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
Filed by
the Registrant
x
Filed by
a Party other than the Registrant
o
Check the
appropriate box:
o
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Preliminary
Proxy Statement
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o
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Confidential,
For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to Rule 14a-11(c) or Rule
14a-12
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O.I.
Corporation
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x
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No
fee required.
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o
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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 is determined)
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(4)
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Proposed
maximum aggregate value of transaction:
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o
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Fee
paid previously with preliminary proxy materials.
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o
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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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To our
Fellow Shareholders:
We cordially invite you to attend the
2010 Annual Meeting of Shareholders of O.I. Corporation to be held on Tuesday,
May 18, 2010, at 11:00 a.m. local time at our Company headquarters located at
151 Graham Road, College Station, Texas 77845.
We encourage you to read the Notice of
Annual Meeting of Shareholders and the proxy statement so that you may be
informed about the business to take place at the Meeting. Your
participation in our business is important, regardless of the number of our
shares that you own.
If you are a shareholder holding shares
of OI common stock in street name, please note that beginning in 2010 your
broker can no longer vote your shares for the election of directors without your
express direction. It is important to us that each shareholder has a
voice in the matters described herein. We urge you to complete the
enclosed documents to either vote by proxy or instruct your broker how to vote
on your behalf.
We look forward to seeing you on May
18
th
.
Sincerely,
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J.
Bruce Lancaster
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Chief
Executive Officer and
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Chief
Financial Officer
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Donald
P. Segers, Ph.D.
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President
and
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Chief
Operating Officer
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Notice
of Annual Meeting of Shareholders to be held on May 18, 2010
To
the Shareholders of O.I. Corporation:
The
Annual Meeting of Shareholders (the “Meeting”) of O.I. Corporation
(referred to as the “Company,” “OI,” “we,” or “our”) will be held on Tuesday,
May 18, 2010, at 11:00 a.m. local time at our Company headquarters located at
151 Graham Road, College Station, Texas 77845 for the purposes of considering
and voting upon the following matters proposed by the Board of
Directors:
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(i)
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the
election of five directors to serve until our 2011 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
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(ii)
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the
ratification of the appointment of McGladrey & Pullen, LLP as the
Company’s independent public accountants for 2010;
and
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(iii)
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the
transaction of such other business as may properly come before the
Meeting.
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Information
regarding the foregoing matters is set forth in the accompanying proxy materials
dated April 16, 2010.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
Our
Proxy Statement and Annual Report on Form 10-K
are
also available on our website located at
www.oico.com/oicorp
.
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The stock
transfer books will not be closed, but only shareholders of record at the close
of business on March 31, 2010, will be entitled to notice of and to vote at the
Meeting. A list of shareholders entitled to vote at the Meeting will
be available for inspection at our principal executive offices.
After
completing the business of the Meeting, there will be a period for questions and
discussion with the Company's officers and directors.
Regardless
of whether you plan to personally attend, or how many shares of OI common stock
you hold, it is important that your shares be represented at the
Meeting.
Please
date, sign, and immediately return your proxy card in the postage-paid envelope
provided.
You may revoke your proxy at any time prior to
exercise at the Meeting.
By
Order of the Board of Directors
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Laura
E. Hotard
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Corporate
Counsel &
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Corporate
Secretary
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April 16,
2010
TABLE
OF CONTENTS
NOTICE OF
MEETING
PROXY
STATEMENT
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PAGE
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
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1
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QUESTIONS
AND ANSWERS
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1
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THE
MEETING
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3
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Solicitation,
Date, Time, and Place
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3
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Appointment
of Proxyholders
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3
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Signature
on Proxy
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3
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Revocation
of Proxies
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3
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Expenses
of Solicitation
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3
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Record
Date; Shareholders Entitled to Vote; Quorum; Vote Required
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3
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Voting
of Proxies
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4
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Other
Matters to Be Acted on at the Meeting
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4
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General
Information
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5
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Required
Vote
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5
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PROPOSAL
1 - ELECTION OF DIRECTORS
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6
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Nominees
for Board of Directors
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6
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INFORMATION
ABOUT THE BOARD OF DIRECTORS
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8
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The
Board of Directors; Director Independence; Board
Leadership
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8
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Meetings
of the Board of Directors
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8
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Attendance
at Annual Meeting
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8
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Committees
of the Board
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8
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Audit
Committee
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9
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Compensation
Committee
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10
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Nominating
and Corporate Governance Committee
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10
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Special
Committees
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11
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The
Board’s Role in Risk Management
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11
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Director
Nominations
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12
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Code
of Ethics
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12
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Communications
by Shareholders and Other Interested Parties with the
Board
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12
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REPORT
OF THE AUDIT COMMITTEE
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13
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EXECUTIVE
OFFICERS OF THE REGISTRANT
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14
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EXECUTIVE
COMPENSATION
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14
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Summary
Compensation Table
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14
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Narrative
to Summary Compensation Table
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15
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Outstanding
Equity Awards at Fiscal Year-End 2009
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18
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Post-Employment
Compensation
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18
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Nonqualified
Deferred Compensation
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18
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Potential
Payments upon Termination or Change-in-Control
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18
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Disclosure
of Director Compensation
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20
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Narrative
Disclosure to Director Compensation Table
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20
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Stock
Ownership Guidelines
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21
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Equity
Compensation Plans
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21
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Certain
Relationships and Related Transactions, Employment Contracts, Termination
of Employment Contracts and Change-in-Control Arrangements
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22
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PROPOSAL
2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
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23
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Principal
Accounting Fees and Services
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23
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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25
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NO
INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY
STATEMENT
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26
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SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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26
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SHAREHOLDERS
PROPOSALS
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26
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ANNUAL
REPORT
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27
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OTHER
MATTERS
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27
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PROXY
STATEMENT
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
The
following Proxy materials are available for you to review online at
www.oico.com/oicorp
:
·
This Proxy
Statement;
·
The Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2009;
and
·
Any amendments
to the foregoing that are required to be furnished to our
shareholders.
In
accordance with the Securities and Exchange Commission rules, the
foregoing website provides complete anonymity. No registration
is required to view the materials online and no tracking cookies will be
placed on your computer.
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QUESTIONS
AND ANSWERS
Q: When
and where is the Annual Meeting?
A:
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The
Company’s Annual Meeting of Shareholders will be held at 11:00 a.m. local
time Tuesday, May 18, 2010, at the Company’s headquarters located at 151
Graham Road, College Station, Texas,
77845.
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Q:
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Who
is entitled to vote?
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A:
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You
are entitled to vote at the Annual Meeting if the Company’s records show
that you owned shares of the Company’s common stock, par value $0.10, on
March 31, 2010 (the “Record Date”). As of March 31, 2010, there
were 2,365,036 shares of common stock
outstanding.
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Q:
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How
many votes is each share entitled
to?
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A:
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Each
share of common stock is entitled to one
vote.
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A:
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The
Board of Directors is asking for your proxy, meaning that you authorize us
to vote your shares at the Meeting in the manner you
direct. You may vote for or against all, some, or none of our
director nominees. You may also vote for or against the other
item(s) or abstain from voting. If you sign and return a proxy
card but do not specify how to vote, we will vote your shares in favor of
our director nominees and for the ratification of the selection of
McGladrey & Pullen as our independent registered public
accountants.
