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
(Amendment No. )
Filed by the Registrant
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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 Section 240.14a-12
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SMITH-MIDLAND CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the 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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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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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Proposed maximum aggregate value of transaction:
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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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Form, Schedule or Registration Statement No.:
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SMITH-MIDLAND CORPORATION
5119 Catlett Road
Midland, Virginia 22728
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on
Tuesday, August 14, 2018
Dear Stockholders:
You are cordially invited to attend the
2018
Annual Meeting of Stockholders of SMITH-MIDLAND CORPORATION (the “Company”), a Delaware corporation, to be held at Smith-Midland Corporation located at 5119 Catlett Road, Midland, Virginia 22728 on
Tuesday, August 14, 2018
at 5:00 p.m. local time. The annual meeting is being held for the following purposes:
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1.
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To elect five (5) members to the Board of Directors;
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2.
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To ratify the appointment of the accounting firm BDO USA, LLP as the Company’s Independent Registered Public Accountants for the current year ending
December 31, 2018
; and
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To consider and act upon any matters incidental to the foregoing and any other matters that may properly come before the meeting or any and all adjournments thereof.
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The Board of Directors has fixed the close of business on
June 25, 2018
as the record date for the determination of Stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment or adjournments thereof. The foregoing items of business are more fully described in the Proxy Statement accompanying this notice.
We hope that all stockholders will be able to attend the Annual Meeting in person. In order to assure that a quorum is present at the Annual Meeting, please date, sign and promptly return the enclosed proxy whether or not you expect to attend the Annual Meeting. A prepaid postage envelope has been enclosed for your convenience. If you attend the Annual Meeting, your proxy will, at your request, be returned to you and you may vote your shares in person.
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By Order of the Board of Directors
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Rodney I. Smith
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Chairman
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Midland, Virginia
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July 10, 2018
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Important Notice Regarding the Availability of Proxy Materials for the
2018
Annual Meeting of Stockholders to be held on
August 14, 2018
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Pursuant to Securities and Exchange Commission rules we have elected to utilize the "full set delivery" option of providing paper copies of all of our proxy materials, including a proxy card, to our stockholders, as well as providing access to our proxy materials on a publicly assessable website. The Company's Notice of Annual Meeting, Proxy Statement and Annual Report to Stockholders for the fiscal year ended
December 31, 2017
are available on our corporate website and may be accessed at
www.edocumentview.com/SMID
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SMITH-MIDLAND CORPORATION
5119 Catlett Road
Midland, Virginia 22728
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of SMITH-MIDLAND CORPORATION (the “Company”) for use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Tuesday, August 14, 2018
, at 5:00 p.m. local time at Smith-Midland Corporation located at 5119 Catlett Road, Midland, Virginia 22728 and at any adjournment or adjournments thereof.
These proxy solicitation materials are first being mailed to stockholders of record on or about
July 10, 2018
, together with the Company’s Annual Report to Stockholders.
This proxy statement, form of proxy and the annual report are available at: http://www.edocumentview.com/SMID
Stockholders of record at the close of business on
June 25, 2018
will be entitled to vote at the Annual Meeting or any adjournment thereof. On or about the record date,
5,080,395
shares of the Company’s common stock, $.01 par value per share (“Common Stock”), were issued and outstanding. The Company has no other outstanding voting securities.
Each share of Common Stock entitles the holder to one vote with respect to all matters submitted to Stockholders at the Annual Meeting. A quorum for the Annual Meeting is a majority of the shares outstanding. Abstentions and broker non-votes are each included in the determination of the number of shares present and voting for the purpose of determining whether a quorum is present. Broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (1) the broker does not receive voting instructions from the beneficial owner and (2) the broker lacks discretionary authority to vote the shares. Brokers are prohibited from exercising discretionary authority on non-routine matters. Proposal one is considered a non-routine matter and, therefore, brokers cannot exercise discretionary authority regarding this proposal for beneficial owners who have not returned proxies to the brokers.
Abstentions or broker non-votes or failures to vote will have no effect in the election of directors, who will be elected by a plurality of the affirmative votes cast.
The affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote to ratify the appointment of BDO USA, LLP as the Company’s independent auditors for the year ending
December 31, 2018
will be required for approval. An abstention will be counted as a vote against this proposal.
An Annual Report, containing the Company’s audited financial statements for the years ended
December 31, 2017
and
December 31, 2016
, is being mailed to all Stockholders entitled to vote.
Execution of a proxy will not in any way affect a Stockholder’s right to attend the Annual Meeting and vote in person. The proxy may be revoked at any time before it is exercised by written notice to the Company's Secretary prior to the Annual Meeting, or by giving to the Secretary a duly executed proxy bearing a later date than the proxy being revoked at any time before such proxy is voted, or by appearing at the Annual Meeting and voting in person. The shares represented by all properly executed proxies received in time for the Annual Meeting will be voted as specified therein. Proxies that are signed and returned but do not include voting instructions shares will be voted in favor of the election of Directors of those persons named in this Proxy Statement and in favor of the proposal to ratify and approve the selection of BDO USA, LLP as the independent auditors for the Company for the year ending
December 31, 2018
.
