UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
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Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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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
§240.14a-12
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Simpson Manufacturing Co., Inc.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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x
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No fee required.
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o
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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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o
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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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Persons who are to respond to the collection
of information contained in this form are not required to respond unless the
form displays a currently valid OMB control number.
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SIMPSON
MANUFACTURING CO., INC.
5956 W.
Las Positas Blvd.
Pleasanton,
California 94588
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Simpson Manufacturing Co., Inc.:
We will hold the
annual meeting of our stockholders at 2:00 p.m., Pacific Daylight Time, on
Friday, April 17, 2009, at our home office located at 5956 W. Las Positas
Blvd., Pleasanton, California. The
matters that you will address at this meeting are:
1.
A proposal to elect as directors the 3 persons
nominated by a committee of independent members of our Board of Directors, each
to hold office for a 3-year term and until his or her successor is elected and
qualifies or until his or her earlier resignation or removal.
2.
A
proposal to ratify correction of a clerical error in the previously approved
Simpson Manufacturing Co., Inc. 1994 Stock Option Plan.
3.
A
proposal to ratify our Board of Directors selection of PricewaterhouseCoopers
LLP as our independent registered public accounting firm for the current fiscal
year.
4.
Any
other business that properly comes before the meeting.
Only stockholders of record as of February 23,
2009, are entitled to notice of and will be entitled to vote at this meeting or
any adjournment of this meeting.
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BY ORDER OF THE BOARD
OF DIRECTORS
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Michael J. Herbert
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Secretary
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Pleasanton, California
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March 3, 2009
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TO ASSURE THAT
YOUR SHARES ARE REPRESENTED AT THE MEETING, WE URGE YOU TO COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED, OR VOTE BY TELEPHONE OR THE INTERNET AS INSTRUCTED ON THE PROXY,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
YOU CAN REVOKE YOUR PROXY AT ANY TIME BEFORE THE PROXIES YOU APPOINT
CAST YOUR VOTES.
SIMPSON MANUFACTURING CO., INC.
5956 W.
Las Positas Blvd.
Pleasanton,
California 94588
March 3,
2009
PROXY
STATEMENT
Solicitation and Voting of
Proxies
On behalf of the Board of
Directors of Simpson Manufacturing Co., Inc., a Delaware corporation, we
are soliciting from you a proxy in the enclosed form for use at our Annual
Meeting of Stockholders. We will hold
this meeting at our home office located at 5956 W. Las Positas Blvd.,
Pleasanton, California, on Friday, April 17, 2009, at 2:00 p.m.,
Pacific Daylight Time. Your proxy will be used at this meeting or at any
adjournment of this meeting. Only holders of record of our common stock at the
close of business on February 23, 2009, may vote at this meeting. At the close of business on that date, we had
48,986,689 shares of our common stock outstanding and entitled to vote. A majority, or 24,493,345, of these shares,
present in person or represented by proxy at this meeting, will constitute a
quorum for the transaction of business.
We are distributing this Proxy Statement and our Annual Report to
Stockholders for the year ended December 31, 2008, to each of our
stockholders on or about March 3, 2009.
Revocability of Proxy
If you give a proxy, you
may revoke it, at any time before the proxy holders vote it at the meeting, in
any of the 3 following ways:
·
deliver
a written notice to our Secretary by any means, including facsimile, stating
that the proxy is revoked;
·
sign
a proxy bearing a later date and deliver it to our Secretary; or
·
attend
the meeting and vote in person, although your attendance at the meeting will
not, by itself, revoke your proxy.
If, however, your shares
are held of record by a broker, bank or other nominee and you desire to vote at
the meeting, you must bring to the meeting a letter from the broker, bank or
other nominee confirming your beneficial ownership of the shares you desire to
vote.
Expenses
of Proxy Solicitation
We are paying the
expenses of this solicitation of proxies.
After we mail this Proxy Statement and other soliciting materials, we or
our agents may also solicit proxies by mail, telephone, electronic mail or
facsimile or in person.
Voting
Rights
As a holder of our common stock, you are entitled to
one vote per share on any matter submitted to a vote of the stockholders. Our Bylaws permit stockholders to cumulate
their votes in the election of directors at an annual meeting if, at least 65
days before the meeting, a stockholder notifies our Secretary in writing of the
stockholders intention to cumulate votes.
Cumulative voting would entitle each stockholder to give one properly
nominated candidate a number of votes equal to the number of directors to be
elected multiplied by the number of shares the stockholder holds or to
distribute those votes on the same principle among as many properly nominated
candidates as the stockholder thinks fit.
Our Secretary has not, however, received a cumulative voting notice for
this meeting, and as a result cumulative voting will not be available at this
meeting.
1
Our Board of
Directors expects all nominees named below to be available for election. If any nominee is not available, the proxy
holders may vote for a substitute whom the Governance and Nominating Committee
of our Board of Directors may nominate.
We are not aware of any specific matter to be brought before the meeting
that is not identified in the notice of the meeting and this Proxy
Statement. If, however, stockholders
present proposals at the meeting that are not included in this Proxy Statement,
the proxy holders will have discretion to vote on those proposals as they see
fit. The proxies solicited by this Proxy
Statement will confer discretionary authority on matters of which we are not
aware a reasonable time before the meeting.
Accordingly, the proxy holders may use their discretionary authority to
vote on any such matter pursuant to the proxies in the enclosed form.
Our stockholders
may cast votes personally at the meeting or the proxy holders may cast the
votes of stockholders who provide proxies in the enclosed form. Our stockholders will elect directors at the
meeting by a plurality of the votes cast at the meeting. In the election of directors, that is, the
nominees receiving the highest numbers of affirmative votes of the shares
entitled to be voted for them up to the number of directors to be elected by
such shares are elected. Votes against a
nominee and votes withheld have no legal effect. Approval of Proposal Nos. 2 and 3 will
require the affirmative vote of a majority of the votes cast at the
meeting. Abstentions and broker nonvotes
count as shares present for determination of a quorum but do not count as
affirmative or negative votes on any item to be voted on and do not count in
determining the number of shares voted on any item.
2
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The following table
provides information, as of February 23, 2009, unless otherwise indicated,
about the beneficial ownership of our common stock by
·
each
stockholder known by us to be the beneficial owner of more than 5% of our
common stock,
·
each
director and director nominee,
·
each
person currently serving as one of our executive officers named in the Summary
Compensation Table see Executive Compensation below, and
·
all
of our current executive officers and directors as a group.
Name and, for Each 5%
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Amount and Nature of
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Percent
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Beneficial Owner, Address
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Beneficial Ownership (1)
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of Class
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Barclay Simpson
(2)
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5956 W. Las
Positas Blvd.
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Pleasanton, CA
94588
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10,575,248
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21.6
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%
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Royce &
Associates, LLC (3)
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1414 Avenue of
the Americas
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New York, NY
10019
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6,240,649
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12.7
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%
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Neuberger
Berman, LLC (4)
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605 Third Avenue
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New York, NY
10158
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3,948,472
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8.1
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%
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Bank of America
Corporation (5)
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100 North Tryon
Street, Floor 25
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Bank of America
Corporate Center
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Charlotte, NC
28255
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3,007,086
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6.1
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%
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Columbia Wagner
Asset
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Management L.P.
(6)
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227 West Monroe
Street, Suite 3000
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Chicago, IL
60606
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2,631,900
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5.4
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%
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Synder Capital
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Management L.P.
(7)
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One Market Plaza
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Steuart Tower,
Suite 1200
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San Francisco,
CA 94105
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2,549,723
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5.2
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%
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Barclays Global
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Investors, N.A.
(8)
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400 Howard
Street
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San Francisco,
CA 94105
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2,436,677
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5.0
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%
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Thomas J
Fitzmyers (9)
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222,709
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*
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Phillip T.
Kingsfather (10)
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65,860
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*
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Michael J. Herbert (11)
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117,000
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*
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Stephen P. Eberhard (12)
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129,748
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*
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3
Name and, for Each 5%
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Amount and Nature of
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Percent
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Beneficial Owner, Address
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Beneficial Ownership (1)
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of Class
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Jennifer A. Chatman
(13)
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5,000
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*
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Gary M. Cusumano
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800
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*
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Earl F. Cheit
(14)
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9,000
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*
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Peter N.
Louras, Jr. (14)
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11,683
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*
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Robin G.
MacGillivray (13)
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5,000
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*
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Barry Lawson
Williams (14)
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7,000
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*
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All current
executive officers and directors as a group (15)
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11,221,249
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22.7
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%
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*
Less than 0.5%
(1)
We
based the information in this table on information that our officers and
directors provided to us and on statements on Schedule 13D or 13G that
stockholders filed with the Securities and Exchange Commission and sent to
us. Unless otherwise indicated below,
the persons named in the table had sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.
(2)
Includes 1,750 shares subject to options that we
granted under the 1994 Stock Option Plan and that are exercisable within 60
days.
(3)
As of December 31, 2008, Royce &
Associates, LLC had sole power to vote or direct the vote and to dispose or
direct the disposition of these shares.
(4)
Neuberger Berman, LLC is deemed to be a beneficial owner since it has shared power to make decisions whether to retain or dispose, and in some cases the sole power to vote, the securities of many unrelated clients. Neuberger Berman, LLC does not, however, have any economic interest in the securities of those clients. The clients are the actual owners of the securities and have the sole right to receive and the power to direct the receipt of dividends from or proceeds from the sale of such securities. As of December 31, 2008, Neuberger Berman, LLC had shared power to dispose of 3,948,472 shares, sole voting power with respect to 2,200 shares and shared voting power with respect to 3,369,400 shares.
With regard to the shares set forth in the table, Neuberger Berman, LLC and Neuberger Berman Management LLC are deemed to be beneficial owners since they both have shared power to make decisions whether to retain or dispose and vote the securities. Neuberger Berman, LLC and Neuberger Berman Management LLC serve as a sub-adviser and investment manager, respectively, of Neuberger Bermans various Mutual Funds which hold such shares in the ordinary course of their business and not with the purpose nor with the effect of changing or influencing the control of the issuer. The holdings of Lehman Brothers Asset Management LLC and Lehman Brothers Asset Management Inc, affiliates of Neuberger Berman LLC, are also aggregated to comprise the holdings referenced herein.
(5)
As
of December 31, 2008, Bank of America Corporation and its affiliates, NB
Holdings Corporation, BAC North America Holding Company, BANA Holding
Corporation, Bank of America N.A., Columbia Management Group, LLC, Columbia
Management Advisors, LLC, Banc of America Securities Holdings Corporation, Banc
of America Securities LLC, Banc of America Investment Advisors, Inc. and
U.S. Trust Company of Delaware, in its capacity as investment
4
adviser, collectively
beneficially owned these shares, of which:
Bank of America Corporation had shared power to vote 2,696,660 shares
and shared power to dispose of 3,007,086 shares; NB Holdings Corporation had
shared power to vote 2,696,660 shares and shared power to dispose of 3,007,086
shares; BAC North America Holding Company had shared power to vote 2,695,803
shares and shared power to dispose of 3,006,229 shares; BANA Holding
Corporation had shared power to vote 2,695,803 shares and shared power to
dispose of 3,006,229 shares; Bank of America, N.A. had sole power to vote
155,920, sole power to dispose 231,370 shares, shared power to vote 2,539,883
shares and shared power to dispose of 2,774,859 shares; Columbia Management
Group, LLC had shared power to vote 2,440,025 shares and shared power to
dispose of 2,674,035 shares; Columbia Management Advisors, LLC had sole power
to vote 2,413,745, sole power to dispose of 2,613,870 shares, shared power to
vote 26,280 shares and shared power to dispose of 60,165 shares; Banc of
America Securities Holdings Corporation had shared power to vote 857 shares and
shared power to dispose of 857 shares; Banc of America Securities LLC had sole
power to vote 857 shares and sole power to dispose of 857 shares; Banc of
America Investment Advisors, Inc. had shared power to vote 21,748 shares;
and United States Trust Company, N.A. had sole power to vote 13,065 shares,
shared power to vote 3,670 shares, sole power to dispose of 13,065 shares and
shared power to dispose of 3,670 shares.
(6)
As
of December 31, 2008, Columbia Wagner Asset Management L.P. had sole power to vote or direct the vote and to
dispose or direct the disposition of these shares.
(7)
As
of December 31, 2008, Synder Capital Management L.P. and Synder Capital
Management, Inc. had shared power to
vote 2,284,023 shares and shared power to dispose 2,549,723 shares.
(8)
As
of December 31, 2008, Barclays Global Investors, N.A. and its affiliates,
Barclays Global Fund Advisors, Barclays Global Investors Ltd., Barclays
Global Investors Japan Limited, Barclays Global Investors Canada Limited,
Barclays Global Investors Australia Limited and Barclays Global Investors
(Deutschland) AG collectively beneficially
owned these shares. Barclays Global Investors, N.A. and its affiliates had
sole power to vote or direct the vote of
1,886,645 shares and to dispose or direct the disposition of 2,436,677 shares.
(9)
Includes 51,750 shares subject to options that we
granted under our 1994 Stock Option Plan and that are exercisable within 60 days.
Mr. Fitzmyers has a revolving line of credit in the maximum amount of
approximately $1.0 million that is secured, in part, by 150,000 shares of our
common stock that he owns. There is currently no balance due on this line of
credit.
(10)
Includes 52,793 shares subject to options that we
granted under our 1994 Stock Option Plan and that are exercisable within 60
days.
(11)
Includes 117,000 shares subject to options that
we granted under our 1994 Stock Option Plan and that are exercisable within 60
days.
(12)
Includes 36,000 shares subject to options that we
granted under our 1994 Stock Option Plan and that are exercisable within 60
days.
(13)
Includes 5,000 shares subject to options that we
granted under our 1995 Independent Director Stock Option Plan and that are
exercisable within 60 days.
(14)
Includes 7,000 shares subject to options that we
granted under our 1995 Independent Director Stock Option Plan and that are
exercisable within 60 days.
(15)
Includes 357,918 shares subject to options that are
exercisable within 60 days, including the options described in the above notes.
5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominee
We have nominated
for re-election at the meeting Barclay Simpson, Jennifer Chatman and Robin
MacGillivray, whose terms as directors expire in 2009. Below are the names of our directors and
information about them. The persons
authorized to vote the shares represented by proxies in the enclosed form
intend to vote for Mr. Simpson, Ms. Chatman and Ms. MacGillivray.
Under our Bylaws, the stockholders will not be permitted to nominate anyone at
the meeting. If stockholders cast any
votes at the meeting for any candidates other than those that we have
nominated, the persons authorized to vote shares represented by proxies in the
enclosed form, except for proxies withholding authority to vote for the
election of directors or for any particular nominees, will have full discretion
and authority to vote for any or all of the nominees in such order as those
persons may determine.
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Director
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Name
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Age
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Since
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Position
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Barclay Simpson (4)
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87
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1956
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Chairman of the Board
and Director term expiring in 2009
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Thomas J Fitzmyers
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68
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1978
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President and Chief
Executive Officer and Director term expiring in 2011
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Jennifer A. Chatman
(1) (2) (4)
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49
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2004
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Director term
expiring in 2009
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Earl F. Cheit
(2) (3) (4)
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82
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1994
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Director term
expiring in 2011
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Gary M. Cusumano
(1) (2) (4)
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65
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2007
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Director term
expiring in 2010
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Peter N.
Louras, Jr. (1) (2) (3) (4)
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59
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1999
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Director term
expiring in 2010
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Robin G. MacGillivray
(2) (3) (4)
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53
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2004
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Director term
expiring in 2009
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Barry Lawson Williams
(1) (3) (4)
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64
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1994
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Director term
expiring in 2011
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(1)
Member of the
Compensation Committee
(2)
Member of the Audit
Committee
(3)
Member of the Governance
and Nominating Committee
(4)
Member of the Growth
Committee
Executive
Officers
Our executive officers include
Barclay Simpson and Thomas J Fitzmyers.
They are also executive officers and directors of some of our
subsidiaries. Michael J. Herbert, age
50, is our Chief Financial Officer, Treasurer and Secretary and serves some of
our subsidiaries in similar capacities. In February 2009, our Board of
Directors appointed Mr. Herbert as one of our Vice Presidents, effective May 11,
2009. In this new role, Mr. Herbert will manage our international
activities outside of North America. In February 2009,
our Board of Directors also appointed Karen W. Colonias, age 51, as our Chief
Financial Officer, Treasurer and Secretary, effective May 11, 2009. Jeffrey E. Mackenzie, age 47, is also one of our
Vice Presidents. Phillip T. Kingsfather,
age 62, is a director and the President and Chief Executive Officer of our
subsidiary, Simpson Strong-Tie Company Inc.
Stephen P. Eberhard, age 55, is a director and the Chief Executive
Officer of our subsidiary, Simpson Dura-Vent Company, Inc. We regard Mr. Kingsfather and Mr. Eberhard
as executive officers, because they both perform management policy-making
functions for us.
6
Biographical
Information
Barclay Simpson
has been the Chairman of our Board of Directors since 1994. He has been with our management since our
inception in 1956. Mr. Simpson also
is a member of the Boards of Directors of the University Art Museum of the
University of California, Berkeley, and the California College of the
Arts. He is also active in other charitable
and educational institutions.
Thomas J Fitzmyers
has served as our President and as a director since 1978. He has served as our Chief Executive Officer
since 1994. He has served as the Chief
Executive Officer and a director of our subsidiary, Simpson Strong-Tie Company
Inc., since 1983. He has served as a
director of our subsidiary, Simpson Dura-Vent Company, Inc., since
1982. Mr. Fitzmyers was employed by
Union Bank from 1971 to 1978. He was a
Regional Vice President when he left Union Bank to join us in 1978.
Jennifer
A. Chatman
is the Paul J. Cortese Distinguished Professor of
Management, Haas School of Business, University of California, Berkeley. Before joining the Berkeley faculty in 1993,
she was a professor at the Kellogg Graduate School of Management, Northwestern
University. She received her Ph.D. from
University of California, Berkeley in 1988.
She is a member of the Board of Trustees of Prospect Sierra School. In addition to her research and teaching at
University of California, Berkeley, she consults with a wide range of
organizations and teaches in executive development programs at the Haas School
of Business, Stanford University and Columbia University.
Earl F.
Cheit
is Dean and Edgar F. Kaiser Professor Emeritus, Haas
School of Business, University of California, Berkeley. Until 2001, he was Chairman of the Board of
YCI, a consumer products company, and Senior Advisor, Asia Pacific Economic
Affairs, The Asia Foundation. He is a
member of the Audit Committee of the Evelyn and Walter Haas, Jr. Fund, a
Trustee of Mills College, a Trustee of the University of California, Berkeley,
Foundation and founding Chairman of Cal Performances, the performing arts
presenter and commissioner at the University of California, Berkeley. He is a
member of the Bay Area Councils Business Hall of Fame selection committee.
Gary M.
Cusumano
has over
35 years of experience with The Newhall Land and Farming Company, most recently
as its Chairman. He retired from Newhall
Land and Farming Company in January 2006.
He is a director of Granite Construction, Inc. and Forest Lawn
Memorial Park, was formerly a director of Sunkist Growers, Inc.,
Watkins-Johnson Company and Zero Corporation and has served on the boards of
many not-for-profit and community service organizations.
Peter N.
