def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
A. Schulman, Inc.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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3550 West Market Street
Akron, Ohio 44333
November 5, 2010
To Our Stockholders:
You are cordially invited to attend the 2010 Annual Meeting of
Stockholders (the Annual Meeting) to be held on
Thursday, December 9, 2010, at 10:00 a.m., local time,
at The Hilton Inn West, 3180 West Market Street, Akron,
Ohio 44333.
Details of the business to be conducted at the Annual Meeting
are provided in the attached notice of annual meeting and proxy
statement. As a stockholder, you are being asked to vote on a
number of important matters. First, we are asking you to elect
eleven directors whose terms will expire at the annual meeting
in fiscal 2011. Information regarding each of the proposed
director nominees is located in the enclosed proxy statement.
Each of the director nominees is currently serving as a director
of A. Schulman, Inc. Second, we are asking you to ratify our
selection of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for fiscal 2011. Finally, we
are asking you to adopt and approve our 2010 Value Creation
Rewards Plan. The Board of Directors recommends that you vote
FOR each of the director nominees,
FOR the appointment of PricewaterhouseCoopers
LLP and FOR the approval of the 2010 Value
Creation Rewards Plan.
Your vote on these matters is important, regardless of the
number of shares you own, and all stockholders are cordially
invited to attend the Annual Meeting in person. Whether or not
you plan to attend the meeting in person, it is important that
your shares be represented and voted. In order to ensure your
shares are represented, we urge you to execute and return the
enclosed form of proxy, or that you submit your proxy
electronically through the Internet or by telephone promptly.
Sincerely,
Joseph M. Gingo
Chairman, President and Chief Executive Officer
TABLE OF CONTENTS
3550 West
Market Street
Akron, Ohio 44333
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders
of A. Schulman, Inc. (A. Schulman or the
Company) will be held at The Hilton Inn West,
3180 West Market Street, Akron, Ohio 44333, on Thursday,
December 9, 2010 at 10:00 a.m., local time, for the
purpose of considering and acting upon the following matters,
all of which are more completely set forth in the accompanying
proxy statement:
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1.
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the election of eleven directors;
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2.
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the ratification of the appointment of PricewaterhouseCoopers
LLP as A. Schulmans independent registered public
accounting firm for the fiscal year ending August 31, 2011;
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3.
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the adoption and approval of the Companys 2010 Value
Creation Rewards Plan (the 2010 Rewards
Plan); and
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4.
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the transaction of any other business as may properly come
before the stockholders at the Annual Meeting and any
adjournments thereof.
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Stockholders of record at the close of business on
October 15, 2010 are entitled to notice of, and to vote at,
the Annual Meeting and any adjournments thereof.
Your Board of Directors recommends that you vote
FOR the election of each of the director
nominees listed in the proxy statement under
PROPOSAL 1 ELECTION OF
DIRECTORS, FOR the ratification of
PricewaterhouseCoopers LLP under
PROPOSAL 2 RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM and
FOR the approval of A. Schulmans 2010
Rewards Plan under PROPOSAL 3 ADOPTION
AND APPROVAL OF A. SCHULMANS 2010 VALUE CREATION REWARDS
PLAN.
By order of the Board of Directors,
David C. Minc
Vice President, Chief Legal Officer and Secretary
Akron, Ohio
November 5, 2010
Your vote is important. Stockholders are requested to
complete, date, sign and return the enclosed PROXY in the
envelope provided, which requires no postage if mailed in the
United States, or to submit their votes electronically through
the Internet or by telephone.
IMPORTANT
NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS
The Securities and Exchange Commission permits companies to send
a single set of annual disclosure documents to any household at
which two or more stockholders reside, unless contrary
instructions have been received, but only if the company
provides advance notice and follows certain procedures. In such
cases, stockholders continue to receive a separate notice of the
meeting and proxy card. This householding process
reduces the volume of duplicate information and reduces printing
and mailing expenses. A. Schulman, Inc. (A. Schulman
or the Company) has not instituted householding for
stockholders of record; however, a limited number of brokerage
firms may have instituted householding for beneficial owners of
A. Schulman common stock held through such brokerage firms. If
your family has multiple accounts holding shares of A. Schulman
common stock, you may have already received householding
notification from your broker. Please contact your broker
directly if you have any questions or require additional copies
of the annual disclosure documents. The broker will arrange for
delivery of a separate copy of the accompanying proxy statement
or A. Schulmans annual report promptly upon your written
or oral request. You may decide at any time to revoke your
decision to household, and thereby receive multiple copies.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON DECEMBER 9, 2010
The proxy statement,
Form 10-K
for the year ended August 31, 2010 and the 2010 annual
report to stockholders are available at
www.proxydocs.com/shlm.
3550 West
Market Street
Akron, Ohio 44333
November 5,
2010
GENERAL
INFORMATION
The accompanying proxy is being solicited by the Board of
Directors of A. Schulman, Inc. (A. Schulman or the
Company) for use at the 2010 Annual Meeting of
Stockholders (the Annual Meeting) to be held on
December 9, 2010 at 10:00 a.m., local time, and any
adjournments thereof. The mailing address of the principal
executive offices of A. Schulman is 3550 West Market
Street, Akron, Ohio 44333. To obtain directions to attend the
Annual Meeting, please contact A. Schulman at
(330) 666-3751.
This proxy statement and the accompanying form of proxy were
first mailed to stockholders on or about November 5, 2010.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
When And
Where Will The Annual Meeting Be Held?
The Annual Meeting will be held on Thursday, December 9,
2010, at 10:00 a.m., local time, at The Hilton Inn West,
3180 West Market Street, Akron, Ohio 44333.
Why Did I
Receive These Proxy Materials?
You have received these proxy materials because the Board of
Directors is soliciting a proxy to vote your shares at the
Annual Meeting. This proxy statement contains information that
A. Schulman is required to provide to you under the rules of the
Securities and Exchange Commission (the Commission)
and is intended to assist you in voting your shares.
Who May
Vote At The Annual Meeting?
The Board of Directors has set October 15, 2010, as the
record date for the Annual Meeting. This means that
only stockholders of record at the close of business on that
date are entitled to notice of, and to vote at, the Annual
Meeting or any adjournment(s) or postponement(s) thereof. At the
close of business on October 15, 2010, there were
31,487,229 shares of A. Schulman common stock,
$1.00 par value, outstanding. Each share of common stock
entitles the holder to one vote on each item to be voted upon at
the Annual Meeting and there is no cumulative voting.
What Is
The Difference Between Holding Shares As A
Stockholder Of Record And As A Beneficial
Owner?
If your shares are registered directly in your name, you are
considered the stockholder of record of those
shares. A. Schulman has sent these proxy materials directly to
all stockholders of record. Alternatively, if your
shares are held in an account at a brokerage firm, bank,
broker-dealer or other similar organization, which is sometimes
called street name, then you are the
beneficial owner of those shares, and these proxy
materials were forwarded to you by that organization. The
organization holding your shares is the stockholder of record
for purposes of voting such shares at the Annual Meeting. As the
beneficial owner, you have the right to direct that
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organization how to vote the common stock held in your account
by following the voting instructions the organization provides
to you.
How Do I
Vote?
Stockholders of record may vote on matters that are properly
presented at the Annual Meeting in four ways:
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by completing the accompanying proxy and returning it in the
envelope provided;
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by voting telephonically;
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by voting electronically via the Internet; or
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by attending the Annual Meeting and voting in person.
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For the Annual Meeting, A. Schulman is offering stockholders of
record the opportunity to vote their shares electronically
through the Internet or by telephone. Instead of submitting the
enclosed proxy by mail, stockholders of record may vote by
telephone or via the Internet by following the procedures
described on the enclosed proxy. In order to vote via telephone
or the Internet, please have the enclosed proxy in hand, and
call the number or go to the website listed on the proxy and
follow the instructions. The telephone and Internet voting
procedures are designed to authenticate stockholders
identities, to allow stockholders to give their voting
instructions, and to confirm that stockholders
instructions have been recorded properly. Stockholders voting
through the Internet should understand that they may bear
certain costs associated with Internet access, such as usage
charges from their Internet service providers. The deadline for
voting through the Internet or by telephone is 11:25 p.m.,
Eastern Time, on December 8, 2010.
If you hold your shares in street name, you should follow the
voting instructions provided to you by the organization that
holds your shares. If you plan to attend the Annual Meeting and
vote in person, ballots will be available. If your shares are
held in the name of your broker, bank or other stockholder of
record, you must bring a legal proxy from the stockholder of
record indicating that you were the beneficial owner of the
shares on October 15, 2010 in order to vote in person.
How Will
My Shares Be Voted?
If you vote by mail, through the Internet, by telephone or in
person, your shares will be voted as you direct. If you submit a
valid proxy prior to the Annual Meeting, but do not complete the
voting instructions, your shares will be voted:
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FOR the election of each of the director
nominees listed under PROPOSAL 1
ELECTION OF DIRECTORS;
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FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as A. Schulmans independent
registered public accounting firm for the fiscal year ending
August 31, 2011 under PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM; and
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FOR the approval of the Companys 2010
Value Creation Rewards Plan (the 2010 Rewards Plan)
under PROPOSAL 3 ADOPTION AND APPROVAL
OF A. SCHULMANS 2010 VALUE CREATION REWARDS PLAN.
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Your Board of Directors recommends that you vote
FOR the election of each of the director
nominees and FOR each of the other proposals
set forth in this proxy statement.
Can Other
Matters Be Decided At The Annual Meeting?
On the date that this proxy statement was printed, A. Schulman
did not know of any matters to be raised at the Annual Meeting
other than those included in this proxy statement. If you submit
a valid proxy and other matters are properly presented for
consideration at the Annual Meeting, then the individuals
appointed as proxies will have the discretion to vote on those
matters for you.
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May I
Revoke Or Change My Vote?
Yes, proxies may be revoked at any time before a vote is taken
or the authority granted is otherwise exercised. Revocation may
be accomplished by:
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the execution of a later dated proxy with respect to the same
shares;
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the execution of a later casted Internet or telephone vote with
respect to the same shares;
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giving notice in writing to the Corporate Secretary at A.
Schulman, Inc., 3550 West Market Street, Akron, Ohio
44333; or
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notifying the Corporate Secretary in person at the Annual
Meeting.
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If your shares are held in street name and you wish to revoke
your proxy, you should follow the instructions provided to you
by the record holder of your shares. If you wish to revoke your
proxy in person at the Annual Meeting, you must bring a legal
proxy from the stockholder of record indicating that you were
the beneficial owner of the shares on October 15, 2010.
Attending the Annual Meeting will not, by itself, revoke your
proxy.
Who Pays
The Cost Of Proxy Solicitation?
The accompanying proxy is solicited by and on behalf of the
Board of Directors, whose notice of annual meeting is attached
to this proxy statement, and the entire cost of such
solicitation will be borne by A. Schulman. In addition to the
use of the mail, proxies may be solicited by personal interview,
telephone, facsimile and electronic mail by directors, officers
and employees of A. Schulman. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries
for the forwarding of solicitation material to the beneficial
owners of common stock held of record by such persons, and A.
Schulman will reimburse them for reasonable
out-of-pocket
expenses incurred by them in connection therewith. A. Schulman
has engaged Georgeson, Inc. to aid in the solicitation of
proxies in order to assure a sufficient return of votes on the
proposals to be presented at the Annual Meeting. The costs of
such services are estimated at $7,750, plus reasonable
distribution and mailing costs.
How Many
Shares Of Common Stock Must Be Represented At The Annual
Meeting In Order To Constitute A Quorum?
At least 15,743,615 shares of common stock must be
represented at the Annual Meeting in person or by proxy in order
to constitute a quorum for the transaction of business.
Abstentions are counted as present for purposes of determining a
quorum. Street name holders generally cannot vote their shares
directly and must instead instruct the broker, bank or other
stockholder of record how to vote their shares using the voting
instructions provided by it. If a street name holder does not
provide timely instructions, the broker or other nominee may
have the authority to vote on some proposals but not others. If
the broker or other nominee votes on one proposal, but does not
vote on another proposal because the nominee does not have
discretionary voting power and has not received instructions
from the beneficial owner, this results in a broker non-vote.
Broker non-votes on a matter are counted as present for purposes
of establishing a quorum for the meeting, but are not considered
entitled to vote on that particular matter. Consequently, broker
non-votes generally do not have the same effect as a negative
vote on the matter.
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What Are
The Voting Requirements To Elect The Directors And To Approve
The Other Proposals Discussed In This Proxy Statement?
The vote required to approve each of the proposals that are
scheduled to be presented at the Annual Meeting is as follows:
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Proposal
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Vote Required
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Proposal One
Election of Directors
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Election of the director nominees requires the favorable vote of
a plurality of all votes cast by the holders of common stock at
the Annual Meeting. Broker non-votes and proxies marked
WITHHOLD will not be counted toward the
election of directors or toward the election of individual
nominees specified on the proxy and, thus, will have no effect
other than that they will be counted for establishing a quorum.
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Proposal Two
Ratification of Appointment of Independent Registered Public
Accounting Firm
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For the ratification of the appointment of
PricewaterhouseCoopers LLP as A. Schulmans independent
registered public accounting firm for the fiscal year ending
August 31, 2011, the affirmative vote of the holders of a
majority of the shares of common stock present, represented and
entitled to vote at the Annual Meeting will be required for
approval. Stockholders may vote FOR,
AGAINST, or ABSTAIN from
voting on Proposal Two. Broker non-votes will not be counted
for the purpose of determining whether Proposal Two has been
approved. Abstentions will be counted as present and entitled to
vote for purposes of Proposal Two and thus, will have the same
effect as a vote against Proposal Two.
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Proposal Three
Adoption and Approval of A. Schulmans 2010 Value Creation
Rewards Plan
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For the adoption and approval of the 2010 Rewards Plan, the
affirmative vote of the holders of a majority of the common
stock present, represented and entitled to vote at the Annual
Meeting will be required for approval. Stockholders may vote
FOR, AGAINST, or
ABSTAIN from voting on Proposal Three.
Broker non-votes will not be counted for the purpose of
determining whether Proposal Three has been approved.
Abstentions will be counted as present and entitled to vote for
purposes of Proposal Three and, thus, will have the same effect
as a vote against Proposal Three.
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When Must
Stockholder Proposals for 2011 Annual Meeting of Stockholders Be
Submitted?
Any stockholder who intends to present a proposal at the annual
meeting of stockholders in fiscal 2011 must deliver such
proposal to the Corporate Secretary at A. Schulman, Inc.,
3550 West Market Street, Akron, Ohio 44333:
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Not later than July 8, 2011, if the proposal is submitted
for inclusion in A. Schulmans proxy materials for the
meeting pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended (the
Exchange Act); or
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Not earlier than August 11, 2011 and not later than
September 10, 2011, if the proposal is submitted pursuant
to A. Schulmans Amended and Restated By-Laws (the
By-Laws). A. Schulman reserves the right to exercise
discretionary voting authority on such proposals if a
stockholder has failed to submit their proposal within the
designated time period.
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4
CORPORATE
GOVERNANCE
The Board of Directors has long followed, both formally and
informally, corporate governance principles designed to assure
that the Board, through its membership, composition and
committee structure, is able to provide informed, competent and
independent oversight of A. Schulman.
Director
Independence
Under the corporate governance listing standards of the NASDAQ
Global Select Market (NASDAQ) and the Corporate
Governance Guidelines for the Board of Directors (the
Corporate Governance Guidelines), a majority of the
members of the Board of Directors must satisfy NASDAQs
criteria for independence. The Board has determined
that the directors and nominees named below, who are all the
directors other than Mr. Gingo, are independent under
applicable NASDAQ standards for the fiscal year ended
August 31, 2010.
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Eugene R. Allspach
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Howard R. Curd
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Ernest J. Novak, Jr.
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Gregory T. Barmore
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Michael A. McManus, Jr.
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Dr. Irvin D. Reid
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David G. Birney
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Lee D. Meyer
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Stanley W. Silverman
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Michael Caporale, Jr.
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James A. Mitarotonda
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John B. Yasinsky
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Corporate
Governance Guidelines
The Board of Directors has adopted Corporate Governance
Guidelines, which are available on A. Schulmans website at
www.aschulman.com. The Corporate Governance Guidelines
are intended to assure that director qualifications, committee
structure and overall Board processes provide good corporate
governance and independent oversight of A. Schulmans
management.
Board
Committees
The Board of Directors has established the following standing
Committees: (i) Executive Committee; (ii) Audit
Committee; (iii) Compensation Committee;
(iv) Nominating and Corporate Governance Committee; and
(v) Strategic Committee.
Executive
Committee
The Executive Committee is authorized to act on behalf of the
Board of Directors on all corporate actions for which applicable
law does not require participation by the full Board. In
practice, the Executive Committee acts in place of the full
Board of Directors only when emergency issues or scheduling
makes it difficult or impracticable to assemble the full Board.
All actions taken by the Executive Committee must be reported at
the next meeting of the Board of Directors. The Executive
Committee consists of Messrs. Gingo, Mitarotonda and
Yasinsky. The Executive Committee held two meetings during the
fiscal year ended August 31, 2010.
Audit
Committee
The Audit Committee operates under a written charter that
reflects the corporate governance principles advocated by the
Commission and the rules and listing standards of NASDAQ. The
Audit Committee consists of Messrs. Novak (Chair),
Allspach, Caporale, Curd, Meyer, Reid and Silverman. The primary
purposes of the Audit Committee are: (i) to assist the
Board of Directors in fulfilling its responsibility to oversee
the accounting and financial reporting processes of A. Schulman,
including the quality and integrity of the Companys
financial statements and other financial information provided by
A. Schulman to any governmental or regulatory body, the public
or certain other users thereof; (ii) to assist A. Schulman
in fulfilling its compliance with legal and regulatory
requirements; (iii) to analyze and review the
qualifications, independence and performance of, and A.
Schulmans relationship with, its independent registered
public accounting firm; (iv) to analyze and review the
performance of A. Schulmans systems of internal accounting
and financial controls; (v) to analyze and review the
effectiveness of A. Schulmans processes of internal
auditing; and (vi) to assist the Board in monitoring A.
Schulmans independent registered public accounting firm in
the annual independent audit of the Companys financial
statements and the effectiveness of A. Schulmans internal
control over financial reporting. The functions performed by the
Audit Committee include: (1) reviewing the financial
statements with management and A. Schulmans independent
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registered public accounting firm before publication;
(2) reviewing with management and the Companys
independent registered public accounting firm significant
financial reporting issues and judgments made in connection with
the preparation of A. Schulmans financial statements;
(3) reviewing with the Chief Executive Officer and Chief
Financial Officer any issues pertaining to the certifications
required to accompany the filing of the Companys Annual
Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
and any other information required to be disclosed in connection
therewith; (4) overseeing A. Schulmans internal
accounting and financial controls; (5) reviewing legal
matters that may have a material impact on A. Schulmans
financial statements or the Companys compliance policies;
(6) establishing procedures for the proper handling of
complaints concerning accounting or auditing matters;
(7) considering the scope of non-audit services to be
performed by the Companys independent registered public
accounting firm; (8) reviewing and approving in advance the
annual audit plan and scope of work to be performed by the
independent registered public accounting firm;
(9) overseeing the appointment, compensation, retention and
independence of A. Schulmans independent registered public
accounting firm; (10) pre-approving all auditing services
and permitted non-audit services to be performed for A. Schulman
by the independent registered public accounting firm; and
(11) reviewing all related party transactions that are
required to be reported under Item 404(a) of
Regulation S-K.
Additionally, the Audit Committee oversees A. Schulmans
program to comply with Section 404 of the Sarbanes-Oxley
Act of 2002, as amended, which requires the Company to
establish, maintain and assess adequate internal control
structures and procedures for financial reporting.
NASDAQ rules require each member of the Audit Committee to be
able to read and understand financial statements. A. Schulman
believes that each member of the Audit Committee, as
constituted, satisfies this requirement. Members of the Audit
Committee rely, without independent verification, on the
information provided to them and on the representations made by
management and A. Schulmans independent registered public
accounting firm, although each member of the Audit Committee has
the authority to engage and determine funding for independent
advisors as deemed necessary. Furthermore, the Audit
Committees considerations and discussions do not assure:
(i) that the audit of A. Schulmans financial
statements has been carried out in accordance with the standards
of the Public Company Accounting Oversight Board (United
States); (ii) that the financial statements are presented
in accordance with the accounting principles generally accepted
in the United States; or (iii) that the Companys
independent registered public accounting firm is in fact
independent. A more complete description of these
and other Audit Committee functions is contained in the Audit
Committees Charter, a copy of which is available on A.
Schulmans website at www.aschulman.com.
The Audit Committee held a total of six meetings during the year
ended August 31, 2010. The Audit Committee reviewed with
PricewaterhouseCoopers LLP and management A. Schulmans
interim financial results prior to the filing of each of A.
Schulmans Quarterly Reports on
Form 10-Q.
The Board has determined that each of the members of the Audit
Committee is independent as defined under Rule 5605(a)(2)
and Rule 5605(c)(2)(A) of the NASDAQ listing standards. The
Board has also determined that the Chairman of the Audit
Committee, Ernest J. Novak, Jr., is an audit
committee financial expert as defined in regulations
adopted by the Commission.
Compensation
Committee
The primary purpose of the Compensation Committee is to
supervise and, to the extent consistent with the Corporate
Governance Guidelines, exercise the powers of the Board of
Directors with respect to overseeing the use of corporate assets
in compensating executive officers. The Compensation Committee
consists of Messrs. Yasinsky (Chair), Barmore, Birney,
Mitarotonda, Novak, and Silverman. The Compensation Committee
has overall responsibility for executive succession planning,
management development and approving and evaluating the
incentive compensation plans, policies and programs of A.
Schulman. As set forth in the Compensation Committees
Charter, the functions to be performed by the Compensation
Committee include: (i) setting the salary and other
compensation of the Chief Executive Officer and the other
executive officers of A. Schulman; (ii) reviewing incentive
compensation pools for the Company prior to the annual
determination of individual cash and equity-based incentive
awards; (iii) approving all employment,
change-in-control
and severance agreements, as well as all annuity contracts and
benefit or perquisite plans or programs (other than broad-based
employee plans or programs), which are proposed for executive
officers and certain managers; (iv) periodically reviewing
A. Schulmans compensation programs and policies to align
them with the Companys annual and long-term goals and the
interests of the stockholders; and (v) administering,
implementing and interpreting A. Schulmans long-
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term incentive plans, which includes the ability to grant stock
options, restricted stock, stock appreciation rights,
performance incentives, and similar plans and arrangements. The
Compensation Committee may, in its discretion, delegate all or a
portion of its duties and responsibilities to one or more
members of the Committee; provided, however, that such members
must conduct business in accordance with the Compensation
Committee Charter. In addition, the Compensation Committee may
delegate to the Chief Executive Officer, or another executive
designee, the authority to approve salary and other compensation
for employees below the executive officer level in accordance
with overall pools, policy guidelines and limits approved by the
Committee. Pursuant to its charter, the Compensation Committee
has the authority to retain special counsel, compensation
consultants and other experts, as it deems appropriate, to carry
out its functions and to approve the retention terms for any
such counsel, consultants or experts. A more complete
description of these and other Compensation Committee functions
is contained in the Compensation Committees Charter, a
copy of which is available on A. Schulmans website at
www.aschulman.com and in the Compensation Discussion
and Analysis section of this proxy statement beginning on
page 19. The Compensation Committee held five meetings
during the fiscal year ended August 31, 2010. The Board has
determined that each of the members of the Compensation
Committee is independent as defined under Rule 5605(a)(2)
of the NASDAQ listing standards.
Compensation
Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is, or has
been, an employee or officer of A. Schulman. There are no
interlocking relationships between A. Schulman and other
entities that might affect the determination of the compensation
of the Companys executive officers.
Relationship
with Executive Compensation Consultant
As permitted by the Compensation Committee Charter, the
Compensation Committee retained Towers Perrin, Inc.
(Towers Perrin) as its outside compensation
consultant for fiscal 2010 to provide consulting services with
respect to A. Schulmans compensation practices. Effective
January 4, 2010, Towers Perrin was acquired by Watson Wyatt
Worldwide Inc. (Watson Wyatt), resulting in a
combined company called Towers Watson, Inc. (Towers
Watson). Pursuant to the terms of its engagement by the
Compensation Committee, Towers Watson generally reviewed,
analyzed and provided advice regarding A. Schulmans
executive compensation programs for the Companys executive
officers in relation to the objectives of those programs,
including comparisons to designated peer group companies and
comparisons to best practices, and provided
information and advice on competitive compensation practices and
trends, along with specific views on A. Schulmans
compensation programs. In its role as compensation consultant,
representatives of Towers Watson engaged in discussions with the
Compensation Committee and responded on a regular basis to
questions from the Committee and the Committees other
advisors, providing them with their opinions with respect to the
design and implementation of current or proposed compensation
programs. During fiscal 2010, Towers Watson reported directly to
the Compensation Committee and the Committee retained the sole
authority to retain or terminate Towers Watson. In fiscal 2010,
A. Schulman paid Towers Watson fees of approximately $79,889 for
its consulting services relative to the Companys executive
compensation.
During fiscal 2010, the former Watson Wyatt firm, and then
Towers Watson, provided consulting and administration services
to A. Schulman on various matters unrelated to the executive
compensation consulting services provided to the Compensation
Committee. Specifically, in fiscal 2010, A. Schulman received
consulting, plan design and administration services relative to,
among other things, workers compensation insurance
administration, post-retirement medical and life insurance
design, and an analysis of the pending impact of healthcare
reform on the Company. In fiscal 2010, fees for these unrelated
worldwide services totaled $429,796 (including
122,124 Euros translated to U.S. dollars using a
12-month average rate of 1.3664). In determining the scope of
non-executive compensation related services to be provided by
Towers Watson, members of A. Schulman management recommended the
scope and content of the non-executive compensation related
services to be provided by Towers Watson, and the Compensation
Committee approved such other services upon consideration of the
nature and extent of the services to be provided by Towers
Watson.
For fiscal 2011, the Compensation Committee has determined to
retain the services of Pay Governance, LLC (Pay
Governance) as its outside compensation consultant and to
terminate its relationship with Towers Watson.
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All services provided by Pay Governance to the Compensation
Committee will be determined by the Committee, which will have
the sole authority to retain or terminate its outside
compensation consultant. For fiscal 2011, the Compensation
Committee anticipates that Pay Governance will not provide any
outside consulting services to A. Schulman. For fiscal 2011,
management anticipates that A. Schulman will continue to retain
the services of Towers Watson to continue to provide
non-executive compensation related services to the Company.
Nominating
and Corporate Governance Committee
The primary purposes of the Nominating and Corporate Governance
Committee are: (i) to identify individuals qualified to
become directors; (ii) to recommend to the Board of
Directors the candidates for election by stockholders or
appointment by the Board to fill a vacancy; (iii) to
recommend to the Board of Directors the composition and chairs
of Board committees; (iv) to develop and recommend to the
Board of Directors guidelines for effective corporate
governance; and (v) to lead an annual review of the
performance of the Board of Directors and each of its
committees. The Nominating and Corporate Governance Committee
consists of Messrs. Birney (Chair), Allspach, Caporale,
McManus and Reid. A more complete description of these and other
Nominating and Corporate Governance Committee functions is
contained in the Nominating and Corporate Governance
Committees Charter, a copy of which is available on A.
Schulmans website at www.aschulman.com. The
Nominating and Corporate Governance Committee held five meetings
during the fiscal year ended August 31, 2010. The Board has
determined that each of the members of the Nominating and
Corporate Governance Committee is independent as defined under
Rule 5605(a)(2) of the NASDAQ listing standards.
Director
Nominations
In its role as the nominating body for the Board of Directors,
the Nominating and Corporate Governance Committee reviews the
credentials of potential director candidates (including
potential candidates recommended by stockholders), conducts
interviews and makes formal recommendations to the Board for the
annual election or interim appointment of directors. In making
its recommendations, the Nominating and Corporate Governance
Committee considers a variety of factors, including, but not
limited to:
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whether the prospective candidate has demonstrated achievements
in business, education or public service or otherwise possess
the requisite intelligence, education and experience to make a
significant contribution to the membership of the Board of
Directors;
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whether the prospective candidate will contribute a range of
skills and a diversity of perspectives to the Board;
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whether the prospective candidate possesses the highest ethical
standards, a strong sense of professionalism and is prepared to
serve the interests of all stockholders; and
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whether the prospective candidate has the ability and
willingness to commit adequate time to Board and committee
matters.
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As listed above, diversity of viewpoints, background, experience
and other demographics are a few of several criteria on which
the Nominating and Corporate Governance Committee bases its
evaluation of potential candidates for director positions. The
inclusion of diversity in the listed criteria reflects the Board
of Directors belief that diversity is an important
component of an effective Board and the Nominating and Corporate
Governance Committee considers diversity aspects when it
evaluates director candidates and their specific skills,
expertise and background.
For those director candidates who are also employees of A.
Schulman, the Nominating and Corporate Governance Committee
considers members of the executive management of the Company who
have or are in the position to have a broad base of information
about A. Schulman and its business. The Board of Directors
Candidate Guidelines are attached as Exhibit A to
the Corporate Governance Guidelines, a copy of which is
available on A. Schulmans website at
www.aschulman.com. The Nominating and Corporate
Governance Committee has in the past engaged a professional
search firm (to which it paid a fee) to assist in identifying
and evaluating potential nominees and may do so again in the
future.
8
The Nominating and Corporate Governance Committee will consider
recommendations for nomination to stand for election as director
those persons who are recommended to it in writing by any
stockholder in accordance with the procedures for Stockholders
to Recommend Candidates for Directors (which are available on A.
Schulmans website at www.aschulman.com). Any stockholder
wishing to recommend an individual to be considered by the
Nominating and Corporate Governance Committee as a nominee for
election as a director should send a signed letter of
recommendation to the following address: A. Schulman, Inc.,
3550 West Market Street, Akron, Ohio 44333, Attention:
Chair of the Nominating and Corporate Governance Committee,
c/o Corporate
Secretary. Recommendation letters must state the reasons for the
recommendation and contain the full name and address of each
proposed nominee, as well as a brief biographical history
setting forth past and present directorships, employments,
occupations and civic activities. Any such recommendation should
be accompanied by a written statement from the proposed nominee
consenting to be named as a candidate and, if nominated and
elected, consenting to serve as a director. A. Schulman may also
require a candidate to furnish additional information regarding
his or her eligibility and qualifications. The Nominating and
Corporate Governance Committee does not intend to evaluate
candidates proposed by stockholders differently than it
evaluates candidates that are suggested by Board members,
executive officers or other sources.
Strategic
Committee
The primary functions of the Strategic Committee are to
investigate and evaluate strategic alternatives available to A.
Schulman and to work with management on long-range strategic
planning and the identification of potential new business
opportunities. A more complete description of these and other
Strategic Committee functions is contained in the Strategic
Committee Charter, which is available on A. Schulmans
website at www.aschulman.com. The Strategic Committee
consists of Messrs. Curd (Chair), Barmore, McManus, Meyer,
Mitarotonda and Yasinsky. The Strategic Committee held four
meetings during fiscal 2010.
Attendance
at Meetings
The Board of Directors held seven meetings during the year ended
August 31, 2010. All directors, including both incumbent
directors and directors who served for only a portion of fiscal
2010, attended at least 75% of the aggregate of all meetings of
the Board of Directors and any committees thereof on which such
director served during the year. In accordance with the
Corporate Governance Guidelines, directors are expected to
attend all meetings of the Board of Directors (although it is
understood that, on occasion, a director may not be able to
attend a meeting). Directors are also encouraged to attend the
Annual Meeting. All of the members of the Board of Directors,
except Messrs. Allspach and Barmore, each of whom was not
yet a member of the Board, attended the annual meeting of
stockholders held on December 10, 2009.
Board
Leadership and Lead Independent Director
Since his appointment as President and Chief Executive Officer
in 2008, Joseph M. Gingo has served as Chairman of the Board of
Directors. The Board of Directors believes that Mr. Gingo
is best situated to serve as Chairman based upon his significant
leadership position with A. Schulman and his in-depth
familiarity with the Companys business and industry. In
addition, the Board of Directors believes that
Mr. Gingos combined role as Chairman and Chief
Executive Officer positions him to effectively identify A.
Schulmans strategic priorities and lead Board discussions
on the execution of Company strategy. While each of A.
Schulmans non-employee directors brings unique experience,
oversight and expertise from outside the Company and its
industry, Mr. Gingos company-specific experience and
expertise allow him to effectively direct Board discussions and
focus Board decision-making on those items most important to the
Companys overall success. The Board of Directors believes
that the combined role of Chairman and Chief Executive Officer
helps promote A. Schulmans overall strategic development
and facilitates the efficient flow of information between
management and the Board.
While the Board of Directors believes that having a combined
Chairman and Chief Executive Officer is essential to A.
Schulmans overall strategic development, the Board is also
aware that one of its responsibilities is to oversee Company
management and make performance, risk and compensation related
decisions regarding management. In order to appropriately
balance the Board of Directors focus on strategic
development with its management oversight responsibilities, the
Board created the position of Lead Independent Director in 2005.
9
Currently, John B. Yasinsky serves in the capacity of Lead
Independent Director. As Lead Independent Director,
Mr. Yasinsky is responsible for presiding at all executive
sessions of the Board of Directors and acts as an active liaison
between management and A. Schulmans non-employee
directors, maintaining frequent contact both with Mr. Gingo
to advise him on the progress of Board committee meetings, and
with individual non-employee directors concerning recent
developments affecting the Company. Through the role of an
active, engaged Lead Independent Director, it is the opinion of
the Board of Directors that its leadership structure is
appropriately balanced between promoting A. Schulmans
strategic development and the Boards management oversight
function. The Board of Directors also believes that its
leadership structure has created an environment of open,
efficient communication between the Board and management.
