UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
Filed by
the Registrant T
Filed by
a Party other than the Registrant £
Check the
appropriate box:
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£
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Preliminary
Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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T
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Definitive
Proxy Statement
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£
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Definitive
Additional Materials
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£
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Soliciting
Material Pursuant to §240.14a-12
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HOUSTON
WIRE & CABLE
COMPANY
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(Name
of Registrant as Specified in its Charter)
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(Name
of Person(s) Filing Proxy Statement, if Other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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T
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No
fee required.
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£
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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£
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Fee
paid previously with preliminary
materials.
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£
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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Date
Filed:
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HOUSTON
WIRE & CABLE COMPANY
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD MAY 8, 2009
To Our
Stockholders:
The 2009
annual meeting of stockholders of Houston Wire & Cable Company will be held
at our corporate headquarters, 10201 North Loop East, Houston, Texas 77029
on Friday, May 8, 2009, at 8:30 a.m., Central Time. The 2009 annual
meeting of stockholders is being held for the following purposes:
1. To
elect seven directors to serve on the Board of Directors until the 2010 annual
meeting of stockholders and until their successors have been elected and
qualified (Proposal No. 1);
2. To
ratify the selection of Ernst & Young LLP as the Company’s independent
registered public accounting firm for the year ending December 31, 2009
(Proposal No. 2); and
3. To
transact such other business as may properly come before the annual meeting and
any adjournment or postponement thereof.
Only
stockholders of record at the close of business on March 9, 2009 are entitled to
vote at the meeting or at any postponement or adjournment thereof.
Please
act promptly to vote your shares with respect to the proposals described
above. You may vote your shares by marking, signing, dating and
mailing the enclosed proxy card. You may also vote by telephone or
through the Internet by following the instructions set forth on the proxy card.
If you attend the annual meeting, you may vote in person, even if you have
previously submitted a proxy.
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By
Order of the Board of Directors,
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Nicol G. Graham
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Vice
President, Chief Financial Officer, Treasurer and
Secretary
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March 27,
2009
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HOUSTON
WIRE & CABLE COMPANY
10201
North Loop East
Houston,
Texas 77029
PROXY
STATEMENT
This
proxy statement contains information related to the 2009 annual meeting of
stockholders of Houston Wire & Cable Company, a Delaware corporation (the
“Company,” “we” or “us”) that will be held at our corporate headquarters, 10201
North Loop East, Houston, Texas 77029 on Friday, May 8, 2009, at 8:30 a.m.,
Central Time, and at any postponements or adjournments thereof. We
are first mailing notice of availability of this proxy statement and the
accompanying proxy card and 2009 annual report to stockholders (which includes
our annual report on Form 10-K for the year ended December 31, 2008), on or
about March 27, 2009.
ABOUT THE MEETING
What is the purpose of this proxy statement?
The
purpose of this proxy statement is to provide information regarding matters to
be voted on at the 2009 annual meeting of our
stockholders. Additionally, it contains certain information that the
Securities and Exchange Commission (the “SEC”) requires us to provide annually
to stockholders. The proxy statement is also the document used by our
board to solicit proxies to be used at the 2009 annual
meeting. Proxies are solicited to give all stockholders of record an
opportunity to vote on the matters to be presented at the annual meeting, even
if they cannot attend the meeting. The board has designated
Charles A. Sorrentino and Scott L. Thompson as proxies, who
will vote the shares represented by proxies at the annual meeting in accordance
with the stockholders’ instructions.
What proposals will be voted on at the annual meeting?
Stockholders
will vote on the following proposals at the annual meeting:
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the
election of seven directors, each to serve until the next annual meeting
and until a successor is duly elected and qualified (Proposal No.
1);
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the
ratification of the selection of Ernst & Young LLP as the Company’s
independent registered public accounting firm (Proposal No. 2);
and
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any
other business properly coming before the annual meeting and any
adjournment or postponement
thereof.
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Who is entitled to vote?
Only
stockholders of record at the close of business on the record date, March 9,
2009, are entitled to receive notice of the annual meeting and to vote the
shares of common stock that they held on that date at the meeting, or any
postponement or adjournment of the meeting. If your shares are held
in “street name,” please refer to the information forwarded to you by your bank,
broker or other holder of record to see what you must do to vote your
shares.
A
complete list of stockholders entitled to vote at the annual meeting will be
available for examination by any stockholder at our corporate headquarters,
10201 North Loop East, Houston, Texas 77029, during normal business hours
for a period of ten days before the annual meeting and at the annual
meeting.
What is the difference between a stockholder of record and a
beneficial holder of shares?
If your
shares are registered directly in your name with our transfer agent, American
Stock Transfer and Trust Company, you are considered a stockholder of record
with respect to those shares. If this is the case, the stockholder
proxy materials have been sent or provided directly to you by us.
If your
shares are held in a stock brokerage account or by a bank or other nominee (also
known as held “in street name”), you are considered the “beneficial holder” of
the shares, and your brokerage firm, bank or other nominee is the stockholder of
record. If this is the case, the proxy materials have been forwarded
to you by your brokerage firm, bank or other nominee. As the
beneficial holder, you have the right to direct your broker, bank or other
nominee how to vote your shares. Please contact your broker, bank, or
other nominee for instructions on how to vote any shares you beneficially
own.
Who can attend the meeting?
All
stockholders of record as of March 9, 2009, or their duly appointed proxies, may
attend the meeting. If you hold your shares in “street name,” you
will need to bring a copy of a brokerage statement reflecting your stock
ownership as of the record date and check in at the registration desk at the
meeting.
What constitutes a quorum?
A quorum
of stockholders is necessary to hold the annual meeting. The presence
at the meeting, in person or by proxy, of the holders of a majority of the
shares of common stock outstanding on the record date will constitute a
quorum. As of the record date, 17,642,552 shares of our common stock
were outstanding. Shares covered by proxies received but marked as
abstentions will be considered present at the meeting for purposes of
establishing a quorum.
How do I vote?
You may
vote in person at the meeting or by proxy by any of the following
methods:
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Telephoning
the toll-free number listed on the proxy
card;
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Using
the Internet site listed on the proxy card;
or
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Marking,
dating, signing and returning the enclosed proxy
card.
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We
recommend that you vote by proxy even if you plan to attend the meeting so that
we will know as soon as possible that enough votes will be present for us to
hold the meeting. If you vote by proxy, your shares will be voted as
you direct on the proxy card or by telephone or via the Internet. If
you are a stockholder of record and attend the meeting, you may vote at the
meeting or deliver your completed proxy card in person, even if you previously
sent in a proxy card or voted by telephone or via the Internet.
If your
shares are held in “street name,” please refer to the information forwarded to
you by your bank, broker or other holder of record to see what you must do in
order to vote your shares. If you are a “street name” stockholder and
you wish to vote in person at the meeting, you will need to obtain a proxy from
the institution that holds your shares and present it to the inspector of
elections with your ballot when you vote at the annual meeting.
Can I change my vote after I give my proxy?
You can
revoke your proxy, whether it was given by telephone, Internet or mail, before
it is voted by:
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Delivering
to our Secretary at the address on the first page of this proxy statement
a written notice of revocation of your proxy before or at the annual
meeting and prior to voting;
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Delivering
a new proxy bearing a later date by telephone, via the Internet or by
submitting a duly executed proxy card;
or
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Voting
in person at the annual meeting.
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The last
vote you submit chronologically (by any means) will supersede all prior
votes.
If your
shares are held in “street name,” you may vote in person at the annual meeting
if you obtain a proxy from the record holder as described in the answer to the
previous question. The powers of the proxy holders with regard to
your shares will be suspended if you attend the meeting in person and so
request, although attendance at the meeting will not, by itself, revoke a
previously granted proxy.
How many votes are required for the proposals to pass?
Each
outstanding share entitles its holder to cast one vote on each matter to be
voted upon at the annual meeting. Directors are elected by a
plurality vote, meaning that the seven director nominees receiving the greatest
numbers of votes will be elected. The proposal to ratify the
selection of our independent registered public accounting firm requires the
approval of a majority of the votes present, in person or by proxy, at the
annual meeting and entitled to vote on the matter.
How are abstentions and broker non-votes treated?
If a
stockholder withholds authority to vote, or abstains from voting, on any
proposal, it will have the same effect as a vote “AGAINST” that
proposal.
Broker
non-votes with respect to any matter will have no effect on the outcome of the
vote on that matter. A “broker non-vote” occurs on a proposal when
shares held of record by a broker are present or represented at the meeting but
the broker is not permitted to vote on that proposal without instruction from
the beneficial owner of the shares and no instruction has been
given.
What if I do not specify a choice for a matter when returning a
proxy?
Stockholders
should specify their choice for each matter on the enclosed proxy. If
no specific instructions are given, validly submitted proxies will be voted
“FOR” the election of all seven nominees for director and “FOR” the ratification
of the appointment of Ernst & Young LLP as our independent registered public
accounting firm.
Will anyone contact me concerning this vote?
No
arrangements or contracts have been made or entered into with any solicitors as
of the date of this proxy statement, although we reserve the right to engage
solicitors if we deem them necessary. If done, such solicitations may
be made by mail, telephone, facsimile, e-mail or personal
interviews.
What are the board’s recommendations?
The
board’s recommendations, together with the description of each proposal, are set
forth in this proxy statement. In summary, the board unanimously
recommends that you vote:
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“FOR”
the election of each nominee for director (see page 8);
and
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“FOR”
the ratification of Ernst & Young LLP as our independent registered
public accounting firm (see page
24).
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What happens if additional matters are presented at the annual
meeting?
Other
than the two proposals described in this proxy statement, we are not aware of
any other business to be acted upon at the annual meeting. If you
grant a proxy, the persons named as proxy holders on the enclosed proxy card
will vote your shares on any additional matters properly presented for a vote at
the meeting as recommended by the board or, if no recommendation is given, in
their own discretion.
Who will tabulate and certify the vote?
