May 7, 2009, or at any adjournment of the meeting. This
proxy statement contains information about the items being voted
on at the annual meeting.
Who is
entitled to vote?
Record stockholders of Proliance common stock at the close of
business on March 17, 2009 (the record date) can vote at
the meeting. As of the record date, 15,780,489 shares of
Proliance common stock were issued and outstanding. Each
stockholder has one vote for each share of common stock owned as
of the record date. A list of all stockholders entitled to vote
at the meeting will be available for examination by any
stockholder for any purpose germane to the meeting at our office
at 100 Gando Drive, New Haven, Connecticut, for the
ten-day
period immediately preceding the meeting.
How do I
vote?
A form of proxy card and a return envelope for the proxy card
are enclosed. Giving your proxy means that you authorize the
persons named in the enclosed proxy card to vote your shares at
the Proliance annual meeting in the manner you direct. You may
vote by proxy or in person at the annual meeting. To vote by
proxy, you may use one of the following methods if you are a
registered holder (that is, you hold your stock in your own
name):
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Mail, by completing and returning your proxy card;
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Telephone voting, by calling the toll-free number specified on
your proxy card; or
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Via the internet, by accessing the internet website specified on
your proxy card.
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If any proxy is returned without indication as to how to vote,
the Proliance common stock represented by the proxy will be
voted by the persons named on the proxy in favor of each
proposal and in accordance with their best judgment on any other
matters which may come before the meeting.
How do I
vote if my shares are held in street name?
If your broker holds your shares of Proliance common stock in
street name, you must either direct your broker on how to vote
your shares or obtain a proxy from your broker to vote in person
at the annual meeting. If your shares are held in street name,
you should check the voting form that you receive to determine
whether shares may be voted by telephone or the internet.
May I
change my vote?
You may revoke your proxy at any time before it is voted at the
meeting in several ways. You may send in a revised proxy dated
later than the first; or you may vote in person at the meeting;
or you may notify our Secretary in writing prior to the meeting
that you have revoked your proxy.
What
constitutes a quorum?
The holders of a majority of the outstanding shares entitled to
vote at the meeting, present in person or represented by proxy,
constitute a quorum. If you vote by computer, telephone or proxy
card, you will be considered part of the quorum. Abstentions,
broker non-votes and votes withheld from director nominees are
included in the count to determine a quorum. If a quorum is
present, the six director candidates who receive a plurality of
the votes of the shares present in person or represented by
proxy and
entitled to vote on the election of directors will be elected.
Proposal 2 will be approved if the holders of a majority of
our outstanding shares of common stock vote their shares in
favor of the proposal. Proposal 3 will be approved if a
quorum is present and a majority of the votes cast by holders
present in person or represented by proxy are cast in favor of
the proposal.
What is
the effect of broker non-votes and abstentions?
Under the rules of NYSE Amex (formerly known as the American
Stock Exchange), if your broker holds your shares in its
street name, the broker may under certain
circumstances vote your shares on the agenda items even if it
does not receive instructions from you. Because broker non-votes
and abstentions are not considered votes cast on the matters
before the meeting, neither will have an effect on the voting
for Proposals 1 and 3. A broker non-vote has the effect of
a vote against Proposal 2.
How do
employees with shares in the 401(k) plan vote by
proxy?
If you hold Proliance common stock in our employee 401(k) plan,
you will receive a proxy card with instructions on the different
ways available to you to vote your shares. Shares held in our
401(k) plan are voted by the plan trustee in accordance with
voting instructions received from plan participants using the
enclosed proxy card. The plan authorizes our pension and
benefits committee to direct the trustee to vote shares for
which no instructions are received.
Information
regarding householding
Unless we receive contrary instructions from one or more of the
affected stockholders, only one copy of our annual report on
Form 10-K
and this proxy statement is being delivered to multiple
stockholders sharing the same address. We hereby undertake to
promptly deliver a separate copy of this proxy statement
and/or
the
annual report on
Form 10-K
upon the written or oral request of any stockholder to whom the
previous sentence applies. Any written or oral request should be
made to our Secretary,
c/o Proliance
International, Inc., 100 Gando Drive, New Haven, Connecticut
06513 or by telephone
(203-401-6450).
Stockholders sharing the same address and currently receiving
only one copy of the annual report on
Form 10-K
and proxy statement but desiring multiple copies of these
materials in the future, or currently receiving multiple copies
of the annual report on
Form 10-K
and proxy statement but desiring only one copy of these
materials in the future, should contact our Secretary as
provided in the previous sentence.
Stockholder
proposals for the 2010 annual meeting
If a stockholder wants to submit a proposal for inclusion in our
proxy material for the 2010 annual meeting, it must be received
by our Secretary by November 25, 2009. Also, under our
Bylaws, a stockholder can present other business at the 2010
annual meeting, including the nomination of candidates for
director, only if written notice of the business or candidates
is received by our Secretary between January 6, 2010 and
February 5, 2010. There are other procedural requirements
in the Bylaws pertaining to stockholder proposals and director
nominations. Any stockholder may obtain a copy of the Bylaws
without charge by writing to our Secretary.
Which
stockholders own at least 5% of Proliance?
The only persons or groups known to us to be beneficial owners
of more than five percent of Proliances outstanding common
stock are reflected in the chart below. The following
information is based upon Schedules 13D and 13G respectively
filed with the Securities and Exchange Commission by the persons
and entities shown as of the respective dates appearing below
and other information available to Proliance.
2
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Name and Address of
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Amount and Nature of
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Beneficial Owners
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Beneficial Ownership
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Percent of Class
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Gabelli Funds, LLC
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1,023,611
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(a)
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6.5
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%
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One Corporate Center
Rye, NY 10580
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Dimensional Fund Advisors LP
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1,010,171
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(b)
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6.4
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%
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Palisades West, Building One
6300 Bee Cave Road
Austin, TX 78746
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Carl William Dinger III
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997,350
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(c)
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6.3
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%
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P.O. Box 150
Green Village, NJ 07935
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Roger Brown
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852,177
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(d)
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5.4
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5111 Maryland Way
Suite 201
Brentwood, TN 37027
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Michael Lerner
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815,134
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(e)
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5.2
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1555 N. Sheffield Avenue
Chicago, IL 60622
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Paul S. Wilhide
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(f)
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(f
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2121 North Fielder Road
Arlington, TX 76012
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(a)
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Based upon information set forth in a Schedule 13D
Amendment No. 27 filed with the SEC on October 21,
2008. GAMCO Asset Management Inc. holds sole voting power over
569,111 shares of common stock and sole dispositive power
over 571,111 shares of common stock. Gabelli Funds, LLC
holds sole voting and dispositive power over 431,000 shares
of common stock. MJG Associates, Inc. holds sole voting and
dispositive power over 4,500 shares of common stock. Teton
Advisors, Inc. holds sole voting and dispositive power over
17,000 shares of common stock. Mario J. Gabelli is deemed
to have beneficial ownership of all of the foregoing shares of
common stock.
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(b)
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Based upon information set forth in a Schedule 13G
Amendment No. 5 filed with the SEC on February 9,
2009. Dimensional Fund Advisors LP holds sole voting power
over 1,006,115 of the indicated shares and sole dispositive
power over all of the indicated shares, which are held in its
capacity as investment advisor or manager for its advisory
clients. Dimensional Fund Advisors LP disclaims beneficial
ownership of all of the indicated shares.
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(c)
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Based upon information set forth in a Schedule 13D
Amendment No. 3 filed with the SEC on July 12, 2007 by
Carl W. Dinger III, Jeff E. Dinger, Ashley E. Dinger Trust,
Caleigh N. Dinger Trust, Shelby C. Dinger Trust and Carousel
World LP. The listed persons and entities have sole voting and
dispositive power over 518,900, 62,950, 100,000, 100,000,
100,000 and 115,500 shares, respectively. Carl W.
Dinger III and Jeff E. Dinger are trustees of the indicated
trusts and are each a general partner of Carousel World LP.
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(d)
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Based upon information set forth in a Schedule 13D
Amendment No. 2 filed with the SEC on March 12, 2008.
Mr. Brown has sole voting and dispositive power over all of
the indicated shares.
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(e)
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Based upon information set forth in a Schedule 13G filed
with the SEC on March 12, 2008. Mr. Lerner has sole
voting and dispositive power over all of the indicated shares.
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(f)
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Mr. Wilhide holds 9,913 shares of Proliances
Series B Convertible Redeemable Preferred Stock with an
aggregate liquidation preference of $3,453,418 which is
convertible into common stock determined by a ratio based on the
prevailing market price of Proliance common stock. At
March 17, 2009, his outstanding preferred stock would be
convertible into 12,788,889 shares of Proliance common
stock. He also held 459,071 shares of Proliance common
stock at October 15, 2007.
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3
How much
stock is owned by directors and executive officers?
The following table shows beneficial ownership of Proliance
common stock as of March 17, 2009 by our directors and our
executive officers named in the compensation tables in this
proxy statement, except that information with respect to shares
beneficially owned pursuant to the Proliance 401(k) Savings Plan
is as of December 31, 2008.
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Shares Deemed to
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Options
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be Beneficially
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Exercisable
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Percent
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Name of Beneficial Owner
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Owned
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Within 60 Days (a)
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of Class
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Barry R. Banducci
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135,751
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(b)
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12,800
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*
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Charles E. Johnson
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130,456
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(c)
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174,449
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1.9
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%
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William J. Abraham, Jr.
