UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
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Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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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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HOUSTON
WIRE & CABLE COMPANY
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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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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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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Party:
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Date
Filed:
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HOUSTON
WIRE & CABLE COMPANY
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD MAY 8, 2008
To Our
Stockholders:
The 2008
annual meeting of stockholders of Houston Wire & Cable Company will be held
at our corporate headquarters, 10201 North Loop East, Houston, Texas 77029
on Thursday, May 8, 2008, at 8:30 a.m., Central Time. The 2008
annual meeting of stockholders is being held for the following
purposes:
1. To
elect seven directors to serve on the Board of Directors until the 2009 annual
meeting of stockholders and until their successors have been elected and
qualified (Proposal No. 1);
2. To
ratify the selection of Ernst & Young LLP as the Company’s independent
registered public accounting firm for the year ending December 31, 2008
(Proposal No. 2); and
3. To
transact such other business as may properly come before the annual meeting and
any adjournment or postponement thereof.
Only
stockholders of record at the close of business on March 10, 2008 are entitled
to vote at the meeting or at any postponement or adjournment
thereof.
Please
act promptly to vote your shares with respect to the proposals described
above. You may vote your shares by marking, signing, dating and
mailing the enclosed proxy card. You may also vote by telephone or
through the Internet by following the instructions set forth on the proxy card.
If you attend the annual meeting, you may vote in person, even if you have
previously submitted a proxy.
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By
Order of the Board of Directors,
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Nicol G. Graham
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Vice
President, Chief Financial Officer, Treasurer and
Secretary
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March 28,
2008
TABLE OF CONTENTS
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HOUSTON
WIRE & CABLE COMPANY
10201
North Loop East
Houston,
Texas 77029
PROXY
STATEMENT
This
proxy statement contains information related to the 2008 annual meeting of
stockholders of Houston Wire & Cable Company, a Delaware corporation (the
“Company,” “we” or “us”) that will be held at our corporate headquarters, 10201
North Loop East, Houston, Texas 77029 on Thursday, May 8, 2008, at
8:30 a.m., Central Time, and at any postponements or adjournments
thereof. We are first mailing notice of availability of this proxy
statement and the accompanying proxy card, annual report to stockholders and
annual report on Form 10-K for the year ended December 31, 2007, on or
about March 28, 2008.
What
is the purpose of this proxy statement?
The
purpose of this proxy statement is to provide information regarding matters to
be voted on at the 2008 annual meeting of our
stockholders. Additionally, it contains certain information that the
Securities and Exchange Commission (the “SEC”) requires us to provide annually
to stockholders. The proxy statement is also the document used by our
board to solicit proxies to be used at the 2008 annual
meeting. Proxies are solicited to give all stockholders of record an
opportunity to vote on the matters to be presented at the annual meeting, even
if they cannot attend the meeting. The board has designated Charles
A. Sorrentino and Scott L. Thompson as proxies, who will vote the shares
represented by proxies at the annual meeting in accordance with the
stockholders’ instructions.
What proposals will be voted on at the annual
meeting?
Stockholders
will vote on the following proposals at the annual meeting:
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the
election of seven directors, each to serve until the next annual meeting
and until a successor is duly elected and qualified
(Proposal No. 1);
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the
ratification of the selection of Ernst & Young LLP as the Company’s
independent registered public accounting firm (Proposal No. 2);
and
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any
other business properly coming before the annual meeting and any
adjournment or postponement
thereof.
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Who is entitled to vote?
Only
stockholders of record at the close of business on the record date, March 10,
2008, are entitled to receive notice of the annual meeting and to vote the
shares of common stock that they held on that date at the meeting, or any
postponement or adjournment of the meeting. If your shares are held
in “street name,” please refer to the information forwarded to you by your bank,
broker or other holder of record to see what you must do to vote your
shares.
A
complete list of stockholders entitled to vote at the annual meeting will be
available for examination by any stockholder at our corporate headquarters,
10201 North Loop East, Houston, Texas 77029, during normal business hours
for a period of ten days before the annual meeting and at the annual
meeting.
What is the difference between a stockholder of record and a
beneficial holder of shares?
If your
shares are registered directly in your name with our transfer agent, American
Stock Transfer and Trust Company, you are considered a stockholder of record
with respect to those shares. If this is the case, the stockholder
proxy materials have been sent or provided directly to you by us.
If your
shares are held in a stock brokerage account or by a bank or other nominee (also
known as held “in street name”), you are considered the “beneficial holder” of
the shares, and your brokerage firm, bank or other nominee is the stockholder of
record of those shares. If this is the case, the proxy materials have
been forwarded to you by your brokerage firm, bank or other
nominee. As the beneficial holder, you have the right to direct your
broker, bank or other nominee how to vote your shares. Please contact
your broker, bank, or other nominee for instructions on how to vote any shares
you beneficially own.
Who can attend the meeting?
All
stockholders of record as of March 10, 2008, or their duly appointed proxies,
may attend the meeting. If you hold your shares in “street name,” you
will need to bring a copy of a brokerage statement reflecting your stock
ownership as of the record date and check in at the registration desk at the
meeting.
What constitutes a quorum?
A quorum
of stockholders is necessary to hold the annual meeting. The presence
at the meeting, in person or by proxy, of the holders of a majority of the
shares of common stock outstanding on the record date will constitute a
quorum. As of the record date, 18,577,727 shares of our common stock
were outstanding. Shares covered by proxies received but marked as
abstentions will be considered present at the meeting for purposes of
establishing a quorum.
How do I vote?
You may
vote in person at the meeting or by proxy by any of the following
methods:
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Telephoning
the toll-free number listed on the proxy
card;
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Using
the Internet site listed on the proxy
card; or
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Marking,
dating, signing and returning the enclosed proxy
card.
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We
recommend that you vote by proxy even if you plan to attend the meeting so that
we will know as soon as possible that enough votes will be present for us to
hold the meeting. If you vote by proxy, your shares will be voted as
you direct on the proxy card or by telephone or via the Internet. If
you are a stockholder of record and attend the meeting, you may vote at the
meeting or deliver your completed proxy card in person, even if you previously
sent in a proxy card or voted by telephone or via the Internet.
If your
shares are held in “street name,” please refer to the information forwarded to
you by your bank, broker or other holder of record to see what you must do in
order to vote your shares. If you are a “street name” stockholder and
you wish to vote in person at the meeting, you will need to obtain a proxy from
the institution that holds your shares and present it to the inspector of
elections with your ballot when you vote at the annual meeting.
Can I change my vote after I give my proxy?
You can
revoke your proxy, whether it was given by telephone, Internet or mail, before
it is voted by:
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Delivering
to our Secretary at the address on the first page of this proxy statement
a written notice of revocation of your proxy before or at the annual
meeting and prior to voting;
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Delivering
a new duly executed proxy bearing a later date, including a proxy given by
telephone or via the
Internet; or
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Voting
in person at the annual meeting.
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The last
vote you submit chronologically (by any means) will supersede your prior
vote(s).
If your
shares are held in a “street name,” you may vote in person at the annual meeting
if you obtain a proxy as described in the answer to the previous
question. The powers of the proxy holders with regard to your shares
will be suspended if you attend the meeting in person and so request, although
attendance at the meeting will not, by itself, revoke a previously granted
proxy.
How many votes are required for the proposals to
pass?
Each
outstanding share entitles its holder to cast one vote on each matter to be
voted upon at the annual meeting. Directors are elected by a
plurality vote, meaning that the seven director nominees receiving the greatest
numbers of votes will be elected. The proposal to ratify the
selection of our independent registered public accounting firm requires the
approval of a majority of the votes present, in person or by proxy, and entitled
to vote on the matter.
How
are abstentions and broker non-votes
treated?
If a
stockholder withholds authority to vote, or abstains from voting, on any
proposal, it will have the same effect as a vote “AGAINST” that
proposal.
Broker
non-votes with respect to any matter will have no effect on the outcome of the
vote on that matter. A broker “non-vote” occurs on a proposal when
shares held of record by a broker are present or represented at the meeting but
the broker is not permitted to vote on that proposal without instruction from
the beneficial owner of the shares and no instruction has been
given.
What if I do not specify a choice for a matter when returning a
proxy?
Stockholders
should specify their choice for each matter on the enclosed proxy. If
no specific instructions are given, proxies that are signed and returned will be
voted “FOR” the election of all seven nominees for director and “FOR” the
ratification of the appointment of Ernst & Young LLP as our independent
registered public accounting firm.
Will anyone contact me concerning this vote?
No
arrangements or contracts have been made or entered into with any solicitors as
of the date of this proxy statement, although we reserve the right to engage
solicitors if we deem them necessary. If done, such solicitations may
be made by mail, telephone, facsimile, e-mail or personal
interviews.
What
are the board’s recommendations?
Unless
you give other instructions on your proxy card, the persons named as proxy
holders on the enclosed proxy card will vote in accordance with the
recommendations of the board of directors.
The
board’s recommendations, together with the description of each proposal, are set
forth in this proxy statement. In summary, the board recommends that
you vote:
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“FOR”
the election of nominees for director (see page 5);
and
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“FOR”
the ratification of Ernst & Young LLP as our independent registered
public accounting firm
(see page 23).
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What happens if additional matters are presented at the
annual meeting?
Other
than the two proposals described in this proxy statement, we are not aware of
any other business to be acted upon at the annual meeting. If you
grant a proxy, the persons named as proxy holders on the enclosed proxy card
will vote your shares on any additional matters properly presented for a vote at
the meeting as recommended by the board or, if no recommendation is given, in
their own discretion.
Who will tabulate and certify the vote?
Representatives
of Broadridge Financial Solutions, Inc. will tabulate the votes. A
representative of Schiff Hardin LLP, the Company’s legal counsel, will be the
inspector of elections.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth the beneficial ownership of shares of our common
stock for (i) each stockholder who is known by us to own beneficially more
than 5% of the outstanding shares of our common stock, (ii) each of our
directors, (iii) each of our executive officers named in the Summary
Compensation Table on page 16 and (iv) all of our directors and
executive officers as a group. The information below is as of March
10, 2008, unless otherwise indicated.
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Beneficial Owner
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Beneficial
Ownership
Common Stock
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5%
Stockholders
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Number
of Shares(1)
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Percentage
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Neuberger
Berman, LLC(2)
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Investment
Management
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605
Third Avenue
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New
York, NY 10019
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3,076,264
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16.6%
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Royce
& Associates(3)
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1414
Avenue of the Americas
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New
York, NY 10019
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2,623,375
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14.1%
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Capital
Research Global Investors(4)
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333
South Hope Street
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Los
Angeles, CA 90071-1406
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1,838,900
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9.9%
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Lazard
Asset Management LLC(5)
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30
Rockefeller Plaza
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New
York, NY 10112-6300
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1,169,660
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6.3%
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| River Road Asset Management LLC(6) | ||
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Louisville,
KY 40202
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1,142,713
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6.2%
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Executive
Officers and Directors
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Charles
A. Sorrentino
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1,304,438
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7.0%
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Nicol
G. Graham(7)
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167,025
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*
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I.
