DEF 14A of Acme United Corp
Filed Mar 25, 2024 · FY20230001193125-24-076105
Board of Directors
Board of Directors The By-laws of the Company provide that the Company shall have a Board of Directors of not fewer than five nor more than nine directors, as determined by the Board from time to time. The number of directors is presently fixed at eight. Directors serve until the next annual meeting of shareholders and until their respective successors have been elected and qualified. The Board has determined that it is beneficial to combine the positions of its Chief Executive Officer and Chairman of the Board. In making this determination, the Board of Directors considered a number of factors, including the size of the Board in relation to the scope of the Company’s operations, the efficiencies obtained by combining the positions and the fact that the combination of the positions facilitates the alignment of the Board’s agenda with its oversight responsibilities relating to the business and operations of the Company. The Company does not have a lead independent Director.
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Eight directors are to be elected at the Meeting to serve for one-year terms until the 2025 Annual Meeting of Shareholders and until their respective successors are elected and qualified. A plurality of the votes cast at the Meeting is required to elect each of the nominees for Director. The Board has nominated eight individuals for election to the Board of Directors, seven of whom are presently incumbent directors. The Board of Directors knows of no reason why any nominee would be unable to serve as director. Each nominee has consented to being named as a nominee for director of the Company in this Proxy Statement and to serve as a director, if elected. If any nominee should, for any reason, become unable to serve, then all valid proxies will be voted for the election of a substitute nominee, if any, designated by the Board. The following information about the nominees for election as our directors is based, in part, upon information furnished by the nominees. Each nominee, with the exception of Paul Conway, is an incumbent director.
PROPOSAL 1: ELECTION OF DIRECTORS
| Nominees | Principal Occupation and Relevant Skills | Director Since | | Walter C. Johnsen (age 73) | Chairman of the Board and Chief Executive Officer of the Company since January 1, 2007; President and Chief Executive Officer of the Company from November 30, 1995 to December 31, 2006. Mr. Johnsen previously served as Vice Chairman and a principal of Marshall Products, Inc., a medical supply distributor. Mr. Johnsen has served on the Board of TOMI Environmental Solutions, Inc., a publicly traded company, since February 1, 2016. Mr. Johnsen’s qualifications to serve on the Board of the Company include the in-depth knowledge of all facets of the Company’s business which he has gained during his more than twenty-eight years of service as the Company’s Chief Executive Officer. | 1995 |
PROPOSAL 1: ELECTION OF DIRECTORS
| Richmond Y. Holden, Jr. (age 70) | Mr. Holden served as President and CEO of INgageHub, a cloud based Marketing SaaS platform, from January 2015 through early 2016; he continued to serve as a senior advisor to the company until 2019. From 2007 through 2014, Mr. Holden served in senior executive positions at School Specialty, Inc., a distributor of school supplies, equipment and curriculum products. He last served as Executive Vice President of School Specialty, Inc., and President of the Curriculum Group, a division of School Specialty Inc., from 2013 to December 2014. He was President of Educational Resources, a division of School Specialty, Inc., from 2010 to 2013. He served as Chairman and Chief Executive Officer of J.L. Hammett Co., a reseller of educational curriculum, equipment, furniture and products from 1992 to 2006. Mr. Holden served on the Board of Directors of Software Secure, Incorporated, a privately-held company headquartered in Newton, MA, which focused on secure online educational testing technology, from 2007 until its sale in late 2016. He has served on the Board of Directors of Codman Academy Charter Public School in Boston MA since 2012. The qualifications of Mr. Holden to serve on the Board of the Company include his substantial senior executive management experience of large complex companies in the educational markets. In particular, as a result of his experience with School Specialty Inc., then a $650 million publicly held reseller of educational products, Mr. Holden has broad knowledge of educational markets and operational matters relating to developmental strategy, finance, marketing, sales, technology, sourcing, pricing and distribution. | 1998 | | Brian S. Olschan (age 67) | President and Chief Operating Officer of the Company since January 1, 2007; Executive Vice President and Chief Operating Officer of the Company from January 