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59,430
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(d)
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6,000
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*
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Paul R. Lederer
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19,967
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(e)
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6,000
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*
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Vincent L. Martin
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9,394
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*
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James R. Rulseh
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11,149
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*
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F. Alan Smith
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22,967
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(f)
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6,000
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*
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Arlen F. Henock
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51,000
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(g)
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6,250
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*
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Jeffrey L. Jackson
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68,808
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(h)
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49,153
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*
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William J. Long III
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8,051
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(i)
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5,720
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Richard A. Wisot
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16,441
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(j)
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44,576
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*
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All executive officers and directors as a group (12)
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533,414
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310,948
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5.3
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%
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Less than one percent of the class
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(a)
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The director or executive officer has the right to acquire
beneficial ownership of this number of shares within
60 days of the record date for the annual meeting
(March 17, 2009) by exercising outstanding stock
options.
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(b)
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Includes 58,609 shares held by The Banducci Family LLC.
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(c)
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Includes 46,633 shares held in the Proliance 401(k) Savings
Plan and 5,187 shares of restricted stock. Does not include
17,689 shares of restricted stock voluntarily forfeited by
Mr. Johnson on February 10, 2009.
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(d)
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Includes 13,100 shares held in Mr. Abrahams
Keogh account. Also includes 363 shares held by
Mr. Abrahams spouse in an account managed by his son.
Mr. Abraham disclaims beneficial ownership of these
363 shares.
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(e)
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Includes 17,000 shares held by the Paul R. Lederer
Revocable Trust.
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(f)
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Includes 20,000 shares held in the F. Alan Smith Revocable
Trust.
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(g)
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Includes 3,333 shares of restricted stock.
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(h)
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Includes 62,531 shares held in the Proliance 401(k) Savings
Plan and 1,525 shares of restricted stock.
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(i)
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Includes 6,526 shares of restricted stock.
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(j)
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Includes 1,221 shares of restricted stock.
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Section 16(a)
Beneficial Ownership Reporting Compliance
Directors and persons who are considered officers of
the company for purposes of Section 16(a) of the Securities
Exchange Act of 1934 and greater than ten percent stockholders
(referred to as reporting persons) are required to file reports
with the Securities and Exchange Commission showing their
holdings of and transactions in Proliance securities. It is
generally our practice to file the forms on behalf of our
reporting persons who are directors or officers. We believe that
all such forms have been timely filed for 2008.
4
Proposal 1:
Election
of Directors
The board of directors currently has seven members. However,
Paul R. Lederer has determined not to run for re-election and
the size of the board of directors is therefore being reduced to
six members as of the annual meeting. Until the 2009 annual
meeting, the board was divided into three classes whose terms of
office ended in successive years. The classified board will
automatically cease to apply at the 2009 annual stockholders
meeting, and all of our directors are being elected annually for
one-year terms beginning at this meeting.
The Nominating and Governance Committee recommended to the board
of directors, and the board approved, the nomination of each of
the candidates listed below for election at this meeting to
one-year terms expiring at the 2010 annual meeting.
Information about each nominee for director, including the
nominees age, is set forth below. Unless otherwise
indicated, each nominee has held his or her present position for
at least five years. Should you choose not to vote for a
nominee, you may list on the proxy the name of the nominee for
whom you choose not to vote and mark your proxy under
Proposal No. 1 for all other nominees, or vote your
shares by telephone or computer as described on the proxy voting
instruction card. Should any nominee become unable to accept
nomination or election as a director (which is not now
anticipated), the persons named in the enclosed proxy will vote
for a substitute nominee as may be selected by the board of
directors, unless the size of the board is reduced.
NOMINEES
FOR ELECTION TO TERMS EXPIRING AT
THE 2010 ANNUAL MEETING
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Year First
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Principal Occupation
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Name
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Age
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Became Director
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During the Past Five Years
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Barry R. Banducci
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73
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1995
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Chairman of the Board of Proliance from September 1995 to
August 2005 and since October 2007; from 1984 to 1996, Vice
Chairman of the Board and a director of The Equion Corporation,
a manufacturer of automotive products; from 1988 to 1994,
President and Chief Executive Officer of Equion and from 1984 to
1988 President and Chief Operating Officer of Equion; currently
a director of DEMC Corporation.
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William J. Abraham, Jr.
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61
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1995
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Partner with Foley & Lardner, a law firm in Milwaukee,
Wisconsin, since 1980; formerly Chairman of the Business Law
Department of Foley & Lardner and member of its Management
Committee; currently a director of The Vollrath Company, Inc.,
Park Bank, Quad/Graphics, Inc., Phillips Plastics Corporation
and Windway Capital Corp.
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Year First
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Principal Occupation
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Name
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Age
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Became Director
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During the Past Five Years
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Charles E. Johnson
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63
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2001
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Since March 2001, President and Chief Executive Officer of
Proliance; from 1996 to March 2001, President and Director, and
from 1997 to March 2001, Chief Executive Officer, of Canadian
General-Tower Ltd., a producer of polymer films and composite
materials to the automotive and other markets; from 1984 to
1996, various positions at The Equion Corporation, including
President and Chief Operating Officer from 1993 to 1996.
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Vincent L. Martin
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69
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2005
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Mr. Martin is retired. From January 1986 to October 2004, Mr.
Martin was the Chairman of Jason Incorporated, a diversified
manufacturing company based in Milwaukee, Wisconsin; Chief
Executive Officer of Jason Incorporated from 1986 to 1999. In
addition, Mr. Martins business career includes prior
experience with AMCA International, FMC Corp. and Westinghouse
Air Brake. He continues to be a director of Jason and is also a
director of Modine Manufacturing Company.
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James R. Rulseh
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53
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2005
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Special Assistant to the CEO of Modine Manufacturing Company
since January 2009; Regional Vice President - Americas and an
officer of Modine Manufacturing Company from October 2007 to
January 2009; Regional Vice President - Asia and an officer of
Modine Manufacturing Company from November 2006 to October 2007;
from April 2001 to November 2006, Group Vice President and an
officer of Modine Manufacturing Company; from 1998 to March
2001, Managing Director of the Automotive Business Unit of
Modine Europe. He has held various positions with Modine since
1977. Mr. Rulseh is a director of Woodward Governor Company.
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F. Alan Smith
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77
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1995
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Chairman of Advanced Accessory Systems, LLC from September 1995
to April 2003 and a director of 3M from 1986 to 2001; retired
from General Motors Corporation in 1992 after 36 years of
service; from 1981 to 1992, Executive Vice President and a
member of the Board of Directors of GM.
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The board
of directors recommends that stockholders vote FOR the nominees
described in proposal 1.
6
Board
Information and Committees
The board met sixteen times in 2008. Each incumbent director
attended at least 75 percent of the total number of board
meetings and meetings held by the board committees on which he
served during 2008. The board has determined that each of our
non-employee directors currently serving on the board or who
served on the board during 2008 is independent based upon the
criteria provided by the rules of NYSE Amex (formerly known as
the American Stock Exchange).
Members of the board serve on one or more of the three
committees described below, except for directors who are also
employees of the company, who do not serve on board committees.
The
Audit Committee
, which met five times in 2008,
monitors our financial reporting standards and practices and our
internal financial controls to ensure compliance with the
policies and objectives established by the board of directors.
The committee directly retains and recommends for stockholder
approval an independent accounting firm to conduct the annual
audit, and discusses with our independent accountants the scope
of their examinations, with particular attention to areas where
either the committee or the independent accountants believe
special emphasis should be directed. The committee reviews the
quarterly and annual financial statements and the annual
independent accountants report, invites the
accountants recommendations on internal controls and on
other matters, and reviews the evaluation given and corrective
action taken by management. It reviews the independence of the
accountants and pre-approves audit and permissible non-audit
services. It also reviews our internal accounting controls and
the scope and results of our internal auditing activities.
Current members of the audit committee are F. Alan Smith
(Chairman), Paul R. Lederer and Vincent L. Martin. Each member
of the committee is independent under
Rule 10A-3
of the Securities and Exchange Commission and NYSE Alternext
listing standards. The board of directors has determined that
Mr. Smith, Chairman of the committee, qualifies as an
audit committee financial expert as that term is
defined in
Regulation S-K
of the Securities and Exchange Commission.
The
Compensation Committee
, which met five times in 2008,
oversees our executive and director compensation programs,
including establishing our executive and director compensation
policies and annually reviewing all components of compensation
to ensure that our objectives are appropriately achieved. These
functions are not delegated to our officers or to third-party
professionals, although the committee does from time to time
retain third-party consultants to provide advice regarding
compensation issues. During 2006 the committee retained Radford
Surveys & Consulting to provide information and advice
regarding executive compensation matters involving base
salaries, annual incentive compensation, including plan design,
and the long-term equity based awards consisting of grants of
options and restricted shares (including the structure of
performance restricted stock grants and the number of shares to
be awarded to each participant based upon competitive survey
data), and to provide information regarding executive
compensation developments and trends. Radford provided such
services to the committee and is solely answerable to the
committee and not to our management. During 2007, the committee
consulted with Radford on certain limited and discrete
compensation questions. Radford was not consulted by the
committee during 2008. The committee also considers input from
our executive officers although final decisions regarding
executive compensation are made by the committee. The committee
is also responsible for certain administrative aspects of our
compensation plans and stock plans, and approves or recommends
changes in these plans. It also approves performance targets and
grants under our incentive plans and our stock plan for our
executive officers. The committee also reviews officers
potential for growth, and, with the chief executive officer,
will be responsible for succession planning and ensuring
management continuity. Members are Vincent L. Martin (Chairman),
William J. Abraham, Jr. and James R. Rulseh.