Louras, Jr.
is a retired corporate executive. He served as Interim President at John F.
Kennedy University in Pleasant Hill, California, from October 2003 to May 2004. He joined The Clorox Company in 1980 and was
Group Vice President from May 1992 until his retirement in July 2000.
In this position, he served on The Clorox Companys Executive Committee with
overall responsibility for its international business activities and business
development function, including acquisitions and divestitures. Before joining The Clorox Company, Mr. Louras,
a certified public accountant, worked at Price Waterhouse in both their San
Francisco, California, and Philadelphia, Pennsylvania, offices. Mr. Louras
is a member of the American Institute of CPAs and the Pennsylvania Institute of
CPAs. He is currently a member of the Board of Directors of Dealer Fusion, a
privately owned company. Mr. Louras actively participates in civic
projects and serves on the boards of various not-for-profit organizations.
Robin G. MacGillivray
became Senior Vice President of Local and Regional Markets for AT&T West in
November 2008. She is responsible for service and sales to AT&Ts
small business customers nationwide. Previously, she led Business
Communications Services where she was responsible for business market sales and
customer service in California and Nevada.
She previously served as Senior Vice President Strategic Process
Improvement, where she oversaw that companys call center transformation, DSL
improvement, and sales and marketing process standardization efforts. Ms. MacGillivray joined SBC West
Business Communications Services in 1979, after receiving her bachelors degree
in journalism from the School of Journalism and her masters degree in telecommunications
management from the Annenberg School of Communications, both at the University
of Southern California. She completed
the Stanford Executive Program at Stanford University in 1997. She has worked in numerous SBC company
7
organizations and
functions, including Engineering, Operations, Finance, Human Resources,
Marketing, Customer Service and Sales.
She is a Regent of John F. Kennedy University and is President of the
Board of Directors of the Girl Scouts of Northern California.
Barry Lawson Williams
is the retired General Partner of Williams Pacific Ventures Inc., a venture
capital and real estate consulting firm.
He is a director of PG&E Corporation, CH2M HILL Companies, Ltd., SLM
Corp., Northwestern Mutual Life Insurance Co. and R.H. Donnelly &
Co. Mr. Williams was also a General
Partner of WDG Ventures Inc., a California limited partnership, until
2002. He was interim President and Chief
Executive Officer of the American Management Association International during
2000 and 2001.
Karen W.
Colonias
has held the position of Vice President and Branch
Manager of Simpson Strong-Ties Stockton, California, manufacturing facility
since 2004. She joined Simpson Strong-Tie in 1984 as an engineer in the
research and development department, where she was responsible for the design
and testing of new products and code development. In 1998, she was promoted to
Vice President of Engineering, where she was responsible for Simpson Strong-Ties
research and development efforts. Prior to joining Simpson Strong-Tie, she
worked as a civil engineer for the Bechtel Corporation. Ms. Colonias has a
BS in Engineering and an MBA and is also a licensed professional engineer.
Michael
J. Herbert
has served as our and our subsidiaries Chief
Financial Officer, Treasurer and Secretary since 2000. From 1988 to 2000 he held various financial
management positions, with his last position as Director of Finance, with Sun
Microsystems, Inc.
Jeffrey E. Mackenzie
was appointed
Vice President in December 2008. From November 2000 to December 2008,
he served as our Financial Reporting Manager, overseeing our external reporting
and managing various other accounting and finance functions.
Phillip
T. Kingsfather
has served as the President and Chief
Executive Officer of Simpson Strong-Tie Company Inc. since February 2009.
From August 2006, to February 2009, he served as President and Chief
Operating Officer of Simpson Strong-Tie Company Inc. His career with us started in 1979 as an
Outside Sales Representative in the Pacific Northwest for Simpson Strong-Tie
Company Inc. In 1985, he became Regional
Sales Manager. He joined our Anchor Systems sales team in 1997 and was
instrumental in the launch of this product line. In 2003, he was promoted to Vice President in
charge of our Anchor Systems product line, where he served until August 2006.
Stephen
P. Eberhard
has served as the President of Simpson Dura-Vent
Company, Inc. since November 2003 and Chief Executive Officer and a
director of Simpson Dura-Vent Company, Inc. since January 2004. From 1994 to 2003, he served as Vice
President of Information Systems for Simpson Strong-Tie Company Inc. From 1983 to 1994 he served in various
capacities with us and our subsidiaries, including cost accountant, controller,
purchasing manager, and Director of Information Systems. From 1977 to 1982, Mr. Eberhard was
general manager of a family-owned retail industrial equipment dealership. Mr. Eberhard was an auditor with Price
Waterhouse from 1975 to 1977.
8
Independence
The New York Stock
Exchange corporate governance rules require that the board of directors of
a listed company consist of a majority of independent directors. A majority of our directors are independent
under those rules.
Pursuant to the New York
Stock Exchange corporate governance rules, our Board of Directors has adopted
categorical independence standards to assist in determining director
independence. The categorical standards
provide that a director will not be independent of a listed company if:
·
the director is,
or has been within the last 3 years, an employee of the listed company, or an
immediate family member is, or has been within the last 3 years, an executive
officer, of the listed company;
·
the director has
received, or has an immediate family member who has received, during any
12-month period within the last 3 years, more than $120,000 in direct
compensation from the listed company, other than director and committee fees
and pension or other forms of deferred compensation for prior service, provided
such compensation is not contingent in any way on continued service;
·
(a) the director is a
current partner or employee of a firm that is the companys internal or
external auditor; (b) the director has an immediate family member who is a
current partner of such a firm; (c) the director has an immediate family
member who is a current employee of such a firm and personally works on the
listed companys audit; or (d) the director or an immediate family member
was within the last 3 years a partner or employee of such a firm and personally
worked on the listed companys audit within that time;
·
the director or an
immediate family member is, or has been within the last 3 years, employed as an
executive officer of another company where any of the listed companys present
executive officers at the same time serves or served on the other companys
compensation committee; or
·
the director is a current employee, or an
immediate family member is a current executive officer, of another company that
has made payments to, or received payments from, the listed company for
property or services in an amount that, in any of the last 3 fiscal years,
exceeded the greater of $1,000,000 or 2% of the other companys consolidated
gross revenues.
For purposes of the categorical standards, immediate family member
includes a directors spouse, parents, children, siblings, mothers- and
fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and
anyone, other than any domestic employee, who shares the directors home.
Applying the
categorical independence standards, our Board of Directors has affirmatively
determined that each of Mr. Cheit, Mr. Cusumano, Mr. Louras, Mr. Williams,
Ms. Chatman and Ms. MacGillivray is independent under the New York
Stock Exchange corporate governance rules, in that none of them has a material
relationship with us, either directly or as a partner, shareholder, officer or
employee of an organization that has a relationship with us. Our other directors, Mr. Simpson and Mr. Fitzmyers,
are not independent. In making its
determination, our Board of Directors considered all relevant facts and
circumstances, including commercial, industrial, banking, consulting, legal,
accounting, charitable and familial relationships, and considered the issue not
merely from the standpoint of a director, but also from that of persons or
organizations with which a director has an affiliation.
Attendance at Meetings
Our Board of Directors held 12 meetings in 2008. Its committees held a total of 16 meetings in
2008, including 6 meetings of the Audit Committee, 6 meetings of the
Compensation Committee and 4 meetings of the Governance and Nominating
Committee. Each director attended at
least 75% of the meetings of our Board of Directors, except for Barclay Simpson
who attended 8 of the meetings of the Board of Directors, and at least 75% of
the meetings of the committees on which he or she served in 2008. All of our directors, except for Earl Cheit,
attended the annual meeting of our stockholders in 2008, although we do not
have a policy that requires our directors to attend the annual meeting of
stockholders.
9
Meetings
of Independent Directors
Our independent directors meet at regularly scheduled
executive sessions without other members of management. The independent directors rotate the role of
chairperson among themselves for each such meeting to allow each of them an
opportunity to preside.
Communications
with our Board of Directors
We encourage stockholders and interested parties to
communicate any concerns or suggestions directly to the independent members of
our Board of Directors, by writing to:
Board of Directors
Simpson Manufacturing Co., Inc.
P.O. Box 1394
Alamo, CA 94507-7394
OUR BOARD
RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF BARCLAY SIMPSON, JENNIFER A.
CHATMAN AND ROBIN G. MACGILLIVRAY, THE THREE NOMINEES FOR DIRECTOR AT THIS
MEETING.
10
PROPOSAL NO. 2
RATIFICATION OF CORRECTION OF A CLERICAL ERROR IN
THE PREVIOUSLY
APPROVED SIMPSON MANUFACTURING CO., INC. 1994 STOCK OPTION PLAN
At the annual meeting, we will ask our stockholders to
ratify last years amendment to the Simpson Manufacturing Co., Inc. 1994
Stock Option Plan. In Exhibit B of
our 2008 proxy statement, there was an inadvertent clerical error in section 4,
Shares Subject to the Plan, that stated, Subject to the provisions of section
10 relating to adjustments on changes in stock, the stock that may be sold
pursuant to Options shall not exceed the aggregate of 8,000,000 shares of
Common Stock. This statement should have read, Subject to the provisions of
section 10 relating to adjustments on changes in stock, the stock that may be
sold pursuant to Options shall not exceed the aggregate of 16,000,000 shares of
Common Stock. Our Board of Directors and the stockholders had already approved
the aggregate limit of 16,000,000 shares of Common Stock in the amendment dated
July 29, 2002, adjusted for subsequent 2-for-1 stock splits effected in August 2002
and November 2004 in accordance with section 10 of the Simpson
Manufacturing Co., Inc. 1994 Stock Option Plan. The 1994 Stock Option Plan was last amended
on February 13, 2008, and was last approved by our stockholders on April 23,
2008. Our Board of Directors believes
that ratifying the correction of this clerical error is in the best interests
of your Company.
By affording our qualified employees, directors and
consultants the opportunity to buy shares of our common stock, we intend the
1994 Stock Option Plan to enhance our ability to retain the services of persons
who are now employees, directors or consultants, to secure and retain the
services of new employees, directors and consultants, and to provide incentives
for such persons to exert maximum efforts for our success.
Our Board of Directors has delegated the
administration of the 1994 Stock Option Plan to the Compensation
Committee. The Compensation Committee
administers the 1994 Stock Option Plan (as its manager and not as its trustee)
and determines
·
who will be granted options,
·
when and how each option will be granted,
·
whether an option will be an incentive
stock option or a nonstatutory stock option,
·
the provisions of each option, including
the time or times the option may be exercised, and
·
the number of shares for which an option is granted.
The Compensation
Committee also construes and interprets the 1994 Stock Option Plan and the
options granted under it and establishes, amends and revokes rules and
regulations concerning the administration of the 1994 Stock Option Plan.
Participation in the 1994 Stock Option Plan is open to
our employees, directors and consultants selected by the Compensation Committee
on the basis of their past and anticipated future contributions. We may grant a participant incentive stock
options only if the participant is an employee, but we may grant any
participant a nonstatutory stock option.
The exercise price per share of each option (whether an incentive stock
option or a nonstatutory option) must be at least 100% of the fair market value
of a share of our common stock when we grant the option. In addition, we cannot grant a participant
who owns stock representing more than 10% of the voting power of all classes of
our stock an option under the 1994 Stock Option Plan, unless the per-share
exercise price of that option is at least 110% of the fair market value of a
share of our common stock when we grant the option and the period when the
option is exercisable is within 5 years after we grant the option.
The Compensation Committee determines the terms of
each option that we grant to a participant under our 1994 Stock Option Plan. The date or dates on which an option becomes
exercisable may be based on performance or other criteria, but no option may be
exercised more than 10 years from its grant.
The Compensation Committee may divide the number of shares of our common
stock subject to an option under the 1994 Stock Option Plan into periodic
installments, with the option becoming exercisable (vesting) during each
installment period with respect to the shares allotted to that period. The vesting provisions may vary among
options. At the discretion of the
Compensation Committee, we may give an
11
optionee the right
to exercise the option before it vests.
In that case, we will have the right to repurchase from the optionee, at
the exercise price, any shares that the optionee purchases by exercising an
unvested option. This repurchase right
lapses at a rate equivalent to the vesting rate, starting when we grant the
option. In general, if we allow an
optionee to purchase shares under an unvested option and the optionee later
ceases to be one of our employees, directors or consultants, we have 90 days
from the date of such cessation to exercise our repurchase right.
Generally, options that
the Compensation Committee grants under the 1994 Stock Option Plan vest (become
exercisable) in increments over 4 years.
Our Board of Directors has, however, resolved to accelerate the vesting
of options in 2 situations. First, when
an employee who has reached age 60 ceases to be employed by us, the employees
option will fully vest at that time.
Second, all outstanding options under the 1994 Stock Option Plan will
fully vest, and must be exercised, on a change in control of Simpson
Manufacturing Co., Inc. For this
purpose, we define a change in control as one of the following:
·
a merger or
consolidation in which we are not the surviving corporation, if the surviving
corporation refuses to assume or continue our options, or to substitute similar
options, or our options do not otherwise continue in effect,
·
a reverse merger
in which we are the surviving corporation, but as part of the merger the
outstanding shares of our common stock convert into other securities, cash or
other property, if the surviving corporation refuses to assume or continue our
options, or to substitute similar options, or our options do not otherwise
continue in effect, or
·
the dissolution
or liquidation of Simpson Manufacturing Co., Inc.
Both of these
acceleration provisions apply to all participants in our 1994 Stock Option
Plan, including our Named Executive Officers.
Several conditions apply to incentive stock options
generally, in accordance with the Internal Revenue Code. If we grant an incentive stock option, the
special federal income tax treatment accorded to incentive stock options
(discussed below) is available only if
·
the optionee does not sell the shares received on
exercise of the option until at least 2 years after we grant the option and 1
year after its exercise, and
·
we employ the optionee at all times from the date the
option is granted to 3 months before the exercise of the option.
In addition, to
the extent that incentive stock options granted under the 1994 Stock Option
Plan that vest in any year allow an optionee to acquire our common stock with a
fair market value of more than $100,000, those incentive stock options are
treated as nonstatutory stock options.
We have granted the following options under the 1994
Stock Option Plan, all nonstatutory stock options, to the following persons in
the amounts and at the exercise prices indicated:
|
|
|
|
Number of
|
|
Exercise
|
|
|
|
Name and Title of Person
|
|
|
|
Shares Subject
|
|
Price
|
|
Expiration
|
|
or Description of Group
|
|
Year
|
|
to Option
|
|
per Share
|
|
Date
|
|
Stephen P.
Eberhard
|
|
1993
|
|
31,064
|
|
$
|
0.91
|
|
03/03/01
|
|
President and
Chief Executive
|
|
1994
|
|
36,280
|
|
2.88
|
|
05/24/01
|
|
Officer, Simpson
Dura-Vent
|
|
1994
|
|
13,000
|
|
2.56
|
|
01/19/02
|
|
Company, Inc.
|
|
1995
|
|
13,000
|
|
3.38
|
|
12/31/02
|
|
|
|
1996
|
|
5,000
|
|
5.75
|
|
12/31/03
|
|
|
|
1997
|
|
5,000
|
|
8.33
|
|
12/31/04
|
|
|
|
1998
|
|
5,000
|
|
9.36
|
|
12/31/05
|
|
|
|
1999
|
|
6,000
|
|
10.94
|
|
12/31/06
|
|
|
|
2002
|
|
10,000
|
|
16.45
|
|
12/31/09
|
|
|
|
2003
|
|
10,000
|
|
25.43
|
|
12/31/10
|
|
|
|
2004
|
|
16,000
|
|
34.90
|
|
12/31/11
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
Number of
|
|
Exercise
|
|
|
|
Name and Title of Person
|
|
|
|
Shares Subject
|
|
Price
|
|
Expiration
|
|
or Description of Group
|
|
Year
|
|
to Option
|
|
per Share
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J
Fitzmyers
|
|
1993
|
|
126,000
|
|
$
|
0.91
|
|
03/03/01
|
|
President, Chief
Executive
|
|
1994
|
|
828,440
|
|
2.88
|
|
05/24/01
|
|
Officer and
Director
|
|
1994
|
|
18,000
|
|
2.56
|
|
02/13/02
|
|
|
|
1996
|
|
18,000
|
|
5.75
|
|
12/31/03
|
|
|
|
1997
|
|
18,000
|
|
8.33
|
|
12/31/04
|
|
|
|
1998
|
|
18,000
|
|
9.36
|
|
12/31/05
|
|
|
|
1999
|
|
18,000
|
|
10.94
|
|
12/31/06
|
|
|
|
2002
|
|
18,000
|
|
16.45
|
|
12/31/09
|
|
|
|
2003
|
|
18,000
|
|
25.43
|
|
12/31/10
|
|
|
|
2004
|
|
9,000
|
|
34.90
|
|
12/31/11
|
|
|
|
2005
|
|
9,000
|
|
40.72
|
|
01/25/13
|
|
|
|
|
|
|
|
|
|
|
|
Michael J.
Herbert
|
|
2002
|
|
110,000
|
|
16.45
|
|
12/31/09
|
|
Chief Financial
Officer,
|
|
2003
|
|
110,000
|
|
25.43
|
|
12/31/10
|
|
Treasurer and
Secretary
|
|
2004
|
|
4,000
|
|
34.90
|
|
12/31/11
|
|
|
|
2005
|
|
4,000
|
|
40.72
|
|
01/25/13
|
|
|
|
|
|
|
|
|
|
|
|
Karen W.
Colonias
|
|
1993
|
|
20,712
|
|
0.91
|
|
03/03/01
|
|
Vice President,
Simpson
|
|
1994
|
|
14,384
|
|
2.88
|
|
05/24/01
|
|
Strong-Tie
Company Inc.
|
|
1994
|
|
12,000
|
|
2.56
|
|
01/19/02
|
|
|
|
1995
|
|
12,000
|
|
3.38
|
|
12/31/02
|
|
|
|
1996
|
|
5,000
|
|
5.75
|
|
12/31/03
|
|
|
|
1997
|
|
5,000
|
|
8.33
|
|
12/31/04
|
|
|
|
1998
|
|
10,000
|
|
9.36
|
|
12/31/05
|
|
|
|
1999
|
|
14,000
|
|
10.94
|
|
12/31/06
|
|
|
|
2002
|
|
46,000
|
|
16.45
|
|
12/31/09
|
|
|
|
2003
|
|
46,000
|
|
25.43
|
|
12/31/10
|
|
|
|
2004
|
|
3,000
|
|
34.90
|
|
12/31/11
|
|
|
|
2005
|
|
3,000
|
|
40.72
|
|
01/25/13
|
|
|
|
2006
|
|
2,000
|
|
33.62
|
|
02/01/14
|
|
|
|
|
|
|
|
|
|
|
|
Phillip Terry
Kingsfather
|
|
1993
|
|
10,356
|
|
0.91
|
|
03/03/01
|
|
President, Chief
Executive
|
|
1994
|
|
5,532
|
|
2.88
|
|
05/24/01
|
|
Officer, Simpson
Strong-Tie
|
|
1994
|
|
2,000
|
|
2.56
|
|
01/19/02
|
|
Company Inc.
|
|
1995
|
|
2,000
|
|
3.38
|
|
12/31/02
|
|
|
|
1996
|
|
2,000
|
|
5.75
|
|
12/31/03
|
|
|
|
1997
|
|
2,000
|
|
8.33
|
|
12/31/04
|
|
|
|
1998
|
|
8,000
|
|
9.36
|
|
12/31/05
|
|
|
|
1999
|
|
2,000
|
|
10.94
|
|
12/31/06
|
|
|
|
2002
|
|
2,000
|
|
16.45
|
|
12/31/09
|
|
|
|
2003
|
|
8,000
|
|
25.43
|
|
12/31/10
|
|
|
|
2004
|
|
33,000
|
|
34.90
|
|
12/31/11
|
|
|
|
2005
|
|
33,000
|
|
40.72
|
|
01/25/13
|
|
|
|
2006
|
|
2,000
|
|
33.62
|
|
02/01/14
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
Number of
|
|
Exercise
|
|
|
|
Name and Title of Person
|
|
|
|
Shares Subject
|
|
Price
|
|
Expiration
|
|
or Description of Group
|
|
Year
|
|
to Option
|
|
per Share
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey E.