Boards
Role in Risk Oversight
The Board of Directors has oversight responsibility of A.
Schulmans risk management, while the Companys
management is responsible for the
day-to-day
risk management process. A. Schulman faces risks in a variety of
areas including, but not limited to, strategy, operations,
finance, legal, marketing, information technology, human
resources, communications and procurement. In order to
effectively identify, evaluate and manage potential risks to A.
Schulman, the Board of Directors and management developed during
fiscal 2010 an extensive enterprise risk management
(ERM) program, under which management, with the
oversight of the Board, identifies the primary risks the Company
faces with respect to its business, operations and strategy. As
part of the risk identification process, management conducts
interviews with A. Schulmans key business and functional
leaders to help develop and identify risk action items.
Thereafter, for each action item, the Board of Directors and
management: (i) assign a specific prioritization level;
(ii) identify ways to mitigate and manage such action item;
and (iii) delegate responsibility to a particular unit or
group for addressing each action item. As part of the ERM
process, management regularly reports and discusses identified
risk action items with the Board of Directors or a designated
committee thereof. In this regard, the Board of Directors
allocates responsibility to specific Board committees to examine
identified action items to the extent they arise in a specific
committees area of responsibility. For example, the Compensation
Committee is responsible for oversight of risk management with
respect to A. Schulmans executive and non-executive
compensation programs and practices, including its incentive
compensation programs, in order to ensure that the
Companys compensation policies and practices do not
encourage excessive or unnecessary risk-taking and are not
reasonably likely to have a material adverse effect on A.
Schulman. In addition, while the Board of Directors is
ultimately responsible for ERM oversight, the Board has
delegated to the Strategic Committee the responsibility to
assist the Board in the review of managements ERM process
and to help ensure that risk responses are effectively carried
out.
Code of
Conduct
The Board of Directors has adopted a Global Code of Conduct
applicable to A. Schulmans officers and employees and a
Director Code of Conduct, each of which is available on the
Companys website at www.aschulman.com. To further
assure compliance, A. Schulman maintains a worldwide hotline
that allows employees to report confidentially any suspected
violation of its Global Code of Conduct. A. Schulman intends to
satisfy the disclosure requirements regarding an amendment to or
a waiver from a provision of its Global Code of Conduct that
applies to the Companys executive officers by posting such
information on its website at www.aschulman.com.
Executive
Sessions
Executive sessions of non-employee directors are regularly held
at each meeting of the Board of Directors, including meetings
during the fiscal year ended August 31, 2010.
Stockholder
Communications with the Board of Directors
Stockholders may send communications to the Board of Directors
by mail or courier delivery addressed as follows: A. Schulman,
Inc.,
c/o Corporate
Secretary, 3550 West Market Street, Akron, Ohio 44333. In
general, the Corporate Secretary will forward all such
communications to the Chair of the Nominating and Corporate
Governance Committee. The Chair of the Nominating and Corporate
Governance Committee will in turn determine
10
whether the communication should be forwarded to other members
of the Board of Directors and, if so, forward them accordingly.
However, for communications addressed to a particular member of
the Board of Directors or the Chair of a particular committee,
the Corporate Secretary will forward such communications
directly to the Board member so addressed.
Certain
Relationships and Related Transactions
Pursuant to the provisions of its charter, the Audit Committee
is charged with evaluating any transaction or series of
transactions which involve A. Schulman, a related
person and the amount involved exceeds $120,000. According
to the rules of the Commission, a related person is
defined as a director, officer, nominee for director, or five
percent stockholder of A. Schulman since the beginning of the
last fiscal year and their immediate family members. Pursuant to
the Audit Committee Charter, all related person transactions
must be referred to the Audit Committee for approval,
ratification, revision or termination. No director may
participate in the consideration of a related person transaction
in which he or she or an immediate family member is involved.
During fiscal 2010, no related person transactions were brought
before the Audit Committee for approval.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires A.
Schulmans officers and directors, and persons who own more
than ten percent of the common stock, to file reports of
ownership and changes in ownership with the Commission. To A.
Schulmans knowledge, based solely on its review of the
copies of such forms received by the Company, the following
transactions were not timely filed: (i) a Form 4
report on March 3, 2010 by Paul F. DeSantis regarding the
disposition of shares of restricted stock upon vesting of awards
of restricted stock for purposes of tax withholding; and
(ii) a Form 4 report by Bernard Rzepka on
March 3, 2010 regarding the settlement of restricted stock
units.
PROPOSAL ONE
ELECTION OF DIRECTORS
In 2008, the Board of Directors approved, and recommended to the
stockholders that they approve, a proposal to amend A.
Schulmans Amended and Restated Certificate of
Incorporation (the Certificate of Incorporation) to
phase out the classification of the Board of Directors and to
provide for the annual election of directors. Under the terms of
the proposal, those directors previously elected for three-year
terms would complete their three-year term, while directors
nominated for re-election at the 2008 annual meeting of
stockholders would serve a one-year term expiring at the 2009
annual meeting of stockholders. At the 2008 annual meeting of
stockholders, stockholders approved the proposed
declassification amendment. As of the Annual Meeting, the Board
of Directors will have completed its tiered declassification
process and all current directors terms will expire as of
the Annual Meeting.
In accordance with the provisions of the Certificate of
Incorporation and the By-Laws, the Board of Directors has
currently fixed the number of directors at 13. Previously, the
Board of Directors had fixed the number of directors at 11,
however, with the appointment of Eugene R. Allspach and Gregory
T. Barmore pursuant to the terms of the Agreement and Plan of
Merger, dated December 2, 2009, by and among A. Schulman,
ICO, Inc. (ICO) and ICO Schulman, LLC
fka Wildcat Spider LLC (the Merger Agreement), the
Board expanded in size to 13 members upon completion of the
merger in April 2010. As part of A. Schulmans evaluation
and negotiation of the ICO acquisition, the Nominating and
Corporate Governance Committee, in considering whether an
expansion of the Board of Directors would be appropriate,
undertook an extensive evaluation of the then-current directors
of ICO to determine which directors satisfied its criteria for
director candidates. The Nominating and Corporate Governance
determined that Messrs. Barmore and Allspach each had
excellent qualifications to serve as directors of A. Schulman
and agreed to expand the Board of Directors and appoint them as
directors upon completion of the merger and to nominate them at
the Annual Meeting.
Nevertheless, consistent with prior Board reduction actions, the
Board of Directors determined in the latter portion of fiscal
2010 that reductions in the number of directors from 13 to 11 to
be elected at the Annual Meeting and from 11 to nine to be
elected at the annual meeting of stockholders in 2011, would be
appropriate in order to more closely align A. Schulmans
Board size with its business operations and stockholder
interests. Accordingly, pursuant to the directive of the Board
of Directors, the Nominating and Corporate Governance Committee
undertook a process to recommend to the Board a slate of
director candidates for election at the Annual Meeting. On
October 14, 2010, the Board of Directors unanimously
approved a resolution fixing the size of the Board at
11
11 directors effective at the Annual Meeting. Upon the
recommendation of the Nominating and Corporate Governance
Committee, the Board has nominated the following to serve as
directors for the term beginning at the Annual Meeting on
December 9, 2010: Eugene R. Allspach; Gregory T. Barmore;
David G. Birney; Howard R. Curd; Joseph M. Gingo; Michael A.
McManus; Lee D. Meyer; James A. Mitarotonda; Ernest J. Novak;
Irvin D. Reid; and John B. Yasinsky.
Proxies cannot be voted for a greater number of persons than the
number of nominees named in this proxy statement. Unless a
stockholder requests that voting of that stockholders
proxy be withheld for any one or more of the nominees for
director in accordance with the instructions set forth on their
proxy, it is presently intended that shares represented by
proxies in the enclosed form will be voted for the election of
each of the eleven director nominees. All nominees appearing
below have consented to being named in this proxy statement and
to serve if elected. Should any nominee subsequently decline or
be unable to accept such nomination to serve as a director, an
event that the Board of Directors does not now expect, the
persons voting the shares represented by proxies solicited
hereby may vote such shares for a reduced number of nominees.
The election of the director nominees requires the favorable
vote of a plurality of all votes cast by the holders of common
stock at a meeting at which a quorum is present. Broker
non-votes and proxies marked WITHHOLD will
not be counted toward the election of directors or toward the
election of individual nominees specified in the proxy and,
thus, will have no effect other than that they will be counted
for establishing a quorum.
The following sets forth information regarding each nominee for
election as a director, including each individuals age,
principal occupation and business experience during the past
five years. In addition, the following information provides the
Nominating and Corporate Governance Committees evaluation
regarding re-nomination of each of the director nominees and the
key attributes, skills, and qualifications presented by each
director nominee. Information concerning each nominee is based
in part on information received from the respective directors
and in part from A. Schulmans records.
NOMINEES
FOR ELECTION AS DIRECTORS
(Term Expiring in 2011)
Eugene R.
Allspach, Age 63
Mr. Allspach has served as a director of A. Schulman since
May 2010 and is a member of the Audit and Nominating and
Corporate Governance Committees. Since 2003, Mr. Allspach
has served as the President of E. R. Allspach &
Associates, LLC, a company providing consulting services to new
business development activities in the petrochemical industry.
Previously, from 1997 to 2002 Mr. Allspach served as
President and Chief Operating Officer for Equistar Chemicals,
L.P., a petrochemical company, and held numerous executive level
positions for its predecessor companies from 1982 to 1997. In
addition, Mr. Allspach served as a director of ICO from
2008 until its acquisition by A. Schulman in fiscal 2010. The
Nominating and Corporate Governance Committee believes that the
attributes, skills and qualifications Mr. Allspach has
developed through his more than 35 years of experience in
executive management, business development, manufacturing,
operations, marketing and process engineering in the
petrochemicals industry, as well as his prior experience as a
director of ICO, allow him to provide continued financial and
industry expertise to the Board of Directors. Pursuant to the
terms and conditions of the Merger Agreement, A. Schulman has
agreed to nominate Mr. Allspach for election to the Board
of Directors at the Annual Meeting.
Gregory
T. Barmore, Age 68
Mr. Barmore has served as a director of A. Schulman since
May 2010 and is a member of the Compensation and Strategic
Committees. Mr. Barmore is currently retired and serves as
a director of NovaStar Financial, Inc, a specialty finance
company, a position he has held since 1996. Previously,
Mr. Barmore served as Chairman and Chief Executive Officer
of General Electric Capital Mortgage Corporation, a subsidiary
of General Electric Capital Corporation, and held numerous
executive level positions within the General Electric family of
companies from 1966 to 1997. In addition, Mr. Barmore
served as a director of ICO from 2004 until its acquisition by
A. Schulman in fiscal 2010 and served as Chairman of the ICO
Board of Directors from 2005 until 2010. The Nominating and
Corporate Governance Committee believes that the attributes,
skills and qualifications Mr. Barmore has developed
12
through his financial and corporate governance expertise,
experiences as a chief executive officer, public-company
director experience, as well as his prior experience as a
director of ICO, allow him to provide continued financial and
business expertise to the Board of Directors. Pursuant to the
terms and conditions of the Merger Agreement, A. Schulman has
agreed to nominate Mr. Barmore for election to the Board of
Directors at the Annual Meeting.
David G.
Birney, Age 67
Mr. Birney has served as a director of A. Schulman since
2006, is Chair of the Nominating and Corporate Governance
Committee and is a member of the Compensation Committee.
Mr. Birney is currently retired and serves as a director of
Tronox, Inc., a specialty chemical company, a position he has
held since 2006. Previously, Mr. Birney served as President
and Chief Executive Officer of Solvay America, Inc., a
subsidiary of Solvay S.A., an international industrial chemical
group, and held numerous executive level positions within the
Solvay Group from 1978 to 2006. The Nominating and Corporate
Governance Committee believes that the attributes, skills and
qualifications Mr. Birney has developed through his
experiences as a chief executive officer in the chemicals and
plastics industry, public-company director experience, as well
his prior service as a director of A. Schulman, including his
exemplary service as Chair of the Nominating and Corporate
Governance Committee, allow him to provide continued industry
and corporate governance expertise to the Board of Directors and
has nominated him for re-election.
Howard R.
Curd, Age 71
Mr. Curd has served as a director of A. Schulman since
2006, is Chair of the Strategic Committee and is a member of the
Audit Committee. Since 2003, Mr. Curd has served as
President and Chief Executive Officer of Uniroyal Engineered
Products, LLC, a manufacturer of plastic vinyl coated fabrics.
The Nominating and Corporate Governance Committee believes that
the attributes, skills and qualifications Mr. Curd has
developed through his leadership and business experiences in the
plastics industry, as well as experience as a director of A.
Schulman and his exemplary service as Chair of the Strategic
Committee, allow him to provide continued business expertise to
the Board of Directors and has nominated him for re-election.
Joseph M.
Gingo, Age 65
Mr. Gingo has served as Chairman, President and Chief
Executive Officer of A. Schulman since 2008 and is a member of
the Executive Committee. Previously, Mr. Gingo was employed
at The Goodyear Tire & Rubber Company for more than
40 years. From June 2003 through December 2007,
Mr. Gingo served as Executive Vice President, Quality
Systems and Chief Technical Officer at the Goodyear
Tire & Rubber Company. In this role, Mr. Gingo
was responsible for Goodyears Research, Tire Technology
and Engineering and Quality organizations. Prior to that,
Mr. Gingo held numerous domestic and international
leadership positions with The Goodyear Tire & Rubber
Company. Mr. Gingo has served as a director of A. Schulman
since 2000. The Nominating and Corporate Governance
Committee believes that the attributes, skills and
qualifications Mr. Gingo has developed through his
extensive business and leadership experiences in the tire and
rubber industry, as well as his significant leadership
accomplishments with A. Schulman, allow him to provide continued
business and leadership insight to the Board of Directors and
has nominated him for re-election.
Michael
A. McManus, Jr., Age 67
Mr. McManus has served as a director of A. Schulman since
2006 and is a member of the Strategic and Nominating and
Corporate Governance Committees. Since 1999, Mr. McManus
has served as President and Chief Executive Officer of Misonix,
Inc., a medical device manufacturer. Previously,
Mr. McManus held executive positions with New York Bancorp,
Inc., Jamcor Pharmaceutical, Inc., Pfizer, Inc. and Revlon Corp.
Mr. McManus currently serves as a director of Novavax, Inc.
and Mixonix, Inc. and, within the past five years, served as a
director of American Home Mortgage Investment Corp. The
Nominating and Corporate Governance Committee believes that the
attributes, skills and qualifications Mr. McManus has
developed through his experiences as a chief executive officer,
public-company director and his prior service as a director of
A. Schulman, allow him to provide continued business and
corporate governance expertise to the Board of Directors and has
nominated him for re-election.
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Lee D.
Meyer, Age 61
Mr. Meyer has served as a director of A. Schulman since
2008 and is a member of the Audit and Strategic Committees.
Since 2006, Mr. Meyer has acted as a consultant to various
investment firms and to Ply Gem Industries, Inc., a building
product manufacturer. Previously, Mr. Meyer served as
President and Chief Executive Officer of Ply Gem Industries,
Inc. from 2002 through 2006. Mr. Meyer currently serves as
a director of Building Material Distributors, Inc., a private
company, and, during the last five years, served as a director
of PW Eagle, Inc. at the time of its acquisition by J-M
Manufacturing Company in 2007. The Nominating and Corporate
Governance Committee believes that the attributes, skills and
qualifications Mr. Meyer has developed through his
experiences as a chief executive officer and his consulting
roles allow him to provide continued business expertise to the
Board of Directors and has nominated him for re-election.
James A.
Mitarotonda, Age 56
Mr. Mitarotonda has served as a director of A. Schulman
since 2005 and is a member of the Compensation, Strategic and
Executive Committees. Since 1991, Mr. Mitarotonda has
served as the Chairman, President and Chief Executive Officer of
Barington Capital Group, L.P., an investment firm that he
co-founded. Previously, Mr. Mitarotonda served as the
President and Chief Executive Officer of Dynabazaar, Inc. from
May 2006 until April 2007 and January 2004 until December 2004.
Prior to that, Mr. Mitarotonda served as the Co-Chief
Executive Officer and Co-Chairman of LQ Corporation, Inc. from
April 2003 until May 2004 and as its sole Chief Executive
Officer from May 2004 until October 2004. Mr. Mitarotonda
currently serves as a director of The Pep Boys
Manny, Moe and Jack, Griffon Corporation, and Gerber Scientific,
Inc. and, during the past five years, served as a director of
Sielox, Inc, Dynabazaar, Inc. and LQ Corporation, Inc. The
Nominating and Corporate Governance Committee believes that the
attributes, skills and qualifications Mr. Mitarotonda has
developed through his experiences as a chief executive officer,
public-company director, his prior service as a director of A.
Schulman, as well as his status as a significant stockholder,
allow him to provide continued business and corporate governance
expertise to the Board of Directors and has nominated him for
re-election.
Ernest J.
Novak, Jr., Age 65
Mr. Novak has served as a director of A. Schulman since
2003 and is Chair of the Audit Committee. Mr. Novak is
currently retired and serves as a director of BorgWarner, Inc.
and FirstEnergy Corp. Previously, Mr. Novak served in
various positions at Ernst & Young LLP, an
international public accounting firm, including as Coordinating
Partner for large multinational clients, as a member of the
firms International Service Delivery and Quality
Committee, as Area Industry Leader for manufacturing and, for
17 years as the Managing Partner of various international
offices. The Nominating and Corporate Governance Committee
believes that the attributes, skills and qualifications
Mr. Novak has developed through his educational background
in accounting and his professional experiences in performing,
reviewing, and overseeing the audits of financial statements of
a wide range of public companies, as well as his experience as a
director of A. Schulman, including his exemplary service as
Chairman of the Audit Committee, allow him to provide continued
financial and regional business expertise to the Board of
Directors and has nominated him for re-election.
Dr. Irvin
D. Reid, Age 69
Dr. Reid has served as a director of A. Schulman since
January 2009 and is a member of the Audit and Nominating and
Corporate Governance Committees. Since 2008, Dr. Reid has
served as President Emeritus and Eugene Applebaum Professor,
Community Engagement, at Wayne State University, a research
university located in Detroit, Michigan. Previously,
Dr. Reid served as President of Wayne State University from
1997 to 2008. In addition, Dr. Reid previously served two
terms on the Board of the Federal Reserve Bank of Chicago
(Detroit Branch) from 2003 to 2004 and from 2005 to 2008.
Dr. Reid currently serves as a director of The Pep
Boys Manny, Moe and Jack and Mack-Cali Realty
Corporation. The Nominating and Corporate Governance Committee
believes that the attributes, skills and qualifications
Dr. Reid has developed through his academic experience, his
financial and regulatory expertise, as well as his
public-company director experience, allow him to provide
continued financial and business expertise to the Board of
Directors and has nominated him for re-election.
14
John B.
Yasinsky, Age 71
Mr. Yasinsky has served as a director of A. Schulman since
2000 and has served as the Companys Lead Independent
Director since 2008. Mr. Yasinsky is the Chair of the
Compensation Committee and is a member of the Strategic and
Executive Committees. Mr. Yasinsky is currently retired and
is a director of CMS Energy Corporation and Consumers Energy Co.
Previously, Mr. Yasinsky served as Chairman and Chief
Executive Officer of Omnova Solutions, Inc., a manufacturer of
decorative and building products and performance chemicals from
1999 to 2001. Prior to that, Mr. Yasinsky served as the
Chairman and Chief Executive Officer of GenCorp, a
technology-based manufacturer, from 1994 to 1999. The Nominating
and Corporate Governance Committee believes that the attributes,
skills and qualifications Mr. Yasinsky has developed
through his chief executive leadership and business experiences,
as well as his experience as a director of A. Schulman and his
exemplary service as the Companys Lead Independent
Director, allow him to provide continued local business and
corporate governance expertise to the Board of Directors and has
nominated him for re-election.
ADDITIONAL
DIRECTORS
(Term Expiring at the Annual Meeting)
Michael
Caporale, Jr., Age 59
Mr. Caporale has served as a director of A. Schulman since
2008 and is a member of the Audit and Nominating and Corporate
Governance Committees. Mr. Caporale is currently retired.
Previously, Mr. Caporale served as President and Chief
Executive Officer of Associated Materials, Inc., a manufacturer
and distributor of exterior building products, from 2002 through
2006. Additionally, Mr. Caporale previously served as
President and Chief Executive Officer of Associated Materials
Holdings, Inc., the direct parent of Associated Materials, Inc.,
from 2002 through 2006, and as President and Chief Executive
Officer of AMI Holdings, Inc., the direct parent of Associated
Materials Holdings, Inc., from 2004 through 2006.
Mr. Caporales attributes, skills and qualifications
developed through his chief executive leadership and business
experiences qualified him for his prior service on the Board of
Directors.
Stanley
W. Silverman, Age 63
Mr. Silverman has served as a director of A. Schulman since
2008 and is a member of the Audit and Compensation Committees.
Since 2005, Mr. Silverman has served as the President of
Horizon Venture Group LLC, a private firm that invests, as a
limited partner, in companies which have potential for growth
and value creation. Previously, Mr. Silverman served as
President and Chief Executive Officer and was a member of the
Board of Directors of PQ Corporation, a global chemical and
engineered glass materials company, from January 2000 to
February 2005. Mr. Silverman also serves as a director on
C&D Technologies, Inc. and Met-Pro Corporation.
Mr. Silvermans attributes, skills and qualifications
developed through his chief executive leadership and global
business experiences, as well as his public company director
experience, qualified him for his prior nomination for election
to the Board of Directors.
Directors James A. Mitarotonda, David G. Birney, Howard R. Curd
and Michael A. McManus, Jr. each were first appointed or
nominated for election to the Board in connection with, or
pursuant to a process described under, various agreements with a
group of investors led by Barington Capital Group, L.P.
(Barington Capital). Director Irvin D. Reid was
first appointed to the Board of Directors pursuant to a process
determined between A. Schulman and a group of investors lead by
Ramius, LLC. Directors Eugene R. Allspach and Gregory T. Barmore
each were appointed to the Board of Directors pursuant to the
terms and conditions of the Merger Agreement.
15
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of
October 15, 2010 (except as otherwise indicated by
footnote) regarding the beneficial ownership of shares of common
stock by each director and nominee, by each named executive
officer, by all directors and executive officers as a group, and
by each person known to A. Schulman to own 5% or more of its
common stock. Unless otherwise indicated, each beneficial owner
has sole power to vote and dispose of the number of shares set
forth in the table:
|
|
|
|
|
|
|
|
|
|
|
Total Beneficial
|
|
|
Percent of
|
|
Name
|
|
Ownership(1)(2)
|
|
|
Outstanding(3)
|
|
|
Directors, Executive Officers and Nominees
|
Joseph M.
Gingo(4)
|
|
|
84,498
|
|
|
|
*
|
|
Paul F.
DeSantis(5)
|
|
|
91,503
|
|
|
|
*
|
|
Bernard Rzepka
|
|
|
14,500
|
|
|
|
*
|
|
David C. Minc
|
|
|
14,024
|
|
|
|
*
|
|
Kim L. Whiteman
|
|
|
8,710
|
|
|
|
*
|
|
Jack B. Taylor
|
|
|
68,334
|
|
|
|
*
|
|
Eugene R. Allspach
|
|
|
4,314
|
|
|
|
*
|
|
Gregory T. Barmore
|
|
|
51,074
|
|
|
|
*
|
|
David G.
Birney(6)
|
|
|
18,000
|
|
|
|
*
|
|
Michael Caporale,
Jr.(7)
|
|
|
9,500
|
|
|
|
*
|
|
Howard R. Curd
|
|
|
14,000
|
|
|
|
*
|
|
Michael A. McManus, Jr.
|
|
|
8,500
|
|
|
|
*
|
|
Lee D. Meyer
|
|
|
6,000
|
|
|
|
*
|
|
James A.
Mitarotonda(8)
|
|
|
566,286
|
|
|
|
1.80
|
%
|
Ernest J. Novak, Jr.
|
|
|
18,200
|
|
|
|
*
|
|
Dr. Irvin D. Reid.
|
|
|
3,500
|
|
|
|
*
|
|
Stanley W.
Silverman(9)
|
|
|
8,765
|
|
|
|
*
|
|
John B. Yasinsky
|
|
|
23,000
|
|
|
|
*
|
|
All Directors and executive officers as a group (20 persons)
|
|
|
1,629,728
|
|
|
|
5.16
|
%
|
|
5% Or Greater Stockholders
|
Dimensional Fund Advisors
L.P.(10)
|
|
|
1,854,813
|
|
|
|
5.89
|
%
|
Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas,
78746.
|
|
|
|
|
|
|
|
|
BlackRock
Inc.(11)
|
|
|
2,025,898
|
|
|
|
6.43
|
%
|
40 East 52nd Street, New York, New York, 10022
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Includes the following number of shares that are not owned, but
can be purchased within 60 days upon the exercise of
options granted under A. Schulmans 1992 Non-Employee
Directors Stock Option Plan, 2002 Equity Incentive Plan
and/or the Amended and Restated 2006 Incentive Plan (the
2006 Incentive Plan): 60,000 by Mr. DeSantis;
12,000 by Mr. Rzepka; 8,334 by Mr. Taylor; 4,000 by
Mr. Yasinsky; and 84,334 by all directors and executive
officers as a group. |
|
(2) |
|
Includes the following number of restricted shares of common
stock awarded under A. Schulmans 1992 Non-Employee
Directors Stock Option Plan, 2002 Equity Incentive Plan
and/or 2006 Incentive Plan: 42,067 by Mr. Gingo; 14,468 by
Mr. DeSantis; 9,768 by Mr. Minc; 6,102 by
Mr. Whiteman; 15,000 by Mr. Taylor; 834 by
Messrs. Birney, Caporale, Curd, McManus, Meyer,
Mitarotonda, Novak, Reid, Silverman and Yasinsky; and 109,419 by
all directors and executive officers as a group. Directors and
executive officers have the power to vote, but not dispose of,
these restricted shares of common stock. |
|
(3) |
|
For all Directors and executive officers, the percentage of
class is based upon the sum of 31,487,229 shares of common
stock outstanding on October 15, 2010 and the number of
shares of common stock, if any, as to which |
16
|
|
|
|
|
the named individual or group has the right to acquire
beneficial ownership upon the exercise of options within
60 days of October 15, 2010. For all entities that are
listed as beneficial owners of 5% or more of the common stock,
the percentage of class is based upon 31,487,229 shares of
common stock outstanding on October 15, 2010. |
|
(4) |
|
Amount includes 12,500 shares held by the Linda L. Gingo
Trust and 10,000 shares held by the
Joseph M. Gingo Trust. Mr. Gingo has shared
dispositive power with respect to shares held in the Linda L.
Gingo Trust. |
|
(5) |
|
Mr. DeSantis owns his shares jointly with his spouse, and
he has shared voting and dispositive power with respect to such
shares. |
|
(6) |
|
Mr. Birney owns 7,500 shares jointly with his spouse,
and he has shared voting and dispositive power with respect to
such shares. |
|
(7) |
|
Amount includes 3,500 shares held by
Mr. Caporales spouse. |
|
(8) |
|
Amount includes 555,786 shares of common stock held
directly by Barington Companies Equity Partners, L.P.
(Barington). Barington may be deemed to have sole
power to vote and dispose of the shares it beneficially owns.
Mr. Mitarotonda is the sole stockholder and director of LNA
Capital Corp. (LNA), which is the general partner of
Barington Capital , which is the majority member of Barington
Companies Investors, LLC (Barington Investors).
Barington Investors is the general partner of Barington.
Barington Investors may be deemed to have sole power to vote and
dispose of the shares owned by Barington. In addition,
Mr. Mitarotonda, LNA and Barington Capital each may be
deemed to have sole power to vote and dispose of the shares
owned by Barington. Mr. Mitarotonda disclaims beneficial
ownership of any such shares except to the extent of his
pecuniary interest therein. |
|
(9) |
|
Mr. Silverman owns 2,765 shares jointly with his
spouse, and he has shared voting and dispositive power with
respect to such shares. |
|
(10) |
|
As reported in a Schedule 13G filed with the SEC on
January 29, 2010. |
|
(11) |
|
As reported in a Schedule 13G/A filed with the Commission
on February 8, 2010, Dimensional Fund Advisors L.P.
(Dimensional) is the beneficial owner of, has the
sole power to vote or direct the voting of, and the sole power
to dispose or direct the disposition of, an aggregate of
1,854,813 shares of common stock. According to the
Schedule 13G/A, Dimensional is an investment advisor
registered under Section 203 of the Investment Advisors Act
of 1940, which furnishes investment advice to four investment
companies registered under the Investment Company Act of 1940,
as amended, and serves as investment manager to certain other
commingled group trusts and separate accounts (collectively, the
Funds). As reported in the Schedule 13G/A,
Dimensional possesses investment and/or voting power over the
common stock owned by the Funds, and may be deemed to be the
beneficial owner of such shares. However, all such shares are
owned by the Funds, and Dimensional disclaims beneficial
ownership of such shares in its Schedule 13G/A. |
17
Equity
Compensation Plan Information
A. Schulmans 2006 Incentive Plan authorizes the
Company to issue common stock to its employees and non-employee
directors in exchange for consideration in the form of goods or
services. The 2006 Incentive Plan currently authorizes A.
Schulman to issue up to 3,472,686 shares of common stock to
participants. Awards are also currently outstanding under A.
Schulmans 1992 Non-Employee Directors Stock Option
Plan and 2002 Equity Incentive Plan (collectively, with the 2006
Incentive Plan, the Equity Plans). Information, as
of August 31, 2010, on outstanding awards under the Equity
Plans, and information on awards available for grant under the
2006 Incentive Plan, are set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
(a)
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
(b)
|
|
|
Remaining Available for
|
|
|
|
to be Issued
|
|
|
Weighted-Average
|
|
|
Future Issuance Under Equity
|
|
|
|
Upon Exercise of
|
|
|
Exercise
|
|
|
Compensation Plans
|
|
|
|
Outstanding
|
|
|
Price of Outstanding,
|
|
|
(Excluding Securities
|
|
|
|
Options, Warrants
|
|
|
Options,
|
|
|
Reflected in Column
|
|
Plan Category
|
|
and
Rights(1)
|
|
|
Warrants and Rights
|
|
|
(a))
|
|
|
Equity compensation plans approved by security holders
|
|
|
970,416
|
(2)
|
|
$
|
19.77
|
(3)
|
|
|
963,724
|
|
Equity compensation plans not approved by security holders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total
|
|
|
970,416
|
|
|
|
19.77
|
|
|
|
963,724
|
|
|
|
|
(1) |
|
The outstanding options do not have dividend equivalent rights
and are not transferable for value. |
|
(2) |
|
Amount includes 705,154 performance shares granted pursuant to
the 2006 Incentive Plan, the vesting of which is contingent upon
corporate performance, which shall be measure by evaluating the
TSR of the common stock relative to a peer group during the
applicable performance period. |
|
(3) |
|
The weighted average exercise price does not account for awards
of performance-based restricted stock or performance shares, as
described in footnote (2). |
18
COMPENSATION
DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis describes the
Compensation Committees executive compensation philosophy,
objectives and programs, and explains the basis on which fiscal
year 2010 compensation determinations were made by the
Compensation Committee with respect to A. Schulmans named
executive officers. For purposes of this discussion, references
to we, our and us refer to
A. Schulman. For fiscal 2010, our named executive officers were
as follows:
|
|
|
Name
|
|
Title
|
|
Joseph M. Gingo
|
|
President, Chief Executive Officer and Chairman of the Board
|
Paul F. DeSantis
|
|
Vice President, Chief Financial Officer and Treasurer
|
Bernard Rzepka
|
|
General Manager and Chief Operating Officer Europe
|
David C. Minc
|
|
Vice President, Chief Legal Officer and Secretary
|
Kim L. Whiteman
|
|
Vice President Global Human Resources
|
Jack B. Taylor
|
|
Former General Manager and Chief Operating Officer
Asia
|
Compensation
Committee Governance
The compensation program for our named executive officers is
overseen by the Compensation Committee of the Board of
Directors. Compensation Committee members are appointed by the
Board of Directors and meet the independence and other
requirements of NASDAQ and other applicable laws and
regulations. As described on pages 6-7 of this proxy
statement, the duties of the Compensation Committee include,
among other things: (i) determining base salary levels and
bonuses for our named executive officers; (ii) approving
the design and award of all other elements of our executive
compensation program; (iii) evaluating the performance of
our named executive officers; (iv) executive officer
succession planning; and (v) addressing other matters
related to executive compensation. The Compensation Committee
meets as necessary to enable it to fulfill its responsibilities.
The Chair of the Compensation Committee is responsible for the
leadership of the Committee, presiding over Committee meetings,
making Committee assignments, reporting the Committees
actions to our Board of Directors from time to time and, with
the assistance of management, setting the agenda for Committee
meetings. The members of the Compensation Committee and the
Committees specific functions are described in further
detail on pages 6-7 of this proxy statement and the
Compensation Committee Charter is posted at
www.aschulman.com.