The Board of Directors knows of no other matter to be presented at the Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote may be taken, such shares represented by all proxies received by the Board of Directors will be voted with respect thereto in accordance with the judgment of the persons named as attorneys in the proxies. The Board of Directors knows of no matter to be acted upon at the Annual Meeting that would give rise to appraisal rights for dissenting stockholders.
Proposal No. 1
ELECTION OF DIRECTORS
Five Directors, constituting the entire Board of Directors, are to be elected at the Annual Meeting. Each Director of the Company is elected at the Company’s Annual Meeting of Stockholders and serves until his successor is elected and qualified. Vacancies and newly created directorships resulting from any increase in the number of authorized Directors may be filled by a majority vote of Directors then remaining in office. Officers are elected by and serve at the discretion of the Board of Directors.
Shares represented by all proxies received by the Board of Directors and not so marked as to withhold authority to vote for an individual Director, or for all Directors, will be voted (unless one or more nominees are unable or unwilling to serve) for the election of the nominees named below. The Board of Directors knows of no reason why any such nominee should be unwilling to serve, but if such should be the case, proxies will be voted for the election of some other person or for fixing the number of Directors at a lesser number.
The Board unanimously recommends that Stockholders vote
FOR
election of the five nominees for Director.
The following table sets forth certain information concerning each nominee for election as a Director of the Company:
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Name
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Age
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Director
Since
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Position
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Rodney I. Smith
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79
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1970
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Chairman of the Board of Directors
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Ashley B. Smith
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55
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1994
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Chief Executive Officer, President, and Director
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Wesley A. Taylor
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70
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1994
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Director
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G. E. Borst
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77
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2013
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Director
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Richard Gerhardt
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51
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2016
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Director
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Background
The following is a brief summary of the background of each nominee for Director of the Company:
Rodney I. Smith.
Chairman of the Board of Directors.
Rodney I. Smith co-founded the Company in 1960 and became its President and Chief Executive Officer in 1965. He served as President until 2014 and Chief Executive Officer until May 2018. Mr. Smith currently remains as an employee of the Company. He has served on the Board of Directors and has been its Chairman since 1970. Mr. Smith is the principal developer and inventor of the Company’s proprietary and patented products. He is the past President of the National Precast Concrete Association. Mr. Smith has served on the Board of Trustees of Bridgewater College in Bridgewater, Virginia since 1986. The Company believes that Mr. Smith’s extensive experience in the precast concrete products industry and his knowledge of the marketplace gives him the qualifications and skills necessary to serve in the capacity as the Chairman of the Board of Directors.
Ashley B. Smith.
Chief Executive Officer, President and Director.
Ashley B. Smith has served as Chief Executive Officer of the Company since May 2018, President since 2014 and as a Director since 1994. He was Vice President of the Company from 1990 to 2014. Mr. Smith holds a Bachelor of Science degree in Business Administration from Bridgewater College. He is currently President of the National Precast Concrete Association. Mr. Ashley B. Smith is the son of Mr. Rodney I. Smith. The Company believes that Mr. Smith’s education, experience in the precast concrete industry and business experience give him the qualifications and skills necessary to serve in the capacity as a director.
Wesley A. Taylor.
Director
.
Wesley A. Taylor has served as a Director since 1994, and previously held the position as Vice President of Administration from 1989 to 2017. Mr. Taylor holds a Bachelor of Arts degree from Northwestern State University. The Company believes that Mr. Taylor’s education, business experience and his extensive experience in the precast concrete industry gives him the qualifications and skills necessary to serve in the capacity as a director.
G. E. Borst.
Director.
G.E. (Nick) Borst has served as a Director of the Company since 2013 and previously as an advisory member of the Board of Directors since 2005. Mr. Borst is a retired Virginia attorney. He is a past president of the Fauquier County Bar Association and three-term treasurer of the Fauquier County Chamber of Commerce. In private law practice Mr. Borst advised clients on business organization and governance. Mr. Borst is co-founder and past president of Hospice of
Fauquier County, a volunteer organization. He helped establish and has been a long term board member of Verdun Adventure Bound, a 501(C)(3) organization that provides experiential learning programs to over 2,500 young people a year. The Company believes that Mr. Borst’s current and past business-related experience provides him with the knowledge and skills necessary to serve in the capacity as a director of the Company.
Richard Gerhardt.
Director.