1999 to December 31, 2006; Senior Vice President—Sales and Marketing of the Company from September 1996 to January 1999. Mr. Olschan previously served as Vice President and General Manager of the Cordset and Assembly Business of General Cable Corporation, an electrical wire and cable manufacturer. Mr. Olschan’s qualifications to serve on the Board include his detailed knowledge of the Company’s operations which he has gained in his capacity as a member of senior management for more than 27 years, including as Chief Operating Officer since January 1999 and President since January 2007. | 2000 | | Stevenson E. Ward III (age 78) | Mr. Ward served as Vice President and Chief Financial Officer of Triton Thalassic Technologies, Inc. from 2000 until his retirement in 2014. Triton’s technology controls and inactivates pathogens in the healthcare and industrial industries. From 1998 through 2000, Mr. Ward served as Senior Vice President-Administration of Sanofi-Synthelabo, Inc., a major multinational pharmaceutical company. He served as Executive Vice President (1996-1998), responsible for legal, tax, treasury, employee benefits and other functions, and Chief Financial Officer (1994-1996) of Sanofi, Inc., the North American holding company for Sanofi. He also served as Vice President-Finance and Administration, Pharmaceutical Group, Sterling Winthrop, Inc. (1992-1994). Prior to joining Sterling, he was employed by General Electric Company in management positions in Purchasing, Corporate Audit and Finance. Mr. Ward’s qualifications for service on the Board include his extensive experience in senior executive level positions in finance, corporate audit and administration at two Fortune 100 multinational corporations. He also holds a Masters in Business Administration (MBA) degree. | 2001 |
PROPOSAL 1: ELECTION OF DIRECTORS
| Susan H. Murphy (age 72) | Vice President Emerita, Cornell University, from which Dr. Murphy retired in 2016 after a 38-year career, commencing in 1978. She served as Dean of Admissions and Financial Aid from 1985 to 1994; Vice President of Student and Academic Services from 1994 to June 2015, and thereafter she worked in Alumni Affairs and Development until her retirement. In 2013, Dr. Murphy became a member of the Board of Trustees of Adelphi University, and served as Vice Chair of its Board of Trustees from 2016 to 2021, and continues as Chair of Academic Affairs and Student Life Committee. She also served on the Board of Directors for Kendal at Ithaca, a not-for-profit continuing care retirement community from 2014 to 2023. Dr. Murphy received a Ph.D. in Educational Administration from Cornell University. Dr. Murphy has broad senior management level experience in a large, complex organization. In particular, her experience in employee compensation matters and the development and implementation of diversity policies is helpful to the Company. | 2003 | | Rex L. Davidson (age 74) | Since 2009, Mr. Davidson has served as President of Rex Davidson Associates, LLC, a management consulting service. Areas of consultation have included data privacy, especially regarding client and employee data as well as cybersecurity issues. Human capital issues were also addressed including how to recruit, manage and retain a diverse workforce. From 2013-2019, Mr. Davidson served as Executive Director of the Helms Fund. The Helms Fund provides “gap financing” to socially responsible business ventures for capital expenditures. From 2009 to 2019, Mr. Davidson served as Executive Director of Las Cumbres Community Services, which provides developmental disability and mental health services to children, adults and families in Northern New Mexico. Data security for both the company and its clients was an important focus of management. He also served as the Director of Special Initiatives from 2020 to 2021. From 1982 to 2009, Mr. Davidson served as President and Chief Executive Officer of Goodwill Industries of Greater New York and Northern New Jersey, Inc., an organization then having over 2,000 employees and revenues in excess of $100 million. He also served as President of Goodwill Industries Housing Corporation. In his leadership positions, Mr. Davidson addressed significant environmental/climate, data security, and diversity issues and matters. Mr. Davidson’s qualifications to serve on the Board include significant management experience at the highest level in large organizations, having been responsible for the management of Goodwill Industries, among others. Mr. Davidson’s experience in the areas noted above and in the areas of compensation of personnel at all levels, retail matters, such as retail trends and pricing, and diversity policies is of significant benefit to the Company. | 2006 |
PROPOSAL 1: ELECTION OF DIRECTORS