Compensation
Philosophy and Objectives
In determining the amount and composition of executive
compensation, the Compensation Committees goal is to
provide a pay for performance compensation package that will
enable us to: (i) attract and retain talented executives;
(ii) reward outstanding individual and corporate
performance; and (iii) link the interests of our executive
officers to the interests of our stockholders, with the ultimate
goal of improving stockholder value. The Compensation
Committees overall pay strategy is to provide a median
market compensation opportunity for our named executive officers
at their targeted performance levels. The Compensation Committee
attempts to align executive compensation with stockholders
interests through the use of performance-based, at-risk
compensation components for a significant portion of each named
executive officers total compensation. Additionally, the
Compensation Committee seeks to achieve executive retention
through the use of a balance of pay mix and long-term equity
vehicles. In order to emphasize pay that is dependent on
performance and aligned with stockholder interests, we have
adopted the following pay strategy:
|
|
|
|
|
Position base salaries at the 50th percentile of peer
market levels;
|
|
|
|
Provide a median target annual incentive opportunity with upside
and downside leverage depending on actual corporate and personal
performance; and
|
|
|
|
Position target long-term incentive opportunities at the 50th
percentile of peer market levels, with two-thirds of the awards
subject to performance-based vesting, in order to enhance
alignment with stockholders.
|
19
In determining actual compensation levels for our named
executive officers, the Compensation Committee considers all
elements of the compensation program in total and also evaluates
whether individual elements reflect current market practices and
our stated compensation philosophy. The Compensation Committee
believes that offering performance-based, market-comparable pay
opportunities to our named executive officers, bearing in mind
our industry, relative size and performance, allows us to
maintain a stable, successful management team.
The Compensation Committee has full discretion to adjust our
compensation program, or any element thereof, at any time. It
has been the practice of the Compensation Committee to discuss
its compensation determinations with respect to the Chief
Executive Officer with the full Board of Directors and to have
the full Board (other than the Chief Executive Officer) approve
such decisions. At times, however, the Board of Directors may
adjust certain elements of our executive compensation program
outside of the Compensation Committees recommendations.
Compensation
Consultants
As permitted by the Compensation Committee Charter, the
Compensation Committee retained Towers Perrin as its outside
compensation consultant for fiscal 2010 to provide consulting
services with respect to A. Schulmans compensation
practices. Effective January 4, 2010, Towers Perrin was
acquired by Watson Wyatt, resulting in the combined company,
Towers Watson. Pursuant to the terms of its engagement by the
Compensation Committee, Towers Watson generally reviewed,
analyzed and provided advice regarding A. Schulmans
executive compensation programs for the Companys executive
officers in relation to the objectives of those programs,
including comparisons to designated peer group companies and
comparisons to best practices, and provided
information and advice on competitive compensation practices and
trends, along with specific views on A. Schulmans
compensation programs. In its role as compensation consultant,
representatives of Towers Watson engaged in discussions with the
Compensation Committee and responded on a regular basis to
questions from the Committee and the Committees other
advisors, providing them with their opinions with respect to the
design and implementation of current or proposed compensation
programs. During fiscal 2010, Towers Watson reported directly to
the Compensation Committee and the Committee retained the sole
authority to retain or terminate Towers Watson. In fiscal 2010,
A. Schulman paid Towers Watson fees of approximately $79,889 for
its consulting services relative to the Companys executive
compensation.
During fiscal 2010, the former Watson Wyatt firm, and then
Towers Watson, provided consulting and administration services
to A. Schulman on various matters unrelated to the executive
compensation consulting services provided to the Compensation
Committee. Specifically, in fiscal 2010, A. Schulman received
consulting, plan design and administration services relative to,
among other things, workers compensation insurance
administration, post-retirement medical and life insurance
design, and an analysis of the pending impact of healthcare
reform on the Company. In fiscal 2010, fees for these unrelated
worldwide services totaled $429,796 (including 122,124 Euros
translated to U.S. dollars using a 12-month average of 1.3664).
In determining the scope of non-executive compensation related
services to be provided by Towers Watson, members of A. Schulman
management recommended the scope and content of the
non-executive compensation related services to be provided by
Towers Watson, and the Compensation Committee approved such
other services upon consideration of the nature and extent of
the services to be provided by Towers Watson.
For fiscal 2011, the Compensation Committee has determined to
retain the services of Pay Governance as its outside
compensation consultant and to terminate its relationship with
Towers Watson. All services provided by Pay Governance to the
Compensation Committee will be determined by the Committee,
which will have the sole authority to retain or terminate its
outside compensation consultant. For fiscal 2011, the
Compensation Committee anticipates that Pay Governance will not
provide any outside consulting services to A. Schulman. For
fiscal 2011, management anticipates that A. Schulman will
continue to retain the services of Towers Watson to continue to
provide non-executive compensation related services to the
Company.
Compensation
Committee Delegation
Pursuant to the Compensation Committee Charter, the Compensation
Committee may delegate its authority to subcommittees or to the
Chair of the Compensation Committee when it deems such
delegation appropriate and in our best interests. Additionally,
pursuant to its charter, the Compensation Committee may delegate
to the Chief
20
Executive Officer, or other executive designee, the authority to
approve salary and other compensation for employees below the
executive officer level in accordance with overall pools, policy
guidelines and limits approved by the Committee. During fiscal
2010, the Compensation Committee made no subcommittee
delegations.
Setting
Executive Compensation
At its first two regularly scheduled meetings of each fiscal
year (typically in September and October), the Compensation
Committee: (i) evaluates the performance of the Chief
Executive Officer for the prior fiscal year; (ii) reviews
the Chief Executive Officers evaluation of the performance
of the other named executive officers for the prior fiscal year;
(iii) determines whether our named executive officers will
receive bonuses for the prior fiscal year based on the
achievement of performance targets and their respective
individual performance; (iv) establishes the components and
levels of named executive officer compensation (including the
performance criteria for annual performance bonuses) for the
current fiscal year; and (v) reviews and approves the
structure and performance criteria for annual long-term
incentive plan grants to our named executive officers. In the
course of its deliberations, the Compensation Committee from
time to time solicits the recommendations of our Chief Executive
Officer and our other executive officers on various matters
relating to executive compensation. However, the Compensation
Committee makes all final determinations regarding the
compensation program for the named executive officers and, with
respect to the Chief Executive Officer, seeks ratification of
its decisions by the full Board of Directors.
Peer
Group
To assist the Compensation Committee in making compensation
decisions, Towers Watson provided the Compensation Committee
with competitive market data in fiscal year 2010 comparing our
executive compensation practices to those of a specific group of
comparison companies and compensation surveys. The peer group
used for compensation comparison purposes was generally
comprised of specialty chemical companies, including both
similarly sized companies within our geographic footprint and
other chemical and plastics manufacturers recognized as our
broader competitors. The Compensation Committee reviews and
approves the selection of companies used for compensation
comparisons on an annual basis. In fiscal year 2010, the peer
group consisted of the following 19 companies (the
2010 Peer Group):
|
|
|
|
|
Albemarle Corporation
|
|
OM Group, Inc.
|
|
Valhi, Inc.
|
Arch Chemicals, Inc.
|
|
Omnova Solutions Inc.
|
|
Valspar Corporation
|
Cabot Corporation
|
|
PolyOne Company
|
|
W.R. Grace & Co.
|
Cytec Industries, Inc.
|
|
Rockwood Holdings, Inc.
|
|
|
Ferro Corporation
|
|
RPM International Inc.
|
|
|
H.B. Fuller Co.
|
|
Spartech Corporation
|
|
|
Hexcel Corporation
|
|
Solutia, Inc.
|
|
|
Minerals Technologies Inc.
|
|
Stepan Company
|
|
|
The 2010 Peer Group included the same companies as in fiscal
2009 except for: (i) Chemtura Corporation and Tronox
Incorporated, each of which entered Chapter 11 bankruptcy
in fiscal 2010; and (ii) Hercules Incorporated, which was
removed as a result of a merger with a company not in our peer
group.
In addition to the use of peer group data, the Compensation
Committee reviewed compensation survey data in order to ensure
that our executive compensation program, as a whole, is
competitive. For fiscal 2010, the compensation survey data
consisted of
U.S.-based
manufacturing companies of a comparable size to our business.
For fiscal 2010, the Compensation Committees general
approach was to target executive officer pay opportunities at
the median of the 2010 Peer Group and the compensation survey
data.
21
Components
of Executive Compensation
The key components of our executive compensation program, each
of which is addressed separately below, are:
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base salary;
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annual bonuses;
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long-term incentives; and
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retirement and other benefits.
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In determining an executive officers total compensation
package, the Compensation Committee considers each of these key
components and attempts to establish an appropriate balance
between cash and non-cash compensation, and between short-term
and long-term compensation. In addition, the Compensation
Committee annually reviews the total compensation opportunity
for our executive officers. The Compensation Committee attempts
to position each executives total targeted compensation
opportunity near our peer market median in order to provide each
executive officer with a competitive compensation opportunity
and properly focus them on our long-term success. Each year, the
Compensation Committee requests that its compensation consultant
compare the total direct compensation (i.e., base salary
+ annual bonus target + estimated value of our long-term
incentive grants) of our executive officers to the total
compensation opportunities provided by our peer group, in order
to help the Committee evaluate compensation determinations for
the upcoming fiscal year. It is the opinion of the Compensation
Committee that it is important to evaluate our executive
compensation program vis-à-vis our peers in order to
determine potential modifications based upon our compensation
philosophy.
Base
Salaries
Base salaries are intended to reward executive officers based
upon their roles with us and for their performance in those
roles. The Compensation Committee reviews and approves each
named executive officers base salary annually. Base
salaries for executive officers initially are determined by
evaluating the officers respective levels of
responsibility, prior experience and breadth of knowledge, and
by taking into consideration internal equity issues and external
pay practices. Determinations of base salary adjustments are
driven primarily by competitive positioning and profitability,
with the stated goal of maintaining executive officer salaries
at the 50th percentile of market levels. For fiscal 2010,
the base salary for each of our named executive officers is
provided in the Salary column of the Summary
Compensation Table located on page 32 of this proxy
statement.
In fiscal 2010, the Compensation Committee continued to
implement our base salary positioning philosophy, attempting to
position executive officer base salaries at or near the
50th percentile of our peer market, which included managing
certain base salaries that exceeded the peer market median back
to our stated compensation range and managing other salaries
that fell below the targeted median upward toward our stated
compensation range. Based on data presented to the Compensation
Committee by its executive compensation consultant, the
Compensation Committee determined that base salary levels for
Messrs. Gingo, DeSantis, Rzepka and Whiteman approximated
peer market medians within our stated range, falling within
approximately ± 10% of the peer market median level. In
regard to Mr. Minc, the Compensation Committee determined
that his respective base salary fell below our stated
positioning policy, and therefore incrementally increased his
salary toward the peer market median target.
Base salary increases granted in fiscal 2010 were:
(i) required pursuant to applicable law;
(ii) warranted based upon outstanding personal performance;
or (iii) incrementally increased toward peer market median
targets. In targeting our base salary range at the
50th percentile, the Compensation Committee believes that
we are able to properly motivate our executive officers and
fulfill our goals of rewarding outstanding performance and
achieving executive retention. It is the opinion of the
Compensation Committee that by setting base salary levels at
competitive rates, our executive officers are rewarded for
undertaking positions of leadership and provided with an
incentive to continue working for us. However, as base salary
compensation is not typically subject to reduction or forfeiture
based on corporate performance, the Compensation Committee
believes that it should comprise only
22
one component of our overall pay philosophy and that a majority
of our executive compensation structure should be comprised of
at-risk components.
Annual
Bonuses
Our annual bonus program promotes our
pay-for-performance
philosophy by providing our named executive officers with direct
financial incentives in the form of annual cash bonuses based on
our financial performance. Annual bonus opportunities allow us
to communicate specific goals that are of primary importance
during the coming year and to motivate executive officers to
achieve these goals. The annual bonus program is designed to
reward our named executive officers for the achievement of
specified corporate performance targets that the Compensation
Committee believes align the interests of our named executive
officers with the interests of our stockholders. The
Compensation Committee seeks to provide each named executive
officer with a median annual bonus opportunity, as compared to
our peers.
2010
Bonus Targets
In October 2009, the Board of Directors, upon the approval of
the Compensation Committee, established the target bonus awards
(expressed as a percentage of base salary) for each of the named
executive officers and established that each executives
total bonus opportunity would be based upon the achievement of
certain performance metrics. For fiscal 2010, the Board of
Directors established the following target bonus opportunities
for each named executive officer:
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2010 Target Bonus Opportunity
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Named Executives Officer
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(as a % of base salary)
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Joseph M. Gingo
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100
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%
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Paul F. DeSantis
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55
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%
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Bernard Rzepka
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50
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%
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David C. Minc
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50
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%
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Kim L. Whiteman
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40
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%
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Jack B. Taylor
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50
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%
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In conjunction with establishing the target bonus opportunity
for each named executive officer, the Compensation Committee
selected performance metrics for evaluating corporate
performance, along with the respective weighting for each metric
and the threshold, target, stretch, enhanced stretch and maximum
performance goal levels. In selecting performance metrics for
2010, the Compensation Committee sought to establish corporate
performance metrics that focused the named executive officers on
the key drivers of stockholder value and emphasized both our
short- and long-term financial and strategic goals. In light of
such objectives, the Compensation Committee established the
following corporate performance metrics for 2010: (i) Net
Income; (ii) Operating Income; and (iii) Days of
Working Capital, excluding certain unusual, one-time in nature
items. For Messrs. Gingo, DeSantis, Minc and Whiteman, the
Compensation Committee determined that each of their respective
annual bonus opportunities would be measured by our consolidated
worldwide operations, with Net Income and Operating Income each
receiving a 33.0% weighting and Days of Working Capital
receiving a 34.0% weighting. For Mr. Rzepka, the
Compensation Committee established that his annual bonus
opportunity would be based upon the performance of our
consolidated worldwide operations and our European segment, with
the following metric weighting: (1) European Operating
Income 49.5%; (2) European Days of Working
Capital 25.5%; (3) consolidated worldwide Net
Income 8.3%; (4) consolidated worldwide
Operating Income 8.3%; and (5) consolidated
worldwide Days of Working Capital 8.4%. For
Mr. Taylor, the Compensation Committee determined that his
annual bonus opportunity would be based upon the performance of
our consolidated worldwide operations and our Asian segment,
with the following metric weighting: (a) Asian Operating
Income 49.5%; (b) Asian Days of Working
Capital 25.5%; (c) consolidated worldwide Net
Income 8.3%; (d) consolidated worldwide
Operating Income 8.3%; and (e) consolidated
worldwide Days of Working Capital 8.4%. For all
directly reporting executive officers, Mr. Gingo retains
authority to adjust award payouts, based upon individual
performance, up to 20% more than the calculated award amount or
down to 0% of such award amount. Potential bonus
23
awards, measured by reference to threshold, target and maximum
percentages of salary for each named executive officer are
disclosed in the Grants Of Plan-Based Awards table
located on page 33.
2010
Corporate Performance
For fiscal 2010, we utilized our budgeting model to set the
performance levels for each of the performance metrics. The
Compensation Committee believes that achieving the budget
requires strong management performance and is deserving of a
bonus at the targeted award level. For 2010, the Compensation
Committee determined that merely maintaining the 2009 level of
performance would not merit bonus compensation for fiscal 2010.
As a result, the threshold performance level (50% of target)
required for any bonus was set at 110% of our actual 2009
performance and the target was determined to be at budget. The
maximum bonus level of 200% of target was set at 150% of the
budget. The Compensation Committee believes that its targets are
challenging but achievable with successful management
performance.
2010
Performance Goals Consolidated Worldwide (In
Millions of U.S. Dollars)
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Performance Target
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Threshold
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Target
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Maximum
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Actual
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Payout
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Net Income
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$
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16.5
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$
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26.5
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$
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39.7
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$
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39.1
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150
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%
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Operating Income
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$
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20.6
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$
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41.0
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$
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61.5
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$
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52.0
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150
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%
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Days of Working Capital
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59
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57
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50
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59
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50
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%
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2010
Performance Goals European Business Segment (In
Millions of U.S.
Dollars(1))
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Performance Target
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Threshold
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Target
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Maximum
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Actual
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Payout
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Operating Income
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$
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51.8
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$
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53.3
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$
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79.9
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$
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68.9
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100
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%
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Days of Working Capital
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60
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58
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51
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58
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100
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%
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2010
Performance Goals Asia Business Segment (In Millions
of U.S. Dollars)
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Performance Target
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Threshold
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Target
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Maximum
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Actual
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Payout
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Operating Income
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$
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1.0
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$
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1.3
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$
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1.9
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$
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1.9
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200
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%
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Days of Working Capital
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62
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60
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53
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86
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0
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%
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(1) |
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Amounts translated from Euros to U.S. dollars using a
12-month
weighted average of 1.3664. |
Based upon our 2010 consolidated worldwide and European
performance, Messrs. Gingo, DeSantis, Minc and Whiteman
each earned 117% of their total target bonus opportunity, while
Mr. Rzepka earned 129% and Mr. Taylor earned 128%. In
regard to Messrs. DeSantis, Minc and Whiteman,
Mr. Gingo also recommended, and the Compensation Committee
approved, discretionary upward adjustments (each within the 20%
discretionary adjustment limit) to the formulaic awards earned
by each executive under the 2010 Bonus Plan, based upon each
executives outstanding individual performance during the
fiscal year, particularly in light of the significant
acquisition and integration challenges faced by us during the
fiscal year. The annual bonus payments made to our named
executive officers for fiscal year 2010 are reported in the
Summary Compensation Table in the Non-Equity Incentive
Plan Compensation Column located on page 32 of this
proxy statement.
Long-Term
Incentives
As part of our executive compensation program, the Compensation
Committee has historically made annual grants of long-term
stock-based incentive awards to our named executive officers
(and other members of management), including grants of
restricted stock, restricted stock units and performance shares.
Long-term incentives are used by the Compensation Committee to:
(i) balance the short-term focus of base salaries and the
annual bonus program by tying equity-based rewards to
performance achieved over multi-year periods; (ii) ensure
that each named executive officers total compensation
package includes an additional at-risk component of pay;
(iii) align compensation incentives with stockholder
interests; and (iv) provide our named executive officers
with
24
long-term retention incentives. When making our annual
equity-based awards to our named executive officers, the
Compensation Committee considers, but does not exclusively rely
on any one of, the following: (1) our financial performance
in the prior fiscal year; (2) historical award data;
(3) compensation practices at peer group companies; and
(4) each named executive officers respective
individual performance, prior experience and levels of
responsibility with, and contributions to, A. Schulman.
Restricted
Stock
On January 12, 2010, the Compensation Committee awarded
shares of restricted stock to certain of our North American
executives. Of the named executive officers, Messrs. Gingo,
DeSantis, Minc and Whiteman received awards of 27,000, 7,334,
5,034 and 3,368 shares of restricted stock, respectively,
pursuant to the 2006 Incentive Plan. In addition, on
October 23, 2009, the Compensation Committee award
15,000 shares of restricted stock to Jack B. Taylor,
pursuant to the terms of his employment agreement, which is
described in greater detail under the caption
Employment Agreement of Mr. Taylor
beginning on page 44 of this proxy statement. With
respect to the restricted stock awarded to Messrs. Gingo,
DeSantis, Minc, Whiteman and Taylor, such shares vest ratably
over time, subject to continued employment, on each of the first
three anniversaries of the award grant date. During the
restriction period, Messrs. Gingo, DeSantis, Minc, Whiteman
and Taylor may exercise full voting rights associated with their
shares of restricted stock. In addition, during the restriction
period, we will hold all dividends paid with respect to such
shares of restricted stock until the restrictions on the
underlying restricted stock have lapsed.
Restricted
Stock Units
As described in greater detail on page 41 of this proxy
statement under the caption Employment Agreement of
Mr. Gingo, we agreed to provide Mr. Gingo
with three annual grants of performance-based restricted stock
units to help compensate Mr. Gingo for foregone value in
equity grants from his previous employer, The Goodyear
Tire & Rubber Company. These three supplemental grants
were made in each of January 2008, 2009 and 2010, in the values
of $333,000, $500,000 and $667,000, respectively, subject to
certain performance-based vesting and settlement restrictions.
Accordingly, on January 12, 2010, the Compensation
Committee awarded Mr. Gingo an award of 59,526
performance-based restricted stock units (29,763 with dividend
rights) as the third and final installment of these grants.
Generally, under the 2006 Incentive Plan, restricted stock units
are settled in cash in an amount equal to the fair market value
of a share of our common stock on the applicable vesting date,
multiplied by the number of restricted stock units to be
settled. During the restriction period, holders of restricted
stock units have no voting rights with respect to the shares of
common stock underlying the restricted units. For those
restricted stock units conferring dividend rights, we hold all
dividends paid on the underlying shares of common stock and
award such dividends with the cash settlement of underlying
shares upon vesting.
In regard to the performance-based restricted stock units issued
to Mr. Gingo, the vesting of such awards was made
contingent upon our achievement of the same performance criteria
used for the 2010 Bonus Plan. With respect to each performance
metric, the number of performance-based restricted stock units
that could vest equaled: (i)(1) for Net Income, 33.0% of
the total units, (2) for Operating Income, 33.0% of the
total units and (3) for Days Working Capital, 34% of the
total units; and (ii) multiplied by the indicated
percentage at the threshold, target and maximum performance
levels set forth in the 2010 Bonus Plan; provided, however, that
if a performance metric was not achieved or was achieved at a
performance level that was less than threshold, all restricted
stock units with respect to that performance metric would be
forfeited. Based upon A. Schulmans consolidated worldwide
performance in fiscal 2010, Mr. Gingo received the
settlement of 34,525 units, which occurred on
November 1, 2010 at a price of $21.13. All
performance-based restricted stock units awarded to
Mr. Gingo that did not vest were forfeited.
Performance
Shares
In connection with the grant of restricted stock to certain of
our North American executives, the Compensation Committee also
awarded performance shares to Messrs. Gingo, DeSantis, Minc
and Whiteman, pursuant to the 2006 Incentive Plan, in the
following amounts: (i) Mr. Gingo
108,000 shares (54,000 with dividend rights);
(ii) Mr. DeSantis 29,332 shares
(14,666 with dividend rights);
(iii) Mr. Minc 20,132 shares (10,066
with
25
dividend rights); and (iv) Mr. Whiteman
13,464 shares (6,732 with dividend rights). Under the 2006
Incentive Plan, performance shares give the recipient the right
to receive a specified number of shares of our common stock only
if certain terms and conditions are met. Specifically,
performance shares awarded to Messrs. Gingo, DeSantis, Minc
and Whiteman may vest on January 16, 2012 based upon the
following performance criteria: (1) with respect to 50% of
each executives performance shares, our performance
relative to the average performance of the common stock of a
group of peer companies in the S&P Special Chemicals Index,
as measured by total stockholder returns (TSR) from
January 12, 2010 to January 12, 2013 (the
Performance Period); and (2) with respect to
the remaining 50% of each executives performance shares,
our performance relative to the average return on invested
capital (ROIC) of the same group of peer companies
in the S&P Special Chemicals Index for the Performance
Period. With respect to each type of performance shares, no
shares will vest if relative performance is below the 25th
percentile, 100% will vest if relative performance is at the
50th percentile and 200% will vest if relative performance is at
or above the 75th percentile. All performance shares that do not
vest on January 12, 2013 will be forfeited. In regard to
dividend rights, we utilize two types of performance shares:
(a) shares that provide the award recipient with dividend
rights during the Performance Period; and (b) shares that
do not provide dividend rights with respect to the underlying
shares. For those performance shares conferring dividend rights,
we hold all dividends paid on the underlying shares of common
stock and award such dividends with the underlying shares upon
vesting, subject to the same risk of forfeiture.
Time- and
Performance-Based Cash Awards
It has generally been the policy of the Compensation Committee
to grant our foreign executive officers awards of time-and
performance-based restricted stock units, as compared to
restricted stock and performance shares, based upon certain tax
treatment considerations. However, in fiscal 2009, the
Compensation Committee determined to change its grants of time-
and performance-based restricted stock units to time- and
performance-based cash awards in order to take advantage of
additional tax structure advantages in the European nations in
which we conduct business operations. Consequently, in
conjunction with our grant of restricted stock and performance
shares to certain of our North American executives in fiscal
2010, the Compensation Committee awarded both time- and
performance-based cash awards to certain of our foreign
executives, including Mr. Rzepka. In regard to time-based
cash awards, the Compensation Committee issued an award of
$100,629 to Mr. Rzepka. Similar to awards of restricted
stock, time-based cash awards vest ratably over time, subject to
continued employment, on each of the first three anniversaries
of the award grant date. In addition, the Compensation Committee
also approved the issuance of a performance-based cash award to
Mr. Rzepka, the amount of which is set forth in the
Grants of Plan-Based Awards table located on page 33
of this proxy statement. In regard to Mr. Rzepka, the
vesting of his performance-based cash award is contingent upon
the same vesting criteria as the performance shares issued to
our North American executives (i.e., vesting based upon
TSR and ROIC).
Timing of
Grants
The Compensation Committee generally determines equity grants at
a meeting that immediately precedes our release of earnings
results during the second quarter of each fiscal year. Since the
information in these earnings releases has not yet been
incorporated into the market price of our common stock, the
Compensation Committee has historically set the grant date as of
the fifth business day after the release of the earnings
information. While this introduces some level of variability in
our cost incurred in making awards and the value of the awards
to our named executive officers, the Compensation Committee
believes that this practice helps to ensure that information in
its possession when determining award grants is reflected in the
grant date stock price. For future grants, the Compensation
Committee will continue to adhere to its current policy of
scheduling award grants at least five business days after the
release of earnings information.
Retirement
and Other Benefits
The retirement and benefits program component of our executive
compensation program includes: (i) payment of certain
perquisites and other personal benefits; (ii) participation
in a 401(k) plan; and (iii) participation in a
non-qualified retirement plan. We also maintain other
post-retirement benefit plans, such as health care plans and
life insurance benefits, that are available to certain of our
U.S. employees, including certain of our named executive
26
officers, on a non-discriminatory basis. The objectives of our
retirement and benefits programs are: (1) to provide the
named executive officers with reasonable and competitive levels
of protection against contingencies, including retirement, death
and disability, which could interrupt their employment and
income received from us; and (2) reward the named executive
officers for continued service with us.
Periodically, the Compensation Committee reviews how each
element of our retirement and benefits program functions to
achieve the Compensation Committees goals. At the
discretion of the Compensation Committee, these programs may be
modified, supplemented or removed. In general, the Compensation
Committee looks at competitive market practices and the costs of
each of these programs, and weighs those cost against the stated
objectives for maintaining retirement and other benefits. The
components of the fiscal year 2010 retirement and benefits
program for the named executive officers are discussed
individually below.
Perquisites
and Personal Benefits
During fiscal 2010, the only personal benefit that was provided
to our North American named executive officers was a mandatory
physical examination to help ensure the health and welfare of
our key personnel. In regard to our Asian and European named
executive officers, we continued to provide such executives with
certain perquisites and personal benefits that we believe are
consistent with the compensation practices in the markets in
which they serve. Specifically, in fiscal 2010, we continued to
provide Mr. Rzepka with the payment of certain automobile,
fuel and insurance costs as well as certain insurance and
communication-related expenses.
Changes
to Retirement Plan
We previously maintained a qualified defined-contribution
retirement plan, with a 401(k) plan investment option (the
Retirement Plan), for certain of our
U.S.-based
employees, pursuant to which the Board of Directors, in its
discretion, could authorize the payment of contributions to the
Retirement Plan trust to be allocated among participants. In
addition, Retirement Plan participants could make additional
elective deferrals into a direct 401(k) plan account, thereby
providing them with an additional investment option with greater
flexibility and control. Participation in the Retirement Plan
was previously available to all of our
U.S.-based
salaried and non-represented employees (and participating
subsidiaries) who were employed as of the last day of the
Retirement Plan year. Contributions to the Retirement Plan trust
vested in accordance with a specified formula that provided for
partial vesting starting after two years of employment with us
and full vesting after seven years of employment.
Effective September 1, 2009, we transferred each
participants Retirement Plan trust balance to their
respective direct 401(k) plan account, subject to the vesting
criteria previously utilized for Retirement Plan trust
contributions. During fiscal 2010, we provided a matching
contribution of up to 5% of each 401(k) plan account
participants base salary for contributions made to their
401(k) account and a one-time contribution of 2% of base salary
for each 401(k) participant. Consequently, effective
September 1, 2009, the 401(k) plan option is our primary
retirement savings plan for our
U.S.-based
employees. Matching and annual contributions made by us to the
401(k) plan accounts for our U.S. named executive officers
during the fiscal 2010 year are reported in the Summary
Compensation Table located on page 32 of this proxy
statement.
Non-Qualified
Retirement Plan
We also maintain a non-qualified retirement plan for certain of
our North American executives (the Non-Qualified
Plan) pursuant to which the Compensation Committee may
accrue certain amounts for the benefit of 401(k) plan
participants in order to provide such participants with benefits
not otherwise available to them due to certain tax-law driven
compensation limitations. Benefits under the Non-Qualified Plan
vest and become non-forfeitable in accordance with a specified
formula that provides for partial vesting starting after two
years of employment with us and full vesting after seven years
of employment with us. In addition, upon a
Change-in-Control
(as defined in the Non-Qualified Plan), participants
benefits under the Non-Qualified Plan become fully vested and
non-forfeitable. Moreover, if a participants employment is
terminated for any reason within two years of the occurrence of
a
Change-in-Control,
payment of such participants vested account balance shall
be made in a lump sum payment within five days of such
termination. Amounts accrued by us under the Non-Qualified Plan
for the benefit of each participant reflect the investment
performance that would have been realized had a corresponding
amount been invested for the benefit of such participant during
such year in the S&P 500. The amounts accrued (excluding
the assumed investment based performance earnings thereon) by us
pursuant to the Non-Qualified Plan
27
for the benefit of our North American named executive officers
for fiscal year 2010 are disclosed in the Summary
Compensation Table located on page 32 of this proxy
statement. The Compensation Committee believes that maintaining
this plan keeps our retirement package competitive.
European
Retirement Plans
We maintain defined benefit plans for certain of our foreign
employees. During fiscal 2010, Messrs. Taylor and Rzepka
each participated in such defined benefit plans on the same
non-discriminatory basis as other foreign employees who are
participants. Additional information for these plans can be
found in the Pension Benefits table located on
page 40 of this proxy statement and the accompanying
narrative description.
Supplemental
Executive Retirement Plan
A Supplemental Executive Retirement Plan (the SERP),
adopted in 2004, provides benefits to two retired officers of A.
Schulman. The SERP has been amended to prohibit any other
participants.
Employment
Agreements and
Change-In-Control
Arrangements
The Compensation Committee carefully considers the use and
conditions of any employment agreements. The Compensation
Committee recognizes that employment agreements containing
severance and
change-in-control
arrangements are often appropriate to attract prospective
executives who forego significant compensation and opportunities
at the companies they are leaving, or who face relocation
expenses in order to accept employment with us. Generally,
executives are not willing to accept such risks and costs
without protection in the event that their employment with us is
terminated due to unanticipated changes, including a
change-in-control.
Currently, Messrs. Gingo, DeSantis and Taylor are the only
named executive officers who have employment agreements with us.
The Compensation Committee believes that our current employment
agreements serve to protect stockholder interests by assuring
that we will have the continued dedication, undivided loyalty
and objective advice from key executives in the event of a
proposed transaction, or the threat of a transaction, which
could result in a
change-in-control.
Our employment agreements, however, only provide payments to an
employee if their employment is terminated as a result of (or
within a specified period after) a
change-in-control,
(i.e., a double trigger). The Compensation Committee does
not believe that employees should receive additional
compensation merely as a result of a
change-in-control
and believes that our employment agreements provide our
executive officers with adequate protection to ensure that
change-in-control
offers will be evaluated in the best interest of the
stockholders without fear that a transaction could cost his or
her job without compensation. The Compensation Committee
recognizes, however, that these employment agreements may tend
to discourage a takeover attempt as a
change-in-control
could trigger increased compensation expense.
In addition to the use of employment agreements, the
Compensation Committee has authorized the use of separate
change-in-control
agreements with certain key executive personnel, who currently
do not have employment agreements with us. While the
Compensation Committee believes that it is in our best interest
to retain most of our employees on an at will basis,
the Committee also recognizes that we will not be able to retain
key personnel without providing certain protections in the event
of a
change-in-control.
Like the
change-in-control
provisions utilized in our employment agreements, all of our
separate
change-in-control
agreements provide payments to covered employees only if his or
her employment is terminated as a result of (or within a
specified period after) a
change-in-control.
The Compensation Committee believes that such agreements help to
mitigate the fear of job loss associated with potential
change-in-control
transactions and allow our key executive personnel to evaluate
such offers in an appropriate fashion.
Under the terms of our 2006 Incentive Plan, unless specified
otherwise in the associated award agreement or in a separate
employment or
change-in-control
agreement: (i) all of a participants awards will be
fully vested and exercisable upon a Business Combination or
Change-in-Control
(as such terms are defined in the 2006 Incentive Plan); and
(ii) all performance objectives will be deemed to have been
met as of the date of the Business Combination or
Change-in-Control.
Except with respect to Messrs. Gingo and DeSantis (for whom
we will provide a partial
gross-up),
if we conclude that any payment or benefit due to a named
executive officer would be subject to
28
the excise tax imposed by Section 4999 of the Code, then we
will consider: (1) the feasibility of offering substitute
awards that would not constitute parachute payments
under Section 280G of the Code and that would not generate
penalties under Section 409A of the Code; and (2) to
the extent that a substitution is not feasible or that the
payments and benefits due to the participant still would be
subject to the excise tax imposed by Section 4999 of the
Code, we will reduce the payments and benefits due to a
participant to the greatest amount that would not generate an
excise tax under Section 409A of the Code.