Mr. Gerhardt has served as a Director of the Company since 2016. In 2016, he served as Chief Operating Officer of Old Dominion Spirits Corporation in Warrenton, Virginia. From 2003 to 2014, Mr. Gerhardt served in an escalating succession of positions for three global shipping and logistic companies: DHL Global Mail, ESI Global Logistic and MSI Worldwide. His eight years as President, Chief Operating Officer, and Shareholder of MSI Worldwide culminated in its acquisition by Belgian Post. Mr. Gerhardt currently serving his first term as a Fauquier County, Virginia Supervisor for the Cedar Run Magisterial District. Mr. Gerhardt presently serves on the boards of Path Foundation (formally Fauquier Health Foundation), Virginia Gold Cup Association and Fauquier Free Clinic. Mr. Gerhardt holds a Bachelor of Arts in Business Administration with a minor in Economics from Washington College in Chestertown, MD. The Company believes that Mr. Gerhardt's experience in business operations, management, strategic planning and leadership provides him with the knowledge and skills necessary to serve in the capacity as a director of the Company.
GENERAL INFORMATION RELATING TO THE BOARD OF DIRECTORS AND OFFICERS
Director Independence
Currently G.E. Borst and Richard Gerhardt are the only independent directors of the Company as determined under the NASDAQ Marketplace Rules. The other Directors are not considered independent in view of their positions as current or recent executive officers of the Company.
Meetings and Committees of the Board of Directors
The Board of Directors does not have standing Compensation, Nominating, or Audit Committees or any committees performing similar functions at the current time. The Board of Directors has authorized the formation of the Audit and Compensation Committees and anticipates that it will shortly constitute those committees with G.E. Borst and Richard Gerhardt, and adopt committee charters.
Currently, compensation of executive officers, board advisers and directors of the Company, including, but not limited to, the grant of restricted stock pursuant to the 2016 Stock Incentive Plan or other plan which may be established, is decided by the Board of Directors as a whole.
The Company does not have a standing Nominating Committee at the current time. The Company believes that a standing Nominating Committee is not necessary or cost efficient for a company its size. All directors participate in the consideration of director nominees. The Company does not have a formal Nominating Committee Charter. While the Board of Directors has received a small number of stockholder recommendations for consideration of director candidates, it has not received a sufficient amount to warrant the adoption of a formal policy in that regard, although it may consider doing so in the future. It is the Board’s intent to consider any stockholder nominees that may be put forth. The Board has not identified any specific minimum qualifications or skills that it believes must be met by a nominee for director. It is the intent of the Board to review from time to time the appropriate skills and characteristics of directors in the context of the current make-up of the Board and the requirements and needs of the Company at a given time.
In selecting nominees for the Board, the Company considers the diversity of each candidate in regards to the anticipated needs of the Company as a whole so as to leverage the experience and education of each director in achieving the goals of the Company.
The Board of Directors met formally three times during
2017
and met informally on a number of occasions, voting on corporate actions, in some cases, by written consent. All of the Company’s current directors attended all of the meetings of the Board of Directors in person, except for Richard Gerhardt and Wesley A. Taylor who each missed one meeting during 2017.
With the exception of Rodney I. Smith and Ashley B. Smith, who are father and son, respectively, no Director or executive officer of the Company is related by blood, marriage, or adoption to any of the Company’s other Directors or executive officers. There are no related-party transactions required to be disclosed pursuant to Item 404 of Regulation S-K.
Audit Committee
The Company does not have a standing Audit Committee, the entire Board of Directors has functioned as the Audit Committee. As previously stated, the Board of Directors has authorized formation of an Audit Committee and anticipates that it will shortly constitute such committee with G.E. Borst and Richard Gerhardt, its two independent directors. The Board of Directors oversees all accounting and financial reporting processes and the audit of the Company’s financial statements. The Board is responsible for overseeing the quality and integrity of the Company’s financial statements and the qualifications, independence, selection and performance of the Company’s independent registered public accounting firm. The Board of Directors has determined that the Board does not currently have a person serving on it who qualifies as a Financial Expert as defined by the rules of the Securities and Exchange Commission. The Board of Directors does not believe that the addition of such an expert would add anything meaningful to the Company at this time given that its members have the sufficient knowledge and experience to fulfill the duties and obligations that an Audit Committee would have. The Company does not have an Audit Committee Charter, but plans to establish one shortly.
The Board of Directors has recommended that the audited financial statements for fiscal year ended
December 31, 2017
be included in the Company’s Annual Report on Form 10-K for the fiscal year then ended.
Leadership Structure
Currently, the Company separates the roles of Chairman of the Board and Chief Executive Officer. Rodney I. Smith, who is Chairman of the Board, recently left his position as CEO of the Company and currently is employed by the Company. The Company believes that Mr. Rodney Smith's history with the Company, as co-founder and former executive officer, makes him an appropriate person to provide Chairman oversight.
Risk Oversight
It is the responsibility of the Board to oversee the assets of the Company and to ensure that appropriate controls are in place to minimize risks associated with such assets. While the Board is tasked with the responsibility to detect potential high level risks, management is tasked with managing risk on a daily basis. Where possible, management, in conjunction with the Board, has defined high level risk controls to help mitigate the most significant risks to the Company.