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A:
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You
may vote by marking, signing, dating, and returning the enclosed proxy
card in the postage paid envelope
provided.
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If your
shares are held in street name, your broker, bank, or other holder of record
will provide voting instructions.
Q: Do
I have to vote?
A:
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No,
however we strongly encourage you to do so. You may vote for or
against all, some, or none of our director nominees. You may
abstain with respect to or vote “FOR” or “AGAINST” other
proposals.
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Q: Will
my shares be voted if I do not sign and return my proxy card?
A:
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They
could be if your shares are held in street name.
Your broker cannot
vote your shares for the election of directors without your
instruction.
However, your broker or nominee may either
use its discretion to vote your shares on “routine matters” (such as the
ratification of auditors) or leave your shares
un-voted.
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Q: Can
I change my vote?
A:
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Yes. You
may revoke your proxy and change your vote before the Annual Meeting by:
(1) submitting a new proxy card with a later date, (2) notifying the
Company’s Corporate Secretary in writing that you have revoked your proxy,
or (3) voting in person at the Meeting. If you do not properly
revoke your proxy, properly executed proxies will be voted as earlier
specified.
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Q: What
is a quorum?
A:
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A
quorum is the number of shares that must be present, in person or by
proxy, in order for business to be transacted at the Annual
Meeting. At least a majority of the outstanding shares eligible
to vote must be represented at the Meeting, either in person or by proxy,
in order to transact business.
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Q: What
will I be voting on?
A: There
are two proposals that are expected to be voted upon at the Annual
Meeting:
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·
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The
election of five directors to serve until our 2011 Annual Meeting of
Shareholders or until their successors are duly elected and qualified;
and
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The
ratification of the appointment of McGladrey & Pullen, LLP as the
Company’s registered independent public
accountants.
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Q: What
are the Board’s recommendations?
A: The
Board of Directors recommends voting FOR both proposals.
Q: How
do I nominate a director or bring other business before the Annual
Meeting?
A:
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To
be considered for inclusion in our proxy statement and form of proxy for
the 2011 Annual Meeting, director nominations and shareholder
proposals must be received at our offices by December 17, 2010 (the
date that is 120 days prior to the one year anniversary of the mailing of
this Proxy Statement). Proposals must meet all of the
requirements of the SEC and the Company's Bylaws to be eligible for
inclusion in our 2011 proxy materials and must be submitted in writing
delivered or mailed to the Corporate Secretary, O.I.
Corporation, P.O. Box 9010, College Station, Texas 77842-9010.
Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and proxy relating to the 2011 Annual
Meeting of Shareholders any shareholder proposal which may be omitted from
the Company’s proxy materials pursuant to applicable regulations of the
SEC in effect at the time such proposal is
received.
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THE
MEETING
Solicitation,
Date, Time, and Place
This Proxy Statement and the
accompanying proxy card are being made available to the shareholders of
O.I. Corporation (referred to as the “Company,” “OI,” “we,” “our,” or
“us”)
in connection
with the solicitation of proxies to be used in voting at the 2010 Annual Meeting
of Shareholders (the “Meeting”) or any adjournment or postponement of the
Meeting. The Meeting will be held on Tuesday, May 18, 2010, at 11:00
a.m. local time, at our headquarters located at 151 Graham Road, College
Station, Texas, 77845 for the purposes set forth in the Notice of Annual Meeting
of Shareholders. On or about April 16, 2010, we are mailing the Proxy
Statement, proxy card, and Annual Report on Form 10-K to our
shareholders. Shareholders may vote by signing and completing the
enclosed proxy card. These proxies are solicited on behalf of
our Board of Directors.
Appointment
of Proxyholders
The nominees for proxyholder are
officers of the Company. Each shareholder has the right to appoint an
alternative proxyholder, who need not be a shareholder, to attend and act on his
or her behalf at the Meeting instead of the nominees listed. To
exercise such right, either the names of the nominees should be crossed out
(such deletion to be initialed by the person or officer signing the instrument
of proxy) and the name of the shareholder’s appointee should be legibly printed
in the blank space provided for that purpose in the enclosed instrument of
proxy, or another appropriate form of proxy should be completed.
Signature
on Proxy
To be valid, the enclosed instrument of
proxy or other appropriate form of proxy must be signed by the shareholder or
his, her, or its attorney duly authorized in writing or, if the shareholder is a
corporation, the instrument of proxy should be signed in its corporate name by
an officer or attorney thereof duly authorized in writing. An
instrument of proxy signed by a person acting as attorney or in some other
representative capacity (executor, administrator, trustee, etc.) should reflect
such person’s title or capacity following his signature and should be
accompanied by the appropriate instrument evidencing qualification and authority
to act (unless such instrument has previously been provided to the
Company).
Revocation
of Proxies
You can
revoke your proxy before it is exercised at the Meeting in one of three
ways:
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·
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by
submitting written notice to our Corporate Secretary before the Meeting
that you have revoked your proxy;
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·
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by
timely submitting another proxy by fax or mail that is later dated and
properly signed; or
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·
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by
voting in person at the Meeting, provided you have a valid proxy to do so
if you are not the record holder of the
shares.
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Expenses
of Solicitation
We will bear the cost of the
solicitation of the proxies, including the charges and expenses of brokerage
firms and others for forwarding solicitation material to beneficial owners of
stock. All further solicitations will be made either by our transfer
agent or by our employees, neither of whom will be additionally
compensated.
Record
Date; Shareholders Entitled to Vote; Quorum; Vote Required
Holders
of record of our common stock at the close of business on March 31, 2010 (the
“Record Date”) are entitled to notice of and to vote at the
Meeting. At the close of business on the Record Date, 2,365,036
shares of our common stock, par value $0.10 per share, were issued and
outstanding. Each share is entitled to one vote per share on the
matters proposed. Only holders of common stock of record at the close
of business on the Record Date will be entitled to vote at the
Meeting. For a period of ten days after the Record Date, a complete
list of shareholders authorized to vote at the Meeting will be available for
inspection during regular business hours at the Company’s corporate
headquarters.
A quorum
of shareholders (those holding a majority of the outstanding common stock and
attending personally or represented by proxy) is necessary for a valid
Meeting. Abstentions will be included in determining the number of
shares present at the Meeting for the purpose of determining the presence of a
quorum, as will broker non-votes. Broker non-votes occur when brokers
are not permitted under stock exchange rules to vote on a matter without
instructions from beneficial owners of the shares and no instructions are
given. Brokers are permitted to vote on the ratification of
independent public accountants without instructions from beneficial
owners. Brokers are no longer permitted to vote on the election of
directors without instructions from beneficial owners. Accordingly,
if you do not direct your broker how to vote your shares, your shares will not
be voted and will result in a broker non-vote.
Directors
are elected by a plurality of the votes cast for
directors. Ratification of the appointment of independent public
accountants requires approval by a majority of the votes cast on the
proposal. Abstentions (and any broker non-votes) will not be included
in the number of votes cast on a matter and thus will not be taken into account
in determining the approval of these proposals.