Pursuant to the terms of our 2002 Equity Incentive Plan, upon
the occurrence of a
Change-in-Control
(as such term is defined in the 2002 Equity Incentive Plan),
unless we determine otherwise in a participants award
agreement: (i) all stock options shall become immediately
vested and exercisable; (ii) any restrictions imposed on
restricted stock or restricted stock units shall lapse;
(iii) the vesting of all awards denominated in shares of
common stock shall be accelerated and be paid out within
30 days following the
Change-in-Control;
(iv) awards denominated in cash shall be paid to
participants in cash within 30 days following the
Change-in-Control;
and (v) all awards shall become non-cancelable
(i.e., such awards cannot be cancelled without the
participant receiving appropriate compensation as determined by
the Compensation Committee).
Tax and
Accounting Considerations
As a general matter, the Compensation Committee considers the
various tax and accounting implications of the different
compensation vehicles that are employed and the Compensation
Committee seeks to structure executive compensation in a tax
efficient manner.
Deductibility
of Executive Compensation
Section 162(m) of the Code prohibits us from taking a
federal income tax deduction for compensation paid in excess of
$1.0 million in any taxable year to our named executive
officers, unless certain conditions are met. Exceptions are made
for qualified performance-based compensation, among other
things. As part of its role, the Compensation Committee annually
considers the deductibility of executive compensation under
Section 162(m) in structuring our executive compensation
program. The Compensation Committee believes, however, that
compensation and benefit decisions should be primarily driven by
the needs of our business, rather than by tax considerations.
Accordingly, the Compensation Committee may choose to award
compensation that does not meet the requirements of
Section 162(m) where, in its judgment, such payments are
necessary to achieve its compensation philosophy and objectives.
Nonqualified
Deferred Compensation
Section 409A of the Code, which took effect on
January 1, 2005, imposes certain restrictions on amounts
deferred under nonqualified deferred compensation plans and a
20% excise tax on amounts that are subject to, but do not comply
with, Section 409A. Section 409A includes a broad
definition of nonqualified deferred compensation plans, which
may extend to various plans and arrangements that we maintain.
On April 10, 2007, the Treasury Department and the Internal
Revenue Service (the IRS) issued final regulations
relating to the treatment of nonqualified deferred compensation
plans under Section 409A.
Accounting
Standards Codification No. 718
When determining amounts of long-term incentive grants to the
named executive officers and other employees, the Compensation
Committee examines the accounting cost associated with the
grants. Under Accounting Standards Codification No. 718,
Share-Based Payment, grants of stock options, restricted
stock, restricted stock units and other share-based payments
result in an accounting charge.
Stock
Ownership Guidelines
In 2006, the Compensation Committee adopted stock ownership
guidelines for our executive officers. These guidelines require
that, within a five year period from the date of its adoption
or, if later, the date a person becomes an executive officer,
the Chief Executive Officer will maintain stock ownership in
value equal to approximately five times his base salary, while
all other executive officers are expected to hold stock in value
equal to approximately
29
three times their base salary. As has been stated previously,
the Compensation Committee bases a large part of its
compensation philosophy on aligning the interests of our
executive officers and our stockholders. Such efforts could be
undermined in the event that executive officers sold all or a
large part of their awards at vesting. In determining compliance
with these guidelines, the Compensation Committee considers the
beneficial ownership of our executive officers as required to be
reported in a proxy statement.
Compensation
of Directors
The Compensation Committee is also responsible for determining
compensation for our non-employee directors. Generally, the
Compensation Committee structures director compensation in a
fashion to attract and retain high quality individuals to serve
on the Board of Directors, to compensate such individuals for
the time and energy expended in providing us their expertise
and, in part, to provide directors with compensation that is
tied to the performance of our common stock. On an annual basis,
the Compensation Committee requests that its compensation
consultant evaluate our current director compensation levels
relative to our peers. Generally, it is the overall goal of the
Compensation Committee to position Director compensation at a
median market level. During fiscal 2010, upon consultation and
review with Towers Watson, the Compensation Committee determined
to increase its annual retainer fees for non-employee directors
and eliminate director meeting fees. Specifically, the
Compensation Committee approved increasing A. Schulmans
annual director retainer fee from $29,000 to $60,000 and to
eliminate meeting fees unless a director attends more than 24
meetings per year. Additionally, the Compensation Committee
approved the following retainers to directors with additional
duties: (i) $20,000 for the lead independent director;
(ii) $17,500 for the Audit Committee chair;
(iii) $12,500 for the Compensation Committee chair; and
(iv) $10,000 for all other committee chairs. For better
alignment with the term of office of its directors, which
commences immediately following the annual meeting of
stockholders, which is typically held in mid-December, A.
Schulman has adopted a policy of paying its director
compensation on a calendar year basis, with a portion of the
annual retainer fee being paid at the beginning of each calendar
quarter. Director compensation amounts reflected in the
Director Compensation table located on page 48 of
this proxy statement include both per meeting fees relating to
service for the 2009 calendar year, which were paid between
September 1, 2009 through December 31, 2009, and
installments of retainers, which were paid between
January 1, 2010 and August 31, 2010.
In addition, during fiscal 2010, each non-employee director was
awarded 3,500 shares of fully vested and unrestricted
common stock with a grant date fair value of $78,435 per
director. The Compensation Committee has adopted guidelines
requiring each director to maintain share ownership in value
equal to approximately five times his or her base retainer on
and after the fifth year of service on the Board of Directors.
In reviewing each directors share ownership, the
Compensation Committee considers the beneficial ownership of
each director as required to be reported in a proxy statement.
Mr. Gingo, who is currently the only employee director,
does not receive additional compensation for service on our
Board of Directors.
Compensation
Risk Assessment
As part of its oversight of our executive compensation program,
the Compensation Committee considers the impact of our executive
compensation program, and the incentives created by the
compensation awards that it administers, on our risk profile. In
addition, as part of our ERM process, management and the
Compensation Committee review all of our compensation policies
and procedures, including the incentives that they create and
factors that may reduce the likelihood of excessive risk taking,
to determine whether they present a significant risk to us. The
Compensation Committee believes that its governance and
organizational structures, in conjunction with its
risk-mitigation framework, allows us to continue to objectively
assess risk as it relates to all employee compensation programs
and plans. Based upon the results of our ERM assessment during
fiscal 2010, the Compensation Committee determined that the
risks arising from our compensation policies and practices were
not reasonably likely to have a material adverse effect. For
more information regarding our ERM process, see the discussion
provided under the caption Boards Role in Risk
Oversight beginning on page 10 of this proxy
statement.
30
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussion, the
Compensation Committee recommended to the Board of Directors
that the foregoing Compensation Discussion and Analysis be
included in this proxy statement.
Respectfully submitted,
Compensation Committee:
John B. Yasinsky (Chair)
Gregory T. Barmore
David G. Birney
James A. Mitarotonda
Ernest J. Novak, Jr.
Stanley W. Silverman
31
COMPENSATION
TABLES
Summary
Compensation Table
The table below provides information regarding the compensation
of A. Schulmans: (i) Chief Executive Officer;
(ii) Chief Financial Officer; and (iii) four other
most highly compensated executive officers as of August 31,
2010 (although Mr. Taylor remained employed by A. Schulman
on August 31, 2010, he was no longer an executive officer;
however, based on his compensation in fiscal year 2010,
Mr. Taylor would have been one of the three other most
highly compensated persons).
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Change in
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Pension
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Value and
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Nonqualified
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Deferred
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Stock
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Option
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(Non-Equity
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Compensation
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All Other
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Awards
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Awards
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Incentive Plan
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Earnings
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Compensation
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Name and Principal Position
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Year
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Salary ($)
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Bonus ($)
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($)(1)
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($)(2)
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Compensation
($)(3)
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($)(4)
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($)
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Total ($)
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Joseph M. Gingo
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2010
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$
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775,920
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$
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250,000
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(5)
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$
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2,696,668
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$
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900,067
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$
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66,153
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(6)
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$
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4,688,808
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President, Chief Executive
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2009
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$
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768,600
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$
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250,000
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$
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2,212,845
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$
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395,719
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$
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75,393
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$
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3,702,557
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Officer and Chairman of the Board
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2008
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$
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480,000
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$
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490,000
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$
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1,812,472
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$
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589,260
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$
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45,596
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$
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3,417,328
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Paul F. DeSantis
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2010
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$
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350,480
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$
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370,118
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$
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235,808
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$
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45,344
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(7)
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$
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1,001,750
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Chief Financial Officer,
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2009
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$
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348,223
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$
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333,138
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$
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98,310
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$
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49,251
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$
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828,922
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Vice President and Treasurer
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2008
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$
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319,292
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$
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361,215
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$
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181,138
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$
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50,366
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$
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912,011
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Bernard
Rzepka(8)
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2010
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$
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463,661
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$
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320,901
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$
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738,375
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$
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24,681
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(9)
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$
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1,547,618
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General Manager and Chief
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2009
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$
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452,857
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$
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234,812
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$
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320,644
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$
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25,211
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$
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1,033,524
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Operating Officer Europe
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2008
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$
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440,028
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$
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229,950
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$
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246,509
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$
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26,292
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$
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11,469
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$
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954,248
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David C. Minc
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2010
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$
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265,000
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$
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254,037
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$
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165,873
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$
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14,428
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(10)
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$
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699,338
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Vice President, Chief Legal
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Counsel and Secretary
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Kim L. Whiteman
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2010
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$
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265,000
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$
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169,927
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$
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132,233
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$
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14,070
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(11)
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$
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581,230
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Vice President Global
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Human Resources
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Jack B.
Taylor(12)
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2010
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$
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410,364
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$
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278,550
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$
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200,410
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$
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379,208
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$
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16,762
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(12)
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$
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1,285,294
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Former General Manager and
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2009
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$
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552,971
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$
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278,810
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$
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286,078
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$
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50,567
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$
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1,168,426
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Chief Operating Officer Asia
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2008
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$
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545,381
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$
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293,143
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$
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1,308
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$
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62,559
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$
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902,391
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(1) |
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Amounts shown reflect the aggregate grant date fair value
computed in accordance with FASB ASC Topic 718 for awards
granted during such fiscal year. The amounts assume maximum
payout for certain performance-based awards granted in 2010 and
all performance-based awards granted in 2009 and 2008. In this
regard, an award of performance shares granted in fiscal 2010 to
Messrs. Gingo, DeSantis, Minc and Whiteman was excluded in
the amounts of $1,210,140, $328,666, $225,580 and $150,864,
respectively. This award of performance shares was granted in
January 2010 with vesting contingent on A. Schulmans
performance relative to the average ROIC of a group of peer
companies in the S&P Special Chemicals Index over a three
year period. Due to the structure of the award, A. Schulman has
determined that while the Companys ROIC performance over
the three year period may improve, due to the averaging
methodology, compared to peer companies, achieving even the
minimum targets is unlikely. Assumptions used in the calculation
of these amounts are included in Note 10 Incentive
Stock Plans to the Consolidated Financial Statements
included in A. Schulmans Annual Report on
Form 10-K
for the fiscal year ended August 31, 2010. |
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(2) |
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There were no grants of stock options during the fiscal years
2010, 2009 or 2008. |
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(3) |
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The amounts for 2010 in this column represent compensation
awarded based on performance during fiscal 2010 under the A.
Schulmans 2010 Bonus Plan as well as compensation awarded
to Mr. Rzepka for time and performance-based cash awards. |
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(4) |
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Amounts reflect changes in the respective pension values for
Messrs. Taylor and Rzepka. As further described in the
Pension Benefits table located on page 40, as well
as under the caption European Retirement Plans
located on page 40, Messrs. Taylor and Rzepka each
participate in pension plans that are generally available to
employees within the country of the applicable plan. |
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(5) |
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Pursuant to the terms of his employment agreement with A.
Schulman, Mr. Gingo received a cash bonus of $250,000 on
January 1, 2010, two years following the commencement of
his employment. |
32
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(6) |
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For Mr. Gingo, amounts include $26,571 in matching
contributions by A. Schulman into Mr. Gingos 401(k)
plan account and $26,546 in contribution to the Non-Qualified
Plan. Other amounts include a mandatory physical examination and
$10,744 of dividends paid on restricted stock awards for which
the restrictions lapsed in fiscal 2010. |
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(7) |
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For Mr. DeSantis, amounts include $13,871 in matching
contributions by A. Schulman into Mr. DeSantiss
401(k) plan account and $26,199 of dividends paid on restricted
stock awards for which the restrictions lapsed in fiscal 2010.
The remaining amount is a contribution to the Non-Qualified Plan. |
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(8) |
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The Summary Compensation Table data, excluding Stock Awards, for
Mr. Rzepka was translated to U.S. dollars from the
Euro using a
12-month
average rate of 1.3664. No foreign currency translation was
necessary for Stock Award data. |
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(9) |
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For Mr. Rzepka, amounts include $24,681 in certain company
vehicle expenses. |
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(10) |
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For Mr. Minc, amounts include $10,125 in matching
contributions by A. Schulman into Mr. Mincs 401(k)
plan account. Other amounts include dividends paid on restricted
stock awards for which the restrictions lapsed in fiscal 2010
and contributions to the Non-Qualified Plan. |
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(11) |
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For Mr. Whiteman, amounts include $13,250 in matching
contributions by A. Schulman into Mr. Whitemans
401(k) plan account. The remaining amount includes dividends
paid on restricted stock awards for which the restrictions
lapsed in fiscal 2010. |
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(12) |
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The Salary and Non-equity Incentive Plan Compensation data for
Mr. Taylor was translated from the Euro to U.S. dollars
using a
12-month
average rate of 1.3664. The Change in Pension Value,
Nonqualified Deferred Compensation Earnings and All Other
Compensation data was translated from British Pounds to U.S.
dollars using a
12-month
average rate of 1.5657. No foreign currency translation was
necessary for Stock Award data. |
Grants of
Plan Based-Awards
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Estimated Possible Payouts Under
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Estimated Future Payouts
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Non-Equity Incentive Plan Awards
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Under Equity Incentive Plan Awards
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Fair Value
|
|
|
|
|
Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
of Stock
|
|
|
Grant
|
|
Approval
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
and Option
|
Name
|
|
Date
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Awards
|
|
Joseph M. Gingo
|
|
|
10/15/2009
|
|
|
|
10/15/2009
|
|
|
$
|
387,960
|
|
|
$
|
775,920
|
|
|
$
|
1,551,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
27,000
|
|
|
|
54,000
|
|
|
|
|
|
|
$
|
757,620
|
(1)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
27,000
|
|
|
|
54,000
|
|
|
|
|
|
|
$
|
1,210,140
|
(2)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,882
|
|
|
|
29,763
|
|
|
|
59,526
|
|
|
|
|
|
|
$
|
1,081,587
|
(3)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
|
$
|
605,070
|
(4)
|
Paul F. DeSantis
|
|
|
10/15/2009
|
|
|
|
10/15/2009
|
|
|
$
|
96,377
|
|
|
$
|
192,753
|
|
|
$
|
385,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,667
|
|
|
|
7,334
|
|
|
|
14,668
|
|
|
|
|
|
|
$
|
205,792
|
(1)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,667
|
|
|
|
7,334
|
|
|
|
14,668
|
|
|
|
|
|
|
$
|
328,710
|
(2)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,334
|
|
|
$
|
164,355
|
(4)
|
Bernard Rzepka
|
|
|
10/15/2009
|
|
|
|
10/15/2009
|
|
|
$
|
115,119
|
|
|
$
|
230,238
|
|
|
$
|
460,475
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
$
|
33,543
|
|
|
$
|
33,543
|
|
|
$
|
33,543
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
$
|
50,313
|
|
|
$
|
100,626
|
|
|
$
|
201,252
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
$
|
50,313
|
|
|
$
|
100,626
|
|
|
$
|
201,252
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Minc
|
|
|
10/15/2009
|
|
|
|
10/15/2009
|
|
|
$
|
67,500
|
|
|
$
|
135,000
|
|
|
$
|
270,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,517
|
|
|
|
5,034
|
|
|
|
10,068
|
|
|
|
|
|
|
$
|
141,254
|
(1)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,517
|
|
|
|
5,034
|
|
|
|
10,068
|
|
|
|
|
|
|
$
|
225,624
|
(2)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,034
|
|
|
$
|
112,812
|
(4)
|
Kim L. Whiteman
|
|
|
10/15/2009
|
|
|
|
10/15/2009
|
|
|
$
|
53,000
|
|
|
$
|
106,000
|
|
|
$
|
212,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,683
|
|
|
|
3,366
|
|
|
|
6,732
|
|
|
|
|
|
|
$
|
94,450
|
(1)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,683
|
|
|
|
3,366
|
|
|
|
6,732
|
|
|
|
|
|
|
$
|
150,864
|
(2)
|
|
|
|
01/12/2010
|
|
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,368
|
|
|
$
|
75,477
|
(4)
|
Jack B. Taylor
|
|
|
10/15/2009
|
|
|
|
10/15/2009
|
|
|
$
|
78,285
|
|
|
$
|
156,570
|
|
|
$
|
313,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/23/2009
|
|
|
|
09/25/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
278,500
|
(9)
|
33
|
|
|
(1) |
|
Award of performance shares, the terms of which are described
under the caption Performance Shares
beginning on page 25 of this proxy statement based on
TSR. The grant date fair value of these Performance Shares was
computed using the maximum level award in column (h) and
was calculated using a Monte Carlo simulation, which considered
the terms of these Performance Share awards. This simulation
resulted in a grant date fair value of $14.03 for the
Performance Share awards granted on January 12, 2010. |
|
(2) |
|
Award of performance shares, the terms of which are described
under the caption Performance Shares
beginning on page 25 based on ROIC. The grant date fair
value of these Performance Shares was computed using the maximum
level award in column (h) and was calculated using the
closing price of the common stock on the date of grant, which
was $22.41 per share. |
|
(3) |
|
Award of performance-based restricted stock units granted to
Mr. Gingo on January 12, 2010, in which each unit is
equal to the market value of one share of common stock. The
grant date fair value was computed using the closing price of
the common stock on August 31, 2010 of $18.17. Pursuant to
the terms of the award grant, the vesting of such
performance-based restricted stock units was contingent upon A.
Schulmans consolidated worldwide performance in fiscal
2010 in the areas of Net Income, Operating Income and Days of
Working Capital, as described under the caption
Restricted Stock Units beginning on
page 25 of this proxy statement. Based upon A.
Schulmans fiscal 2010 performance, as measured on
August 31, 2010, Mr. Gingo received the settlement of
34,525 units, which occurred on November 1, 2010 at a
price of $21.13. Pursuant to the award grant, Mr. Gingo
forfeited all unvested performance-based restricted stock units
on November 1, 2010. |
|
(4) |
|
Award of restricted stock which vests ratably on the first three
anniversaries of the award grant date. The grant date fair value
of such awards is equal to the closing price of the common stock
on the date of grant, which was $22.41 per share. |
|
(5) |
|
The Estimated Possible Payouts Under Non-Equity Incentive Plan
Awards for Messrs. Taylor and Rzepka were translated from
Euros to U.S. dollars using a
12-month
average of 1.3664. |
|
(6) |
|
In January 2010, A. Schulman granted time-based cash awards to
certain
non-U.S.
employees, which vest ratably on each of the first three
anniversaries of the award grant date. In regard to
Mr. Rzepka, $33,543 will vest on each of January 12,
2011, 2012 and 2013. |
|
(7) |
|
In January 2010, A. Schulman granted performance-based cash
awards to certain
non-U.S.
employees, which may vest at the end of the three year period
following the award grant date, but only if certain terms and
conditions are met. The vesting conditions for these
performance-based cash awards are based on TSR, as described
under the caption Time- and Performance-Based Cash
Awards beginning on page 26 of this proxy
statement. |
|
(8) |
|
In January 2010, A. Schulman granted performance-based cash
awards to certain
non-U.S.
employees, which may vest at the end of the three year period
following the award grant date, but only if certain terms and
conditions are met. The vesting conditions for these
performance-based cash awards are based on ROIC, as described
under the caption Time- and Performance-Based Cash
Awards beginning on page 26 of this proxy
statement. |
|
(9) |
|
Award of restricted stock which vests ratably on each
December 31, 2010, December 31, 2011 and
December 31, 2012. The grant date fair value of such awards
is equal to the closing price of the common stock on the date of
grant, which was $18.57 per share. |
2010
Named Executive Officer Compensation Components
Base
Salary
In fiscal 2010, the Compensation Committee continued to
implement its base salary positioning philosophy, attempting to
position executive officer base salaries at or near the
50th percentile of A. Schulmans peers by increasing
incrementally those base salaries falling below the median
target, while simultaneously managing base salaries that
exceeded the peer market median. Base salary increases granted
in fiscal 2010 were: (i) required pursuant to applicable
law; (ii) warranted based upon outstanding personal
performance; or (iii) incrementally increased toward peer
market median targets. In targeting A. Schulmans base
salary range at the 50th percentile, the Compensation
Committee believes that the Company is able to properly motivate
its executive officers and
34
fulfill the Companys goals of rewarding outstanding
performance and achieving executive retention. It is the opinion
of the Compensation Committee that by setting base salary levels
at competitive rates, A. Schulmans executive officers are
rewarded for undertaking positions of leadership and provided
with an incentive to continue working for us. However, as base
salary compensation is not typically subject to reduction or
forfeiture based on corporate performance, the Compensation
Committee believes that it should comprise only one component of
A. Schulmans overall pay philosophy and that a majority of
the Companys executive compensation structure should be
comprised of at-risk components.
Annual
Bonuses
Under the annual bonus program, the Compensation Committee
establishes the award formulas and the performance goals to be
measured in order to determine the cash performance bonus that
may be earned by each named executive officer for that year,
including the maximum cash bonus each will be eligible to
receive. The bonuses that each of the named executive officers
could have earned are set forth in the Grants of Plan-Based
Awards table located on page 33 of this proxy
statement, and the bonuses actually paid are set forth in the
Summary Compensation Table in the Non-Equity Incentive
Plan Compensation column located on page 32.
In October 2009, the Board of Directors, upon the approval of
the Compensation Committee, established the target bonus awards
for each of the named executive officers and established that
each executives total bonus opportunity would be based upon the
achievement of certain corporate performance metrics. Fiscal
2010 bonus targets for each named executive officer are
disclosed on pages 23-24 of this proxy statement.
In conjunction with establishing the target bonus opportunity
for each named executive officer, the Compensation Committee
selected performance metrics for evaluating corporate
performance, along with the respective weighting for each metric
and the threshold, target, stretch, enhanced stretch and maximum
performance goal levels. In selecting performance metrics for
2010, the Compensation Committee sought to establish corporate
performance metrics that focused the named executive officers on
the key drivers of stockholder value and emphasized both A.
Schulmans short- and long-term financial and strategic
goals. In light of such objectives, the Compensation Committee
established the following corporate performance metrics for
2010: (i) Net Income; (ii) Operating Income; and
(iii) Days of Working Capital, excluding certain unusual,
one-time in nature items. For Messrs. Gingo, DeSantis, Minc
and Whiteman, the Compensation Committee determined that each of
their respective annual bonus opportunities would be measured by
A. Schulmans consolidated worldwide operations, with Net
Income and Operating Income each receiving a 33.0% weighting and
Days of Working Capital receiving a 34.0% weighting. For
Mr. Rzpeka, the Compensation Committee established that his
annual bonus opportunity would be based upon the performance of
A. Schulmans consolidated worldwide operations and the
Companys European segment, with the following metric
weighting: (1) European Operating Income 49.5%;
(2) European Days of Working Capital 25.5%;
(3) consolidated worldwide Net Income 8.3%;
(4) consolidated worldwide Operating Income
8.3%; and (5) consolidated worldwide Days of Working
Capital 8.4%. For Mr. Taylor, the Compensation
Committee determined that his annual bonus opportunity would be
based upon the performance of A. Schulmans consolidated
worldwide operations and the Companys Asian segment, with
the following metric weighting: (a) Asian Operating
Income 49.5%; (b) Asian Days of Working
Capital 25.5%; (c) consolidated worldwide Net
Income 8.3%; (d) consolidated worldwide
Operating Income 8.3%; and (e) consolidated
worldwide Days of Working Capital 8.4%. For all
directly reporting executive officers, Mr. Gingo retained
authority to adjust award payouts, based upon individual
performance, up to 20% more than the calculated award amount or
down to 0% of such award amount.
For fiscal 2010, A. Schulman utilized its budgeting model to set
the performance levels for each of the performance metrics. The
Compensation Committee believes that achieving the budget
requires strong management performance and is deserving of a
bonus at the targeted award. For 2010, the Compensation
Committee determined that merely maintaining the 2009 level of
performance would not merit bonus compensation for fiscal 2010.
As a result, the threshold performance level required for any
bonus was set at 110% of the actual 2009 performance and the
target was determined to be at budget. The maximum bonus level
of 200% of target was set at 150% of the budget. The
Compensation Committee believes that its targets are challenging
but achievable with successful management performance.
35
For fiscal 2010, A. Schulman utilized its budgeting model to set
the performance levels for each of the performance metrics. The
Compensation Committee believes that achieving the budget
requires both strong management performance and is deserving of
a stretch bonus or 125% of the targeted award. For a
detailed discussion regarding fiscal 2010 corporate performance,
see page 24 of the Compensation Discussion and
Analysis.
Restricted
Stock
On January 12, 2010, the Compensation Committee awarded
shares of restricted stock to certain of A. Schulmans
North American executives. Of the named executive officers,
Messrs. Gingo, DeSantis, Minc and Whiteman each received
awards of restricted stock pursuant to the 2006 Incentive Plan,
the amounts of which are set forth in column (i) in the
Grants of Plan-Based Awards table located on page 33
of this proxy statement. In addition, on October 23, 2009,
the Compensation Committee award 15,000 shares of
restricted stock to Jack B. Taylor, pursuant to the terms of his
employment agreement with A. Schulman, which is described in
greater detail under the caption Employment Agreement
of Mr. Taylor beginning on page 44 of this
proxy statement. With respect to the restricted stock awarded to
the named executive officers, such shares vest ratably over
time, subject to continued employment, on each of the first
three anniversaries of the award grant date. During the
restriction period, the named executive officers may exercise
full voting rights associated with their shares of restricted
stock. In addition, during the restriction period, A. Schulman
will hold all dividends paid with respect to such shares of
restricted stock until the restrictions on the underlying
restricted stock have lapsed.
Restricted
Stock Units
On January 12, 2010, the Compensation Committee issued an
awards of performance-based restricted stock units to
Mr. Gingo in accordance with the provisions of the 2006
Incentive Plan and pursuant to the terms of his employment
agreement. As described in greater detail on page 41 of
this proxy statement under the caption Employment
Agreement of Mr. Gingo, A. Schulman agreed to
provide Mr. Gingo with three annual grants of
performance-based restricted stock units to help compensate
Mr. Gingo for foregone value in equity grants from his
previous employer, The Goodyear Tire & Rubber Company.
These three supplemental grants were made in each of January
2008, 2009 and 2010, in the values of $33,000, $500,000 and
$667,000, respectively, subject to certain performance-based
vesting and settlement restrictions. Accordingly, on
January 12, 2010, the Compensation Committee awarded
Mr. Gingo an award of 59,526 performance-based restricted
stock units (29,763 with dividend rights) as the third and final
installment of these grants. Generally, under the 2006 Incentive
Plan, restricted stock units are settled in cash in an amount
equal to the fair market value of a share of A. Schulmans
common stock on the applicable vesting date, multiplied by the
number of restricted stock units to be settled. During the
restriction period, holders of restricted stock units have no
voting rights with respect to the shares of common stock
underlying the restricted units. For those restricted stock
units conferring dividend rights, A. Schulman holds all
dividends paid on the underlying shares of common stock and
award such dividends with the cash settlement of underlying
shares upon vesting. In regard to the performance-based
restricted stock units issued to Mr. Gingo, the vesting and
settlement of such awards was contingent upon A. Schulmans
achievement of certain world wide corporate performance metrics,
as disclosed on page 25 of the Compensation Discussion
and Analysis section of this proxy statement.
Performance
Shares
In connection with the grant of restricted stock to certain of
A. Schulmans North American executives, the Compensation
Committee also awarded performance shares to Messrs. Gingo,
DeSantis, Minc and Whiteman pursuant to the 2006 Incentive Plan,
in the following amounts: (i) Mr. Gingo
108,000 shares (54,000 with dividend rights);
(ii) Mr. DeSantis 29,332 shares
(14,666 with dividend rights);
(iii) Mr. Minc 20,132 shares (10,066
with dividend rights); and
(iv) Mr. Whiteman 13,464 shares
(6,732 with dividend rights. Under the 2006 Incentive Plan,
performance shares give the recipient the right to receive a
specified number of shares of A. Schulmans common stock
only if certain terms and conditions are met. Specifically,
performance shares awarded to Messrs. Gingo, DeSantis, Minc
and Whiteman may vest on January 16, 2012 based upon the
following performance criteria: (1) with respect to 50% of
each executives performance shares, A. Schulmans
performance
36
relative to the average performance of the common stock of a
group of peer companies in the S&P Special Chemicals Index,
as measured by TSR during the Performance Period; and
(2) with respect to the remaining 50% of each
executives performance shares, A. Schulmans
performance relative to the average ROIC of the same group of
peer companies in the S&P Special Chemicals Index for the
Performance Period. With respect to each type of performance
shares, no shares will vest if relative performance is below the
25th percentile, 100% will vest if relative performance is at
the 50th percentile and 200% will vest if relative performance
is at or above the 75th percentile. All performance shares that
do not vest on January 12, 2013 will be forfeited. In
regard to dividend rights, A. Schulman utilizes two types of
performance shares: (a) shares that provide the award
recipient with dividend rights during the Performance Period;
and (b) shares that do not provide dividend rights with
respect to the underlying shares. For those performance shares
conferring dividend rights, A. Schulman holds all dividends paid
on the underlying shares of common stock and award such
dividends with the underlying shares upon vesting, subject to
the same risk of forfeiture.
Time-
and Performance-Based Cash Awards
In conjunction with A. Schulmans grant of restricted stock
and performance shares to certain of the Companys North
American executives, the Compensation Committee awarded both
time- and performance-based cash awards to certain of A.
Schulmans foreign executives, including Mr. Rzepka in
fiscal 2010. In regard to time-based cash awards, the
Compensation Committee issued an award of $100,629 to
Mr. Rzepka. Similar to awards of restricted stock,
time-based cash awards vest ratably over time, subject to
continued employment, on each of the first three anniversaries
of the award grant date. In addition to the time-based cash
awards, the Compensation Committee also approved the issuance of
performance-based cash award to Mr. Rzepka, the amounts of
which are set forth in the Grants of Plan-Based Awards
table located on page 33 of this proxy statement. In
regard to Mr. Rzepka, the vesting of all performance-based
cash awards is contingent upon the same vesting criteria as the
performance shares issued to A. Schulmans North American
executives (i.e., vesting based upon TSR and ROIC).