| Brian K. Barker (age 64) | Brian K. Barker is a founder and has been CEO of AntelopeAI, LLC an artificial intelligence and machine learning start-up since December 2018. He was a founder, director, and CEO of NorthBay Solutions, LLC, a big data and analytics company from 2010 to 2018, and continues to serve as a director. Mr. Barker was the General Manager of the xDoc business unit for Document Sciences Corporation, a document management and customer communications management solutions company, from 2007 until it was acquired by EMC Corporation, an information infrastructure solutions company, in 2008, and then continued as General Manager of the xDoc Business Unit until 2010. He previously was CEO of Cambridge Technology Vision, LLC, a merger and acquisition support software company, from 1997 to 2001, and was President of ClearSpring Technologies, Inc., an event-driven management software company, from 1989 to 1992. Mr. Barker is the co- inventor of Acquisition Trustee, which Intralinks Holdings, Inc. acquired to incorporate in its platform for secure document sharing. The qualifications of Mr. Barker to serve on the Board include his strong data analysis background, significant entrepreneurial achievements, and executive management experience at rapidly growing information technology companies. | 2019 | | Paul J. Conway (Age 64) | Mr. Conway is a founder and managing member of Spark Capital Partners, LLC, an early-stage technology venture capital firm, founded in July 2005. Since 2022, Mr. Conway has served as its Chief Operating Officer and is responsible for financial reporting (both internal and for external investors), treasury, tax, human resources, and investor relations. From 2005-2021, he was Chief Financial Officer of Spark Capital. The firm invests primarily in companies, including in the areas of AI and SaaS and microchip technology. From 2001-2005, Mr. Conway was an executive consultant to early-stage technology companies, having interim executive positions in finance and operations; during this period, he primarily served as an interim CFO. From 1988-2000, Mr. Conway served as Chief Financial Officer of Charles River Ventures (CRV), an early-stage technology venture capital firm. Prior to that, while working at Touche Ross & Co. (1981-1986), now part of Deloitte and Touche, he rose to the level of audit manager. Mr. Conway’s qualifications for service on the Board include his significant entrepreneurial achievement and extensive experience in senior executive level positions in finance, audit oversight, and administration. Mr. Conway was a licensed Certified Public Accountant for over 10 years. | 2024 nominee |
Oversight of Executive Compensation
| • | provide compensation packages that are externally competitive, reasonable and fair within the highly competitive market for talented individuals in our industry but are also internally equitable; |
Oversight of Executive Compensation
| • | reward executives fairly over time for actions consistent with creating long-term shareholder value and enable executives to share in the future success of the Company by acquiring equity interests in the Company; |
Performance Based Cash Bonus Plan
Performance Based Cash Bonus Plan The Company grants performance based “at risk” cash bonus awards under our Cash Bonus Plan based upon the achievement of both Company and individual performance objectives. The Company generally makes cash awards under this Plan if the Company achieves the minimum level of net income set by the Compensation Committee for the applicable year. Specifically, at the beginning of each fiscal year, the Company establishes a cash bonus pool equal to 15% of the Company’s budgeted net income before taxes for that year. Payment of cash bonuses is contingent on achievement of the budgeted net income before taxes after the accrual for bonuses. The bonus pool is adjusted for company performance. It increases to 16% for net income before taxes 110% over the budgeted amount and declines to 14% for net income before taxes within 90% of the budget. The Compensation Committee establishes a detailed sliding scale, subject to the approval of the Board of Directors. The Company allocates an amount equal to 15% of base salary to key managers, including the NEOs. The Company then adjusts the individual allocations based on individual performance, with the historical range of payout being between 0% and 25% of base salary. The proposed bonuses are then totaled and compared to the cash bonus accrual for the fiscal year and adjusted so that the total does not exceed the accrual. If the operating budget is not achieved within the guidelines, no bonus is awarded. In fact, no bonuses were awarded in 2017, 2018 and 2022. In seven of the last fifteen years (i.e., 2009 – 2023), the NEOs received no cash bonuses. In 2023, the Company did not award cash bonuses under the plan to named executive officers. A one-time transaction based cash bonus was paid in 2023 on the successful asset disposition of the Camillus and Cuda product lines.
