DEF 14A of Friedman Industries Inc
Filed Jul 28, 2023 · FY20230001437749-23-021033
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The persons who are elected directors will hold office until the next Annual Meeting of Shareholders and until their successors are elected and shall qualify. The Board of Directors consists of eight members. It is intended that the persons appointed as proxies to act on behalf of shareholders in the enclosed proxy will vote for the election of the eight nominees named below. The management of the Company does not contemplate that any of such nominees will become unavailable to serve as a director. However, should any nominee be unable to serve as a director or become unavailable for any reason, proxies which do not withhold authority to vote for that nominee may be voted for another nominee to be selected by the Nominating Committee of the Board of Directors. The enclosed form of proxy provides a means for shareholders to vote for all of the nominees for director listed therein, to withhold authority to vote for one or more of such nominees or to withhold authority to vote for all of such nominees. If you hold shares of our Common Stock through a broker-dealer, bank nominee, custodian or other securities intermediary, the intermediary will not vote those shares for the election of any nominee for director unless you give the intermediary specific voting instructions on a timely basis directing the intermediary to vote for such nominee. Each director nominee receiving a plurality of votes cast for will be elected as a director. Broker non-votes and withheld votes will have no effect on the plurality vote regarding election of directors. The following table sets forth the names of the nominees for election to the Board of Directors, the principal occupation or employment of each of the nominees, the period during which each nominee has served as a director of the Company and the age of each nominee:
ELECTION OF DIRECTORS
| Nominee | Principal Occupation and Business Experience for more than the Last Five Years | Director Since | Age | | Mike Taylor | President and Chief Executive Officer of the Company since September 2019; formerly Interim President and Interim Chief Executive Officer since February 2019; formerly retired; formerly President, Cargill Metals Supply Chain (steel processing and distribution), The Woodlands, Texas | 2016 | 64 | | Durga D. Agrawal | President, Piping Technology & Products, Inc. (pipe fabrication), Houston, Texas | 2006 | 78 | | Max Reichenthal | President, Texas Iron and Metal (steel product sales), Houston, Texas | 2008 | 65 | | Sandy Scott | Retired; Current director on the boards of Terra Nova Solutions, Rowland Inc., CEDA International, DWD International LLC and Goodwill of Houston; formerly Chief Executive Officer, Sprint Industrial Holdings (rental equipment and transportation company), Houston, Texas | 2022 | 59 | | Joel Spira | Private investor, Houston, Texas; formerly Partner, Weinstein Spira & Company (accounting firm), Houston, Texas | 2007 | 85 | | Tim Stevenson | Chief Executive Officer and Founder, Metal Edge Partners (metals price risk management and strategic advisory services), Plymouth, Minnesota; formerly Managing Director, Cargill Risk Management (price risk management services), Hopkins, Minnesota; formerly North American Lead of Derivatives and Analysis, Cargill, Inc. (steel processor), Hopkins, Minnesota | 2019 | 56 | | Sharon Taylor | Executive Vice President and Chief Financial Officer, Martin Midstream Partners LP and Martin Resource Management Corporation (terminalling, processing, transportation, storage and packaging services for petroleum products and by-products); formerly Director of Finance and Investor Relations, Martin Midstream Partners LP; formerly Business Analyst – Finance, Martin Midstream Partners LP, Kilgore, Texas | 2022 | 58 | | Joe L. Williams | Partner, Pozmantier, Williams & Stone Insurance Consultants, LLC (insurance and risk management consultants), Houston, Texas | 2000 | 77 |
ELECTION OF DIRECTORS
The Board of Directors recommends voting “FOR” the election of each of the nominees named above.
BOARD OF DIRECTORS
BOARD OF DIRECTORS Our business and affairs are managed under the direction of the Board of Directors.