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Equity
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Incentive
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Plan Awards:
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market or
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
Unearned
|
|
Payout Value
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Market Value
|
|
Shares,
|
|
of Unearned
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
of Shares or
|
|
Units or Other
|
|
Shares, Units
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock That
|
|
Units of Stock
|
|
Rights That
|
|
or Other Rights
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
That Have Not
|
|
Have Not
|
|
That Have Not
|
Name
|
|
(Exercisable)
|
|
(Unexercisable)
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested
($)(1)
|
|
Vested
(#)(2)
|
|
Vested
($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph M. Gingo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,067
|
(3)
|
|
$
|
764,357
|
|
|
|
108,000
|
(4)
|
|
$
|
1,962,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,600
|
(5)
|
|
$
|
1,573,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(6)
|
|
$
|
1,817,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,526
|
(7)
|
|
$
|
1,081,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul F. DeSantis
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
24.69
|
|
|
|
01/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,468
|
(8)
|
|
$
|
262,884
|
|
|
|
29,332
|
(4)
|
|
$
|
532,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,800
|
(5)
|
|
$
|
432,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(6)
|
|
$
|
245,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernard Rzepka
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
$
|
13.99
|
|
|
|
10/17/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
18.02
|
|
|
|
10/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
(9)
|
|
$
|
163,530
|
|
|
|
6,750
|
(10)
|
|
$
|
122,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500
|
(11)
|
|
$
|
27,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Minc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,768
|
(12)
|
|
$
|
177,485
|
|
|
|
20,132
|
(4)
|
|
$
|
365,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,800
|
(5)
|
|
$
|
287,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
(6)
|
|
$
|
163,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kim L. Whiteman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,102
|
(13)
|
|
$
|
110,873
|
|
|
|
13,464
|
(4)
|
|
$
|
244,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,800
|
(5)
|
|
$
|
287,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack B. Taylor
|
|
|
8,334
|
|
|
|
|
|
|
|
|
|
|
$
|
18.02
|
|
|
|
10/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(14)
|
|
$
|
272,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(9)
|
|
$
|
272,550
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Market value computed using $18.17, the closing share price of
the common stock on August 31, 2010. |
37
|
|
|
(2) |
|
Awards presented based upon achievement of maximum performance
goals. |
|
(3) |
|
Award of time-based restricted stock, the vesting of which will
occur as follows: (i) 7,533 shares on January 16,
2011; (ii) 7,534 shares on January 16, 2012;
(iii) 9,000 shares on each of January 12, 2011,
2012, and 2013. |
|
(4) |
|
Award of performance shares, the vesting of which is described
under the caption Performance Shares
beginning on page 25 of this proxy statement. Such
performance shares will vest, if at all, on January 12,
2013. |
|
(5) |
|
Award of performance shares that will vest, if at all, on
January 16, 2012, based upon a measurement of TSR on the
common stock relative to a peer group of similar companies from
the award grant date. Specifically, on January 16, 2012:
performance shares may vest based upon the following performance
criteria: (i) the performance of A. Schulmans common
stock relative to a group of peer companies in the S&P
Special Chemicals Index, as measured by TSR from
January 16, 2009 to January 16, 2012 (the Award
Period); and (ii) whether the Companys TSR
during the Award Period are positive or negative. All
performance shares that do not vest on January 16, 2012
will be forfeited. In regard to dividend rights, A. Schulman
utilizes two types of performance shares: (1) shares that
provide the award recipient with dividend rights during the
Award Period; and (2) shares that do not provide dividend
rights with respect to the underlying shares. For those
performance shares conferring dividend rights, A. Schulman hold
all dividends paid on the underlying shares of common stock and
award such dividends with the underlying shares upon vesting,
subject to the same risk of forfeiture. |
|
(6) |
|
Award of performance shares that will vest, if at all, on
February 28, 2011, based upon a measurement of TSR on the
common stock relative to a peer group of similar companies from
the award grant date. Specifically, on February 28, 2011:
(i) if TSR are below the 25th percentile, no performance
shares will vest; (ii) if TSR meet or exceed the 25th
percentile, but is less than the 50th percentile, one-third of
the performance shares will vest; (iii) if TSR meet or
exceed the 50th percentile, but is less than the 75th
percentile, two-thirds of the performance shares will vest; and
(iv) if TSR meet or exceed the 75th percentile, all
performance shares will vest. During the performance period,
holders of such shares have no voting rights. Additionally, in
regard to dividends, A. Schulman utilizes two types of
performance shares: (1) shares that provide the award
recipient with dividend rights during the performance period;
and (2) shares that do not confer dividend rights. For
those performance shares conferring dividend rights, A. Schulman
will hold dividends paid with respect to such shares until the
end of the performance period, subject to the same risk of
forfeiture. All unvested performance shares on February 28,
2011 will be forfeited. |
|
(7) |
|
Award of performance-based restricted stock units granted to
Mr. Gingo on January 12, 2010, the vesting of which is
described under the caption Restricted Stock
Units beginning on page 25 of this proxy
statement. Based upon A. Schulmans fiscal 2010
performance, as measured on August 31, 2010, Mr. Gingo
received the settlement of 34,525 units, which occurred on
November 1, 2010 at a price of $21.13. Pursuant to the
award grant, Mr. Gingo forfeited all unvested
performance-based restricted stock units on November 1,
2010. |
|
(8) |
|
Award of time-based restricted stock, the vesting of which will
occur as follows: (i) 2,444 shares on January 12,
2011; (ii) 2,445 shares on each of January 12,
2012 and 2013; (iii) 2,067 shares on each of
January 16, 2011 and 2012; and (iv) 3,000 shares
on February 28, 2011. |
|
(9) |
|
Award of time-based restricted stock units, each unit of which
is equal to the market value of one share of common stock on the
vesting date. These time-based restricted stock units are
settled in cash at the end of four years following the award
grant date to be settled on May 2, 2011. |
|
(10) |
|
Award of performance-based restricted stock units that will
vest, if at all, on February 28, 2011. The vesting
parameters for these performance-based restricted stock units
are the same as that described in footnote 6. On
February 28, 2011, vested units will be settled in cash
equal to the market value of one share of common stock, with all
unvested units subject to forfeiture. In regard to dividends, A.
Schulman utilizes two types of performance-based cash-settled
restricted stock units: (i) units that provide the award
recipient with dividend rights during the performance period;
and (ii) units that do not confer dividend rights. For
those units conferring dividend rights, A. Schulman will hold
dividends paid with respect to the underlying shares until the
end of the performance period, subject to the same risk of
forfeiture. |
38
|
|
|
(11) |
|
Award of time-based restricted stock units, each unit of which
is equal to the market value of one share of common stock on the
vesting date. These restricted stock units vest ratably on the
first three anniversaries of the award grant date. These
restricted stock units will be settled on February 28, 2011. |
|
(12) |
|
Award of time-based restricted stock, the vesting of which will
occur as follows: (i) 1,678 shares on each of
January 12, 2011, 2012 and 2013;
(ii) 1,367 shares on each of January 16, 2011 and
2012; and (iii) 2,000 shares on June 4, 2011. |
|
(13) |
|
Award of time-based restricted stock, the vesting of which will
occur as follows: (i) 1,367 shares on each of
June 15, 2011 and 2012; (ii) 1,122 shares on
January 12, 2011; and (iii) 1,123 shares on each
of January 12, 2012 and 2013. |
|
(14) |
|
Award of time-based restricted stock, 5,000 of which will vest
on each of December 31, 2010, 2011 and 2012. |
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise ($)
|
|
|
Vesting (#)
|
|
|
Vesting ($)
|
|
|
Joseph M. Gingo
|
|
|
|
|
|
|
|
|
|
|
45,059
|
(1)
|
|
$
|
971,273
|
|
Paul F. DeSantis
|
|
|
|
|
|
|
|
|
|
|
17,066
|
(2)
|
|
$
|
402,623
|
|
Bernard Rzepka
|
|
|
|
|
|
|
|
|
|
|
8,500
|
(3)
|
|
$
|
170,230
|
|
David C. Minc
|
|
|
|
|
|
|
|
|
|
|
3,366
|
(4)
|
|
$
|
71,874
|
|
Kim L. Whiteman
|
|
|
|
|
|
|
|
|
|
|
1,366
|
(5)
|
|
$
|
28,946
|
|
Jack B. Taylor
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(6)
|
|
$
|
289,050
|
|
|
|
|
(1) |
|
These awards include: (i) 2,000 shares of restricted
stock that vested on February 1, 2010, with a value
realized on vesting based on the closing price of the common
stock on the date of vesting of $22.13;
(ii) 834 shares of restricted stock and 167 restricted
stock units, both which vested on April 11, 2010 with a
value realized on vesting based on the closing price of the
common stock on the date of vesting of $23.69; and
(iii) 7,533 shares of restricted stock that vested on
January 16, 2010 with a value realized upon vesting based
on the closing price of the common stock on the vesting date of
$23.07. Amount also includes 34,525 performance-based restricted
stock units, which vested on August 31, 2010, but were not
valued or settled until November 1, 2010 at a price of
$21.13. |
|
(2) |
|
These awards include: (i) 3,000 shares of restricted
stock that vested on February 28, 2010, with a value
realized upon vesting based on the closing price of the common
stock on the vesting date of $23.56; (ii) 3,000 shares
of restricted stock and 9,000 shares of performance-based
restricted stock that vested on April 11, 2010, with a
value realized on vesting based on the closing price of the
common stock on the date of vesting of $23.69; and
(iii) 2,066 shares of restricted stock that vested on
January 16, 2010 with a value realized upon vesting based
on the closing price of the common stock on the vesting date of
$23.07. |
|
(3) |
|
These awards include: (i) 7,000 restricted stock units
vested on October 21, 2009, with a value realized on vested
based on the closing price of the common stock on the date of
vesting, which was $19.27; and (ii) 1,500 restricted stock
units vested on February 28, 2010, with a value realized on
vested based on the closing price of the common stock on the
date of vesting, which was $23.56. |
|
(4) |
|
These awards include: (i) 2,000 shares of restricted
stock that vested on June 4, 2010, with a value realized
upon vesting based on the closing price of the common stock on
the vesting date of $20.18; and (ii) 1,366 shares of
restricted stock that vested on January 16, 2010 with a
value realized upon vesting based on the closing price of the
common stock on the vesting date of $23.07. |
|
(5) |
|
These awards are restricted stock awards which vested on
June 15, 2010, with a value realized on vested based on the
closing price of the common stock on the date of vesting, which
was $21.19. |
|
(6) |
|
These awards include 15,000 restricted stock units vested on
October 21, 2009, with a value realized on vested based on
the closing price of the common stock on the date of vesting,
which was $19.27. |
39
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
|
|
Number of Years
|
|
|
Present Value of
|
|
|
Payments During
|
|
Name
|
|
Plan Name
|
|
Credited Service (#)
|
|
|
Accumulated Benefit ($)
|
|
|
Last Fiscal Year ($)
|
|
|
Joseph M. Gingo
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul F. DeSantis
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernard
Rzepka(1)
|
|
A. Schulman GmbH,
Kerpen
Pension Plan
|
|
|
17
|
|
|
|
1,548,395
|
|
|
|
|
|
David Minc
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Kim Whiteman
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
Taylors(2)
|
|
A. Schulman, Inc. LTD
1978 Retirement
Benefits Scheme
|
|
|
40
|
|
|
$
|
5,395,850
|
|
|
$
|
306,234
|
|
|
|
|
(1) |
|
The value presented for Mr. Rzepka was converted from Euros
to U.S. dollars at a
12-month
average rate of 1.3664. Assumptions include age 65 commencement,
no decrements for either death or termination prior to
age 65, Heubeck 2005 Generational mortality after 65 and a
discount rate of 3.75% at August 31, 2010. |
|
(2) |
|
The values presented for Mr. Taylor were converted from
British Pounds to U.S. dollars at a
12-month
average rate of 1.5657. Assumptions include a discount rate of
4.8% at August 31, 2010 and the PA92 Long Cohort Year of
Birth +2 age rating mortality table. There has been no further
benefit accrual for Mr. Taylor since he turned age 60
in October 2006. |
European
Retirement Plans
Each of the European named executive officers participate in
pension plans that are generally available to employees within
the country of the applicable plan. For Mr. Rzepka, his
pension benefits are calculated at a rate of 0.8% of his final
pensionable salary up to the applicable social security pension
ceiling per year of service with a maximum of 20% and an
additional 1.6% of pensionable salary for that portion exceeding
the social security pension ceiling, with a maximum of 60%.
Under German law, Mr. Rzepkas benefits under the plan
are fully vested and include a widows pension of 50% of
the amount payable. If Mr. Rzepkas employment
terminates prior to his reaching age 65, his benefits would
be reduced based upon his total years of service divided by the
number of years of service he would need to reach age 65.
Mr. Rzepkas spouse is entitled to receive 50% of his
pension upon his death in service or during retirement.
Mr. Taylor is currently receiving benefits under his
pension plan, based upon two-thirds of his final salary and is
fully vested in those amounts. Portions of his pension
(approximately one-third) are subject to adjustment for
inflation. Upon Mr. Taylors death, his widow is
entitled to receive two-thirds of his pre-commutation pension.
Mr. Taylors pension benefits relate to his prior
service in A. Schulmans European operations.
Non-qualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
Contributions in
|
|
Contributions in
|
|
Withdrawals/
|
|
Earnings in Last
|
|
Balance at Last
|
Name
|
|
Last FY ($)
|
|
Last FY
($)(1)
|
|
Distributions ($)
|
|
FY
($)(2)
|
|
FYE ($)
|
|
Joseph M. Gingo
|
|
|
|
|
|
$
|
26,546
|
|
|
|
|
|
|
$
|
11,343
|
|
|
$
|
88,986
|
|
Paul F. DeSantis
|
|
|
|
|
|
$
|
5,274
|
|
|
|
|
|
|
$
|
7,312
|
|
|
$
|
37,273
|
|
Bernard Rzepka
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Minc
|
|
|
|
|
|
$
|
1,083
|
|
|
|
|
|
|
$
|
267
|
|
|
$
|
2,099
|
|
Kim L. Whiteman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack B. Taylor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Column contains contributions by A. Schulman in the last fiscal
year under the Non-Qualified Plan. Amounts shown are included in
the All Other Compensation column shown in the Summary
Compensation Table located on page . |
40
|
|
|
(2) |
|
Earnings in this column represent estimated earnings on the
Non-Qualified Plan, which are based upon the performance of the
S&P 500. These amounts are not included in the Summary
Compensation Table since they do not constitute above market
interest or preferential earnings. |
Employment
Agreements
A. Schulman currently maintains employment agreements with
certain members of its senior executive personnel. Of the named
executive officers, A. Schulman currently has entered into
employment agreements only with Messrs. Gingo, DeSantis and
Taylor, the material terms of which are outlined below. In
regard to Messrs. Rzepka and Minc, A. Schulman does not
currently maintain employment agreement with such individuals,
however, each he has executed a
change-in-control
agreement with the Company, the material terms of which are
described below. In regard to Mr. Whiteman, A. Schulman
does not currently maintain an employment or
change-in-control
agreement with him.
Employment
Agreement of Mr. Gingo
On December 17, 2007, A. Schulman entered into an
employment agreement with Joseph M. Gingo (the Gingo
Agreement) to employ him as its President and Chief
Executive Officer, which was subsequently amended on
December 17, 2008 and January 9, 2009. As amended, the
term of the Gingo Agreement ends on December 31, 2011;
provided, however, at December 31, 2009, the term of the
Gingo Agreement was automatically extended for an additional
year to December 31, 2012 because neither Mr. Gingo
nor A. Schulman provided notice to the other of non-extension
prior to October 1, 2009.
As amended, the Gingo Agreement provides for a base salary of
$775,000.00, which may be increased during the term at the
discretion of the Board of Directors. Mr. Gingo is also
eligible for participation in A. Schulmans annual bonus
program for senior executives, with an initial target level of
70% and leverage ranging from zero to 200% based upon
performance metrics to be established by Mr. Gingo and the
Compensation Committee and approved by the Board of Directors.
Additionally, Mr. Gingo is eligible to receive an annual
award of performance-based restricted shares or restricted stock
units as long-term incentive compensation under the 2006
Incentive Plan. Specifically, each award of performance-based
restricted shares or restricted stock units shall be based on a
target grant value of 200% of Mr. Gingos base salary,
with vesting based upon performance metrics to be agreed upon by
the Compensation Committee and Mr. Gingo and approved by
the full Board of Directors. However, in regard to fiscal 2009,
Mr. Gingo expressly waived his right to a minimum amount
and agreed to an award of approximately 66,667 shares of
restricted stock or performance shares, which equaled the same
award level as the prior years grant. Ultimately, in
fiscal 2009, A. Schulman awarded Mr. Gingo
22,600 shares of time-based restricted stock and a target
award of 44,300 performance shares as long-term incentive
compensation. Mr. Gingo is entitled to receive all fringe
benefits made generally available to A. Schulmans
executives in accordance with the Companys policies and is
eligible to participate in all other employee compensation and
benefit plans available generally to executives of A. Schulman
at a level appropriate for his position. During fiscal 2008, the
Compensation Committee determined to eliminate most perquisites
for North American named executive officers, including the use
of company cars.
When Mr. Gingo was retained as the President and Chief
Executive Officer of A. Schulman, it was agreed that he would be
compensated for certain foregone cash bonuses and value in
equity grants from his previous employer, The Goodyear
Tire & Rubber Company. These compensation elements
were comprised of four cash bonuses and three annual grants of
performance-based restricted stock units, each totaling
$1,500,000 in intended value. Therefore, upon commencement of
his employment on January 1, 2008, Mr. Gingo received
a lump sum payment of $750,000, and he received additional lump
sum cash payments of $250,000 on January 1, 2009 and
January 1, 2010. Mr. Gingo is entitled to receive one
additional cash payment of $250,000 on December 31, 2010,
subject to his continued employment. In the event that
Mr. Gingos employment is terminated for any reason,
other than termination for Cause (as defined in the Gingo
Agreement) by A. Schulman or his voluntary resignation, each
remaining unpaid cash bonus will become immediately due and will
be paid to Mr. Gingo within 30 days of termination
In addition to the lump sum cash payments, Mr. Gingo was
entitled to receive three annual performance-based restricted
stock unit grants, totaling $1.5 million in initial grant
value. The restricted stock unit grants issued to
41
Mr. Gingo were as follows: (1) on February 29,
2008, Mr. Gingo received $333,000 (grant value) of
restricted stock units; (2) on January 16, 2009,
Mr. Gingo received $500,000 (grant value) of restricted
stock units (RSU Award 2); and (3) on
January 12, 2010, Mr. Gingo received $667,000 (grant
value) of restricted stock units (RSU Award 3). In
the event Mr. Gingos employment is terminated:
(i) without Cause or for Good Reason following a
Change-in-Control
(as such terms are defined in the Gingo Agreement);
(ii) due to Resignation for Cause (as defined in the Gingo
Agreement); or (iii) without Cause prior to a
Change-in-Control,
and RSU Award 3 has not been issued, then Mr. Gingo is
entitled to be paid an amount equal to the aggregate initial
share grant value of RSU Award 3 within 90 days of his
termination. A. Schulman agreed to provide Mr. Gingo such
performance-based restricted stock units as a way of making him
whole for the long-term incentive compensation that the Company
believes would have been payable to Mr. Gingo had he
remained at his prior employer until retirement. In regards to
the January 12, 2010 grant, A. Schulman and Mr. Gingo
agreed to have vesting contingent upon the same performance
metrics as under the Companys fiscal 2010 bonus plan. As a
result of fiscal 2010 performance, Mr. Gingo settled
approximately 34,525 performance-based restricted stock units on
November 1, 2010 for a total value of $729,513.
Upon termination of Mr. Gingos employment,
Mr. Gingo may be entitled to receive certain
post-termination benefits depending upon whether such
termination is by A. Schulman without Cause, in relation to a
Change-in-Control,
or by reason of Mr. Gingos death or Disability (as
such terms are defined in the Gingo Agreement). In the event
that A. Schulman terminates Mr. Gingos employment
without Cause prior to the expiration of the Gingo Agreement and
prior to a
Change-in-Control,
Mr. Gingo shall receive his salary for the remaining term
of the Gingo Agreement, plus a bonus for each year of the
remaining term, each of which shall be equal to either the
greater of: (1) $490,000; or (2) the average annual
bonus during the most recent three calendar years of
Mr. Gingos employment or such shorter period during
which Mr. Gingo has been employed. Additionally,
Mr. Gingo shall receive an amount equal to up to one
years base salary plus one years annual bonus in
consideration of (and subject to Mr. Gingos continued
compliance with) the confidentiality, non-competition and
non-solicitation provisions of the Gingo Agreement. In the event
that Mr. Gingo is terminated by reason of death, A.
Schulman shall pay a lump sum amount equal to 60% of
Mr. Gingos salary for 24 months to a designated
beneficiary. In the event that Mr. Gingo becomes Disabled
during the term of the Gingo Agreement, A. Schulman shall pay
Mr. Gingo 60% of his base salary during the period of his
Disability (not to exceed 24 months). After six months of
Disability, A. Schulman shall have the right to terminate
Mr. Gingo; provided, however that the 60% payments shall
continue for the remainder of the 24 month period.
The Gingo Agreement also provides that, in the event
Mr. Gingo is terminated following a
Change-in-Control
event for any reason, except: (1) termination by A.
Schulman for Cause; (2) termination by reason of death or
Disability; or (3) termination by Mr. Gingo without
Good Reason (as such terms are defined in the Gingo Agreement),
Mr. Gingo shall be paid a lump sum amount equal to:
(i) Mr. Gingos base salary in effect divided by
12 and multiplied by the number of full months remaining on the
term; and (ii) the average annual bonus earned by
Mr. Gingo in the immediately preceding fiscal years
multiplied by the number of fiscal years remaining under the
term when a bonus was not paid. In addition, Mr. Gingo
shall remain entitled to receive any of the aforementioned
unpaid lump sum cash or RSU awards that have not been issued or
paid. Additionally, Mr. Gingo shall receive an amount equal
to up to one years base salary plus one years annual
bonus in consideration of (and subject to Mr. Gingos
continued compliance with) the confidentiality, non-competition
and non-solicitation provisions of the Gingo Agreement. Finally,
Mr. Gingo shall also continue to receive certain insurance
benefits (reduced to the extent comparable benefits are actually
provided without cost to him by another source after
termination) from the date of termination through the remainder
of the term of the Gingo Agreement.
Pursuant to the confidentiality, non-competition and
non-solicitation provisions of the Gingo Agreement, for a period
of one year following any termination of Mr. Gingos
employment, Mr. Gingo will not, directly or indirectly,
either as an individual for his own account or as an investor,
or other participant in, or as an employee, agent, or
representative of, any other business enterprise:
(1) solicit, employ, entice, take away or interfere with,
or attempt to solicit, employ, entice, take away or interfere
with, any employee of A. Schulman; or (2) engage,
participate in, finance, aid or be connected with any enterprise
that competes with the business of the Company. The geographical
limitations on the foregoing restrictions on Mr. Gingo
include any country in which A. Schulman is doing business as of
Mr. Gingos termination date.
42
In addition to the amounts described above under the Gingo
Agreement, Mr. Gingo is entitled to an additional payment
equal to any excise tax imposed under Sections 280G and
4999 of the Code, if any, as a result of certain amounts payable
to him in respect of a
Change-in-Control.
Employment
Agreement of Mr. DeSantis
On January 4, 2006, A. Schulman entered into an employment
agreement with Paul F. DeSantis (the DeSantis
Agreement) to retain him as its Vice President, Treasurer
and Chief Financial Officer, which was subsequently amended on
December 17, 2008. As amended, the term of the DeSantis
Agreement was to end on December 31, 2009 (the
Initial Term); however, the term of the DeSantis
Agreement automatically extended for a term of one year (an
Extended Term) since neither party gave notice to
the other of non-extension not less than 30 days prior to
the expiration of the Initial Term or any Extended Term.
Under the terms of the DeSantis Agreement, Mr. DeSantis is
provided a fixed base salary (as in effect on December 17,
2008), which may be increased during the term at the discretion
of the Board of Directors. Mr. DeSantis is also eligible
for participation in A. Schulmans bonus program for senior
executives, with an initial target level of 50%. Additionally,
upon commencement of his employment, Mr. DeSantis received
a grant of 60,000 nonqualified stock options at an exercise
price of $24.69 and a bonus of $120,000. Mr. DeSantis is
also entitled to receive all fringe benefits made generally
available to the A. Schulmans executives in accordance
with the A. Schulmans policies and is eligible to
participate in all other employee compensation and benefit plans
available generally to executives of A. Schulman at a level
appropriate for his position.
Upon termination of Mr. DeSantis employment,
Mr. DeSantis may be entitled to receive certain
post-termination benefits depending upon whether such
termination is by A. Schulman without Cause, in relation to a
Change-in-Control,
or by reason of Mr. DeSantis death or Disability (as
such terms are defined in the DeSantis Agreement). In the event
that A. Schulman terminates Mr. DeSantis employment
without Cause prior to the expiration of the DeSantis Agreement
and prior to a
Change-in-Control,
Mr. DeSantis shall receive his salary for a period of one
year after termination, plus a bonus payment in a lump sum equal
to 50% of his average annual bonus during the most recent five
calendar years of employment, in consideration of (and subject
to Mr. DeSantis continued compliance with) the
confidentiality, non-competition and non-solicitation provisions
of the DeSantis Agreement. In the event that Mr. DeSantis
is terminated by reason of death, A. Schulman shall pay a lump
sum amount equal to 60% of his salary for a period of
24 months to a designated beneficiary. In the event that
Mr. DeSantis becomes Disabled during the term of the
DeSantis Agreement, A. Schulman shall pay Mr. DeSantis 60%
of his base salary during the period of his Disability (not to
exceed 24 months). After six months of Disability, A.
Schulman shall have the right to terminate Mr. DeSantis;
provided, however, that the 60% payments shall continue for the
remainder of the
24-month
period.
The DeSantis Agreement also provides that, in the event
Mr. DeSantis is terminated following a
Change-in-Control
event for any reason except: (1) termination by A. Schulman
for Cause; (2) termination by reason of death or
Disability; or (3) termination by Mr. DeSantis without
Good Reason, Mr. DeSantis shall be paid a lump sum amount
equal to three times the sum of: (i) the higher of his
annual base salary payable immediately (a) prior to the
event causing the termination or (b) the
Change-in-Control;
plus (ii) an amount equal to the higher of his annual bonus
earned in the fiscal year preceding the date of termination or
the average annual bonus earned by him in the three fiscal years
immediately preceding the
Change-in-Control.
One-third of such lump sum payment shall be in consideration of
(and subject to Mr. DeSantis continued compliance
with) the confidentiality, non-competition and non-solicitation
provisions of the DeSantis Agreement. In addition,
Mr. DeSantis shall be paid a lump sum amount equal to the
sum of: (1) any unpaid annual incentive compensation
previously awarded for any completed fiscal year preceding the
termination, the payment of which was contingent only upon
continued employment to a subsequent date; and (2) a pro
rata portion of his deemed annual bonus for the fiscal year in
which the termination occurred. Mr. DeSantis will also
continue to receive certain insurance benefits (reduced to the
extent comparable benefits are actually provided without cost to
him by another source after termination) for a period of
36 months following the date of termination.
For a period of one year following any termination of
Mr. DeSantis employment, Mr. DeSantis shall not,
directly or indirectly, either as an individual for his own
account or as an investor, or other participant in, or as an
43
employee, agent, or representative of, any other business
enterprise: (1) solicit, employ, entice, take away or
interfere with, or attempt to solicit, employ, entice, take away
or interfere with, any employee of A. Schulman; or
(2) engage, participate in, finance, aid or be connected
with any enterprise that competes with the business of the
Company. The geographical limitations on the foregoing
restrictions on Mr. DeSantis include any country in which
A. Schulman is doing business as of Mr. DeSantis
termination date.
In addition to the amounts described above under the DeSantis
Agreement, Mr. DeSantis is entitled to an additional
payment equal to any excise tax imposed under Sections 280G
and 4999 of the Code, if any, as a result of certain amounts
payable to him in respect of a
Change-in-Control.
Employment
Agreement of Mr. Taylor
On May 28, 2003, A. Schulman entered into an employment
agreement with Jack B. Taylor (the Taylor
Agreement), which was subsequently amended on
August 31, 2008 and August 28, 2009, in conjunction
with Mr. Taylors continuing appointment as General
Manager and Chief Operating Officer Asia. As
amended, the term of the Taylor Agreement ends on
December 31, 2011; provided, however, that either
Mr. Taylor or A. Schulman may terminate the Taylor
Agreement on December 31, 2010 upon 60 days notice.
As amended, the Taylor Agreement provides Mr. Taylor with a
base salary of 200,000 Euros, which may be modified during the
term of the Taylor Agreement. Mr. Taylor is also eligible
for participation in A. Schulmans bonus program for senior
executives, with a 50% bonus potential, and is also entitled to
participate in all employee compensation and benefit plans
available generally to employees of A. Schulman on a level
appropriate to his position. Additionally, Mr. Taylor is
entitled to receive certain equity award grants, the material
terms of which are to be determined by the Compensation
Committee, provided that Mr. Taylor remains employed with
the Company through the term of the Taylor Agreement. Moreover,
Mr. Taylor is entitled to receive all employee benefits
available generally to employees of A. Schulman having
comparable levels of responsibility. Finally, Mr. Taylor is
authorized to incur reasonable expenses for promoting the
business of A. Schulman, including expenses for entertainment,
travel and similar items, and shall receive reimbursement for
all such expenses.
Upon termination of Mr. Taylors employment,
Mr. Taylor may be entitled to receive certain
post-termination benefits depending upon whether such
termination is by A. Schulman without Cause, in relation to a
Change-in-Control,
or by reason of Mr. Taylors death or Disability (as
such terms are defined in the Taylor Agreement). In the event
that A. Schulman terminates Mr. Taylors employment
without Cause prior to the expiration of the Taylor Agreement
and prior to a
Change-in-Control,
Mr. Taylor shall receive his salary for the remaining term
of the Taylor Agreement, plus a bonus for each year of the
remaining term in an amount equal to 50% of his average annual
bonus during the most recent five calendar years of employment.
In the event that Mr. Taylors employment is
terminated by reason of his death, A. Schulman shall pay, in
addition to all compensation and benefits earned by
Mr. Taylor prior to his death, a lump sum payment equal to
60% of his salary for a period of 24 months to a designated
beneficiary. In the event that Mr. Taylor becomes Disabled
during the term of the Taylor Agreement, A. Schulman shall pay
Mr. Taylor 60% of his base salary during the period of his
Disability (not to exceed 24 months). After six months of
Disability, A. Schulman shall have the right to terminate
Mr. Taylor; provided, however, that the 60% payments shall
continue for the remainder of the
24-month
period.
The Taylor Agreement also provides that, in the event
Mr. Taylor is terminated following a
Change-in-Control
event for any reason except: (1) termination by A. Schulman
for Cause; (2) termination by reason of death or
Disability; or (3) termination by Mr. Taylor without
Good Reason, Mr. Taylor shall be paid (in lieu of any
further salary or severance benefit payments) a lump sum amount
equal to three times the sum of: (i) the higher of his
annual base salary payable immediately prior to (a) the
event causing the termination or (b) the
Change-in-Control;
plus (ii) an amount equal to the higher of his annual bonus
earned in the fiscal year preceding the date of termination or
the average annual bonus earned by him in the three fiscal years
immediately preceding the
Change-in-Control.
In addition, Mr. Taylor shall be paid a lump sum amount
equal to the sum of: (1) any unpaid annual incentive
compensation previously awarded for any completed fiscal year
preceding the termination, the payment of which was contingent
only upon continued employment to a subsequent date; and
(2) a pro rata portion of his deemed annual bonus for the
fiscal year in which the termination occurred. Mr. Taylor
will also continue to receive certain
44
insurance benefits (reduced to the extent comparable benefits
are actually provided without cost to him by another source
after termination) for a period of 36 months following the
date of termination.
For a period of three years following any termination of
Mr. Taylors employment (which occurs prior to a
Change-in-Control),
Mr. Taylor shall not, directly or indirectly, either as an
individual for his own account or as an investor, or other
participant in, or as an employee, agent, or representative of,
any other business enterprise: (1) solicit, employ, entice,
take away or interfere with, or attempt to solicit, employ,
entice, take away or interfere with, any employee of A.
Schulman; or (2) engage, participate in, finance, aid or be
connected with any enterprise that competes with the business of
the Company. The geographical limitations on the foregoing
restrictions on Mr. Taylor include any country in which A.
Schulman is doing business as of Mr. Taylors
termination date.
Change-in-Control
Agreement with Mr. Rzepka
A. Schulman has entered into a
change-in-control
agreement with Mr. Rzepka (the Rzepka
Agreement), in order to provide him with certain benefits
in the event of a
Change-in-Control
(as such term is defined in the Rzepka Agreement). The Rzepka
Agreement provides that, in the event Mr. Rzepka is
terminated following a
Change-in-Control
event for any reason except: (i) termination by A. Schulman
for Cause; (ii) termination by reason of death or
Disability; or (iii) termination by Mr. Rzepka without
Good Reason, Mr. Rzepka will be paid (in lieu of any
further salary or severance benefit payments) a lump sum amount
equal to three times the sum of: (1) the higher of
(a) the executives annual base salary payable
immediately prior to the event causing the termination or
(b) the
Change-in-Control;
plus (2) an amount equal to the higher of
(a) Mr. Rzepkas annual bonus earned in the
fiscal year preceding the date of termination or (b) the
average annual bonus earned by Mr. Rzepka in the three
fiscal years immediately preceding the
Change-in-Control
(as such terms are defined in the Rzepka Agreement). In
addition, Mr. Rzepka will be paid a lump sum amount equal
to the sum of: (A) any unpaid annual incentive compensation
previously awarded for any completed fiscal year preceding the
termination, the payment of which was contingent only upon
continued employment to a subsequent date; and (B) a pro
rata portion of Mr. Rzepkas deemed annual bonus for
the fiscal year in which the termination occurred.
Mr. Rzepka will also continue to receive certain insurance
benefits (reduced to the extent comparable benefits are actually
provided without cost to the executive by another source after
termination) for a period of 36 months following the date
of termination.
Change-in-Control
Agreement with Mr. Minc
A. Schulman has entered into a
change-in-control
agreement with Mr. Minc (the Minc Agreement),
in order to provide him with certain benefits in the event of a
Change-in-Control
(as such term is defined in the Minc Agreement). The Minc
Agreement provides that, in the event the Mr. Minc is
terminated following a
Change-in-Control
event for any reason except: (i) termination by A. Schulman
for Cause; (ii) termination by reason of death or
disability (within the meaning of Section 409A of the
Code); or (iii) termination by the executive without Good
Reason, Mr. Minc will be entitled to the following:
(1) continued payment of Mr. Mincs compensation
and provision of benefits through the date of Termination (as
such term is defined in the Minc Agreement), which shall be paid
within 30 days following Mr. Mincs date of
Termination or, if earlier, the date specified in the applicable
plan, program or arrangement; (2) an amount equal to any
accrued, but unused vacation days, as determined under A.
Schulmans personnel policy, which amount shall be paid
within 30 days following Mr. Mincs date of
Termination; and (3) a lump sum cash payment within
30 days following the Mr. Mincs date of
Termination equal to the sum of (a) 150% of
Mr. Mincs base salary for the calendar year
immediately preceding the year in which the date of Termination
occurs, plus (b) 100% of Mr. Mincs annual target
bonus for the fiscal year in which Termination occurs. In
addition, Mr. Minc shall also continue to receive certain
insurance benefits for his continued benefit and that of all
family members and other dependents who were enrolled in the
programs on Mr. Mincs date of Termination. The term
of the Minc Agreement expires on April 1, 2011.
Potential
Payments upon Termination or
Change-in-Control
Pursuant to the terms of each named executive officers
respective employment/change-in-control agreement, each named
executive officer is entitled to certain benefits depending upon
the nature of their separation from service with A. Schulman.