Stock Option Program For Employees
Stock Option Program For Employees The Company’s stock option program is administered by the Board of Directors, which acts upon recommendations of the Compensation Committee. The purpose of the Company’s stock option program is to facilitate the acquisition of equity interests in the Company by its officers and key employees, thereby enabling them to share in the future success of the Company’s business. The Compensation Committee believed that stock options were the appropriate form of equity to grant to our NEOs in 2023, considering market practices and the Compensation Committee’s goal of tying pay to performance. Stock options only provide value if the market price of our stock increases and therefore the Compensation Committee felt options directly incentivized our executives to increase shareholder value over the long-term. In determining the total number of options to be granted to participants in the program in a given year, the Board of Directors, takes into account factors such as: (i) the total number of shares of common stock outstanding; (ii) the total number of shares of common stock which remain available for grant under the Company’s various stock option plans; (iii) the need to have an appropriate balance between currently paid and longer-term compensation, and between cash and equity compensation, and (iv) the performance of the Company. The Company presently maintains its 2022 Employee Stock Option Plan (the “2022 Employee Plan”), which provides for the issuance of incentive and nonqualified stock options having an exercise price equal to the fair market value of the Common Stock on the date the option is granted. Options granted under the 2022 Employee Plan vest 25% one day after the first anniversary of the grant date and 25% one day after each of the next three anniversaries. Under the terms of the 2022 Employee Plan, no option may be granted after the tenth anniversary of the effective date of the plan, i.e., after February 22, 2032. As of December 31, 2023, the number of shares available for grant under the 2022 Employee Plan was 3,250. Options granted by the Company to employees historically have had a term of ten years. Commencing in July 2006, the Company has granted only non-qualified stock options to its employees. The Board presently anticipates that the remaining options which it may grant under the 2022 Employee Plan will be non-qualified stock options. An optionee may exercise an option by delivering to the Company payment of the exercise price in cash, or, subject to the approval of the Company, by delivering of shares of the Company’s common stock, which would otherwise have been issuable to the optionee. The 2022 Employee Plan also provides for the cash settlement of option exercises, subject to the approval of the Company. Options granted under the 2022 Employee Plan are not transferable by the optionee other than by the will or by laws of descent and distribution. Each option is exercisable, during the lifetime of the optionee, only by the optionee. The 2022 Employee Plan is administered by our Board of Directors.
Summary Compensation Table
Summary Compensation Table The following table sets forth information concerning the compensation of our NEOs (i.e., the Company’s Principal Executive Officer and each of the two other most highly compensated executive officers of the Company for the fiscal years ended December 31, 2023 and 2022).
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) (1) | All Other Compensation ($) | Total ($) | | Walter C. Johnsen | 2023 | $966,681 | $519,188 | $316,250 | $42,487(2) | $1,844,535 | | Chairman & Chief Executive Officer | 2022 | $903,440 | — | $334,200 | $41,987(2) | $1,279,627 | | Brian S. Olschan | 2023 | $838,587 | $435,588 | $253,000 | $11,887(3) | $1,539,061 | | President & Chief Operating Officer | 2022 | $783,726 | — | $278,500 | $11,387(3) | $1,073,612 | | Paul G. Driscoll | 2023 | $506,993 | $260,294 | $158,125 | $11,887(3) | $937,298 | | Vice President & Chief Financial Officer | 2022 | $473,250 | — | $167,100 | $11,387(3) | $652,312 |
Summary Compensation Table
| (1) Represents the aggregate fair value of stock options on grant date rather than an amount paid to or realized by the NEO. For information on valuation assumptions, refer to Note 11, “Stock Option Plans”, in the notes to the Company’s financial statements in its Annual Report on Form 10-K for the year ended December 31, 2023. |
Summary Compensation Table
Each option vests in four equal annual installments commencing one day after the first anniversary of the grant date and thereafter one day after each of the three succeeding annual anniversary dates of the grant date. The exercise price of each option is equal to 100 percent of the fair market value on the grant date. The fair market value was determined to be the closing price of the Common Stock on the day on which the option is granted. The options granted to NEOs in 2023 had an exercise price of $30.47 per share. Options granted to NEOs in 2022 had an exercise price of $29.35 per share. The number of shares underlying the options granted to the NEOs in 2023 and 2022 were as follows:
Summary Compensation Table
| | Number of Shares Underlying Options | | | Name | 2023 | 2022 | | Walter C. Johnsen | 25,000 | 30,000 | | Brian S. Olschan | 20,000 | 25,000 | | Paul G. Driscoll | 12,500 | 15,000 |
Summary Compensation Table
| (2) Consists of reimbursement of out-of-pocket health care expenses, payment of life insurance premiums and Company matching contribution to the Company’s 401(k) Profit Sharing Plan. |
Summary Compensation Table
| (3) Consists of reimbursement of payments of life insurance premiums and Company matching contribution to the Company’s 401(k) Profit Sharing Plan. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table shows outstanding stock option awards classified as exercisable and unexercisable as of December 31, 2023 for each of the NEOs.