Code of Ethics
Our Board of Directors has adopted a Professional Code of Ethics as well as a Finance Code of Professional Conduct. The Professional Code of Ethics covers all employees of the Company and describes the policies and procedures for their ethical conduct. The Finance Code of Professional Conduct covers conduct in the practice of financial management and specifically relates to the Chief Executive Officer, the Chief Financial Officer, Accounting Manager and other associates of the finance organization.
Communications Between Stockholders and the Board of Directors
Stockholders and other interested parties wishing to communicate with members of the Board of Directors should send a letter to the Secretary of the Company with instructions as to which director(s) is to receive the communication. The Secretary will forward the written communication to each member of the Board of Directors identified by the stockholder or, if no individual director is identified, to all members of the Board of Directors.
Director Attendance at Annual Meeting
The Company has not in the past required members of the Board of Directors to attend each annual meeting of the stockholders because the formal meetings have been attended by very few stockholders, and have generally been brief and procedural in nature. All of the Company’s current directors attended the
2017
Annual Meeting of stockholders. The Board will continue to monitor stockholder interest and attendance at future meetings and re-evaluate this policy as appropriate.
Director Compensation
All Directors, whether employee or non-employee, receive $1,000 per meeting attended as compensation for their services as Directors and are reimbursed for expenses incurred in connection with the performance of their duties. For the twelve months ended
December 31, 2017
, total cash payments made to all Directors were $13,000.
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Director Compensation Table for
2017
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Name
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Fees
Earned or
Paid in Cash ($)
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Stock
Awards ($)(2)
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Option
Awards ($)
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Non-Equity
Incentive
Plan
Compen-sation
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Non-
Qualified
Deferred
Compen-
sation Earnings
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All Other
Compen-sation
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Total ($)
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Rodney I. Smith
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3,000
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10,900
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—
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—
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—
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—
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13,900
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(1)
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Ashley B. Smith
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3,000
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—
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—
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—
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—
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—
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3,000
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(1)
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Wesley A. Taylor
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2,000
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10,900
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—
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—
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—
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—
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12,900
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G.E. Borst
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3,000
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—
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—
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—
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—
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—
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3,000
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Richard Gerhardt
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2,000
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—
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2,000
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(1)
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Reflected in Summary Compensation Table below.
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(2) Mr. Rodney I. Smith and Mr. Wesley A. Taylor each received 2,000 shares of restricted stock granted pursuant to the Company's 2016 Equity Incentive Plan for additional compensation as directors. Mr. Ashley B. Smith, Mr. G. E. "Nick" Borst and Mr. Richard Gerhardt each received 2,000 shares of restricted stock granted pursuant to such Plan in December 2016.
Executive Officers
The executive officers, including the Chairman of the Board who continues to provide services to the Company as an employee, of the Company are:
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Director or
Executive
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Name
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Age
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Officer Since
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Position
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Rodney I. Smith
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79
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1970
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Chairman of the Board of Directors
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Ashley B. Smith
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55
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1994
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Chief Executive Officer, President and Director
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Adam J. Krick
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33
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2018
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Chief Financial Officer
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Adam J. Krick.
Chief Financial Officer.
Mr. Krick has served as Chief Financial Officer of the Company since January 2018. Prior to becoming the Chief Financial Officer, Mr. Krick served as the Accounting Manager for the Company since 2014. Prior to joining the Company, Mr. Krick worked in public accounting focusing on tax and business consulting. Mr. Krick is a Certified Public Accountant and holds a Bachelor of Business Administration degree in Accounting from James Madison University.
For the biographies of Messrs. Rodney I. Smith and Ashley B. Smith please see “Proposal No. 1—Election of Directors”.
Proposal No. 2
PROPOSAL TO RATIFY AND APPROVE THE SELECTION OF BDO USA, LLP
AS THE INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR ENDING
December 31, 2018
The Company has selected BDO USA, LLP to serve as its independent registered public accounting firm for the year ending
December 31, 2018
.
The Board unanimously recommends that Stockholders vote FOR the ratification of the selection of BDO USA, LLP as the independent auditors for the Company for the year ending
December 31, 2018
.
The Company does not currently have an Audit Committee, and accordingly, the following Audit Committee Report is being given by the entire Board of Directors, acting as the Audit Committee
.
AUDIT COMMITTEE REPORT
The Board of Directors, in fulfilling its role as the Audit Committee, is responsible for overseeing the integrity of the Company’s financial statements, the qualifications, independence, selection and compensation of the Company’s registered independent public accounting firm, and the internal control functions as they relate to the the preparation of the financial statements. Our Company currently does not have an Audit Committee Charter, but plans to establish one shortly in conjuction with its intent to shortly constitute an Audit Committee.
Management is responsible for the preparation, presentation and correctness of the Company’s financial statements, internal controls over financial reporting and procedures designed to assure compliance with generally accepted accounting procedures. The Company’s independent registered public accounting firm, BDO USA, LLP, is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards in the United States of America and issuing a report thereon.