In the absence of a quorum (1,182,519
shares) at the Meeting, either in person or by proxy, the Meeting may be
adjourned from time to time for not more than 29 days, without notice, other
than announcement at the Meeting, until a quorum shall be formed.
Voting
of Proxies
Please use the enclosed postage-paid
envelope to return the proxy card or voting form that accompanies this proxy
statement.
Shares Held of
Record
. Our transfer agent and registrar, American Stock
Transfer & Trust Company, 59 Maiden Lane, New York, NY 10038, will tabulate
the votes. Proxies must be received by 11:59 p.m. Eastern time on May
17, 2010. Giving such a proxy will not affect your right to vote in
person if you decide to attend the Meeting.
Shares Held in a Bank or Brokerage
Account
. A number of banks and brokerage firms participate in
a program (separate from that offered by American Stock Transfer & Trust
Co.) that permits shareholders to direct their vote by internet or
telephone. If your shares are held in an account at such a bank or
brokerage, you may direct the voting of those shares by the internet or
telephone by following the instructions on the voting form provided by the bank
or brokerage. Votes directed by internet or telephone through such a
program must be received by 11:59 p.m. Eastern time on May 17,
2010. Directing your vote in this manner will not affect your right
to vote in person if you decide to attend the Meeting; however, you must first
request a legal proxy either on the internet or the voting form that accompanies
this proxy statement. Requesting a legal proxy prior to the deadlines
described above will automatically cancel any voting directions you have
previously given
.
Shares
for which proxies have been executed will be voted as specified in the
proxies. If no specification is made, the shares will be voted FOR
each of the Proposals described in this Notice of Meeting.
Other
Matters to Be Acted on at the Meeting
At the
Meeting, we will act only on the matters indicated in the accompanying Notice of
Meeting and procedural matters related to the Meeting. The
accompanying instrument of proxy confers discretionary authority upon the
persons named therein with respect to amendments or variations to matters
identified in the Notice of Meeting and with respect to other matters which may
properly come before the Meeting or any adjournment thereof but does not confer
authority to vote for the election of any person as a director of the Company
other than for those persons named in this proxy statement. At the
time of printing this proxy statement, our management knows of no such
amendments, variations, or other matters to come before the Meeting other than
the matters referred to in the Notice of Meeting. If any other
business or amendments or variations to the matters identified in the Notice of
Meeting properly come before the Meeting, then the persons named in the enclosed
instrument of proxy will vote on such matters in accordance with their best
judgment.
General
Information
The
mailing address of our principal executive offices is: O.I.
Corporation, P.O. Box 9010, College Station, Texas 77842-9010. Our
telephone number is (979) 690-1711 and our facsimile number is (979)
690-0440.
Solicitation of proxies is expected to
commence on or about April 16, 2010 (the approximate date this proxy statement
was first made available to shareholders).
Required
Vote
A quorum
is required in order to transact any business at the Meeting.
Election of
Directors.
The affirmative vote of a plurality of the shares
of common stock present in person or represented by proxy at the Meeting and
entitled to vote is required for the election of the nominees as
directors. That is, the nominees receiving the greatest number of
votes will be elected. A “WITHHELD” vote will not affect the election
of the nominees as directors.
Other
Proposals.
The affirmative vote of the holders of a majority
of the shares of common stock present in person or represented by proxy at the
Meeting and entitled to vote is required to ratify McGladrey & Pullen, LLP
as our independent auditors.
Effect of Withheld Votes and
Abstentions.
In the election of directors, you may withhold
your vote. Withheld votes will have no effect on the outcome of the
election. You may vote to “abstain” on other proposals. If
you vote to “abstain” on a proposal, your shares will be counted as present at
the Meeting for purposes of that proposal and will have the same effect as a
vote against that proposal.
Broker-dealers.
Broker-dealers
who hold their customer’s shares in street name may, under the applicable rules
of the exchange and other self-regulatory organizations of which the
broker-dealers are members, sign and submit proxies for such shares and may vote
such shares on routine matters, which includes the ratification of
auditors. Broker-dealers may not vote such shares on other matters,
including the election of directors, without specific instructions from the
customers who beneficially own such shares. Proxies signed and submitted by
broker-dealers which have not been voted on matters described in the previous
sentence are referred to as broker non-votes. Broker non-votes on a
particular matter are not deemed to be shares present and entitled to vote on
such matters. Broker non-votes, if any, will not be counted as votes
cast on any proposal.
PROPOSAL
1
ELECTION
OF DIRECTORS
The
Board of Directors has nominated and urges you to vote FOR the five
nominees listed below. Proxies solicited hereby will be so
voted unless shareholders specify otherwise in their
proxies. The affirmative vote of the holders of a plurality of
the shares of common stock present in person or by proxy at the Meeting
and entitled to vote is required for approval of this
proposal.
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At the Meeting, five incumbent
directors are to stand for re-election to serve until the 2011 Annual Meeting of
Shareholders or until their respective successors are elected and qualified in
accordance with the provisions of the Company’s Bylaws. Shareholders
are being asked to vote for the re-election of Raymond E. Cabillot, Richard W.K.
Chapman, J. Bruce Lancaster, John K.H. Linnartz, and Donald P.
Segers.
In identifying qualified individuals to
become members of the Board of Directors, the Nominating and Corporate
Governance Committee selects candidates whose attributes it believes would be
most beneficial to the Company. The Nominating and Corporate
Governance Committee evaluates each individual’s experience, integrity,
competence, diversity, skills, and dedication in the context of the needs of the
Board of Directors. All nominees, whether recommended by a security
holder or not, are evaluated on the same criteria with particular emphasis on
the complementary skills and experience needed to balance the Board’s overall
makeup relative to our strategy and operations. The Nominating and
Corporate Governance Committee continually strives to bring diversity of
opinions, experience, and skill to the oversight of the Company’s
business.
We believe that the individuals
identified below possess the appropriate skills and experience to manage our
business. Messrs. Cabillot and Linnartz represent our two largest
shareholders and are highly-skilled financial analysts. Each
possesses the skills to provide in-depth financial analysis of our business
operations as well as potential investment opportunities. Dr.
Chapman, a Ph.D. Biochemist and Physiologist, has significant knowledge of the
analytical instrument industry from his own experiences serving in high-ranking
executive roles within the industry as well as founding two instrumentation
companies. Dr. Chapman contributes significant insight into product
development, product markets, and operational synergies affecting our
business. Mr. Lancaster brings more than thirty years of financial
analysis and business planning from his experiences as a Certified Public
Accountant and Chief Financial Officer of numerous public and private
companies. Mr. Lancaster is skilled in merger and acquisition
analysis and negotiation as well as the financial reporting requirements
applicable to public companies. Dr. Segers, a Ph.D. Chemist,
has a wealth of experience with the science underlying our technologies as well
as the operations of our business. As our Chief Operating Officer, he
provides valuable insight regarding the day-to-day operation of our facilities,
our employees, and new products in development.
Unless otherwise marked, the shares
represented by the enclosed proxy will be voted "FOR" the re-election as
directors of the five nominees named above. The proxy cannot be voted
for a greater number of persons than the number of nominees named. If
any nominee becomes unavailable for any reason, or if a vacancy should occur
before the election (which events are not anticipated), the shares represented
by the enclosed proxy may be voted for such person as may be determined by the
holders of such proxy.