Representatives
of Broadridge Financial Solutions, Inc. will tabulate the votes. A
representative of Schiff Hardin LLP, the Company’s legal counsel, will be the
inspector of elections.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth the beneficial ownership of shares of our common
stock for (i) each stockholder who is known by us to own beneficially more than
5% of the outstanding shares of our common stock, (ii) each of our directors,
(iii) each of our executive officers named in the Summary Compensation Table on
page 18 and (iv) all of our directors and executive officers as a
group. The information below is as of March 9, 2009, unless otherwise
indicated.
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Beneficial Owner
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Beneficial Ownership Common Stock
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5% Stockholders
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Number of Shares(1)
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Percentage
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Royce
& Associates, LLC (2)
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1414
Avenue of the Americas
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New
York, NY 10019
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2,649,975
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15.0%
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Capital
Research Global Investors (3)
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333
South Hope Street
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Los Angeles,
CA 90071-1406
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1,946,500
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11.0%
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River
Road Asset Management LLC (4)
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462
S. 4th Street, Suite 1600
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Louisville,
KY 40202
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1,724,962
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9.8%
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Barclays
Global Investors NA (5)
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400
Howard Street
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San Francisco, CA 94105
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1,032,018
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5.8%
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FMR
LLC (6)
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82
Devonshire Street
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Boston, Massachusetts 02109
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1,000,000
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5.7%
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Executive Officers and
Directors
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Charles A. Sorrentino
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1,304,438
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7.4%
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Nicol G. Graham(7)
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171,900
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*
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Michael T. Campbell
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6,044
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I. Stewart Farwell
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9,000
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Peter M. Gotsch
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10,746
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*
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Wilson B. Sexton
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60,000
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*
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William H. Sheffield
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5,000
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Scott L. Thompson
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15,000
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*
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All directors and executive officers as a group (8
persons)(7)
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1,582,127
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9.0%
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*
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Less
than 1%
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(1)
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The
information contained in this table was furnished to us by the individuals
named in the table and reflects the SEC’s definition of beneficial
ownership. Except as noted below, the nature of beneficial ownership for
shares shown in this table is sole voting and investment power (including
shares as to which spouses and minor children of the individuals covered
by this table have such power).
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(2)
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As
reported in an amendment to Statement on Schedule 13G filed with the SEC
on behalf of Royce & Associates, LLC on January 26,
2009.
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(3)
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As
reported in an amendment to Statement on Schedule 13G filed with the SEC
on behalf of Capital Research Global Investors, a division of Capital
Research and Management Company, on February 13, 2009. Capital
Research Global Investors is deemed to be the beneficial owner of these
shares as a result of Capital Research and Management Company acting as
investment adviser to various investment companies registered under
Section 8 of the Investment Company Act of
1940.
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(4)
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As
reported in an amendment to Statement on Schedule 13G filed with the SEC
on behalf of River Road Asset Management LLC on February 17,
2009. River Road Asset Management LLC had sole voting power
with respect to 1,405,072 shares.
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(5)
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As
reported in a Statement on Schedule 13G filed with the SEC on behalf of
Barclays Global Investors NA. and certain of its affiliates on
February 5, 2009. Barclays Global Investors NA. and its
affiliates had sole voting power with respect to 1,011,459
shares. Neither Barclays Global Investors NA nor any of its
affiliates individually had beneficial ownership of more than 5% of our
common stock.
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(6)
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As
reported in a Statement on Schedule 13G filed with the SEC on behalf of
FMR LLC and Edward C. Johnson 3d, its chairman, on
February 17, 2009. Fidelity Management & Research Company,
a wholly-owned subsidiary of FMR LLC, is deemed to be the beneficial owner
of these shares as a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment Company
Act of 1940.
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(7)
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Includes
60,772 shares owned by the Nicol Gordon Graham IRA—Chase
Bank and 6,875 shares issuable upon the exercise of options that could be
exercised within 60 days after March 9,
2009.
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PROPOSAL NO. 1 — ELECTION OF DIRECTORS
Our
amended and restated bylaws provide for each director to stand for election each
year at our annual meeting and to serve until the next annual meeting and until
a successor is duly elected and qualified.
The board
of directors approved the slate of seven nominees upon the recommendation of the
Nominating and Corporate Governance Committee. The board recommends
that the stockholders elect the nominees designated below to serve until our
annual meeting and until their successors are duly elected and
qualified. The nominees for election to the office of director, and
certain information with respect to their backgrounds, are set forth
below.
All seven
of the nominees named herein presently serve as members of the board of
directors.
It is the
intention of the persons named in the accompanying proxy card, unless otherwise
instructed, to vote to elect the nominees named below as the
directors. Each nominee has consented to serve as a director if
elected at this year’s annual meeting. In the event any nominee is
unable to serve as a director, discretionary authority is reserved to the board
to vote for a substitute. The board has no reason to believe that any
nominee named below will be unable to serve if elected.
Nominees standing for election to the Board
Charles A. Sorrentino,
age 64. Director since 1998.
President
and Chief Executive Officer of the Company
Mr. Sorrentino
joined the Company as President and Chief Executive Officer in
1998. Prior to joining us, Mr. Sorrentino served as President of
Pameco Corporation, a national heating, ventilation, air conditioning and
refrigeration distributor, from 1994 to 1998. Pameco was a $600
million distributor that was listed on the New York Stock Exchange following an
initial public offering in 1997 and was later merged into a larger
company. Prior to working with Pameco, Mr. Sorrentino served
with PepsiCo, Inc. for nine years. During this time, he held a
variety of positions, including Subsidiary President, Division Vice President
and Region Vice President. After completing college,
Mr. Sorrentino served twelve years with United Technologies (Sundstrand
Corporation), a NYSE-listed manufacturer of industrial, heating and air
conditioning components in a variety of engineering, sales, marketing and
executive management functions. Mr. Sorrentino earned an M.B.A.
from the University of Chicago and a B.S. in Mechanical Engineering from
Southern Illinois University. He also served in the United States
Marine Corps.
Michael T. Campbell,
age 64. Director since 2008.
Independent
Director
Mr. Campbell
has been a member of the Board of Advisors of Lee Truck Equipment, Inc. (d/b/a
Casper’s Truck Equipment) since July 2007. He performed project work
as a financial and accounting consultant both individually and with Resources
Connection from January 2003 to December 2005. He was an accounting
and auditing partner with Deloitte & Touche prior to his retirement in June
2001. Mr. Campbell is a Certified Public Accountant and holds an
M.B.A. degree from the University of Michigan and a B.S. degree from the United
States Military Academy. Mr. Campbell is recognized as
a Certified Professional Director by the National Association of Corporate
Directors in the United States.
I.
Stewart Farwell, age 68. Director since 2006.
Independent
Director
Prior to
his retirement in April 2008, Mr. Farwell held various positions at Rheem
Manufacturing Company, a leading manufacturer of central heating and cooling
products, including President of the Water Heater and HVAC Divisions, Chief
Operating Officer and most recently President & CEO. He now
serves as Special Advisor to Rheem's Board of Directors and Senior Management.
His prior experience also includes serving on the Board of various trade
associations and Chairman of the Gas Appliance Manufacturers
Association. Mr. Farwell is recognized as a Certified
Professional Director by the National Association of Corporate Directors in the
United States.
Peter M. Gotsch,
age 44. Director since 1997.
Managing
Member, Ellipse Capital LLC
Mr. Gotsch
has been the managing member of Ellipse Capital LLC, a private equity firm,
since June 2008. Prior to that, Mr. Gotsch was a member of Code
Hennessy & Simmons LLC, since 1989. He holds a B.A. degree from
St. Olaf College and an M.B.A. from Northwestern University. He
currently serves as the Chairman of the Board of The Hillman Companies, Inc. and
on the Board of Directors of Beacon Roofing Supply, Inc.
Wilson B. Sexton,
age 72. Director since 2006.
Chairman
of the Board, SCP Pool Corporation
Mr. Sexton
has been the Chairman of the Board and a director of SCP Pool Corporation, a
wholesale distributor of swimming pool supplies, equipment and leisure products,
since 1993. From January 1999 to May 2001, Mr. Sexton also
served as Chief Executive Officer of SCP Pool
Corporation. Mr. Sexton is a Certified Public Accountant and
holds a B.B.A. degree from Southern Methodist University. He is
currently on the Board of Directors of SCP Pool Corporation and Beacon Roofing
Supply, Inc.
William H. Sheffield,
age 60. Director since 2006.
Independent
Director
Mr. Sheffield
is a corporate director and serves on the boards of directors of Ontario Power
Generation Inc., Canada Post Corporation, Corby Distilleries Ltd. and Velan
Inc. Mr. Sheffield served as Chief Executive Officer of Sappi
Fine Paper from 2001 until 2003. He holds an MBA and a BSc, and is
recognized as a Certified Professional Director by the National Association of
Corporate Directors in the United States and the Institute of Corporate
Directors in Canada.
Scott L. Thompson,
age 50. Director since 2006.
President
& CEO, Dollar Thrifty Automotive Group
Mr. Thompson
has been the President & CEO and a Director of Dollar Thrifty Automotive
Group, a company providing worldwide car rental services, since October
2008. Mr. Thompson was a founder of Group 1 Automotive, Inc, a
specialty retailer in the automotive retailing industry, where he served as the
CFO and Treasurer from 1996 until 2004. In addition to non-executive
Chairman of the Board for Houston Wire & Cable Company, he also serves on
the Board of Directors of Conn's, Inc., a specialty retailer of electronics and
home appliances. Mr. Thompson is a Certified Public Accountant
and is recognized as a Certified Professional Director by the National
Association of Corporate Directors in the United States.
Board Recommendation and Stockholder Vote Required
The board
of directors recommends a vote “FOR” the election of the nominees named above
(Proposal No. 1 on the accompanying proxy card).
The seven
nominees who receive the greatest number of votes will be elected
directors.