Management has represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed with management and BDO USA, LLP, the Company’s independent registered public accountants, the Company’s audited financial statements as of and for the year ended
December 31, 2017
. The Audit Committee also discussed with BDO USA, LLP the matters required to be discussed by Statement on Auditing Standards No. 61 “Communications with Audit Committee”, as amended (AICPA, Professional Standards, Vol. 1 AU, Section 380), as adopted by the Public Company Accounting Oversight Board (PCAOB) in Rule 3200T. The Audit Committee has received the written disclosures and the letter from BDO USA, LLP required by applicable requirements of the PCAOB regarding BDO USA, LLP’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with BDO USA, LLP its independence. The Audit Committee has also discussed the compatibility of the provision of non-audit services with the independent auditor’s independence.
Management has also represented to the Audit Committee that it has completed an assessment of the effectiveness of the Company’s internal control over financial reporting, and the Audit Committee has reviewed and discussed with management and BDO USA, LLP the scope and results of their respective assessments of the Company’s internal control over financial reporting.
Based on the reports and discussions described in this report, the Audit Committee recommended that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017
, for filing with the Securities and Exchange Commission.
The Board of Directors in its role as
The Audit Committee
Rodney I. Smith
Ashley B. Smith
Wesley A. Taylor
G.E. Borst
Richard Gerhardt
AUDIT AND RELATED FEES
The aggregate fees billed for each of the two most recent fiscal years for professional services rendered by BDO USA, LLP, the principal accountant for the audit of the Company, for assurance and related services related to the audit; for tax compliance, tax advice, and tax planning; and for all other audited-related fees are shown in the table below.
Audit Fees. Fees charged as audit fees are for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Forms 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
Tax Fees. Tax fees are for professional services rendered by BDO USA, LLP for tax compliance, tax advice, and tax planning.
Audit-Related Fees. Fees paid to BDO USA, LLP for the audit of the Company's 401(k) benefit plan.
The Company currently does not have a separate standing Audit Committee, the entire Board of Directors acts as the Audit Committee. Messrs. Borst and Gerhardt are considered to be independent when using the definition of the NASDAQ Marketplace Rules.
In accordance with applicable laws and regulations, the Board acting as the Audit Committee reviews and pre-approves any non-audit services to be performed by BDO USA, LLP to ensure that the work does not compromise their independence in performing their audit services. The Board acting as the Audit Committee generally also reviews and pre-approves all audits, audit related, tax and all other fees, as applicable. In some cases, pre-approval may be provided for up to a year and relates to a particular category or group of services and is subject to a specific budget and SEC rules.
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2017
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2016
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Audit Fees
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$
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186
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$
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123
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Tax Fees
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52
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—
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Audit-Related Fees
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10
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10
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Total Fees
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$
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248
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$
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133
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of July 3, 2018, certain information concerning ownership of the Company’s Common Stock by (i) each person known by the Company, based solely on filings with the Securities and Exchange Commission, to own of record or be the beneficial owner of more than five percent (5%) of the Company’s Common Stock, (ii) named executive officers and Directors, and (iii) all Directors, and executive officers as a group. Except as otherwise indicated, the stockholders listed in the table have sole voting and investment powers with respect to the shares indicated.
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Number of Shares
Beneficially Owned
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Percentage of
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Name and Address of Beneficial Owner (1)
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(2)
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Class
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Rodney I. Smith (1)(3)(4)(5)
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684,798
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13.5%
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Ashley B. Smith (1)(3)(4)(6)
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171,767
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3.4%
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Wesley A. Taylor (1)(7)
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11,333
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*
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G.E. Nick Borst (8)
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83,000
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1.6%
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.
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Richard Gerhardt (9)
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2,000
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*
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William A. Kenter (1)
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15,000
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*
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Adam J. Krick (1)(10)
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3,000
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*
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Thompson Davis & Co. Inc. (11)
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288,019
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5.7%
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Wax Asset Management, LLC (12)
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618,412
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12.2%
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All directors and executive officers as a group (7 persons)(13)
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970,898
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19.1%
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(1) The address for each of Messrs. Rodney I. Smith, Ashley B. Smith, Wesley A. Taylor, William A. Kenter, and Adam J. Krick is c/o Smith-Midland Corporation, 5119 Catlett Road, Midland, Virginia 22728.
(2) Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of Common Stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
(3) Ashley B. Smith is the son of Rodney I. Smith. Each of Rodney I. Smith and Ashley B. Smith disclaims beneficial ownership of the other’s shares of Common Stock.
(4) Does not include aggregate of 78,883 shares of Common Stock held by Matthew Smith and Roderick Smith. Matthew Smith and Roderick Smith are sons of Rodney I. Smith, and brothers of Ashley B. Smith. Also, does not include shares held by Merry Robin Bachetti, sister of Rodney I. Smith and aunt of Ashley B. Smith, for which each of Rodney I. Smith and Ashley B. Smith disclaims beneficial ownership.