Nominees
for Board of Directors
Name
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Age
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Current Position
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Raymond
E. Cabillot
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47
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Director,
Co-Chairman of the Board
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Richard
W. K. Chapman
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65
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Director
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J.
Bruce Lancaster
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54
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Director,
CEO, and CFO
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John
K. H. Linnartz
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49
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Director,
Co-Chairman of the Board
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Donald
P. Segers
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54
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Director,
President, and COO
|
The biographies of the nominees to
serve as directors of the Company until the 2011 Annual Meeting of Shareholders
or until their successors are elected and qualified and certain information with
respect to the business experience of each nominee during the last five years
are set forth below. The Board of Directors has determined that each
of the current non-employee directors standing for re-election is independent
within the meaning of the Nasdaq Stock Market listing standards. The
nominees have consented to be named in this proxy statement and to serve as
directors, if elected.
Raymond E. Cabillot
(47)
. Mr. Cabillot has served on our Board of Directors since
May 2006 and is currently serving as Co-Chairman of the Board. In
2006, Farnam Street Partners LP, a shareholder of OI, proposed Mr. Cabillot for
nomination to the Board of Directors and the Board nominated and shareholders
elected him for such position. Mr. Cabillot has, from January 1998 until
the present, served as Chief Executive Officer and a director of Farnam Street
Capital, the General Partner of Farnam Street Partners LP, a private investment
partnership located in Minneapolis, MN. He was a Senior Research
Analyst at Piper Jaffray from 1990 to 1998. Prior to that, he worked
for Prudential Capital Corporation from 1987 to 1990 as an Associate Investment
Manager and as an Investment Manager. Mr. Cabillot serves as a
director of several private companies. Mr. Cabillot has a B.A. degree
with a double major in Economics and Chemistry from Saint Olaf College and an
M.B.A. from the University of Minnesota.
Richard W. K. Chapman, Ph.D.
(65).
Dr. Chapman has served on our Board of Directors since
August 2001. In 2008, Dr. Chapman founded Harbinger Instruments,
Inc. Dr. Chapman has been a managing partner with GlenRose Capital,
LLC, a private equity firm specializing in the acquisition and operation of high
technology companies since 2000. Dr. Chapman now serves as the Chief
Operating Officer of GlenRose Instruments, successor corporation to GlenRose
Capital. Currently, Dr. Chapman is on the board of GlenRose Instruments’
private subsidiary, Eberline Services, an environmental remediation company, and
is the Founder and Chairman of Axxiom, Inc., a private real estate and
technology firm. From 1992 to 2000, Dr. Chapman was Senior Vice
President of Thermo Instrument Systems, Inc., an analytical instrumentation
manufacturer, when it was a publicly traded company. He was
President, Chief Executive Officer, and Director of ThermoQuest Corporation from
its inception in 1995 throughout its existence as a publicly traded company,
ending in May 2000.
J. Bruce Lancaster
(54).
Mr. Lancaster has served on our Board of Directors since
June 2007, when he was also named Chief Executive Officer of the
Company. He joined the Company in early 2007 as Vice President and
Chief Financial Officer. Mr. Lancaster served as Executive Vice
President and CFO for Boss Holdings, Inc., (OTCBB: BSHI) from 1998 to
2006. Mr. Lancaster previously served as Vice President of Finance
and Administration for Acme Boot Co. during 1996 and 1997 and Vice President of
Finance for the former Kinark Corporation, now North American Galvanizing and
Coatings, Inc., (AMEX: NGA) from 1989 to 1995. Mr. Lancaster holds
both a B.B.A. and an M.B.A. from Texas A&M University and is a Certified
Public Accountant.
John K. H. Linnartz
(49).
Mr. Linnartz has served on our Board of Directors since
May 2008 and is currently serving as Co-Chairman of the Board. Since
March of 2003, Mr. Linnartz has been the Managing Member of Mustang Capital
Management, LLC, the General Partner of Mustang Capital Advisors, LP, a
registered investment advisor located in Houston, Texas. From 2000 to
2003, he served as Vice President and Member of the Bank and Thrift Group at
Stephens, Inc. Prior to that, Mr. Linnartz was a Limited Partner at
J.C. Bradford & Company (now UBS Financial Services). Mr.
Linnartz served as a Founding Director of Trinity Bank N.A. (OTCBB: TYBT)
located in Fort Worth, Texas from 2003 to 2006.
Donald P. Segers, Ph.D.
(54).
Dr. Segers has served on our Board of Directors since
June 2007, when he was also named President and Chief Operating Officer of the
Company. Dr. Segers joined the Company in July of 1997 as a Senior Research
Scientist and was promoted to Manager of Programs in October of
1998. In September of 2000, he was promoted to General Manager and in
February of 2001 was named Vice President and General Manager. Before
joining OI, Dr. Segers was Supervisor of Applied Physical Chemistry in the
Physical Chemistry Group at Southern Research Institute in Birmingham,
AL. Dr. Segers holds a Ph.D. in Chemistry from North Carolina State
University.
INFORMATION
ABOUT THE BOARD OF DIRECTORS
The
Board of Directors; Director Independence; Board Leadership
Our business and the risks associated
therewith are managed through the oversight and direction of our Board of
Directors. During 2009, we had three standing
committees: the Audit Committee, the Compensation Committee, and the
Nominating and Corporate Governance Committee, and two ad hoc committees: the
Special Committee and the Investment Committee. Our Board of
Directors currently consists of five persons. Under applicable Nasdaq
and SEC requirements, (i) we are required to have a majority of independent
directors, and (ii) all of the members of each committee must be
independent. The Board of Directors has affirmatively determined that
each of Raymond E. Cabillot, Richard W.K. Chapman, and John K.H. Linnartz is an
“independent director” as such term is defined in Nasdaq Marketplace Rule
5605(a)(2). The Board of Directors has also affirmatively determined
that each member of each committee of the Board of Directors satisfies the
independence requirements applicable to committees as prescribed by the Nasdaq
Marketplace Rules and the rules and regulations of the SEC. This
determination extends to Messrs. Cabillot and Linnartz who are not subject to
the safe harbor provisions of Rule 10A-3 of the Securities Exchange Act of 1934
regarding independence of Audit Committee members. Messrs. Lancaster
and Segers are not “independent directors” because they are executive officers
of the Company.
In 2009, the Board reconsidered its
composition and determined that it would both reduce costs and improve
efficiency to reduce the size of the Board by one
position. Accordingly, Leo B. Womack did not stand for re-election at
the 2009 Annual Meeting of Shareholders. This reduced the size of the
Board to five members, including three non-employee members. These
same five directors are standing for reelection in 2010.
Directors are elected at each Annual
Meeting of Shareholders and serve until a successor is duly elected and
qualified at an appropriate Annual Meeting of the
Shareholders. Vacancies may be filled by an affirmative vote of the
majority of the remaining directors.