Mackenzie
|
|
1996
|
|
4,000
|
|
5.75
|
|
12/31/03
|
|
Vice President
|
|
1997
|
|
4,000
|
|
8.33
|
|
12/31/04
|
|
|
|
1998
|
|
6,000
|
|
9.36
|
|
12/31/05
|
|
|
|
1999
|
|
6,000
|
|
10.94
|
|
12/31/06
|
|
|
|
2002
|
|
8,000
|
|
16.45
|
|
12/31/09
|
|
|
|
2003
|
|
8,000
|
|
25.43
|
|
12/31/10
|
|
|
|
2004
|
|
4,000
|
|
34.90
|
|
12/31/11
|
|
|
|
2005
|
|
4,000
|
|
40.72
|
|
01/25/13
|
|
|
|
|
|
|
|
|
|
|
|
Barclay Simpson
|
|
1994
|
|
2,000
|
|
2.56
|
|
02/13/00
|
|
Chairman of the
Board
|
|
1996
|
|
2,000
|
|
6.33
|
|
12/31/01
|
|
|
|
1997
|
|
2,000
|
|
9.16
|
|
12/13/02
|
|
|
|
1998
|
|
2,000
|
|
10.30
|
|
12/31/03
|
|
|
|
1999
|
|
2,000
|
|
12.03
|
|
12/31/04
|
|
|
|
2002
|
|
2,000
|
|
18.10
|
|
12/31/07
|
|
|
|
2003
|
|
2,000
|
|
27.98
|
|
12/31/08
|
|
|
|
2004
|
|
1,000
|
|
38.39
|
|
12/31/09
|
|
|
|
2005
|
|
1,000
|
|
44.79
|
|
01/25/11
|
|
|
|
|
|
|
|
|
|
|
|
Current
Executive Officers,
|
|
various
|
|
1,841,768
|
|
$
|
0.91-44.79
|
|
03/03/01-
|
|
as a Group
|
|
|
|
|
|
|
|
02/01/14
|
|
|
|
|
|
|
|
|
|
|
|
Current
Directors Who
|
|
|
|
|
|
|
|
|
|
Are Not
Executive
|
|
|
|
|
|
|
|
|
|
Officers, as a
Group*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees and
Consultants
|
|
various
|
|
7,474,548
|
|
0.91-40.72
|
|
03/03/01-
|
|
Who Are Not
Executive
|
|
|
|
|
|
|
|
02/22/16
|
|
Officers, as a
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
Our
independent directors do not participate in our 1994 Stock Option Plan, but
instead participate in our 1995 Independent Director Stock Option Plan. See Executive Compensation Director
Compensation 1995 Independent Director Stock Option Plan.
The closing market price of a share of our common
stock, as reported by the New York Stock Exchange on February 23, 2009,
was $15.40.
In general, on exercising an option granted under the
1994 Stock Option Plan, the optionee must pay us the exercise price in
cash. The Compensation Committee has
discretion to allow the optionee to pay the exercise price, either at the time
the option is granted or when the optionee exercises it, by delivering shares
of our common stock to us, or according to a deferred payment arrangement, or
in some other manner. If the
Compensation Committee allows the optionee to defer payment for the exercise of
an option, we charge the optionee interest at least annually on the deferred
amount at the minimum rate that avoids characterization of any of the exercise
price as interest under the Internal Revenue Code or, if less, at the maximum
rate permitted by law.
The grant of a nonstatutory stock option under the
1994 Stock Option Plan should not have any federal income tax
consequences. On exercising a
nonstatutory stock option, the optionee generally recognizes taxable ordinary
income equal to the excess of (a) the fair market value of the shares of
our common stock purchased on such exercise, over (b) the option exercise
price for those shares. We generally
must withhold tax from the optionees regular or supplemental wages based on
the amount of ordinary income that the optionee recognizes and we are generally
entitled to a business expense deduction
14
in that
amount. To the extent provided in an
option, the optionee may satisfy the withholding obligation by paying cash, by
authorizing us to withhold shares from the shares the optionee would otherwise
receive on exercising the option, or by delivering to us shares of our common
stock that the optionee already owns.
When an optionee sells shares acquired by exercising a
nonstatutory stock option, the optionee recognizes capital gain or loss equal
to the difference between the selling price for those shares and the fair
market value of the shares when the optionee exercises the option. If the optionee holds the shares for a year
or more after exercising the nonstatutory option (not including the time the
optionee holds the option before exercising it), any gain on the sale of those
shares is long-term capital gain. An
optionees sale of shares acquired on exercise of a nonstatutory stock option
has no tax consequences to us.
The grant of an incentive stock option under the 1994
Stock Option Plan generally has no federal income tax consequences to the
optionee. Similarly, the optionee should
not recognize any income on exercising an incentive stock option. The optionee recognizes income with respect
to an incentive stock option when the optionee sells the shares acquired on
exercise of the option, and the optionee then generally recognizes capital gain
or loss equal to the difference between the selling price and the option
exercise price for those shares. This
federal income tax treatment is available, however, only if the optionee does
not sell the shares acquired on exercise of an incentive stock option until at
least 2 years after the option grant and at least 1 year after the option
exercise. If an optionee sells the
shares before holding them for the required period (a disqualifying
disposition), the shares are treated similarly to shares acquired through the
exercise of a nonstatutory stock option the optionee generally recognizes as
ordinary income in the year of the sale the excess of the fair market value of
the shares when the optionee exercises the option over the option exercise
price for those shares, and recognizes as capital gain the excess, if any, of
the selling price over the fair market value of the shares when the optionee
exercises the option. If an optionee
sells the shares before holding them for the required period at a price less
than fair market value of the shares when the optionee exercises the option,
the optionee recognizes ordinary income equal to the excess, if any, of the
amount realized on the sale over the exercise price. In case of a disqualifying disposition, we
generally can take a business expense deduction in an amount equal to the
amount the optionee recognizes as ordinary income.
Exercise of an incentive stock option may have
implications with respect to alternative minimum tax. After calculating regular tax liability, a
taxpayer must determine whether he or she owes alternative minimum tax by
recalculating his or her tax by disallowing certain deductions and adding
certain items to income. The alternative
minimum tax calculation requires an optionee to include in income the excess of
the fair market value of the shares at the time of exercise over the option
exercise price, potentially resulting in federal tax of up to 28% on such
amount.
Currently, the maximum marginal federal income tax
rate on an individuals net long-term capital gains is 15% and on an individuals
ordinary income is 35%. Because an
individual may deduct up to $3,000 of net capital losses in any year, it may be
advantageous to characterize gain as long-term capital gain if the optionee has
capital losses from other investments.
If an optionee under the 1994 Stock Option Plan ceases
to be our employee, director or consultant for a reason other than disability
or death, the optionee may exercise an option he or she holds under the 1994
Stock Option Plan, to the extent that such option is vested on the date of such
cessation, at any time during the period ending on the earlier of (a) the
90th day after such cessation (or such longer or shorter period as is specified
in the option, which must be at least 30 days), and (b) the date that the
option expires. If the optionee does not
exercise the option within that time, the option terminates and the optionee
forfeits the right to exercise it. Any option
or portion of an option that is not vested when the optionee ceases to be our
employee, director or consultant terminates on that date and cannot be
exercised thereafter.
If an optionee ceases to be our employee, director or
consultant because the optionee becomes disabled, the optionee may exercise an
option granted to the optionee under the 1994 Stock Option Plan, to the extent
that such option is vested on the date of such cessation, within the period
ending on the earlier of (a) the first anniversary of such cessation (or
such longer or shorter period as is specified in the option, which must be at
least 6 months), and (b) the date that the option expires. If the optionee
does not exercise
15
the option within
that time, the option terminates and the optionee forfeits the right to
exercise it. Any option or portion of an
option that is not vested when the optionee ceases to be our employee, director
or consultant terminates on that date and may not be exercised thereafter.
If an optionee under the 1994 Stock Option Plan dies
while serving as our employee, director or consultant or within a period
specified in the option after ceasing to be our employee, director or
consultant, the optionees estate or the person who inherits the option may
exercise it, to the extent that the option is vested at the time of death,
within the period ending on the earlier of (a) the 180th day after the
first anniversary of the optionees death (or such longer or shorter period as
is specified in the option, which must be at least 6 months), and (b) the
date that the option expires. If the
option is not exercised within that time, it terminates and may not be
exercised. Any option or portion of an
option that has not vested at the date of death terminates on that date and may
not be exercised.
Notwithstanding the termination, disability or death
of an optionee, the Compensation Committee may extend the expiration date of
any outstanding option as the Compensation Committee considers appropriate, but
not beyond the expiration date of the option as set forth in the option
agreement.
An optionee may not, during his or her lifetime, sell,
assign, transfer, pledge, hypothecate or otherwise dispose of an option granted
under the 1994 Stock Option Plan, whether by operation of law or otherwise,
except by will or the laws of descent and distribution applicable to the
optionee. An option granted under the
1994 Stock Option Plan also may not be made subject to execution, attachment or
similar process. Nevertheless, the
Compensation Committee has discretion when granting an option or thereafter to
permit the optionee to transfer the option to a trust or other entity
established by the optionee for estate planning purposes. The Compensation Committee also has
discretion to permit other transfers or impose conditions or limitations on any
permitted transfer. Otherwise, only the
person to whom we grant an option may exercise it during his or her lifetime.
The Compensation Committee may suspend or terminate
the 1994 Stock Option Plan at any time.
Unless the Compensation Committee terminates it earlier, the 1994 Stock
Option Plan will terminate on May 28, 2012. We will not grant any options under the 1994
Stock Option Plan after it is terminated.
Options outstanding when the 1994 Stock Option Plan is terminated,
however, may be exercised after the termination of the 1994 Stock Option Plan,
according to the vesting schedules of the options, until the end of the
exercise period of the options as determined under the options. The Compensation Committee may amend the 1994
Stock Option Plan at any time, subject in some cases to the approval of our
stockholders.
The 1994 Stock Option Plan is not subject to any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
and is not qualified under Internal Revenue Code section 401(a).
For an optionee under the 1994 Stock Option Plan who
is not our affiliate (that is, a director, executive officer or other person
controlling, controlled by or under common control with us), there are no
restrictions on the optionees sale of the shares purchased on exercising an
option under the 1994 Stock Option Plan.
An optionee who is our affiliate may not sell shares of our common stock
that the optionee acquires on exercise of an option, unless the resale is
registered under the Securities Act of 1933, as amended, or the sale is made
pursuant to an applicable exemption from registration, including pursuant to Rule 144
under the Securities Act of 1933. In
general, under Rule 144 as currently in effect, an affiliate would be
entitled to sell shares of our common stock in brokers transactions,
transactions with market makers or in qualifying riskless principal
transactions within any 3 month period in an amount that does not exceed the
greater of (a) 1 percent of the then outstanding shares of our common
stock and (b) the average weekly trading volume of our common stock on the
New York Stock Exchange during the 4 calendar weeks preceding the date on which
notice of the sale is filed with the Securities and Exchange Commission. Sales under Rule 144 are also subject to
notice requirements and the availability of current public information about
Simpson Manufacturing Co., Inc. We
may, in our discretion, register for resale the shares of our common stock that
are subject to the 1994 Stock Option Plan by filing a post-effective amendment
to the registration statement on Form S-8 relating to the 1994 Stock
Option Plan to add a reoffer prospectus on Form S-3, after which resales
of shares acquired on exercise of options under the 1994 Stock Option Plan would
no longer be subject to the limitations of Rule 144.
16
A copy of the 1994 Stock Option Plan, as amended, is
attached to this Proxy Statement as Exhibit A and is incorporated herein
by this reference. The foregoing
description of the 1994 Stock Option Plan is qualified in its entirety by
reference to Exhibit A attached hereto.
OUR BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF CORRECTION OF THE CLERICAL
ERROR IN THE PREVIOUSLY APPROVED SIMPSON MANUFACTURING CO., INC. 1994 STOCK
OPTION PLAN, AS AMENDED AND ATTACHED AS EXHIBIT A.
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Board of Directors has selected
PricewaterhouseCoopers LLP as the principal independent registered public
accounting firm to audit our internal controls over financial reporting and
financial statements for 2009. You will
be asked to ratify that selection.
PricewaterhouseCoopers LLP has audited our financial statements since
before our initial public offering in 1994.
A PricewaterhouseCoopers LLP representative will be present at the
meeting, will be given an opportunity to make a statement at the meeting if he
or she desires to do so, and will be available to respond to appropriate
questions.
OUR BOARD
RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP.
17
EXECUTIVE
COMPENSATION
Compensation Discussion and
Analysis
The overall philosophy of
our compensation program is to provide a high degree of incentive to employees
by creating programs that reward achievement of specific profit goals. We believe that these incentive programs,
based on profit targets, align the interests of employees and stockholders,
allow us to attract high performing employees and help us retain the services
of employees whose contributions are instrumental in achieving our goals. Historically, as a means of creating a sense
of unity and cooperation among our employees, we have not had any special
compensation plans exclusively for executive officers. Our Named Executive Officers are at-will employees. We do not have a written employment contract
with any of them and we generally do not offer any severance benefits. We or the officer can terminate the
employment relationship at any time, for any reason, with or without cause.
The primary objective of our overall compensation
program is to motivate our Named Executive Officers and other officers and
employees to increase stockholder value and fairly compensate them relative to
our achievement of that objective. To
retain their services, some portion of their compensation, in the form of
salary and profit sharing trust contributions, should compensate them for their
own investment of time, regardless of the performance of our businesses. Each element of the compensation of our
Principal Executive Officer, our Principal Financial Officer and our 3 other
most highly compensated executive officers (who we call our Named Executive
Officers) and other officers and employees possesses characteristics intended
to motivate them in different ways. We
believe that coordinating the compensation elements helps us to retain the
services of our Named Executive Officers, other officers and other key
employees and to motivate them to achieve results that increase the value of
our common stock. The following is an
analysis of the basic elements of our compensation program.
The Compensation Committee of our Board of Directors
believes that the forms of compensation for our Named Executive Officers
generally should match those of all of our salaried employees. Our compensation program comprises 4 basic
elements:
·
salary,
·
payments to our
defined contribution profit sharing plan,
·
cash profit
sharing, and
·
stock options.
Comparative Market Information
While the Compensation
Committee did not use the services of an external compensation consultant to
perform an analysis or our compensation policies for 2008, the Compensation
Committee did engage Semler Brossy Consulting Group, LLC in 2007 to perform an
analysis of our compensation policies and to identify benchmarks against which
to compare our Named Executive Officers 2007 compensation. Semler Brossy Consulting Group, LLC issued a
report in April 2007, using data from two general industry surveys as
benchmarks: a 2006 Confidential Survey of Executive Compensation and the 2006
Mercer Benchmark Database Executive Positions. Semler Brossy Consulting
Group, LLC represented to the Compensation Committee that participants in both
surveys reflected a broad group of general industries ranging in size from less
than $500 million to more than $10 billion in revenue, and that the data were
size-adjusted to be comparable to our size using statistical analyses. The
Compensation Committee did not consider the component companies underlying the
survey data, because the Compensation Committee believes that the surveys
provided a fair representation of market trends and general comparative
information. For 2009, as in 2008, the
Compensation Committee did not specifically target, or benchmark, any of the
elements of compensation to any particular percentile or level within the
comparative market survey information from 2007.
18
Salary and Profit Sharing Trust
Contributions
Base salary is a guaranteed minimum amount for
performing the functions of the job, but salary alone provides no additional
performance opportunity or motivation to increase value over the long
term. The Compensation Committee
determines the salaries for all of our Named Executive Officers using historical
salary levels for their positions and adjustments for changes in cost of living
and responsibilities. We consider our salary levels sufficient to motivate our
Named Executive Officers to perform the basic functions of their jobs. We
believe that our salary levels are generally set below those of comparable
companies because we believe that it is more effective to have a higher
proportion of our compensation in the form of incentives.
The Compensation
Committee was concerned that we could lose key employees who might be enticed
by higher salaries at comparable jobs. For 2009, the Compensation Committee
decided that the salaries of some of our Named Executive Officers were
substantially below the levels that those individuals would likely be paid by
others for comparable services given the breadth of their responsibility and
experience. Therefore, the Compensation
Committee increased the salary of our Chief Financial Officer by 25%, increased
the salary of the President and Chief Operating Officer of Simpson Strong-Tie
Company Inc. by 48% and increased the salary of the President and Chief
Executive Officer of Simpson Dura-Vent Company, Inc. by 25%. We will offset those salary increases by
reducing amounts, if any, that would otherwise be paid to the respective
officers for 2009 under our Executive Officer Cash Profit Sharing Plan, up to
the amount of the respective officers salary increases. Thus, the total cash compensation that we pay
to each of those officers will not change, except that it should increase to
the extent, if any, that the amount paid to such officer under our Executive
Officer Cash Profit Sharing Plan is less then the amount of such officers
salary increase. In April 2008, we
made similar adjustments for most of our other U.S.-based salaried
employees. Our Chairman and our
President and Chief Executive Officer did not receive an increase in salary for
2009. A comparison of our Chief
Executive Officers 2008 salary with the benchmarks identified in the 2007
Semler Brossy Consulting Group, LLC report is as follows:
|
|
|
|
General Industry Survey
|
|
Position
|
|
Simpson
|
|
25
th
Percentile
|
|
Median
|
|
|
|
|
|
|
|
|
|
President &
CEO
|
|
$
|
336,000
|
|
$
|
560,000
|
|
$
|
679,000
|
|
|
|
|
|
|
|
|
|
|
|
|
The 2008 salaries
for the other Named Executive Officers were substantially below the 25
th
percentile of the general industry survey
mentioned above, except that the salary of the President and Chief Executive
Officer of Simpson Dura-Vent Company, Inc. was slightly above the 25
th
percentile.
As a result, the Compensation Committee believes that our Chief
Executive Officers and the other Named Executive Officers salaries are fair
relative to salaries of their peers, given the other elements of our
compensation program, even though these salaries are generally lower than those
paid by companies in the general industry survey. With the exception of Barclay Simpsons
salary, which has not increased since before our initial public offering in
1994, and except as described above, our Named Executive Officers salaries
have historically increased an average of about 3% per year.