The table below represents amounts that would be payable or
benefits owed to each of the
45
named executive officers as of August 31, 2010, upon
termination of their employment as a result of the scenarios
indicated in each column. The amounts were calculated assuming
the termination occurred on August 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Involuntary
|
|
|
Termination upon
|
|
|
|
|
|
|
Death or
|
|
|
Termination with
|
|
|
Termination
|
|
|
Change-in-
|
|
Compensation Components
|
|
Retirement(1)
|
|
|
Disability(2)
|
|
|
Cause(3)
|
|
|
Without
Cause(4)
|
|
|
Control(5)
|
|
|
For Joseph M. Gingo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
931,104
|
|
|
$
|
|
|
|
$
|
4,212,806
|
|
|
$
|
4,705,296
|
|
Guaranteed bonus
|
|
$
|
917,000
|
|
|
$
|
917,000
|
|
|
$
|
|
|
|
$
|
917,000
|
|
|
$
|
917,000
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
57,185
|
|
Incentive plan based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
752,000
|
|
|
$
|
1,264,854
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,117,239
|
|
Restricted stock units
|
|
$
|
627,319
|
|
|
$
|
627,319
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
627,319
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
Plan(7)
|
|
$
|
61,777
|
|
|
$
|
61,777
|
|
|
$
|
61,777
|
|
|
$
|
61,777
|
|
|
$
|
61,777
|
|
Non-Qualified
Plan(7)
|
|
$
|
88,986
|
|
|
$
|
88,986
|
|
|
$
|
88,986
|
|
|
$
|
88,986
|
|
|
$
|
88,986
|
|
Section 280G gross up
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,685,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,447,082
|
|
|
$
|
3,891,040
|
|
|
$
|
150,763
|
|
|
$
|
5,280,569
|
|
|
$
|
14,260,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Paul F. DeSantis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
420,576
|
|
|
$
|
|
|
|
$
|
422,631
|
|
|
$
|
2,224,568
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
26,907
|
|
Incentive plan based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
181,789
|
|
|
$
|
330,451
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,473,587
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
Plan(7)
|
|
$
|
62,489
|
|
|
$
|
85,670
|
|
|
$
|
62,489
|
|
|
$
|
62,489
|
|
|
$
|
85,670
|
|
Non-Qualified
Plan(7)
|
|
$
|
|
|
|
$
|
37,273
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
37,273
|
|
Section 280G gross up
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
421,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
244,278
|
|
|
$
|
873,970
|
|
|
$
|
62,489
|
|
|
$
|
485,120
|
|
|
$
|
4,269,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Bernard
Rzepka(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,224,568
|
|
Health/Welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
26,907
|
|
Incentive plan based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units
|
|
$
|
192,846
|
|
|
$
|
224,569
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
313,433
|
|
Cash awards
|
|
$
|
59,695
|
|
|
$
|
171,779
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
970,691
|
|
Stock options
|
|
$
|
9,860
|
|
|
$
|
9,860
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,860
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
plan(9)
|
|
$
|
1,548,395
|
|
|
$
|
1,548,395
|
|
|
$
|
1,548,395
|
|
|
$
|
1,548,395
|
|
|
$
|
1,548,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,810,796
|
|
|
$
|
1,954,603
|
|
|
$
|
1,548,395
|
|
|
$
|
1,548,395
|
|
|
$
|
5,093,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For David C. Minc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,241,554
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
57,185
|
|
Incentive plan based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
121,531
|
|
|
$
|
222,529
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
993,899
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
Plan(7)
|
|
$
|
28,855
|
|
|
$
|
28,855
|
|
|
$
|
28,855
|
|
|
$
|
28,855
|
|
|
$
|
28,855
|
|
Non-Qualified
Plan(7)
|
|
$
|
2,099
|
|
|
$
|
2,099
|
|
|
$
|
2,099
|
|
|
$
|
2,099
|
|
|
$
|
2,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
152,485
|
|
|
$
|
253,483
|
|
|
$
|
30,854
|
|
|
$
|
30,854
|
|
|
$
|
2,323,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Kim L. Whiteman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Health/welfare benefits
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Incentive plan based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock awards
|
|
$
|
39,763
|
|
|
$
|
110,873
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
355,514
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
Plan(7)
|
|
$
|
15,036
|
|
|
$
|
16,477
|
|
|
$
|
15,036
|
|
|
$
|
15,036
|
|
|
$
|
16,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
54,799
|
|
|
$
|
127,350
|
|
|
$
|
15,036
|
|
|
$
|
15,036
|
|
|
$
|
371,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack B.
Taylor(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
464,521
|
|
|
$
|
|
|
|
$
|
865,240
|
|
|
$
|
2,381,105
|
|
Health/welfare
benefits(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
128,456
|
|
Incentive plan based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units
|
|
$
|
227,187
|
|
|
$
|
272,550
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
272,550
|
|
Restricted stock awards
|
|
$
|
78,156
|
|
|
$
|
272,550
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
272,550
|
|
Stock Option
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
|
$
|
|
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
Retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
plan(9)
|
|
$
|
5,395,850
|
|
|
$
|
5,395,850
|
|
|
$
|
5,395,850
|
|
|
$
|
5,395,850
|
|
|
$
|
5,395,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,702,443
|
|
|
$
|
6,406,721
|
|
|
$
|
5,395,850
|
|
|
$
|
6,262,340
|
|
|
$
|
8,451,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
(1) |
|
A. Schulman considers normal retirement age to be 60 years
of age, therefore, Messrs. DeSantis, Rzepka and Whiteman
would not be eligible for retirement at August 31, 2010. A
portion of restricted stock units and restricted stock awards
are released upon retirement. The number of awards released is
determined by the time elapsed since the date of grant. Upon
retirement, the named executive officers will receive a portion
of any outstanding performance-based awards, based on the time
elapsed since the date of grant; however, such awards will only
be released at the end of the vesting period if the performance
criteria has been met. All options vest upon retirement. This
calculation assumes all options were exercised on the date of
termination. The value of equity awards was calculated using the
closing price of the common stock on August 31, 2010. |
|
(2) |
|
The severance amount is a lump sum payment equal to 60 of the
base salary for 24 months. All time-based restricted stock
units and restricted stock awards are considered fully vested
upon death or disability, therefore the amount reflects the
value of all time-based restricted stock and restricted stock
units outstanding for the named executive officers. Upon death
or disability, the named executive officers will receive a
portion of any outstanding performance-based awards, based on
the time elapsed since the date of grant; however, such awards
will only be released at the end of the vesting period if the
performance criteria has been met. All options vest upon death
or disability. This calculation assumes all options were
exercised on the date of termination. The value of equity awards
was calculated using the closing price of the common stock on
August 31, 2010. |
|
(3) |
|
A. Schulman does not provide for any severance when termination
occurs with cause. Under the 2006 Incentive Plan, all restricted
stock units and restricted stock awards are cancelled upon
termination with cause. All options, vested and unvested, are
forfeited immediately upon termination with no remaining time to
exercise. |
|
(4) |
|
The severance benefits for Messrs. Gingo, DeSantis and
Taylor reflect the severance compensation provided under each
executives respective employment agreement. Under the 2006
Incentive Plan, all restricted stock units and restricted stock
awards are cancelled upon termination without cause. Unvested
options will be forfeited, however, unexercised vested options
will remain exercisable for 90 days past termination. The
value of equity awards was calculated using the closing price of
the common stock on August 31, 2010. |
|
(5) |
|
Severance benefits determined pursuant to each named executive
officers respective employment/change-in-control
agreement. Upon a
change-in-control,
all equity awards become fully vested regardless of whether
there is a subsequent termination. All time based restricted
stock units and restricted stock awards are considered fully
vested upon a
change-in-control,
therefore, the amount reflects the value of all restricted stock
awards outstanding for the named executive officers. All
performance criteria included in the vesting terms of any
outstanding equity awards are deemed to have been met as of the
date of a
change-in-control.
All options vest immediately upon a
change-in-control.
Amount assumes all options will be exercised on the date of
termination. The value of equity awards was calculated using the
closing price of the common stock on August 31, 2010. |
|
(6) |
|
In the event of termination following a
change-in-control,
each named executive officer is eligible to 36 months of
life, disability, accident and health insurance without cost.
These amounts are estimated based on current costs for insurance
and could change depending on the actual timing of such event. |
|
(7) |
|
The Retirement Plan trust balances transferred to each
participating named executive officers 401(k) account and
balances in the Non-qualified Plan for each named executive
officer who participates become 100% vested upon eligible
retirement, disability, death or a
change-in-control.
A. Schulman considers normal retirement age to be 60, therefore,
Messrs. DeSantis and Whiteman were not eligible for
retirement at August 31, 2010; however, the potential
vested balance is included. Messrs. Rzepka and Taylor do
not participate in the Retirement Plan or the Non-Qualified
Plan. For termination with or without cause, the named executive
officers only have rights to the vested balance at the
termination date. The amounts for each participating named
executive officers 401(k) plan account are based on the
actual Retirement Plan trust balance transfers into an account
for each participant. The Non-Qualified Plan is unfunded and the
balance represents the contributions accrued and the earnings
that are estimated based on the performance of the S&P 500.
The amount is estimated based on balances as of August 31,
2010. |
47
|
|
|
(8) |
|
The amounts for Messrs. Taylor and Rzepka were calculated
using primarily Euro amounts, which were converted to U.S.
dollars using a
12-month
average rate of 1.3664. Certain amounts for Mr. Taylor were
calculated using amounts in British Pounds, which were converted
to U.S. dollars using a
12-month
average rate of 1.5657. |
|
(9) |
|
Values for the pension plans are the present values of the
accumulated benefit, or as specifically allotted by local law,
as of August 31, 2010. |
Director
Compensation
The following table sets forth compensation information for each
of A. Schulmans non-employee directors. Directors who are
also employees of A. Schulman receive no additional compensation
for their services as a director.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name
|
|
in Cash
($)(1)
|
|
|
Awards
($)(2)
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation(3)
|
|
|
Total
|
|
|
Eugene R. Allspach
|
|
$
|
10,000
|
|
|
$
|
51,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
61,863
|
|
Gregory T. Barmore
|
|
$
|
10,000
|
|
|
$
|
51,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
61,863
|
|
David G. Birney
|
|
$
|
71, 500
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,224
|
|
|
$
|
157,159
|
|
Michael Caporale, Jr.
|
|
$
|
62,250
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,000
|
|
|
$
|
141,685
|
|
Howard R. Curd
|
|
$
|
68,500
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,484
|
|
|
$
|
149,419
|
|
Michael A. McManus, Jr.
|
|
$
|
60,000
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,485
|
|
|
$
|
140,920
|
|
Lee D. Meyer
|
|
$
|
69,250
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,000
|
|
|
$
|
148,685
|
|
James A. Mitarotonda
|
|
$
|
58,500
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,224
|
|
|
$
|
144,159
|
|
Ernest J. Novak, Jr.
|
|
$
|
73,000
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,224
|
|
|
$
|
158,659
|
|
Dr. Irvin D. Reid
|
|
$
|
59,250
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
137,685
|
|
Stanley W. Silverman
|
|
$
|
63,750
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,000
|
|
|
$
|
143,185
|
|
John B. Yasinsky
|
|
$
|
91,250
|
|
|
$
|
78,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,224
|
|
|
$
|
176,909
|
|
As of
August 31, 2010, the directors held the following
stock-based awards and options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Restricted
|
|
Number of Restricted
|
|
Number of Options
|
Name
|
|
Stock
Awards(3)
|
|
Stock
Units(4)
|
|
Outstanding
|
|
Eugene R. Allspach
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory T. Barmore
|
|
|
|
|
|
|
|
|
|
|
|
|
David G. Birney
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
Michael Caporale, Jr.
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
Howard R. Curd
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
Michael A. McManus, Jr.
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
Lee D. Meyer
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
James A. Mitarotonda
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
Ernest J. Novak, Jr.
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
Dr. Irvin D. Reid
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
Stanley W. Silverman
|
|
|
834
|
|
|
|
2,500
|
|
|
|
|
|
John B. Yasinsky
|
|
|
834
|
|
|
|
2,500
|
|
|
|
4,000
|
|
|
|
|
(1) |
|
Amounts shown reflect all fees earned or paid in cash for
services as a director during fiscal 2010, which include both
per meeting fees relating to service for the 2009 calendar year,
which were paid between September 1, 2009 through
December 31, 2009, and installments of retainers, which
were paid between January 1, 2010 and August 31, 2010. |
48
|
|
|
(2) |
|
Amounts shown reflect the aggregate grant date fair value
computed in accordance with FASB ASC Topic 718 for awards
granted during such fiscal year. Assumptions used in the
calculation of these amounts are included in Note 10
Incentive Stock Plans to the Consolidated Financial
Statements included in A. Schulmans Annual Report on
Form 10-K
for the fiscal year ended August 31, 2010. |
|
(3) |
|
During fiscal 2010, three restricted stock grants for the Board
of Directors vested. Included in this column are the accrued
dividends, which were earned on restricted stock during the
vesting period. |
|
(3) |
|
The vesting of 834 shares of restricted stock will occur on
February 28, 2011. |
|
(4) |
|
Award of restricted stock units include fully vested
stock-settled restricted stock units which shall be settled in
shares of the common stock on a 1-to-1 basis on April 9,
2012, the third anniversary of the grant date. |
Director
Compensation
Annual compensation of directors is comprised of a retainer in
the amount of $60,000 and an award of 3,500 shares of
common stock. A. Schulman has eliminated meeting fees unless
directors attend more than 24 meetings annually, in which case
directors will receive $1,500 for each Board or Committee
meeting attended. Additional retainers are provided for the
following leadership positions on the Board of Directors:
(i) Lead Independent Director $20,000;
(ii) Audit Committee Chair $17,500;
(iii) Compensation Committee Chair $12,500; and
(iv) all other Committee Chairs $10,000. For
better alignment with the term of office of its directors, which
commences immediately following the annual meeting of
stockholders, which is typically held in mid-December, A.
Schulman has adopted a policy of paying its director
compensation on a calendar year basis, with a portion of the
annual retainer fee being paid at the beginning of each calendar
quarter.
Pursuant to the Amended and Restated Directors Deferred Units
Plan (the Directors Plan), a director may elect,
prior to the first day of any calendar year, to defer all or a
portion of his or her director fees in such calendar year.
Deferred director fees for each calendar quarter are aggregated
and credited to an account for each participating director (the
Account) until the last day of each quarter (a
Valuation Date). In addition, on each Valuation
Date, the Account is credited with the amount of any dividends
that would have been paid to the director had he or she actually
owned shares of common stock equal to the number of units in the
Account at the time of the dividend payment. On each Valuation
Date, all amounts credited to the Account are converted into
units by dividing the amount in the Account by the closing price
of common stock on the Valuation Date. Upon the earlier of a
directors separation from service as a director, a change
of control or a directors disability (each a
Triggering Event), units will be converted into cash
and paid to the director in a single lump sum no later than
March 15 of the calendar year that begins after the calendar
year during which a Triggering Event occurs. The conversion into
cash will be made using the closing price of the common stock on
the date prior to the date that payment is made. At present, no
directors of A. Schulman are active participants in the
Directors Plan.
49
AUDIT
COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of A.
Schulmans previous or future filings under the Securities
Act of 1933, as amended, or the Exchange Act, that might
incorporate this proxy statement or future filings with the
Commission, in whole or in part, the following report shall not
be deemed to be incorporated by reference into any such filing.
The purpose of the Audit Committee is to oversee the accounting
and financial reporting process of A. Schulman and is
responsible for overseeing the qualifications, independence and
performance of, and the Companys relationship with, its
independent registered public accounting firm. The Audit
Committee is comprised of seven independent directors, as
defined by applicable NASDAQ and Commission rules, and operates
under a written charter adopted by the Board. The Audit
Committee includes the following members of the Board of
Directors: Ernest J. Novak, Jr. (Chair), Eugene R.
Allspach, Michael Caporale, Jr., Howard R. Curd, Lee D.
Meyer, Dr. Irvin D. Reid and Stanley W. Silverman.
The Audit Committee has met, reviewed and discussed with
management the consolidated financial statements of the Company
for the fiscal year ended August 31, 2010, who represented
to the Audit Committee that the financial statements were
prepared in accordance with accounting principles generally
accepted in the United States. The Audit Committee also
discussed with PricewaterhouseCoopers LLP, A. Schulmans
registered independent public accounting firm, matters required
to be discussed by 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. PricewaterhouseCoopers LLP
provided to the Audit Committee written disclosures pursuant to
Rule 3526 of the Public Company Oversight Board
(Communications with Audit Committees Concerning Independence).
The Audit Committee has discussed with PricewaterhouseCoopers
LLP any relationships with or services to the Company or its
subsidiaries that may impact the objectivity and independence of
PricewaterhouseCoopers LLP, and the Audit Committee has
satisfied itself as to PricewaterhouseCoopers LLPs
independence.
Based upon the Audit Committees discussion with management
and PricewaterhouseCoopers LLP, and the Audit Committees
review of the representation of management and the report of
PricewaterhouseCoopers LLP to the Audit Committee, the Audit
Committee recommended to the Board of Directors that the audited
consolidated financial statements for the year ended
August 31, 2010 be included in A. Schulmans Annual
Report on
Form 10-K
filed with the Commission. The Audit Committee also recommended
that PricewaterhouseCoopers LLP be appointed as A.
Schulmans independent registered public accounting firm
for the 2011 fiscal year.
The Audit Committee:
Ernest J. Novak, Jr., Chair
Eugene R. Allspach
Michael Caporale, Jr.
Howard R. Curd
Lee D. Meyer
Dr. Irvin D. Reid
Stanley W. Silverman
50
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected
PricewaterhouseCoopers LLP as the independent registered public
accounting firm to examine the books, records and accounts of A.
Schulman and its subsidiaries for the fiscal year ending
August 31, 2011. This selection is being presented to
stockholders for ratification or rejection at the Annual
Meeting. THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS
RECOMMEND THAT SUCH APPOINTMENT BE RATIFIED.
PricewaterhouseCoopers LLP was the independent registered public
accounting firm of A. Schulman for the fiscal year ended
August 31, 2010, and is considered by the Audit Committee
and the Board of Directors to be well qualified. Representatives
of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to make a statement if they desire to do so and will be
available to respond to appropriate questions.
For ratification, this Proposal Two will require the
affirmative vote of the holders of a majority of the shares of
common stock present, represented and entitled to vote at the
Annual Meeting in person or represented by proxy. In determining
whether Proposal Two has received the requisite vote for
approval, broker non-votes will not be counted for the purpose
of determining whether Proposal Two has been approved.
Abstentions will be counted as present and entitled to vote on
the matter for purposes of Proposal Two and, thus, will
have the same effect as a vote against Proposal Two. If
Proposal Two is rejected, or if PricewaterhouseCoopers LLP
declines to act or becomes incapable of acting as the
independent registered public accounting firm of A. Schulman, or
if its employment is discontinued, the Audit Committee will
appoint another public auditor, the continued employment of
whom, after the Annual Meeting of Stockholders, will be subject
to ratification by the stockholders.
Fees
Incurred by Independent Registered Public Accounting
Firm
Set forth below are the aggregate fees and expenses for
professional services rendered to A. Schulman by
PricewaterhouseCoopers LLP, the Companys independent
registered public accounting firm for fiscal 2010 and fiscal
2009.
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2010
|
|
|
Fiscal 2009
|
|
|
Audit
Fees(1)
|
|
$
|
3,612,000
|
|
|
$
|
2,743,000
|
|
Audit-Related
Fees(2)
|
|
$
|
883,000
|
|
|
$
|
40,100
|
|
Tax
Fees(3)
|
|
$
|
1,478,000
|
|
|
$
|
1,045,000
|
|
All Other Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1) |
|
Comprised of the aggregate fees for professional services
rendered by PricewaterhouseCoopers LLP in connection with its
integrated audit of A. Schulmans consolidated financial
statements and its internal control over financial reporting,
and its limited reviews of the Companys unaudited
consolidated interim financial statements included in A.
Schulmans Quarterly Reports on
Form 10-Q,
as well as statutory audits of the Companys subsidiaries
and consents to Commission filings. |
|
(2) |
|
Comprised of services rendered by PricewaterhouseCoopers LLP
primarily related to reviews of subsidiary financial statements
and various due diligence considerations. |
|
(3) |
|
Comprised of professional services rendered by
PricewaterhouseCoopers LLP for tax planning and advice and
domestic and international tax compliance and tax return
preparation. |
Pre-Approval
of Fees
The Audit Committee pre-approves the audit and non-audit
services performed by the independent registered public
accounting firm to assure that the provision of the services
does not impair the registered public accounting firms
independence. Unless a type of service to be provided by the
independent registered public accounting firm has received
general pre-approval, it requires specific pre-approval by the
Audit Committee. In addition, any proposed services exceeding
pre-approved cost levels require specific Audit Committee
pre-approval. The Audit Committee has delegated pre-approval
authority to its Chairman, provided that the pre-approval is
reviewed by the full Audit Committee at its next regular meeting.
51
PROPOSAL 3
ADOPTION AND APPROVAL OF A. SCHULMANS 2010 VALUE CREATION
REWARDS PLAN
The Board of Directors proposes that the stockholders approve
the adoption of the 2010 Rewards Plan. On October 14, 2010,
the Board of Directors adopted the 2010 Rewards Plan, subject to
approval by the stockholders. Set forth below is a summary of
the material features of the 2010 Rewards Plan, which summary is
qualified in its entirety by the text of the 2010 Rewards Plan,
a copy of which is attached to this proxy statement as
Appendix A.
The purpose of the 2010 Rewards Plan is to foster and promote A.
Schulmans long-term financial success and increase
stockholder value by motivating performance through incentive
compensation. The 2010 Rewards Plan is intended to encourage
participants to acquire and maintain ownership interests in A.
Schulman and to attract and retain the services of talented
individuals upon whose judgment and special efforts the
successful conduct of A. Schulmans business is largely
dependent. The 2010 Rewards Plan serves these purposes by making
equity- and cash-based awards (Awards) available for
grant to eligible participants in the form of:
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nonqualified stock options to purchase shares of common stock
(NQSOs);
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incentive stock options to purchase shares of common stock
(ISOs and, together with NQSOs, Options);
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stock appreciation rights (SARs);
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restricted shares of common stock (Restricted Stock);
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restricted stock Awards that may be settled in Shares, cash or a
combination thereof (Restricted Stock Units);
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other stock-based Awards Awards that are valued in
whole or in part by reference to, or otherwise based on, the
fair market value of the shares of common stock (Other
Stock-Based Awards); and
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cash-based Awards (Cash Awards).
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Section 162(m)
of the Internal Revenue Code
Under the 2010 Rewards Plan, the Compensation Committee may
grant Restricted Stock, Other Stock-Based Awards and Cash Awards
in a manner that constitutes qualified performance-based
compensation for purposes of Section 162(m) of the
Code and the Treasury Regulations promulgated thereunder
(Performance-Based Awards). Section 162(m)
generally limits the deduction that A. Schulman may take for
certain remuneration paid in excess of $1,000,000 to any
covered employee (as defined in Section 162(m))
in any one taxable year. Performance-Based Awards granted under
the 2010 Rewards Plan will not count against this $1,000,000
deduction limitation provided that; (i) the lapse of
restrictions on such Performance-Based Awards and the
distribution of cash, shares of common stock or other property
pursuant to such Performance-Based Awards is contingent upon
satisfying one or more of the performance criteria enumerated in
the 2010 Rewards Plan, as established and certified by the
Compensation Committee; and (ii) the Performance-Based
Awards otherwise satisfy the requirements for qualified
performance-based compensation under Section 162(m). The
2010 Rewards Plan is designed so that Options and SARs granted
thereunder will be considered qualified performance-based
compensation for purposes of Section 162(m). A. Schulman is
submitting the 2010 Rewards Plan, including the performance
criteria set forth therein, to the stockholders for approval at
the Annual Meeting to ensure that Performance-Based Awards
granted under the 2010 Rewards Plan will be deductible as
qualified performance-based compensation.
Administration
The Compensation Committee will administer the 2010 Rewards
Plan, except in the case of Awards to directors, which will be
determined by the entire Board of Directors. The Compensation
Committee will be comprised of at least two directors, each of
whom will be an outside director (within the meaning
of Section 162(m) of the Code and the Treasury Regulations
promulgated thereunder), a non-employee director
(within the meaning of
Rule 16b-3
under the Exchange Act) and an independent director
under applicable NASDAQ rules.
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In its capacity as plan administrator, the Compensation
Committee will determine which participants will be granted
Awards, the type of each Award granted and the terms and
conditions of each Award. The Compensation Committee will also
have full power and authority to: (i) establish, amend and
rescind rules and regulations relating to the 2010 Rewards Plan;
(ii) interpret the 2010 Rewards Plan and all related award
agreements; and (iii) make any other determinations that it
deems necessary or desirable for the administration of the 2010
Rewards Plan. Any action taken by the Compensation Committee
will be final, binding and conclusive on all parties.
With respect to each Award granted under the 2010 Rewards Plan,
A. Schulman will enter into a written or electronic award
agreement with the participant which describes the terms and
conditions of the Award, including; (i) the type of Award
and when and how it may be exercised or earned;(ii) any exercise
price associated with the Award; (iii) how the Award will
or may be settled; and (iv) any other applicable terms and
conditions affecting the Award.
Eligibility
The Board of Directors may select any director of A. Schulman or
an affiliate company who is not an employee to receive Awards
under the 2010 Rewards Plan. The Compensation Committee may
select any: (i) employees of A. Schulman and its
affiliates; and (ii) consultants who render services to the
Company or its affiliates to receive Awards under the 2010
Rewards Plan. As of August 31, 2010, there were ten
non-employee directors of A. Schulman and approximately
2,900 employees of the Company and its affiliates. A.
Schulman is unable to reasonably estimate the number of
third-party consultants who will be eligible to receive Awards
under the 2010 Rewards Plan.
Available
Shares of Common Stock
Subject to the adjustments discussed below, the aggregate number
of shares of common stock available for the grant of Awards
under the 2010 Rewards Plan will be 1,375,000. Shares of common
stock issued under the 2010 Rewards Plan may consist of;
(i) treasury shares; (ii) authorized but unissued
shares of common stock not reserved for any other purpose; or
(iii) shares of common stock purchased by A. Schulman or on
the Companys behalf in the open market for such purpose.
Upon the grant of an ISO, a NQSO or a SAR, A. Schulman will
reduce the number of shares of common stock available for
issuance under the 2010 Rewards Plan by an amount equal to the
number of shares of common stock subject to such Award. Upon the
grant of an Award, other than an ISO, a NQSO or a SAR, that is
to be settled by the issuance of shares of common stock (a
Full Value Award), A. Schulman will reduce the
number of shares of common stock available for issuance under
the 2010 Rewards Plan by an amount equal to the number of shares
of common stock subject to such Award multiplied by 2.48. In the
case of any SAR which is settled in shares of common stock, A.
Schulman will count the full number of shares of common stock
subject to the SAR against the number of shares of common stock
available for future Awards, regardless of the number of shares
of common stock used to settle the SAR upon exercise. The
Compensation Committee may grant Full Value Awards covering up
to 10% of the shares of common stock available for issuance
pursuant to the 2010 Rewards Plan without regard to the minimum
vesting requirements of the 2010 Rewards Plan with respect to
Awards of Restricted Stock, Restricted Stock Units and Other
Stock-Based Awards.
The following shares of common stock may be awarded under the
2010 Rewards Plan and do not count against the
1,375,000 share limit:
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shares of common stock covered by an Award granted under the
2010 Rewards Plan that expires or is forfeited, cancelled,
surrendered or otherwise terminated without the issuance of such
shares of common stock;
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shares of common stock covered by an Award granted under the
2010 Rewards Plan that, by its terms, may be settled only in
cash;
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shares of common stock granted through the assumption of, or in
substitution for, outstanding awards granted by a company to
individuals who become eligible participants in the 2010 Rewards
Plan as the result
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of a merger, consolidation, acquisition or other corporate
transaction involving such company and A. Schulman or any of its
affiliates; and
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shares of common stock covered by an Award granted under the
2010 Rewards Plan that are later returned to A. Schulman
pursuant to any compensation recoupment policy, provision or
agreement.
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During any fiscal year of A. Schulman, the Compensation
Committee may not grant any participant:
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Options covering more than 250,000 shares of common stock;
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SARs covering more than 250,000 shares common stock;
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Performance-Based Awards that are to be settled in shares of
common stock covering more than 150,000 shares of common
stock; or
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Performance-Based Awards that are to be settled in cash equal to
more than $3,000,000.
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The foregoing limits only apply to Awards that are granted to
covered employees and designated by the Compensation Committee
as qualified performance-based compensation for purposes of
Section 162(m) of the Code.
In the event of any common stock dividend, common stock split,
recapitalization, merger, reorganization, consolidation,
combination, spin-off, distribution of assets to stockholders,
exchange of shares of common stock or any other change affecting
the common stock, the Compensation Committee will make such
substitutions and adjustments as it deems equitable and
appropriate to: (i) the aggregate number of shares of
common stock that it may issue under the 2010 Rewards Plan;
(ii) any common stock-based limits imposed under the 2010
Rewards Plan; and (iii) the exercise price, number of
shares of common stock and other terms or limitations applicable
to outstanding Awards.
On October 15, 2010, the closing price of the shares of
common stock on NASDAQ was $21.14.
Types of
Awards
Options
The Compensation Committee may grant Options at any time during
the term of the 2010 Rewards Plan in such number, and upon such
terms and conditions, as it determines. The exercise price of
any Option will be at least equal to the fair market value of
the shares of common stock (i.e., the closing price of
the shares of common stock on NASDAQ) on the date the Option is
granted, and may be paid: (i) in cash; (ii) by
tendering previously-acquired shares of common stock;
(iii) by a cashless exercise;
and/or
(iv) through any other method approved by the Compensation
Committee. The Compensation Committee will also determine the
term of the option (which may not exceed ten years), the vesting
terms and conditions and any other terms and conditions of the
Option, all of which will be reflected in the related award
agreement. The award agreement will specify whether the Option
is intended to be an ISO or a NQSO. The Compensation Committee
may grant all of the shares of common stock available for
issuance under the 2010 Rewards Plan with respect to ISOs.
However, the Compensation Committee may only grant ISOs to
employees of A. Schulman or its subsidiaries, and ISOs will be
subject to certain additional restrictions, including without
limitation compliance with the requirements of Section 422
of the Code.
Stock
Appreciation Rights
The Compensation Committee may grant SARs at any time during the
term of the 2010 Rewards Plan in such number, and upon such
terms and conditions, as it determines. The exercise price of
any SAR will be at least equal to the fair market value of the
shares of common stock on the date the SAR is granted. The
Compensation Committee will also determine the term of the SAR
(which may not exceed ten years), the vesting terms and
conditions and any other terms and conditions of the SAR, all of
which will be reflected in the related award agreement. Upon
exercise of a SAR, a participant will be entitled to receive an
amount equal to the difference between: (i) the fair market
value of a share of common stock on the exercise date; and
(ii) the exercise price per share of common stock,
multiplied by the number of shares of common stock with respect
to which the SAR is exercised. A SAR may be settled in shares
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of common stock, cash or a combination thereof, as specified by
the Compensation Committee in the related award agreement.
Restricted
Stock
The Compensation Committee may grant shares of Restricted Stock
at any time during the term of the 2010 Rewards Plan in such
number, and upon such terms and conditions, as it determines.
Restricted Stock consists of shares of common stock that are
issued to a participant but are subject to forfeiture based upon
satisfaction of certain terms, conditions and restrictions which
may include, without limitation: (i) a requirement that
participants pay a purchase price for each share of Restricted
Stock; (ii) restrictions based on the achievement of
specific performance goals; (iii) time-based restrictions;
or (iv) holding requirements or sale restrictions upon
vesting. The Compensation Committee will determine the terms,
conditions and restrictions applicable to each Restricted Stock
Award, all of which will be reflected in the related award
agreement. Except as otherwise set forth in the 2010 Rewards
Plan or described in the related award agreement in connection
with a participants termination due to death, Disability
or Retirement (as such terms are defined in the 2010 Rewards
Plan): (1) no condition on vesting of a Restricted Stock
Award that is based upon the achievement of specified
performance goals may be based on performance over a period of
less than one year; and (2) no condition on vesting of a
Restricted Stock Award that is based upon continued employment
or the passage of time may provide for vesting in full of the
Award more quickly than in pro rata installments over three
years from the date of grant.
During the period that the shares of Restricted Stock remain
subject to forfeiture: (i) A. Schulman may retain the
certificates representing shares of Restricted Stock;
(ii) a participant may not sell or otherwise transfer the
shares of Restricted Stock; and (iii) unless otherwise
provided in the related award agreement, a participant will
generally be entitled to exercise full voting rights and receive
all dividends paid with respect to the shares of Restricted
Stock (except that receipt of any such dividends will be subject
to the same terms, conditions and restrictions as apply to the
shares of Restricted Stock). At the end of the restriction
period: (1) the participant will forfeit the shares of
Restricted Stock if all terms, conditions and restrictions
specified in the related award agreement have not been met; or
(2) A. Schulman will distribute the shares of Restricted
Stock to the participant if all terms, conditions and
restrictions specified in the related award agreement have been
met.