We separate the positions of Chairman
of the Board of Directors and Chief Executive Officer. We believe
this benefits our shareholders by creating greater shareholder representation in
the boardroom as well as creating an additional level of risk
management. Messrs. Cabillot and Linnartz, representatives of our two
largest shareholders, are currently serving as Co-Chairmen of the Board of
Directors. Our independent directors met in executive session on five
separate occasions during 2009.
Meetings
of the Board of Directors
The Board of Directors held five
meetings during 2009, three of which were teleconferences, and two of which were
special meetings. In order to further Company-wide cost reductions
implemented in 2009, the Board of Directors resolved to conduct a portion of its
meetings telephonically. We anticipate that, moving forward, we will
continue to hold a significant percentage of our Board meetings
telephonically. In 2009, each of the then-current directors attended
all of the meetings of the Board of Directors and any committee of the Board of
Directors on which he served.
1
Attendance
at Annual Meeting
Although
we do not have a formal policy regarding attendance by the Board of Directors at
the Annual Meeting of Shareholders, we encourage directors to attend, and a
meeting of the Board of Directors typically is held on the same day as the
Annual Meeting of Shareholders. We anticipate that each director
nominated for re-election will attend both meetings in 2010. Each of
the then-current directors attended the 2009 Annual Meeting of
Shareholders.
Committees
of the Board
The Board has three standing committees
to facilitate and assist the Board in the execution of its
responsibilities. The committees are currently the Audit Committee,
the Compensation Committee, and the Nominating and Corporate Governance
Committee. In accordance with best practice and Marketplace Rules of
the Nasdaq Stock Market, Inc., all the committees are comprised solely of
independent non-employee directors. Charters for each of the
committees are available on the Company’s website at
www.oico.com
/
oicorp
. The table
below shows current membership of each of the standing Board
committees:
1
Mr.
Womack departed the Board on September 21, 2009.
|
|
|
|
Nominating
and Corporate
|
Audit
Committee
|
|
Compensation
Committee
|
|
Governance
Committee
|
Raymond
E. Cabillot
|
|
Raymond
E. Cabillot
|
|
Raymond
E. Cabillot
|
Richard
W.K. Chapman
|
|
Richard
W.K. Chapman*
|
|
Richard
W.K. Chapman
|
John
K.H. Linnartz*
|
|
John
K.H. Linnartz
|
|
John
K.H.
Linnartz*
|
*
Committee Chairman
In
addition to the standing committees mentioned above, the Board convenes special
committees to consider various other matters as they arise. During
2009, the Board maintained two special committees: the Special
Committee comprised of Messrs. Cabillot, Linnartz, and Womack and the Investment
Committee comprised of Messrs. Cabillot, Lancaster, and Linnartz. The
Special Committee disbanded in 2009.
Audit
Committee.
Pursuant to its charter, the Audit Committee
assists the Board of Directors in overseeing (1) the financial statements and
audits of the Company, (2) the Company’s compliance with financial reporting
requirements, and (3) the independence and performance of the Company’s internal
and external auditors. The Audit Committee Charter further requires
the Audit Committee to, among other things:
|
·
|
Review
the annual audited financial statements with management and the
independent auditors and determine whether to recommend to the Board that
they be included in the Company’s Annual Report on Form
10-K;
|
|
·
|
Review
proposed major changes to the Company’s auditing and accounting principles
and practices;
|
|
·
|
Review
and evaluate the Company’s system of internal
controls;
|
|
·
|
Review
significant financial reporting issues raised by management or the
independent auditors; and
|
|
·
|
Establish
procedures for the receipt, retention, and treatment of complaints
received by the Company regarding accounting, internal accounting
controls, or auditing matters as well as the confidential and anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
|
The Board of Directors has determined
that both Raymond E. Cabillot and John K.H. Linnartz qualify as “audit committee
financial experts” as defined in the applicable rules and regulations of the
Securities Exchange Act of 1934 (the “Exchange Act”), “financially sophisticated
audit committee members” as defined under Nasdaq Marketplace Rules, and are
“independent” as defined by the Exchange Act.
The Audit Committee held six meetings
during 2009, four of which were teleconferences, and all then-current members of
the Audit Committee were present at each meeting.
2
The SEC has
indicated that the designation of a person as an “audit committee financial
expert” does not (i) mean that such person is an expert for any purpose,
including without limitation for purposes of Section 11 of the Securities Act of
1933, as amended, (ii) impose on such person any duties, obligations, or
liability that are greater than the duties, obligations, and liability imposed
on such person as a member of the Audit Committee and the Board of Directors in
the absence of such designation, or (iii) affect the duties, obligations, or
liability of any other member of the Audit Committee or the Board of
Directors.
As required by Nasdaq, our Board of
Directors has reviewed the qualifications of its Audit Committee members and has
determined that none of them has a relationship with us that may interfere with
the exercise of their independence from management and the
Company. This determination extends to Messrs. Cabillot and Linnartz
who are not subject to the safe harbor provisions of Rule 10A-3 of the
Securities Exchange Act of 1934 regarding independence of Audit Committee
members.
2
The
Audit Committee was comprised of Messrs. Chapman, Linnartz, and Womack through
September 21, 2009 and Messrs. Cabillot, Chapman, and Linnartz throughout the
remainder of the year.
In January 2010, the Audit Committee
reviewed its charter and recommended no changes. The Audit Committee
Charter is available at no charge on our web site at
www.oico.com/oicorp.
Compensation Committee
.
Pursuant to its charter, the Compensation Committee assists the Board of
Directors in fulfilling its oversight responsibilities for compensation of
executive officers and administration of the Company’s compensation and benefit
plans. The Compensation Committee Charter further provides that the
Compensation Committee shall, among other things:
|
·
|
Recommend
to the Board the hiring or termination of the Company’s executive
officers;
|
|
·
|
Review
and determine the non-equity compensation payable to the Company’s
executive officers;
|
|
·
|
Develop
a succession plan for executive officers;
and
|
|
·
|
Review
and recommend action regarding the reservation of authorized and unissued
Company common stock or the purchase of Company common
stock.
|
The Compensation Committee held three
meetings during 2009 and one such meeting was a teleconference. Each
member of the Compensation Committee was present at each meeting.
3
In January 2010, the Compensation
Committee reviewed its charter and recommended no changes. The
Compensation Committee Charter is available at no charge on our web site located
at
www.oico.com/oicorp
.
The Compensation Committee is
responsible for evaluating and setting the compensation for our named executive
officers. The Compensation Committee sets executive compensation by evaluating
base salary (cash), short-term incentives (bonus—cash, equity, or both),
long-term incentives (equity), and benefits. The Compensation Committee is
solely responsible for determining the compensation of our named executive
officers. The named executive officers do not participate in
deliberations relating to their own compensation. No
compensation consultant advised the Compensation Committee in determining the
compensation of our named executive officers in 2009.
Under its charter, the Compensation
Committee may delegate separate but concurrent authority to administer the
Company’s compensation and benefits plans to subcommittees with respect to
employees and consultants that are not subject to short-swing profit
restrictions. For fiscal year 2009, the Compensation Committee
reviewed and approved the total compensation package for each of the Company’s
named executive officers.
Nominating and Corporate Governance
Committee.