Director Qualifications
Director Qualifications As set forth in the Charter of the Nominating Committee of the Board of Directors, a majority of the members of the Board of Directors must qualify as independent directors in accordance with the applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the rules promulgated thereunder and the applicable rules of the NYSE – American. In addition, the Nominating Committee considers the following qualifications in assessing director candidates: (a) an understanding of business and financial affairs and the complexities of a business organization; (b) a record of competence and accomplishments through leadership in industry, education, the professions or government; (c) a genuine interest in representing all of the shareholders and the interest of the Company overall; (d) a willingness to maintain a committed relationship with the Company as a director; (e) a willingness and ability to spend the necessary time required to function effectively as a director; (f) a reputation for honesty and integrity; and (g) such other additional qualifications as the Nominating Committee may establish from time to time, taking into account the composition and expertise of the entire Board of Directors. In addition, the following experience, qualifications, attributes and skills were considered in determining the current nominees for director: Mr. Taylor is currently the President and Chief Executive Officer of the Company and has past experience as President of Cargill Metals Supply Chain, a large steel processing and distribution business. His executive experience and his extensive knowledge of the steel industry qualify him to serve as a member of our Board of Directors. Mr. Agrawal has past and current experience as an executive officer and is currently the President of Piping Technology & Products Inc. in Houston, Texas. His independence, his executive experience and broad operational and business experience qualify him to serve as a member of our Board of Directors. Mr. Reichenthal has past and current experience as an executive officer and is currently the President of Texas Iron and Metal in Houston, Texas. He is thoroughly familiar with the steel and pipe business. His independence, his business experience and his experience as an executive officer qualify him to serve as a member of our Board of Directors. Ms. Scott has past experience as an executive officer and director experience with companies in a variety of industries. Her independence, executive experience and director experience qualify her to serve as a member of our Board of Directors. Mr. Spira has a background in accounting and finance. He was formerly a partner at Weinstein Spira & Company, an accounting firm in Houston, Texas. His independence, his executive experience and his background in accounting and financial matters qualify him to serve as a member of our Board of Directors. Mr. Stevenson is the founding partner of Metal Edge Partners, a risk management and advisory firm that focuses its services in the metals industry, located in Plymouth, Minnesota. Mr. Stevenson is a Chartered Financial Analyst (CFA) as well as a Commodity Trading Advisor (CTA). Mr. Stevenson’s prior experience includes working for a large steel service center where he traded steel derivatives and was on the mergers and acquisitions team. He also was an analyst and portfolio manager at several hedge funds and a mutual fund company. His unique combination of steel industry, risk management and finance experience qualify him to serve as a member of our Board of Directors. Ms. Taylor has past and current experience in management level finance and investor relations positions. Ms. Taylor qualifies as a “financial expert” as defined by the U.S. Securities and Exchange Commission (the “SEC”). Ms. Taylor is not related to Mike Taylor, the Company’s President and Chief Executive Officer. Ms. Taylor’s executive experience in finance and investor relations qualify her to serve as a member of our Board of Directors. Mr. Williams has a broad range of experience in insurance and risk management. He has served as an executive officer in several large insurance businesses and is currently a partner of Pozmantier, Williams & Stone Insurance Consultants, LLC in Houston, Texas. His independence, insight into business operations and executive experience qualify him to serve as a member of our Board of Directors.
Identifying and Evaluating Nominees for Directors
Identifying and Evaluating Nominees for Directors The Nominating Committee of the Board of Directors utilizes a variety of methods for identifying and evaluating nominees for director. The Nominating Committee assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Nominating Committee will consider various potential candidates for director. Candidates may come to the attention of the Nominating Committee through current Board members, professional search firms, shareholders or other persons. Shareholders may recommend nominees by contacting the Nominating Committee at P.O. Box 2192, Longview, Texas 75606. With respect to appropriately qualified nominees recommended by shareholders, our Nominating Committee will consider such nominees in the same manner as it evaluates other potential director nominees. In evaluating director nominations, the Nominating Committee seeks to achieve a diverse range of perspectives based on each Board member’s knowledge, life experiences, capabilities and background. While the Nominating Committee does not have a formal policy with respect to diversity, it does attempt to identify director nominees who can provide a diverse perspective to the Board of Directors.
Director Compensation
Director Compensation For the fiscal year ended March 31, 2023, directors were paid $9,000 per quarter. In addition, the Chairman and members of the Audit Committee received $3,000 and $2,250, respectively, per quarter. Mr. Taylor did not receive any compensation for serving as a director. Except for Mr. Taylor, who is a Named Executive Officer (as defined in “Executive Compensation” below), the following table summarizes compensation paid to each director during the fiscal year ended March 31, 2023.