The
Nominating and Governance Committee
, which met twice
in 2008, recommends nominees for election to the board of
directors and recommends membership and duties of the board
committees. The committee also reviews and evaluates the
effectiveness of corporate administration and our governing
documents, and
7
reviews and monitors our programs and policies relating to
directors. Members are William J. Abraham, Jr. (Chairman),
Barry R. Banducci and James R. Rulseh.
Each committee is governed by a written charter. Copies of each
committee charter are available on our website at www.pliii.com.
Board
Policy on Director Elections
On December 7, 2006, our board approved a policy regarding
director elections. The policy notes that our directors are
elected by a plurality vote. However, as a matter of good
corporate governance, the board expects each director to tender
his or her resignation prior to any meeting of the stockholders
at which the directors seat on the board will be subject
to election in a non-contested election, provided that the
resignation will take effect only if the number of votes cast
against the directors election and the number of votes
withheld from the directors election exceed, in the
aggregate, the number of votes cast for the directors
election. The board will nominate for election or re-election as
director only candidates who agree to submit, promptly following
the annual meeting at which they are elected or re-elected as
director, such a resignation letter. In addition, the board will
fill director vacancies and new directorships only with
candidates who agree to tender, promptly following their
appointment to the board, the same form of resignation tendered
by other directors in accordance with the policy.
If the number of votes cast against the incumbent
directors election and the number of votes withheld from
the incumbent directors election exceed, in the aggregate,
the number of votes cast for the directors election, our
Nominating and Governance Committee will act on an expedited
basis to determine whether to accept the directors
resignation and will submit a recommendation for prompt
consideration by the board. The board expects the director whose
resignation is under consideration to abstain from participating
in any decision regarding that resignation. The Nominating and
Governance Committee and the board may consider any factors they
deem relevant in deciding whether to accept a directors
resignation. The Board will render its final decision with
respect to the matter not later than ninety (90) days
following the applicable stockholders meeting.
Each member of our board has executed and delivered a
resignation letter in accordance with the policy.
Directors
Compensation
Directors Fees.
The compensation of our
board members is as follows: (1) a retainer of $20,000 per
year ($60,000 for the chairman of the board), (2) a per
board meeting fee of $1,500, (3) additional retainers for
committee service in the amount of $8,000 for each committee
chairman ($10,000 in the case of the audit committee chairman)
and $5,000 in the case of committee members who do not chair a
committee, and (4) a per committee meeting fee of $1,000.
No meeting fee is paid for telephonic meetings, unless the
meeting is a full, multiple agenda item meeting (the
determination is made by the applicable board or committee
chairman). On October 22, 2008, the Board revised its
compensation for telephonic meetings to provide a $500 per
meeting fee for abridged telephonic meetings between 30 and 90
minutes in length. On March 5, 2009, the Board agreed to
cut its retainer payments for the final three quarters of 2009
and its per meeting payments for meetings held after
March 5, 2009 by 10%. The Board also agreed to delay
payment of all such amounts until the fourth quarter of 2009.
Policy on Director Share Ownership.
On
March 1, 2007, our board of directors approved a policy to
create a target for director share ownership such that within
five years, each director would own stock valued at three times
the base annual board retainer amount (currently, the target
would be stock valued at $60,000, or three times the $20,000
base annual retainer). At each annual meeting each director has
the right to elect to receive 50% of the annual base retainer of
$20,000 in form of restricted stock with one year vesting, in
lieu of cash. During 2007, each of our six non-employee
directors elected to receive 2,967 shares of restricted
stock in lieu of $10,000 that would otherwise have been paid as
part of their cash retainer. On February 28, 2008, our
board of directors amended the policy to allow the chairman of
the board to receive one half of the chairmans base
retainer of $60,000 in the form of restricted stock. Due to
8
the dilutive impact of such grants in 2008 resulting from the
decline in the price of Proliance common stock, none of the
directors elected to receive 50% of their retainer in the form
of restricted stock during 2008.
Other Director Compensation.
Each director and
committee member is reimbursed for travel and related expenses
incurred in attending meetings.
Our non-employee directors are eligible to receive options,
restricted stock and other equity-linked grants under our Equity
Incentive Plan. However, no such grants were made to our
non-employee directors during 2008.
Director Compensation Table.
The following
table shows all compensation earned during or with respect to
the 2008 fiscal year by each of the non-employee directors for
services rendered to Proliance and its subsidiaries during 2008.
2008
DIRECTOR COMPENSATION
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Fees Earned or
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Stock Awards (b)
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All Other
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Total
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Name(a)
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Paid in Cash ($)
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($)
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Compensation ($)
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($)
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William J. Abraham, Jr.
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$
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54,000
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$
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3,098
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$
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57,098
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Barry R. Banducci
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83,500
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3,333
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86,833
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Paul R. Lederer
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44,500
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3,098
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47,598
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Vincent L. Martin
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59,500
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3,333
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62,833
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James R. Rulseh
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48,000
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3,333
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51,333
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F. Alan Smith
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51,500
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3,333
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54,833
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(a)
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Our non-employee directors are eligible to receive options,
restricted stock and other equity-linked grants under our Equity
Incentive Plan. During 2007, Messrs. Abraham, Banducci,
Lederer, Martin, Rulseh and Smith each received a grant of
2,967 shares of restricted stock under the Equity Incentive
Plan in lieu of $10,000 of cash retainer. Each such grant of
restricted stock vested in its entirety on May 3, 2008. No
equity grants were made to our non-employee directors during
2008. As of December 31, 2008, Mr. Banducci held
options to purchase 12,800 shares of Proliance common
stock, and Messrs. Abraham, Lederer and Smith each held
options to purchase 6,000 shares of Proliance common stock.
The other listed directors did not hold any options to purchase
our common stock.
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(b)
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Dollar amounts set forth with regard to restricted stock grants
for each individual are those recognized for financial statement
reporting purposes in accordance with FAS 123R.
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Communications
with Directors
In order to provide our security holders and other interested
parties with a direct and open line of communication to the
board of directors, the board of directors has adopted the
following procedures. Proliance security holders and other
interested persons may communicate with the chairmen of our
Nominating and Governance Committee, Compensation Committee or
Audit Committee or with the non-management directors as a group
by sending an email to directors@pliii.com. The email should
specify which of the foregoing is the intended recipient.
Communications may also be sent by mail addressed in care of the
corporate Secretary, Proliance International, Inc., 100 Gando
Drive, New Haven, CT 06513.
All communications received in accordance with these procedures
will be reviewed initially by our corporate Secretary. The
Secretary will relay all such communications to the appropriate
director or directors unless the Secretary determines that the
communication:
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does not relate to the business or affairs of Proliance or the
functioning or constitution of the board of directors or any of
its committees;
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relates to routine or insignificant matters that do not warrant
the attention of the board of directors;
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9
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is an advertisement or other commercial solicitation or
communication;
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is frivolous or offensive; or
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is otherwise not appropriate for delivery to directors.
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The director or directors who receive any such communication
will have discretion to determine whether the subject matter of
the communication should be brought to the attention of the full
board of directors or one or more of its committees and whether
any response to the person sending the communication is
appropriate. Any response will be made only in accordance with
applicable law and regulations relating to the disclosure of
information.
Our Secretary will retain copies of all communications received
pursuant to these procedures for a period of at least one year.
The Nominating and Governance Committee of the board of
directors will review the effectiveness of these procedures from
time to time and, if appropriate, recommend changes.
We have not established a formal policy regarding director
attendance at our annual meetings of stockholders, but our
directors generally do attend the annual meeting. The chairman
of the board presides at the annual meeting of stockholders, and
the board of directors generally holds one of its regular
meetings in conjunction with the annual meeting of stockholders.
Accordingly, unless one or more members of the board are unable
to attend, all members of the board are present for the annual
meeting. Each of the seven members of the board at the time of
our 2008 annual meeting of stockholders attended that meeting.
Nomination
of Directors
The Nominating and Governance Committee has adopted
specifications applicable to members of the board of directors,
and nominees for the board of directors recommended by the
Nominating and Governance Committee must meet these
specifications. The specifications provide that a candidate for
director should:
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Have a reputation for industry, integrity, honesty, candor,
fairness and discretion;
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Be knowledgeable in his or her chosen field of endeavor, which
field should have such relevance to our businesses as would
contribute to the companys success;
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Be knowledgeable, or willing and able to become so quickly, in
the critical aspects of our businesses and operations; and
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Be experienced and skillful in serving as a competent overseer
of, and trusted advisor to, senior management of a publicly held
corporation.
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In addition, nominees for the board of directors should
contribute to the mix of skills, core competencies and
qualifications of the board through expertise in one or more of
the following areas: accounting and finance, the automotive
industry, international business, mergers and acquisitions,
leadership, business and management, strategic planning,
government relations, investor relations, executive leadership
development, and executive compensation.
The Nominating and Governance Committee will consider
stockholder nominees for the Boards slate of directors for
the 2010 annual meeting of stockholders that are submitted prior
to the end of 2009 to our Secretary at Proliances offices,
100 Gando Drive, New Haven, Connecticut 06513. Any
recommendation must be in writing and must include a detailed
description of the business experience and other qualifications
of the recommended nominee as well as the signed consent of the
nominee to serve if nominated and elected, so that the candidate
may be properly considered. All stockholder recommendations will
be reviewed in the same manner as other potential candidates for
board membership.
The Nominating and Governance Committee has not received any
nominees for election to the board at the 2009 annual meeting
from any stockholder or group that has held more than 5% of our
common stock for a period of one year.