For all years
through 2008, we made contributions to our profit sharing trust for our Named
Executive Officers in amounts equal to 15% of their base salaries, up to the
amounts that we were allowed to deduct from income under Internal Revenue Code
section 404(a). In addition, all
employees are entitled to a proportionate share of forfeited contributions from
employees who terminate their employment before fully vesting in the profit
sharing plan. The Compensation Committee
views these contributions and forfeitures as serving a similar objective as
salaries. In February 2009, the Compensation Committee established a
contribution amount equal to 10% of base salaries to our profit sharing trust
for the 2009 contribution that is to be made in 2010, up to the amounts that we
are allowed to deduct from income under Internal Revenue Code section 404(a) for
all U.S. based salaried employees of Simpson Manufacturing Co., Inc. and
our subsidiaries.
19
Executive Officer Cash Profit
Sharing Plan
To achieve the goal of long-term stock price
appreciation, the Compensation Committee believes that compensation that is
based on profitability needs to incorporate both short-term and long-term
elements. The short-term element is our
Executive Officer Cash Profit Sharing Plan.
Under our Executive Officer Cash Profit Sharing Plan we pay incentive
compensation out of the portion of our profits that exceeds a specified return
on qualified assets. At the beginning of
each year, the Compensation Committee reviews and approves the quarterly
operating profit goals for the year, the rate of return on qualified assets,
and the percentage participation of each of our Named Executive Officers. The Compensation Committee generally defines
the quarterly operating profit goal for the relevant profit center, which may
be Simpson Manufacturing Co., Inc. as a whole or one of our subsidiaries,
as:
Income from operations of the relevant profit center
|
|
Plus:
|
Stock
compensation charges
|
|
|
|
Certain
incentive compensation and commissions
|
|
|
|
Salaried pension
contributions
|
|
|
|
Self-insured
workers compensation costs
|
Equals: Operating profit
The adjustments to
income from operations are excluded
because they are not specifically within our officers control.
The Compensation Committee bases qualifying levels on
the value of the relevant profit centers net operating assets, multiplied by a
rate of return on those assets. We
generally determine the return on assets as follows:
Average assets, net of specified liabilities, for the
3 months ended on the last day of the second month of the quarter
|
|
Less:
|
Cash
|
|
|
|
Real estate
|
|
|
|
Goodwill and
indefinite lived intangible assets
|
|
|
|
Self-insured
workers compensation reserves
|
Multiplied by:
|
|
Specified return
on asset percentage for the relevant profit center
|
|
|
|
Equals:
|
|
Qualifying level
|
The Compensation
Committee bases individual percentages of participation on job function. The Compensation Committee has discretion to
increase, reduce or eliminate any award under our Executive Officer Cash Profit
Sharing Plan, but the percentage of the qualifying level that each officer
receives generally does not change during the year, except for minor changes
when other participants enter or leave the pool during the year. We do not guarantee any minimum payments to
our Named Executive Officers under our Executive Officer Cash Profit Sharing
Plan. We may not pay more than $2.5
million per year to a Named Executive Officer under our Executive Officer Cash
Profit Sharing Plan. We believe that our
Executive Officer Cash Profit Sharing Plan motivates our Named Executive
Officers to maximize our short-term profits and rewards them when those profits
are realized.
In 2007, the
Compensation Committee approved the profitability goals for our Executive
Officer Cash Profit Sharing Plan before we received the results of the Semler
Brossy Consulting Group, LLC report. Therefore, the Compensation Committee did
not specifically target, or benchmark, the amount of short-term incentive
compensation to be paid to our Named Executive Officers for achieving our
profitability goals to any particular percentile or level within the general
industry survey.
20
In 2009, as in
2008, the Compensation Committee did not specifically target, or benchmark, the
amount of short-term incentive compensation to be paid to our Named Executive
Officers to any particular percentile or level within the general industry
survey. The total cash compensation that
the Compensation Committee set for meeting our profitability goals for 2009 is
lower than the total cash compensation set for 2008 to correspond to the lower
profitability goals for 2009 than for 2008, because the Compensation Committee
expects the softness in the construction and home-building industry to continue
in 2009.
Based on our operating profit goal for each of the 4
quarters of 2009, our officers may receive a payout after our quarterly
earnings are announced to the public. If
the operating profit is lower or higher than the targeted operating profit, the
payout will be correspondingly lower or higher, but we generally do not make
any payment when the operating profit for the quarter is less than the
qualifying level for the quarter.
For the full year
2009, the annual operating profit goals, qualifying levels and targeted payouts
for each of the following executive officers
are
as follows:
|
|
Operating
|
|
Qualifying
|
|
Targeted
|
|
|
|
Profit Goal
|
|
Level
|
|
Payout{1}
|
|
|
|
|
|
|
|
|
|
Thomas J
Fitzmyers
|
|
$
|
66,205,000
|
|
$
|
76,897,000
|
|
$
|
270,000
|
|
|
|
|
|
|
|
|
|
Barclay Simpson
|
|
66,205,000
|
|
76,897,000
|
|
78,000
|
|
|
|
|
|
|
|
|
|
Phillip Terry
Kingsfather
|
|
62,497,000
|
|
70,468,000
|
|
102,000
|
|
|
|
|
|
|
|
|
|
Michael J.
Herbert
|
|
66,205,000
|
|
76,897,000
|
|
85,000
|
|
|
|
|
|
|
|
|
|
Karen W.
Colonias{2}
|
|
66,205,000
|
|
76,897,000
|
|
85,000
|
|
|
|
|
|
|
|
|
|
Jeffrey E.
Mackenzie
|
|
66,205,000
|
|
76,897,000
|
|
37,000
|
|
|
|
|
|
|
|
|
|
Stephen P.
Eberhard
|
|
3,708,000
|
|
6,429,000
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
{1}
Amounts
expected to be paid for the full year of 2009 if operating profit goals
established at the beginning of the year are met and qualifying levels are as
projected at the beginning of the year.
{2}
Amounts
represent estimated annualized operating profit goal and targeted payout.
We use these parameters only to provide incentive to
our officers and employees who participate in our Executive Officer Cash Profit
Sharing Plan and our Cash Profit Sharing Plan.
You should not draw any inference whatsoever from these parameters about
our future financial performance. You
should not take these parameters as projections or guidance of any kind.
21
For 2008, the operating profit goals, the qualifying
level and the targeted payout that we presented in last years proxy statement
are reprinted below, along with the amounts that we paid to our Named Executive
Officers for 2008.
|
|
Operating
|
|
Qualifying
|
|
Targeted
|
|
Actual
|
|
|
|
Profit Goal
|
|
Level
|
|
Payout{1}
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J
Fitzmyers
|
|
$
|
162,509,000
|
|
$
|
95,586,000
|
|
$
|
1,213,000
|
|
$
|
1,031,536
|
|
|
|
|
|
|
|
|
|
|
|
Barclay Simpson
|
|
162,509,000
|
|
95,586,000
|
|
348,000
|
|
296,316
|
|
|
|
|
|
|
|
|
|
|
|
Phillip Terry
Kingsfather
|
|
161,852,000
|
|
88,392,000
|
|
650,000
|
|
514,941
|
|
|
|
|
|
|
|
|
|
|
|
Michael J.
Herbert
|
|
162,509,000
|
|
95,586,000
|
|
526,000
|
|
423,745
|
|
|
|
|
|
|
|
|
|
|
|
Stephen P.
Eberhard
|
|
657,000
|
|
7,194,000
|
|
|
|
13,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
{1}
Amounts
were expected to be paid for the full year of 2008 if operating profit goals
established at the beginning of the year were met and qualifying levels were as
projected at the beginning of the year.
Stock Options
The Simpson Manufacturing
Co., Inc. 1994 Stock Option Plan affords selected employees, directors and
consultants the opportunity to own shares of our common stock, by which we
intend:
·
to enhance our
ability to retain the services of persons who are now employees, directors or
consultants,
·
to secure and
retain the services of new employees, directors and consultants, and
·
to provide
incentives for them to exert maximum efforts for our success.
While the purpose
of our Executive Officer Cash Profit Sharing Plan is to motivate our officers
to achieve short-term profit goals, we believe that compensation through the
grant of stock options motivates our key employees to pursue long-term stock
price appreciation.
The terms of the
stock option grants were established, and have generally been consistently
applied, since the 1994 Stock Option Plan was adopted, and we believe that they
generally fall below the range of comparable compensation plans as indicated by
the 2007 Semler Brossy Consulting Group, LLC report. Under our 1994 Stock Option Plan, we grant
non-qualified stock options that have 7-year terms, except for those we grant
to Barclay Simpson, which have 5-year terms.
Each stock option has an exercise price equal to the contemporaneous
closing market price, except for options we grant to Barclay Simpson, which
have exercise prices that are 110% of the contemporaneous closing market
prices. Stock options granted to Named
Executive Officers vest annually over the first 4 years at a rate of 25% per
year. Stock option grants for every
employee, including a Named Executive Officer, will become fully vested if the
employee ceases to be employed by us after reaching age 60 or in the event of a
change in control. We believe that this
allows employees, who have made substantial contributions during their careers,
to retire without having to give up any of the value that they have earned on
their previously granted stock options.
We also believe that it is appropriate to accelerate the vesting of
outstanding stock options on a change in control, because we do not afford
other significant termination benefits to our employees. The 1994 Stock Option Plan is qualified under
section 162(m) of the Internal Revenue Code of 1986.
We believe that
stock options align the interests of our Named Executive Officers with the
interests of our stockholders, because the Named Executive Officers realize
value from stock options only to the extent that the price of our common stock
appreciates over the terms of the options.
We make an annual stock option grant to a Named Executive Officer only
when the profit center for which he or she is responsible, which may be one of
our branches or subsidiaries or may be Simpson Manufacturing Co., Inc.
22
as a whole,
achieves its profitability goals for the preceding year. If we meet all applicable operating profit
goals for 2009, computed as income from operations of the relevant business
plus stock option charges, certain incentive compensation and commissions,
salaried pension contributions and self-insured workers compensation costs, we
anticipate granting stock options to the following executive officers for the
following numbers of shares of our common stock:
|
|
Operating
|
|
Option
|
|
|
|
Profit Goal{1}
|
|
Grant
|
|
|
|
|
|
|
|
Thomas J
Fitzmyers
|
|
$
|
65,578,000
|
|
18,000 shares
|
|
|
|
|
|
|
|
Barclay Simpson
|
|
65,578,000
|
|
2,000 shares
|
|
|
|
|
|
|
|
Phillip Terry
Kingsfather
|
|
61,876,000
|
|
106,000 shares
|
|
|
|
|
|
|
|
Michael J.
Herbert
|
|
65,578,000
|
|
40,000 shares
|
|
|
|
|
|
|
|
Karen W.
Colonias
|
|
61,876,000
|
|
2,000 shares
|
|
|
|
19,245,000
|
|
4,000 shares
|
|
|
|
|
|
|
|
Jeffrey E.
Mackenzie
|
|
65,578,000
|
|
40,000 shares
|
|
|
|
|
|
|
|
Stephen P.
Eberhard
|
|
3,702,000
|
|
32,000 shares
|
|
|
|
|
|
|
|
|
{1}
Each
Operating Profit Goal relates to Simpson Manufacturing Co., Inc., except
that the $61,876,000 Operating Profit Goal for each of Phillip Terry
Kingsfather and Karen W. Colonias relates to Simpson Strong-Tie Company Inc.,
the $19,245,000 Operating Profit Goal for Karen W. Colonias relates to the
Simpson Strong-Tie Company Inc. branch in Stockton, California, and the
Operating Profit Goal for Stephen P. Eberhard relates to Simpson Dura-Vent
Company, Inc.
We use these
parameters only to provide incentive to our officers and employees who
participate in our 1994 Stock Option Plan.
You should not draw any inference whatsoever from these parameters about
our future financial performance. You
should not take these parameters as projections or guidance of any kind.
The Compensation
Committee generally targets the number of shares subject to stock option grants
to all employees, including our Named Executive Officers, to approximate 1.0%
to 1.3% of our total outstanding stock each year. In 2009, we granted options to purchase
53,000 shares, about 0.1% of our outstanding common stock, out of a possible
696,500 shares that were approved by our Compensation Committee for operating
profit performance during 2008. Our
Chief Executive Officer and the other Named Executive Officers did not meet
their operating profit goals for 2008, and we therefore did not grant any stock
options to any of them in 2009. For
2009, the Compensation Committee targeted a number of shares equal to
approximately 3.3% of the outstanding shares of our common stock for possible
stock option grants in 2010. This target percentage increased for 2009 as a
result of granting so few stock options over the past three years as well as an
increase in the number of participants in the plan.
The number of
shares subject to stock options that we grant to each of our officers is
determined by our Compensation Committee based on several factors, including
position, length of service, prior stock option grants and shares of our stock
owned. For example, when an employee
becomes an officer, the Compensation Committee may grant to the officer an
option for a number of shares that the Compensation Committee believes will
afford the officer enough of an investment in our common stock to align the
officers interests with the interests of our stockholders. After the officer achieves that level of
investment, the Compensation Committee generally grants stock options for fewer
shares to the officer. The intent of the
1994 Stock Option Plan is to reward performance achievements with future
value. The Compensation Committee does
not use competitive pay benchmarks to set long-term incentives and believes
that our long-
23
term incentives
are lower than competitive practice, based on the general industry survey of
long-term incentives from the 2007 Semler Brossy Consulting Group, LLC report.
As a result, the Compensation Committee does not directly utilize total direct
compensation, salary plus short-term and long-term incentive opportunities, in
the context of competitive survey pay data.
Timing of
Stock Option Grants
The Compensation
Committee approves the number of shares to be granted under our 1994 Stock
Option Plan and the general terms of the grant on achieving the profitability
goal set at the beginning of the year.
The only variable that remains after the end of the year is the
determination of whether we have achieved our goals. The Compensation Committee cannot make this
determination until the financial statements are prepared and the financial
statement audit by our independent registered public accounting firm is
substantially complete. The Compensation
Committee ordinarily meets to finalize the option grants within a few days of
announcing our financial results for the year.
It is our policy that the exercise price of each such option equals the
closing price of our common stock reported by the New York Stock Exchange at
the close of trading on the day before the meeting, which may or may not be the
day of the announcement. In 2009, the
Compensation Committee granted options to purchase 29,000 shares on the day
before the announcement and therefore set the exercise price at the closing
price two days before the announcement of our fourth quarter 2008 earnings (February 5,
2009). The Compensation Committee also
met approximately two weeks later and granted options to purchase an additional
24,000 shares at an exercise price at the closing price on February 20,
2009, to 7 employees at a branch that had met its goals for 2008 but had been
inadvertently omitted from consideration at the earlier meeting. We follow this
practice for all stock option grants under the 1994 Stock Option Plan, not just
grants to our officers. We generally
grant stock options only once each year, and do not ordinarily grant stock
options at other times, such as when employees are newly hired or promoted,
although the Compensation Committee has the discretion to do so.
Under our 1995
Independent Director Stock Option Plan, our Board of Directors grants options
to our independent directors as of the February 15
th
following each year in which we achieve our
company-wide operating goals. Our Board
of Directors did not choose this date to coincide with the release of
information and has consistently applied this procedure since we adopted the
1995 Independent Director Stock Option Plan.
We did not achieve our profitability goals for 2008, and we therefore
did not grant options to any of our independent Directors in 2009.
Compensation
and the Achievement of Operating Goals
Before the
beginning of each year, our managers and employees propose budgets for the
coming year for their respective profit centers. Our senior managers, including our Named
Executive Officers, review the proposed budgets, adjust these budgets as they
consider appropriate, and present the budgets to our Board of Directors. Our Board of Directors then considers and
approves a budget that it considers appropriate for each profit center. Based on the approved budgets, the
Compensation Committee determines:
·
the
return on asset goals for the coming year, on which the Compensation Committee
bases the qualifying income levels for both our Executive Officer Cash Profit
Sharing Plan and our Cash Profit Sharing Plan; and
·
the
profitability goals for the coming year, on which the Compensation Committee
bases stock option grants under our 1994 Stock Option Plan.
Our Board of
Directors also bases stock option grants under our 1995 Independent Director
Stock Option Plan on the company-wide profitability goals. Our Named Executive Officers are subject to
the same standards as our other officers and employees for purposes of stock
option grants under our 1994 Stock Option Plan and payments under our Executive
Officer Cash Profit Sharing Plan. With
the few exceptions noted below in the Summary Compensation Table, we have no
special programs for any of our Named Executive Officers. Our Board of Directors and its Compensation
Committee aim to design the goals to be achievable, but only with considerable
effort, effort the Compensation Committee believes will promote the growth and
profitability of our businesses. The
Compensation Committee, according to its guidelines, has
24
discretion to
increase or decrease the size of the stock option award based on factors that
it deems relevant. For example, the
Compensation Committee may grant an additional stock option to an employee who
is promoted during the year, if the employees profitability goal for that year
is achieved. The Compensation Committee
also has discretion to award stock options when the relevant goal is not
achieved, but has never done so.
Wealth
Accumulation
Our compensation
programs for our Named Executive Officers, as well as other high-performing
employees, are predominately based on quarterly and annual operating
results. We believe that we should award
above-average compensation for above-average performance and that we should
closely tie the reward to that performance.
As a result, our compensation structure allows high-performing employees
the opportunity to accumulate significant wealth. A feature of our 1994 Stock Option Plan,
however, allows us to limit excess grants of stock options to certain
individuals. When an employee is
promoted into a key role, such as an officer of Simpson Manufacturing Co., Inc.
or one of our subsidiaries, we may give the employee an opportunity to earn a
grant of an option for a substantial number of shares if the employee meets his
or her operating goals. The Compensation
Committee sets limits for these employees that, when reached, are removed from
their annual grant targets. For example,
our Chief Financial Officer, Michael J. Herbert, earned a grant of an option to
purchase 110,000 shares for each of 2002 and 2003. After Mr. Herbert achieved his goals for
those 2 years and we granted the options to him for each of those 2 years, the
Compensation Committee reduced his subsequent grant targets to 4,000 shares per
year for the following 3 years. Mr. Herbert
is now eligible for grant of an option for 40,000 shares if we achieve our
operating profit goals for 2009. The
Compensation Committee believes that this provides appropriate incentive for
selected key employees to continue to perform at a high level, while avoiding
excessive option grants.
25
Summary Compensation Table
The table below provides
information on compensation for the year ended December 31, 2008, for our
Principal Executive Officer, our Principal Financial Officer and our 3 other
most highly compensated executive officers.
We refer to these officers as Named Executive Officers. The amounts shown include all compensation
for services to us and our subsidiaries in all capacities.
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Incentive
|
|
All
|
|
|
|
Name and
|
|
|
|
|
|
Awards
|
|
Plan
|
|
Other
|
|
|
|
Principal Position
|
|
Year
|
|
Salary($)
|
|
($){1}
|
|
Compensation($){2}
|
|
Compensation($){3}
|
|
Total($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J
Fitzmyers,
|
|
2008
|
|
336,036
|
|
57,578
|
|
1,074,278
|
|
55,789
|
{4}
|
1,523,681
|
|
Our President
and
|
|
2007
|
|
326,249
|
|
100,395
|
|
1,738,321
|
|
54,288
|
{4}
|
2,219,253
|
|
Chief Executive
|
|
2006
|
|
316,747
|
|
97,380
|
|
2,721,091
|
|
57,844
|
{4}
|
3,193,062
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J.