Pursuant to its charter, the Nominating and
Corporate Governance Committee assists the Board of Directors in: (1)
identifying qualified individuals to become members of the Board, (2)
determining the composition of the Board and its committees, (3) monitoring
effectiveness of the Board and its committees, and (4) developing, monitoring,
and evaluating sound corporate governance policies and
procedures. The Nominating and Corporate Governance Committee Charter
further provides that the Nominating and Corporate Governance Committee, among
other things:
|
·
|
Recommend
that the Board select a group of individuals to be nominated for election
at each Annual Meeting of
Shareholders;
|
|
·
|
Review
and make recommendations to the Board concerning compensation arrangements
for non-employee directors;
|
|
·
|
Develop
and recommend to the Board an annual self-evaluation process for the Board
and its committees;
|
|
·
|
Review
the effectiveness of the Company’s system for monitoring compliance with
laws and regulations and the results of management’s investigation and
follow-up on any instances of noncompliance;
and
|
|
·
|
Initiate
and oversee special investigations as
necessary.
|
The Nominating and Corporate Governance
Committee held two meetings during 2009, neither of which were teleconferences,
and all then-current members of the Nominating and Corporate Governance
Committee were present at each meeting.
4
3
The
Compensation Committee was comprised of Messrs. Cabillot, Chapman, and Linnartz
the entire year.
4
The
Nominating and Corporate Governance Committee was comprised of Messrs. Cabillot,
Linnartz, and Womack through September 21, 2009, and Messrs. Cabillot, Chapman,
and Linnartz throughout the remainder of the year.
The Board and the Nominating and
Corporate Governance Committee met in January of 2010 to determine the director
nominees for 2010. The Nominating and Corporate Governance Committee
evaluated the skill set and experience of each of the then-current directors and
made a determination that each should stand for re-election at the 2010 Annual
Meeting of Shareholders. The Nominating and Corporate Governance Committee then
recommended to the Board a slate of five directors to be considered for
re-election at the Meeting.
In January 2010, the Nominating and
Corporate Governance Committee reviewed its charter and recommended no
changes. The Nominating and Corporate Governance Charter is available
at no charge on our web site at
www.oico.com
/oicorp.
Special
Committees.
As needed, special committees may be constituted
by the Board to review special matters or assist in special investigations and
any matters which may arise out of those investigations. In 2009, we
had two special committees.
Special
Committee.
The Special Committee met with our management and
outside legal and financial advisors to evaluate and respond to certain merger
and acquisition related opportunities. During 2009, the Special
Committee held five meetings and engaged in additional discussion and review
through an informal process. Messrs. Cabillot, Linnartz, and Womack
served on this committee. This committee disbanded in
2009.
Investment
Committee.
The Investment Committee evaluates potential
investments for the Company’s surplus assets, including the evaluation of
potential acquisition candidates. During 2009, the Investment
Committee held eight meetings and engaged in additional discussion and review
through an informal process. Messrs. Cabillot, Lancaster, and
Linnartz serve on this committee.
The
Board’s Role in Risk Management
The Board
of Directors oversees the assets of the Company, ensures appropriate controls
are maintained, and that our business is conducted in compliance with applicable
laws and regulations. Our Executive Officers report directly to the
Board of Directors regarding the risks facing our business and we believe the
members of our Board possess the appropriate experience and skill to understand
the Company’s material enterprise risks, including operational, financial,
strategic, compliance, and reputational risks. Additionally, as noted
above, we separate the positions of Chief Executive Officer and Chairman of the
Board of Directors which we believe creates an additional level of risk
management.
The Board
oversees risk through a number of Committees which meet regularly and report
back to the full Board. In particular:
|
·
|
The
Audit Committee oversees risks related to our financial statements and
related accounting matters. The Audit Committee also evaluates
the effectiveness of our system of internal controls. Members
of the Audit Committee meet at least annually in an executive session with
representatives of the Company’s independent accounting
firm.
|
|
·
|
The
Compensation Committee evaluates the risks associated with our
compensation programs and meets to review and approve compensation
programs which are designed to mitigate risk while providing competitive
compensation.
|
|
·
|
The
Nominating and Corporate Governance Committee oversees our ethics program
and reviews the Company’s system for monitoring compliance with laws and
regulations. Additionally, the Nominating and Corporate
Governance Committee evaluates directors and director nominees to ensure
the Company’s Board of Directors is appropriately configured with
individuals who are qualified to oversee our business and make complex
business decisions without subjecting the Company to unnecessary
risk.
|
Director
Nominations
In evaluating potential director
candidates, the Nominating and Corporate Governance Committee considers the
appropriate balance of experience, skills, and characteristics required of the
Board of Directors and seeks to ensure that at least a majority of the directors
are independent under the applicable Marketplace Rules of The Nasdaq Stock
Market, Inc. The Nominating and Corporate Governance Committee
selects director nominees based on their personal and professional integrity,
depth and breadth of experience, ability to make independent analytical
inquiries, understanding of our business, willingness to devote adequate
attention and time to duties of the Board of Directors, and such other criteria
as are deemed relevant by the Nominating and Corporate Governance
Committee. Although we do not have a formal policy regarding
diversity, the Nominating and Corporate Governance Committee believes that the
backgrounds and qualifications of the directors, considered as a group, should
provide a diverse mix of experience, knowledge, and skills.
In identifying potential director
candidates, the Nominating and Corporate Governance Committee relies on
recommendations made by current directors and officers. In addition,
the Nominating and Corporate Governance Committee may engage a third party
search firm to identify and recommend potential candidates. Finally,
the Nominating and Corporate Governance Committee will consider candidates
recommended by shareholders.
Our
Bylaws contain provisions that address the process by which a shareholder may
nominate an individual to stand for election to the Board of Directors at our
Annual Meeting. Generally, shareholders desiring to make such
recommendations should submit a written notice of the recommendation to the
Corporate Secretary of the Company at our principal executive offices located at
151 Graham Road, College Station, Texas 77845. In order for any
nomination notice to be considered timely for next year’s Annual Meeting of
Shareholders, the written notice must be received by our Corporate Secretary by
December 17, 2010 (the date that is 120 days prior to the one year anniversary
of the mailing of this Proxy Statement). In the event that the Annual
Meeting is held more than 60 days before or 30 days after the anniversary of the
prior meeting, all proposals must generally be received between 60 and 90 days
prior to the meeting. Please see “Shareholder Proposals” below for a
further discussion of the nomination process. Shareholders may
contact our Corporate Secretary at our principal executive offices for a copy of
the relevant Bylaw provisions regarding the requirements for nominating director
candidates.
Assuming
that a shareholder recommendation contains the information required by our
Bylaws and applicable rules and regulations of the Securities and Exchange
Commission, the Nominating and Corporate Governance Committee will evaluate a
candidate recommended by a shareholder by following substantially the same
process, and applying substantially the same criteria, as for candidates
identified through other sources.
Code
of Ethics
We have adopted a Code of Business
Conduct and Ethics (the “Code”) that applies to all of our employees, executive
officers and directors, including our principal executive officer and principal
financial officer. The Code contains written standards that are
reasonably designed to deter wrongdoing and includes provisions regarding
ethical conduct, conflicts of interest, proper disclosure in all public
communications, compliance with all applicable governmental laws, rules and
regulations, and the prompt reporting of violations of the Code and
accountability for adherence to the Code. A copy of the Code is
available at no charge on our web site at
www.oico.com/oicorp
.