CORPORATE GOVERNANCE AND BOARD COMMITTEES
Board Composition
Our board
of directors currently consists of seven directors. Each director is
elected for a term of one year and serves until a successor is duly elected and
qualified or until his or her death, resignation or removal. There
are no family relationships between any of our directors or executive
officers. Our executive officers are elected by and serve at the
discretion of the board of directors.
Director Independence
The board
of directors has determined that each person who served as a director in 2008,
and each director nominee for 2009, except Mr. Sorrentino is “independent”
under Nasdaq Marketplace Rule 4200(a)(15). Under Rule 4200(a)(15), a
director is considered independent as long as he or she does not have a
relationship with the Company or management which would interfere with the
exercise of independent judgment in carrying out the director’s
responsibilities. The Nasdaq Marketplace Rules also enumerate certain
relationships which preclude a finding of independence and generally provide
that an individual cannot be considered independent if, among other things, he
or she is a current officer or other employee of the issuer or directly or
indirectly receives certain significant payments from the issuer other than in
his or her capacity as a director or board committee member.
Board Meetings
The board
met six times during 2008. All persons who were directors during 2008
attended at least 75% of these meetings and meetings of committees on which they
served. Absent special circumstances, each director is expected to
attend the annual meeting of stockholders. All of the directors
attended the 2008 annual meeting of stockholders.
Executive Sessions
The
independent directors meet in executive sessions separate from management at
least two times a year. The independent directors met in executive
sessions four times during 2008.
Committees Established by the Board of Directors
The board
has three standing committees: (1) Audit Committee; (2) Nominating and Corporate
Governance Committee; and (3) Compensation Committee.
Audit
Committee. The Audit Committee consists of
Messrs. Campbell, Thompson, Gotsch, and
Sexton. Mr. Thompson served as the Chairperson until March 2009,
when Mr. Campbell was elected Chairperson. Mr. Thompson
remains a committee member. The board has determined that each member
is independent for purposes of Rule 4200(a)(15) of the Nasdaq Marketplace Rules
and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934. Each of
the Audit Committee members is financially literate as determined by our board
in its business judgment. The board has also determined that
Mr. Campbell and Mr. Thompson each is an “audit committee financial
expert” as such term is defined under the applicable SEC rules.
The Audit
Committee met six times in 2008. In August 2008, the board updated
the Audit Committee charter, a copy of which may be found by accessing the
“Investor Relations” section of our website at http://www.houwire.com and
clicking on the “Corporate Governance” link.
The
principal duties and responsibilities of the Audit Committee are to assist the
board in its oversight of:
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the
accounting and financial reporting processes of the Company and the audits
of the financial statements of the
Company;
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the
independent auditors’ qualifications and independence;
and
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the
performance of the independent
auditors.
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Our Audit
Committee is also responsible for:
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maintaining
free and open communication between the committee, independent auditors,
and management of the Company;
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•
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reviewing
and appraising the fairness of related party transactions;
and
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preparing
the report required to be prepared pursuant to the rules of the SEC for
inclusion in the Company’s annual proxy
statement.
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The Audit
Committee has the resources and authority appropriate to discharge its duties
and responsibilities, including the authority to select, retain, terminate, and
approve the fees and other retention terms of counsel, accountants or other
experts and advisors, as it deems necessary or appropriate. See the
“Report of the Audit Committee” on page 22.
Nominating and
Corporate Governance Committee. The Nominating and Corporate
Governance Committee consists of Messrs. Farwell, Sheffield, and
Thompson. Mr. Farwell serves as the Chairperson. The
board has determined that all committee members are independent for purposes of
Rule 4200(a)(15) of the Nasdaq Marketplace Rules.
The
Nominating and Corporate Governance Committee met five times in
2008. The board updated the Nominating and Corporate Governance
Committee charter in August 2008, and a copy of the updated charter may be found
by accessing the “Investor Relations” section of our website at http://www.houwire.com and
clicking on the “Corporate Governance” link.
The
principal duties and responsibilities of the Nominating and Corporate Governance
Committee are to:
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identify
persons that the Committee believes are qualified to be directors of the
Company and consider and evaluate other candidates for director brought to
the attention of the Committee, including persons nominated by
stockholders in accordance with the nomination procedures specified in the
Company’s By-laws or otherwise recommended by
stockholders;
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recommend
to the board (a) the nominees for election as directors at each annual
meeting of stockholders or at any special meeting of stockholders at which
directors are to be elected and (b) the persons to be appointed by the
board to fill any vacancy on the board (including any vacancy resulting
from an increase in the size of the
board);
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review
the committee structure of the board and the membership of the board
committees, and recommend to the board nominees for appointment to each of
the committees;
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discuss
and recommend to the board, after consultation with the Chairman of the
Company’s Compensation Committee, an appropriate successor in the event of
the unexpected death, incapacity or resignation of the CEO (with the
understanding that the Compensation Committee is responsible for reviewing
and making recommendations to the board on management development and
succession planning in all other
circumstances);
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review
and reassess, at least annually, the adequacy of the Company’s Corporate
Governance Guidelines and recommend to the board for approval any changes
that the Committee deems necessary or
appropriate;
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review
any proposals submitted by stockholders for inclusion in the Company’s
proxy statement and recommend to the board any action to be taken in
response to such proposals; and
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oversee
the annual evaluation of the board.
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The
criteria that the Nominating and Corporate Governance Committee establishes may
include a candidate’s business and financial experience and acumen, integrity,
willingness to devote the necessary time and energy to fulfill the duties and
responsibilities of a director, independence and other criteria and
qualifications as the Nominating and Corporate Governance Committee determines
to be appropriate under the circumstances. The Nominating and
Corporate Governance Committee will consider nominees for our board of directors
recommended by stockholders, using the same criteria as for other
candidates.
The
Nominating and Corporate Governance Committee has the authority to retain a
search firm to be used to identify director candidates. The
Nominating and Corporate Governance Committee has the authority to retain and
terminate any such search firm, including authority to approve the firm’s fees
and other retention terms. The Nominating and Corporate Governance
Committee also has authority to retain other advisors. The Company
will provide for appropriate funding, as determined by the Nominating and
Corporate Governance Committee, for payment of compensation to any search firm
or other advisors.
Stockholder Recommendations for
Director Nominations. As noted above, the Nominating and
Corporate Governance Committee considers and establishes procedures regarding
recommendations for nomination to the board, including nominations submitted by
stockholders. For information on how to nominate a person for
election as a director at the 2010 annual meeting, please see the discussion
under the heading “Stockholder Proposals and Nominations for 2010 Annual
Meeting.” The Nominating and Corporate Governance Committee will
evaluate all potential candidates in the same manner, regardless of the source
of the recommendation. Based on the information provided to the
Nominating and Corporate Governance Committee, it will make an initial
determination whether to conduct a full evaluation of a candidate. As
part of the full evaluation process, the Nominating and Corporate Governance
Committee may conduct interviews, obtain additional background information and
conduct reference checks of the candidate, among other things. The
Nominating and Corporate Governance Committee may also ask the candidate to meet
with management and other members of the board.
Compensation
Committee. The Compensation Committee consists of
Messrs. Gotsch, Sexton, and Sheffield. Mr. Gotsch serves as
the Chairperson. The board has determined that all committee members
are (i) independent for purposes of Rule 4200(a) (15) of the Nasdaq Marketplace
Rules, (ii) “non-employee directors” as defined under the Rule 16b-3 of the
Securities Exchange Act of 1934, and (iii) “outside directors” as defined by
Section 162(m) of the Internal Revenue Code.
The
Compensation Committee met five times in 2008. The Compensation
Committee charter, as adopted in June 2006, may be found by accessing the
“Investor Relations” section of our website at http://www.houwire.com and
clicking on the “Corporate Governance” link.
The
principal duties and responsibilities of the Compensation Committee are as
follows:
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make
recommendations to the Board with respect to the CEO’s compensation
level;
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consider
the Company’s performance and relative shareholder return, the value of
similar incentive awards to the CEOs at comparable companies, and the
awards given to the Company’s CEO in past years when determining the
long-term component of the CEO’s
compensation;
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review
the CEO’s recommendations on compensation of the executive officers of the
Company and make recommendations to the Board with respect thereto and
with respect to the Company’s major compensation policies and practices;
and
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administer
and review the Houston Wire & Cable Company 2006 Stock Plan, including
approving the number and distribution of options under such
plan.
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The
Compensation Committee has the authority to delegate any of its responsibilities
to subcommittees as it deems appropriate, provided the subcommittees are
composed entirely of independent directors. The Compensation
Committee also may retain a compensation consultant or other advisors to assist
in the evaluation of CEO or executive officer compensation. The
Compensation Committee has authority to retain and terminate any such consulting
firm. The Company will provide for appropriate funding, as determined
by the Compensation Committee, for payment of compensation to any consulting
firm or other advisors employed by the Compensation Committee.
The CEO
may not be present during any deliberations on his compensation.
Compensation Committee Interlocks and Insider
Participation
The
Compensation Committee consists of Messrs. Gotsch, Sexton and Sheffield.
None of the members of the Compensation Committee is or ever was an officer or
employee of the Company or any of its subsidiaries.
Stock
Ownership Guidelines
The board of directors has adopted
stock ownership guidelines encouraging each director to invest an amount equal
to three times the director’s annual cash retainer in the Company’s common
stock.
Communications with Directors
Stockholders
may communicate any concerns they have regarding the Company, including
recommendations of candidates for director, to the board of directors or to any
member of the board via web form by accessing the investor relations section of
our website at
http://www.houwire.com and clicking on the “Corporate Governance” and
“Contact Our Board” links, through our Corporate Governance Hotline at
866-373-6359 or by writing to them at the following address:
Houston
Wire & Cable Company
Attention:
[Board of Directors]/[Board Member]
c/o
Investor Relations Coordinator
10201
North Loop East
Houston,
TX 77029
Communications
directed to the independent directors should be sent to the attention of the
Chairman of the Nominating and Corporate Governance Committee, c/o the Investor
Relations Coordinator, at the address indicated above.