Herbert
|
|
2008
|
|
213,727
|
|
25,590
|
|
435,221
|
|
32,234
|
{5}
|
706,772
|
|
Our Chief
Financial
|
|
2007
|
|
213,766
|
|
287,253
|
|
484,981
|
|
29,709
|
{5}
|
1,015,709
|
|
Officer and
Secretary
|
|
2006
|
|
186,503
|
|
443,248
|
|
614,524
|
|
29,560
|
{5}
|
1,273,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclay Simpson,
|
|
2008
|
|
150,000
|
|
6,398
|
|
308,594
|
|
23,013
|
|
488,005
|
|
Our Chairman of
the
|
|
2007
|
|
150,000
|
|
11,155
|
|
535,141
|
|
23,268
|
|
719,564
|
|
Board
|
|
2006
|
|
150,000
|
|
10,820
|
|
1,103,927
|
|
23,841
|
|
1,288,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillip T.
Kingsfather,
|
|
2008
|
|
187,458
|
|
216,673
|
|
538,236
|
|
157,654
|
{6}
|
1,100,021
|
|
President and
Chief
|
|
2007
|
|
180,250
|
|
230,148
|
|
652,764
|
|
152,187
|
{6}
|
1,215,349
|
|
Operating
Officer of
|
|
2006
|
|
143,033
|
|
223,828
|
|
548,812
|
|
113,772
|
{6}
|
1,029,445
|
|
Simpson
Strong-Tie
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen P.
Eberhard,
|
|
2008
|
|
200,788
|
|
47,640
|
|
13,491
|
|
45,460
|
{7}
|
307,379
|
|
President and
Chief
|
|
2007
|
|
194,940
|
|
71,428
|
|
15,959
|
|
109,157
|
{7}
|
391,484
|
|
Executive
Officer of
|
|
2006
|
|
192,806
|
|
86,853
|
|
276,588
|
|
65,651
|
{7}
|
621,898
|
|
Simpson
Dura-Vent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
{1}
We determined the value of each stock
option award by multiplying the number of shares subject to the option that
vested during 2008 by the fair value per share as of the grant date for each
grant beginning with January 1, 2005.
We applied the Black-Scholes option pricing model to determine fair
value in accordance with Statement of Financial Accounting Standards No. 123R
Share Based Payment (Revised 2004), using the following assumptions:
|
|
Risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Free
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Grant
|
|
Interest
|
|
Dividend
|
|
Expected
|
|
|
|
Exercise
|
|
Fair
|
|
Date
|
|
Rate
|
|
Yield
|
|
Life
|
|
Volatility
|
|
Price
Range
|
|
Value
|
|
02/13/08
|
|
2.90%
|
|
1.68%
|
|
6.0 years
|
|
27.1%
|
|
|
|
|
|
$23.78
|
|
$
|
6.16
|
|
02/02/07
|
|
4.84%
|
|
1.19%
|
|
5.9 years
|
|
29.0%
|
|
|
|
|
|
$33.62
|
|
$
|
11.11
|
|
01/26/06
|
|
4.46%
|
|
0.79%
|
|
6.3 years
|
|
27.2%
|
|
$40.72
|
|
to
|
|
$44.79
|
|
$
|
13.68
|
|
01/01/05
|
|
3.87%
|
|
0.57%
|
|
6.4 years
|
|
28.0%
|
|
$34.90
|
|
to
|
|
$38.39
|
|
$
|
11.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
In January 2005,
our Board of Directors resolved to accelerate the vesting of all unvested stock
options in the event of a change of control.
See Grants of Plan-Based Awards below.
{2}
Awards earned under our Executive Officer
Cash Profit Sharing Plan are earned in 1 quarter and paid in the following
quarter. The amount in this column
represents all cash paid during the specified years under our Executive Officer
Cash Profit Sharing Plan. No amounts are
deferred or payable by their terms at a later date. See Process and Procedures
for Consideration and Determination of Executive and Director Compensation
Non-Equity Incentive Plan Compensation below.
{3}
Includes a contribution of an amount
equal to 15% of each officers salary for each of the specified years to the
officers profit sharing trust account, up to the annual qualified contribution
limit of $33,750 per account, plus funds forfeited by other employees who
terminated from the profit sharing trust with an unvested balance.
{4}
Includes:
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
Profit sharing
trust contribution and forfeitures
|
|
$
|
34,520
|
|
$
|
34,126
|
|
$
|
33,377
|
|
Hire of aircraft
|
|
13,971
|
|
13,317
|
|
15,666
|
|
Reimbursement of
personal income taxes related to hire of aircraft
|
|
7,248
|
|
6,845
|
|
8,601
|
|
Charitable gift
matching contributions
|
|
50
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
The
amount related to Mr. Fitzmyers use of an aircraft included travel
between his home and our offices and travel on business. As the lessee of the airplane, Mr. Fitzmyers
is responsible for the aircrafts maintenance and he receives a portion of each
payment to the charter company for its use, whether by us or others. The total cost to us, including Mr. Fitzmyers
compensation, approximated $274,000 in 2008, $345,000 in 2007 and $213,000 in
2006, for Mr. Fitzmyers to use this and other airplanes. In computing the compensation cost of
airplane use, we applied the Standard Industrial Fare Level tables prescribed
by applicable Internal Revenue Service regulations. The independent members of our Board of
Directors unanimously approved this arrangement.
{5}
Includes:
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
Profit sharing
trust contribution and forfeitures
|
|
$
|
31,234
|
|
$
|
28,709
|
|
$
|
28,560
|
|
Charitable gift
matching contributions
|
|
1,000
|
|
1,000
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
{6}
Includes:
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
Profit sharing
trust contribution and forfeitures
|
|
$
|
27,654
|
|
$
|
22,187
|
|
$
|
18,548
|
|
Housing allowance
|
|
130,000
|
|
130,000
|
|
54,167
|
|
Reimbursement of
relocation costs
|
|
|
|
|
|
30,897
|
|
Reimbursement of
personal income taxes related to relocation costs
|
|
|
|
|
|
10,160
|
|
|
|
|
|
|
|
|
|
|
|
|
The amount related to Mr. Kingsfathers
housing allowance included incremental financing and transaction costs. In December 2008,
the Compensation Committee extended Mr. Kingsfathers housing allowance
for an additional 2 years through 2011. The independent members of our Board of
Directors unanimously approved this arrangement.
27
{7}
Includes:
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
Profit sharing
trust contribution and forfeitures
|
|
$
|
29,908
|
|
$
|
28,799
|
|
$
|
28,649
|
|
Automobile
allowance
|
|
15,552
|
|
15,096
|
|
14,656
|
|
Reimbursement of
relocation costs
|
|
|
|
48,947
|
|
16,572
|
|
Reimbursement of
personal income taxes related to relocation costs
|
|
|
|
16,315
|
|
5,524
|
|
Charitable gift
matching contributions
|
|
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation Committee
The Compensation
Committee of our Board of Directors is responsible for the development and
review of our compensation policy for all of our salaried employees, including
compensation in the form of stock options, and is responsible for reviewing and
approving the compensation discussion and analysis for inclusion in our Annual
Report on Form 10-K and our proxy statement. The Compensation Committee comprises 4
independent directors, as defined by the New York Stock Exchange Rules. In addition, the members of the Compensation
Committee are both
·
non-employee directors directors who
satisfy the requirements established by the Securities and Exchange Commission
for non-employee directors under Rule 16b-3 under the Securities Exchange
Act of 1934, and
·
outside directors directors who
satisfy the requirements established under Internal Revenue Code section
162(m).
Our Board of Directors
appoints the members of the Compensation Committee for indefinite terms and may
remove any member at any time. The
Compensation Committee operates under a written charter that our Board of
Directors adopted, which is also available on our website at
http://www.simpsonmfg.com/financials/compensation.html
.
We will provide a printed copy of the charter
to any stockholder on request.
To assist in identifying benchmarks for the future compensation of our
Named Executive Officers, the Compensation Committee engaged the services of
Semler Brossy Consulting Group, LLC in 2007.
In April of that year, it issued a report encompassing all of our
compensation programs for our Named Executive Officers. In the report, Semler Brossy Consulting
Group, LLC identified 2 general industry surveys, the 2006 Confidential Survey
of Executive Compensation and the 2006 Mercer Benchmark Database Executive
Positions. In 2008, we increased the
salaries for each of our Named Executive Officers by 3%, except that we did not
increase Barclay Simpsons salary. In 2009, we increased the salaries of our
Named Executive Officers as follows:
|
|
% Increase
|
|
|
|
in 2009
|
|
|
|
Salary from
|
|
|
|
2008 Salary
|
|
|
|
|
|
Barclay Simpson
|
|
0
|
%
|
Thomas J
Fitzmyers
|
|
0
|
%
|
Phillip Terry
Kingsfather
|
|
48
|
%
|
Michael J.
Herbert
|
|
25
|
%
|
Stephen P.
Eberhard
|
|
25
|
%
|
See Compensation
Discussion and Analysis
Salary and Profit
Sharing Trust Contributions
, above.
The Compensation Committee
does not delegate its duties of determining executive officer
compensation. Our officers do, however,
participate in our annual budgeting process, which forms the basis for the
Compensation Committees determination of operating profit goals used for determining
28
qualifying income for our
cash profit sharing plans and whether we grant stock options. The Board of Directors, in its entirety, is
responsible for reviewing and approving the annual budget.
Compensation Committee Interlocks
and Insider Participation
The Compensation
Committee of our Board of Directors comprises Barry Lawson Williams, Chairman,
Jennifer A. Chatman, Gary M. Cusumano and Peter N. Louras, Jr., all of
whom are independent directors. Mr. Williams,
Ms. Chatman, Mr. Cusumano and Mr. Louras have no relationships
with us or any of our subsidiaries, other than as members of our Board of
Directors and its committees.
In March 2007, we
appointed Gerald Hagel, as a vice president of Simpson Strong-Tie Company
Inc. Mr. Hagel is the co-lessor of
the property that we lease in Addison, Illinois. In 2008, Simpson Strong-Tie Company Inc. paid
approximately $268,000 to lease this property from Mr. Hagel and his wife
Susan Hagel, a former employee of Simpson Strong-Tie Company Inc. In December 2007, we extended the lease
on the property for an additional 5 years, through 2012. The members of our Board of Directors who are
not employees or officers unanimously approved our lease of this property.
In January 2005, we
appointed Michael Petrovic as an officer of Simpson Strong-Tie Canada, Limited,
a wholly-owned subsidiary of Simpson Strong-Tie Company Inc. Mr. Petrovic was an owner of MGA
Construction Hardware & Steel Fabricating Limited and MGA Connectors
Limited, which Simpson Strong-Tie Canada, Limited acquired in 2003. He was a co-owner of the property that
Simpson Strong-Tie Canada, Limited occupies in Maple Ridge, British Columbia. Simpson Strong-Tie Canada, Limited paid
approximately $170,000 in 2006 to lease the property from Mr. Petrovic and
his associates. In February 2007,
we purchased this building from Mr. Petrovic and his associates for $4.0
million. The members of our Board of
Directors who are not employees or officers unanimously approved our purchase
of this property.
In 2003, Thomas J
Fitzmyers, our Chief Executive Officer and a member or our Board of Directors,
leased an airplane that a third-party charter company manages. We pay the charter company standard hourly
rates when Mr. Fitzmyers uses this airplane to travel between his home and
our offices or to travel on business. Mr. Fitzmyers
is responsible for maintaining the airplane and he receives a portion of the
payments that we make to the charter company for its use, whether by us or
others. In 2008, we paid approximately
$274,000 for Mr. Fitzmyers to use this and other airplanes, including
$21,219 that we paid to Mr. Fitzmyers as compensation (see Summary
Compensation Table above). The members
of our Board of Directors who are not employees or officers unanimously
approved this arrangement.
Process
and Procedures for Consideration and Determination of Executive and Director
Compensation
Salary
We
compensate our employees at a generally comparable level to other organizations
of similar sizes in our industry.
Although our base salaries have historically been set at levels that our
Compensation Committee believes are below the market, a greater proportion of
total compensation is based on a system that provides employees with incentives
to attain our profitability goals. In
2008, an adjustment was made for most of our salaried employees to increase
their base salaries to a more competitive level while reducing their participation
in any amounts paid under our Cash Profit Sharing Plan by the same amount. This
adjustment gives our employees a higher guaranteed component of their total
cash compensation. See Compensation
Discussion and Analysis
Salary and Profit
Sharing Trust Contributions
, above.
Qualified
Profit Sharing Plans
We and our U.S. subsidiaries maintain defined contribution
profit sharing plans for U.S.-based salaried employees, including our Named
Executive Officers, and for U.S.-based non-union hourly employees. An employee is eligible for participation in
a given calendar year if he or she is an employee on the first and last days of
that year and completes the minimum service requirement during that year.
29
The minimum
service requirement for a salaried employee is at least 1,000 hours of service
and for an hourly employee is at least 750 hours of service. As of December 31, 2008, 741 salaried
employees and 813 hourly employees participated in these plans. Under both of these plans, our Board of
Directors has exclusive discretion to authorize contributions to the plan
trusts. These plans limit our
subsidiaries contributions to the plan trusts to amounts deductible for
federal income tax purposes under Internal Revenue Code section 404(a). Barclay Simpson and Michael J. Herbert, who
are Named Executive Officers, are trustees of the plan trusts, and also
participate in the plan for salaried employees.
Some of our foreign subsidiaries maintain similar plans for their
employees.
Non-Equity
Incentive Plan Compensation
We
provide non-equity incentive plan compensation through two cash profit sharing
plans. One is our Executive Officer Cash
Profit Sharing Plan for our Named Executive Officers and the other is our Cash
Profit Sharing Plan for other qualified employees. Under our Executive Officer Cash Profit
Sharing Plan, we made quarterly payments to our Named Executive Officers in
2008 in the total amounts shown in the Summary Compensation Table under the
heading, Non-Equity Incentive Plan Compensation.
In 2008, our stockholders re-approved our
Executive Officer Cash Profit Sharing Plan, to provide performance-based
compensation to our Named Executive Officers.
Our Executive Officer Cash Profit Sharing Plan is intended to comply
with section 162(m) of the Internal Revenue Code of 1986 and the related
regulations and interpretations. For
these officers, our Executive Officer Cash Profit Sharing Plan replaced our
Cash Profit Sharing Plan described below, in which all officers had participated
for over 25 years. The total awards to
any participating officer under the Executive Officer Cash Profit Sharing Plan
earned during the 4 quarters of a calendar year may not exceed $2,500,000. In other respects, our Executive Officer Cash
Profit Sharing Plan provides incentive compensation to the participating
officers on the same terms as apply to other employees under our Cash Profit
Sharing Plan. Our Executive Officer Cash
Profit Sharing Plan enables us to deduct fully, for federal income tax purposes,
amounts we pay to participating officers under our Executive Officer Cash
Profit Sharing Plan. In 2008, only the
payments to our Chief Executive Officer exceeded $1,000,000 under our Executive
Officer Cash Profit Sharing Plan.
Our Board of Directors has delegated the
oversight of our Executive Officer Cash Profit Sharing Plan to its Compensation
Committee. The Compensation Committee
has sole discretion and authority to administer and interpret our Executive Officer
Cash Profit Sharing Plan in accordance with Internal Revenue Code section
162(m). The Compensation Committee may
at any time amend our Executive Officer Cash Profit Sharing Plan, subject in
some cases to the approval of our stockholders, or may terminate it at any
time.
The Compensation Committee
determines the amount of the award that each of the participating officers will
be eligible to receive under the Executive Officer Cash Profit Sharing Plan
each fiscal quarter. The Compensation
Committee bases awards on a percentage of the amount by which the operating
profit, as defined by the Compensation Committee, of the relevant profit center
which may be Simpson Manufacturing Co., Inc. as a whole or one of our
subsidiaries exceeds a qualifying level for the fiscal quarter. See Compensation Discussion and Analysis
Executive Officer Cash Profit Sharing Plan, above.
We maintain our
Cash Profit Sharing Plan for the benefit of our employees and our subsidiaries
employees, other than the officers who participate in our Executive Officer Cash
Profit Sharing Plan discussed above. The
Cash Profit Sharing Plan is not qualified under section 162(m) of the
Internal Revenue Code of 1986. We may
change, amend or terminate our Cash Profit Sharing Plan at any time. Under our Cash Profit Sharing Plan, as
currently in effect, the Compensation Committee reviews and approves a
qualifying level for the coming fiscal year for each of Simpson Manufacturing
Co., Inc., Simpson Dura-Vent Company, Inc. and qualifying branches of
Simpson Strong-Tie Company Inc. The
qualifying level equals the value of the net operating assets, as defined by
the Compensation Committee, of Simpson Manufacturing Co., Inc., Simpson
Dura-Vent Company, Inc. or the respective branch of Simpson Strong-Tie
Company Inc., multiplied by a rate of return on those assets, as determined by
the Compensation Committee. If profits
exceed the qualifying level in any fiscal quarter, we pay a portion of the
excess to the eligible employees as cash compensation. Our executive officers determine, and our
Compensation
30
Committee reviews and approves, the
percentage of the excess that we will distribute and the rates we use to
calculate the amounts that we distribute to participants. Whether or not we pay amounts in any quarter
under our Cash Profit Sharing Plan does not affect an employees ability to
earn amounts in any other quarter under our Cash Profit Sharing Plan. Under our Cash Profit Sharing Plan, we paid
amounts totaling $17.5 million in 2008, $30.1 million in 2007 and $39.0 million
in 2006.
1994 Stock Option Plan
By affording
selected employees, directors and consultants the opportunity to own shares of
our common stock, we intend the 1994 Stock Option Plan to:
·
enhance our ability to retain the
services of our employees, directors or consultants and to secure and retain
the services of prospective employees, directors and consultants; and
·
provide incentives for them to exert
maximum efforts for our success.
Our Board of Directors
adopted and our stockholders approved our 1994 Stock Option Plan prior to our
initial public offering in 1994. We
amended our 1994 Stock Option Plan in 1997, 2000, 2002, 2004 and 2008. Our stockholders approved the 1997, 2000,
2002 and 2008 amendments. We may not
sell more than 16 million shares of common stock (including shares already
sold) pursuant to all options granted under our 1994 Stock Option Plan. Common stock sold on exercise of stock
options granted under the 1994 Stock Option Plan may be previously unissued
shares or reacquired shares, bought on the market or otherwise. In 2008, we granted stock options under our
1994 Stock Option Plan to purchase 54,000 shares of our common stock, pursuant
to commitments we had made in 2007. In
2009, we granted stock options under our 1994 Stock Option Plan to purchase
53,000 shares of our common stock, pursuant to commitments we had made in
2008. We did not grant any stock options
to our Named Executive Officers in 2008 or 2009. If we meet all of our operating profit goals
for 2009, we anticipate granting stock options under our 1994 Stock Option Plan
to purchase 1,604,000 shares, 198,000 of which would be granted to Named
Executive Officers. Compensation to our
Named Executive Officers related to stock options that vested in 2008 is shown
in the Summary Compensation Table. See Compensation
Discussion and Analysis
Stock Options.