Stewart Farwell
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5,000
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*
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Peter
M. Gotsch
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10,746
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*
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Robert
G. Hogan
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1,000
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*
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Wilson
B. Sexton
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45,000
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*
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William
H. Sheffield
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2,000
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*
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Scott
L. Thompson
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15,000
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*
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All
directors and executive officers as a group (8 persons)(7)
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1,550,209
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8.3%
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*
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Less
than 1%
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(1)
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The
information contained in this table was furnished to us by the individuals
named in the table and reflects the SEC’s definition of beneficial
ownership. Except as noted below, the nature of beneficial ownership for
shares shown in this table is sole voting and/or investment power
(including shares as to which spouses and minor children of the
individuals covered by this table have such
power).
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(2)
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As
reported in an amendment to Statement on Schedule 13G filed with the SEC
on behalf of Neuberger Berman, Inc., Neuberger Berman LLC, Neuberger
Berman Management Inc. and Neuberger Berman Equity Funds on February 12,
2008. The Neuberger Berman entities had sole voting power with
respect to an aggregate of 232,646 shares, shared voting power with
respect to an aggregate of 2,074,902 shares and shared investment power
with respect to an aggregate of 3,076,264
shares.
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(3)
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As
reported in an amendment to Statement on Schedule 13G filed with the SEC
on behalf of Royce & Associates, LLC on January 30,
2008.
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(4)
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As
reported in a Statement on Schedule 13G filed with the SEC on behalf of
Capital Research Global Investors, a division of Capital Research and
Management Company, on February 11, 2008. Capital Research
Global Investors expressly disclaims that it is the beneficial owner of
these shares.
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(5)
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As
reported in a Statement on Schedule 13G filed with the SEC on behalf of
Lazard Asset Management LLC on February 7, 2008. Lazard Asset
Management LLC had sole voting power with respect to 1,055,260
shares.
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(6)
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As
reported in a Statement on Schedule 13G filed with the SEC on behalf of
River Road Asset Management LLC on February 13, 2008. River
Road Asset Management LLC had sole voting power with respect to 883,383
shares.
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(7)
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Includes
60,772 shares owned by the Nicol Gordon Graham IRA—Chase Bank and 4,625
shares issuable upon the exercise of options that could be exercised
within 60 days after March 10,
2008.
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PROPOSAL NO.
1 — ELECTION OF DIRECTORS
Our
amended and restated bylaws provide for each director to stand for election each
year at our annual meeting and to serve until the next annual meeting and until
a successor is duly elected and qualified.
The board
of directors approved the slate of seven nominees upon the recommendation of the
Nominating and Corporate Governance Committee. The board recommends
that the stockholders elect the nominees designated below to serve until our
annual meeting and until their successors are duly elected and
qualified. The nominees for election to the office of director, and
certain information with respect to their backgrounds, are set forth
below.
Six of
the nominees named herein presently serve as members of the board of
directors. Robert G. Hogan, a director of the Company since 2005,
will not stand for re-election at the annual meeting. Michael T.
Campbell, a new director nominee, will stand for election to Mr. Hogan’s vacated
seat. Mr. Campbell was recommended for consideration as a director by
William H. Sheffield, a member of the Nominating and Corporate Governance
Committee. Mr. Sheffield received Mr. Campbell’s name from a former
partner and chief executive of one of the major global accounting firms, with
whom Mr. Sheffield serves on another board. In developing a list of
potential director candidates, the Nominating and Corporate Governance Committee
focused on a prospective director who, if elected, could be determined to be an
“audit committee financial expert,” as defined by the SEC, and could replace
Scott L. Thompson as chairman of the Audit Committee. The Nominating
and Corporate Governance Committee believes that, since Mr. Thompson was
appointed to the board chairmanship in November 2007, it is advisable to appoint
another director to serve as chairman of the Audit Committee.
It is the
intention of the persons named in the accompanying proxy card, unless otherwise
instructed, to vote to elect the nominees named below as the
directors. Each nominee has consented to serve as a director if
elected at this year’s annual meeting. In the event any nominee is
unable to serve as a director, discretionary authority is reserved to the board
to vote for a substitute. The board has no reason to believe that any
nominee named below will be unable to serve if elected.
Nominees Standing for Election to the Board
Charles
A. Sorrentino, age 63. Director since 1998.
President
and Chief Executive Officer of the Company
Mr. Sorrentino
joined us as President and Chief Executive Officer in 1998. Prior to
joining us, Mr. Sorrentino served as President of Pameco Corporation, a
national heating, ventilation, air conditioning and refrigeration distributor,
from 1994 to 1998. Pameco was a $600 million distributor that
was listed on the New York Stock Exchange following an initial public offering
in 1997 and was later merged into a larger company. Prior to working
with Pameco, Mr. Sorrentino served with PepsiCo, Inc. for nine
years. During this time, he held a variety of positions, including
Subsidiary President, Division Vice President and Region Vice
President. After completing college, Mr. Sorrentino served
twelve years with United Technologies (Sundstrand Corporation), a NYSE-listed
manufacturer of industrial, heating and air conditioning components in a variety
of engineering, sales, marketing and executive management
functions. Mr. Sorrentino earned an M.B.A. from the University
of Chicago and a B.S. in Mechanical Engineering from Southern Illinois
University. He also served in the United States Marine
Corps.
Michael
T. Campbell, age 63.
Member,
Board of Advisors of Lee Truck Equipment, Inc.
Mr.
Campbell has been a member of the Board of Advisors of Lee Truck Equipment, Inc.
(d/b/a Casper’s Truck Equipment) since July 2007. He performed
project work as a financial and accounting consultant both individually and with
Resources Connection from January 2003 to December 2005. He was an
accounting and audit partner with Deloitte & Touche prior to his retirement
in June 2001. Mr. Campbell is a Certified Public Accountant and holds
an M.B.A. degree from the University of Michigan and a B.S. degree from the
United States Military Academy.
I.
Stewart Farwell, age 66. Director since 2006.
Chief
Executive Officer, Rheem Manufacturing Company
Mr. Farwell
has been the CEO of Rheem Manufacturing Company since
February 2006. Mr. Farwell served as COO of Rheem from
June 2002 until July 2005 and he served as President of Rheem’s HVAC
Division from July 2000 until June 2002. Rheem
Manufacturing Company is a leading North American producer of water heaters,
central warm air furnaces and air conditioners, and swimming pool heaters and
commercial boilers.
Peter
M. Gotsch, age 43. Director since 1997.
Member,
Code Hennessy & Simmons LLC
Mr. Gotsch
has been a member of Code Hennessy & Simmons LLC since 1997 and
employed by its affiliates since 1989. He holds a B.A. degree from
St. Olaf College and an M.B.A. from Northwestern University. He
currently serves as the Chairman of the Board of The Hillman
Companies, Inc. and on the Board of Directors of Beacon Roofing
Supply, Inc.
Wilson
B. Sexton, age 71. Director since 2006.
Chairman
of the Board, SCP Pool Corporation
Mr. Sexton
has been the Chairman of the Board and a director of SCP Pool Corporation
since 1993. From January 1999 to May 2001, Mr. Sexton
also served as Chief Executive Officer of SCP Pool
Corporation. Mr. Sexton is a Certified Public Accountant and
holds a B.B.A. degree from Southern Methodist University. He is
currently on the Board of Directors of SCP Pool Corporation and Beacon Roofing
Supply, Inc.
William
H. Sheffield, age 59. Director since 2006.
Corporate
director
Mr. Sheffield
is a corporate director and serves on the boards of directors of Ontario Power
Generation Inc., Canada Post Corporation, Corby Distilleries Ltd. and Velan
Inc. Mr. Sheffield served as Chief Executive Officer of Sappi
Fine Paper from 2001 until 2003. He holds an MBA and a BSc, and is
recognized as a certified professional director by the National Association of
Corporate Directors in the United States and the Institute of Corporate
Directors in Canada.
Scott
L. Thompson, age 48. Director since 2006.
Non-executive
Chairman of the Board of Directors of the Company
Mr. Thompson
was elected non-executive Chairman in November,
2007. Mr. Thompson consults with private equity companies and
serves on the Boards of Directors of Conn’s, Inc. and UAP Holding
Corp. Mr. Thompson was a founder of Group 1
Automotive, Inc., a Fortune 500 specialty retailer in the automotive
retailing industry. Mr. Thompson served as the Chief Financial
Officer and Treasurer of Group 1 Automotive, Inc. from 1996 until
2005. Mr. Thompson is a Certified Public
Accountant.
Board recommendation and stockholder vote
required
The board
of directors recommends a vote “FOR” the election of the nominees named above
(Proposal No. 1 on the accompanying proxy card).
The
affirmative vote of a plurality of the votes cast at the meeting at which a
quorum is present is required for the election of each nominee.
CORPORATE GOVERNANCE AND BOARD COMMITTEES
Board Composition
Our board
of directors currently consists of seven directors. Each director is
elected for a term of one year and serves until a successor is duly elected and
qualified or until his or her death, resignation or removal. There
are no family relationships between any of our directors or executive
officers. Our executive officers are elected by and serve at the
discretion of the board of directors.
Director Independence
The board
of directors has determined that each person who served as a director in 2007,
and each director nominee for 2008, except Mr. Sorrentino is “independent” under
Nasdaq Marketplace Rule 4200(a)(15). Under
Rule 4200(a)(15), a director is considered independent as long as he or she
does not have a relationship with the Company or management which would
interfere with the exercise of independent judgment in carrying out the
director’s responsibilities. The Nasdaq Marketplace Rules also
enumerate certain relationships which preclude a finding of independence and
generally provide that an individual cannot be considered independent if, among
other things, he or she is a current officer or other employee of the issuer or
directly or indirectly receives certain significant payments from the issuer
other than in his or her capacity as a director or board committee
member. The Nasdaq Marketplace Rules provide newly-public
companies a one-year grace period in which to achieve full compliance with the
requirements to have a majority of independent directors and entirely
independent audit, compensation and nominating committees. In 2007
and within the one-year grace period provided by The Nasdaq Marketplace Rules,
we were able to meet all of the director independence requirements with respect
to our board of directors and its committees.
The board
met six times during 2007. Absent special circumstances, each
director is expected to attend the annual meeting of
stockholders. All persons who were directors during 2007 attended at
least 75% of these meetings and meetings of committees on which they
served.