Any
stockholder or other interested person who has a particular concern regarding
accounting, internal accounting controls, or other audit matters that he or she
wishes to bring to the attention of the Audit Committee may communicate those
concerns to the Audit Committee or its Chairman, using the address indicated
above.
A
majority of the independent directors of the Company has approved procedures
with respect to the receipt, review and processing of, and any response to,
written communications sent by stockholders and other interested persons to the
board of directors. Any written communication regarding accounting, internal
accounting controls, or other matters are processed in accordance with
procedures adopted by the Audit Committee.
Code of Business Conduct
The board
has adopted a Code of Business Conduct, most recently updated in November 2008,
a copy of which may be found by accessing the investor relations section of our
website at
http://www.houwire.com and clicking on the “Corporate
Governance” link. Under the Code of Business Conduct, we insist on
honest and ethical conduct by all of our directors, officers, employees and
other representatives, including the following:
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Our
directors, officers and employees are required to avoid situations in
which their personal, family or financial interests conflict with those of
the Company;
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Our
directors, officers and employees must refrain from engaging in any
activities that compete with the Company, or which may compromise its
interests;
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Our
directors, officers and employees must refrain from taking any business or
investment opportunity discovered in the course of employment with or
service to the Company that the director, officer or employee knows, or
should have or has reason to know, would benefit the Company;
and
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Our
directors, officers and employees must comply with all applicable
governmental laws, rules and
regulations.
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We are
also committed to ensuring that all disclosures in reports and documents that
the Company files with the SEC, as well as other public communications made by
the Company, are full, fair, accurate, timely and
understandable. Further, we will comply with all laws, rules and
regulations that are applicable to our activities and expect all of our
directors, officers and employees to obey the law. Any violation of
applicable law or any deviation from the standards embodied in the Code of
Business Conduct will result in appropriate corrective and disciplinary action,
up to and including termination of employment. Any director, officer
or employee who in good faith believes or suspects that any portion of the Code
of Business Conduct has been violated should report such violation to the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have
entered into various restricted securities agreements with five current
employees, including Charles A. Sorrentino, whose agreement is dated
December 31, 1998 and amended June 28, 2000 and April 26, 2007, and
Nicol G. Graham, whose agreement is dated September 11,
1997. The agreements apply to any shares of our stock that the
employees own or acquire, including shares issued upon exercise of
options. These agreements provide Messrs. Sorrentino and Graham
the rights to include their shares of our common stock in future registration
statements that we file. The agreements with Messrs. Sorrentino
and Graham may be terminated upon the mutual agreement of the Company, Code,
Hennessy & Simmons II, L.P. and the executive or a holder of 70% or more of
the securities issued to the executive. In addition, the agreements
terminate automatically upon a sale of the Company, other than in a public
offering. The agreements contain rights in favor of us and Code,
Hennessy & Simmons II, L.P. to repurchase shares held by these employees
upon termination of employment.
DIRECTOR COMPENSATION
Independent
members of the board of directors, other than the chairman of the board, receive
an annual retainer of $30,000, paid quarterly. Each independent
director, other than the chairman of the board, is also entitled to receive
$1,500 for each board meeting attended and $1,000 for each committee meeting,
with half the applicable amount paid in connection with a telephonic
meeting. The chairman of each of the Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee is entitled to
receive an additional $5,000 per year. The chairman of the board
receives an annual retainer of $70,000, but receives no additional fee for any
board or committee meeting that he or she attends. All fees may be
paid in cash or shares of our common stock, at the choice of the
director. Mr. Sorrentino does not receive any compensation for
his service as a director.
In
addition, upon election to the board, each independent director receives a
one-time grant of an option exercisable for 15,000 shares of our common
stock. Upon re-election, each independent director also receives an
annual grant of an option exercisable for 5,000 shares or, in the case of the
chairman of the board, 10,000 shares. All directors’ options become
exercisable one year after the date of grant. Exercise prices are set
at fair market value at the date of grant. Options may be forfeited
in the event the director terminates, other than by retirement, his or her
relationship with us.
We
reimburse members of our board of directors for any out-of-pocket expenses they
incur in connection with services provided as directors. The
Nominating and Corporate Governance Committee has adopted a policy encouraging
each director to devote at least one day each year to director education, and we
pay for the cost of attending continuing education programs, up to $5,000 per
director per year. Perquisites paid or provided to directors in 2008 were
significantly less than the SEC’s minimum threshold for disclosure
($10,000).
The
following table sets forth all compensation paid to each of our non-employee
directors in 2008:
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Name
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Fees
Earned or
Paid in Cash
($)
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Option
Awards
($)(1)
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Total
($)
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Michael T. Campbell
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39,000
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93,484
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132,484
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I.
Stewart Farwell
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48,250
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54,253
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102,503
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Peter M. Gotsch
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35,750
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31,161
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66,911
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Wilson B. Sexton
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46,750
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54,253
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101,003
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William H. Sheffield
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47,750
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54,253
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102,003
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Scott L. Thompson
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75,000
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85,414
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160,414
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____________
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(1)
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This
column shows the dollar amount we recognized for financial statement
reporting purposes in 2008 in accordance with SFAS No. 123(R) for all
option awards that have been granted to each of our non-employee
directors. See note 8 of the Notes to our Consolidated
Financial Statements contained in our Annual Report on Form 10-K for the
year ended December 31, 2008 for a discussion of the assumptions we made
in the valuation of these options. Each of
Messrs. Farwell, Sexton, Sheffield and Gotsch, upon their re-election
to the board at the annual meeting of stockholders on May 8, 2008,
received an option to purchase 5,000 shares of our common stock at an
exercise price of $17.36 per share. Mr. Thompson received an option
to purchase 10,000 shares for being elected as chairman of the board and
Mr. Campbell received an option to purchase 15,000 shares for being
elected to the board. The grant date fair value of each such director’s
2008 option award, computed in accordance with SFAS No. 123(R) and the
number of stock options held at March 9, 2009 by non-employee directors
was:
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Name
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2008
Grant Date Fair Value of Options ($)
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Cumulative
Stock Options Held (#)
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Michael
T. Campbell
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143,822
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15,000
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I.
Stewart Farwell
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47,941
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25,000
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Peter
M. Gotsch
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47,941
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5,000
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Wilson
B. Sexton
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47,941
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25,000
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William
H. Sheffield
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47,941
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25,000
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Scott
L. Thompson
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95,881
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10,000
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(*)
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*
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In
addition, Mr. Thompson gave 20,000 options to his two adult children.
Mr. Thompson disclaims beneficial ownership of these
options.
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Prior to
August 2007, Mr. Gotsch was not considered to be independent, because of
his relationship with a significant stockholder, Code, Hennessy & Simmons
II, L.P., and did not receive any directors’ fees or
options. Following the disposition by Code, Hennessy & Simmons
II., L.P. of all of its shares of Company common stock, Mr. Gotsch was
determined to be independent and earned director fees and received
options.
EXECUTIVE COMPENSATION
Compensation
Discussion and Analysis
Our
Compensation Committee is empowered to review the chief executive officer’s
recommendations on compensation of our senior management and to make
recommendations regarding major compensation policies and practices. The
Compensation Committee reports its recommendations to the full board of
directors for approval and authorization. The Compensation Committee is also
responsible for setting the annual compensation of the chief executive officer
and administering our stock plans, including approving the number and
distribution of options under the plans. The committee is charged with
recommending, for the approval of the full board of directors, the annual
compensation and compensation procedures for our senior management, including
our executive officers.
Objectives
of Compensation Program
Our
compensation program aims to attract and retain qualified, energetic employees
who are enthusiastic about our mission and culture. A further objective of our
compensation program is to provide incentives and reward each employee for his
or her contribution to the Company. In addition, we strive to promote an
ownership mentality among key leadership and the board of directors. Finally, we
endeavor to ensure that our compensation program is perceived as fundamentally
fair to all stakeholders.
What
Our Compensation Program is Designed to Reward
Our
compensation program is designed to reward each employee’s contribution to the
Company. In measuring an officer’s contributions, the Compensation Committee
considers a number of factors, including our profitable growth and the
achievement of financial performance targets. The total compensation package for
each member of our senior management includes incentive compensation that is
based primarily on the achievement of financial performance targets. Operating
income is the primary basis for determining incentive compensation, and revenue
growth and inventory turns are secondary factors. In its simplest definition,
operating income is equivalent to operating earnings before interest and taxes.
The Compensation Committee establishes operating income, revenue and inventory
turns targets for the upcoming fiscal year based in part upon the incremental
improvement in those measures over the prior fiscal year. We have not used stock
price performance as a factor in determining annual compensation, because the
price of our common stock is subject to a variety of factors outside our
control.
Elements
of Company’s Compensation Plan and How Each Element Relates to Our
Objectives
Annual
senior management compensation consists of a base salary component, an incentive
component and stock options.
Base Salary. We
seek to provide our senior management with a level of a base salary in the form
of cash compensation appropriate to their roles and responsibilities. Base
salaries for members of our senior management are established based on each
officer’s qualifications and experience, scope of responsibilities, future
potential and past performance. Base salaries are reviewed annually and adjusted
as necessary to realign salaries with market levels, after taking into account
individual responsibilities, performance and experience.
Incentive Cash
Bonuses. Our practice is to award incentive cash bonuses to
our senior management based upon their individual performance, as well as
performance objectives of the Company.
For 2008,
Mr. Sorrentino’s incentive bonus was paid pursuant to his employment
agreement with the Company. Under Mr. Sorrentino’s employment agreement,
his potential bonus is based on achieving a performance target for the
applicable fiscal year, as follows:
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If
we achieve less than 85% of the target for the fiscal year, then no
incentive bonus is paid for that fiscal
year.
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If
we achieve 100% of the target for the fiscal year, then the incentive
bonus is equal to 50% of Mr. Sorrentino’s base salary as of the end
of that year.