10
Code of
Ethics
Our board of directors has approved a Code of Business Conduct
in accordance with the rules of the Securities and Exchange
Commission and NYSE Amex (formerly known as the American Stock
Exchange) that governs the conduct of each of our employees and
directors, including our principal executive officer, principal
financial officer, principal accounting officer and controller.
Our Code of Business Conduct is maintained on our website at
www.pliii.com. Any amendments to or waivers of the Code of
Business Conduct that apply to our principal executive officer,
principal financial officer or principal accounting officer and
that relates to any element of the definition of the term
code of ethics, as the term is defined by the
Securities and Exchange Commission, will be posted on our
website at www.pliii.com. There are currently no such amendments
or waivers.
Executive
Officer Compensation
Executive
Contracts and Severance and
Change of Control Arrangements
Charles E. Johnson.
Effective March 12,
2001, we entered into an employment agreement with Charles E.
Johnson, our President and Chief Executive Officer. The
agreement, as amended, has automatic one-year extensions upon
each anniversary date of the agreement unless either party gives
at least 90 days notice to the contrary. The
employment agreement can be terminated by Proliance for
serious cause (as defined in the employment
agreement) or in the event Mr. Johnson becomes disabled,
and Mr. Johnson can terminate the agreement for good
reason (as defined in the agreement). The employment
agreement provided annual pension benefits, supplemental to the
annual benefits paid under our retirement plans, in an amount
determined in accordance with the applicable Proliance
retirement plan, without giving effect to limits imposed by the
Internal Revenue Code and regulations of the IRS on the amount
of benefits payable or compensation that may be used in
determining benefits that may be paid to an individual under a
Federal income tax qualified plan. The employment agreement
provided for an annual salary of $500,000 and a bonus of up to
150% of base salary determined based upon performance targets
set annually by the board, however, the base salary component
has been reduced as described below.
On May 4, 2006, we entered into an amendment to the
employment agreement with Mr. Johnson, pursuant to which
(i) a deferred compensation arrangement regarding certain
potential annual bonus payments in excess of 75% of base salary
was deleted, and (ii) Mr. Johnsons existing
contractual supplemental retirement benefits and certain
severance benefits were removed from the employment agreement
and moved into a separate Supplemental Executive Retirement Plan
(the SERP). These changes were designed to comply
with Section 409A of the Internal Revenue Code and did not
expand the level or types of benefits payable to
Mr. Johnson.
On March 26, 2007, we amended Mr. Johnsons
employment agreement and SERP as follows:
(i) Mr. Johnson agreed to reduce his base salary for
the 2007 calendar year from $500,000 to $425,000; (ii) we
agreed to extend the term of Mr. Johnsons employment
agreement by one year, through March 11, 2009; and
(iii) we agreed to increase the amounts payable in the
event Mr. Johnsons employment is terminated other
than following a change of control transaction. Specifically,
upon termination other than within two years after a change of
control transaction is presented to our Board, Mr. Johnson
would receive his base salary plus life, long-term disability,
and medical, dental and vision insurance coverage and automobile
allowance for two years following termination (formerly one
year).
On December 6, 2007 we entered into a further amendment to
Mr. Johnsons employment agreement in response to
final regulations issued in connection with Internal Revenue
Code Section 409A which did not expand the level or types
of benefits payable to Mr. Johnson. This additional
amendment: (i) conforms the provisions relating to a
termination for good reason to the Section 409A safe harbor
provisions,
11
(ii) clarifies that any termination of employment must
constitute an involuntary separation from service (as defined
for purposes of Section 409A) in order to trigger severance
payments, (iii) moves the supplemental healthcare, life
insurance and long-term disability benefits, which may
constitute deferred compensation, to the SERP, and
(iv) conforms the definition of change in control to a
Section 409A definition.
On August 8, 2008, we entered into a further amendment to
Mr. Johnsons employment agreement, pursuant to which
he voluntarily agreed to reduce his base salary for the full
2008 calendar year from $500,000 to $425,000. On
January 27, 2009, we entered into another amendment to
Mr. Johnsons employment agreement to continue this
voluntary reduction in his base salary for the 2009 calendar
year. If Mr. Johnsons employment terminates during
2009, any severance payments would be based on a $425,000 annual
base salary. Effective March 12, 2009,
Mr. Johnsons employment agreement automatically
renewed for an additional one year period.
Mr. Johnsons employment agreement and SERP contain
provisions which provide that, in the event we terminate
Mr. Johnsons employment other than for serious
cause or his disability, death or retirement, or if
Mr. Johnson terminates his employment for good
reason, we would pay him over a twenty-four month period
(subject to Section 409A) an amount equal to two times his
base salary and would reimburse him for premiums paid for life
and long term disability coverage for a two year period and
would allow Mr. Johnson to retain eligibility for medical,
dental and vision coverage for a two year period after
termination. In addition, we would pay Mr. Johnson accrued
vacation pay and all other amounts to which he is entitled under
the agreement prior to termination. The employment agreement
also contains a non-competition and non-solicitation covenant
for a period of one year following termination and contains a
customary confidentiality provision. Assuming Mr. Johnson
was terminated on December 31, 2008, he would have been
entitled to aggregate benefits under his employment agreement
valued at $1,065,238.
In the event Mr. Johnsons employment is terminated
within two years after a change of control transaction is
presented to our board of directors, Mr. Johnsons
severance payment would equal 2.99 times his base amount (as
that term is defined in Section 280G of the Internal
Revenue Code). Change of control severance is payable over a
three-year period. We would also reimburse Mr. Johnson for
premiums paid for life and long term disability coverage for a
three year period and would allow Mr. Johnson to retain
eligibility for medical, dental and vision coverage for a three
year period after termination. In addition he would receive
immediate vesting of all stock options and restricted stock.
Change of control payments to Mr. Johnson are subject to a
cap such that we will not have to pay excise tax under the
provisions of Section 4999 of the Internal Revenue Code.
Assuming Mr. Johnson was terminated on December 31,
2008 in connection with a change of control, he would have been
entitled to aggregate benefits under his employment agreement
valued at $1,317,532.
Executive Severance Plan.
In May 2006, we
implemented an Executive Severance Plan for our senior
executives. Each of our named executive officers other than
Mr. Johnson is a participant in the Executive Severance
Plan. The Executive Severance Plan replaced prior severance
letter agreements with our senior executives. Pursuant to the
Executive Severance Plan, if the participant loses his current
position (except for termination for cause) and such
termination constitutes a separation of service under
Section 409A, or if following a change of control the
participants employment terminates for certain listed
reasons, then his base salary will continue to be paid until he
either secures other full-time employment, or for one year,
whichever occurs first. Payments under the Executive Severance
Plan may be subject to certain timing delays in accordance with
Section 409A.
On December 6, 2007, the Executive Severance Plan was
amended, effective January 1, 2008, to comply with
Section 409A, but did not expand the level or types of
benefits payable to the participants. The Executive Severance
Plan was also revised to add a one year non-compete and
non-solicit provision together with standard confidentiality and
non-disparagement covenants.
Assuming Messrs. Henock, Long, Jackson and Wisot were each
terminated on December 31,
12
2008, they would have been entitled to benefits under the
Executive Severance Plan valued at up to $294,055, $294,055,
$216,239 and $187,331, respectively.
Compensation
Discussion and Analysis
Our Compensation Committee, which is comprised of three
independent non-employee directors, has formulated a
compensation philosophy that is designed to enable us to
attract, retain and reward capable employees who can contribute
to the success of Proliance, principally by setting overall
compensation at the median of the marketplace through a
combination of (1) base salaries, (2) annual incentive
opportunities and (3) long term incentive opportunities for
senior management. We believe that implementation of a system of
compensation that emphasizes performance-based compensation
provides a strong alignment to stockholders interests.
Five key principles serve as the guiding framework for
compensation decisions for all employees of Proliance:
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To attract and retain the most highly qualified management and
employee team.
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To pay competitively compared to similar automotive companies.
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To encourage superior employee performance by aligning rewards
with stockholder interests, especially through the use of
tangible performance targets.
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To motivate senior executives to achieve Proliances annual
and long-term business goals by providing equity-based incentive
opportunities.
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To strive for fairness in administration by emphasizing
performance related contributions as the basis for pay decisions.
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To implement these policies, we have designed the framework for
a four-part executive compensation program consisting of base
salary, annual incentives, long-term incentive opportunities for
senior management, and other employment benefits.
Base Salary.
We will seek to maintain levels
of compensation that are competitive with similar automotive
companies. Base salary represents the fixed component of the
executive compensation program. Proliances philosophy
regarding base salaries is to maintain salaries for the
aggregate officer group at the competitive industry average.
Periodic increases in base salary will relate to individual
contributions evaluated against established objectives, length
of service, and the industrys annual competitive pay
practice movement. We believe that base salary for 2008 for our
chief executive officer and for the other executive officers was
generally at or near the competitive industry average.
We did not provide general salary increases to our executive
officers during 2008. Mr. Johnson agreed to reduce his
annual base salary for 2008 from $500,000 to $425,000.
Mr. Johnson is continuing to be paid at the $425,000 level
during 2009.
Annual Incentive Program.
We have designed an
annual incentive program pursuant to which key Proliance
employees will be eligible to receive performance bonuses in a
range based upon a percentage of their annual base salary.
Payment of the performance bonuses is based upon performance
measures set by the Compensation Committee that may incorporate
overall corporate, strategic business unit and personal targets.