Director Compensation Table for Fiscal Year 2023
Director Compensation Table for Fiscal Year 2023
Director Compensation Table for Fiscal Year 2023
| Name | Fees Earned or Paid in Cash ($) | All Other Compensation ($) (1) | Total ($) | | Durga Agrawal | 45,000 | 10,000 | 55,000 | | Max Reichenthal | 45,000 | 10,000 | 55,000 | | Sandy Scott (2) | 21,000 | 10,000 | 31,000 | | Joel Spira | 48,000 | 10,000 | 58,000 | | Tim Stevenson | 36,000 | 10,000 | 46,000 | | Sharon Taylor (2) | 21,000 | 10,000 | 31,000 | | Joe L. Williams | 36,000 | 10,000 | 46,000 |
Director Compensation Table for Fiscal Year 2023
| (1) All other compensation consists of restricted stock awards issued to directors during the fiscal year ended March 31, 2023. |
Director Compensation Table for Fiscal Year 2023
| (2) Ms. Scott and Ms. Taylor were added to the Board of Directors during the fiscal year ended March 31, 2023. |
Procedures and Processes for Determining Executive and Director Compensation
Procedures and Processes for Determining Executive and Director Compensation The Compensation Committee of the Board of Directors is responsible for reviewing and recommending to the full Board of Directors the compensation of our Chief Executive Officer and our other Named Executive Officers. The Committee also reviews and discusses with the Chief Executive Officer, and recommends to the full Board of Directors, the compensation for all other officers of the Company. The Committee may retain compensation consultants or other advisers it deems appropriate. Based on the Committee’s analysis of relevant data, the Committee determines its recommendation regarding the compensation of our Chief Executive Officer during an executive session of the Committee at which the Chief Executive Officer is not present. Our Chief Executive Officer makes recommendations regarding the compensation of our other executive officers and other officers to the Committee. The Committee considers the recommendations, discusses the recommendations with our Chief Executive Officer, may discuss the matter in executive session and then makes recommendations to the full Board of Directors. The final determination as to the compensation of the Chief Executive Officer and all other officers of the Company is made by the full Board of Directors based on the recommendations of the Committee. The Board of Directors, or an authorized committee thereof, may from time to time review and determine the form and amount of director compensation, including cash, equity-based awards and other director compensation to maintain a transparent and readily understandable compensation program which ensures that the directors continue to receive fair and appropriate compensation for the time commitment required to discharge their duties as directors for a company of our size.
Summary Compensation Table
Summary Compensation Table The following table sets forth certain information regarding compensation paid for services rendered during the fiscal years ended March 31, 2023 and March 31, 2022, to each of our executive officers, including our principal executive officer and our principal financial officer (collectively, the “Named Executive Officers”):
Summary Compensation Table for Fiscal Year 2023
Summary Compensation Table for Fiscal Year 2023
Summary Compensation Table for Fiscal Year 2023
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | | Michael J. Taylor | 2023 | 279,996 | 809,369 | — | 4,165 | 1,093,530 | | President & Chief Executive Officer | 2022 | 279,996 | 1,198,786 | — | 5,233 | 1,484,015 | | Alex LaRue | 2023 | 180,000 | 539,577 | — | 7,470 | 727,047 | | Chief Financial Officer — Secretary & Treasurer | 2022 | 180,000 | 799,191 | — | 11,587 | 990,778 |
Summary Compensation Table for Fiscal Year 2023
| (1) Represents base salary. |
Summary Compensation Table for Fiscal Year 2023
| (2) Includes quarterly bonuses based on a percentage of our quarterly net income and Christmas bonuses, each of which is paid at the discretion of the Board of Directors. |
Summary Compensation Table for Fiscal Year 2023
| (3) Reflects the aggregate grant date fair value for stock awards computed in accordance with FASB ASC Topic 718. |
Summary Compensation Table for Fiscal Year 2023
| (4) Reflects contributions by the Company to the Friedman Industries, Inc. Employees’ Retirement and 401(k) Plan for the benefit of the Named Executive Officers and cash dividends received related to restricted shares awarded under the Company’s restricted stock plan. |
Outstanding Equity Awards at Fiscal Year-End 2023
Outstanding Equity Awards at Fiscal Year-End 2023
Outstanding Equity Awards at Fiscal Year-End 2023
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value Of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | (a) | (b) | (c) | (d) | (e) | (f)(g) | (h) | | (i) | (j) | | Michael J. Taylor | ____ | ____ | ____ | ____ | ____ | 30,000(1) | $340,200 | ____ | ____ | | Alex LaRue | ____ | ____ | ____ | ____ | ____ | 3,000(2) | $34,020 | ____ | ____ |
Outstanding Equity Awards at Fiscal Year-End 2023
| (1) The unvested stock awards for Mr. Taylor will vest in 10,000 share increments on April 1, 2023, April 1, 2024 and April 1 2025. |
Outstanding Equity Awards at Fiscal Year-End 2023
| (2) The unvested stock awards for Mr. LaRue will vest in 1,000 share increments on April 1, 2023, April 1, 2024 and April 1 2025. |
Outstanding Equity Awards at Fiscal Year-End 2023
| (3) Based on the closing price of our common stock on March 31, 2023 of $11.34. |
Potential Payments upon Termination or Change-in-Control
Potential Payments upon Termination or Change-in-Control The Named Executive Officers will receive the same benefits as our other employees upon termination of their employment. We maintain the Friedman Industries, Inc. Employees’ Retirement and 401(k) Plan (the “Plan”), a defined contribution and 401(k) plan. The Plan covers substantially all employees, including officers, and employees fully vest in the Plan upon six years of service. The Company maintains a life insurance policy on Mr. LaRue but does not currently have a policy in place on Mr. Taylor. From time to time and in its discretion, the Board has approved the transfer of the applicable policy to an officer upon their retirement. At March 31, 2023, the cash surrender value of the life insurance policy held by the Company on Mr. LaRue was approximately $8,000. None of the Named Executive Officers has a change-in-control agreement with us.