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If
we achieve 115% or more of the target for the fiscal year, then the
incentive bonus is equal to 100% of the base salary as of the end of that
year.
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If
we achieve a percentage of the target for the fiscal year that is between
any two of the 85%, 100% or 115% thresholds referred to above, then the
incentive bonus is a percentage of the base salary for that fiscal year
calculated on a straight line basis between the percentage that would
apply at those two thresholds.
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Under
Mr. Sorrentino’s agreement, the board of directors (or the Compensation
Committee) establishes the specific performance targets for Mr. Sorrentino
no later than sixty days after the beginning of each fiscal year.
Mr. Sorrentino must agree with the performance target established, and the
performance target must be consistent with our business plan approved by the
board of directors for such fiscal year. For 2008, the Compensation
Committee established the performance target as achieving operating income of
$54.0 million. Our 2008 operating income was $40.4 million, which is
less than 85% of the $54.0 million, so Mr. Sorrentino was not eligible for
an incentive bonus for 2008. For 2009, Mr. Sorrentino’s bonus
also will be based on achieving a specified operating income
target.
For 2008,
Mr. Graham (and all members of senior management, other than
Mr. Sorrentino) participated in our Senior Management Bonus
Program. For each participant under the program, the potential bonus
award was based on the participant’s salary at the end of the
year. In order for any bonus to be paid for 2008, we needed to
achieve the operating income threshold of $50.0 million set by the Compensation
Committee for the year. If the threshold had been met, then the
participant would have received a “basic” bonus equal to a percentage (ranging
from 0% to 40%) of his or her salary, depending on our performance with respect
to targets established for three incentive factors: operating income, revenue
and inventory turns. For 2008, 70% of the bonus was based on
performance against the targets for operating income (the target for a minimum
payout was $50.0 million and for a maximum payout was $58.0 million), 20% of the
bonus was based on performance against the established targets for revenue (a
minimum payout at $360 million and a maximum at $400 million), and 10% of the
bonus was based on performance against the established targets for inventory
turns (a minimum payout at 4.00 times and a maximum at 4.25
times). The full basic bonus of 40% of salary was available if we
achieved the maximum target for each of the three incentive
factors. The bonus available for each incentive factor was calculated
on a stand-alone basis (provided the operating income threshold was met) and was
calculated on a pro rata, straight line basis between the 0% and 40% level,
provided the specific target for such incentive factor was met. In
addition, starting in 2007, the Compensation Committee established an additional
award potential of 10% of salary, in the event we achieve certain sales
thresholds with respect to certain proprietary products.
The 2008
program also provided that a bonus equal to an additional 5% of salary could
have been awarded in the event that we made one or more acquisitions during the
relevant year and the acquired businesses met established financial
goals. The maximum bonus payable (the basic bonus plus the additional
bonus) could not exceed 55% of the participant’s base salary. Under the program,
all bonuses are payable the year following the year for which performance is
being measured, after receipt of (and subject to) the audit of the financial
statements for the relevant year. No award is payable under the
program for any full or partial year to a participant whose employment
terminates prior to the time the bonus is paid. In all cases, the payment is in
the discretion of the Compensation Committee, and the Compensation Committee
retains the right to terminate a participant’s participation in the bonus
program at any time, in which case no bonus may be paid.
In 2008,
we failed to meet the operating income threshold under the Senior Management
Bonus Program, so Mr. Graham and other members of senior management were
not entitled to receive a bonus under the terms of the program.
For 2009,
the Senior Management Bonus Program is similar to the program in 2008, but will
be based on targets approved for 2009.
Equity Awards. In addition to
base salary and incentive compensation, each member of our senior management is
eligible to receive stock option grants under our stock plan. We believe that
through our broad-based plan, the economic interests of our employees, including
our executives, are more closely aligned to those of the stockholders. The
number of stock options granted to each executive officer is made on a
discretionary basis rather than pursuant to a formula by the Compensation
Committee after consideration of the CEO’s recommendations.
How
the Company Chose Amounts and/or Formulas for Each Element
In 2007,
our Compensation Committee engaged Pearl Meyer & Partners to review
Mr. Sorrentino’s compensation package and to provide a market perspective
to the Compensation Committee with respect to Mr. Sorrentino’s
compensation. The Compensation Committee reviewed the information prepared by
Pearl Meyer & Partners, and then entered into negotiations with
Mr. Sorrentino regarding an appropriate long-term incentive grant. During
these negotiations, the committee considered Mr. Sorrentino’s tenure with
us, our financial results and the success of our initial public offering. The
committee also considered the fact that Mr. Sorrentino had not received any
equity-based compensation in the prior four years and that Mr. Sorrentino
had requested that his compensation contain a greater equity component than it
then did. Based on these negotiations, the Compensation Committee determined to
grant to Mr. Sorrentino an option to purchase 500,000 shares of our common
stock, which is the maximum annual award permitted under the 2006 Stock Plan, at
a price of $26.19 per share, which was the closing price of our common stock on
the date of the grant. This option vests in two equal installments on
March 9, 2011 and 2012.
The
committee believes that this grant aligns Mr. Sorrentino’s compensation
with the interests of stockholders and, due to the delayed vesting schedule,
will assist in retaining Mr. Sorrentino as our President and Chief
Executive Officer. In the event of Mr. Sorrentino’s death or
permanent disability, the option grant will vest on a pro-rata basis over the
term of the vesting schedule, such that the option will vest with respect to a
percentage of the shares subject to the option equal to the percentage of the
vesting period during which Mr. Sorrentino served prior to his death or
disability.
In
January 2008, the Compensation Committee awarded Mr. Sorrentino an option
to purchase an additional 65,000 shares at a price of $11.99 per share, the
closing price of our common stock on the date of grant. This option
vests in two equal installments on the same dates as the 2007
grant. In December 2008, the Compensation Committee awarded
Mr. Sorrentino an option to purchase an additional 65,000 shares at a price
of $9.27 per share, the closing price of our common stock on the date of
grant. This option vests in two equal installments on the same dates
as the 2007 grant.
Each
executive officer’s current and prior compensation is considered in setting
future compensation. The elements of our plan (base salary, bonus and stock
options) are similar to the elements used by many companies. We do
not have an exact formula for allocating between cash and non-cash
compensation. In making its annual stock option grants in December
2008, the board determined that the awards would be larger than usual, in light
of the fact that there was no payout for 2008 under the Senior Management Bonus
Program and to provide an incentive for the future.
Our chief
executive officer provides recommendations to the Compensation Committee
regarding most compensation matters, including compensation of other members of
key management.
With
respect to current employees, we plan stock option grant dates well in advance
of any actual grant. The timing of each grant is determined to coincide with a
scheduled meeting of our board of directors and its Compensation Committee and,
except in highly unusual circumstances, we will not allow discretionary option
grants at other dates. The grant date is established when our Compensation
Committee approves the grant and all key terms have been determined. The
exercise price of each of our stock option grants is the market closing price on
the grant date. Our general policy is for the annual grant to occur in December
several weeks after the official announcement of our third quarter results so
that the stock option exercise price reflects a fully-informed market price. If
at the time of any planned option grant date any member of our board of
directors or any executive officer is aware of material non-public information,
we would not generally make the planned stock option grant. In such event, as
soon as practical after material information is made public, the Compensation
Committee would call a special meeting and otherwise take all necessary steps to
authorize the delayed stock option grant. Regarding the grant process, the
Compensation Committee does not delegate any related function, and executive
officers are not treated differently from other employees.
Tax
Considerations
We have
structured our compensation program to comply with Internal Revenue Code
Sections 162(m) and 409A. Section 162(m) of the Internal Revenue Code imposes a
limitation on tax deductions of any publicly-held corporation for compensation
paid to certain executives in excess of $1,000,000 in any taxable year, unless
the compensation is performance-based. Section 409A of the Internal Revenue Code
addresses certain nonqualified deferred compensation benefits payable to an
executive and provides that, if such benefits do not comply with Section 409A,
they will be taxable in the first year they are not subject to a substantial
risk of forfeiture. In such case, the executive is subject to regular federal
income tax, interest and an additional federal income tax of 20% of the benefit
includible in income. We have no individuals with non-performance based
compensation paid in excess of the Internal Revenue Code Section 162(m) tax
deduction limit.
Employment
Arrangements and Payments upon Termination of Employment
We
entered into an employment agreement dated April 26, 2006 with
Mr. Sorrentino, our President and Chief Executive Officer, with a term that
extends through April 26, 2011. It provides for a base salary of $425,000 per
year, subject to annual reviews and increases (but not decreases) by our board.
The Compensation Committee approved increases in Mr. Sorrentino’s base
salary to $450,000, effective March 2007, and to $475,000, effective March
2008. Mr. Sorrentino’s employment agreement entitles him to an
annual bonus of up to 100% of base salary, as described above.
Mr. Sorrentino’s agreement provides for reimbursement of reasonable
business expenses, the employment benefits generally available to our
executives, four weeks of vacation per year and a car allowance of $1,000 per
month. Mr. Sorrentino may participate in our 2006 Stock Plan. Under his
employment agreement, Mr. Sorrentino is entitled to severance equal to two
years’ base salary if we terminate his employment without cause, or if he
terminates his employment for good reason. The employment agreement limits
Mr. Sorrentino’s ability to compete with us for two years after his
employment ends.
Under
Mr. Sorrentino’s employment agreement, the phrases “termination without
cause” and “termination for good reason” are defined as follows:
“termination
without cause” shall mean a termination of Mr. Sorrentino’s employment for any
reason other than by reason of the following: (i) a material breach by Mr.