The
independent directors meet in executive sessions separate from management at
least two times a year. The independent directors met in executive
sessions four times during 2007.
The board
has three standing committees: (1) Audit Committee; (2) Nominating and Corporate
Governance Committee; and (3) Compensation Committee.
Audit
Committee. The Audit Committee consists of
Messrs. Thompson, Gotsch, and Sexton. Mr. Thompson serves as the
Chairperson. The board has determined that each member is independent
for purposes of Rule 4200(a)(15) of the Nasdaq Marketplace Rules and
Rule 10A-3(b)(1) of the Exchange Act. Each of the Audit
Committee members is financially literate as determined by our board in its
business judgment. The board has also determined that Mr. Thompson is
an “audit committee financial expert” as such term is defined under the
applicable SEC rules.
The Audit
Committee met seven times in 2007. The board has adopted an Audit
Committee charter, a copy of which may be found by accessing the “Investor
Relations” section of our website at http://www.houwire.com and
clicking on the “Corporate Governance” link.
The
principal duties and responsibilities of the Audit Committee are to assist the
board in its oversight of:
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•
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the
accounting and financial reporting processes of the Company and the audits
of the financial statements of the
Company;
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•
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the
independent auditors’ qualifications and independence;
and
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•
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the
performance of the independent
auditors.
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Our Audit
Committee is also responsible for:
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•
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maintaining
free and open communication between the committee, independent auditors,
and management of the Company;
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•
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reviewing
and appraising the fairness of related party
transactions; and
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•
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preparing
the report required to be prepared pursuant to the rules of the SEC for
inclusion in the Company’s annual proxy
statement.
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The Audit
Committee also has the resources and authority appropriate to discharge its
duties and responsibilities, including the authority to select, retain,
terminate, and approve the fees and other retention terms of counsel,
accountants or other experts and advisors, as it deems necessary or
appropriate. See the “Report of the Audit Committee of the Board of
Directors” on page 21.
Nominating and
Corporate Governance Committee. The Nominating and Corporate
Governance Committee consists of Messrs. Farwell, Sheffield, and
Thompson. Mr. Farwell serves as the Chairperson. The board
has determined that all committee members are independent for purposes of
Rule 4200(a)(15) of the Nasdaq Marketplace Rules.
The
Nominating and Corporate Governance Committee met six times in
2007. The board has adopted a Nominating and Corporate Governance
Committee charter, a copy of which may be found by accessing the “Investor
Relations” section of our website at http://www.houwire.com and
clicking on the “Corporate Governance” link.
The
principal duties and responsibilities of the Nominating and Corporate Governance
Committee are as follows:
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to
identify and recommend potential candidates qualified to become directors,
consistent with criteria approved by the
board;
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•
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to
recommend to the board director nominees to be presented for stockholder
approval at the annual meeting;
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•
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to
recommend directors for appointment to board committees;
and
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•
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to
establish, subject to approval by the full board, criteria and personal
qualifications to be used in making selections of candidates to the board
of directors.
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The
criteria that the Nominating and Corporate Governance Committee establishes may
include a candidate’s business and financial experience and acumen, integrity,
willingness to devote the necessary time and energy to fulfill the duties and
responsibilities of a director, independence and other criteria and
qualifications as the Nominating and Corporate Governance Committee determines
to be appropriate under the circumstances. The Nominating and
Corporate Governance Committee will consider nominees for our board of directors
recommended by stockholders, using the same criteria as for other
candidates.
The
Nominating and
Corporate Governance Committee has the authority to retain a search firm
to be used to identify director candidates. The Nominating and Corporate
Governance Committee has the authority to retain and terminate any such
search firm, including authority to approve the firm’s fees and other retention
terms. The Nominating and Corporate
Governance Committee also has authority to retain other
advisors. The Company will provide for appropriate funding, as
determined by the Nominating and Corporate
Governance Committee, for payment of compensation to any search firm or
other advisors.
Stockholder Recommendations for
Director Nominations. The Nominating and Corporate Governance
Committee will consider nominees for our board of directors recommended by
stockholders, using the same criteria as for other candidates. As
noted above, the Nominating and Corporate Governance Committee considers and
establishes procedures regarding recommendations for nomination to the board,
including nominations submitted by stockholders. For information on
how to nominate a person for election as a director at the 2009 annual meeting,
please see the discussion under the heading “Stockholder Proposals and
Nominations for 2009 Annual Meeting.” The Nominating and Corporate
Governance Committee will evaluate all potential candidates in the same manner,
regardless of the source of the recommendation. Based on the
information provided to the Nominating and Corporate Governance Committee, it
will make an initial determination whether to conduct a full evaluation of a
candidate. As part of the full evaluation process, the Nominating and
Corporate Governance Committee may conduct interviews, obtain additional
background information and conduct reference checks of the candidate, among
other things. The Nominating and Corporate Governance Committee may
also ask the candidate to meet with management and other members of the
board.
There
have been no material changes to the procedures by which security holders may
recommend nominees to the Company’s board of directors since our public offering
in June 2006.
Compensation
Committee. The Compensation Committee consists of
Messrs. Gotsch, Sexton, and Sheffield. Mr. Gotsch serves as the
Chairperson. The board has determined that all committee members are
(i) independent for purposes of Rule 4200(a) (15) of Nasdaq’s
Marketplace Rules, (ii)”non-employee directors” as defined under the
Rule 16b-3 of the Securities Exchange Act of 1934, and (iii) “outside
directors” as defined by Section 162(m) of the Internal Revenue
Code.
The
Compensation Committee met six times in 2007. The board has adopted a
Compensation Committee charter, a copy of which may also be found by accessing
the “Investor Relations” section of our website at http://www.houwire.com and
clicking on the “Corporate Governance” link.
The
principal duties and responsibilities of the Compensation Committee are as
follows:
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to
provide a general review of compensation and benefit plans to ensure they
meet the Company’s objectives;
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to
review the chief executive officer’s recommendations on compensation of
executive officers and make recommendations for adopting and changing
major compensation policies and
practices; and
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to
fix the annual compensation of the chief executive officer and administer
the Company’s stock plans.
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The
Compensation Committee has the authority to delegate any of its responsibilities
to subcommittees as it deems appropriate, provided the subcommittees are
composed entirely of independent directors. The Compensation
Committee also may retain a compensation consultant or other advisors to assist
in the evaluation of CEO or executive officer compensation. The
Compensation Committee has authority to retain and terminate any such consulting
firm. The Company will provide for appropriate funding, as determined
by the Compensation Committee, for payment of compensation to any consulting
firm or other advisors employed by the Compensation Committee.
The CEO
may not be present during any deliberations on his compensation.
Compensation Committee Interlocks and Insider
Participation
The
Compensation Committee consists of Messrs. Gotsch, Sexton and Sheffield. None of
the members of the Compensation Committee is or ever was an officer or employee
of the Company or any of its subsidiaries.
Communications with Directors
Stockholders
may communicate any concerns they have regarding the Company, including
recommendations of candidates for director, to the board of directors or to any
member of the board via web form by accessing the investor relations section of
our website at
http://www.houwire.com and clicking on the “Corporate Governance” and
“Contact Our Board” links, through our Corporate Governance Hotline at
866-373-6359 or by writing to them at the following address:
Houston
Wire & Cable Company
Attention:
[Board of Directors]/[Board Member]
c/o
Investor Relations Coordinator
10201
North Loop East
Houston,
TX 77029
Communications
directed to the independent directors should be sent to the attention of the
Chairman of the Nominating and Corporate Governance Committee, c/o the Investor
Relations Coordinator, at the address indicated above.
Any
stockholder or other interested person who has a particular concern regarding
accounting, internal accounting controls, or other audit matters that he or she
wishes to bring to the attention of the Audit Committee may communicate those
concerns to the Audit Committee or its Chairman, using the address indicated
above.
A
majority of the independent directors of the Company has approved procedures
with respect to the receipt, review and processing of, and any response to,
written communications sent by stockholders and other interested persons to the
board of directors. Any written communication regarding accounting, internal
accounting controls, or other matters are processed in accordance with
procedures adopted by the Audit Committee.
Code of Business Conduct
The board
has adopted a Code of Business Conduct (the “Code”), a copy of which may be
found by accessing the investor relations section of our website at http://www.houwire.com and
clicking on the “Corporate Governance” link. Under the Code, we
insist on honest and ethical conduct by all of our directors, officers,
employees and other representatives, including the following:
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Our
directors, officers and employees are required to avoid situations in
which their personal, family or financial interests conflict with those of
the Company.
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Our
directors, officers and employees must refrain from engaging in any
activities that compete with the Company, or which may compromise its
interests.
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Our
directors, officers and employees must refrain from taking any business or
investment opportunity discovered in the course of employment with or
service to the Company that the director, officer or employee knows, or
should have or has reason to know, would benefit the
Company.
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Our directors,
officers and employees must comply with all applicable governmental
laws, rules and regulations.
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We are
also committed to ensuring that all disclosures in reports and documents that
the Company files with the SEC, as well as other public communications made by
the Company, are full, fair, accurate, timely and
understandable. Further, we will comply with all laws, rules and
regulations that are applicable to our activities and expect all of our
directors, officers and employees to obey the law. Any violation of
applicable law or any deviation from the standards embodied in this Code will
result in appropriate corrective and disciplinary action, up to and including
termination of employment. Any director, officer or
employee who in good faith believes or suspects that any portion of this Code
has been violated should report such violation to the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Executive
Officers
We have
entered into various restricted securities agreements with five current
employees, including Charles A. Sorrentino, whose agreement is dated
December 31, 1998 and amended June 28, 2000 and April 26, 2007,
and Nicol G. Graham, whose agreement is dated September 11,
1997. The agreements apply to any shares of our stock that the
employees own or acquire, including shares issued upon exercise of
options. These agreements provide Messrs. Sorrentino
and Graham the rights to include their shares of our common stock in future
registration statements that we file. The agreements with
Messrs. Sorrentino and Graham may be terminated upon the mutual agreement
of the Company, Code, Hennessy & Simmons II, L.P. and the
executive or a holder of 70% or more of the securities issued to the
executive. In addition, the agreements terminate automatically upon a
sale of the Company, other than in a public offering. The agreements
contain rights in favor of us and Code, Hennessy &
Simmons II, L.P. to repurchase shares held by these employees upon
termination of employment.
Relationship
with Code, Hennessy & Simmons II, L.P.