Communications
by Shareholders and Other Interested Parties with the Board
Shareholders and other interested
parties may communicate with one or more members of the Board of Directors by
writing to all or one of the following: Audit Committee Chairman, Compensation
Committee Chairman, or Nominating Committee Chairman, c/o Corporate Secretary,
O.I. Corporation, P.O. Box 9010, College Station, Texas
77842-9010.
REPORT
OF THE AUDIT COMMITTEE
Our Audit Committee is composed of
three independent directors, each of whom is able to read and understand
fundamental financial statements. Two members of the Audit Committee are
Audit Committee Financial Experts as defined by the SEC in Disclosures Required
by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002 and in Regulation
S-K.
The primary functions of the Audit
Committee are to assist the Board in fulfilling its oversight responsibilities
by reviewing financial information provided to the shareholders and others, the
systems of internal controls established by management, and the audit
process. The Audit Committee will meet at least four times per year,
including each time we propose to issue our quarterly or annual earnings
information. It is the responsibility of the Audit Committee to
provide an open avenue of communication between the Board of Directors,
management, the internal accounting team, and the independent
accountants. The Audit Committee is also empowered to appoint the
independent auditors, establish the audit fees, pre-approve any non-audit
services provided by independent auditors, and to hire outside counsel or other
consultants as necessary.
During
2009, the members of the Audit Committee participated in two in-person meetings
and four telephone conferences. McGladrey & Pullen, LLP has
served as the Company’s independent registered public accountants since
2007.
In order to adhere to the rules and
regulations set forth under the Sarbanes-Oxley Act of 2002, the Audit Committee
reviewed its written charter in January 2010 and recommended no
changes. The charter is available at no charge on our web site at
www.oico.com/oicorp
. The
charter describes the scope and administration of the Audit Committee’s
responsibilities.
The Audit Committee has discussed with
McGladrey & Pullen, LLP the matters required to be discussed by Statement on
Audit Standards No. 61, as amended, (Communication with Audit Committees); and
the Audit Committee has received and discussed the written disclosure and the
letter from McGladrey & Pullen required by Independent Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). The
Audit Committee has also discussed the independence of McGladrey & Pullen,
LLP with that firm.
With and without management present,
the Audit Committee discussed and reviewed the results of McGladrey &
Pullen, LLP’s examination of the Company’s December 31, 2009 financial
statements. The discussion included matters related to the conduct of
the audit, such as the selection of and changes in significant accounting
policies, the methods used to account for significant or unusual transactions,
the effect of significant accounting policies in controversial or emerging
areas, the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors’ conclusions regarding the
reasonableness of those estimates, and significant adjustments arising from the
audit and disagreements, if any, with management over the application of
accounting principles, the basis for management’s accounting estimates and the
disclosures in the financial statements.
Based on the review and discussions
with our independent registered public accountants, the Audit Committee
recommended to the Board of Directors, and the Board of Directors has approved,
that our audited financial statements be included in the Securities and Exchange
Commission Annual Report on Form 10-K for the year ended December 31,
2009.
The
Audit Committee
John K.H.
Linnartz, Audit Committee Chairman
Raymond
E. Cabillot
Richard
W.K. Chapman
EXECUTIVE
OFFICERS OF THE REGISTRANT
The
executive officers of the Company, their ages, positions, and offices are as
follows:
Name
|
|
Age
|
|
Position
|
|
Date Elected to Position
|
J.
Bruce Lancaster
|
|
54
|
|
Chief
Executive Officer and Chief Financial Officer
|
|
2007
|
Donald
P. Segers
|
|
54
|
|
President
and Chief Operating Officer
|
|
2007
|
J. Bruce
Lancaster joined the Company in early 2007 as Vice President and Chief Financial
Officer. In June of 2007, he was named Chief Executive Officer. Prior to joining
OI, Mr. Lancaster was the Executive Vice President and Chief Financial
Officer for Boss Holdings, Inc. (OTCBB: BSHI) from 1998 to 2006. He previously
served as Vice President of Finance and Administration for Acme Boot Co. during
1996 and 1997 and Vice President of Finance for the former Kinark Corporation,
now North American Galvanizing and Coatings, Inc., (AMEX: NGA) from 1989 to
1995. Mr. Lancaster holds both a B.B.A. and an M.B.A. from Texas
A&M University and is a Certified Public Accountant.
Donald P.
Segers, Ph.D., joined the Company in July of 1997 as Senior Research Scientist.
He was promoted to Manager of Programs in October of 1998. In September of 2000,
he was promoted to General Manager and in February of 2001 he was named Vice
President and General Manager. On January 21, 2007, he was appointed Acting
President of the Company and, in June of 2007, he was named President and Chief
Operating Officer. Before joining OI, Dr. Segers was Supervisor of Applied
Physical Chemistry in the Physical Chemistry Group at Southern Research
Institute in Birmingham, Alabama. Dr. Segers holds a Ph.D. in
Chemistry from North Carolina State University.
EXECUTIVE
COMPENSATION
The following table lists, for the year
ended December 31, 2009, compensation awarded to or earned by the named
executive officers in 2009. We had no other executive officers whose
compensation exceeded $100,000 during 2009.
SUMMARY
COMPENSATION TABLE
Name and
Principal
Position
|
|
Year
|
|
Salary
($)
(1)
|
|
|
Bonus
($)
(2)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
(4)
|
|
|
Non-equity
Incentive Plan
Compensation
($)
|
|
|
Nonqualified
Deferred
Compensation
earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
J.
Bruce L
anc
aster
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Executive
Officer
& Chief
|
|
2009
|
|
|
206,667
|
|
|
|
—
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,807
|
(5)
|
|
|
216,474
|
|
Financial
Officer
|
|
2008
|
|
|
225,000
|
|
|
|
33,970
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,845
|
(6)
|
|
|
268,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald
P. Segers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
and
|
|
2009
|
|
|
206,667
|
|
|
|
—
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,968
|
(7)
|
|
|
210,635
|
|
Chief
Operating Officer
|
|
2008
|
|
|
225,000
|
|
|
|
40,124
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,900
|
(8)
|
|
|
272,024
|
|
(1)
|
Effective
February 23, 2009, each of Messrs. Lancaster and Segers voluntarily agreed
to a temporary 10% reduction in base salary as part of a Company-wide
salary reduction. Each will be returned to his regular base
salary upon a determination by the Compensation Committee that business
conditions support such a
decision.
|
(2)
|
Bonus
compensation is generally paid subsequent to the year indicated in the
table when the results for that year are known. Bonus amounts
are included for the year in which the bonus was earned, not when it was
paid.
|
(3)
|
In
2008, the Company adopted an Executive Bonus Plan which provided for the
calculation of bonus compensation for Messrs. Lancaster and Segers based
upon target objectives for sales growth, pre-tax earnings as a percentage
of sales, and stock price growth
, each
measured on a year-over-year basis
. The maximum
percentages of base salary for the NEOs ranged from 0% to 150%, with a
target cash bonus set at 50% of base salary. The full details
of the plan are set forth below in the section labeled “Narrative to
Summary Compensation Table.” Due to a decline in the Company’s
business, no bonuses were paid for 2009. An adjusted figure was
used to calculate Dr. Segers’ bonus for 2008 to exclude certain
non-operating items at the request of the CEO as approved by the
Compensation Committee.