Restricted
Stock Units
The Compensation Committee may grant Restricted Stock Units at
any time during the term of the 2010 Rewards Plan in such
number, and upon such terms and conditions, as it determines. An
Award of Restricted Stock Units may be settled in shares of
common stock, cash or a combination thereof. Awards of
Restricted Stock Units may include dividend equivalents, but may
not provide voting rights with respect to the shares of common
stock underlying the Restricted Stock Units. The Compensation
Committee will impose such other terms, conditions and
restrictions on any Award of Restricted Stock Units, which may
include: (i) restrictions based on the achievement of
specific performance goals; (ii) time-based restrictions;
or (iii) holding requirements or sale restrictions upon
vesting. The Compensation Committee will determine the terms,
conditions and restrictions applicable to each Restricted Stock
Award, all of which will be reflected in the related award
agreement. Except as otherwise set forth in the 2010 Rewards
Plan or described in the related award agreement in connection
with a participants termination due to death, Disability
or Retirement (as such terms are defined in the 2010 Rewards
Plan): (1) no condition on vesting of an Award of
Restricted Stock Units that is based upon the achievement of
specified performance goals may be based on performance over a
period of less than one year; and (2) no condition on
vesting of an Award of Restricted Stock Units that is based upon
continued employment or the passage of time may provide for
vesting in full of the Restricted Stock Units more quickly than
in pro rata installments over three years from the date of grant.
Other
Stock-Based Awards
The Compensation Committee may grant Other Stock-Based Awards at
any time during the term of the 2010 Rewards Plan in such
number, and upon such terms and conditions, as it determines.
The Compensation Committee may grant Other Stock-Based Awards in
such form as it determines, including, without limitation:
(i) unrestricted shares of common stock; or
(ii) performance-based restricted stock units that are
settled in shares of common stock
and/or cash.
The award agreement relating to each Other Stock-Based Award
will specify the terms and conditions
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upon which the Award will vest, the form of settlement (which
may be cash, shares of common stock or a combination thereof),
whether the Award will include dividend equivalents and any
other terms and conditions of the Award, provided that dividend
equivalents may not be provided with respect to any unearned
performance-based Award. Except as otherwise set forth in the
2010 Rewards Plan or described in the related award agreement in
connection with a participants termination due to death,
Disability or Retirement: (1) no condition on vesting of an
Other Stock-Based Award that is based upon the achievement of
specified performance goals may be based on performance over a
period of less than one year; and (2) no condition on
vesting of an Other Stock-Based Award that is based upon
continued employment or the passage of time may provide for
vesting in full of the Award more quickly than in pro rata
installments over three years from the date of grant.
Cash-Based
Awards
The Compensation Committee may grant Cash Awards at any time
during the term of the 2010 Rewards Plan in such amounts, and
upon such terms and conditions, as it determines. The award
agreement relating to each Cash Award will specify the payment
amount or payment range, any applicable performance objectives
and any other terms and conditions of such Award.
Performance-Based
Awards
Under the terms of the 2010 Rewards Plan, the Compensation
Committee may grant Cash Awards, Restricted Stock Awards and
Other Stock-Based Awards in a manner that constitutes qualified
performance-based compensation and is deductible by A. Schulman
under Section 162(m) of the Code and the Treasury
Regulations promulgated thereunder. Specifically, the
Compensation Committee will condition the grant, vesting,
exercisability
and/or
settlement of such Performance-Based Awards on the attainment of
performance goals during a specified performance period. The
Compensation Committee will base or dervive the performance
goals on one or more of the following performance criteria
enumerated in the 2010 Rewards Plan:
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Net earnings
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Earnings per share
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Net sales
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Net income (before and after taxes)
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Net income
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Net operating profit
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Return measures (including return on assets, capital, equity or
sales)
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Cash flow (including operating cash flow and free cash flow)
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Cash flow return on capital
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Earnings before and after taxes
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Gross or operating margins
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Productivity ratios
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Share price (including total stockholder return)
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Expense targets
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Margins
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As determined by the Compensation Committee, the selected
performance criteria may relate to the individual participant,
A. Schulman, the Company and one or more affiliates of A.
Schulman or one or more divisions or business units of the
Company, or any combination of the foregoing, and may be applied
on an absolute basis
and/or be
relative to one or more peer group companies or indices.
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For each Performance-Based Award granted to an individual who is
or is likely to be a covered employee, the Compensation
Committee will establish in writing the applicable performance
goals, performance period and formula for computing the
Performance-Based Award while the outcome of the applicable
performance goals is substantially uncertain, but in no event
later than the earlier of: (i) 90 days after the
beginning of the applicable performance period; or (ii) the
expiration of 25% of the applicable performance period. After
the end of each performance period, the Compensation Committee
will certify in writing whether the performance goals and other
material terms imposed on the Performance-Based Award have been
satisfied.
To the extent consistent with Section 162(m) of the Code,
the Compensation Committee may calculate performance goals
relating to any Performance-Based Award without regard to
extraordinary items, and may adjust such performance goals in
recognition of unusual or non-recurring events affecting A.
Schulman or its affiliates or changes in applicable tax laws or
accounting principles. Under the 2010 Rewards Plan, the
Compensation Committee has the authority to exercise negative
discretion and reduce (but not increase) the amount of a
Performance-Based Award actually paid to a participant.
Termination
of Employment or Service
The Compensation Committee will determine the extent to which
each Award granted under the 2010 Rewards Plan will vest and the
extent to which a participant will have the right to exercise
and/or
settle the Award in connection with a participants
termination of employment or service. Such provisions, which
will be reflected in the related award agreement, need not be
uniform among all Awards and may reflect distinctions based on
the reasons for termination. However, the Compensation Committee
may generally only accelerate the vesting conditions of an Award
upon a participants termination due to death, Disability
or Retirement or involuntary termination without Cause (as such
terms are defined in the 2010 Rewards Plan).
Change in
Control
Except as otherwise provided in the related award agreement, in
the event of a Change in Control (as such term is defined in the
2010 Rewards Plan): (i) all of a participants Awards
will be fully vested; (ii) all performance objectives
relating to a participants Awards will be deemed to have
been satisfied (and, if the performance objectives require that
performance be attained at a target level, the
performance objectives will be deemed to have been satisfied at
that target level as of the date of the Change in
Control; (iii) all Options and SARs will be fully
exercisable; and (iv) all Awards other than Options and
SARs will be paid or settled, as the case may be, within
60 days following the date of the Change in Control.
Except as otherwise provided in the related award agreement or
any other written agreement between A. Schulman or any of its
affiliates, if A. Schulman concludes that any payment or benefit
due to a participant under the 2010 Rewards Plan, when combined
with any other payment or benefit due to the participant from A.
Schulman, any affiliates or any other entity would be considered
a parachute payment within the meaning of
Section 280G of the Code, the payment or benefit will be
reduced to $1.00 less than the amount that would be considered a
parachute payment.
Transferability
Except as otherwise provided in a related award agreement:
(i) a participant may not sell, transfer, pledge, assign or
otherwise alienate or hypothecate an Award, except by will or
the laws of descent and distribution; and (ii) during a
participants lifetime, only the participant or his or her
guardian or legal representative may exercise an Award.
No Rights
as a Stockholder
Except as otherwise provided in the 2010 Rewards Plan or in a
related award agreement, a participant will not have any rights
as a stockholder with respect to shares of common stock covered
by an Award unless and until the participant becomes the record
holder of such shares of common stock.
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Repricing
The 2010 Rewards Plan expressly prohibits the Board or
Compensation Committee from amending the terms of an outstanding
Award to: (i) reduce the exercise price of an outstanding
Option or SAR; or (ii) cancel an outstanding Option or SAR
in exchange for cash or other Awards (including Options or SARs)
having an exercise price less than the exercise price of the
original Option or SAR, without stockholder approval.
Effective
Date and Term
The 2010 Rewards Plan will become effective upon its approval by
the stockholders and, unless earlier terminated, will continue
until the tenth anniversary of the effective date of the 2010
Rewards Plan (except that the Compensation Committee may not
grant any ISOs after October 14, 2020).
Amendment
or Termination
The Board or Compensation Committee may amend or terminate the
2010 Rewards Plan at any time, except that no amendment or
termination may be made without stockholder approval if:
(i) the amendment materially increases the benefits
accruing to participants; (ii) the amendment materially
increases the aggregate number of shares of common stock
authorized for grant under the 2010 Rewards Plan; (iii) the
amendment materially modifies the eligibility requirements for
participation; or (iv) such approval is required by any
law, regulation or stock exchange rule.
U.S.
Federal Income Tax Consequences
The following is a brief summary of the general
U.S. federal income tax consequences relating to
participation in the 2010 Rewards Plan. This summary is based on
U.S. federal tax laws and Treasury Regulations in effect on
the date of this proxy statement and does not purport to be a
complete description of the U.S. federal income tax laws.
In addition, this summary does not constitute tax advice or
describe federal employment, state, local or foreign tax
consequences. Each participant should consult with his or her
tax advisor concerning the U.S. federal income tax and
other tax consequences of participating in the 2010 Rewards Plan.
Incentive
Stock Options
A. Schulman intends for ISOs to qualify for special
treatment available under Section 422 of the Code. A
participant will not recognize taxable income when an ISO is
granted and A. Schulman will not receive a deduction at that
time. A participant will not recognize ordinary income upon the
exercise of an ISO provided that the participant was, without a
break in service, an employee of A. Schulman or a subsidiary
during the period beginning on the grant date of the ISO and
ending on the date three months prior to the date of exercise
(one year prior to the date of exercise if the
participants employment is terminated due to Disability).
If the participant does not sell or otherwise dispose of the
shares of common stock acquired upon the exercise of an ISO
within two years from the grant date of the ISO or within one
year after the participant receives the shares of common stock,
then, upon disposition of such shares of common stock, any
amount realized in excess of the exercise price will be taxed to
the participant as a capital gain, and A. Schulman will not be
entitled to a corresponding deduction. The participant generally
will recognize a capital loss to the extent that the amount
realized is less than the exercise price.
If the foregoing holding period requirements are not met, the
participant generally will recognize ordinary income at the time
of the disposition of the shares of common stock in an amount
equal to the lesser of: (i) the excess of the fair market
value of the shares of common stock on the date of exercise over
the exercise price; or (ii) the excess, if any, of the
amount realized upon disposition of the shares of common stock
over the exercise price, and A. Schulman will be entitled to a
corresponding deduction. Any amount realized in excess of the
value of the shares of common stock on the date of exercise will
be capital gain. If the amount realized is less than the
exercise price, the participant generally will recognize a
capital loss equal to the excess of the exercise price over the
amount realized upon the disposition of the shares of common
stock.
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The rules that generally apply to ISOs do not apply when
calculating any alternative minimum tax liability. The rules
affecting the application of the alternative minimum tax are
complex, and their effect depends on individual circumstances,
including whether a participant has items of adjustment other
than those derived from ISOs.
Nonqualified
Stock Options
A participant will not recognize any income when a NQSO is
granted, and A. Schulman will not receive a deduction at that
time. However, when a NQSO is exercised, a participant will
recognize ordinary income equal to the excess, if any, of the
fair market value of the shares of common stock that the
participant purchased on the date of exercise over the exercise
price. If a participant uses shares of common stock or a
combination of shares of common stock and cash to pay the
exercise price of a NQSO, the participant will recognize
ordinary income equal to the value of the excess of the number
of shares of common stock that the participant purchases over
the number of shares of common stock that the participant
surrenders, less any cash the participant uses to pay the
exercise price. When a NQSO is exercised, A. Schulman will be
entitled to a deduction equal to the ordinary income that the
participant recognizes.
If the amount a participant receives upon disposition of the
shares of common stock that the participant acquired by
exercising a NQSO is greater than the aggregate exercise price
that the participant paid, the excess will be treated as a
long-term or short-term capital gain, depending on whether the
participant held the shares of common stock for more than one
year after the participant acquired them by exercising the NQSO.
Conversely, if the amount a participant receives upon
disposition of the shares of common stock that the participant
acquired by exercising a NQSO is less than the aggregate
exercise price the participant paid, the difference will be
treated as a long-term or short-term capital loss, depending on
whether the participant held the shares of common stock for more
than one year after the participant acquired them by exercising
the NQSO.
Stock
Appreciation Rights
A participant will not recognize taxable income when a SAR is
granted, and A. Schulman will not receive a deduction at that
time. When a SAR is exercised, a participant will recognize
ordinary income equal to the excess of the cash
and/or the
fair market value of the shares of common stock the participant
receives over the aggregate exercise price of the SAR, if any,
and A. Schulman will be entitled to a corresponding deduction.
If the amount a participant receives upon disposition of the
shares of common stock that the participant acquired by
exercising a SAR is greater than the aggregate exercise price
that the participant paid, the excess will be treated as a
long-term or short-term capital gain, depending on whether the
participant held the shares of common stock for more than one
year after the participant acquired them by exercising the SAR.
Conversely, if the amount a participant receives upon
disposition of the shares of common stock that the participant
acquired by exercising a SAR is less than the aggregate exercise
price that the participant paid, the difference will be treated
as a long-term or short-term capital loss, depending on whether
the participant held the shares of common stock for more than
one year after the participant acquired them by exercising the
SAR.
Restricted
Stock
Unless a participant makes an election under Section 83(b)
of the Code (a Section 83(b) Election), the
participant generally will not recognize taxable income when
Restricted Stock is granted, and A. Schulman will not receive a
deduction at that time. Instead, a participant will recognize
ordinary income when the Restricted Stock vests (i.e., when the
underlying shares of common stock are freely transferable or not
subject to a substantial risk of forfeiture) equal to the fair
market value of the shares of common stock that the participant
receives when the terms, conditions and restrictions have been
met, less any consideration paid for the Restricted Stock, and
A. Schulman generally will be entitled to a deduction equal to
the income that the participant recognizes.
If the amount a participant receives upon disposition of these
shares of common stock is greater than the fair market value of
the shares of common stock when the Restricted Stock vested, the
excess will be treated as a long-term or short-term capital
gain, depending on whether the participant held the shares of
common stock for more than one year after the Restricted Stock
vested. Conversely, if the amount the participant receives upon
disposition of these shares of common stock is less than the
fair market value of the shares of common stock when the
Restricted
59
Stock vested, the difference will be treated as a long-term or
short-term capital loss, depending on whether the participant
held the shares of common stock for more than one year after the
Restricted Stock vested.
If a participant makes a Section 83(b) Election, the
participant will recognize ordinary income on the grant date
equal to the fair market value of the shares of common stock
subject to the Restricted Stock Award on the grant date, and A.
Schulman will be entitled to a deduction equal to the income
that the participant recognizes at that time.
However, the participant will not recognize income when (and if)
the Restricted Stock vests. If a participant who has made a
Section 83(b) Election earns the shares of common stock
subject to a Restricted Stock Award, any appreciation between
the grant date and the date the participant disposes of the
shares of common stock will be treated as a long-term or
short-term capital gain, depending on whether the participant
held the shares of common stock for more than one year after the
grant date. Conversely, if the amount the participant receives
upon disposition of these shares of common stock is less than
the fair market value of the shares of common stock on the grant
date, the difference will be treated as a long-term or
short-term capital loss, depending on whether the participant
held the shares of common stock for more than one year after the
grant date. Also, if a participant forfeits his or her
Restricted Stock, the participant cannot take a tax deduction in
connection with the forfeiture of the Restricted Stock subject
to a Section 83(b) Election.
Restricted
Stock Units and Other Stock-Based Awards
Generally, a participant will not recognize taxable income when
a Restricted Stock Unit or an Other Stock-Based Award is
granted, and A. Schulman will not receive a deduction at that
time. However, upon the settlement of the Restricted Stock Unit
or Other Stock-Based Award, the participant will recognize
ordinary income equal to the cash
and/or fair
market value of the shares of common stock that the participant
receives, less the aggregate exercise price of the Restricted
Stock Unit or Other Stock-Based Award, if any. A. Schulman
generally will be entitled to a deduction equal to the income
that the participant recognizes.
If the participant receives shares of common stock upon the
settlement of a Restricted Stock Unit or Other Stock-Based Award
and the amount the participant receives upon disposition of the
shares of common stock acquired upon the settlement of the
Restricted Stock Unit or Other Stock-Based Award is greater than
the fair market value of the shares of common stock when they
were issued to the participant, the excess will be treated as a
long-term or short-term capital gain, depending on whether the
participant held the shares of common stock for more than one
year after they were issued. Conversely, if the amount the
participant receives upon disposition of these shares of common
stock is less than the value of the shares of common stock when
they were issued, the difference will be treated as a long-term
or short-term capital loss, depending on whether the participant
held the shares of common stock for more than one year after
they were issued.
Cash-Based
Award
A participant will not recognize ordinary income at the time a
Cash Award is granted, and A. Schulman will not be entitled to a
deduction at that time. In general, a participant will recognize
ordinary income when the Cash Award is settled equal to the
amount of the cash received, and A. Schulman will be entitled to
a corresponding deduction.
Section 409A
Section 409A of the Code imposes certain restrictions on
amounts deferred under non-qualified deferred compensation plans
and a 20% additional tax on amounts that are subject to, but do
not comply with, Section 409A. Section 409A includes a
broad definition of non-qualified deferred compensation plans,
which includes certain types of equity incentive compensation.
A. Schulman intend for the Awards granted under the 2010 Rewards
Plan to comply with or be exempt from the requirements of
Section 409A and the Treasury Regulations promulgated
thereunder.
New Plan
Benefits
All Awards granted under the 2010 Rewards Plan will be at the
discretion of the Compensation Committee and, in the case of
Performance-Based Awards, dependent upon A. Schulmans
future performance. As a result, the
60
specific number and terms of Awards that: (i) will be
granted to participants; or (ii) would have been granted to
participants during the 2010 fiscal year had the 2010 Rewards
Plan been in place, are not determinable. See
Compensation of Directors beginning on
page 30 of this proxy statement for information regarding
A. Schulmans non-employee director compensation program,
which is expected to be continued under the 2010 Rewards Plan.
For information regarding the shares of common stock available
for issuance under A. Schulmans existing equity
compensation plans, see the EQUITY COMPENSATION PLAN
INFORMATION beginning on page of
this proxy statement.
Vote
Required
For the adoption and approval of the 2010 Rewards Plan, the
affirmative vote of the holders of a majority of the common
stock present, represented and entitled to vote at the Annual
Meeting will be required for approval. Broker non-votes will not
be counted for the purpose of determining whether
Proposal Three has been approved. Abstentions will be
counted as present and entitled to vote on the matter for
purposes of Proposal Three and, thus, will have the same
effect as a vote against Proposal Three.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE 2010 INCENTIVE PLAN.
61
OTHER
MATTERS
The Board of Directors knows of no matters to be presented for
action at the Annual Meeting other than those described in this
proxy statement. A. Schulmans By-Laws describe procedures,
including minimum notice provisions, for stockholder nomination
of Directors and submission of other stockholder business to be
transacted at any Annual Meeting. A copy of the pertinent By-Law
provisions is available on request to the Corporate Secretary at
A. Schulman, Inc., 3550 West Market Street, Akron, Ohio
44333. If any such stockholder proposals or other business to be
transacted properly comes before the Annual Meeting, it is
intended that shares represented by Proxies solicited hereby
will be voted in respect thereof in accordance with the best
judgment of the proxy holders.
SOLICITATION
OF PROXIES
The cost of soliciting the accompanying Proxy will be borne by
A. Schulman. A. Schulman may reimburse brokers, nominees,
fiduciaries and custodians their reasonable expenses for sending
proxy material to principals and obtaining their instructions.
In addition to solicitation by mail, Proxies may be solicited in
person, by telephone or telegraph or by officers, directors and
regular employees of A. Schulman. Further, A. Schulman has
retained Georgeson, Inc. to perform solicitation services in
connection with this proxy statement. For such services, A.
Schulman will pay Georgeson, Inc. a fee of approximately $7,500.
Additionally, Georgeson, Inc. will be reimbursed for certain
out-of-pocket
expenses and indemnified against certain liabilities incurred in
connection with this proxy solicitation.
By order of the Board of Directors,
Vice President, General Counsel and Secretary
November 5, 2010
62
Appendix A
A.
SCHULMAN, INC.
2010
VALUE CREATION REWARDS PLAN
The Plan is intended to foster and promote the long-term
financial success of the Company and its Affiliates and to
increase stockholder value by providing Participants an
opportunity to acquire and maintain an ownership interest in the
Company and enabling the Company and its Affiliates to attract
and retain the services of outstanding individuals upon whose
judgment and special efforts the successful conduct of the
Companys business is largely dependent.
ARTICLE I
DEFINITIONS
When used in the Plan, the following capitalized words, terms
and phrases shall have the meanings set forth in this
Article I. For purposes of the Plan, the form of any word,
term or phrase shall include any and all of its other forms.
1.1 Act shall mean the Securities
Exchange Act of 1934, as amended from time to time, or any
successor thereto.
1.2 Affiliate shall mean any entity
with whom the Company would be considered a single employer
under Section 414(b) or (c) of the Code, but modified
as permitted under Treasury Regulations promulgated under any
Code section relevant to the purpose for which the definition is
applied.
1.3 Award shall mean any
Nonqualified Stock Option, Incentive Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit,
Other Stock-Based Award or Cash-Based Award granted pursuant to
the Plan.
1.4 Award Agreement shall mean any
written or electronic agreement between the Company and a
Participant that describes the terms and conditions of an Award.
If there is a conflict between the terms of the Plan and the
terms of an Award Agreement, the terms of the Plan shall govern.
1.5 Beneficial Owner shall mean a
beneficial owner as defined in
Rule 13d-3
under the Act.
1.6 Board shall mean the Board of
Directors of the Company.
1.7 Cash-Based Award shall mean a
cash Award granted pursuant to Article X of the Plan.
1.8 Cause shall mean, unless
otherwise provided in the related Award Agreement or in any
employment agreement between the Participant and the Company or
any Affiliate or in any other agreement between the Participant
and the Company or any Affiliate (but only within the context of
the events contemplated by the employment agreement or other
agreement, as applicable), a Participants (a) gross
neglect of duties owed to the Company or its Affiliates,
(b) knowing commission of misfeasance or permission of
nonfeasance of duties in any material respect, or
(c) commission of a felony.
1.9 Change in Control shall mean,
with respect to the payment, exercise or settlement of any Award:
(a) Any Person (as defined below), within any 12 month
period, becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates other than in
connection with the acquisition by the Company or its Affiliates
of a business) representing 30 percent or more of either
the then outstanding Shares of common stock of the Company or
the combined voting power of the Companys then outstanding
securities; or
(b) The following individuals cease for any reason to
constitute a majority of the number of persons then serving on
the Board (Board Members): individuals who, on the
date hereof, constitute the Board and any new Board Member
(other than a Board Member whose initial assumption of office is
in connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation relating
to the election of Board
A-1
Members) whose appointment or election by the Board or
nomination for election by the Companys stockholders was
approved by a vote of at least two-thirds of the Board Members
then still in office who either were Board Members on the date
hereof or whose appointment, election or nomination for election
was previously so approved; or
(c) The Company consummates any other transaction involving
a merger or consolidation with any other corporation or issues
voting securities in connection with the consummation of a
merger or consolidation of the Company (or any direct or
indirect subsidiary of the Company) pursuant to applicable stock
exchange requirements, other than: (i) a merger or
consolidation in which voting securities of the Company
outstanding immediately prior to such merger or consolidation
continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity
or any parent thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any subsidiary of the Company, at
least 70 percent of the combined voting power of the voting
securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation; (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including in the securities Beneficially Owned by such Person
any securities acquired directly from the Company or its
Subsidiaries other than in connection with the acquisition by
the Company or its Subsidiaries of a business) representing
30 percent or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the
Companys then outstanding securities, or (iii) any
transaction or series of integrated transactions immediately
following which the record holders of the common Shares of the
Company immediately prior to such transaction or series of
transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions; or
(d) The Company liquidates, dissolves, or sells or disposes
of all or substantially all of the Companys assets, other
than a sale or disposition by the Company of all or
substantially all of the Companys assets to an entity, at
least 70 percent of the combined voting power of the voting
securities of which are owned by stockholders in substantially
the same proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, any event or transaction which
would otherwise constitute a Change in Control (a
Transaction) shall not constitute a Change in
Control for purposes of this Plan if, with respect to a
Participant, the Participant participates as an equity investor
in the acquiring entity or any of its Affiliates (the
Acquiror). For purposes of the preceding sentence,
such Participant shall not be deemed to have participated as an
equity investor in the Acquiror by virtue of: (x) obtaining
Beneficial Ownership of any equity interest in the Acquiror as a
result of the grant to the Participant of an incentive
compensation award under one or more incentive plans of the
Acquiror (including, but not limited to, the conversion in
connection with the Transaction of incentive compensation awards
of the Company into incentive compensation awards of the
Acquiror), on terms and conditions substantially equivalent to
those applicable to other executives of the Company immediately
prior to the Transaction, after taking into account normal
differences attributable to job responsibilities, title and
similar matters; (y) obtaining Beneficial Ownership of any
equity interest in the Acquiror on terms and conditions
substantially equivalent to those obtained in the Transaction by
all other stockholders of the Company or (z) passive
ownership of less than 3 percent of the stock of the
Acquiror.
For purposes of this definition, Person has the
meaning given in Section 3(a)(9) of the Act, as modified
and used in Sections 13(d) and 14(d) thereof, and shall
include persons acting as a group within the meaning
of Section 409A of the Code; provided, however, that except
that the term will not include (i) the Company or any
Related Entity, (ii) a trustee or other fiduciary holding
securities under any employee benefit plan of the Company or any
Related Entity, (iii) an underwriter temporarily holding
securities pursuant to an offering of those securities, or
(iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
1.10 Code shall mean the Internal
Revenue Code of 1986, as amended from time to time, or any
successor thereto.
A-2
1.11 Committee shall mean:
(a) in the case of Awards to Directors, the entire
Board; and
(b) in the case of all other Awards, the Compensation
Committee of the Board (or a subcommittee thereof), which will
be comprised of at least two directors, each of whom is an
outside director, within the meaning of
Section 162(m) of the Code and the Treasury Regulations
promulgated thereunder, a non-employee director
within the meaning of
Rule 16b-3
under the Act, and an independent director under the
rules of the exchange on which the Shares are listed.
1.12 Company shall mean A.
Schulman, Inc., a Delaware corporation, and any successor
thereto.
1.13 Consultant shall mean any
person who renders services to the Company or any Affiliate
other than an Employee or a Director.
1.14 Covered Employee shall mean a
covered employee within the meaning of
Section 162(m) of the Code and the Treasury Regulations
promulgated thereunder.
1.15 Director shall mean a person
who, on an applicable grant date, (a) is an elected member
of the Board or of a Related Board (or has been appointed to the
Board or to a Related Board to fill an unexpired term and will
continue to serve at the expiration of that term only if elected
by stockholders); and (b) is not an Employee.
1.16 Disability shall mean:
(a) with respect to the payment, exercise or settlement of
any Award that is (or becomes) subject to Section 409A of
the Code (and for which no exception applies): (i) the
Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than
12 months; (ii) the Participant is, by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three
months under an accident and health plan covering Employees of
the Participants employer; or (iii) the Participant
is determined to be totally disabled by the Social Security
Administration or Railroad Retirement Board; and
(b) with respect to any other Award, disability
as defined in Section 22(e)(3) of the Code;
Disability will be determined by the Committee in good faith
upon receipt of sufficient medical advice from one or more
individuals, selected by the Committee, who are qualified to
give professional medical advice.
1.17 Employee shall mean any person
who is a common law employee of the Company or any Affiliate. A
person who is classified as other than a common-law employee but
who is subsequently reclassified as a common law employee of the
Company or any Affiliate for any reason and on any basis shall
be treated as a common law employee only from the date that
reclassification occurs and shall not retroactively be
reclassified as an Employee for any purpose under the Plan.
1.18 Fair Market Value shall mean
the value of one Share on any relevant date, determined under
the following rules:
(a) If the Shares are traded on an exchange, the reported
closing price on the relevant date if it is a
trading day, otherwise on the next trading day;
(b) If the Shares are traded
over-the-counter
with no reported closing price, the mean between the lowest bid
and the highest asked prices on that quotation system on the
relevant date if it is a trading day, and if the relevant date
is not a trading day, then on the next trading day; or
(c) If neither (a) nor (b) applies: (i) with
respect to Options, Stock Appreciation Rights and any Award that
is subject to Section 409A of the Code, the value as
determined by the Committee through the reasonable application
of a reasonable valuation method, taking into account all
information material to the value of the Company, within the
meaning of Section 409A of the Code and the Treasury
Regulations promulgated thereunder; and (ii) with respect
to all other Awards, the fair market value as determined by the
Committee in good faith.
A-3
1.19 Full Value Award shall mean an
Award that is settled by the issuance of Shares, other than an
Incentive Stock Option, a Nonqualified Stock Option or a Stock
Appreciation Right.
1.20 Incentive Stock Option shall
mean an Option that is intended to satisfy the requirements of
Section 422 of the Code.
1.21 Nonqualified Stock
Option shall mean an Option that is not intended
to be an Incentive Stock Option.
1.22 Option shall mean an option to
purchase Shares which is granted pursuant to Article V of
the Plan. An Option may be either an Incentive Stock Option or a
Nonqualified Stock Option.
1.23 Other Stock-Based Award shall
mean an Award granted pursuant to Article IX of the Plan.
1.24 Participant shall mean an
Employee, Director or Consultant who is granted an Award under
the Plan.
1.25 Performance-Based Award shall
mean an Award granted pursuant to Article XI of the Plan.
1.26 Performance Criteria shall
mean (a) with respect to a Participant who is or is likely
to be a Covered Employee and for an Award that is intended to
constitute qualified performance based compensation
within the meaning of Section 162(m) of the Code, the
performance criteria described in Section 11.2(a) of the
Plan, and (b) with respect to any other Participant, any
performance criteria determined by the Committee in its sole
discretion.
1.27 Plan shall mean the A.
Schulman, Inc. 2010 Value Creation Rewards Plan, as set forth
herein and as may be amended from time to time.
1.28 Related Board shall mean the
board of directors of any incorporated Affiliate or the
governing body of any unincorporated Affiliate.
1.29 Restricted Stock shall mean an
Award granted pursuant to Article VII of the Plan under
which a Participant is issued Shares which are subject to
specified restrictions on vesting and transferability.
1.30 Restricted Stock Unit shall
mean an Award granted pursuant to Article VIII of the Plan
under which a Participant is issued a right to receive a
specified number of Shares or a cash payment equal to a
specified number of Shares, the settlement of which is subject
to specified restrictions on vesting and transferability.
1.31 Retirement shall mean, unless
otherwise provided in the related Award Agreement or in any
employment agreement between the Participant and the Company or
any Affiliate or in any other agreement between the Participant
and the Company or any Affiliate (but only within the context of
the events contemplated by the employment agreement or other
agreement, as applicable): (a) with respect to Participants
who are Employees, voluntary termination after age 60; and
(b) with respect to Participants who are Directors,
voluntary termination of service as a Director (i) after
serving one full term as elected Director, and (ii) being
nominated for election to a second consecutive term.
1.32 Shares shall mean the common
shares, par value $0.01 per share, of the Company or any
security of the Company issued in satisfaction, exchange or in
place of these shares.
1.33 Stock Appreciation Right shall
mean an Award granted pursuant to Article VI of the Plan
under which a Participant is given the right to receive the
difference between the Fair Market Value of a Share on the date
of grant and the Fair Market Value of a Share on the date of
exercise of the Award.
1.34 Subsidiary shall mean with
respect to an Incentive Stock Option, an Affiliate that is also
a subsidiary corporation as defined under
Section 424(f) of the Code.
1.35 Treasury Regulations shall
mean the regulations issued by the United States Department of
the Treasury with respect to the relevant section of the Code.
A-4
ARTICLE II
SHARES SUBJECT TO THE PLAN
2.1 Number of Shares Available for
Awards. Subject to this Article II, the aggregate
number of Shares with respect to which Awards may be granted
under the Plan shall be 1,375,000, all of which may be granted
with respect to Incentive Stock Options. The Shares may consist,
in whole or in part, of treasury Shares, authorized but unissued
Shares not reserved for any other purpose or Shares purchased by
the Company or an independent agent in either a private
transaction or in the open market. Subject to this
Article II: (a) upon a grant of a Full Value Award,
the number of Shares available for issuance under the Plan shall
be reduced by 2.48 Shares for each Share subject to such
Full Value Award, and any Shares underlying such an Award that
become available for future grant under the Plan pursuant to
Section 2.2 shall be added back to the Plan in an amount
equal to the number of Shares subject to the Award at the date
of grant, and (b) upon a grant of an Option or Stock
Appreciation Right, the number of Shares available for issuance
under the Plan shall be reduced by an amount equal to the number
of Shares subject to such Award, and any Shares underlying such
an Award that become available for future grant under the Plan
pursuant to Section 2.2 shall be added back to the Plan in
an amount equal to the number of Shares subject to such an Award
that become available for future grant under the Plan pursuant
to Section 2.2. Without limiting the foregoing, with
respect to any Stock Appreciation Right that is settled in
Shares, the full number of Shares subject to the Award shall
count against the number of Shares available for Awards under
the Plan regardless of the number of Shares used to settle the
Stock Appreciation Right upon exercise.
2.2 Share Usage. In addition to the number of
Shares provided for in Section 2.1, the following Shares
shall be available for Awards under the Plan (a) Shares
covered by an Award that expires or is forfeited, canceled,
surrendered or otherwise terminated without the issuance of such
Shares, (b) Shares covered by an Award that is settled only
in cash, (c) Shares granted through the assumption of, or
in substitution for, outstanding awards granted by a company to
individuals who become Employees, Directors or Consultants as
the result of a merger, consolidation, acquisition or other
corporate transaction involving such company and the Company or
any Affiliate, and (d) any Shares from awards exercised for
or settled in vested and nonforfeitable Shares that are later
returned to the Company pursuant to any compensation recoupment
policy, provision or agreement. Nothing in the foregoing shall
be construed as permitting any Shares surrendered upon exercise
of an Award as payment of the applicable exercise price or
withheld to satisfy any applicable taxes to be again available
for Awards under the Plan.