In
connection with our initial public offering in 2006, we entered into a
registration rights agreement with Code, Hennessy & Simmons II,
L.P., which was our largest stockholder at the time. Peter M. Gotsch,
a director of the Company, is a limited partner of an affiliate of Code,
Hennessy & Simmons II, L.P. Pursuant to that agreement, in March
2007 we registered under the Securities Act an underwritten public offering of
shares of common stock by Code, Hennessy & Simmons II, L.P. and other
selling stockholders. We paid half of the approximately $400,000 in
fees and expenses (other than underwriting discounts) associated with the sale
of shares of common stock by the selling stockholders, including Code,
Hennessy & Simmons II, L.P. As a result of that public
offering, Code, Hennessy & Simmons II, L.P.’s ownership was reduced to
approximately 8% of our outstanding common stock. In
August 2007, Code, Hennessy & Simmons II, L.P. distributed
all of its remaining shares of our common stock and no longer holds any
shares.
There are
no related party transactions disclosed above under the heading “Certain
Relationships and Related Transactions” that have not been reviewed and approved
in accordance with our Code of Business Conduct.
DIRECTOR COMPENSATION
Independent
members of the board of directors, other than the chairman of the board, receive
an annual retainer of $30,000, paid quarterly. Each independent
director, other than the chairman of the board, is also entitled to receive
$1,500 for each board meeting attended and $1,000 for each committee meeting,
with half the applicable amount paid in connection with a telephonic
meeting. The chairman of each of the Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee is entitled to
receive an additional $5,000 per year. The chairman of the board
receives an annual retainer of $70,000, but receives no additional fee for any
board or committee meeting that he or she attends. All fees may be
paid in cash or shares of our common stock, at the choice of the
director. Mr. Sorrentino does not receive any compensation for his
service as a director.
In
addition, upon election to the board, each independent director receives a
one-time grant of an option exercisable for 15,000 shares of our common
stock. Upon re-election, each independent director also receives an
annual grant of an option exercisable for 5,000 shares or, in the case of
the chairman of the board, 10,000 shares. All directors’ options
become exercisable one year after the date of grant. Exercise prices
are set at fair market value at the date of grant. Options may be
forfeited in the event the director terminates, other than by retirement, his or
her relationship with us.
We
reimburse members of our board of directors for any out-of-pocket expenses they
incur in connection with services provided as directors. The
Nominating and Corporate Governance Committee has adopted a policy encouraging
each director to devote at least one day each year to director education, and we
pay for the cost of attending continuing education programs, up to $5,000 per
director per year. Perquisites paid or provided to directors in 2007 were
significantly less than the SEC’s minimum threshold for disclosure
($10,000).
The
following table sets forth all compensation paid to each of our non-employee
directors in 2007:
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Name
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Fees Earned
or Paid in Cash
($)
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Option Awards
($)(2)
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Total
($)
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I.
Stewart Farwell
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56,250
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114,394 |
170,644
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Peter
M. Gotsch(1)
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16,333
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— |
16,333
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Robert
G. Hogan(1)
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13,250
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— |
13,250
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Wilson
B. Sexton
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55,000
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91,070 |
146,070
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William
H. Sheffield
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54,000
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126,270 |
180,270
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Scott
L. Thompson
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77,167
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114,394 |
191,561
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(1)
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Prior
to August 2007, Messrs. Gotsch and Hogan were not considered to be
independent, because of their relationship with a significant stockholder,
Code, Hennessy & Simmons II, L.P., and did not receive any directors’
fees or options. Following the disposition by Code, Hennessy
& Simmons II., L.P. of all of its shares of Company common stock,
Messrs. Gotsch and Hogan were determined to be independent and earned
directors’ fees.
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(2)
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This
column shows the dollar amount we recognized for financial statement
reporting purposes in 2007 in accordance with SFAS
No. 123(R) for all option awards that have been granted to each
of our non-employee directors. See note 8 of the Notes to our
Consolidated Financial Statements contained in our Annual Report of Form
10-K for the year ended December 31, 2007 for a discussion of the
assumptions we made in the valuation of these options. Each of
Messrs. Farwell, Sexton, Sheffield and Thompson, upon their re-election to
the board at the annual meeting of stockholders on May 1, 2007, received
an option to purchase 5,000 shares of our common stock at an exercise
price of $30.25 per share. The grant date fair value of each such
director’s option award, computed in accordance with SFAS No. 123(R) was
$69,275. As of March 10, 2008, the non-employee directors hold stock
options with respect to the following number of shares: Mr.
Farwell—20,000; Mr. Gotsch—0; Mr. Hogan—0;
Mr. Sexton—20,000; Mr. Sheffield—20,000 and Mr.
Thompson—20,000.
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Compensation
Discussion and Analysis
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Our
Compensation Committee is empowered to review the chief executive officer’s
recommendations on compensation of our senior management and to make
recommendations regarding major compensation policies and practices. The
Compensation Committee reports its recommendations to the full board of
directors for approval and authorization. The Compensation Committee is also
responsible for setting the annual compensation of the chief executive officer
and administering our stock plans, including approving the number and
distribution of options under the plans. The committee is charged with
recommending, for the approval of the full board of directors, the annual
compensation and compensation procedures for our senior management, including
our executive officers.
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Objectives
of Compensation Program
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Our
compensation program aims to attract and retain qualified, energetic employees
who are enthusiastic about our mission and culture. A further objective of our
compensation program is to provide incentives and reward each employee for his
or her contribution to the Company. In addition, we strive to promote an
ownership mentality among key leadership and the board of directors. Finally, we
endeavor to ensure that our compensation program is perceived as fundamentally
fair to all stakeholders.
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What
Our Compensation Program is Designed to
Reward
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Our
compensation program is designed to reward each employee’s contribution to the
Company. In measuring an officer’s contributions, the Compensation Committee
considers a number of factors, including our profitable growth and the
achievement of financial performance targets. The total compensation package for
each member of our senior management includes incentive compensation that is
based primarily on the achievement of financial performance targets. Operating
income is the primary basis for determining incentive compensation, and revenue
growth and inventory turns are secondary factors. In its simplest definition,
operating income is equivalent to operating earnings before interest and taxes.
The Compensation Committee establishes operating income, revenue and inventory
turns targets for the upcoming fiscal year based in part upon the incremental
improvement in those measures over the prior fiscal year. We have not used stock
price performance as a factor in determining annual compensation, because the
price of our common stock is subject to a variety of factors outside our
control.
Elements
of Company’s Compensation Plan and How Each Element Relates to Our
Objectives
Annual
senior management compensation consists of a base salary component, an incentive
component and stock options.
Base Salary. We
seek to provide our senior management with a level of a base salary in the form
of cash compensation appropriate to their roles and responsibilities. Base
salaries for members of our senior management are established based on each
officer’s qualifications and experience, scope of responsibilities, future
potential and past performance. Base salaries are reviewed annually and adjusted
as necessary to realign salaries with market levels, after taking into account
individual responsibilities, performance and experience.
Incentive Cash
Bonuses. Our practice is to award incentive cash bonuses to
our senior management based upon their individual performance, as well as
performance objectives of the Company.
For 2007,
Mr. Sorrentino’s incentive bonus was paid pursuant to his employment
agreement with the Company. Under Mr. Sorrentino’s employment agreement,
his potential bonus is based on achieving a performance target for the
applicable fiscal year, as follows:
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If
we achieve less than 85% of the target for the fiscal year, then no
incentive bonus is paid for that fiscal
year.
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If
we achieve 100% of the target for the fiscal year, then the incentive
bonus is equal to 50% of Mr. Sorrentino’s base salary as of the end of
that year.
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If
we achieve 115% or more of the target for the fiscal year, then the
incentive bonus is equal to 100% of the base salary as of the end of that
year.
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If
we achieve a percentage of the target for the fiscal year that is between
any two of the 85%, 100% or 115% thresholds referred to above, then the
incentive bonus is a percentage of the base salary for that fiscal year
calculated on a straight line basis between the percentage that would
apply at those two thresholds.
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Under Mr.
Sorrentino’s agreement, the board of directors (or the Compensation Committee)
establishes the specific performance targets for Mr. Sorrentino no later
than sixty days after the beginning of each fiscal year. Mr. Sorrentino
must agree with the performance target established, and the performance target
must be consistent with our business plan approved by the board of directors for
such fiscal year. For 2007, the Compensation Committee established
the performance target as achieving operating income of $58.0
million. Our 2007 operating income of $49.7 million was slightly over
85% of the $58.0 million target, so Mr. Sorrentino received an incentive bonus
of 2.3% of his base salary. For 2008, Mr. Sorrentino’s bonus
also will be based on achieving a specified operating income
target.
For 2007,
Mr. Graham (and all members of senior management, other than Mr. Sorrentino)
participated in our Senior Management Bonus Program. For each
participant under the program, the potential bonus award was based on the
participant’s salary at the end of the year. In order for any bonus
to be paid for 2007, we needed to achieve the operating income threshold of
$52.75 million set by the Compensation Committee for the year. If the
threshold had been met, then the participant would have received a “basic” bonus
equal to a percentage (ranging from 0% to 40%) of his or her salary, depending
on our performance with respect to targets established for three incentive
factors: operating income, revenue and inventory turns. For 2007, 70%
of the bonus was based on performance against the targets for operating income
(the target for a minimum payout was $52.75 million and for a maximum payout was
$63.3 million), 20% of the bonus was based on performance against the
established targets for revenue (a minimum payout at $345 million and a maximum
at $365 million), and 10% of the bonus was based on performance against the
established targets for inventory turns (a minimum payout at 4.25 times and a
maximum at 4.75 times). The full basic bonus of 40% of salary was
available if we achieved the maximum target for each of the three incentive
factors. The bonus available for each incentive factor was calculated
on a stand-alone basis (provided the operating income threshold was met) and was
calculated on a pro rata, straight line basis between the 0% and 40% level,
provided the specific target for such incentive factor was met. In
addition, starting in 2007, the Compensation Committee established an additional
award potential of 10% of salary, in the event we achieve certain sales
thresholds with respect to certain proprietary products and maintain established
gross margins.
The 2007
program also provided that a bonus equal to an additional 5% of salary could
have been awarded in the event that we made one or more acquisitions during the
relevant year and the acquired businesses met established financial
goals. The maximum bonus payable (the basic bonus plus the additional
bonus) could not exceed 55% of the participant’s base salary. Under the program,
all bonuses are payable the year following the year for which performance is
being measured, after receipt of (and subject to) the audit of the financial
statements for the relevant year. No award is payable under the
program for any full or partial year to a participant whose employment
terminates prior to the time the bonus is paid. In all cases, the payment is in
the discretion of the Compensation Committee, and the Compensation Committee
retains the right to terminate a participant’s participation in the bonus
program at any time, in which case no bonus may be paid.