Due to uncertainty surrounding the impact of the destruction of
Proliances main distribution facility by tornadoes in
February 2008, the Compensation Committee set bonus targets for
fiscal 2008 based one-half upon achievement of five targets
(counting for 10% each) relating to meeting Proliances
debt covenants and consummating a refinancing transaction. The
other half of the bonus payment was at the discretion of the
Compensation Committee. Maximum bonus payouts were capped at
target levels. Achievement of 2008 target levels would have
resulted in bonus payments as a percentage of base salary as
follows: Charles E. Johnson (75%); Arlen F.
Henock (50%); William J. Long III (50%);
Jeffrey L. Jackson - (50%); Richard A. Wisot (40%).
The Compensation Committee determined that based upon
satisfaction of debt covenants that 35% of the total target
achievement had been met and authorized payment of the following
amounts to the named executive officers: Charles E.
Johnson $111,500; Arlen F. Henock - $50,750; William
J. Long III $50,750; Jeffrey L. Jackson
13
$36,750; Richard A. Wisot $25,200. No discretionary
incentive payments for 2008 were authorized.
The Compensation Committee is formulating the 2009 incentive
payment structure and has not yet determined the applicable
metrics or targets for 2009.
Long-Term Incentives.
We believe that the pay
program should provide senior executives with an opportunity to
increase their ownership and potentially gain financially from
Proliance stock price increases. By this approach, the best
interests of stockholders and senior executives will be closely
aligned. Therefore, senior executives are eligible to receive
restricted stock and are also eligible to receive stock options,
giving them the right to purchase shares of common stock at a
specified price in the future. These grants will vest based upon
the passage of time, the achievement of performance metrics, or
both. We believe that the use of restricted stock and stock
options as the basis for long-term incentive compensation meets
our defined compensation strategy and business needs by
achieving increased value for stockholders and retaining key
employees.
On August 12, 2008, the Compensation Committee authorized
grants to senior management of ten-year nonqualified stock
options under the Equity Incentive Plan vesting in four equal
annual installments. These grants were made to
Messrs. Johnson (95,000 shares), Henock
(80,000 shares), Long (80,000 shares), Jackson
(25,000 shares) and Wisot (18,000 shares). Each grant
was made with an exercise price of $1.20 per share, representing
the market price of the common stock on the date of grant. In
recognition of additional responsibilities undertaken by
Mr. Long, on August 12, 2008 he also received a grant
of 5,000 shares of time-vested restricted stock under the
Equity Incentive Plan vesting in three equal annual installments.
Other Benefits.
Our philosophy is to provide
competitive health- and welfare-oriented benefits to executives
and employees, but to maintain a conservative posture relative
to executive benefits. Consistent with industry practices, we
provide an automobile allowance to executive officers.
Compliance with Section 162(m) of the Internal Revenue
Code.
Section 162(m) of the Internal Revenue
Code generally disallows a tax deduction to a public corporation
for compensation over $1 million paid to a
corporations chief executive officer and four other most
highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the cap if
certain requirements are met. The salaries for our highest paid
executives will be set, in part based on independent studies, at
levels at or near the competitive industry average but are not
expected to reach $1 million in the near future. We intend
to structure the overall compensation of our executive officers
in a manner that should ensure that Proliance does not lose any
tax deductions because of the $1 million compensation limit
in the foreseeable future.
Our Equity Incentive Plan incorporates maximum limitations on
individual annual stock option and restricted stock grants so as
to meet the requirements of Section 162(m). The Equity
Incentive Plan also identifies performance measures to be used
if we decide to use performance-based vesting restricted stock
in the future to meet the requirements of Section 162(m).
Compensation
Disclosure Tables
Summary Compensation Table.
The following
table (Table I) shows all compensation earned by or granted
to, during or with respect to the 2006, 2007 and 2008 fiscal
years, the chief executive officer, the chief financial officer
and to the three other highest paid executive officers for
services rendered to Proliance and its subsidiaries during these
years. (Persons in this group are referred to individually as a
named executive officer and collectively as the
named executive officers, and, unless otherwise
noted, the titles listed are the titles held as of the end of
the 2008 fiscal year.)
TABLE
I
2006-2008
SUMMARY COMPENSATION TABLE
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Change in
|
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|
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|
|
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|
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Pension
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|
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|
|
|
|
|
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Non-
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Value
|
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|
|
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|
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|
Equity
|
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and Nonqualified
|
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Stock
|
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Option
|
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Incentive
|
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Deferred
|
|
|
|
|
|
|
|
|
Salary
|
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Bonus
|
|
Awards
|
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Awards
|
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Plan
|
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Compensation
|
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All Other
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(a)
|
|
($)(b)
|
|
Compensation ($)
|
|
Earnings ($)
|
|
Compensation ($)(c)
|
|
($)
|
|
Charles E. Johnson
|
|
|
2008
|
|
|
$
|
425,000
|
|
|
$
|
0
|
|
|
$
|
51,167
|
|
|
$
|
25,134
|
|
|
$
|
111,500
|
|
|
$
|
25,679
|
|
|
$
|
31,847
|
|
|
$
|
670,327
|
|
President and Chief
|
|
|
2007
|
|
|
|
425,000
|
|
|
|
0
|
|
|
|
42,396
|
|
|
|
18,801
|
|
|
|
0
|
|
|
|
26,178
|
|
|
|
36,161
|
|
|
|
548,536
|
|
Executive Officer
|
|
|
2006
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
11,389
|
|
|
|
15,667
|
|
|
|
0
|
|
|
|
21,635
|
|
|
|
31,800
|
|
|
|
580,491
|
|
Arlen F. Henock
|
|
|
2008
|
|
|
|
290,000
|
|
|
|
0
|
|
|
|
4,836
|
|
|
|
15,269
|
|
|
|
50,750
|
|
|
|
0
|
|
|
|
15,997
|
|
|
|
376,852
|
|
Executive Vice
|
|
|
2007
|
|
|
|
161,731
|
|
|
|
0
|
|
|
|
2,281
|
|
|
|
5,796
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8,368
|
|
|
|
178,176
|
|
President and Chief
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Long III
|
|
|
2008
|
|
|
|
290,000
|
|
|
|
0
|
|
|
|
4,855
|
|
|
|
10,863
|
|
|
|
50,750
|
|
|
|
18,650
|
|
|
|
15,920
|
|
|
|
391,038
|
|
Executive Vice
|
|
|
2007
|
|
|
|
251,539
|
|
|
|
0
|
|
|
|
4,020
|
|
|
|
5,530
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15,743
|
|
|
|
276,832
|
|
President
|
|
|
2006
|
|
|
|
231,539
|
|
|
|
0
|
|
|
|
3,350
|
|
|
|
4,608
|
|
|
|
0
|
|
|
|
0
|
|
|
|
25,600
|
|
|
|
265,097
|
|
Domestic Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey L. Jackson
|
|
|
2008
|
|
|
|
210,000
|
|
|
|
0
|
|
|
|
4,020
|
|
|
|
7,197
|
|
|
|
36,750
|
|
|
|
14,325
|
|
|
|
15,811
|
|
|
|
288,103
|
|
Vice President
|
|
|
2007
|
|
|
|
210,000
|
|
|
|
0
|
|
|
|
4,020
|
|
|
|
5,530
|
|
|
|
0
|
|
|
|
15,032
|
|
|
|
17,638
|
|
|
|
252,220
|
|
Human Resources
|
|
|
2006
|
|
|
|
210,000
|
|
|
|
0
|
|
|
|
3,350
|
|
|
|
4,608
|
|
|
|
0
|
|
|
|
13,572
|
|
|
|
15,710
|
|
|
|
247,240
|
|
Richard A. Wisot
|
|
|
2008
|
|
|
|
180,000
|
|
|
|
0
|
|
|
|
3,216
|
|
|
|
5,624
|
|
|
|
25,200
|
|
|
|
9,000
|
|
|
|
16,415
|
|
|
|
239,455
|
|
Vice President,
|
|
|
2007
|
|
|
|
206,499
|
|
|
|
0
|
|
|
|
3,216
|
|
|
|
4,424
|
|
|
|
0
|
|
|
|
10,111
|
|
|
|
18,995
|
|
|
|
243,245
|
|
Treasurer and
|
|
|
2006
|
|
|
|
240,000
|
|
|
|
0
|
|
|
|
2,680
|
|
|
|
3,687
|
|
|
|
0
|
|
|
|
10,279
|
|
|
|
17,554
|
|
|
|
274,200
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Dollar amounts set forth with regard to restricted stock grants
for each individual are those recognized for financial statement
reporting purposes for the respective years indicated in
accordance with FAS 123R disregarding the estimate of
forfeitures related to service-based vesting conditions. Share
value utilized for purposes of this determination is the
applicable market value on the date of grant. The dollar amounts
set forth do not include the value of grants of 31,119, 0,
9,153, 9,153, and 7,322 shares respectively made in 2006
and grants of 51,700, 15,000, 30,200, 13,700, and
11,000 shares respectively made in 2007 to
Messrs. Johnson, Henock, Long, Jackson and Wisot, in the
form of performance restricted stock under the Equity Incentive
Plan vesting in four equal annual installments in the case of
the 2006 grants and three equal annual installments in the case
of the 2007 grants (provided that the grants were subject to
forfeiture in the event certain annual net income and cash flow
metrics were not met). Since the 2006 and 2007 net income
and cash flow metrics were not met, the performance restricted
stock was forfeited as of December 31, 2006 and
December 31, 2007, respectively. For a further discussion
of the assumptions underlying these amounts, reference is made
to the footnotes to Proliances financial statements set
forth in
Form 10-K
for the fiscal year ended December 31, 2008.
|
|
|
|
(b)
|
|
Dollar amounts set forth with regard to option grants for each
individual are those recognized for financial statement
reporting purposes for the respective years indicated in
accordance with FAS 123R disregarding the estimate of
forfeitures related to service-based vesting conditions. The
amounts set forth herein are based on a Black-Scholes
calculation. For a discussion of the assumptions underlying
these amounts, reference is made to the footnotes to
Proliances financial statements set forth in
Form 10-K
for the fiscal year ended December 31, 2008.
|
|
|
|
(c)
|
|
Amounts shown for 2008 consist of, for Messrs. Johnson,
Henock, Long, Jackson and Wisot, car allowances ($25,000,
$12,000, $10,000, $10,500, and $12,000, respectively),
contributions to defined contribution plans ($4,600, $2,677,
$4,600, $4,200 and $3,462, respectively) and payment of life
insurance premiums ($2,247, $1,320, $1,320, $1,111 and $953,
respectively).
|
|
(d)
|
|
Mr. Henock commenced employment with Proliance on
June 4, 2007.
|
15
2008 Grants of Plan-Based Awards; Vested Restricted
Stock.