Pay Versus Performance
Pay Versus Performance In accordance with the SEC’s disclosure requirements, we are providing the following information about the relationship between executive compensation, our total shareholder return and net income for the most recent two years.
Pay Versus Performance Table
Pay Versus Performance Table The following table sets forth information concerning the compensation of our named executive officers for each of the fiscal years ended March 31, 2023 and 2022, and our financial performance for each such fiscal year. The amounts shown for “Compensation Actually Paid” reflects the Summary Compensation Table total with certain adjustments as described below, but does not reflect compensation actually earned, realized, or received by our NEOs.
Pay Versus Performance Table
| Year (1) | Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO ($) (2) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non- PEO NEOs ($) (2) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($) | Net Earnings ($) | | 2023 | 1,093,530 | 1,166,430 | 727,047 | 734,337 | 140.17 | 21,344,000 | | 2022 | 1,484,015 | 1,513,515 | 990,778 | 1,071,728 | 108.90 | 14,066,000 |
Pay Versus Performance Table
(1) For each fiscal year shown, our principal executive officers, or PEOs and our remaining NEOs or Non-PEO NEOs, represent the following individuals:
Pay Versus Performance Table
| Year | PEOs | Non-PEO NEOs | | 2023 | Michael J. Taylor | Alex LaRue | | 2022 | Michael J. Taylor | Alex LaRue |
Pay Versus Performance Table
(2) Amounts represent compensation actually paid to our PEO and the average compensation actually paid to our Non-PEO NEOs for the relevant fiscal year as determined under Item 402(v)(2)(iii) of Regulation S-K to calculate “compensation actually paid”, which include the following adjustments:
Pay Versus Performance Table
| Compensation actually paid to PEO and average compensation actually paid to Non-PEO NEOs |
Pay Versus Performance Table
| As Reported in Summary Compensation Table(a) | | | Equity Award Adjustments | | | | | | Year | Total Compensation ($) | Deduct Stock and Option Awards ($) | Add Fair Value as of Year End of Awards Granted During Year that Remain Outstanding and Unvested as of Year End(b) ($) | Add Year over Year Change in Fair Value of Awards Granted in Prior Year that Remain Outstanding and Unvested as of Year End(c) ($) | Add Fair Value as of Vesting Date of Awards Granted During Year that Vested During Year(d) ($) | Add Year over Year Change in Fair Value of Awards Granted in Prior Year that Vest During Year(e) ($) | Compensation “Actually Paid” (f) ($) | | PEO | | | | | | | | | 2023 | 1,093,530 | - | - | 50,600 | - | 22,300 | 1,166,430 | | 2022 | 1,484,015 | - | - | 28,800 | - | 700 | 1,513,515 | | Non-PEO NEOs | | | | | | | | | 2023 | 727,047 | - | - | 5,060 | - | 2,230 | 734,337 | | 2022 | 990,778 | - | - | 2,880 | - | 78,070 | 1,071,728 |
Pay Versus Performance Table
| (a) Reflects, for our PEO, the applicable amounts reported in the Summary Compensation Table and for the Non-PEO NEOs, the average of the applicable amounts reported in the Summary Compensation Table in each of the fiscal years indicated. | | (b) Reflects either (i) the fair value, with respect to our PEO, or (ii) the average of the fair value, with respect to the Non-PEO NEOs, in each case as of March 31 of the covered fiscal year of awards granted in the covered fiscal year that remained outstanding and unvested (in whole or in part) as of the end of the covered fiscal year. | | (c) Reflects either (i) the change in fair value, with respect to our PEO, or (ii) the average of the change in fair value, with respect to the Non-PEO NEOs, in each case from March 31 of the prior fiscal year to March 31 of the covered fiscal year of awards granted in a prior fiscal year that remained outstanding and unvested (in whole or in part) as of the end of the covered fiscal year. | | (d) Reflects either (i) the fair value, with respect to our PEO, or (ii) the average of the fair value, with respect to the Non-PEO NEOs, in each case, as of the day awards became vested in the covered fiscal year, when such awards were also granted in the covered fiscal year. | | (e) Reflects either (i) the change in fair value, with respect to our PEO, or (ii) the average of the change in fair value, with respect to the Non-PEO NEOs, in each case from March 31 of the prior fiscal year to the day awards became vested in the covered fiscal year, when such awards were granted in a prior fiscal year. | | (f) Reflects, for our PEO, the total compensation actually paid and for the Non-PEO NEOs, the average total compensation actually paid in each of the fiscal years indicated. |