In 2007,
we failed to meet the operating income threshold under the Senior Management
Bonus Program, so Mr. Graham and other members of senior management were not
entitled to receive a bonus under the terms of the program. However,
the Compensation Committee recognized that the Company performed well with
respect to the revenue and inventory-based targets, as well as the sales of
proprietary products, and noted that operating income had been adversely
affected by certain unbudgeted expenses, including the spring 2007 secondary
public offering and charges for stock-based compensation awarded to Mr.
Sorrentino. In light of these considerations, the Compensation
Committee determined that it would be appropriate to make a discretionary award
to Mr. Graham and other members of senior management equal to 25% of their
salaries.
For 2008,
the Senior Management Bonus Program is similar to the program in 2007, but will
be based on targets approved for 2008.
Equity Awards. In addition to
base salary and incentive compensation, each member of our senior management is
eligible to receive stock option grants under our stock plan. We believe that
through our broad-based plan, the economic interests of our employees, including
our executives, are more closely aligned to those of the stockholders. The
number of stock options granted to each executive officer is made on a
discretionary basis rather than pursuant to a formula by the Compensation
Committee after consideration of the CEO’s recommendations.
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How
the Company Chose Amounts and/or Formulas for Each
Element
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In 2007,
our Compensation Committee engaged Pearl Meyer & Partners to review
Mr. Sorrentino’s compensation package and to provide a market perspective
to the Compensation Committee with respect to Mr. Sorrentino’s
compensation. The Compensation Committee reviewed the information prepared by
Pearl Meyer & Partners, and then entered into negotiations with
Mr. Sorrentino regarding an appropriate long-term incentive grant. During
these negotiations, the committee considered Mr. Sorrentino’s tenure with
us, our financial results and the success of our initial public offering. The
committee also considered the fact that Mr. Sorrentino had not received any
equity-based compensation in the prior four years and that Mr. Sorrentino
had requested that his compensation contain a greater equity component than it
then did. Based on these negotiations, the Compensation Committee determined to
grant to Mr. Sorrentino an option to purchase 500,000 shares of our common
stock, which is the maximum annual award permitted under the 2006 Stock Plan, at
a price of $26.19 per share, which was the closing price of our common stock on
the date of the grant. This option vests in two equal installments on
March 9, 2011 and 2012.
The
committee believes that this grant will align Mr. Sorrentino’s compensation with
the interests of stockholders and, due to the delayed vesting schedule, will
assist in retaining Mr. Sorrentino as our President and Chief Executive
Officer. In the event of Mr. Sorrentino’s death or permanent disability,
the option grant will vest on a pro-rata basis over the term of the vesting
schedule, such that the option will vest with respect to a percentage of the
shares subject to the option equal to the percentage of the vesting period
during which Mr. Sorrentino served prior to his death or
disability.
In
January 2008, the Compensation Committee awarded Mr. Sorrentino an option to
purchase an additional 65,000 shares at a price of $11.99 per share, the closing
price of our common stock on the date of grant. This option vests in
two equal installments on the same dates as the 2007 grant.
Each
executive officer’s current and prior compensation is considered in setting
future compensation. The elements of our plan (base salary, bonus and stock
options) are similar to the elements used by many companies. We do
not have an exact formula for allocating between cash and non-cash
compensation.
Our chief
executive officer provides recommendations to the Compensation Committee
regarding most compensation matters, including compensation of other members of
key management.
With
respect to current employees, we plan stock option grant dates well in advance
of any actual grant. The timing of each grant is determined to coincide with a
scheduled meeting of our board of directors and its Compensation Committee and,
except in highly unusual circumstances, we will not allow discretionary option
grants at other dates. The grant date is established when our Compensation
Committee approves the grant and all key terms have been determined. The
exercise price of each of our stock options grants is the market closing price
on the grant date. Our general policy is for the annual grant to occur in
December several weeks after the official announcement of our third quarter
results so that the stock option exercise price reflects a fully-informed market
price. If at the time of any planned option grant date any member of our board
of directors or any executive officer is aware of material non-public
information, we would not generally make the planned stock option grant. In such
event, as soon as practical after material information is made public, the
Compensation Committee would call a special meeting and otherwise take all
necessary steps to authorize the delayed stock option grant. Regarding the grant
process, the Compensation Committee does not delegate any related function, and
executive officers are not treated differently from other
employees.
|
|
Tax
Considerations
|
We have
structured our compensation program to comply with Internal Revenue Code
Sections 162(m) and 409A. Section 162(m) of the Internal
Revenue Code imposes a limitation on tax deductions of any publicly-held
corporation for compensation paid to certain executives in excess of $1,000,000
in any taxable year, unless the compensation is performance-based.
Section 409A of the Internal Revenue Code addresses certain nonqualified
deferred compensation benefits payable to an executive and provides that, if
such benefits do not comply with Section 409A, they will be taxable in the
first year they are not subject to a substantial risk of forfeiture. In such
case, the executive is subject to regular federal income tax, interest and an
additional federal income tax of 20% of the benefit includible in income. We
have no individuals with non-performance based compensation paid in excess of
the Internal Revenue Code Section 162(m) tax deduction
limit.
|
|
Employment
Arrangements and Payments upon Termination of
Employment
|
We
entered into an employment agreement dated April 26, 2006 with
Mr. Sorrentino, our President and Chief Executive Officer, with a term that
extends through April 26, 2011. It provides for a base salary of $425,000
per year, subject to annual reviews and increases (but not decreases) by our
board. The Compensation Committee approved increases in Mr. Sorrentino’s base
salary to $450,000, effective March 2007, and to $475,000, effective March
2008. Mr. Sorrentino’s employment agreement also entitles him to
an annual bonus of up to 100% of base salary, as described above.
Mr. Sorrentino’s agreement also provides for reimbursement of reasonable
business expenses, the employment benefits generally available to our
executives, four weeks of vacation per year and a car allowance of $1,000 per
month. Mr. Sorrentino also may participate in our 2006 Stock Plan. Under
his employment agreement, Mr. Sorrentino is entitled to severance equal to
two years’ base salary if we terminate his employment without cause, or if he
terminates his employment for good reason. The employment agreement limits
Mr. Sorrentino’s ability to compete with us for two years after his
employment ends.
Under Mr.
Sorrentino’s employment agreement, the phrases “termination without cause” and
“termination for good reason” are defined as follows:
“termination
without cause” shall mean a termination of Mr. Sorrentino’s employment for any
reason other than by reason of the following: (i) a material breach by Mr.
Sorrentino of his employment agreement or material neglect by Mr. Sorrentino of
his assigned duties, which includes any failure to follow the written direction
of the board of directors (other than by reason of disability), or repeated
refusal by Mr. Sorrentino to perform his assigned duties (other than by reason
of disability) which continues for thirty days following receipt of written
notice from the board of directors; (ii) the commission by Mr. Sorrentino of any
act of fraud or embezzlement against us or the commission of any felony or act
involving dishonesty; (iii) the commission by Mr. Sorrentino of any act of moral
turpitude which actually causes us financial harm; (iv) a material breach by Mr.
Sorrentino of the terms of the confidentiality provisions contained in his
employment agreement or any other confidentiality or non-disclosure agreement he has
with us; or (v) Mr. Sorrentino’s commencement of employment with another company
while he is employed by us without the prior consent of the board of
directors.
“termination
for good reason” shall mean the voluntary termination by Mr. Sorrentino of his
employment, if without his prior consent: (i) we relocate our principal
executive offices to a location outside the Houston, Texas metropolitan area,
(ii) we materially reduce his responsibilities, duties, authority, title, or
reporting relationship; or (iii) we act in any way that would reduce his base
salary or if we adversely affect his participation in or materially reduce his
benefit under any of our benefit plans in which he is participating; provided,
however, that a “termination for good reason” shall not be permitted unless Mr.
Sorrentino has given us at least thirty days’ prior written notice that he has a
basis for such a termination, the notice specifies the facts and circumstances
constituting a basis for such a termination, and we do not remedy such facts and
circumstances constituting the basis for his termination for good reason within
the thirty-day period.
Assuming
that Mr. Sorrentino had terminated his employment with us as of
December 31, 2007 (whether “without cause” or “for good reason”), he would
have received 24 months of his then current salary in accordance with our
current general payroll practices (which would equal $450,000 per year for 2008
and 2009), and a payment of $10,350, which reflects the incentive compensation
to which he was entitled for 2007 under his agreement. If Mr.
Sorrentino terminated his employment on December 31, 2007 following a change in
control, then pursuant to the terms of our 2006 Stock Plan, in addition to the
payments discussed in the preceding sentence, all of his outstanding options
would have fully vested as of the date of the change in control.
Our other
members of senior management are elected by and serve at the discretion of the
board of directors.
Summary
Compensation Table
The
following table and related notes sets forth information concerning the
compensation paid to our Chief Executive Officer and Chief Financial Officer for
fiscal years 2007 and 2006. Because our Chief Executive Office and Chief
Financial Officer are our only executive officers, the following compensation
disclosures have been limited to those two individuals. For ease of reference,
we collectively refer to these executive officers throughout this section as our
“named executive officers.”
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)(1)
|
Option
Awards
($)(2)
|
Non-Equity
Incentive Plan
Compensation($)(3)
|
All Other
Compensation
($)(4)
|
Total
($)
|
|||||||||||||
|
Charles
A. Sorrentino,
|
||||||||||||||||||||
|
President
and Chief
|
||||||||||||||||||||
|
Executive
Officer
|
2007
|
$
|
444,231
|
—
|
$$
|
971,977
|
$
|
10,350
|
$
|
23,014
|
$
|
1,449,572
|
||||||||
|
2006
|
$
|
383,173
|
—
|
$
|
—
|
$
|
425,000
|
$
|
19,094
|
$
|
827,267
|
|||||||||
| Nicol G. Graham, |
|
|||||||||||||||||||
|
Chief
Financial Officer
|
2007
|
$
|
180,600
|
$
|
45,570
|
$
|
21,110
|
—
|
$
|
14,636
|
|
$
|
261,916
|
|||||||
|
2006
|
$
|
167,000
|
—
|
$$
|
615
|
$
|
52,500
|
$
|
6,440
|
$
|
226,555
|
|||||||||
____________
|
(1)
|
The
amount shown in this column is the discretionary award made to Mr. Graham
for 2007. Please see “Compensation Discussion and
Analysis — Elements of Company’s Compensation Plan and How Each
Element Relates to Our Objectives – Incentive Cash
Bonuses.”
|
|
(2)
|
This
column shows the dollar amount recognized by the Company for financial
reporting purposes in 2007 in accordance with SFAS
No. 123(R) for all stock options granted to each named executive
officer. See note 8 of Notes to Consolidated Financial Statements
contained in our Annual Report of Form 10-K for the year ended December
31, 2007 for a discussion of the assumptions made by the Company in the
valuation of these option awards. Under SFAS No. 123(R), the fair
value of option awards is recognized as expense over the vesting period of
the award except where it is accelerated for employees that are
retirement-eligible or will become retirement-eligible during the vesting
period. The value of the stock options reported in the “Option Awards”
column is different from the grant date fair value of the stock options
granted in 2007 because the “Option Awards” column includes, as required
by SFAS No. 123(R), the expense of awards granted prior to 2007 where
the vesting period for those awards extends into 2007 to the extent the
expense was not previously accelerated due to retirement-eligibility of
the employees. The expense of the option awards for Mr. Graham, who
is a non-retirement-eligible employee, is spread equally over the full
vesting period. In addition to the amount shown above, we expensed $11,404
in 2007 with respect to outstanding option grants to Mr. Graham that
were made prior to 2007. As a private company, we accounted for
those awards under APB 25 rather than SFAS
No. 123(R).
|
|
(3)
|
The
amounts shown for Mr. Sorrentino represent payments made pursuant to the
terms of his current employment agreement, since its execution on April
26, 2006. The amount shown for Mr. Graham represents
payments made pursuant to the Company’s senior management incentive plan.