Employee Stock Bonus Plan
Under our 1994
Employee Stock Bonus Plan, we award shares of our common stock, based on years
of service, to employees who do not participate in our 1994 Stock Option
Plan. The Compensation Committee reviews
and approves the number of shares we award, as well as the period of
service. The Compensation Committee has
tried to balance the amount of the stock bonus awards over the years as the
stock price has fluctuated, by increasing or reducing the number of shares that
we award in a given year. We also award
cash bonuses to these employees to compensate for their income taxes payable as
a result of these bonuses. We have
generally issued the shares to an employee in the year following the year in
which the employee reached a tenth anniversary.
None of our Named Executive Officers participates in our 1994 Employee
Stock Bonus Plan.
Employment Agreements
We do not
ordinarily enter into any written employment agreements with our officers and
we do not currently have an employment agreement with any of our Named
Executive Officers.
Grants of
Plan-Based Awards
We generally grant
options under our 1994 Stock Option Plan once each year, in late January or
early February, on the day that our Compensation Committee meets to approve the
grants that employees earned by meeting or exceeding our branch, subsidiary or
company goals for the preceding fiscal year.
The exercise price per share under these options generally equals or
exceeds the closing market price per share of our common stock as reported by
the New York Stock Exchange for the day preceding the date of the Compensation
Committee meeting. In 2008 and 2007, we
granted options under our 1994 Stock Option Plan to purchase, respectively,
54,000 and 122,500 shares of our common stock pursuant to commitments related
to
31
the respective
preceding fiscal years. We did not grant
any options under our 1994 Stock Option Plan to any of the Named Executive
Officers during 2008.
Generally, options
that the Compensation Committee grants under the 1994 Stock Option Plan vest
(become exercisable) in increments over 4 years. Our Board of Directors has, however, resolved
to accelerate the vesting of options in two situations. First, when an employee ceases employment
with us after reaching age 60, all of the employees unvested options vest
fully. Second, all outstanding options
under the 1994 Stock Option Plan will fully vest, and must be exercised, on a
change in control of Simpson Manufacturing Co., Inc. For this purpose, we define a change in
control as one of the following:
·
a merger or consolidation in which we are
not the surviving corporation, if the surviving corporation refuses to assume
or continue our options, or to substitute similar options, or our options do
not otherwise continue in effect;
·
a reverse merger in which we are the
surviving corporation, but as part of the merger the outstanding shares of our
common stock convert into other securities, cash or other property, if the
surviving corporation refuses to assume or continue our options, or to
substitute similar options, or our options do not otherwise continue in effect;
or
·
the dissolution or liquidation of Simpson
Manufacturing Co., Inc.
These acceleration
provisions apply to all participants in our 1994 Stock Option Plan, including
our Named Executive Officers.
Outstanding
Equity Awards at Fiscal Year End
As of December 31,
2008, our Named Executive Officers held the following stock options that had
been granted under our 1994 Stock Option Plan:
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
|
|
|
|
|
|
Options
|
|
Options
|
|
Option
|
|
Option
|
|
|
|
(#) Exer-
|
|
(#)
Unex-
|
|
Exercise
|
|
Expiration
|
|
Name
|
|
cisable
|
|
ercisable{1}
|
|
Price($)
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J
Fitzmyers
|
|
18,000
|
|
|
|
16.450
|
|
12/31/09
|
|
|
|
18,000
|
|
|
|
25.430
|
|
12/31/10
|
|
|
|
6,750
|
|
2,250
|
{2}
|
34.900
|
|
12/31/11
|
|
|
|
4,500
|
|
4,500
|
{2}
|
40.720
|
|
01/25/13
|
|
|
|
|
|
|
|
|
|
|
|
Michael J.
Herbert
|
|
110,000
|
|
|
|
25.430
|
|
12/31/10
|
|
|
|
3,000
|
|
1,000
|
{2}
|
34.900
|
|
12/31/11
|
|
|
|
2,000
|
|
2,000
|
{2}
|
40.720
|
|
01/25/13
|
|
|
|
|
|
|
|
|
|
|
|
Barclay Simpson
|
|
750
|
|
250
|
{2}
|
38.390
|
|
12/31/09
|
|
|
|
500
|
|
500
|
{2}
|
44.792
|
|
01/25/11
|
|
|
|
|
|
|
|
|
|
|
|
Phillip T.
Kingsfather
|
|
334
|
|
|
|
16.450
|
|
12/31/09
|
|
|
|
3,334
|
|
|
|
25.430
|
|
12/31/10
|
|
|
|
21,312
|
|
688
|
{3}
|
34.900
|
|
12/31/11
|
|
|
|
24,062
|
|
8,938
|
{3}
|
40.720
|
|
01/25/13
|
|
|
|
500
|
|
1,500
|
{2}
|
33.620
|
|
02/01/14
|
|
|
|
|
|
|
|
|
|
|
|
Stephen P.
Eberhard
|
|
10,000
|
|
|
|
16.450
|
|
12/31/09
|
|
|
|
10,000
|
|
|
|
25.430
|
|
12/31/10
|
|
|
|
12,000
|
|
4,000
|
{2}
|
34.900
|
|
12/31/11
|
|
{1}
As discussed above see Grants of Plan-Based Awards
vesting of stock options will accelerate on a change in control or on the
optionee ceasing employment with us after reaching age 60.
32
{2}
Unless vesting accelerates as discussed above, options
vest at the rate of 1/4
th
per year on the anniversary of the date of
grant.
{3}
Unless vesting accelerates as discussed above, options vest
at the rate of 1/48
th
per month each month
beginning with the first month after the month of grant.
Option
Exercises and Stock Vested
The
following table provides information for the year ended December 31, 2008,
on the exercise of stock options granted to our Named Executive Officers under
our 1994 Stock Option Plan:
|
|
Option Awards
|
|
|
|
Shares
|
|
Value
|
|
|
|
Acquired on
|
|
Realized on
|
|
Name
|
|
Exercise
(#)
|
|
Exercise
($)
|
|
|
|
|
|
|
|
Michael J.
Herbert
|
|
110,000
|
|
1,003,390
|
|
Potential Payments on Termination or Change in
Control
We do not currently have or plan to adopt any deferred
compensation programs or defined benefit pension plans and generally do not pay
benefits after termination of employment.
In some circumstances, however, we may compensate a former employee
after terminating employment with us, including the acceleration of vesting of
stock options on voluntary termination after reaching the age of 60 or in the
event of a change in control. In either event, no compensation would be
provided to any of the Named Executive Officers so long as the market value per
share of our common stock is less than $27.76, the closing price per share on December 31,
2008.
Director Compensation
The following table provides information on compensation for the year
ended December 31, 2008, that we paid to our directors who are not also
our employees or officers. The amounts
shown include all compensation for services to us.
|
|
Fees
|
|
|
|
|
|
|
|
Earned or
|
|
All
|
|
|
|
|
|
Paid in
|
|
Other
|
|
Total
|
|
Name
|
|
Cash($)
|
|
Compensation($){1}
|
|
($)
|
|
|
|
|
|
|
|
|
|
Jennifer A.
Chatman
|
|
79,000
|
|
|
|
79,000
|
|
|
|
|
|
|
|
|
|
Earl F. Cheit
|
|
83,000
|
|
1,000
|
|
84,000
|
|
|
|
|
|
|
|
|
|
Gary M. Cusumano
|
|
83,000
|
|
1,000
|
|
84,000
|
|
|
|
|
|
|
|
|
|
Peter N.
Louras, Jr.
|
|
83,000
|
|
|
|
83,000
|
|
|
|
|
|
|
|
|
|
Robin G.
MacGillivray
|
|
70,000
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
Barry Lawson
Williams
|
|
85,500
|
|
|
|
85,500
|
|
{1}
Represents matching contributions made by us for
charitable gifts made by the director.
33
We pay each of our
directors whom we do not compensate as an officer or employee
·
an annual retainer
of $32,000,
·
a fee of $2,000
for attending in person each meeting of our Board of Directors or attending by
telephone a meeting that is scheduled to be held by telephone conference,
·
a fee of $2,000
for attending in person each committee meeting held on a day when our Board of
Directors does not meet,
·
a fee of $1,000
for each committee meeting he or she attends in person on the same day as a
meeting of our Board of Directors or another committee, and
·
a fee of half of
the normal fee for each Board of Directors or committee meeting he or she
attends by telephone, unless it is scheduled to be held by telephone
conference.
We pay the Chair of the
Audit Committee an additional annual fee of $8,000. We pay the Chair of each of the Compensation
Committee and the Governance and Nominating Committee an additional annual fee
of $4,000. We reimburse outside
directors for expenses incurred in attending Board of Directors and committee
meetings and educational programs. We
also pay each of our outside directors $3,000 per day and reimburse his or her
expenses when he or she visits our facilities to observe operations.
1995
Independent Director Stock Option Plan
Our Board of Directors adopted the Simpson
Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, and
our stockholders approved it, in 1995.
Our Board of Directors amended our 1995 Independent Director Stock
Option Plan in 1997, 2002 and 2004. Our
stockholders approved the 2002 amendment.
The purposes of our 1995 Independent Director Stock Option Plan are to
give our independent directors an opportunity to own shares of our common stock
to align their efforts with our long-term financial success and to secure their
continued service. We may not sell more
than 320,000 shares of our common stock, including shares already sold,
pursuant to all options granted under our 1995 Independent Director Stock
Option Plan. On exercise of options granted
under our 1995 Independent Director Stock Option Plan, we may sell previously
unissued shares or reacquired shares, bought on the market or otherwise. Under our 1995 Independent Director Stock
Option Plan we grant options to our independent directors as of the February 15
th
following each year
in which we achieve our operating goals.
We did not grant any options under our 1995 Independent Director Stock
Option Plan in 2007, 2008 or 2009. If we
meet the company-wide operating profit goal for 2009, we anticipate granting a
stock option in 2010 to purchase 5,000 shares of our common stock under our
1995 Independent Director Stock Option Plan to each of our independent
Directors.
During 2008, none
of our independent Directors exercised any stock options granted under our 1995
Independent Director Stock Option Plan.
Compensation
Committee Report
The Compensation
Committee of our Board of Directors reviewed the above Compensation Discussion
and Analysis, discussed it with our officers and recommended its inclusion in
our Annual Report on Form 10-K for the year ended December 31, 2008,
and in this Proxy Statement.
Compensation Committee
Barry Lawson
Williams, Chairman
Jennifer A.
Chatman
Gary M. Cusumano
Peter N. Louras, Jr.
34
Report of
the Audit Committee of our Board of Directors
The Audit Committee of
our Board of Directors is responsible for financial and accounting
oversight. Its policies and practices
are described below.
Composition
The Audit Committee
comprises 5 independent directors, as defined by the New York Stock Exchange
rules. It operates under a written
charter that our Board of Directors adopted, which is available on our website
at http://www.simpsonmfg.com/financials/audit.html, and a copy of which is
attached as Exhibit B of this Proxy Statement. We will provide a printed copy of the charter
to any stockholder on request. The
members of the Audit Committee are Peter N. Louras, Jr., Chairman,
Jennifer A. Chatman, Earl F. Cheit, Gary M. Cusumano and Robin G.
MacGillivray. Our Board has determined
that each of them meets the definitions and standards for independence and is
financially literate, and that 1 of the Audit Committee members, Peter N.
Louras, Jr., has financial management expertise as required by the New
York Stock Exchanges rules and meets the Securities and Exchange
Commissions definition of an audit committee financial expert.
Responsibilities
The Audit Committee is
directly responsible for the appointment, compensation, retention and oversight
of the accounting firm that we engage as our independent registered public
accounting firm. Our officers are
responsible for our internal controls and financial reporting process. Subject to the Audit Committees oversight,
our independent registered public accounting firm is responsible for performing
an independent audit of our internal controls over financial reporting and for
performing an independent audit of our consolidated financial statements in
accordance with generally accepted auditing standards and for reporting on
those audits.
Review with Officers and the
Independent Registered Public Accounting Firm
The Audit Committee met 6
times in 2008 and has held discussions with our officers and the independent
registered public accounting firm. Our
officers represented to the Audit Committee that our consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States. The Audit
Committee has reviewed and discussed the consolidated financial statements with
our officers and PricewaterhouseCoopers LLP, our independent registered public
accounting firm. The Audit Committee has
discussed with PricewaterhouseCoopers LLP the matters that they were required
to discuss under Statement on Auditing Standards No. 90,
Audit Committee Communications
, which amends Statement on
Auditing Standards No. 61,
Communication with Audit
Committees.
The Audit
Committee has received the written disclosures and the letter from
PricewaterhouseCoopers LLP, the independent accountants, required by applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent accountants communications with the Audit Committee concerning
independence. The Audit Committee
discussed with PricewaterhouseCoopers LLP that firms independence. On that
basis, the Audit Committee believes that PricewaterhouseCoopers LLP is
independent.
35
Summary
Based on the Audit Committees
discussions with our officers and PricewaterhouseCoopers LLP, the Audit
Committees review of the representations of our officers, and the report of
PricewaterhouseCoopers LLP to the Audit Committee, the Audit Committee
recommended that our Board of Directors include the audited consolidated
financial statements in our Annual Report on Form 10-K for the year ended December 31,
2008, as filed with the Securities and Exchange Commission. The Audit Committee believes that it has
satisfied its responsibilities under its charter.
Audit
Committee
Peter N. Louras, Jr., Chairman
Jennifer A. Chatman
Earl F. Cheit
Gary M. Cusumano
Robin G.
MacGillivray
Audit and Related Fees
Audit
Fees
For professional
services for the audit of our annual consolidated financial statements included
in our annual report on Form 10-K, the audit of our internal control over
financial reporting, and review of the condensed consolidated financial
statements included in our quarterly reports on Form 10-Q, we paid
PricewaterhouseCoopers LLP an aggregate of approximately $1,628,000 for 2008
and $1,579,000 for 2007, approximately 66% and 73%, respectively, of the total
fees that we paid to PricewaterhouseCoopers LLP for those years.
Audit-Related
Fees
We did not pay any
audit-related fees to PricewaterhouseCoopers LLP for 2008 and 2007.
Tax Fees
For professional
services for tax compliance associated with our annual tax returns, and for tax
advisory and planning services, we paid PricewaterhouseCoopers LLP an aggregate
of approximately $597,000 for 2008 and $572,000 for 2007, approximately 24% and
26%, respectively, of the total fees that we paid to PricewaterhouseCoopers LLP
for those years.
All Other
Fees
For all other
services, we paid PricewaterhouseCoopers LLP an aggregate of approximately
$246,000 for 2008 and $29,000 for 2007, approximately 10% and 1%, respectively,
of the total fees that we paid to PricewaterhouseCoopers LLP for those
years. These other services were
primarily for work related to post-implementation review of information
technology systems.
The Audit
Committee must pre-approve fees to be paid to PricewaterhouseCoopers LLP before
PricewaterhouseCoopers LLP begins work.
The Audit Committee pre-approved all fees and services for
PricewaterhouseCoopers LLPs work in 2008 and 2007. The Audit Committee has determined that the
fees for services rendered were compatible with maintaining
PricewaterhouseCoopers LLPs independence.
36
Governance
and Nominating Committee of our Board of Directors
Our Board of Directors
has a standing Governance and Nominating Committee, which is primarily
responsible for nominating candidates to our Board of Directors. Its charter and our corporate governance
guidelines are available on our website at
http://www.simpsonmfg.com/financials/governance.html. We will provide a printed copy of each to any
stockholder on request. The 4 members of
the Governance and Nominating Committee, Earl F. Cheit, Chairman, Peter N.
Louras, Jr., Robin G. MacGillivray and Barry Lawson Williams, are
independent and meet all applicable independence requirements.
The Governance and
Nominating Committee considers all candidates identified as potential
directors, including those submitted by stockholders for its
consideration. Any of our stockholders
can recommend a director candidate to the Governance and Nominating Committee
by writing a letter to:
Simpson Manufacturing Co., Inc.
Board of Directors
Governance and Nominating Committee
5956 W. Las Positas Blvd.
Pleasanton, CA 94588
For the Governance and
Nominating Committee to consider a candidate for the 2010 annual meeting, we
must receive the letter not later than November 2, 2009. The letter should include a description of
the attributes that the stockholder believes the candidate would bring to our
Board of Directors and the candidates biography and contact information.
When evaluating a
director candidate, whether or not recommended by a stockholder, the Governance
and Nominating Committee uses for guidance our Governance Guidelines on
Director Qualification and Key Director Responsibilities and considers the
candidates education, business experience, financial expertise, industry
experience, business acumen, interpersonal skills, vision, teamwork, integrity,
strategic ability and customer focus.
The Governance and Nominating Committee will review and discuss
potential candidates who come to its attention, whether from internal or
external sources. From the review and
discussion, the Governance and Nominating Committee may narrow the list of
potential candidates and interview the remaining candidates. The Governance and Nominating Committee will
recommend for consideration by the full Board of Directors any candidate that
the Governance and Nominating Committee considers to be suitable.
Our Bylaws also permit
our stockholders directly to nominate directors. To do so, a stockholder must notify our
Secretary at least 75 days, but not more than 90 days, before an annual
meeting, unless we do not publicly disclose the date of the meeting at least 85
days before the date that the meeting is scheduled to be held, in which case
our Secretary must receive the stockholders notice within 10 days after we
publicly disclose the meeting date. A
stockholders notice nominating 1 or more director candidates must state as to
each such candidate
·
the candidates
name, age, business address and residence address,
·
the candidates
principal occupation or employment,
·
the number of
shares of our common stock that the candidate beneficially owns and other
information, if any, required by our Bylaws, and
·
any other
information relating to the candidate that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including
without limitation the candidates written consent to being named in the proxy
statement as a nominee and to serving as a director if elected).
The stockholders notice
must also state the stockholders name and address, as they appear on our
books, and the number of shares of our common stock that the stockholder
beneficially owns and other information, if any, required by our Bylaws. We will disregard a purported nomination that
does not comply with these procedures in our Bylaws. We did not receive such a notice from any
stockholder for our 2009 annual meeting of stockholders.
37
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires our directors and
officers and persons who own more than 10% of our common stock to file initial
reports of ownership and reports of changes in ownership of our common stock
with the Securities and Exchange Commission.
Securities and Exchange Commission regulations require such persons to
furnish us with copies of all section 16(a) reports that they file. Based solely on our review of the copies of
such reports that we received and written representations from the executive
officers and directors, we believe that in 2008 our directors and officers and
10% stockholders met all of the section 16(a) filing requirements
regarding our common stock except that Stephen P. Eberhard, President and Chief
Executive Officer of Simpson Dura-Vent Company, Inc., made 2 gifts of
shares of our common stock to his children in August and September 2008
and was 4 days late filing the first report on Form 4 and 1 day late
filing the second report on Form 4.
Code of Ethics
We have adopted a code of
business conduct and ethics that applies to our Chief Executive Officer and our
Chief Financial Officer, as well as all other of our and our subsidiaries
employees. This code of ethics is posted
on our website at http://www.simpsonmfg.com/about/ethics.html. We will provide a printed copy of the code of
ethics, free of charge, to any stockholder on request.
OTHER
BUSINESS
Our Board of Directors
does not presently intend to bring any other business before the meeting. So far as our Board of Directors is aware, no
matters will be brought before the meeting except as specified in the notice of
the meeting. The persons that you will
appoint as your proxies in the enclosed form intend to vote according to their
judgment on any other business that properly comes before the meeting.