During 2008, we made plan-based equity and
non-equity grants to the named executive officers as described
below.
Equity Grants.
On August 12, 2008, the
Compensation Committee authorized grants to the named executive
officers of ten-year nonqualified stock options under the Equity
Incentive Plan vesting in four equal annual installments. These
grants were made to Messrs. Johnson (95,000 shares),
Henock (80,000 shares), Long (80,000 shares), Jackson
(25,000 shares) and Wisot (18,000 shares). Each grant
was made with an exercise price of $1.20 per share, representing
the market price of the common stock on the date of grant. In
recognition of additional responsibilities undertaken by
Mr. Long, on August 12, 2008 he also received a grant
of 5,000 shares of time-vested restricted stock under the
Equity Incentive Plan vesting in three equal annual installments.
Non-Equity Grants Annual Incentive
Program.
Our annual incentive program provides
that key Proliance employees will be eligible to receive
performance bonuses in a range based upon a percentage of their
annual base salary. Payment of the performance bonuses is based
upon performance measures set by the Compensation Committee that
may incorporate overall corporate, strategic business unit and
personal targets. Due to uncertainty surrounding the impact of
the destruction of Proliances main distribution facility
by tornadoes in February 2008, the Compensation Committee set
bonus targets for fiscal 2008 based one-half upon achievement of
five targets (counting for 10% each) relating to meeting
Proliances debt covenants and consummating a refinancing
transaction. The other half of the bonus payment was at the
discretion of the Compensation Committee. Maximum bonus payouts
were capped at target levels. Achievement of 2008 target levels
would have resulted in bonus payments as a percentage of base
salary as follows: Charles E. Johnson (75%); Arlen
F. Henock (50%); William J. Long III
(50%); Jeffrey L. Jackson (50%); Richard A. Wisot -
(40%). The Compensation Committee determined that based upon
satisfaction of debt covenants that 35% of the total target
achievement had been met and authorized payment of the following
amounts to the named executive officers: Charles E.
Johnson $111,500; Arlen F. Henock
$50,750; William J. Long III $50,750; Jeffrey
L. Jackson $36,750; Richard A. Wisot
$25,200. No discretionary incentive payments for 2008 were
authorized.
2008 Restricted Stock Vesting.
On
March 2, 2008, certain shares of restricted stock
previously granted to our named executive officers on
March 2, 2006 vested. Shares vested as follows:
Mr. Johnson 2,593 shares;
Mr. Long 763 shares;
Mr. Jackson 763 shares;
Mr. Wisot 610 shares. Based upon the value
of a share of Proliance common stock on March 2, 2008
($2.78) the vested shares were valued as follows:
Mr. Johnson $7,209; Mr. Long
$2,121; Mr. Jackson $2,121;
Mr. Wisot $1,696. On June 4, 2008,
1,667 shares of restricted stock previously granted to
Mr. Henock on June 4, 2007 vested. Based upon the
value of a share of Proliance common stock on June 4, 2008
($1.20) the vested shares were valued on the vesting date at
$2,000.
16
Outstanding Equity Awards at Fiscal Year-End
Table.
Shown in Table II below is
information with respect to outstanding equity-based awards
(consisting of unexercised options to purchase Proliance common
stock and unvested restricted Proliance common stock) held by
the named executive officers at December 31, 2008. There
were no outstanding equity incentive compensation awards at
December 31, 2008.
TABLE
II
OUTSTANDING
EQUITY AWARDS AT 2008 FISCAL YEAR END
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Shares or Units
|
|
of Shares or
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
of Stock That
|
|
Units of Stock
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
That Have Not
|
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
Name
|
|
(#)
|
|
(a) (#)
|
|
($)
|
|
Date
|
|
(b) (#)
|
|
(c) ($)
|
|
Charles E. Johnson
|
|
|
60,000
|
|
|
|
0
|
|
|
$
|
2.90
|
|
|
|
3/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
3.20
|
|
|
|
6/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
0
|
|
|
|
4.72
|
|
|
|
5/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
|
4.65
|
|
|
|
2/25/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
12,966
|
|
|
|
12,966
|
|
|
|
5.27
|
|
|
|
3/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
95,000
|
|
|
|
1.20
|
|
|
|
8/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,876
|
|
|
$
|
8,235
|
|
Arlen F. Henock
|
|
|
6,250
|
|
|
|
18,750
|
|
|
|
2.90
|
|
|
|
6/4/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
80,000
|
|
|
|
1.20
|
|
|
|
8/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,333
|
|
|
|
1,200
|
|
William J. Long III
|
|
|
3,813
|
|
|
|
3,814
|
|
|
|
5.27
|
|
|
|
3/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
80,000
|
|
|
|
1.20
|
|
|
|
8/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,526
|
|
|
|
2,349
|
|
Jeffrey L. Jackson
|
|
|
10,000
|
|
|
|
0
|
|
|
|
2.5625
|
|
|
|
1/2/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
3.39
|
|
|
|
2/6/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
3,833
|
|
|
|
0
|
|
|
|
3.39
|
|
|
|
2/6/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
|
0
|
|
|
|
3.39
|
|
|
|
2/6/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
4.72
|
|
|
|
5/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
0
|
|
|
|
5.25
|
|
|
|
5/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
3,813
|
|
|
|
3,814
|
|
|
|
5.27
|
|
|
|
3/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
25,000
|
|
|
|
1.20
|
|
|
|
8/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,525
|
|
|
|
549
|
|
Richard A. Wisot
|
|
|
25,000
|
|
|
|
0
|
|
|
|
3.20
|
|
|
|
6/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
4.72
|
|
|
|
5/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
3,051
|
|
|
|
3,051
|
|
|
|
5.27
|
|
|
|
3/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
18,000
|
|
|
|
1.20
|
|
|
|
8/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,221
|
|
|
|
440
|
|
|
|
|
(a)
|
|
All unvested options vest in four equal annual installments from
the date of grant (which is, in each case, ten years prior to
the indicated expiration date).
|
|
(b)
|
|
Shares of restricted stock listed vest as follows:
Mr. Johnson 17,689 shares vest on
March 26, 2009 (the second anniversary of the date of
grant) and 5,187 shares vest in two equal installments on
March 2, 2009 and 2010; Mr. Henock
3,333 shares vest in two equal annual installments on June
4, 2009 and 2010; Mr. Long 5,000 shares
vest in three equal installments on August 12,
|
17
|
|
|
|
|
2009, 2010 and 2011 and 1,526 shares vest in two equal
installments on March 2, 2009 and 2010;
Mr. Jackson 1,526 shares vest in two equal
installments on March 2, 2009 and 2010;
Mr. Wisot 1,221 shares vest in two equal
installments on March 2, 2009 and 2010. Mr. Johnson
agreed to voluntarily forfeit the 17,689 shares of
restricted stock described above on February 10, 2009.
|
|
(c)
|
|
These values are based on $0.36 per share, the market price of a
share of Proliance common stock as of December 31, 2008.
|
Pension Benefits Table.
Shown in
Table III below is information as of December 31, 2008
with respect to each plan that provides retirement-based
payments or other benefits to the named executive officers.
TABLE
III
PENSION BENEFITS AT DECEMBER 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Present
|
|
|
|
|
|
|
|
|
Years
|
|
|
Value of
|
|
|
Payments
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
During Last
|
|
|
|
|
|
Service
|
|
|
Benefit
|
|
|
Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Charles E. Johnson
|
|
Proliance International, Inc. Pension Plan
Supplemental Executive Retirement Plan
|
|
|
7
7
|
|
|
$
|
67,185
77,907
|
|
|
$
|
0
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arlen F. Henock
|
|
Proliance International, Inc. Pension Plan
|
|
|
2
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Long III
|
|
Proliance International, Inc. Pension Plan
|
|
|
3
|
|
|
|
18,650
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey L. Jackson
|
|
Proliance International, Inc. Pension Plan
|
|
|
16
|
|
|
|
128,727
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard A. Wisot
|
|
Proliance International, Inc. Pension Plan
|
|
|
7
|
|
|
|
62,399
|
|
|
|
0
|
|
Each of our named executive officers are covered by the
Proliance International, Inc. Pension Plan, which is a
non-contributory defined benefit cash balance plan. Through
March 31, 2009 we credited an amount, quarterly, to a
notional account for each participant under the plan equal to
the sum of (i) each participants total compensation
for the quarter (excluding bonus) multiplied by a percentage
factor plus (ii) each participants total compensation
for the quarter (excluding bonus) in excess of a fraction of the
Social Security wage base multiplied by a percentage factor. The
percentage factors were determined under the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus % of
|
|
|
|
|
|
|
Pay Above
|
|
|
|
|
|
|
1/12 of Social
|
|
|
|
Credit Account
|
|
|
Security Taxable
|
|
Years of Service
|
|
with % of Pay
|
|
|
Wage Base
|
|
|
Less than 10 years
|
|
|
2.25
|
%
|
|
|
2
|
%
|
10 to 20 years
|
|
|
3.00
|
%
|
|
|
2
|
%
|
20 or more years
|
|
|
4.00
|
%
|
|
|
2
|
%
|
Each year of employment, the notional account balances was
credited quarterly with interest equal to the average of the
one-year Treasury bill rate on the first day of October,
November and December of the previous calendar year multiplied
by his or her account balance at the beginning of the quarter.