(5) Does not include 2,500 shares of Common Stock held by Hazel Bowling, former wife of Rodney I. Smith, and mother of Mr. Smith’s children. Mr. Smith disclaims beneficial ownership of the shares held by Hazel Bowling. Includes 28,000 restricted shares granted pursuant to the Company's 2016 Equity Incentive Plan, which shares vest ratably, on an annual basis, over a remaining two year period.
(6) Includes 21,333 restricted shares granted pursuant to the Company's 2016 Equity Incentive Plan, which shares vest ratably, on an annual basis, over a remaining two year period.
(7) Includes 11,333 restricted shares granted pursuant to the Company's 2016 Equity Incentive Plan, which shares vest ratably, on an annual basis, over a remaining two year period.
(8) Address of holder is P.O. Box 351, Ophelia, VA 22530. Includes 1,333 restricted shares granted pursuant to the Company's 2016 Equity Incentive Plan, which shares vest ratably, on an annual basis, over a remaining two year vesting period.
(9) Address of holder is 8305 Old Dumfries Road, Catlett, VA 20119. Includes 1,333 restricted shares granted pursuant to the Company's 2016 Equity Incentive Plan, which shares vest ratably, on an annual basis, over a remaining two year vesting period.
(10) Includes 2,500 restricted shares granted in January 2018 pursuant to the Company's 2016 Equity Incentive Plan, which shares vested in full immediately on the grant date pursuant to the 2016 Equity Incentive Plan. Includes 333 restricted shares granted pursuant to the Company's 2016 Equity Incentive Plan, which shares vest ratably, on an annual basis, over a remaining two year period.
(11) Address of holder is 15 S. 5th Street, Richmond, VA 23219.
(12) Address of holder is 44 Cherry Street, Madison, CT 06830.
(13) Includes 63,665 unvested restricted shares for all directors and executive officers as a group.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of
December 31, 2017
regarding the Company's equity compensation plans:
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Plan Category
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Number of
securities to be
issued upon
exercise of
outstanding
options, warrants and rights
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Weighted
average exercise
price of
outstanding
options, warrants and rights
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Number of
securities remaining
available for future
issuance under
equity compensation plans
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Equity compensation plans approved by security holders (1)
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10,333.00
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1.21
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—
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Equity compensation plans not approved by security holders
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—
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—
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225,000
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Total
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10,333
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1.21
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225,000
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(1) The 500,000 options, available for issuance under the 2008 Stock Option Plan of the Company have been canceled by the Company's Board of Directors and replaced by the Smith-Midland 2016 Equity Incentive Plan (the "Equity Incentive Plan"), which has a balance of 225,000 shares of stock unissued and available for award at
December 31, 2017
.
On October 13, 2016 the Company's Board of Directors adopted the Equity Incentive Plan. Employees, directors and consultants of the Company are eligible to participate in the Equity Incentive Plan. The Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors or the full Board during such times as no committee is appointed by the Board or during such times as the Board is acting in lieu of the committee (the "Committee"). The Equity incentive Plan provides for the grant of equity-based compensation in the form of restricted stock, restricted stock units, performance shares, performance cash and other share-based awards. The Committee has the authority to determine the type of award, as well as the amount, terms and conditions of each award, under the Equity Incentive Plan subject to the limitations and other provisions of the Equity Incentive Plan. An aggregate of 400,000 shares of Common Stock were authorized for issuance under the Equity Incentive Plan, subject to adjustment for stock splits, dividends, distributions, recapitalizations and other similar transactions or events, of which amount 223,833 remains available for issuance. If any shares subject to an award are forfeited, expire, or otherwise terminate without issuance of such shares, such shares shall, to the extent of such forfeiture, expiration, or termination, again be available for issuance under the Equity Incentive Plan.
Compensation of Executive Officers
The following table sets forth the compensation paid by the Company for services rendered for
2017
and
2016
to the principal executive officer and the Company’s two most highly compensated executive officers other than the principal executive officer (the “named executive officers”) as of the end of
2017
:
Summary Compensation Table
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Name and Principal Position
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Year
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Salary ($)(1)
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Bonus ($)(2)
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Stock Awards ($)
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Option Awards ($)
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Non-Qualified Deferred Compensation Earning ($)
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All Other Compen- sation ($)
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Total ($)
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Rodney I. Smith
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2017
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116,774
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64,230
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228,900
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102,000
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511,904
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Chief Executive Officer
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2016
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108,788
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4,375
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102,000
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215,163
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and Chairman of the
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Board (3)(4)
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Ashley B. Smith
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2017
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201,994
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59,808
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3,000
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264,802
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President (4)(5)
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2016
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192,423
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3,385
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158,400
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3,000
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357,208
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William A. Kenter
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2017
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124,834
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28,284
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81,750
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—
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234,868
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Chief Financial Officer (6)
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2016
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112,357
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2,300
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|
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|
—
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114,657
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(1) Represents salaries paid in
2017
and
2016
for services provided by each named executive officer serving in the capacity listed.
(2) Represents amounts paid for annual performance-based bonus related to operations for the prior year.