Sorrentino of his employment agreement or material neglect by Mr. Sorrentino of
his assigned duties, which includes any failure to follow the written direction
of the board of directors (other than by reason of disability), or repeated
refusal by Mr. Sorrentino to perform his assigned duties (other than by reason
of disability) which continues for thirty days following receipt of written
notice from the board of directors; (ii) the commission by Mr. Sorrentino of any
act of fraud or embezzlement against us or the commission of any felony or act
involving dishonesty; (iii) the commission by Mr. Sorrentino of any act of moral
turpitude which actually causes us financial harm; (iv) a material breach by Mr.
Sorrentino of the terms of the confidentiality provisions contained in his
employment agreement or any other confidentiality or non - disclosure agreement he has
with us; or (v) Mr. Sorrentino’s commencement of employment with another company
while he is employed by us without the prior consent of the board of
directors.
“termination
for good reason” shall mean the voluntary termination by Mr. Sorrentino of his
employment, if without his prior consent: (i) we relocate our principal
executive offices to a location outside the Houston, Texas metropolitan area,
(ii) we materially reduce his responsibilities, duties, authority, title, or
reporting relationship; or (iii) we act in any way that would reduce his base
salary or if we adversely affect his participation in or materially reduce his
benefit under any of our benefit plans in which he is participating; provided,
however, that a “termination for good reason” shall not be permitted unless Mr.
Sorrentino has given us at least thirty days’ prior written notice that he has a
basis for such a termination, the notice specifies the facts and circumstances
constituting a basis for such a termination, and we do not remedy such facts and
circumstances constituting the basis for his termination for good reason within
the thirty-day period.
Assuming
that Mr. Sorrentino had terminated his employment with us as of December 31,
2008 (whether “without cause” or “for good reason”), he would have received 24
months of his then current salary in accordance with our current general payroll
practices (which would equal $475,000 per year for 2009 and 2010). If
Mr. Sorrentino terminated his employment on December 31, 2008 following a
change in control, then pursuant to the terms of our 2006 Stock Plan, in
addition to the payments discussed in the preceding sentence, all of his
outstanding options would have fully vested as of the date of the change in
control.
Our other
members of senior management are elected by and serve at the discretion of the
board of directors.
Summary
Compensation Table
The
following table and related notes sets forth information concerning the
compensation paid to our Chief Executive Officer and Chief Financial Officer for
fiscal years 2008, 2007 and 2006. Because our Chief Executive Office and Chief
Financial Officer are our only executive officers, the following compensation
disclosures have been limited to those two individuals. For ease of reference,
we collectively refer to these executive officers throughout this section as our
“named executive officers.”
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)(1)
|
Option
Awards
($)(2)
|
Non-Equity
Incentive
Plan Compensation
($)(3)
|
All
Other Compensation
($)(4)
|
Total
($)
|
|||||||||||||
|
Charles A. Sorrentino,
|
||||||||||||||||||||
|
President
and Chief
Executive
Officer
|
2008
|
469,231
|
—
|
1,294,427
|
—
|
24,312
|
1,787,970
|
|||||||||||||
|
2007
|
444,231
|
—
|
971,977
|
10,350
|
23,014
|
1,449,572
|
||||||||||||||
|
2006
|
383,173
|
—
|
—
|
425,000
|
19,094
|
827,267
|
||||||||||||||
|
Nicol G. Graham,
|
|
|||||||||||||||||||
|
Chief
Financial Officer
|
2008
|
189,291
|
—
|
29,384
|
—
|
12,760
|
231,435
|
|||||||||||||
|
2007
|
180,600
|
45,570
|
21,110
|
—
|
14,636
|
261,916
|
||||||||||||||
|
2006
|
167,000
|
—
|
615
|
52,500
|
6,440
|
226,555
|
____________
|
(1)
|
In
2007, the Company did not meet the operating income threshold under the
Senior Management Bonus Program, largely due to certain unbudgeted
expenses, and the Compensation Committee made a discretionary award to Mr.
Graham and other members of senior management (other than Mr. Sorrentino)
equal to 25% of their salaries. The amount shown in this column
represents the discretionary award made to
Mr. Graham.
|
|
(2)
|
This
column shows the dollar amount recognized by the Company for financial
reporting purposes in 2008 in accordance with SFAS No. 123(R) for all
stock options granted to each named executive officer. See note
8 of Notes to Consolidated Financial Statements contained in our Annual
Report of Form 10-K for the year ended December 31, 2008 for a discussion
of the assumptions made by the Company in the valuation of these option
awards. Under SFAS No. 123(R), the fair value of option awards
is recognized as expense over the vesting period of the award except where
it is accelerated for employees that are retirement-eligible or will
become retirement-eligible during the vesting period. The value of the
stock options reported in the “Option Awards” column is different from the
grant date fair value of the stock options granted in 2008 because the
“Option Awards” column includes, as required by SFAS No. 123(R), the
expense of awards granted prior to 2008 where the vesting period for those
awards extends into 2008 to the extent the expense was not previously
accelerated due to retirement-eligibility of the employees. The expense of
the option awards for Mr. Graham, who is a non-retirement-eligible
employee, is spread equally over the full vesting period. In addition to
the amount shown above, we expensed $11,404 in 2008 and in 2007 with
respect to outstanding option grants to Mr. Graham that were made
prior to 2007. As a private company, we accounted for those
earlier awards under Accounting Principles Board Opinion No. 25 rather
than SFAS No. 123(R).
|
|
(3)
|
The
amounts shown for Mr. Sorrentino represent payments made pursuant to
the terms of his current employment agreement, since its execution on
April 26, 2006. The amount shown for Mr. Graham represents
payments made pursuant to the Company’s senior management incentive plan.
Mr. Graham’s bonus was based on the achievement of operating income
targets, revenue and inventory-turns targets, in each case, as approved by
the Company’s board of directors and its Compensation
Committee. For a description of the incentive arrangements,
please see “Compensation Discussion and Analysis – Elements of Company’s
Compensation Plan and How Each Element Relates to Our Objectives –
Incentive Cash Bonuses.”
|
|
(4)
|
All
Other Compensation reported for Mr. Sorrentino in 2008 represents a $9,000
matching contribution by the Company to our 401(k) Plan, $3,312 for group
term life and long-term disability insurance premiums and $12,000 for an
auto allowance. All Other Compensation reported for Mr. Graham in 2008
represents a $7,039 matching contribution by the Company to our 401(k)
Plan, $1,044 for group term life and long-term disability insurance
premiums and $4,677 for personal use of an
automobile.
|
Grants
of Plan Based Awards
The
following table sets forth information for each named executive officer with
respect to:
|
|
·
|
Estimated
possible payouts under non-equity incentive plan awards for 2008,
and
|
|
|
·
|
Stock
options granted in 2008.
|
|
Estimated
Possible Payouts Under
Non-Equity Incentive Plan Awards(2)
|
All
Other Option
Awards:
Number
of Securities
Underlying
|
Exercise
or Base
Price of
Option
|
Grant
Date
Fair Value
of Stock
and Option
|
||||||||||||||||||||||
|
Name
|
Grant
Date(1)
|
Threshold
($)(3)
|
Target
($)(4)
|
Maximum
($)(5)
|
Options
(#)(6)
|
Awards
($/sh)(7)
|
Awards
($)(8)
|
||||||||||||||||||
|
Charles A. Sorrentino
|
01/09/08
|
403,750 | 475,000 | 546,250 | 65,000 | 11.99 | 400,762 | ||||||||||||||||||
|
12/17/08
|
65,000 | 9.27 | 264,833 | ||||||||||||||||||||||
|
Nicol G. Graham
|
12/17/08
|
— | — | 105,267 | 10,000 | 9.27 | 40,700 | ||||||||||||||||||
____________
|
(1)
|
The
“Grant Date” reflects the date on which the Compensation Committee acted
to approve the grant of the award.
|
|
(2)
|
The
amounts shown for Mr. Sorrentino reflect the amounts that were
payable pursuant to his employment agreement and are based on performance
targets established by the Compensation Committee and board of directors
for 2008. Mr. Sorrentino did not receive a payout under
his agreement for 2008. For a description of
Mr. Sorrentino’s employment agreement, please see “Compensation
Discussion and Analysis — Elements of Company’s Compensation Plan and How
Each Element Relates to Our Objectives – Employment Agreements.” The
amounts shown for Mr. Graham represent the potential payout under our
Senior Management Bonus Program for 2008. No payouts were
actually made under the Senior Management Bonus Program in
2008.
|
|
(3)
|
Non-Equity Incentive Plan
Awards – Threshold. Pursuant to our employment agreement
with Mr. Sorrentino, the amount shown in this column for
Mr. Sorrentino represents 85% of his salary for 2008, the percentage
of his salary to be paid upon reaching the thresholds set in accordance
with his agreement. Pursuant to the Senior Management Bonus
Program, in which Mr. Graham participates, performance at or below a
specific incentive factor will result in no payment with respect to that
incentive factor. Performance above the minimum goals for each
incentive factor result in a payment (based on a percentage of the
executive’s salary) ranging from $1 to the maximum bonus amount for each
incentive factor, depending on the level at which the performance goal was
attained.
|
|
(4)
|
Non-Equity Incentive Plan
Awards – Target. Pursuant to our employment agreement
with Mr. Sorrentino, the amount shown in this column for
Mr. Sorrentino represents 100% of his salary for 2008. The
Senior Management Bonus Program, in which Mr. Graham participates,
does not specify a target amount. Where “target” amounts are
not determinable, the SEC rules require the disclosure of representative
amounts based on the previous fiscal year’s performance. Accordingly, we
have disclosed above in the “Target” column the amount that would be paid
under our 2008 Senior Management Bonus Program to Mr. Graham, based
on our performance in 2007.
|
|
(5)
|
Non-Equity Incentive Plan
Awards – Maximum. Pursuant to our employment agreement
with Mr. Sorrentino, the amount shown in this column for
Mr. Sorrentino represents 115% of his salary for 2008, the maximum
percentage of his salary that is available to him under his
agreement. Pursuant to the 2008 Senior Management Bonus
Program, the amount shown in this column for Mr. Graham represents
55% of his salary for 2008, the maximum percentage of his salary that is
available to him under the Program.