Upon retirement, the notional account balance will be paid in
the form of a lump sum payment or converted to an annuity to
provide monthly benefit payments.
In addition, Mr. Johnsons Supplemental Executive
Retirement Plan provides annual pension benefits, supplemental
to the annual benefits paid under our retirement plans, in an
amount determined in accordance with the applicable Proliance
retirement plan, without giving effect to limits imposed by the
Internal Revenue Code and regulations of the IRS on the amount
of benefits payable or compensation that may be used in
determining benefits that may be paid to an individual under a
Federal income tax qualified plan.
On January 27, 2009, we amended the Proliance
International, Inc. Pension Plan in order to cease all future
benefit accruals under the plan for non-union employees
effective as of March 31, 2009. We also amended
Mr. Johnsons Supplemental Executive Retirement Plan
to cease all future benefit accruals effective as of
March 31,
18
2009 under the retirement benefits and death benefits sections
of the plan.
Equity Compensation Plan Table.
The following
table (Table IV) sets forth general information concerning
our equity compensation plans as of December 31, 2008.
TABLE
IV
EQUITY COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
Weighted-average
|
|
|
remaining available
|
|
|
|
Number of securities
|
|
|
exercise price of
|
|
|
for issuance under equity
|
|
|
|
to be issued upon
|
|
|
outstanding options,
|
|
|
compensation plans
|
|
|
|
exercise of outstanding
|
|
|
warrants and
|
|
|
(excluding securities
|
|
|
|
options, warrants and
|
|
|
rights ($)
|
|
|
reflected in column
|
|
Plan Category
|
|
rights (a)
|
|
|
(b)
|
|
|
(a)) (c)
|
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
1995 Stock Plan
|
|
|
309,777
|
|
|
$
|
3.93
|
|
|
|
0
|
|
1995 Non-Employee Directors Plan
|
|
|
30,800
|
|
|
$
|
4.61
|
|
|
|
0
|
|
Equity Incentive Plan
|
|
|
644,423
|
|
|
$
|
2.25
|
|
|
|
671,946
|
|
Equity compensation plans not approved by security holders
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Total
|
|
|
985,000
|
|
|
$
|
2.85
|
|
|
|
671,946
|
|
19
Compensation
Committee Report
The Compensation Committee is comprised of three independent
non-employee directors. As members of the Compensation
Committee, it is our responsibility to administer
Proliances executive compensation programs, monitor
corporate performance and its relationship to compensation of
executive officers, and make appropriate recommendations
concerning matters of executive compensation.
In this context, the Compensation Committee has reviewed and
discussed with management the section of this proxy statement
above entitled Compensation Discussion and Analysis.
Based on this review and discussion, the Compensation Committee
recommended to the board of directors, and the board has
approved, that the Compensation Discussion and Analysis be
incorporated by reference into Proliances annual report on
SEC
Form 10-K
for the year ended December 31, 2008.
Compensation Committee
of the Board of Directors
Vincent L. Martin, Chairman
William J. Abraham, Jr.
James R. Rulseh
Audit
Committee Report
The Audit Committee reviews Proliances financial reporting
process on behalf of the board of directors. Management has
primary responsibility for the financial statements and the
reporting process, including the system of internal controls.
The independent registered public accounting firm is responsible
for performing an independent audit of Proliances
consolidated financial statements in accordance with standards
of the Public Company Accounting Oversight Board (United States)
and to issue a report on the financial statements. The Audit
Committee monitors these processes through periodic meetings
with management and the independent registered public accounting
firm.
In this context, the Audit Committee has reviewed and discussed
with management and the independent accountants the audited
financial statements for the fiscal year ended December 31,
2008. The Audit Committee has discussed with the independent
accountants the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit
Committees). In addition, the Audit Committee has received from
the independent accountants the written disclosures and letter
required by the applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountants communications with the Audit Committee
concerning independence, and discussed with them their
independence from Proliance and its management. The Audit
Committee has also considered whether the independent
accountants provision of non-audit services to Proliance
is compatible with the accountants independence.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the board of directors, and
the board has approved, that the audited financial statements
for the fiscal year ended December 31, 2008 be included for
filing in Proliances annual report on SEC
Form 10-K
for the year ended December 31, 2008.
Audit Committee of the Board of Directors
- F. Alan Smith, Chairman
- Paul R. Lederer
- Vincent L. Martin
Audit
Committee Pre-Approval Policy
Pursuant to its charter, the Audit Committee is responsible for
selection, approving compensation and overseeing the
independence, qualifications and performance of the independent
accountants. The Audit Committee has adopted a pre-approval
policy pursuant to which certain permissible audit and non-audit
services may be provided by the independent accountants.
Pre-approval is generally provided for up to one year, is
detailed as to the particular service or category of services
and may be subject to a specific budget. The Audit Committee may
also pre-approve particular services on a
case-by-case
basis. In assessing requests for services by the independent
accountants, the Audit Committee considers whether such services
are consistent with the auditors independence; whether the
independent accountants are likely to provide the most effective
and efficient service based upon their familiarity with the
company; and
20
whether the service could enhance our ability to manage or
control risk or improve audit quality.
Notwithstanding the pre-approval policy, all of the
audit-related, tax and other services provided by BDO Seidman,
LLP in fiscal year 2008 and related fees were approved in
advance by the Audit Committee.
Proposal 2:
Approval
of an Amendment to the Certificate of Incorporation to Increase
the Authorized Number of Shares of Common Stock
We are asking our stockholders to approve an amendment to
Proliances amended and restated certificate of
incorporation to increase the number of authorized shares of our
common stock from 47,500,000 to 125,000,000. As of
March 17, 2009, 15,780,489 shares of common stock were
issued and outstanding. As of that date, an aggregate of
17,048,628 shares of common stock are reserved for issuance
upon conversion of outstanding preferred stock, exercise of
outstanding warrants, or upon conversion of options outstanding
or eligible to be granted under our equity incentive plans. In
addition, there currently are, and will continue to be,
2,500,000 authorized shares of preferred stock. Each additional
share of common stock will have the same rights and privileges
as each share of currently authorized common stock. Subject to
stockholder approval, the first sentence of Article FOURTH
of our amended and restated certificate of incorporation, as
amended, will read as follows:
FOURTH. The total number of shares of stock which the
corporation shall have the authority to issue is 127,500,000, of
which 2,500,000 shares shall be Preferred Stock, par value
$.01 per share, and 125,000,000 shares shall be Common
Stock, par value $.01 per share.
Our board of directors unanimously approved this amendment to
our amended and restated certificate of incorporation on
March 5, 2009. Our board of directors believes it is in the
best interests of Proliance to increase the number of authorized
shares of common stock in order to give us greater flexibility
in considering and planning future business needs. The purposes
for which additional authorized stock could be issued include,
but are not limited to, funding of our capital needs and
corporate growth, corporate mergers and acquisitions, grants
under employee stock plans, and for stock splits and stock
dividends. We have been engaged in an effort to refinance our
outstanding debt since early 2008 and while we have no
definitive agreements with respect to any such transaction, we
believe that additional available common stock may be integral
to such a refinancing transaction, if one is consummated. If
this proposal is not adopted, our flexibility in raising capital
and pursuing acquisitions would be severely limited.
Our board of directors will determine whether, when and on what
terms the issuance of shares of common stock may be warranted.
We will be permitted to issue the additional shares of common
stock without further action by the stockholders unless such
action is required by applicable law or by the rules of any
applicable stock exchange. Stockholders do not have pre-emptive
rights with respect to the issuance of additional shares of
common stock. We currently have no definitive agreements or
commitments with respect to the sale or issuance of any
additional shares of common stock, except in connection with the
options outstanding or to be granted under our stock option
plans and outstanding warrants and convertible preferred stock.
If this proposal is approved, we will file an amendment to our
amended and restated certificate of incorporation with the
Delaware Secretary of State containing the language set forth
above as soon as practicable after the annual meeting to effect
the increase in the authorized shares of our common stock.
Except in certain cases such as a stock dividend, the issuance
of additional shares of common stock would have the effect of
diluting the voting power and ownership of existing
stockholders. In addition, another effect of the approval of
this proposal, although not a factor in the board of
directors decision to propose the amendment, may be to
enable the board to issue shares of
21
common stock in a manner that might have the effect of
discouraging or making it more difficult for a third party to
obtain control of Proliance by means of a merger, tender offer,
proxy contest or other approach.
The board
of directors recommends that stockholders vote FOR the amendment
to the certificate of incorporation increasing our authorized
number of shares of common stock.