(3) Mr. Rodney Smith was paid $99,000 in each of
2017
and
2016
, which is included in the column titled “All Other Compensation”, for royalty payments due under his employment contract with the Company, which is more fully described in the following section titled “Employment Contracts and Termination of Employment and Change in Control Arrangements”. In addition, Mr. Rodney Smith received director’s compensation in the amount of $3,000 for the years
2017
and
2016
. Includes, under Stock Awards, 42,000 restricted shares granted to Mr. Smith in January 2017, vesting ratably, on an annual basis, over a three year vesting period. The value of the common stock shares at the grant date was $228,900.
(4) In May 2018, Ashley B. Smith replaced Rodney I. Smith as Chief Executive Officer of the Company. Mr. Rodney I. Smith remained as Chairman of the Board and is currently an employee of the Company.
(5) Mr. Ashley Smith received director’s compensation in the amount of $3,000 for each of the years
2017
and
2016
. Mr. Ashley Smith was granted 32,000 shares of restricted common stock on December 14, 2016, pursuant to the Company's 2016 Equity Incentive Plan. The grants vest ratably, on an annual basis, over a three year vesting period. The value of the common stock shares at the grant date was $158,400.
(6) Includes 15,000 restricted shares granted in January 2017 pursuant to the Company's 2016 Equity Incentive Plan, which shares vested in full immediately on the grant date. The value of the common stock shares at the grant date was $81,750. Mr. Kenter retired as Chief Financial Officer of the Company as of December 31, 2017; he continues employment on a part-time basis in an advisory role.
Outstanding Equity Awards At Fiscal Year-End
The following table sets forth information for the named executive officers regarding any common share purchase options, stock awards or equity incentive plan awards that were outstanding as of
December 31, 2017
.
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Name
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Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
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Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisa-ble
|
|
Option
Exercise Price
($/Sh)
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Option
Expiration Date
|
Number of Shares or Units of Stock that have not Vested (#)(1)
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Market Value of Shares or Units of Stock that have not Vested ($)
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Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#)
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Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested ($)
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Rodney I. Smith
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—
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—
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—
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|
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—
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42,000
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228,900
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|
—
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|
—
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Ashley B. Smith
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—
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|
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—
|
|
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—
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|
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—
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|
21,333
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|
105,598
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|
—
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—
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|
William A. Kenter
|
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—
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|
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—
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—
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—
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—
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—
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—
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—
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TOTAL
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—
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—
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63,333
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334,498
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—
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—
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(1) Restricted shares granted vest, ratably, on an annual basis, over three years from the date of grant.
Employment Contracts and Termination of Employment and Change in Control Arrangements.
The Company entered into a four-year Employment Agreement with Rodney I. Smith, its current Chairman of the Board, effective as of September 30, 2002. The term of employment automatically renews commencing on the date one year after the effective date, and on an annual basis thereafter, for an additional one year, unless earlier terminated or not renewed as provided for therein. The agreement provides for an annual base salary of $99,000 (“Base Salary”), which will be reviewed at least annually and adjusted from time to time at the determination of the Board of Directors. It also provides for an annual royalty fee of $99,000 payable as consideration for Mr. Smith’s assignment to the Company of all of his rights, title and interest in and to the Patents (as defined in the agreement). Payment of the royalty continues only for as long as the Company is using the inventions underlying the Patents. Mr. Smith is also entitled to performance-based bonus as determined by the Board each calendar year.
Mr. Smith’s employment agreement provides further that if Mr. Smith (i) voluntarily leaves the employ of the Company within six months of his becoming aware of a Change of Control (as defined in the agreement) of the Company, then he shall be entitled to receive a lump sum amount equal to three times the five-year average of his combined total annual compensation, which includes the Base Salary and bonus, less one dollar ($1.00), and certain other unpaid accrued amounts as of the date of his termination, or (ii) is terminated by the Company without Cause (as defined in the agreement) or leaves the Company with Good Reason (as defined in the agreement), Mr. Smith shall be entitled to a lump sum payment equal to three times the combined Base Salary and bonus paid during the immediately preceding calendar year, and such other unpaid accrued amounts. In any of such cases, the Company will provide Mr. Smith with certain Company fringe benefits for two years, subject to certain conditions as provided for in the agreement, and all of Mr. Smith’s unvested options to purchase Company stock shall become fully vested and exercisable on the date of termination. Mr. Smith will be entitled to exercise all such options for three years from the date of termination. The Company will have no further obligations to Mr. Smith, other than with respect to the payment of royalties.
In the event Mr. Smith’s employment by the Company is terminated as a result of Mr. Smith’s (i) death, his estate shall be entitled to a lump sum payment of one times the combined Base Salary and bonus, and certain other accrued and unpaid amounts, or (ii) disability, Mr. Smith shall be entitled to Base Salary and bonus for a period of one year commencing with the date of termination, and all other unpaid accrued amounts.
In the event Mr. Smith’s employment is terminated for cause or Mr. Smith voluntarily leaves the employ of the Company for no reason, Mr. Smith shall be entitled to accrued but unpaid Base Salary and Bonus up to the date of termination, and all other unpaid amounts.