38
DISCLAIMER
REGARDING INCORPORATION BY REFERENCE OF THE REPORTS OF
THE AUDIT AND COMPENSATION COMMITTEES
THE INFORMATION SHOWN IN
THE SECTIONS ENTITLED REPORT OF THE AUDIT COMMITTEE OF OUR BOARD OF DIRECTORS
AND COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT
INTO ANY FILING BY SIMPSON MANUFACTURING CO., INC. WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT SIMPSON
MANUFACTURING CO., INC. INCORPORATES THIS INFORMATION BY SPECIFIC REFERENCE,
AND SUCH INFORMATION SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
STOCKHOLDER
PROPOSALS
We must receive
stockholder proposals for inclusion in our proxy statement and form of proxy
relating to our 2010 Annual Meeting of Stockholders a reasonable time before we
begin our solicitation, and in any event not later than November 2, 2009.
BY ORDER OF THE BOARD
Michael J. Herbert
Secretary
TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING, WE URGE YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, OR VOTE BY
TELEPHONE OR THE INTERNET AS INSTRUCTED ON THE PROXY OR THE NOTICE REGARDING
THE AVAILABILITY OF PROXY MATERIALS, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. YOU CAN REVOKE YOUR PROXY AT
ANY TIME BEFORE IT IS VOTED.
39
EXHIBIT A
SIMPSON
MANUFACTURING CO., INC.
1994
STOCK OPTION PLAN
Adopted February 23,
1994
and
Amended through February 13, 2008
1.
PURPOSES
.
(a)
The
purpose of the Plan is to provide a means by which selected Employees and
Directors of and Consultants to the Company, and its Affiliates, may be given
an opportunity to purchase stock of the Company.
(b)
The
Company, by means of the Plan, seeks to retain the services of persons who are
now Employees or Directors of or Consultants to the Company and its Affiliates,
to secure and retain the services of new Employees, Directors and Consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.
(c)
The
Company intends that the Options issued under the Plan shall, in the discretion
of the Board or any Committee to which responsibility for administration of the
Plan has been delegated pursuant to subsection 3(c), be either Incentive Stock
Options or Nonstatutory Stock Options. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and in such form as issued pursuant to section 6, and a separate
certificate or certificates will be issued for shares purchased on exercise of
each type of Option.
2.
DEFINITIONS
.
(a)
Affiliate
means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Code sections 424(e) and (f), respectively, and that
qualifies as an eligible issuer of service recipient stock, as that term is
defined in Treasury Regulations section 1.409A-1(b)(5)(iii)(E).
(b)
Board
means the Board of Directors of the Company.
(c)
Code
means the Internal Revenue Code of 1986, as amended.
(d)
Committee
means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(e)
Common Stock
means the common stock of the Company.
(f)
Company
means Simpson Manufacturing Co., Inc., a
Delaware corporation.
(g)
Consultant
means any person, including an advisor, engaged
by the Company or an Affiliate to render consulting services and who is
compensated for such services; provided that the term Consultant shall not
include Directors who are paid only a directors fee by the Company or who are
not compensated by the Company for their services as Directors.
(h)
Continuous Status as an Employee, Director or Consultant
means the employment or relationship as a Director or Consultant is not
interrupted or terminated. The Board, in its sole discretion, may determine
whether Continuous Status as an Employee, Director or Consultant shall be
considered interrupted in the case of: (i) any leave of absence approved
by the Board, including sick leave, military leave or any other personal leave;
or (ii) transfers between locations of the Company or between the Company,
Affiliates or their successors.
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(i)
Director
means a member of the Board.
(j)
Employee
means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither service as a Consultant or a Director
nor payment of a directors fee by the Company shall be sufficient to
constitute employment by the Company.
(k)
Exchange Act
means the Securities Exchange Act of 1934, as
amended.
(l)
Fair Market Value
means the value of the Common Stock as
determined in good faith by the Board and in a manner consistent with section
260.140.50 of Chapter 3 of Title 10 of the California Code of Regulations and
with Treasury Regulations section 1.409A-1(b)(5)(iv).
(m)
Incentive Stock Option
means an Option intended to qualify
as an incentive stock option within the meaning of section 422 of the Code and
the regulations promulgated thereunder.
(n)
Non-Employee Director
means a Director who satisfies the
requirements established from time to time by the Securities and Exchange
Commission for non-employee directors under Rule 16b-3.
(o)
Nonstatutory Stock Option
means an Option not intended to
qualify as an Incentive Stock Option.
(p)
Officer
means a person who is an officer of the Company
within the meaning of section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q)
Option
means a stock option granted pursuant to the Plan.
(r)
Option Agreement
means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement
shall be subject to the terms and conditions of the Plan.
(s)
Optioned Stock
means the Common Stock of the Company
subject to an Option.
(t)
Optionee
means an Employee, Director or Consultant who
holds an outstanding Option.
(u)
Outside Director
means a member of the Board who satisfies
the requirements established from time to time for outside directors under
section 162(m) of the Code.
(v)
Plan
means this Simpson Manufacturing Co., Inc. 1994
Stock Option Plan.
(w)
Rule 16b-3
means Rule 16b-3 under the Exchange
Act or any successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan.
(x)
Securities Act
means the Securities Act of 1933, as
amended.
3.
ADMINISTRATION
.
(a)
The
Plan shall be administered by the Board unless and until the Board delegates
administration to a Committee, as provided in subsection 3(c).
(b)
The
Board shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:
(1)
To
determine from time to time which of the persons eligible under the Plan shall
be granted Options; when and how each Option shall be granted; whether an
Option will be an Incentive Stock Option or a Nonstatutory Stock Option; the
terms and conditions of each Option granted (which need not be
A-2
identical), including the
time or times such Option may be exercised as a whole or in part; and the
number of shares for which an Option shall be granted to each such person;
(2)
To
grant Options under the Plan;
(3)
To
construe and interpret the Plan and Options granted under it, and to establish,
amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective; and
(4)
To
amend the Plan as provided in section 11.
(c)
The
Board may delegate administration of the Plan to a Committee of the Board that
will satisfy the requirements of rule 16b-3. The Committee shall consist solely of two or
more Directors, each of whom is a Non-Employee Director and an Outside
Director, who shall be appointed by the Board.
Subject to the foregoing, from time to time the Board may increase the
size of the Committee and appoint additional qualified members, remove members
(with or without cause) and appoint new members in substitution therefor, or
fill vacancies, however caused. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board shall
thereafter be to the Committee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish
the Committee at any time and revest in the Board the administration of the
Plan. Notwithstanding anything in this
section 3 to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant options to
eligible persons who are not then subject to section 16 of the Exchange Act.
4.
SHARES
SUBJECT TO THE PLAN
.
(a)
Subject
to the provisions of section 10 relating to adjustments on changes in stock,
the stock that may be sold pursuant to Options shall not exceed in the
aggregate 16,000,000 shares of the Common Stock. If any Option shall for any reason expire or
otherwise terminate, as a whole or in part, without having been exercised in
full, the stock not purchased under such Option shall revert to and again
become available for issuance under the Plan; provided, however, that the
maximum number of shares of Common Stock with respect to which Options may be
granted during a calendar year to any employee is 150,000 shares.
(b)
The
stock subject to the Plan may be unissued shares or reacquired shares, bought
on the market or otherwise.
5.
ELIGIBILITY
.
(a)
Incentive
Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted only to Employees, Directors
or Consultants.
(b)
No
person shall be eligible for the grant of an Option if, at the time of grant,
such person owns (or is deemed to own pursuant to section 424(d) of the
Code) stock possessing more than ten percent of the total combined voting power
of all classes of stock of the Company or of any of its Affiliates unless the
exercise price of such Option is at least 110 percent of the Fair Market Value
of such stock at the date of grant and the Option is not exercisable after the
expiration of five years from the date of grant.
6.
OPTION
PROVISIONS
.
Each Option shall
be in such form and shall contain such terms and conditions as the Board shall
deem appropriate. The provisions of
separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option Agreement or
otherwise), except as the Board may otherwise determine in the specific case,
the substance of each of the following provisions:
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(a)
Term
of Options
. No Option shall be
exercisable after the expiration of ten years from the date it is granted.
(b)
Price
. The exercise price of each Option shall be
not less than 100 percent of the Fair Market Value of the stock subject to the
Option on the date the Option is granted.
(c)
Consideration
. The purchase price of stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) in
the absolute discretion of the Board or the Committee (which discretion may be
exercised in a particular case without regard to any other case or cases), at
the time of the grant or thereafter, (A) by the withholding of shares of
Common Stock issuable on exercise of the Option or delivery to the Company of
other Common Stock of the Company, (B) according to a deferred payment or
other arrangement (which may include, without limiting the generality of the
foregoing, the use of other Common Stock of the Company) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may
be acceptable to the Board.
In the case of any
deferred payment arrangement, interest shall be payable at least annually and
shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement, or if less, the maximum rate permitted by law.
(d)
Transferability
. An Option shall not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed by the Optionee during
his or her lifetime, whether by operation of law or otherwise, other than by
will or the laws of descent and distribution applicable to such Optionee, or be
made subject to execution, attachment or similar process; provided that the
Board may in its discretion at the time of approval of the grant of an Option
or thereafter permit an Option to be transferred by an Optionee to a trust or
other entity established by the Optionee for estate planning purposes, and may
permit further transferability, or impose conditions or limitations on any
permitted transferability. An Option
shall otherwise be exercisable during the lifetime of the person to whom the
Option is granted only by such person.
(e)
Vesting
. The total number of shares of stock subject
to an Option may, but need not, be allotted in periodic installments (which
may, but need not, be equal). An Option
Agreement may provide that from time to time during each of such installment
periods, the Option may become exercisable (vest) with respect to some or all
of the shares allotted to that period, and may be exercised with respect to
some or all of the shares allotted to such period or any prior period as to
which the Option shall have become vested but shall not have been fully
exercised. An Option may be subject to
such other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the Board may deem
appropriate. The vesting provisions may
vary among Options, but in each case will provide for vesting of at least
twenty percent per year of the total number of shares subject to the Option.
(f)
Conditions
On Exercise of Options and Issuance of Shares
.
(1)
Shares
shall not be issued on exercise of an Option unless the exercise of such Option
and the delivery of such shares pursuant thereto shall comply with all
applicable laws and regulations, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated thereunder
and the requirements of any stock exchange on which the Common Stock may then
be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(2)
The
Company may require any Optionee, or any person to whom an Option is
transferred under subsection 6(d), as a condition of exercising an Option, (1) to
give written assurances satisfactory to the Company as to the Optionees
knowledge and experience in financial and business matters or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Option for such persons own account and not
with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inapplicable if (i) the
A-4
issuance of the shares on
the exercise of the Option has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, with
advice of its counsel, place such legends on stock certificates issued under
the Plan as the Company deems necessary or appropriate to comply with
applicable securities laws, including, but not limited to, legends restricting
the transfer of the stock.
(g)
Termination
of Employment or Relationship as a Director or Consultant
. If an Optionees Continuous Status as an
Employee, Director or Consultant terminates (other than on the Optionees death
or disability), the Optionee may exercise his or her Option (to the extent that
the Optionee shall have been entitled to exercise it at the date of
termination) but only within the period ending on the earlier of (i) the
ninetieth day after the termination of the Optionees Continuous Status as an
Employee, Director or Consultant (or such longer or shorter period, which in no
event shall be less than thirty days, specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionee does not
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
(h)
Disability
of Optionee
. If an Optionees
Continuous Status as an Employee, Director or Consultant terminates as a result
of the Optionees disability, the Optionee may exercise his or her Option (to
the extent that the Optionee shall have been entitled to exercise it at the
date of termination), but only within the period ending on the earlier of (i) the
first anniversary of such termination (or such longer or shorter period, which
in no event shall be less than six months, specified in the Option Agreement),
or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
and again become available for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(i)
Death
of Optionee
. If of an Optionee dies
during, or within a period specified in the Option after the termination of,
the Optionees Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent that the Optionee shall have been
entitled to exercise the Option at the date of death) by the Optionees estate
or by a person who shall have acquired the right to exercise the Option by
bequest or inheritance, but only within the period ending on the earlier of (i) the
one hundred eightieth day after the first anniversary of the date of death (or
such longer or shorter period, which in no event shall be less than six months,
specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at the time of death, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after death, the
Optionees estate or a person who shall have acquired the right to exercise the
Option by bequest or inheritance does not exercise the Option within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.
(j)
Exemptions
. Notwithstanding subsections (g), (h) and
(i) above, the Board shall have the authority to extend the expiration
date of any outstanding Option in circumstances in which it deems such action
to be appropriate (provided that no such extension shall extend the term of an
Option beyond the date of expiration of the term of such Option as set forth in
the Option Agreement).
(k)
Early
Exercise
. The Option may, but need
not, include a provision whereby the Optionee may elect at any time while an
Employee, Director or Consultant to exercise the Option as to any part or all
of the shares subject to the Option prior to the full vesting of the
Option. Any unvested shares so purchased
shall be subject to a repurchase right in favor of the Company, with the
repurchase price to be equal to the original purchase price of the stock, or to
any other restriction the Board determines to be appropriate; provided that the
right to repurchase at the original purchase price shall lapse at a minimum
rate of twenty percent per year over five years from the date the Option is granted
and such right shall be exercised within ninety days of termination of
employment for cash or cancellation of purchase money indebtedness for the
shares. Should the right of repurchase
be assigned by the Company, the assignee shall pay the Company cash equal to
the
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difference between the
original purchase price and the stocks Fair Market Value at the time of the
assignment if the original purchase price is less than such Fair Market Value.
(l)
Withholding
. To the extent approved by the Board in the
specific case, at the time of approval of the grant of the Option or
thereafter, the Optionee may satisfy any Federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (l) tendering a cash
payment; (2) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the Optionee as a result of the exercise
of the Option; or (3) delivering to the Company owned and unencumbered
shares of the Common Stock of the Company.
The value of shares withheld or delivered shall equal the Fair Market
Value of the shares on the day the Option is exercised.
7.
COVENANTS
OF THE COMPANY
.
(a)
During
the terms of the Options, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such Options.
(b)
The
Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to issue and sell
shares of stock on exercise of the Options; provided that this undertaking
shall not require the Company to register under the Securities Act either the
Plan, any Option or any stock issued or issuable pursuant to any such
Option. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission or agency
the authority that counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock on exercise of such Options
unless and until such authority is obtained.
8.
USE
OF PROCEEDS FROM STOCK
.
Proceeds from the sale of
stock pursuant to Options shall constitute general funds of the Company.
9.
MISCELLANEOUS
.
(a)
Neither
an Optionee nor any person to whom an Option is transferred under subsection 6(d) shall
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Option unless and until such person has
satisfied all requirements for exercise of the Option pursuant to its
terms. No adjustment will be made for
dividends or other rights for which the record date is prior to the date of
satisfaction of all such requirements.
(b)
Throughout
the term of any Option, the Company shall deliver to the holder of such Option,
not later than 120 days after the close of each of the Companys fiscal years
during the Option term, a balance sheet and an income statement. This section shall not apply when issuance is
limited to key employees whose duties in connection with the Company assure
them access to equivalent information.
(c)
Nothing
in the Plan or any instrument executed or Option granted or other action taken
pursuant thereto shall confer on any Employee, Director, Consultant or Optionee
any right to continue in the employ of the Company or any Affiliate (or to
continue acting as a Director or Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or relationship as a
Director or Consultant of any Employee, Director, Consultant or Optionee with
or without cause.
(d)
To
the extent that the aggregate Fair Market Value (determined at the time of
grant) of stock with respect to which Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year under all plans of
the Company and its Affiliates exceeds $100,000, the Options or portions
thereof in excess of such limit (according to the order in which they are
granted) shall be treated as Nonstatutory Stock Options.
A-6
10.
ADJUSTMENTS
ON CHANGES IN STOCK
.
(a)
If
any change is made in the stock subject to the Plan, or subject to any Option
(through merger, consolidation, reclassification, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split or reverse stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or otherwise), the Plan and
outstanding Options will be appropriately adjusted by the Board in the
class(es) and maximum number of shares subject to the Plan and the class(es)
and number of shares and price per share of stock subject to outstanding
Options.
(b)
In
the event of: (1) a merger or consolidation in which the Company is not
the surviving corporation or (2) a reverse merger in which the Company is
the surviving corporation but the shares of the Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise then to the extent
permitted by applicable law: (i) any surviving corporation shall assume
any Options outstanding under the Plan or shall substitute similar options for
those outstanding under the Plan, or (ii) such Options shall continue in
full force and effect. If any surviving
corporation refuses to assume or continue such Options, or to substitute
similar options for those outstanding under the Plan, then such Options shall
be terminated if not exercised prior to such event. In the event of a dissolution or liquidation
of the Company, any Options outstanding under the Plan shall terminate if not
exercised prior to such event.
11.
AMENDMENT
OF THE PLAN
.
(a)
The
Board at any time or from time to time shall have the right to amend, modify,
suspend or terminate the Plan for any reason; provided that the Company will
seek stockholder approval for any change if and to the extent required by
applicable law, regulation or rule.
(b)
It
is expressly contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide Optionees with the maximum
benefits provided or to be provided under the Code and the regulations
promulgated thereunder relating to Incentive Stock Options or to cause the Plan
or Incentive Stock Options granted under it to comply therewith.
(c)
Rights
and obligations under any Option granted before amendment of the Plan shall not
be altered or impaired by any amendment of the Plan, unless (i) the
Company requests the consent of the person to whom the Option shall have been
granted and (ii) such person consents in writing.
12.
TERMINATION
OR SUSPENSION OF THE PLAN
.
(a)
The
Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate on May 28, 2012. No
Options may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b)
Rights
and obligations under any Option granted while the Plan is in effect shall not
be altered or impaired by suspension or termination of the Plan, except with
the consent of the person to whom the Option shall have been granted.
13.
EFFECTIVE
DATE OF PLAN
.
The Plan shall become
effective as determined by the Board, but no Options granted under the Plan
shall be exercised unless and until the Plan shall have been approved by the
stockholders of the Company, which approval shall be within twelve months
before or after the date the Plan is adopted by the Board, and, if required, an
appropriate permit shall have been issued by the Commissioner of Corporations
of the State of California.
14.
COMPLIANCE
WITH SECTION 16 OF THE EXCHANGE ACT
It is the Companys
intent that the Plan comply in all respects with Rule 16b-3. If any provision of this Plan is found not to
be in compliance with Rule 16b-3, that provision shall be deemed to have
been amended or deleted as and to the extent necessary to comply with Rule 16b-3,
and the remaining provisions of
A-7
the Plan shall continue
in full force and effect, without change.
All transactions under the Plan shall be executed in accordance with the
requirements of Section 16 of the Exchange Act and the applicable
regulations promulgated thereunder.
15.
COMPLIANCE
WITH SECTION 409A OF THE CODE
It is the Companys
intent that the Plan comply in all respects with Code section 409A and the
applicable regulations promulgated thereunder.
If any provision of the Plan is found not to be in compliance with Code
section 409A and the applicable regulations promulgated thereunder, that
provision shall be deemed to have been amended or deleted as and to the extent
necessary to comply with Code section 409A and the applicable regulations
promulgated thereunder, and the remaining provisions of the Plan shall continue
in full force and effect, without change.