Proposal 3:
Approval
of Appointment of Proliances Independent
Accountants
The Audit Committee of our board of directors has selected BDO
Seidman, LLP as our independent registered public accounting
firm for the year ending December 31, 2009, and has
directed that the selection of independent accountants be
submitted for ratification by stockholders at the annual
meeting. BDO Seidman, LLP has been our independent accounting
firm since September 2004. A representative of BDO Seidman, LLP
is expected to be present at the annual meeting and will have an
opportunity to make a statement if he or she desires and will be
available to respond to appropriate questions.
Stockholder ratification of the selection of BDO Seidman, LLP as
our independent accountants is not required by our Bylaws or
otherwise. However, the Audit Committee is submitting the
selection of BDO Seidman, LLP to the stockholders for
ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee
will reconsider whether or not to retain that firm. Even if the
selection were ratified, the Audit Committee in its discretion
may direct the appointment of a different independent accounting
firm at any time during the year if the Audit Committee
determines that such a change would be in the best interests of
Proliance and its stockholders.
Audit
Fees
Aggregate fees billed by BDO Seidman, LLP for professional
services rendered for the audit of our annual consolidated
financial statements included in the annual report on
Form 10-K
and the review of interim consolidated financial statements
included in quarterly reports on Form
10-Q
and the
review and audit of the application of new accounting
pronouncements and SEC releases and work regarding a
registration statement and related responses to SEC comment
letters were $1,053,070 and $828,890 for the years ended
December 31, 2008 and 2007, respectively.
Audit-Related
Fees
Aggregate fees billed by BDO Seidman, LLP for assurance and
related services that are reasonably related to the performance
of the audit or review of our financial statements and that are
not disclosed under Audit Fees above were $17,688
and $97,163 for the years ended December 31, 2008 and 2007,
respectively. These audit related services include primarily
audit work in connection with acquisitions and employee benefit
plan audits.
Tax
Fees
Aggregate fees billed by BDO Seidman, LLP for professional
services rendered to Proliance for tax compliance, tax advice
and tax planning were $50,433 and $55,382 for the years ended
December 31, 2008 and 2007, respectively. These tax related
services include primarily tax compliance, tax planning and
advice.
All Other
Fees
There were no fees billed by BDO Seidman, LLP to Proliance for
all other products and services for the years ended
December 31, 2008 and 2007.
The board of directors
recommends that stockholders vote FOR the appointment of BDO
Seidman, LLP as the companys independent accountants for
2009.
22
ADDITIONAL
INFORMATION
Certain
Transactions
On March 1, 2005 we sold our OEM business to Modine
Manufacturing Company for $17 million in cash. On
July 22, 2005, following receipt of approval of our
stockholders, we completed a merger transaction pursuant to
which Modine Aftermarket Holdings, Inc. (Modine Aftermarket)
merged into Proliance. Modine Aftermarket was spun off from
Modine immediately prior to the merger and held Modines
aftermarket business. In connection with the merger, we issued a
total of 8,145,810 shares of our common stock to Modine
shareholders, or 0.235681 shares for each outstanding
Modine common share. Immediately after the effectiveness of the
merger, prior Transpro, Inc. shareholders owned 48% of the
combined company on a fully diluted basis, while Modine
shareholders owned the remaining 52%. As a result of the merger,
we are focused on supplying heating and cooling components and
systems to the automotive and heavy duty aftermarkets in North
and Central America and Europe.
In connection with the foregoing transactions, Modine and
Proliance entered into a number of agreements for the conduct of
the parties after the closings, including: (i) an
Aftermarket License Agreement pursuant to which Modine licensed
certain intellectual property used in the aftermarket business
to Proliance on a royalty-free basis; (ii) an OEM License
Agreement pursuant to which Proliance licensed certain
intellectual property of benefit to Modine to Modine on a
royalty-free basis; (iii) an Aftermarket Supply Agreement
pursuant to which Modine would sell product formerly sold on an
intercompany basis to the aftermarket business to Proliance at
agreed upon prices that reflected Modines intercompany
transactions prior to the merger; (iv) an OEM Supply
Agreement pursuant to which Proliance would sell product
formerly sold on an intercompany basis to Modine Jackson, Inc.
(formerly our subsidiary G&O Manufacturing) to Modine at
agreed upon prices that reflected Proliances intercompany
transactions prior to the stock purchase; (v) an
Aftermarket Transition Services Agreement pursuant to which
Modine provided certain services to Proliance; (vi) an OEM
Transition Services Agreement pursuant to which Proliance
provided certain transition services to Modine Jackson, Inc.;
and (vii) a Tax Indemnification Agreement pursuant to which
the parties determined liability for taxes pre- and post-closing
and the indemnification of a party with regard to the division
of tax liability. During 2007 we made aggregate payments to
Modine under these agreements in the amount of $6.6 million
and Modine made aggregate payments to Proliance under these
agreements in the amount of $2.3 million. During 2008 we
made aggregate payments to Modine under these agreements in the
amount of $5.6 million and Modine made aggregate payments
to Proliance under these agreements in the amount of
$2.7 million.
James R. Rulseh, a member of our board of directors, was an
executive officer of Modine until January 2009 and Bradley C.
Richardson, who was a member of our board of directors until May
2007, was also an executive officer of Modine, however, neither
Mr. Rulseh nor Mr. Richardson were on our board of
directors at the time the sale of the OEM business was
negotiated or consummated and they joined our board of directors
only upon consummation of the Modine Aftermarket merger.
We have from time to time retained the law firm of
Foley & Lardner to perform legal services on our
behalf. Payments made by us to Foley & Lardner in 2007
and 2008 were approximately $133,480 and $73,766, respectively.
William J. Abraham, Jr., one of our directors, is a partner
at Foley & Lardner.
Our board of directors has approved a Code of Business Conduct
in accordance with the rules of the Securities and Exchange
Commission and NYSE Amex (formerly known as the American Stock
Exchange) that governs the conduct of each of our employees and
directors. Our Code of Business Conduct is maintained on our
website at www.pliii.com. Other than as generally set forth in
our Code of Business Conduct, our board does not have a specific
policy regarding review of transactions involving directors,
management or other related parties. However, we discourage such
transactions and have historically limited the approval of any
such transactions to specific and rare instances with the full
23
disclosure to, and approval of, the disinterested members of our
board.
Solicitation
of Proxies
In addition to the use of the mails, proxies may be solicited by
the directors, officers, and employees of the company without
additional compensation in person, or by telephone, facsimile,
email or otherwise. Arrangements may also be made with brokerage
firms and other custodians, nominees, and fiduciaries for the
forwarding of solicitation material to the beneficial owners of
Proliance common stock held of record, and we will reimburse
these brokers, custodians, nominees, and fiduciaries for
reasonable out-of-pocket expenses incurred. The cost of
solicitation will be borne entirely by Proliance. In addition,
we have retained Morrow & Co., LLC, 470 West
Avenue, Stamford, CT 06902 to act as solicitors with respect to
the annual meeting for a fee of $5,000 plus out-of-pocket
expenses.
Other
Matters
Directions to the annual meeting can be obtained by making a
written or oral request to our Secretary,
c/o Proliance
International, Inc., 100 Gando Drive, New Haven, Connecticut
06513 or by telephone
(203-401-6450).
Management knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters
properly come before the meeting, it is the intention of the
individuals named in the enclosed proxy to vote in accordance
with their judgment.
By order of the board of directors.
Secretary
24
Attachment A
PROLIANCE INTERNATIONAL, INC.
This proxy is solicited by the Board of Directors for
the Annual Meeting of Stockholders to be held on May 7, 2009
As an alternative to completing this form, you may enter your vote instruction by telephone at
1-800-PROXIES, or via the Internet at WWW.VOTEPROXY.COM and follow the simple instructions. Use
the Company Number and Account Number shown on your proxy card.
The undersigned hereby appoints Barry R. Banducci and Charles E. Johnson, and each of them, as
the true and lawful attorneys, agents and proxies of the undersigned, each with full power of
substitution, to represent and vote all shares of common stock of Proliance International, Inc.
held of record by the undersigned on March 17, 2009 at the Annual Meeting of Stockholders to be
held at 11:00 a.m. on Thursday, May 7, 2009 at The Quinnipiack Club, 221 Church Street, New Haven,
Connecticut and at any adjournment thereof, as specified on the reverse side of this proxy card and
in their discretion upon such other matters as may properly come before such Annual Meeting and at
any adjournment thereof. Any and all proxies heretofore given are hereby revoked.
This proxy, when properly executed, will be voted as designated by the undersigned. If no
choice is specified, the proxy will be voted for Proposals (1), (2) and (3) and in the discretion
of the proxies upon such other matters as may properly come before the Annual Meeting.
If the undersigned is a participant in the Proliance International, Inc. 401(k) Savings Plan,
then the undersigned directs the trustee of the 401(k) plan to appoint the above-named individuals
as proxies to vote and act with respect to all common shares held by the undersigned in his or her
401(k) plan account in the manner specified on the reverse of this card and in their discretion
upon such other matters as may properly come before the meeting or any adjournment thereof. If you
are such a participant and your voting instructions are not received by 11:59 p.m., Eastern Time,
on Tuesday, May 5, 2009, the trustee of the 401(k) plan will vote those shares as directed by the
Proliance Pension and Benefits Committee.
Please consider the issues discussed in the proxy statement and cast your vote by marking the
boxes on the REVERSE SIDE. You need not mark any boxes if you wish to vote in accordance with the
Board of Directors recommendations. It is important that your shares are represented at this
meeting, whether or not you attend the meeting in person. Therefore, please complete the reverse
side and mail it or use the Internet or toll-free telephone voting system explained on the reverse
side.
(Continued and to be dated and signed on the reverse side)
Proliance (AMEX:PLI)
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