|
|
(6)
|
This
column shows the number of shares that may be issued to the named
executive officers upon exercise of stock options granted in
2008.
|
|
(7)
|
The
exercise price for all stock options granted in 2008 was the closing sale
price of our common stock on the date of grant as reported by The Nasdaq
Global Market.
|
|
(8)
|
The
grant date fair value of the option awards was computed in accordance with
SFAS No. 123(R). See footnote 8 to the Consolidated Financial Statements
contained in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008 for a discussion of the assumptions made in the
valuation of these option awards.
|
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information for each named executive officer with
respect to each option to purchase common stock that had not been exercised and
remained outstanding at December 31, 2008. The Company’s executive
officers currently do not have any other outstanding stock awards.
|
Option Awards
|
|||||||||||
|
Name
|
Number
of Securities Underlying
Unexercised
Options Exercisable
(#)
|
Number
of Securities Underlying
Unexercised
Options Unexercisable
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|||||||
|
Charles A. Sorrentino
|
— | 500,000 (1) | 26.19 |
03/09/2017
|
|||||||
| — | 65,000 (2) | 11.99 |
01/09/2018
|
||||||||
| — | 65,000 (2) | 9.27 |
12/17/2018
|
||||||||
|
Nicol G. Graham
|
1,875 | 3,750 (3) | 2.67 |
12/30/2015
|
|||||||
| 4,000 | 6,000 (4) | 21.73 |
12/20/2016
|
||||||||
| 1,000 | 4,000 (5) | 15.40 |
12/18/2017
|
||||||||
| — | 10,000 (6) | 9.27 |
12/17/2018
|
||||||||
____________
|
(1)
|
The
options under this grant vest in equal installments of 250,000 shares per
year on March 9, 2011 and March 9,
2012.
|
|
(2)
|
The
options under this grant vest in equal installments of 32,500 shares per
year on March 9, 2011 and March 9,
2012.
|
|
(3)
|
The
remaining options under this grant vest in equal installments of 1,875
shares per year on December 30, 2009 and
2010.
|
|
(4)
|
The
remaining options under this grant vest in equal installments of 2,000
shares per year on December 20, 2009, 2010 and
2011.
|
|
(5)
|
The
options under this grant vest in equal installments of 1,000 shares per
year on December 18, 2009, 2010, 2011 and
2012.
|
|
(6)
|
The
options under this grant vest in equal installments of 2,000 shares per
year on December 17, 2009, 2010, 2011, 2012 and
2013.
|
Option
Exercises and Stock Vested
The
following table sets forth information for each named executive officer with
respect to:
|
|
·
|
The
exercise during 2008 of stock options to purchase shares of our common
stock, and
|
|
|
·
|
The
dollar amount realized upon exercise of the stock
options.
|
|
Option Awards
|
||||||
|
Name
|
Number
of Shares Acquired
on
Exercise
(#)
|
Value
Realized
on Exercise
($)(1)
|
||||
|
Charles A Sorrentino
|
—
|
—
|
||||
|
Nicol G. Graham
|
2,625
|
$
38,801
|
||||
____________
|
(1)
|
Value Realized on
Exercise. The value realized on the exercise of
stock options represents the pre-tax difference between the option
exercise price and the closing price of the stock on the exercise date,
multiplied by the number of shares of common stock covered by the stock
options exercised by
Mr. Graham.
|
Defined
Pension Plans, Non-Qualified Defined Contribution Plans and Non-Qualified
Deferred Compensation Plans
We do not
maintain any defined benefit plans, non-qualified defined contribution plans or
non-qualified deferred compensation plans.
REPORT OF THE COMPENSATION COMMITTEE
The
Compensation Committee of the Board of Directors has furnished the following
report to the stockholders of the Company in accordance with rules adopted by
the SEC.
The
Compensation Committee of the Company states that the committee reviewed and
discussed with management the Company’s Compensation Discussion and Analysis
contained in this proxy statement.
Based
upon the review and discussions referred to above, the Compensation Committee
recommended to the Board of Directors that the Company’s Compensation Discussion
and Analysis be included in this proxy statement.
This
report is submitted on behalf of the members of the Compensation
Committee:
|
Members
of the Compensation Committee
|
|
|
Peter M. Gotsch,
Chairman
|
|
|
William H Sheffield
|
|
|
Wilson B. Sexton
|
Dated:
March 10, 2009
EQUITY COMPENSATION PLAN INFORMATION
The
following table provides information as of December 31, 2008 with respect to our
compensation plans (including individual compensation arrangements) under which
our equity securities are authorized for issuance:
|
(a)
|
(b)
|
(c)
|
|||||||
|
Plan
Category
|
Number
of Securities
to be Issued
upon Exercise
of Outstanding
Options,
Warrants and
Rights
|
Weighted-Average
Price
of Outstanding
Options,
Warrants and
Rights(3)
|
Number
of Securities Remaining
Available for
Issuance under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a)
|
||||||
|
Equity
compensation plans approved by security holders(1)
|
1,112,500
|
$
20.23
|
687,500
|
||||||
|
Equity
compensation plans not approved by security holders(2)
|
65,081
|
$
2.30
|
—
|
____________
|
(1)
|
Amounts
shown in this row relate solely to stock options granted under our 2006
Stock Plan. The 2006 plan provides for discretionary awards of stock
options and restricted stock to selected employees and directors. Our
board may grant non-qualified or incentive stock options to selected
employees and non-qualified stock options to non-employee directors. The
board may set the terms and conditions applicable to the options,
including the exercise price of the option, type of option and the number
of shares subject to the option. In any event, each option will expire 10
years from the date of grant.
|
Our board
also may grant restricted stock awards to directors and selected employees,
either for no consideration or for such appropriate consideration as the board
determines. The board has the discretion to determine the number of shares
awarded and the restrictions, terms and conditions of the award. Subject to the
restrictions, the recipient of an award will be a stockholder with respect to
the shares awarded to him or her and will have the rights of a stockholder with
respect to the shares, including the right to vote the shares and receive
dividends, if any, on the shares. Our board may establish, as restrictions on
the stock, performance goals and targets for participants, which lapse if we
achieve the performance goals and targets for the designated performance period.
The performance goals may be based on one or more business criteria. Performance
goals may be absolute in their terms or measured against or in relationship to
the performance of other companies or indices selected by the
board.
|
(2)
|
Amounts
shown in this row relate solely to non-qualified stock options granted
under our 2000 Stock Plan. No grants under the 2000 plan have been made
since the Company’s public offering in June 2006 nor will be made in the
future. Under the 2000 Stock Plan the board of directors was able to grant
non-qualified or incentive stock options to selected key employees and
non-qualified stock options to non-employee directors. The duration of any
option could not exceed 10 years from the grant date. The board was also
able to grant stock awards to key employees and directors for such numbers
of shares, and subject to such vesting requirements, restrictions and
other terms and conditions, as the board determined in its
discretion.
|
|
(3)
|
Weighted-average
exercise price of outstanding stock
options.
|
REPORT OF THE AUDIT COMMITTEE
Management
is responsible for the Company’s financial reporting process including its
system of internal controls, and for the preparation of the consolidated
financial statements in accordance with generally accepted accounting
principles. Ernst & Young LLP, is responsible for auditing those
financial statements and issuing a report thereon.
The Audit
Committee of the board is responsible for providing oversight of our accounting
and financial reporting functions. The board appoints the Audit
Committee annually, with the committee consisting of at least three directors.
The Audit Committee operates under a formal charter, which is available on the
Company’s website at http:www.houwire.com and by clicking on the “Corporate
Governance” link. The Audit Committee charter sets forth in detail,
the duties and responsibilities of the Audit Committee.
The Audit
Committee received the written disclosures and the letter from Ernst & Young
LLP, the Company’s independent registered public accounting firm, that are
required by the applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant’s communications with the
Audit Committee concerning independence. The disclosures described
the relationships and fee arrangements between the firm and the
Company. Consistent with the applicable requirements of the Public
Company Accounting Oversight Board and the rules and regulations of the SEC, the
Audit Committee considered whether the provision of non-audit services by the
independent registered public accounting firm to the Company for the fiscal year
ended December 31, 2008 is compatible with maintaining Ernst & Young LLP’s
independence and has discussed with Ernst & Young LLP the firm’s
independence from the Company.
The
Audit Committee reviewed and discussed with the Company’s independent registered
public accounting firm the 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. The Audit Committee reviewed and discussed with
management and the Company’s independent registered public accounting firm the
audited financial statements of the Company for the year ended December 31,
2008.
Based on
the above-mentioned reviews and discussions with management and the Company’s
independent registered public accounting firm, the Audit Committee, exercising
its business judgment, recommended to the board that the Company’s audited
financial statements be included in its Annual Report on Form 10-K for the year
ended December 31, 2008, for filing with the SEC.
This
report is submitted on behalf of the members of the Audit
Committee:
|
Scott L. Thompson,
Chairman
|
|
|
Michael T. Campbell
|
|
|
Peter M. Gotsch
|
|
|
Wilson B. Sexton
|
|
Dated:
March 10, 2009
PRINCIPAL INDEPENDENT ACCOUNTANT FEES AND SERVICES
Audit
Committee’s Pre-Approval and Procedures
The Audit
Committee is responsible for the appointment, compensation, retention and
oversight of the work of Ernst & Young LLP, our independent registered
public accounting firm. The independent registered public accounting firm
reports directly to the Audit Committee. As part of its responsibility, the
committee established a policy requiring the pre-approval of all audit and
permissible non-audit services performed by the registered public accounting
firm. In pre-approving services, the Audit Committee considers whether such
services are consistent with the SEC’s rules on auditor
independence.