Mr. Graham’s bonus was based on the achievement of operating income
targets, revenue and inventory-turns targets, in each case, as approved by
the Company’s board of directors and its Compensation
Committee. For a description of the payments made, please see
“Compensation Discussion and Analysis — Elements of Company’s
Compensation Plan and How Each Element Relates to Our Objectives –
Incentive Cash Bonuses.”
|
|
(4)
|
All
Other Compensation reported for Mr. Sorrentino represents a $8,712
matching contribution by the company to our 401(k) Plan, $3,302 for
group term life and long-term disability insurance premiums and $11,000
for an auto allowance. All Other Compensation reported for Mr. Graham
represents a $6,944 matching contribution by the Company to our
401(k) Plan, $2,032 for group term life and long-term disability
insurance premiums and $5,660 for personal use of an
automobile.
|
Grants
of Plan Based Awards
The
following table sets forth information for each named executive officer with
respect to:
|
|
·
|
Estimated
possible payouts under non-equity incentive plan awards for 2007,
and
|
|
|
·
|
Stock
options granted in 2007.
|
|
Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards(2)
|
All Other
Option
Awards:
Number of
Securities
Underlying
|
Exercise or
Base Price
of Option
|
Grant
Date Fair
Value of
Stock and
|
||||||||||||||||||||||
|
Name
|
Grant
Date (1)
|
Threshold
($)(3)
|
Target
($)(4)
|
Maximum
($)(5)
|
Options
(#)(6)
|
Awards
($/sh)(7)
|
Option
Awards(8)
|
||||||||||||||||||
|
Charles
A. Sorrentino
|
3/9/07
|
382,500
|
450,000
|
517,500
|
500,000
|
$
|
26.19
|
$
|
5,986,350
|
||||||||||||||||
|
Nicol
G. Graham
|
12/18/07
|
—
|
1,568
|
100,254
|
5,000
|
$
|
15.40
|
$
|
40,680
|
||||||||||||||||
____________
|
(1)
|
The
“Grant Date” reflects the date on which the Compensation Committee acted
to approve the grant of the award.
|
|
(2)
|
The
amounts shown for Mr. Sorrentino reflect the amounts that were
payable pursuant to his employment agreement and are based on performance
targets established by the Compensation Committee and board of directors
for 2007. Mr. Sorrentino did not receive a payout under his
agreement for 2007. For a description of Mr. Sorrentino’s
employment agreement, please see “Compensation Discussion and
Analysis — Elements of Company’s Compensation Plan and How Each
Element Relates to Our Objectives – Employment Agreements.” The amounts
shown for Mr. Graham represent the potential payout under our Senior
Management Bonus Program for 2007. The amount actually paid
under the Senior Management Bonus Program to Mr. Graham for 2007 appears
in the “Non-Equity Incentive Plan Compensation” column of the Summary
Compensation Table.
|
|
(3)
|
Non-Equity Incentive Plan
Awards – Threshold. Pursuant to our employment agreement
with Mr. Sorrentino, the amount shown in this column represents 85% of his
salary for 2007, the percentage of his salary to be paid upon reaching the
thresholds set in accordance with his agreement. Pursuant to
the Senior Management Bonus Program, performance at or below a specific
incentive factor will result in no payment with respect to that incentive
factor. Performance above the minimum goals for each incentive
factor result in a payment (based on a percentage of the executive’s
salary) ranging from $1 to the maximum bonus amount for each incentive
factor, depending on the level at which the performance goal was
attained.
|
|
(4)
|
Non-Equity Incentive Plan
Awards – Target. Pursuant to the employment agreement
with Mr. Sorrentino, the amount shown in this column for Mr. Sorrentino
represents 100% of his salary for 2007. The Senior Management
Bonus Program, in which Mr. Graham participates, does not specify a target
amount. Where “target” amounts are not determinable, the SEC
rules require the disclosure of representative amounts based on the
previous fiscal year’s performance. Accordingly, we have disclosed above
in the “Target” column the amount that would be paid under our 2007 Senior
Management Bonus Program to Mr. Graham, based on our performance in
2006.
|
|
(5)
|
Non-Equity Incentive Plan
Awards – Maximum. Pursuant to the employment agreement
with Mr. Sorrentino, the amount shown in this column represents 115% of
his salary for 2007, the maximum percentage of his salary that is
available to him under his agreement. Pursuant to the 2007
Senior Management Bonus Program, for Mr. Graham, the amount shown in this
column represents 55% of his salary for 2007, the maximum percentage of
his salary that is available to him under the
Program.
|
|
(6)
|
This
column shows the number of shares that may be issued to the named
executive officers upon exercise of stock options granted in
2007.
|
|
(7)
|
The
exercise price for all stock options granted in 2007 was the closing sale
price of our common stock on the date of grant as reported by The Nasdaq
Global Market.
|
|
(8)
|
The
grant date fair value of the option awards was computed in accordance with
SFAS No. 123(R). See footnote 8 to the Consolidated Financial
Statements contained in the Company’s Annual Report on Form 10-K for the
period ended December 31, 2007 for a discussion of the assumptions made in
the valuation of these option awards.
|
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information for each named executive officer with
respect to each stock option to purchase common stock that had not been
exercised and remained outstanding at December 31, 2007. The
Company’s executive officers currently do not have any other outstanding stock
awards.
|
Option Awards
|
|||||||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|||||||||
|
Charles
A. Sorrentino
|
—
|
500,000
|
(1)
|
$
|
26.19
|
3/9/2017
|
|||||||
|
Nicol
G. Graham
|
750
|
—
|
$
|
0.53
|
1/1/2014
|
||||||||
|
1,875
|
5,625
|
(2)
|
$
|
2.67
|
12/30/2015
|
||||||||
|
2,000
|
8,000
|
(3)
|
$
|
21.73
|
12/19/2016
|
||||||||
|
—
|
5,000
|
(4)
|
$
|
15.40
|
12/18/2017
|
||||||||
____________
|
(1)
|
The
options under this grant vest in equal installments of 250,000 shares per
year on March 9, 2011 and March 9,
2012.
|
|
(2)
|
The
remaining options under this grant vest in equal installments of 1,875
shares per year on December 30, 2008, 2009 and
2010.
|
|
(3)
|
The
remaining options under this grant vest in equal installments of 2,000
shares per year on December 19, 2008, 2009, 2010 and
2011.
|
|
(4)
|
The
options under this grant vest in equal installments of 1,000 shares per
year on December 18, 2008, 2009, 2010, 2011 and
2012.
|
Option
Exercises and Stock Vested
The
following table sets forth information for each named executive officer with
respect to:
|
·
|
The
exercise during 2007 of stock options to purchase shares of our common
stock, and
|
|
·
|
The
dollar amount realized upon exercise of the stock
options.
|
|
Option Awards
|
||||||||
|
Name
|
Number of Shares
Acquired
on Exercise
(#)
|
Value
Realized on
Exercise
($)(1)
|
||||||
|
Charles
A Sorrentino
|
—
|
—
|
||||||
|
Nicol
G. Graham
|
3,375
|
$
|
39,998
|
|||||
____________
|
(1)
|
Value Realized on
Exercise. The value realized on the exercise of stock
options represents the pre-tax difference between the option exercise
price and the closing price of the stock on the exercise date, multiplied
by the number of shares of common stock covered by the stock options held
by Mr. Graham.
|
Defined
Pension Plans, Non-Qualified Defined Contribution Plans and Non-Qualified
Deferred Compensation Plans
We do not
maintain any defined benefit plans, non-qualified defined contribution plans or
non-qualified deferred compensation plans.
REPORT OF THE COMPENSATION COMMITTEE
The
Compensation Committee of the Board of Directors has furnished the following
report to the stockholders of the Company in accordance with rules adopted by
the SEC.
The
Compensation Committee of the Company states that the committee reviewed and
discussed with management the Company’s Compensation Discussion and Analysis
contained in this proxy statement.
Based
upon the review and discussions referred to above, the Compensation Committee
recommended to the Board of Directors that the Company’s Compensation Discussion
and Analysis be included in this proxy statement.
This
report is submitted on behalf of the members of the Compensation
Committee:
|
Members
of the Compensation Committee
|
|
|
Peter
M. Gotsch, Chairman
|
|
|
William
H Sheffield
|
|
|
Wilson
B. Sexton
|
EQUITY COMPENSATION PLAN INFORMATION
The
following table provides information as of December 31, 2007 with respect
to our compensation plans (including individual compensation arrangements) under
which our equity securities are authorized for issuance:
|
(a)
|
(b)
|
(c)
|
||||||||||
|
Plan Category
|
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
Weighted-Average
Price of
Outstanding
Options, Warrants
and Rights(3)
|
Number of Securities
Remaining Available
for Issuance under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)(4)
|
|||||||||
|
Equity
compensation plans approved by security holders(1)
|
797,500
|
$
|
23.71
|
1,003,000
|
||||||||
|
Equity
compensation plans not approved by security holders(2)
|
112,785
|
$
|
1.97
|
—
|
||||||||
|
(1)
|
Amounts
shown in this row relate solely to stock options granted under our 2006
Stock Plan. The 2006 plan provides for discretionary awards of stock
options and restricted stock to selected employees and directors. Our
board may grant non-qualified or incentive stock options to selected
employees and non-qualified stock options to non-employee directors. The
board may set the terms and conditions applicable to the options,
including the exercise price of the option, type of option and the number
of shares subject to the option. In any event, each option will expire
10 years from the date of
grant.
|
Our board
also may grant restricted stock awards to directors and selected employees,
either for no consideration or for such appropriate consideration as the board
determines. The board has the discretion to determine the number of shares
awarded and the restrictions, terms and conditions of the award. Subject to the
restrictions, the recipient of an award will be a stockholder with respect to
the shares awarded to him or her and will have the rights of a stockholder with
respect to the shares, including the right to vote the shares and receive
dividends, if any, on the shares. Our board may establish, as restrictions on
the stock, performance goals and targets for participants, which lapse if we
achieve the performance goals and targets for the designated performance period.