Outstanding Equity Awards at Fiscal Year-End
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date (1) | | Walter C. Johnsen | 40,000 | — | $16.92 | 7/30/24 | | | 6,000 | — | $19.18 | 2/24/25 | | | 45,000 | — | $21.49 | 8/3/26 | | | 60,000 | — | $23.99 | 1/24/27 | | | 45,000 | — | $24.92 | 10/16/27 | | | 13,500 | — | $23.94 | 1/23/28 | | | 45,000 | — | $22.66 | 8/8/28 | | | 25,000 | — | $19.48 | 8/7/29 | | | 7,500 | 2,500 | $24.06 | 1/21/30 | | | 33,750 | 11,250 | $23.05 | 8/12/30 | | | 10,000 | 10,000 | $32.64 | 1/26/31 | | | 22,500 | 22,500 | $39.56 | 8/11/31 | | | 7,500 | 22,500 | $29.35 | 8/3/32 | | | | 25,000 | $30.47 | 8/2/33 | | Brian S. Olschan | 4,000 | — | $19.18 | 2/24/25 | | | 35,000 | — | $21.49 | 8/3/26 | | | 45,000 | — | $23.99 | 1/24/27 | | | 35,000 | — | $24.92 | 10/16/27 | | | 9,200 | — | $23.94 | 1/23/28 | | | 35,000 | — | $22.66 | 8/8/28 | | | 20,000 | — | $19.48 | 8/7/29 | | | 5,625 | 1,875 | $24.06 | 1/21/30 | | | 26,250 | 8,750 | $23.05 | 8/12/30 | | | 7,500 | 7,500 | $32.64 | 1/26/31 | | | 17,500 | 17,500 | $39.56 | 8/11/31 | | | 6,250 | 18,750 | $29.35 | 8/3/32 | | | | 20,000 | $30.47 | 8/2/33 |
Outstanding Equity Awards at Fiscal Year-End
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date (1) | | Paul G. Driscoll | 15,000 | — | $16.92 | 7/30/24 | | | 15,000 | — | $21.49 | 8/3/26 | | | 15,000 | — | $24.92 | 10/16/27 | | | 20,000 | — | $22.66 | 8/8/28 | | | 15,000 | — | $19.48 | 8/7/29 | | | 1,875 | 625 | $24.06 | 1/21/30 | | | 15,000 | 5,000 | $23.05 | 8/12/30 | | | 5,000 | 5,000 | $32.64 | 1/26/31 | | | 10,000 | 10,000 | $39.56 | 8/11/31 | | | 3,750 | 11,250 | $29.35 | 8/3/32 | | | | 12,500 | $30.47 | 8/2/33 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Options vest in four equal parts beginning one day after the first anniversary of grant date and thereafter one day after each of the three succeeding annual anniversary dates of the grant date. Each option has a ten-year term. |
Performance
| Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based On Total Shareholder Return | Net Income ($OOO’s) | | 2023 | $1,844,535 | $2,457,648(1) | $1,238,180(4) | $1,675,367 | $145 | $8,148(7) | | 2022 | $1,279,627 | $996,952(2) | $862,962(5) | $682,743 | $75 | $3,037 | | 2021 | $1,772,823 | $1,553,068(3) | $1,149,527(6) | $1,012,868 | $111 | $10,148 |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Stock Options
| Name | Fees Earned or Paid in Cash | Additional Cash Paid (1) | Total | | Brian K. Barker | $68,960 | $48,500 | $117,460 | | Rex L. Davidson | $73,280 | $48,500 | $121,780 | | Richmond Y. Holden, Jr. | $77,900 | $48,500 | $126,400 | | Susan H. Murphy | $68,960 | $48,500 | $117,460 | | Stevenson E. Ward III | $78,945 | $48,500 | $127,445 |