Prior to
the engagement of the registered public accounting firm for an upcoming
audit/non-audit service period, defined as a twelve-month timeframe, Ernst &
Young LLP submits a detailed list of services expected to be rendered during
that period as well as an estimate of the associated fees for each of the
following four categories of services to the Audit Committee for
approval:
|
|
•
|
Audit Services consist
of services rendered by an external auditor for the audit of our annual
consolidated financial statements (including tax services performed to
fulfill the auditor’s responsibility under generally accepted auditing
standards) and internal controls and reviews of financial statements
included in Form 10-Qs, and includes services that generally only an
external auditor can reasonably provide, such as comfort letters,
statutory audits, attest services, consents and assistance with and review
of documents filed with the SEC.
|
|
|
•
|
Audit-Related Services
consist of assurance and related services by an external auditor that are
reasonably related to audit or review of financial statements, including
employee benefit plan audits, due diligence related to mergers and
acquisitions, and accounting
consultations.
|
|
|
•
|
Tax Services consist of
services not included in Audit Services above, rendered by an external
auditor for tax compliance.
|
|
|
•
|
Other Non-Audit Services
are any other permissible work that is not an Audit, Audit-Related or Tax
Service.
|
Circumstances
may arise during the twelve-month period when it may become necessary to engage
the independent registered public accounting firm for additional services not
contemplated in the original pre-approval. In those instances, the Audit
Committee requires specific pre-approval before engaging the independent
auditor.
The table
below summarizes the fees billed by our independent registered public accounting
firm, Ernst & Young LLP, for the fiscal years ended December 31, 2008 and
2007:
|
Year
|
Audit
Fees
|
Audit-Related
Fees
|
Tax
Fees
|
All
Other Fees
|
Total
|
||||||||||
|
2008
|
$ 419,099 | $ — | $ 51,500 | $ — | $ 470,599 | ||||||||||
|
2007
|
$ 717,906 | $ — | $ 40,775 | $ — | $ 758,681 |
________
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(1)
|
Audit
fees include fees for professional services rendered for the audit of our
annual consolidated financial statements, the audit of our internal
controls and the reviews of the interim financial statements included in
our Forms 10-Q. The audit fees in 2008 and 2007 also included charges for
internal control compliance with Sarbanes-Oxley Section 404. For 2007 the
audit fees include charges of $159,943 related to audit work performed in
connection with our secondary public offering in March
2007.
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|
(2)
|
There
were no audit-related services for fiscal 2008 and
2007.
|
|
(3)
|
Tax
fees represent professional services related to tax
compliance.
|
For the
fiscal year ended December 31, 2008, none of the Audit-Related Fees, Tax Fees or
Other Fees were approved in accordance with the exceptions to the pre-approval
requirements set forth in 16 CFR 210.2-01(c)(7)(i)(C).
The Audit
Committee has considered the compatibility of the provision of services covered
by the preceding paragraph with the maintenance of the principal accountant’s
independence from the Company and has determined that the provision of such
services is not incompatible with the maintenance of such
independence. The Audit Committee annually reviews the performance of
the independent registered public accounting firm and the fees charged for their
services.
PROPOSAL NO. 2 — RATIFICATION OF SELECTION OF
INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
General
Stockholder
ratification of the selection of Ernst & Young LLP as the Company’s
independent registered public accounting firm for the year ending December 31,
2009 is not required. However, the board of directors is submitting the
selection of Ernst & Young LLP as the Company’s independent registered
public accounting firm to the stockholders for ratification to learn the opinion
of stockholders on this selection. If the stockholders fail to ratify Ernst
& Young LLP as the independent registered public accounting firm, the Audit
Committee will reassess its appointment. Even if the selection is ratified, the
Audit Committee in its discretion may direct the appointment of a different
independent registered public accounting firm at any time during the year if it
determines that such change would be in the best interests of the Company and
its stockholders. Representatives of Ernst & Young are expected to be at the
Annual Meeting of stockholders and will have the opportunity to make a
statement, if they desire to do so, and to respond to appropriate questions from
those attending the meeting.
Board Recommendation and Stockholder Vote Required
The board
of directors recommends a vote “FOR” the ratification of the selection of Ernst
& Young LLP as the Company’s independent registered public accounting firm
for the year ending December 31, 2009 (Proposal No. 2 on the proxy
card).
The
affirmative vote of the holders of a majority of the votes represented at the
annual meeting in person or by proxy will be required for approval.
ANNUAL REPORT TO STOCKHOLDERS
We have
enclosed our 2008 annual report to stockholders for the fiscal year ended
December 31, 2008 with this proxy statement. The annual report
includes our annual report on Form 10-K for the fiscal year ended December 31,
2008, as filed with the SEC. The annual report on Form 10-K contains
our audited financial statements, along with other financial information about
us. We urge you to read these documents carefully.
You can
also obtain, free of charge, a copy of our annual report on Form 10-K
by:
|
|
•
|
accessing
the Investor Relations section of our website at http://www.houwire.com
and clicking on the “SEC Filings”
link;
|
|
|
•
|
writing
to:
|
Houston
Wire & Cable Company — Investor Relations Coodinator
10201
North Loop East
Houston,
Texas 77029; or
|
|
•
|
telephoning
us at: (713) 609-2100.
|
You can
also obtain a copy of our annual report on Form 10-K and other periodic filings
that we make with the SEC from the SEC’s website at
http://www.sec.gov.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR 2010 ANNUAL
MEETING
The proxy
rules of the SEC permit our stockholders, after notice to the Company, to
present proposals for stockholder action in our proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate for
stockholder action and are not properly omitted by us in accordance with the
proxy rules. In order for any stockholder proposal to be considered
for inclusion in our proxy statement to be issued in connection with our 2010
annual meeting of stockholders, that proposal must be received at our corporate
headquarters, 10201 North Loop East, Houston, Texas 77029 (Attention: Investor
Relations Coordinator), no later than December 4, 2009.
Our
certificate of incorporation and by-laws provide that stockholder action can be
taken only at an annual or special meeting of stockholders and cannot be taken
by written consent in lieu of a meeting. Our certificate of
incorporation and by-laws provide that, except as otherwise required by law,
special meetings of our stockholders can only be called pursuant to a resolution
adopted by a majority of our board of directors or by our chief executive
officer or the chairman of our board of directors. Stockholders are not
permitted to call a special meeting or to require our board to call a special
meeting.
Our
by-laws establish an advance notice procedure for stockholder proposals to be
brought before an annual meeting of our stockholders, including proposed
nominations of persons for election to our board. Stockholders at our
annual meeting may only consider proposals or nominations specified in the
notice of meeting or brought before the meeting by or at the direction of our
board or by a stockholder who was a stockholder of record on the record date for
the meeting and upon giving of notice and provided that the stockholder has
given to our secretary timely written notice, in proper form, of the
stockholder’s intention to bring that business before the
meeting. Specifically, our bylaws provide the following procedure in
order that business may properly come before the stockholders at the annual
meeting. Among other things, stockholders intending to bring business
before the annual meeting must provide written notice of such intent to the
Secretary of the Company. Such notice must be given no earlier than
January 2, 2010 and no later than February 1, 2010. In addition, the
following information must be provided in the written notice: (1) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (2) the name and
address, as they appear on the Company’s books, of the stockholder proposing
such business, (3) the class and number of shares of common stock that are
beneficially owned by the stockholder, (4) any material interest of the
stockholder in such business and (5) a representation that the stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting.
If the
stockholder proposes to nominate a person as a director, the written notice must
be given no earlier than January 2, 2010 and no later than February 1, 2010 and
must set forth the following information as to each proposed nominee: (1) the
name, age, business address and, if known, residence address of such nominee,
(2) the principal occupation or employment of such nominee, (3) the number of
shares of common stock which are beneficially owned by such nominee, and (4) any
other information concerning the nominee that must be disclosed as to nominees
in proxy solicitations pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, including such person’s written consent to be named as
a nominee and to serve as a director if elected. As to the
stockholder giving the notice, the following information is required: (1) the
name and address, as they appear on the Company’s books, of such stockholder and
(2) the number of shares of common stock beneficially owned by such stockholder.
The Company may require any proposed nominee to furnish such other information
as may reasonably be required by the Company to determine the eligibility of
such proposed nominee to serve as a director of the Company.
GENERAL
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our officers, directors
and persons who own more than ten percent of a registered class of our equity
securities to file reports of ownership and changes in ownership on Forms 3, 4
and 5, as applicable, with the SEC. Officers, directors and stockholders owning
more than ten percent of our common stock are required by the SEC regulations to
furnish us with copies of all Forms 3, 4 and 5 they file.
Based
solely upon a review of Forms 3 and 4 and any amendments furnished to Houston
Wire & Cable Company, we believe that our directors, officers, and greater
than 10% beneficial owners complied with all applicable Section 16 filing
requirements, except for the following: (1) Mr. Wilson Sexton, a director, filed
a Form 4, which was late by one day, to report the purchase of 5,000 shares of
common stock, and (2) Mr. Michael Campbell, a director, filed a late Form 4 to
report the purchase of 44 shares of common stock pursuant to a dividend
reinvestment.
Other
Information
The
expenses of preparing and mailing this proxy statement and the accompanying
proxy card and the cost of solicitation of proxies, if any, will be borne by
us. In addition to the use of mailings, proxies may be solicited by
personal interview, telephone and by our directors, officers and regular
employees without special compensation therefore. We expect to
reimburse banks, brokers and other persons for their reasonable out-of-pocket
expenses in handling proxy materials for beneficial owners of our common
stock.
Unless
contrary instructions are indicated on the proxy card, all shares of common
stock represented by valid proxies received pursuant to this solicitation (and
not revoked before they are voted) will be voted “FOR” all of the proposals
described in this proxy statement.
OTHER MATTERS
Our board
does not know of any other matters that are to be presented for action at the
2009 annual meeting. Should any other matter come before the annual
meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.
|
BY
ORDER OF THE BOARD OF DIRECTORS
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|
|
|
|
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Nicol G. Graham
|
|
|
Vice
President, Chief Financial Officer, Treasurer and
Secretary
|
Dated:
March 27, 2009
26