The performance goals may be based on one or more business criteria. Performance
goals may be absolute in their terms or measured against or in relationship to
the performance of other companies or indices selected by the
board.
|
(2)
|
Amounts
shown in this row relate solely to non-qualified stock options granted
under our 2000 Stock Plan. No grants under the 2000 plan have been made
since the Company’s public offering in June 2006, and any future
equity grants will be made under our 2006 Stock Plan described in Note 1
above. Under the 2000 Stock Plan the board of directors was able to grant
non-qualified or incentive stock options to selected key employees and
non-qualified stock options to non-employee directors. The duration of any
option could not exceed 10 years from the grant date. The board was
also able to grant stock awards to key employees and directors for such
numbers of shares, and subject to such vesting requirements, restrictions
and other terms and conditions, as the board determined in its
discretion.
|
|
(3)
|
Weighted-average
exercise price of outstanding stock
options.
|
|
(4)
|
The
amount shown does not reflect the impact of the grant on January 9, 2008
to Mr. Sorrentino of an option to purchase 65,000 shares of common stock.
As a result of that grant, 938,000 shares of stock remain available under
the 2006 plan.
|
REPORT OF THE AUDIT COMMITTEE TO THE BOARD OF
DIRECTORS
The Audit
Committee of the board is responsible for providing oversight of our accounting
and financial reporting functions. The board appoints the Audit
Committee and its chairman annually, with the committee consisting of at least
three directors. The Audit Committee operates under a formal charter, which is
available on the Company’s website at http:www.houwire.com and by clicking on
the “Corporate Governance” link. The Audit Committee charter sets
forth in detail, the duties and responsibilities of the Audit
Committee.
The Audit
Committee received the written disclosures and the letter from Ernst & Young
LLP, the Company’s independent registered public accounting firm, that are
required by the Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees), as adopted by the Public Company Accounting Oversight Board
in Rule 3600T. The disclosures described the relationships and fee
arrangements between the firm and the Company. Consistent with
Independence Standards Board Standard No. 1 and the rules and regulations
of the SEC, the Audit Committee considered whether the provision of non-audit
services by the independent registered public accounting firm to the Company for
the fiscal year ended December 31, 2007 is compatible with maintaining
Ernst & Young LLP’s independence and has discussed with Ernst & Young
LLP the firm’s independence from the Company.
Management
is responsible for the Company’s financial reporting process including its
system of internal controls, and for the preparation of the consolidated
financial statements in accordance with generally accepted accounting
principles. Ernst & Young LLP, is responsible for auditing those
financial statements and issuing a report thereon.
The Audit
Committee reviewed and discussed with the Company’s independent registered
public accounting firm the matters required to be discussed by the Statement on
Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol.
1 AU Section 380), as adopted by the Public Company Accounting Oversight Board
in Rule 3200T. The Audit Committee reviewed and discussed with
management and the Company’s independent registered public accounting firm the
audited financial statements of the Company for the year ended December 31,
2007.
Based on
the above-mentioned reviews and discussions with management and the Company’s
independent registered public accounting firm, the Audit Committee, exercising
its business judgment, recommended to the board that the Company’s audited
financial statements be included in its Annual Report on Form 10-K for the year
ended December 31, 2007, for filing with the SEC.
This
report is submitted on behalf of the members of the Audit
Committee:
|
Peter M. Gotsch
|
|
|
Wilson B. Sexton
|
|
|
Scott L. Thompson,
Chairman
|
PRINCIPAL INDEPENDENT ACCOUNTANT FEES AND SERVICES
Audit
Committee’s Pre-Approval and Procedures
The Audit
Committee is responsible for the appointment, compensation, retention and
oversight of the work of Ernst & Young LLP, our independent registered
public accounting firm. The independent registered public accounting firm
reports directly to the Audit Committee. As part of its responsibility, the
committee established a policy requiring the pre-approval of all audit and
permissible non-audit services performed by the registered public accounting
firm. In pre-approving services, the Audit Committee considers whether such
services are consistent with the SEC’s rules on auditor
independence.
Prior to
the engagement of the registered public accounting firm for an upcoming
audit/non-audit service period, defined as a twelve-month timeframe,
Ernst & Young LLP submits a detailed list of services expected to be
rendered during that period as well as an estimate of the associated fees for
each of the following four categories of services to the Audit Committee for
approval:
|
•
|
Audit Services consist
of services rendered by an external auditor for the audit of our annual
consolidated financial statements (including tax services performed to
fulfill the auditor’s responsibility under generally accepted auditing
standards) and internal controls and reviews of financial statements
included in Form 10-Qs, and includes services that generally only an
external auditor can reasonably provide, such as comfort letters,
statutory audits, attest services, consents and assistance with and review
of documents filed with the
SEC.
|
|
•
|
Audit-Related Services
consist of assurance and related services (e.g. due diligence) by an
external auditor that are reasonably related to audit or review of
financial statements, including employee benefit plan audits, due
diligence related to mergers and acquisitions, and accounting
consultations.
|
|
•
|
Tax Services consist of
services not included in Audit Services above, rendered by an external
auditor for tax
compliance.
|
|
•
|
Other Non-Audit Services
are any other permissible work that is not an Audit, Audit-Related or Tax
Service.
|
Circumstances
may arise during the twelve-month period when it may become necessary to engage
the independent registered public accounting firm for additional services not
contemplated in the original pre-approval. In those instances, the Audit
Committee requires specific pre-approval before engaging the independent
auditor.
The table
below summarizes the fees billed by our independent registered public accounting
firm, Ernst & Young LLP, for the fiscal years ended December 31,
2006 and December 31, 2007.
|
Year
|
Audit
|
Audit-Related
|
Tax
|
All Other
|
Total
|
|||||||||||||||
|
2007
|
$
|
717,906
|
$
|
—
|
$
|
40,775
|
$
|
—
|
$
|
758,681
|
||||||||||
|
2006
|
$
|
855,525
|
$
|
—
|
$
|
36,585
|
$
|
—
|
$
|
892,110
|
||||||||||
(1) Audit
fees include fees for professional services rendered for the audit of our annual
consolidated financial statements, the audit of our internal controls and the
reviews of the interim financial statements included in our Forms 10-Q. The
audit fees in 2007 also included charges for internal control compliance with
Sarbanes-Oxley Section 404. For 2007 the audit fees include charges of $159,943
related to audit work performed in connection with our secondary public offering
in March, 2007. For 2006, the audit fees include fees of $454,427 related to
audit work performed in connection with our public offering in June as well as
other fees for services performed in connection with the filing of our Form S-8
in 2006.
(2) There
were no audit-related services for fiscal 2007 and 2006.
(3) Tax
fees represent professional services related to tax compliance.
The Audit
Committee has considered the compatibility of the provision of services covered
by the preceding paragraph with the maintenance of the principal accountant’s
independence from the Company and has determined that the provision of such
services is not incompatible with the maintenance of such
independence. The Audit Committee annually reviews the performance of
the independent registered public accounting firm and the fees charged for their
services.
PROPOSAL
NO. 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The
Audit Committee has appointed the firm of Ernst & Young LLP as the Company’s
independent registered public accounting firm for the year ending December 31,
2008, subject to ratification by the Company’s stockholders, Ernst & Young
has served as the Company’s independent public accountants since 1997.
Representatives of Ernst & Young are expected to be at the Annual Meeting of
Stockholders and will have the opportunity to make a statement, if they desire
to do so, and to respond to appropriate questions from those attending the
meeting.
Board recommendation and stockholder vote required
The board
of directors recommends a vote “FOR” the ratification of the selection of Ernst
& Young LLP as the Company’s independent registered public accounting firm
for the year ending December 31, 2008 (Proposal No. 2 on the proxy
card).
The
affirmative vote of the holders of a majority of the votes represented at the
annual meeting in person or by proxy will be required for approval.
ANNUAL REPORT TO STOCKHOLDERS
We have
enclosed our 2007 annual report to stockholders for the fiscal year ended
December 31, 2007 with this proxy statement. The annual report
includes our audited financial statements, along with other financial
information about us, which we urge you to read carefully.
Our
annual report on Form 10-K for the fiscal year ended December 31,
2007, as filed with the SEC, is included in the 2007 annual report to
stockholders, which accompanies this proxy statement.
You can
also obtain, free of charge, a copy of our annual report on Form 10-K
by:
|
|
•
|
accessing
the Investor Relations section of our website at http://www.houwire.com
and clicking on the “SEC Filings”
link;
|
|
|
•
|
writing
to:
|
Houston
Wire & Cable Company — Investor Relations
10201
North Loop East
Houston,
Texas 77029; or
|
|
•
|
telephoning
us at: (713) 609-2100.
|
You can also obtain a copy of our
annual report on Form 10-K and other periodic filings that we make with the
SEC from the SEC’s EDGAR database at http://www.sec.gov.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR 2009 ANNUAL
MEETING
The proxy
rules of the SEC permit our stockholders, after notice to the Company, to
present proposals for stockholder action in our proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate for
stockholder action and are not properly omitted by our action in accordance with
the proxy rules. In order for any stockholder proposal to be
considered for inclusion in our proxy statement to be issued in connection with
our 2009 annual meeting of stockholders, that proposal must be received at our
corporate headquarters, 10201 North Loop East, Houston, Texas 77029 (Attention:
Investor Relations Coordinator), no later than December 4,
2008.
Our
certificate of incorporation and by-laws provide that stockholder action can be
taken only at an annual or special meeting of stockholders and cannot be taken
by written consent in lieu of a meeting. Our certificate of
incorporation and by-laws provide that, except as otherwise required by law,
special meetings of our stockholders can only be called pursuant to a resolution
adopted by a majority of our board of directors or by our chief executive
officer or the chairman of our board of directors. Stockholders are not
permitted to call a special meeting or to require our board to call a special
meeting.