The employment agreement also contains non-competition and non-solicitation covenants for one year following Mr. Smith’s termination of employment for any reason.
On December 31, 2008, the Board of Directors approved an amendment to the Employment Agreement to include changes required to be in compliance with Section 409A of the Internal Revenue Code, nonqualified deferred compensation.
In May 2018, Mr. Smith relinquished his position as Chief Executive Officer of the Company. He has remained with the Company as an employee and as Chairman of the Board, and is continued to be paid pursuant to his Employment Agreement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) (“Section 16(a)”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires executive officers and Directors and persons who beneficially own more than ten percent (10%) of the Company’s Common Stock to file initial reports of ownership on Form 3 and reports of changes in ownership on Form 4 with the Securities and Exchange Commission (the “Commission”) and any national securities exchange on which the Corporation’s securities are registered.
Based solely on a review of the copies of such forms furnished to the Company, the Company believes that all Section 16(a) filing requirements applicable to its executive officers, Directors and greater than ten percent (10%) beneficial owners were satisfied during
2017
, except for the following late filings: Form 4 filed May 30, 2017 for Wesley A. Taylor (3
transactions); Form 4 filed June 20, 2017 for Rodney I. Smith (1 transaction); Form 4 filed July 27, 2017 for Rodney I. Smith
(2 transactions); Form 4 filed August 4, 2017 for Rodney I. Smith (1 transaction); Form 4 filed September 22, 2017 for Rodney
I. Smith (2 transactions); and Form 4 filed November 6, 2017 for Rodney I. Smith (1 transaction).
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BDO USA, LLP acted as our independent registered public accounting firm for the fiscal year ended
December 31, 2017
. A representative of BDO USA, LLP plans to be present at the Annual Meeting with the opportunity to make a statement if he desires to do so, and will be available to respond to appropriate questions.
VOTING AT MEETING
The Board of Directors has fixed
June 25, 2018
as the record date for the determination of Stockholders entitled to vote at this Annual Meeting. On or about that date,
5,080,395
shares of Common Stock were outstanding and entitled to vote.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company. In addition to the solicitation of proxies by mail, officers and employees of the Company may solicit in person or by telephone. The Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to beneficial owners.
REVOCATION OF PROXY
Subject to the terms and conditions set forth herein, all proxies received by the Company will be effective, notwithstanding any transfer of the shares to which such proxies relate, unless prior to the Annual Meeting, the Company receives a written notice of revocation signed by the person who, as of the record date, was the registered holder of such shares. The Notice of Revocation must indicate the certificate number or numbers of the shares to which such revocation relates and the aggregate number of shares represented by such certificate(s).
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2017 ANNUAL MEETING
Pursuant to SEC Rule 14a-8, in order to be included in proxy material for next year’s annual meeting, Stockholders’ proposed resolutions must be received by the Company no later than
March 12, 2019
. In addition, the by-laws of the Company require that we be given advance notice of stockholder nominations for election to the Board of Directors and of other matters which stockholders wish to present for action at an annual meeting of stockholders. The required notice must be delivered to the Secretary of the Company at our principal offices not less than 60 days and not more than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. These requirements are separate from and in addition to the SEC requirements that a stockholder must meet in order to have a stockholder proposal included in the Company’s proxy statement.
Pursuant to our by-laws, if notice of any stockholder proposal is received earlier than
May 16, 2019
or after
June 15, 2019
, then the notice will be considered untimely and we are not required to present such proposal at the Annual Meeting to be held in
2019
. If the Board of Directors chooses to present a proposal submitted after
June 15, 2019
at next year’s Annual
Meeting, then the persons named in proxies solicited by the Board of Directors for such Annual Meeting may exercise discretionary voting power with respect to such proposal.
HOUSEHOLDING OF PROXY MATERIAL
Some banks, brokers and other nominee record holders may have been sent to multiple stockholders in your household. If you would like to obtain another copy of the proxy statement, proxy card or annual report to stockholders, please contact by mail Secretary, Smith-Midland Corporation, 5119 Catlett Road, Midland, Virginia 22728. If you want to receive separate copies of our proxy statements, proxy card and annual reports in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other nominee record holder.
ANNUAL REPORT ON FORM 10-K
An Annual Report on Form 10-K as filed with the SEC for the year ended
December 31, 2017
, containing financial and other information about the Company, is being mailed to all stockholders of record as of the Record Date, at the Company's cost.
MISCELLANEOUS
The management does not know of any other matter that may come before the Annual Meeting. However, if any other matters are properly presented to the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote, or otherwise act, in accordance with their judgment on such matters.
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By Order of the Board of Directors:
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|
|
/s/ Rodney I. Smith
|
|
|
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|
Rodney I. Smith
|
|
|
Chairman of the Board of Directors
|
|
|
Midland, Virginia
|
|
|
|
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|
July 10, 2018
|
THE MANAGEMENT HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.