All transactions under the Plan shall be executed in accordance with the
requirements of Code section 409A and the applicable regulations promulgated
thereunder.
A-8
EXHIBIT B
SIMPSON
MANUFACTURING CO., INC.
CHARTER
OF THE AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
February 23,
2009
I. PURPOSE
The
primary purpose of the Audit Committee (the Committee) of the Board of
Directors (the Board) of Simpson Manufacturing Co., Inc. (the Company)
is to provide independent and objective oversight of the accounting functions
and internal controls of the Company and its subsidiaries and to ensure the
integrity of the Companys financial statements and compliance with applicable
legal and regulatory requirements. The
Committee is responsible for preparing a report of its findings, to be included
in the Companys annual proxy statement.
The Committee has the sole authority and responsibility to select,
evaluate the qualifications and independence of, and, where appropriate,
replace the independent auditors. Also,
the Committee evaluates the performance of the Companys internal audit
function.
The
Committees role is one of oversight and review. It is not expected to audit the Company, to
define the scope of the audit, to control the Companys accounting practices,
or to define the standards to be used in preparation of the Companys financial
statements.
II. FUNCTIONS
The
Committee shall perform the following functions in the following areas:
1.
Independent
Auditors
. Exercise sole authority to
retain and terminate the Companys independent auditors and approve all audit
engagement fees and terms, as well as all significant non-audit engagements
with the independent auditors. The
independent auditors shall report directly to the Committee.
2.
Plan
of Audit
. Consult with the independent auditors regarding the plan of
audit. The Committee also shall review with the independent auditors their
report on the audit and review with the Companys officers the independent
auditors suggested changes or improvements in the Companys accounting
practices or controls.
3.
Accounting
Principles and Disclosure
. Review significant developments in accounting
rules. The Committee shall review with the Companys officers recommended
changes in the Companys methods of accounting or financial statements. The
Committee also shall review with the independent auditors any significant
proposed changes in accounting principles and financial statements. The Committee shall review with the Companys
officers and the independent auditors any correspondence with regulatory
authorities and any published reports that raise material issues regarding the
Companys accounting practices.
4.
Internal
Accounting Controls
. Discuss the Companys major financial risk exposures
and the steps the Companys officers have taken to monitor and control such
exposures. The Committee consults with
the independent auditors regarding the adequacy of internal accounting
controls. Where appropriate, consultation with the independent auditors
regarding internal controls shall be conducted out of the presence of the
Companys officers.
B-1
5.
Financial
Disclosure Documents
. Review with
the Companys officers and the independent auditors the Companys financial
disclosure documents including all interim and annual financial statements and
reports filed with the Securities and Exchange Commission or sent to
stockholders and interested parties and, following the satisfactory completion
of each year-end review, recommend to the Board the inclusion of the audited
financial statements in the Companys annual report on Form 10-K. The Committee shall discuss with the Companys
officers the type and presentation of information to be included in the Companys
earnings press releases (paying particular attention to any use of pro forma
or adjusted non-GAAP information), as well as financial information and
earnings guidance provided to analysts and rating agencies. The review shall
include any significant problems and material disputes between the Companys
officers and the independent auditors and a discussion with the independent
auditors out of the presence of the Companys officers of the quality of the
Companys accounting principles as applied in its financial reporting, the
clarity of the Companys financial disclosures and degree of aggressiveness or
conservatism of the Companys accounting principles and underlying estimates,
and a frank and open discussion of other significant decisions made by the
Companys officers in preparing the financial disclosure and reviewed by the
independent auditors.
6.
Internal
Control Systems
. Conduct separate meetings quarterly with the Companys
officers, internal auditors, and independent auditors to review the Companys
internal control systems intended to ensure the reliability of financial
reporting and compliance with applicable codes of conduct, laws, and
regulations. The review shall include internal audit summaries of and, as
appropriate, copies of its significant reports to the Companys officers and
the officers responses, as well as any significant problems and regulatory
concerns.
7.
Ethical
Environment
. Consult with the Companys officers on the establishment and
maintenance of an environment that promotes ethical behavior, including the
establishment, communication, and enforcement of codes of conduct to guard
against dishonest, unethical, or illegal activities. The Committee shall establish procedures for
the receipt, retention, and treatment of complaints received by the Company
from its employees regarding accounting, internal accounting controls, and
auditing matters, and the confidential, anonymous submission by employees of
concerns regarding questionable accounting or auditing matters.
8.
Oversight
of Independent Auditors
. Evaluate qualifications, performance and
independence of the independent auditors on an annual basis and where
appropriate retain a replacement for the independent auditors. In such
evaluation, the Committee shall annually obtain and review a report of the
independent auditors internal quality-control procedures, any material issues
raised by their internal quality-control review or any external review
occurring within the preceding five years with respect to one more independent
audits carried out by the independent auditors, and steps taken to resolve any
such issues. With regard to the
evaluation of independence, the Committee shall ensure that the independent
auditors deliver to the Committee a formal written statement delineating all
relationships between the independent auditors and the Company. The Committee
shall engage in a dialogue with the independent auditors with respect to any
disclosed relationships or services that may affect the objectivity and
independence of the independent auditors and in response to the independent
auditors report take, or recommend that the Board take, appropriate action to
satisfy itself of the independent auditors independence. The Committee shall review the response of
the Companys officers to any audit problems or difficulties.
9.
Hiring
Policies for Former Employees of the Independent Auditors
. Ensure compliance with the following hiring
policies: Any former employee of the
independent auditors may be eligible for employment with the Company if he or
she has no influence over the independent auditors operations or financial
policies; has no capital balance in the
B-2
independent
auditors; has no financial arrangement with the independent auditors; and has
not been a member of the independent auditors audit engagement team within the
year preceding the commencement of employment with the Company. In addition, a formal hiring request must be
received and reviewed by the Chief Financial Officer for any proposed
employment candidate who was an audit supervisor or above with the independent
auditors. The Chief Financial Officer
must discuss the formal hiring request with the Committee Chair before an offer
is extended.
10.
Review
and Amendment of Charter
. Perform
annually a self-evaluation of the Committees performance to assess and insure
effectiveness. Also, the Committee will review this Charter annually, to assess
its adequacy and propose appropriate amendments to the Board.
11.
Whistleblower
Communications
. Ensure that the
Company has appropriate procedures for receiving and responding to complaints
about the Companys accounting, internal accounting controls or auditing
matters. To carry out this
responsibility the Committee posts on the Companys internal website the
procedures for two formal means by which employees may confidentially or
anonymously express directly to the Committee their concerns about accounting
or auditing matters. The two formal means are US mail sent directly to the
Committees PO Box and interoffice mail sent by sealed envelope to the
Committee Chair. Committee procedures
concerning the handling and consideration of complaints are appended to this
Charter, along with a statement of the informal means by which employees may
express concerns about accounting or auditing matters.
III. COMPOSITION & INDEPENDENCE
The
Committee shall consist of not fewer than three independent Directors, who
shall be appointed by the Board of Directors. Members of the Committee shall be
financially literate or become financially literate within a reasonable period
of time after appointment to the Committee, and at least one member of the Committee
shall have accounting or related financial management expertise or any other
comparable experience or background that results in the individuals financial
sophistication. No member of the Committee shall be employed or otherwise
affiliated with the Companys independent auditors. Each member of the Committee shall meet the
independence and experience requirements of the New York Stock Exchange, Section 10A(m)(3) of
the Securities Exchange Act of 1934 (the Exchange Act) and the rules and
regulation of the Securities and Exchange Commission.
In the
event that a Committee member faces a potential or actual conflict of interest
with respect to a matter before the Committee, that Committee member shall be
responsible for fully informing the Committee Chair, and in the case where the
Committee Chair faces a potential or actual conflict of interest, the Committee
Chair shall fully inform the Chairman of the Board. In the event that the
Committee Chair, or the Chairman of the Board, concurs that a potential or
actual conflict of interest exists, an independent substitute Director shall be
appointed as a Committee member until the matter posing the potential or actual
conflict of interest is resolved. The
Board may, at any time and in its complete discretion, replace a Committee
member.
IV. MEETINGS
The
Committee shall meet on a regular basis. Meetings shall be scheduled at the
discretion of the Committee Chair. The Committee may ask the Companys officers
or others to attend a meeting and provide pertinent information as necessary.
V. REPORTS
The
Committee will report to the Board regularly with respect to its activities and
its recommendations. When presenting any recommendation or advice to the Board,
the Committee will provide such background
B-3
and
supporting information as may be necessary for the Board to make an informed
decision. The Committee will keep minutes of its meetings and will make such
minutes available to the Board for review.
The
Committee shall report to the shareholders in the Companys proxy statement for
its annual meeting whether the Committee has satisfied its responsibilities
under this Charter.
VI. OTHER AUTHORITY
The
Committee is authorized to confer with the Companys officers and other
employees to the extent it may deem necessary or appropriate to fulfill its
duties. The Committee is authorized to conduct or authorize investigations into
any matters within the scope of the Committees responsibilities. The Committee
is also authorized to seek outside legal or other advice to the extent it deems
necessary or appropriate, provided it shall keep the Board informed as to the
nature and extent of such outside advice.
The Committee shall have the authority to delegate any of its responsibilities
to subcommittees or individual(s) as the Committee may deem appropriate in
its sole discretion. The Company shall
provide appropriate funding, as deemed necessary by the Committee, to
compensate any independent auditor, outside legal counsel, or any other
advisors employed by the Committee, and to pay ordinary Committee
administrative expenses that are necessary and appropriate in carrying out its
duties.
B-4
APPENDIX A
AUDIT COMMITTEE INFORMAL WHISTLEBLOWER PROCEDURES
February 23, 2009
PROCEDURES
1.
Submission and Receipt of Complaints
Employees
are free to bring complaints about accounting or auditing matters directly to
the attention of their supervisors or any other manager as they would any other
workplace concern. If the employee is
not satisfied that the matter has been appropriately addressed, the employee
should feel free to contact the President of his/her company or the President
of Simpson Manufacturing Co., Inc. (the Company). When a President
receives such a complaint, he or she shall forward it promptly in the following
order and manner:
Position:
|
|
Authorization to Receive
Complaint:
|
Company
Quality Manager
|
|
Authority
to receive notification of all reports except reports implicating himself.
|
|
|
|
Company
Controller
|
|
Authority
to receive notification of all reports except reports implicating himself,
the Chief Financial Officer or the Company Quality Manager.
|
|
|
|
Chief
Financial Officer
|
|
Authority
to receive notification of all reports except reports implicating himself or
the Company Quality Manager.
|
|
|
|
Board
Director
|
|
Authorization
to receive notification of all reports.
|
An
employee may choose to deliver any complaint directly to the Audit Committee of
the Companys Board of Directors by mail at P.O. Box 1394, Alamo, CA
94507-7394, or in a sealed envelope sent through the Companys interoffice mail
to the Chair of the Audit Committee.
2. Retention of Records of Complaints
Records
pertaining to a complaint are the property of the Company and shall be
retained:
a.
in compliance with applicable laws and
document retention policies;
b.
subject to safeguards that ensure their
confidentiality, and, when applicable, the anonymity of the person making the
complaint.
3.
Consideration of Complaints
a.
All complaints shall be treated as
confidential.
b.
Although a person making an anonymous
complaint may be advised that maintaining anonymity could hinder an effective
investigation, the anonymity of the person making the complaint shall be
maintained unless the person indicates that he or she no longer wishes to
remain anonymous.
c.
The Chair of the Audit Committee shall
inform the Audit Committee, in summary form or otherwise, of all complaints
received, with an initial assessment as to the appropriate treatment of each
complaint. Assessment, investigation, and evaluation of each complaint shall be
conducted by, or at the direction of, the Audit Committee. If the Audit Committee deems it appropriate,
the
B-5
Audit Committee may
engage at the Companys expense independent advisors, such as outside counsel
and accountants unaffiliated with the Companys auditor.
d.
Following investigation and evaluation of
a complaint, the Chair of the Audit Committee shall report to the Audit
Committee on recommended disciplinary or remedial action, if any. The action
determined by the Audit Committee to be appropriate under the circumstances
shall then be brought to the Board or to the appropriate officers for
authorization or implementation, respectively. If the action taken to resolve a
complaint is deemed by the Audit Committee to be material or otherwise
appropriate for inclusion in the minutes of the meetings of the Audit
Committee, it shall be so noted in the minutes.
e.
Any effort to retaliate against any
person making a complaint in good faith is strictly prohibited and shall be
reported immediately to the Chair of the Audit Committee or the Quality
Manager.
B-6
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THIS PROXY CARD
IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS: Signature (Joint Owners) Signature [PLEASE SIGN WITHIN
BOX] Date Date Vote on Proposals For address changes and/or comments, please
check this box and write them on the back where indicated. 2. Ratification of
correction of a clerical error in the previously approved Simpson
Manufacturing Co., Inc. 1994 Stock Option Plan. Please indicate if you plan
to attend this meeting. (Please sign exactly as name appears hereon,
indicating title or representative capacity, where applicable) IF VOTING BY
MAIL, PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE 3. Ratification of the selection of PricewaterhouseCoopers
LLP as independent registered public accounting firm. SIMPSON MANUFACTURING
CO., INC. 5956 W. LAS POSITAS BLVD. PLEASANTON, CA 94588 SMPSN1 For Against
Abstain Vote on Directors 01) Barclay Simpson 02) Jennifer A. Chatman 03)
Robin G. MacGillivray The Board of Directors recommends a vote FOR the
nominees in proposal 1, and a vote FOR proposals 2 and 3. 1. Election of 3
Directors to serve for a three-year term Nominees: VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information until 11:59 P.M. Eastern Time the day before the
meeting date (Simpson Manufacturing Co., Inc. Profit Sharing Trust plan
participants may transmit their voting instructions until 11:59 P.M. Eastern
Time on 04/14/09). Have your proxy card in hand when you access the web site
and follow the instructions to obtain your records and to create an
electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS If you would like to reduce the costs incurred by our company in
mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or the
Internet. To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that you agree
to receive or access proxy materials electronically in future years. VOTE BY
PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting
instructions until 11:59 P.M. Eastern Time the day before the meeting date
(Simpson Manufacturing Co., Inc. Profit Sharing Trust plan participants may
transmit their voting instructions until 11:59 P.M. Eastern Time on 04/14/09).
Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717. 0 0 0 SIMPSON MANUFACTURING
CO., INC. For All Withhold All For All Except To withhold authority to vote
for any individual nominee(s), mark For All Except and write the number(s)
of the nominee(s) on the line below. 0 0 0 0 0 0 0 0 0 Yes No Unless
otherwise specified, this proxy will be voted for the nominees listed above
as directors and for proposals 2 and 3, and will be voted in the discretion
of the proxies on such other matters as may properly come before the meeting
or any adjournment thereof. Such other matters are not related. KEEP THIS
PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY
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Address
Changes/Comments:
___________________________________________________________________________
________________________________________________________________________________________________________
(If you noted any Address Changes/Comments above, please mark corresponding
box on the reverse side.) Important Notice Regarding the Availability of
Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and
Annual Report are available at www.proxyvote.com PROXY THIS PROXY IS
SOLICITED BY THE BOARD OF DIRECTORS OF SIMPSON MANUFACTURING CO., INC. Annual
Meeting of Stockholders - April 17, 2009 The undersigned hereby appoints
Barclay Simpson and Thomas J Fitzmyers, and each of them, attorneys and
proxies of the undersigned, with full power of substitution and
resubstitution, to vote on behalf of the undersigned all shares of the common
stock of Simpson Manufacturing Co., Inc. that the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on April 17, 2009, at
5956 W. Las Positas Blvd., Pleasanton, California, and at all adjournments
thereof, hereby revoking any proxy heretofore given with respect to such
common stock, and the undersigned authorizes and instructs said proxies to
vote as indicated on the reverse side hereof. The shares represented by this
proxy will be voted as directed, or if directions are not indicated, will be
voted for the election as directors of some or all of the persons listed on
this proxy, in the manner described in the proxy statement. This proxy
confers on the proxyholders the power of cumulative voting and the power to
vote cumulatively for fewer than all of the nominees as described in such
proxy statement. (CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) SEE REVERSE
SIDE SEE REVERSE SIDE
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R1SMC1 SIMPSON
MANUFACTURING CO., INC. 5956 W. LAS POSITAS BLVD. PLEASANTON, CA 94588 You
are receiving this communication because you hold shares in the above
company, and the materials you should review before you cast your vote are
now available. This communication presents only an overview of the more
complete proxy materials that are available to you on the Internet. We
encourage you to access and review all of the important information contained
in the proxy materials before voting. ** IMPORTANT NOTICE ** Regarding the
Availability of Proxy Materials for the Stockholder Meeting to be held on
04/17/09 SIMPSON MANUFACTURING CO., INC. The Notice and Proxy Statement and
Annual Report to Stockholders are available at www.proxyvote.com See the
Reverse Side for Meeting Information and Instructions on How to Vote Have the
12 Digit Control Number available and visit: www.proxyvote.com PROXY
MATERIALS - VIEW OR RECEIVE If you want to receive a paper or e-mail copy of
these documents, you must request one. There is no charge to you for
requesting a copy. Please make your request for a copy as instructed below on
or before 04/08/09 to facilitate timely delivery. HOW TO VIEW MATERIALS VIA
THE INTERNET HOW TO REQUEST A COPY OF MATERIALS 1) BY INTERNET - www.proxyvote.com
2) BY TELEPHONE - 1-800-579-1639 3) BY E-MAIL* - sendmaterial@proxyvote.com
*If requesting materials by e-mail, please send a blank e-mail with the 12
Digit Control Number (located on the following page) in the subject line.
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R1SMC2 Meeting
Type: Annual Meeting Date: 04/17/09 Meeting Time: 2:00 P.M., PDT For holders
as of: 02/23/09 Meeting Location: Meeting Information Simpson Manufacturing
Co., Inc. 5956 W. Las Positas Blvd. Pleasanton, CA 94588 Many stockholder
meetings have attendance requirements including, but not limited to, the
possession of an attendance ticket issued by the entity holding the meeting.
Please check the meeting materials for any special requirements for meeting
attendance. At the Meeting, you will need to request a ballot to vote these
shares. Vote In Person How To Vote Vote By Internet To vote now by Internet,
go to WWW.PROXYVOTE.COM. Use the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59 P.M.
Eastern Time the day before the meeting date (Simpson Manufacturing Co., Inc.
Profit Sharing Trust plan participants may transmit their voting instructions
until 11:59 P.M. Eastern Time on 04/14/09). Have your notice in hand when you
access the web site and follow the instructions.
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Voting items 2.
Ratification of correction of a clerical error in the previously approved
Simpson Manufacturing Co., Inc. 1994 Stock Option Plan. 3. Ratification of
the selection of PricewaterhouseCoopers LLP as independent registered public
accounting firm. 01) Barclay Simpson 02) Jennifer A. Chatman 03) Robin G.
MacGillivray The Board of Directors recommends a vote FOR the nominees in
proposal 1, and a vote FOR proposals 2 and 3. 1. Election of 3 Directors to
serve for a three-year term. Nominees: R1SMC3
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R1SMC4
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