2.3 Fiscal Year Limits. Subject to
Section 2.4 and unless and until the Committee determines
that an Award to a Covered Employee shall not be designed as
qualified performance-based compensation under
Section 162(m) of the Code, during any fiscal year of the
Company, the Committee may not grant to any Participant who is a
Covered Employee (a) Options covering more than
250,000 Shares; (b) Stock Appreciation Rights covering
more than 250,000 Shares, (c) Performance-Based Awards
that are to be settled in Shares covering more than
150,000 Shares, and (d) Performance-Based Awards that
are to be settled in cash equal to more than $3,000,000.
2.4 Adjustments. In the event of any Share dividend,
Share split, recapitalization (including payment of an
extraordinary dividend), merger, reorganization, consolidation,
combination, spin-off, distribution of assets to stockholders,
exchange of Shares or any other change affecting the Shares, the
Committee shall make such substitutions and adjustments, if any,
as it deems equitable and appropriate to (a) the aggregate
number of Shares that may be issued under the Plan, (b) any
Share-based limits imposed under the Plan, and (c) the
exercise price, number of Shares and other terms or limitations
applicable to outstanding Awards. Notwithstanding the foregoing,
an adjustment pursuant to this Section 2.4 shall be made
only to the extent such adjustment complies, to the extent
applicable, with Section 409A of the Code.
2.5 Full Value Awards. Notwithstanding anything
in the Plan to the contrary, the Committee may grant Full Value
Awards covering up to ten percent (10%) of the Shares available
for issuance pursuant to Section 2.1 without regard to the
minimum vesting requirements of Sections 7.3(a), 8.3, and
9.1 of the Plan.
A-5
ARTICLE III
ADMINISTRATION
3.1 In General. The Plan shall be administered
by the Committee. The Committee shall have full power and
authority to: (a) interpret the Plan and any Award
Agreement; (b) establish, amend and rescind any rules and
regulations relating to the Plan; (c) select Participants;
(d) establish the terms and conditions of any Award
consistent with the terms and conditions of the Plan, including
the dates on which Awards may vest and be exercised, the
acceleration of any such dates and the expiration date of any
Award; and (e) make any other determinations that it deems
necessary or desirable for the administration of the Plan. The
Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any Award
Agreement in the manner and to the extent the Committee deems
necessary or desirable. Any decision of the Committee in the
interpretation and administration of the Plan shall be made in
the Committees sole and absolute discretion and shall be
final, conclusive and binding on all persons.
3.2 Delegation of Duties. In its sole
discretion, the Committee may delegate any ministerial duties
associated with the Plan to any person (including Employees) it
deems appropriate; provided, however, that the Committee may not
delegate (a) any duties that it is required to discharge to
comply with Section 162(m) of the Code or any other
applicable law, (b) its authority to grant Awards to any
Participant who is subject to Section 16 of the Act, or
(c) its authority under any equity award granting policy of
the Company that may be in effect from time to time.
ARTICLE IV
ELIGIBILITY
Any Employee, Director or Consultant selected by the Committee
shall be eligible to be a Participant in the Plan; provided,
however, that Incentive Stock Options shall only be granted to
Employees who are employed by the Company or a Subsidiary.
ARTICLE V
OPTIONS
5.1 Grant of Options. Subject to the terms and
conditions of the Plan, Options may be granted to Participants
in such number, and upon such terms and conditions, as shall be
determined by the Committee in its sole discretion.
5.2 Award Agreement. Each Option shall be
evidenced by an Award Agreement that shall specify the exercise
price, the term of the Option, the number of Shares covered by
the Option, the conditions upon which the Option shall become
vested and exercisable and such other terms and conditions as
the Committee shall determine and which are not inconsistent
with the terms and conditions of the Plan. The Award Agreement
also shall specify whether the Option is intended to be an
Incentive Stock Option or a Nonqualified Stock Option.
5.3 Exercise Price. The exercise price per
Share of an Option shall be determined by the Committee at the
time the Option is granted; provided, however, that in no event
shall the exercise price per Share of any Option be less than
one hundred percent (100%) of the Fair Market Value of a Share
on the date of grant.
5.4 Term. The term of an Option shall be
determined by the Committee; provided, however, that in no event
shall the term of any Option exceed ten (10) years from its
date of grant.
5.5 Exercisability. Options shall become
exercisable at such times and upon such terms and conditions as
shall be determined by the Committee. Such terms and conditions
may include, without limitation, the satisfaction of
(a) performance goals based on one or more Performance
Criteria, or (b) time-based vesting requirements.
5.6 Exercise of Options. Except as otherwise
provided in the Plan or in a related Award Agreement, an Option
may be exercised for all or any portion of the Shares for which
it is then exercisable. An Option shall be exercised by the
delivery of a notice of exercise to the Company or its designee
in a form specified by the Committee which sets forth the number
of Shares with respect to which the Option is to be exercised
and full payment of the exercise price for such Shares. The
exercise price of an Option may be paid (a) in cash or its
equivalent, (b) by tendering (either by actual delivery or
attestation) previously acquired Shares having an aggregate Fair
Market
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Value at the time of exercise equal to the aggregate exercise
price; provided that such Shares had been held for at least six
months or such other period required to obtain favorable
accounting treatment and to comply with the requirements of
Section 16 of the Act, (c) by a cashless exercise
(including by withholding Shares deliverable upon exercise and
through a broker-assisted arrangement to the extent permitted by
applicable law); (d) by a combination of the methods
described in clauses (a), (b) and/or (c); or
(e) though any other method approved by the Committee in
its sole discretion. As soon as practicable after receipt of the
notification of exercise and full payment of the exercise price,
the Company shall cause the appropriate number of Shares to be
issued to the Participant.
5.7 Special Rules Applicable to Incentive Stock
Options. Notwithstanding any other provision in the
Plan to the contrary:
(a) The terms and conditions of Incentive Stock Options
shall be subject to and comply with the requirements of
Section 422 of the Code.
(b) The aggregate Fair Market Value of the Shares
(determined as of the date of grant) with respect to which
Incentive Stock Options are exercisable for the first time by
any Participant during any calendar year (under all plans of the
Company and its Subsidiaries) may not be greater than $100,000
(or such other amount specified in Section 422 of the
Code), as calculated under Section 422 of the Code.
(c) No Incentive Stock Option shall be granted to any
Participant who, at the time the Incentive Stock Option is
granted, owns stock possessing more than ten percent of the
total combined voting power of all classes of stock of the
Company or of any Subsidiary, unless: (i) the exercise
price of such Incentive Stock Option is at least
110 percent of the Fair Market Value of a Share on the date
the Incentive Stock Option is granted; and (ii) the date on
which such Incentive Stock Option will expire is not later than
five years from the date the Incentive Stock Option is granted.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1 Grant of Stock Appreciation Rights. Subject
to the terms and conditions of the Plan, Stock Appreciation
Rights may be granted to Participants in such number, and upon
such terms and conditions, as shall be determined by the
Committee in its sole discretion.
6.2 Award Agreement. Each Stock Appreciation
Right shall be evidenced by an Award Agreement that shall
specify the exercise price, the term of the Stock Appreciation
Right, the number of Shares covered by the Stock Appreciation
Right, the conditions upon which the Stock Appreciation Right
shall become vested and exercisable and such other terms and
conditions as the Committee shall determine and which are not
inconsistent with the terms and conditions of the Plan.
6.3 Exercise Price. The exercise price per
Share of a Stock Appreciation Right shall be determined by the
Committee at the time the Stock Appreciation Right is granted;
provided, however, that in no event shall the exercise price per
Share of any Stock Appreciation Right be less than
100 percent of the Fair Market Value of a Share on the date
of grant.
6.4 Term. The term of a Stock Appreciation
Right shall be determined by the Committee; provided however,
that in no event shall the term of any Stock Appreciation Right
exceed ten years from its date of grant.
6.5 Exercisability of Stock Appreciation
Rights. A Stock Appreciation Right shall become
exercisable at such times and upon such terms and conditions as
may be determined by the Committee. Such terms and conditions
may include, without limitation, the satisfaction of
(a) performance goals based on one or more Performance
Criteria, or (b) time-based vesting requirements.
6.6 Exercise of Stock Appreciation
Rights. Except as otherwise provided in the Plan or in
a related Award Agreement, a Stock Appreciation Right may be
exercised for all or any portion of the Shares for which it is
then exercisable. A Stock Appreciation Right shall be exercised
by the delivery of a notice of exercise to the Company or its
designee in a form specified by the Committee which sets forth
the number of Shares with respect to which the Stock
Appreciation Right is to be exercised. Upon exercise, a Stock
Appreciation Right shall entitle a Participant to
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an amount equal to: (a) the excess of (i) the Fair
Market Value of a Share on the exercise date over (ii) the
exercise price per Share; multiplied by (b) the number of
Shares with respect to which the Stock Appreciation Right is
exercised. A Stock Appreciation Right may be settled in full
Shares, cash or a combination thereof, as specified by the
Committee in the related Award Agreement.
ARTICLE VII
RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the
terms and conditions of the Plan, Shares of Restricted Stock may
be granted to Participants in such number, and upon such terms
and conditions, as shall be determined by the Committee in its
sole discretion.
7.2 Award Agreement. Each Restricted Stock
Award shall be evidenced by an Award Agreement that shall
specify the number of Shares of Restricted Stock, the restricted
period(s) applicable to the Shares of Restricted Stock, the
conditions upon which the restrictions on the Shares of
Restricted Stock will lapse and such other terms and conditions
as the Committee shall determine and which are not inconsistent
with the terms and conditions of the Plan.
7.3 Terms, Conditions and Restrictions.
(a) The Committee shall impose such other terms, conditions
and/or
restrictions on any Shares of Restricted Stock as it may deem
advisable, including, without limitation, a requirement that the
Participant pay a purchase price for each Share of Restricted
Stock, restrictions based on the achievement of specific
performance goals (which may be based on one or more of the
Performance Criteria), time-based restrictions or holding
requirements or sale restrictions placed on the Shares by the
Company upon vesting of such Restricted Stock. Notwithstanding
the foregoing, subject to Section 2.5 and Article XIII
of the Plan or as described in the related Award Agreement in
connection with a Participants death, termination due to
Disability
and/or
Retirement, no condition on vesting of a Restricted Stock Award
that is based upon achievement of specified performance goals
shall be based on performance over a period of less than one
year and no condition on vesting of a Restricted Stock Award
that is based upon continued employment or the passage of time
shall provide for vesting in full of the Restricted Stock Award
more quickly than in pro rata installments over three years from
the date of grant of the Award.
(b) To the extent deemed appropriate by the Committee, the
Company may retain the certificates representing Shares of
Restricted Stock in the Companys possession until such
time as all terms, conditions
and/or
restrictions applicable to such Shares have been satisfied or
lapse.
(c) Unless otherwise provided in the related Award
Agreement or required by applicable law, the restrictions
imposed on Shares of Restricted Stock shall lapse upon the
expiration or termination of the applicable restricted period
and the satisfaction of any other applicable terms and
conditions.
7.4 Rights Associated with Restricted Stock during
Restricted Period. During any restricted period
applicable to Shares of Restricted Stock:
(a) Such Shares of Restricted Stock may not be sold,
transferred, pledged, assigned or otherwise alienated or
hypothecated.
(b) Unless otherwise provided in the related Award
Agreement: (i) the Participant shall be entitled to
exercise full voting rights associated with such Shares of
Restricted Stock; and (ii) the Participant shall be
entitled to all dividends and other distributions paid with
respect to such Shares of Restricted Stock during the restricted
period; provided, however, that receipt of any such dividends or
other distributions will be subject to the same terms and
conditions as the Shares of Restricted Stock with respect to
which they are paid.
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ARTICLE VIII
RESTRICTED STOCK UNITS
8.1 Grant of Restricted Stock Units. Subject to
the terms and conditions of the Plan, Participants may be
granted Restricted Stock Units in such number, and upon such
terms and conditions, as shall be determined by the Committee in
its sole discretion.
8.2 Award Agreement. Each Award of Restricted
Stock Units shall be evidenced by an Award Agreement that shall
specify the number of Shares underlying the Award, the
restricted period(s), the conditions upon which the restrictions
on the Restricted Stock Units will lapse, the time at and form
in which the Restricted Stock Units will be settled, and such
other terms and conditions as the Committee shall determine and
which are not inconsistent with the terms and conditions of the
Plan.
8.3 Terms, Conditions and Restrictions. The
Committee shall impose such other terms, conditions
and/or
restrictions on any Award of Restricted Stock Units as it may
deem advisable, including, without limitation, restrictions
based on the achievement of specific performance goals (which
may be based on one or more of the Performance Criteria),
time-based restrictions or holding requirements or sale
restrictions placed on the Shares by the Company upon vesting of
such Restricted Stock. Notwithstanding the foregoing, subject to
Section 2.5 and Article XIII of the Plan or as
described in the related Award Agreement in connection with a
Participants death, termination due to Disability
and/or
Retirement, no condition on vesting of an Award of Restricted
Stock Units that is based upon achievement of specified
performance goals shall be based on performance over a period of
less than one year and no condition on vesting of an Award of
Restricted Stock Units that is based upon continued employment
or the passage of time shall provide for vesting in full of the
Restricted Stock Units more quickly than in pro rata
installments over three years from the date of grant of the
Award.
8.4 Form of Settlement. An Award of Restricted
Stock Units may be settled in full Shares, cash or a combination
thereof, as specified by the Committee in the related Award
Agreement.
8.5 Dividend Equivalents. Awards of Restricted
Stock Units may provide the Participant with dividend
equivalents, as determined by the Committee in its sole
discretion and set forth in the related Award Agreement. In no
event will a Participant have any voting rights with respect to
the Shares underlying the Restricted Stock Units.
ARTICLE IX
OTHER STOCK-BASED AWARDS
9.1 Grant of Other Stock-Based Awards. Subject
to the terms and conditions of the Plan, Other Stock-Based
Awards may be granted to Participants in such number, and upon
such terms and conditions, as shall be determined by the
Committee in its sole discretion. Other Stock-Based Awards are
Awards that are valued in whole or in part by reference to, or
otherwise based on the Fair Market Value of, the Shares, and
shall be in such form as the Committee shall determine,
including without limitation, (a) unrestricted Shares,
whole or otherwise, or (b) performance-based restricted
stock units that are settled in Shares
and/or cash.
Notwithstanding the foregoing, subject to Section 2.5 and
Article XIII of the Plan or as described in the related
Award Agreement in connection with a Participants death,
termination due to Disability
and/or
Retirement, no condition on vesting of an Other Stock-Based
Award that is based upon achievement of specified performance
goals shall be based on performance over a period of less than
one year and no condition on vesting of an Other Stock-Based
Award that is based upon continued employment or the passage of
time shall provide for vesting in full of the Other Stock-Based
Award more quickly than in pro rata installments over three
years from the date of grant of the Award.
9.2 Award Agreement. Each Other Stock-Based
Award shall be evidenced by an Award Agreement that shall
specify the terms and conditions upon which the Other
Stock-Based Award shall become vested, if applicable, the time
and method of settlement, the form of settlement and such other
terms and conditions as the Committee shall determine and which
are not inconsistent with the terms and conditions of the Plan.
9.3 Form of Settlement. An Other Stock-Based
Award may be settled in full Shares, cash or a combination
thereof, as specified by the Committee in the related Award
Agreement.
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9.4 Dividend Equivalents. Awards of Other
Stock-Based Awards may provide the Participant with dividend
equivalents, as determined by the Committee in its sole
discretion and set forth in the related Award Agreement. Nothing
in the foregoing shall be construed as permitted dividend
equivalents to be provided with respect to any unearned
Performance Award.
ARTICLE X
CASH-BASED AWARDS
Subject to the terms and conditions of the Plan, Cash-Based
Awards may be granted to Participants in such amounts and upon
such other terms and conditions as shall be determined by the
Committee in its sole discretion. Each Cash-Based Award shall be
evidenced by an Award Agreement that shall specify the payment
amount or payment range, the time and method of settlement and
the other terms and conditions, as applicable, of such Award
which may include, without limitation, performance objectives
and that the Cash-Based Award is a Performance-Based Award under
Article XI.
ARTICLE XI
PERFORMANCE-BASED AWARDS
11.1 In General. Notwithstanding anything in
the Plan to the contrary, Cash-Based Awards, Shares of
Restricted Stock and Other Stock-Based Awards may be granted in
a manner which is deductible by the Company under
Section 162(m) of the Code as Performance-Based Awards. As
determined by the Committee in its sole discretion, the grant,
vesting, exercisability
and/or
settlement of any Performance-Based Award shall be conditioned
on the attainment of performance goals based upon one or more
Performance Criteria during a performance period established by
the Committee. Any such Performance-Based Award must meet the
requirements of this Article XI.
11.2 Performance Criteria.
(a) For purposes of the Plan, the Performance
Criteria for Participants who are or are likely to be
Covered Employees may be based upon or derived from any of the
following:
(i) Net earnings;
(ii) Earnings per Share;
(iii) Net sales;
(iv) Net income (before and after taxes);
(v) Net income;
(vi) Net operating profit;
(vii) Return measures (including return on assets, capital,
equity or sales);
(viii) Cash flow (including operating cash flow and free
cash flow);
(ix) Cash flow return on capital;
(x) Earnings before and after taxes, interest, depreciation
and/or
amortization;
(xi) Gross or operating margins;
(xii) Productivity ratios;
(xiii) Share price (including total stockholder return);
(xiv) Expense targets; and
(xv) Margins.
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(b) Performance Criteria may relate to the individual
Participant, the Company, the Company and one or more Affiliate
or one or more of their respective divisions or business units,
or any combination of the foregoing, and may be applied on an
absolute basis
and/or be
relative to one or more peer group companies or indices, or any
combination thereof, in each case, as determined by the
Committee in its sole discretion.
11.3 Establishment of Performance Goals. With
respect to Performance-Based Awards for Participants who are or
are likely to be Covered Employees, the Committee shall
establish (a) the applicable performance goals and
performance period, (b) the formula for computing the
Performance-Based Award and (c) such other terms and
conditions applicable to the Performance-Based Award in writing
while the outcome of the applicable performance period is
substantially uncertain, but in no event later than the earlier
of: (i) 90 days after the beginning of the applicable
performance period; or (ii) the expiration of
25 percent of the applicable performance period.
11.4 Certification of Performance. With respect
to Performance-Based Awards for Participants who are or are
likely to be Covered Employees and that are intended to
constitute qualified performance based compensation
within the meaning of Section 162(m) of the Code, the
Committee shall certify in writing whether the applicable
performance goals and other material terms imposed on such
Performance-Based Awards have been satisfied, and, if they have,
ascertain the amount of the applicable Performance-Based Award.
No such Performance-Based Award shall be granted, vested,
exercisable
and/or
settled, as the case may be, until the Committee makes this
certification.
11.5 Modifying Performance-Based Awards. To the
extent consistent with Section 162(m) of the Code,
performance goals relating to such Performance-Based Awards may
be calculated without regard to extraordinary items or adjusted,
as the Committee deems equitable, in recognition of unusual or
non-recurring events affecting the Company
and/or its
Affiliates or changes in applicable tax laws or accounting
principles.
11.6 Negative Discretion. In the
Committees sole discretion, the amount of a
Performance-Based Award actually paid to a Participant may be
less than the amount otherwise payable based on the satisfaction
of the performance goals and other materials terms of the
Performance-Based Award.
ARTICLE XII
TERMINATION OF EMPLOYMENT OR SERVICE
With respect to each Award granted under the Plan, the Committee
shall, subject to the terms and conditions of the Plan,
determine the extent to which the Award shall vest and the
extent to which the Participant shall have the right to exercise
and/or
receive settlement of the Award on or following the
Participants termination of employment or services with
the Company
and/or an
Affiliate. Such provisions shall be determined in the sole
discretion of the Committee at any time prior to or after such
termination, shall be included in the related Award Agreement or
an amendment thereto, need not be uniform among all Awards
granted under the Plan and may reflect distinctions based on the
reasons for termination.
Subject to Sections 7.3(a), 8.3 and 9.1, or as otherwise
provided in the Plan, the vesting conditions of an Award may
only be accelerated upon the death, termination due to
Disability, Retirement or involuntary termination without Cause
of the Participant. Notwithstanding the foregoing, in no event
shall any Performance-Based Award granted to a Covered Employee
that is intended to constitute qualified performance-based
compensation under Section 162(m) of the Code, be
settled or become exercisable in full, upon the termination of
employment of the Covered Employee without regard to the
satisfaction of the related Performance Criteria.
ARTICLE XIII
CHANGE IN CONTROL
13.1 Exercise and Settlement. Except as
otherwise provided in the related Award Agreement, upon the
occurrence of a Change in Control: (a) all of
Participants Awards will be fully vested; (b) all
performance objectives relating to a Participants Awards
will be deemed to have been satisfied (and, if the performance
objectives required that performance be attained at a
target level, the performance objectives will be
deemed to have been satisfied at that target level)
as of the date of such Change in Control; (c) all Options
and Stock Appreciation Rights will be fully exercisable; and
(d) all Awards other than Options and Stock Appreciation
Rights
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will be paid or settled, as the case may be, within 60 days
following the date of such Change in Control. Any action
relating to an Award that is subject to Section 409A of the
Code shall be consistent with the requirements thereof.
13.2. Effect of Section 280G of the
Code. Unless specified otherwise in the associated
Award Agreement or in another written agreement between the
Participant and the Company or any Affiliate, if the Company
concludes that any payment or benefit due to a Participant under
the Plan, when combined with any other payment or benefit due to
the Participant from the Company or any other entity
(collectively, the Payor), would be considered a
parachute payment within the meaning of
Section 280G of the Code, the Payor will reduce the
payments and benefits due to the Participant under the Plan to
$1.00 less than the amount that would otherwise be considered a
parachute payment within the meaning of
Section 280G of the Code. Any reduction pursuant to this
Section 13.2 shall be made in accordance with
Section 409A of the Code and the Treasury Regulations
promulgated thereunder.
ARTICLE XIV
AMENDMENT OR TERMINATION OF THE PLAN
14.1 In General. The Board or the Committee may
amend or terminate the Plan at any time; provided, however, that
no amendment or termination shall be made without the approval
of the Companys stockholders to the extent that
(a) the amendment materially increases the benefits
accruing to Participants under the Plan, (b) the amendment
materially increases the aggregate number of Shares authorized
for grant under the Plan (excluding an increase in the number of
Shares that may be issued under the Plan as a result of
Section 2.4), (c) the amendment materially modifies
the requirements as to eligibility for participation in the
Plan, or (d) such approval is required by any law,
regulation or stock exchange rule.
14.2 Repricing. Except for adjustments made
pursuant to Section 2.4 of the Plan, in no event may the
Board or the Committee amend the terms of an outstanding Award
to reduce the exercise price of an outstanding Option or Stock
Appreciation Right or cancel an outstanding Option or Stock
Appreciation Right in exchange for cash, other Awards or Options
or Stock Appreciation Rights with an exercise price that is less
than the exercise price of the original Option or Stock
Appreciation Right without stockholder approval.
ARTICLE XV
TRANSFERABILITY
15.1 Except as described in Section 15.2 or as
provided in a related Award Agreement, an Award may not be sold,
transferred, pledged, assigned or otherwise alienated or
hypothecated, except by will or the laws of descent and
distribution and, during a Participants lifetime, may be
exercised only by the Participant or the Participants
guardian or legal representative. Notwithstanding any provision
contained in this Article XV, no Award may be transferred
by a Participant for value or consideration.
15.2 Unless otherwise specifically designated by the
Participant in writing, a Participants beneficiary under
the Plan shall be the Participants spouse or, if no spouse
survives the Participant, the Participants estate.
ARTICLE XVI
MISCELLANEOUS
16.1 No Right to Continued Service or to
Awards. The granting of an Award under the Plan shall
impose no obligation on the Company or any Affiliate to continue
the employment or services of a Participant or interfere with or
limit the right of the Company or any Affiliate to terminate the
services of any Employee, Director or Consultant at any time. In
addition, no Employee, Director or Consultant shall have any
right to be granted any Award, and there is no obligation for
uniformity of treatment of Participants. The terms and
conditions of Awards and the Committees interpretations
and determinations with respect thereto need not be the same
with respect to each Participant.
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16.2 Tax Withholding.
(a) The Company or an Affiliate, as applicable, shall have
the power and the right to deduct, withhold or collect any
amount required by law or regulation to be withheld with respect
to any taxable event arising with respect to an Award granted
under the Plan. This amount may, as determined by the Committee
in its sole discretion, be: (i) withheld from other amounts
due to the Participant; (ii) withheld from the value of any
Award being settled or any Shares being transferred in
connection with the exercise or settlement of an Award;
(iii) withheld from the vested portion of any Award
(including the Shares transferable thereunder), whether or not
being exercised or settled at the time the taxable event arises;
or (iv) collected directly from the Participant.
(b) Subject to the approval of the Committee, a Participant
may elect to satisfy the withholding requirement, in whole or in
part, by having the Company or an Affiliate, as applicable,
withhold Shares having a Fair Market Value on the date the tax
is to be determined equal to the minimum statutory total tax
that could be imposed on the transaction; provided that such
Shares would otherwise be distributable to the Participant at
the time of the withholding and if such Shares are not otherwise
distributable at the time of the withholding, provided that the
Participant has a vested right to distribution of such Shares at
such time. All such elections shall be irrevocable and made in
writing and shall be subject to any terms and conditions that
the Committee, in its sole discretion, deems appropriate.
16.3 Requirements of Law. The grant of Awards
and the issuance of Shares shall be subject to all applicable
laws, rules and regulations (including applicable federal and
state securities laws) and to all required approvals of any
governmental agencies or national securities exchange, market or
other quotation system. Without limiting the foregoing, the
Company shall have no obligation to issue Shares under the Plan
prior to (a) receipt of any approvals from any governmental
agencies or national securities exchange, market or quotation
system that the Committee deems necessary and
(b) completion of registration or other qualification of
the Shares under any applicable federal or state law or ruling
of any governmental agency that the Committee deems necessary.
16.4 Legends. Certificates for Shares delivered
under the Plan may be subject to such stock transfer orders and
other restrictions that the Committee deems advisable under the
rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange or other recognized
market or quotation system upon which the Shares are then listed
or traded, or any other applicable federal or state securities
law. The Committee may cause a legend or legends to be placed on
any certificates issued under the Plan to make appropriate
reference to restrictions within the scope of this
Section 16.4.
16.5 Uncertificated Shares. To the extent that
the Plan provides for the issuance of certificates to reflect
the transfer of Shares, the transfer of Shares may be effected
on a noncertificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.
16.6 Governing Law. The Plan and all Award
Agreements shall be governed by and construed in accordance with
the laws of (other than laws governing conflicts of laws) the
State of Ohio, except to the extent that the laws of the state
in which the Company is incorporated are mandatorily applicable.
16.7 No Impact on Benefits. Awards are not
compensation for purposes of calculating a Participants
rights under any employee benefit plan that does not
specifically require the inclusion of Awards in calculating
benefits.
16.8 Rights as a Stockholder. Except as
otherwise provided in the Plan or in a related Award Agreement,
a Participant shall have none of the rights of a stockholder
with respect to Shares covered by an Award unless and until the
Participant becomes the record holder of such Shares.
16.9 Successors and Assigns. The Plan shall be
binding on all successors and assigns of the Company and each
Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or
representative of the Participants creditors.
16.10 Section 409A of the Code.
(a) Awards granted pursuant to the Plan that are subject to
Section 409A of the Code, or that are subject to
Section 409A but for which an exception from
Section 409A of the Code applies, are intended to comply
with or be
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exempt from Section 409A of the Code and the Treasury
Regulations promulgated thereunder, and the Plan shall be
interpreted, administered and operated accordingly.
(b) If a Participant is determined to be a specified
employee (within the meaning of Section 409A of the
Code and as determined under the Companys policy for
determining specified employees), the Participant shall not be
entitled to payment or to distribution of any portion of an
Award that is subject to Section 409A of the Code (and for
which no exception applies) and is payable or distributable on
account of the Participants separation from
service (within the meaning of Section 409A of the
Code) until the expiration of six months from the date of such
separation from service (or, if earlier, the Participants
death). Such Award, or portion thereof, shall be paid or
distributed on the first business day of the seventh month
following such separation from service.
(c) Nothing in the Plan shall be construed as an
entitlement to or guarantee of any particular tax treatment to a
Participant, and none of the Company, its Affiliates, the Board
or the Committee shall have any liability with respect to any
failure to comply with the requirements of Section 409A of
the Code.
16.11 Foreign Employees. Without amending the
Plan, the Committee may grant Awards to Participants who are
foreign nationals on such terms and conditions different from
those specified in the Plan as may in the judgment of the
Committee be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of
such purposes, the Committee may make such modifications,
amendments, procedures, and the like as may be necessary or
advisable to comply with provisions of laws of other countries
in which the Company or its Subsidiaries operate or have
employees
16.12 Savings Clause. In the event that any
provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the
remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision
had not been included.
ARTICLE XVII
EFFECTIVE DATE AND TERM OF THE PLAN
This Plan shall be effective upon its approval by the
stockholders. No Incentive Stock Options shall be granted under
the Plan after October 14, 2020, and no other Awards shall
be granted under the Plan after the tenth anniversary of the
effective date of the Plan or, if earlier, the date the Plan is
terminated. Notwithstanding the foregoing, the termination of
the Plan shall not preclude the Company from complying with the
terms of Awards outstanding on the date the Plan terminates.
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A. SCHULMAN, INC.
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Shareowner ServicesSM
P.O. Box 64945
St. Paul, MN 55164-0945 |
Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week
Your phone or Internet vote authorizes the named
proxies to vote your shares in the same manner as if you
marked, signed and returned your proxy.
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INTERNET www.eproxy.com/shlm
Use the Internet to vote your proxy until 11:25 p.m. (ET) on December 8, 2010. |
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PHONE 1-800-560-1965
Use a touch-tone telephone to vote your proxy until 11:25 p.m. (ET) on December 8, 2010. |
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MAIL Mark, sign and date your proxy
and return it in the postage-paid envelope provided. |
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING
TO BE HELD ON DECEMBER 9, 2010
The proxy statement, Form 10-K for the year ended August 31, 2010 and the 2010 annual report to stockholders are available at
http://www.proxydocs.com/shlm.
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY.
Please detach here
The Board of Directors Recommends a Vote FOR Items 1, 2, 3, and 4.
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1. Election of directors:
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01
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Eugene R. Allspach
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07
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Lee D. Meyer
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o
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Vote FOR
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o
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Vote WITHHELD |
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02
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Gregory T. Barmore
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08
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James A. Mitarotonda
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all nominees
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from all nominees |
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03
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David G. Birney
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09
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Ernest J. Novak, Jr.
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(except as marked) |
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04
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Howard R. Curd
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10
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Dr. Irvin D. Reid
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05
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Joseph M. Gingo
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11
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John B. Yasinsky
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06
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Michael A. McManus, Jr.
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(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
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2.
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The ratification of the selection of
PricewaterhouseCoopers LLP as A. Schulmans
independent registered public accounting firm for the fiscal year ending August 31, 2011.
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o
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For
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o
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Against
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o
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Abstain |
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3.
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The adoption and approval of A. Schulmans 2010 Value Creation Rewards Plan.
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For
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Against
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Abstain |
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4.
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The transaction of any other business as may properly come before the stockholders at the Annual Meeting and any adjournments thereof.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
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Address Change? Mark Box o Indicate changes below:
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Date
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Signature(s) in Box
Please sign exactly as your name(s)
appears on proxy. If held in joint tenancy, all persons should sign. Trustees, adminis-trators, etc., should
include title and authority. Corporations should provide full name of corporation and title of authorized officer
signing the proxy.
A. SCHULMAN, INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, December 9, 2010
10:00 A.M. Local Time
The Hilton Inn West
3180 West Market Street
Akron, Ohio 44333
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A. Schulman, Inc.
3550 West Market Street
Akron, Ohio 44333
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Proxy |
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF A. SCHULMAN, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 9, 2010.
The undersigned hereby appoints JOSEPH M. GINGO,
PAUL F. DESANTIS, and DAVID C. MINC and each of them as proxies, each with the full power to appoint his substitute,
and hereby authorizes them to represent and to vote all of the shares of common stock of A. Schulman, Inc. the
undersigned is entitled to vote at the Annual Meeting of Stockholders of A. Schulman, Inc. to be held on December 9,
2010 and at any adjournment(s) and postponement(s) thereof, in the manner specified on this proxy and as fully as the
undersigned could do if personally present at the meeting. Receipt of a separate notice of annual meeting and proxy
statement is acknowledged by return of this proxy or by voting via telephone or Internet in accordance with the
instructions on the other side of this proxy.
You are encouraged to specify your choices by marking
the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the
Board of Directors recommendations. If you vote by telephone or Internet you do not need to mail back this proxy.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY,
USING THE ENCLOSED ENVELOPE OR VOTE VIA TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE OTHER SIDE OF
THIS PROXY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF A. SCHULMAN, INC. THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED
FOR EACH OF THE DIRECTOR NOMINEES AND FOR EACH PROPOSAL.
(Continued and to be voted on reverse side.)