Our
by-laws establish an advance notice procedure for stockholder proposals to be
brought before an annual meeting of our stockholders, including proposed
nominations of persons for election to our board. Stockholders at our annual
meeting may only consider proposals or nominations specified in the notice of
meeting or brought before the meeting by or at the direction of our board or by
a stockholder who was a stockholder of record on the record date for the meeting
and upon giving of notice and provided that the stockholder has given to our
secretary timely written notice, in proper form, of the stockholder’s intention
to bring that business before the meeting. Specifically, our bylaws
provide the following procedure in order that business may properly come before
the stockholders at the annual meeting. Among other things,
stockholders intending to bring business before the annual meeting must provide
written notice of such intent to the Secretary of the Company. Such
notice must be given no earlier than January 2, 2009 and no later than
February 1, 2009. In addition, the following information must be
provided in the written notice: (1) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (2) the name and address, as they appear on the
Corporation’s books, of the stockholder proposing such business, (3) the class
and number of shares of the Corporation’s capital stock that are beneficially
owned by the stockholder, (4) any material interest of the stockholder in such
business and (5) a representation that the stockholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.
If the
stockholder proposes to nominate a person as a director, the written notice must
be given no earlier than January 2, 2009 and no later than February 1, 2009 and
must set forth the following information as to each proposed nominee: (1) the
name, age, business address and, if known, residence address of such nominee,
(2) the principal occupation or employment of such nominee, (3) the number of
shares of stock of the Corporation which are beneficially owned by such nominee,
and (4) any other information concerning the nominee that must be disclosed as
to nominees in proxy solicitations pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, including such person’s written
consent to be named as a nominee and to serve as a director if
elected. As to the stockholder giving the notice, the following
information is required: (1) the name and address, as they appear on the
Corporation’s books, of such stockholder and (2) the class and number of shares
of the Corporation which are beneficially owned by such stockholder. The
Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a director of the Corporation.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of
the Securities Exchange Act of 1934 requires our officers, directors and persons
who own more than ten percent of a registered class of our equity securities to
file reports of ownership and changes in ownership on Forms 3, 4 and 5, as
applicable, with the SEC. Officers, directors and stockholders owning more than
ten percent of our common stock are required by the SEC regulations to furnish
us with copies of all Forms 3, 4 and 5 they file.
Based
solely upon its review of the Forms 3, 4 and 5 furnished to us pursuant to
Section 16(a) of the Securities Exchange Act of 1934, we believe that all
of our directors, officers and beneficial owners of more than 10% of our common
stock filed all such reports on a timely basis during 2007.
Other
Information
The
expenses of preparing and mailing this proxy statement and the accompanying
proxy card and the cost of solicitation of proxies, if any, will be borne by
us. In addition to the use of mailings, proxies may be solicited by
personal interview, telephone and by our directors, officers and regular
employees without special compensation therefore. We expect to
reimburse banks, brokers and other persons for their reasonable out-of-pocket
expenses in handling proxy materials for beneficial owners of our common
stock.
Unless
contrary instructions are indicated on the proxy card, all shares of common
stock represented by valid proxies received pursuant to this solicitation (and
not revoked before they are voted) will be voted “FOR” all of the proposals
described in this proxy statement.
Our board
does not know of any other matters that are to be presented for action at the
2008 annual meeting. Should any other matter come before the annual
meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
Nicol
G. Graham
|
|
|
Vice
President, Chief Financial Officer, Treasurer and
Secretary
|
Dated:
March 28, 2008
24
 |
|||||
 C/O
AMERICAN STOCK TRANSFER
6201
15TH
AVENUE
BROOKLYN,
NY 11219
|
ELECTRONIC
DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If
you would like to reduce the costs incurred by Houston Wire & Cable 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 stockholder communications
electronically in future years.
|
 |
|||
|
BROADRIDGE
FINANCIAL
SOLUTIONS, INC.
ATTENTION:
TEST
PRINT
51
MERCEDES WAY
EDGEWOOD,
NY
11717
  |
35
46
|
VOTE
BY INTERNET- 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 cut-off date or meeting date.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.
VOTE BY PHONE -1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
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 Houston Wire & Cable Company,
c/o Broadridge, 51 Mercedes Way, Edgewood,
NY 11717.
|
 |
0000
0000 0000
|
|
NAME
|
||||
|
HOUSTON WIRE
8 CABLE CO - COMMON
|
123,456,789,012.12345
|
|||
|
HOUSTON WIRE
8 CABLE CO - COMMON
|
123,456,789,012.12345
|
|||
|
HOUSTON
WIRE S CABLE CO - COMMON
|
123,456,789,012.12345
|
|||
|
HOUSTON WIRE
8 CABLE CO - COMMON
|
123,456,789,012.12345
|
|||
|
HOUSTON WIRE
8 CABLE CO - COMMON
|
123,456,789,012.12345
|
|||
|
HOUSTON WIRE
8 CABLE CO - COMMON
|
123,456,789,012.12345
|
|||
|
HOUSTON WIRE
8 CABLE CO - COMMON
|
123,456,789,012.12345
|
|||
|
HOUSTON
WIRE S CABLE CO - COMMON
|
123,456,789,012.12345
|
|
TO
VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
S
|
hwire1
|
TO
V0TE BY MAIL- KEEP THIS PORTION FOR YOUR RECORDS
|
|
DETACH
AND RETURN THIS PORTION ONLY
|
THIS PROXY CARD IS ONLY VALID WHEN SIGNED AND
DATED
|
HOUSTON
WIRE & CABLE COMPANY
THE
DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2
Vote
on the Directors
|
|
FOR
ALL
£
|
|
WITHHOLD
ALL
£
|
|
FOR ALL
EXCEPT
£
|
|
To
withhold authority to vote any individual nominee(s), mark "For All
Except" and write the number(s) of the nominee(s) on the
line
|
|
|
1.
|
To
elect as Directors of Houston Wire & Cable Company
the
nominees listed below
|
||||||||||||
|
|
01)
02)
03)
04)
|
Michael T. Campbell
Ian Stewart Farwell
Peter M. Gotsch
Wilson B. Sexton
|
|
05)
06)
07)
|
William H. Sheffield
Charles A. Sorrentino
Scott
L. Thompson
|
||||||||
|
|
|
||||||||||||
|
Vote
on Proposal
|
For
|
Against
|
Abstain
|
|
|||||||||
|
|
|
||||||||||||
|
2.
|
To
ratify the selection of Ernst & Young LLP as the Company’s independent
registered public accounting firm for the year ending December 31,
2008
|
£
|
£
|
£
|
|
||||||||
|
The
shares represented by this proxy when properly executed will be voted in
the manner directed herein by the undersigned Stockholder(s). If no direction is made, this
proxy will be voted FOR items 1 and 2. If any other matters
properly come before the meeting, or if cumulative voting is required, the
person named in this proxy will vote in their discretion.
|
|||||||||||||
|
Please
indicate if you plan to attend this meeting.
|
Yes
£
|
No
£
|
BROADRIDGE
FINANCIAL
SOLUTIONS, INC.
ATTENTION:
TEST
PRINT
51
MERCEDES WAY
EDGEWOOD,
NY
11717
|
|
P60057
|
123,456,789,012
4424k109
461
|
||||||||
|
Signature
[PLEASE SIGN WITHIN BOX]
|
DATE
|
Signature
(Joint Owners)
|
Date
|
||||||
|
|
|
HOUSTON
WIRE & CABLE COMPANY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS
MAY
8, 2008
The
stockholder(s) hereby appoint(s) Scott L. Thompson and Charles A.
Sorrentino, or either of them, as proxies, each with the power to appoint
his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side of this ballot, all of the shares of Common
Stock of Houston Wire & Cable Company that the stockholder(s) is/are
entitled to vote at the Annual Meeting of Stockholders to be held at 8:30
a.m., CDT, on May 8, 2008, at 10201 North Loop East, Houston, TX 77029,
and any adjournment or postponement thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD
OF DIRECTORS AND FOR EACH PROPOSAL.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
REPLY ENVELOPE
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
|
10201
North Loop East
Houston,
TX 77029
Important
Notice Regarding the Availability of Proxy Materials for Shareholder Meeting To
Be Held on May 8, 2008.
1. 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.
2. The
proxy statement and annual report to shareholders are available at: www.proxyvote.com.
3. 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 April 24, 2008 to
facilitate timely delivery.
Dear
Stockholder:
Under new
Securities and Exchange Commission rules, you are receiving this notice that the
proxy materials for our 2008 Annual Meeting of Stockholders are available on the
Internet.
The 2008
Annual Meeting of Stockholders of Houston Wire & Cable Company will be held
at our corporate headquarters, 10201 North Loop East, Houston, TX 77029, on
Thursday, May 8, 2008 at 8:30 a.m., Central Time. Only stockholders
of record at the close of business on March 10, 2008 are entitled to vote at the
meeting or any adjournment or postponement thereof.
Proposals
to be voted on at the Annual Meeting are listed below, along with the Board of
Directors’ recommendations.
The Board
of Directors recommends that you vote FOR each of the following
proposals:
1. Election
of seven directors to serve on the Board of Directors until the 2009 Annual
Meeting of Stockholders:
|
•
|
Michael
T. Campbell
|
•
|
William
H. Sheffield
|
|
|
•
|
Ian
Stewart Farwell
|
•
|
Charles
A. Sorrentino
|
|
|
•
|
Peter
M. Gotsch
|
•
|
Scott
L. Thompson
|
|
|
•
|
Wilson
B. Sexton
|
2. Ratification
of the selection of Ernst & Young LLP as the Company’s independent
registered public accounting firm for the year ending December 31,
2008.
This
Notice also constitutes notice of the 2008 Annual Meeting of Stockholders of the
Company.
You may
access the following proxy materials at www.proxyvote.com:
|
•
|
Notice
of the 2008 Annual Meeting of Stockholders
|
|
•
|
2008
Proxy Statement
|
|
•
|
Annual
Report to Stockholders for the year ended December 31,
2007
|
|
•
|
Proxy
card
|
You may
access your proxy materials and proxy card online by going to www.proxyvote.com,
having your 12-digit control number (located on the following page) ready when
you go to this web site and following the instructions on that web
site.
If you
prefer a paper or e-mail copy of the proxy materials, you may request one
by:
|
•
|
Sending
an e-mail to sendmaterial@proxyvote.com
(to request material by e-mail, please send a blank e-mail with
your 12-digit control number (located on the following page) in the
subject line) or
|
|
•
|
Calling
1-800-690-6903 or
|
|
•
|
Making
a request online at www.proxyvote.com.
|
There is
no charge to you for requesting a copy of the proxy materials. To
facilitate timely delivery, please make your request on or before April 24,
2008.
Stockholders
of record as of March 10, 2008, the record date for the Annual Meeting, are
cordially invited to attend the 2008 Annual Meeting of
Stockholders. Directions to attend the Annual Meeting, where you may
vote in person, can be found on our website at www.houwire.com.
|
HOUSTON
WIRE & CABLE COMPANY
|