|
(4)
|
Options
are granted based on the Compensation Committee’s review of the Company’s
year-end performance as of December 31 and are generally granted in the
year subsequent to the year in which such amounts are shown in the
table.
|
(5)
|
Includes
$2,143 for use of a Company vehicle for the first half of the year and
$2,200 for a car allowance for the remainder of the year. Also
included is a $3,394 matching contribution to Mr. Lancaster’s 401(k) Plan
as well as a $382 allocation of Plan forfeitures which are allocated among
all Plan participants. Pursuant to the Company’s 401(k) Plan,
the Company matches 50% of the first 6% of base salary contributed to the
Plan by an employee. The Company suspended its match in May of
2009, and it has not yet been reinstated. A $1,688 matching
contribution to Mr. Lancaster’s contribution to the Company’s Employee
Stock Purchase Plan is also included. Pursuant to the Company’s
Employee Stock Purchase Plan, any employee who has worked for the Company
for at least one year is eligible to receive a matching contribution from
the Company equal to 15% of their contribution to the
Plan.
|
(6)
|
Includes
$2,458 for personal use of a Company vehicle and a $6,900 matching
contribution to Mr. Lancaster’s 401(k) Plan. Pursuant to the
Company’s 401(k) Plan, the Company matches 50% of the first 6% of base
salary contributed to the Plan by an employee. Also included is
a $487 matching contribution to Mr. Lancaster’s contribution to the
Company’s Employee Stock Purchase Plan. Pursuant to the
Company’s Employee Stock Purchase Plan, any employee who has worked for
the Company for at least one year is eligible to receive a matching
contribution from the Company equal to 15% of their contribution to the
Plan.
|
(7)
|
Includes
the Company’s contribution of $3,579 to Dr. Segers’ 401(k)
Plan. Pursuant to the Company’s 401(k) Plan, the Company
matches 50% of the first 6% of base salary contributed to the Plan by an
employee. The Company suspended its match in May of 2009, and
it has not yet been reinstated. Plan forfeitures are allocated
among all participants in the Plan, and an allocation in the amount of
$389 is also included.
|
(8)
|
Includes
the Company’s contribution of $6,900 to Dr. Segers’ 401(k)
Plan. Pursuant to the Company’s 401(k) Plan, the Company
matches 50% of the first 6% of base salary contributed to the Plan by an
employee.
|
Narrative
to Summary Compensation Table
The
following narrative summarizes what we believe to be the material factors
necessary to understand the information included in the table
above.
J. Bruce
Lancaster, our Chief Executive Officer and Chief Financial Officer, and Donald
P. Segers, our President and Chief Operating Officer, are parties to employment
agreements with the Company. Below is a summary description of the
material terms of these employment agreements which, as such, is not
complete. Complete copies of each of these employment agreements are
filed as exhibits to our Current Report on Form 8-K filed June 26, 2007 with the
SEC. These agreements were amended in August 2008, and copies of the
amendments are filed as exhibits 10.3 and 10.4 to the Company’s Report on Form
10-Q for the period ending June 30, 2008.
|
·
|
Term of Each Employment
Agreement
. Both of our named executive officers, or
NEOs, are “at will” employees and, as such, there is no set term for their
employment with the Company.
|
|
·
|
Compensation.
The
employment agreements provide for the following base salaries for the
executive officers for 2009 and
2010:
|
Executive
Officer
|
|
2009
Base Salary($)
|
|
2010
Base Salary($)
|
J.
Bruce Lancaster
|
|
225,000
|
|
225,000
|
Donald
P. Segers
|
|
225,000
|
|
225,000
|
The
salary awarded the executive officers was determined after the Compensation
Committee reviewed the salary historically awarded the executive officers of the
Company. The Compensation Committee believes the salary is
competitive although the salaries are materially below the average salaries
awarded by other companies in our industry.
Effective
February 23, 2009, each of Messrs. Lancaster and Segers voluntarily agreed to a
temporary 10% reduction in pay as part of a Company-wide salary
reduction. This temporary reduction does not affect Base Salary as
defined in the employment agreements and each will be returned to his regular
Base Salary upon a determination by the Compensation Committee that business
conditions support such a decision.
|
·
|
Participation in Compensation
Plans
. Each NEO is eligible to participate in the
following plans:
|
|
·
|
Executive Compensation
Plan
. Pursuant to this plan, each NEO has the
opportunity to earn an annual bonus based on performance measures and
annual incentive plan goals, which are established by the Compensation
Committee.
|
For 2008
and 2009, bonus compensation for each NEO was based upon target objectives for
sales growth, pre-tax earnings as a percentage of sales, and stock price growth,
each measured on a year-over-year basis. The target objectives were
as follows: sales growth – 20%, pre-tax earnings as a percentage of
sales – 30%, and stock price growth – 30%. The maximum percentages of
base salary for the NEOs ranged from 0% to 150%, with a target cash bonus set at
50% of base salary. Under the Plan, each NEO was also eligible to
receive a grant of options to purchase up to 20,000 shares of the Company’s
common stock upon the achievement of a combined 50% of the maximum target
objectives set by the Compensation Committee. In 2008, the
Company achieved 6.41% sales growth, 5.92% pre-tax earnings as a percentage of
sales, and 0% stock price growth, resulting in eligibility for each NEO to
receive a bonus in the amount of $33,970. However, as noted above in
the notes to the Summary Compensation Table, Dr. Segers’ bonus was recalculated
to exclude certain non-operating items at the request of the CEO as approved by
the Compensation Committee. Both NEOs declined an award of stock
options for 2008. Due to a decline in the Company’s business in 2009,
the target objectives under the plan were not achieved and, therefore, no
bonuses were paid or stock options awarded for 2009.
The
Compensation Committee terminated its Executive Compensation Plan for the NEOs
in March of 2010 and adopted a new plan which applies only to Mr. Lancaster, the
Company’s CEO. Dr. Segers is no longer subject to an Executive
Compensation Plan. The details of each NEO’s 2010 bonus
calculation are as follows:
Mr.
Lancaster.
For 2010 and subsequent years while he is actively employed by the Company and
in addition to his Base Salary as defined in his employment agreement, Mr.
Lancaster will be eligible to earn a cash bonus equal to 10% of Free Cash Flow
in excess of $3,000,000 annually, as adjusted by a charge of 15% on any
Incremental Investment Capital (defined below). The charge for
investment capital shall be applied annually year-over-year but shall be
pro-rated based upon the month in which the invested capital is contributed by
the Company. “Free Cash Flow” refers to the Company’s earnings before
interest, taxes, depreciation, and amortization (“EBITDA”), less capital
expenditures. “Incremental Investment Capital” refers to capital
invested subsequent to January 1, 2010 pursuant to approval of the Company’s
Investment Committee for strategic initiatives, such as the acquisition of a
business or product line. The Committee has the discretion to exclude
certain one time events such as the sale of assets from Cash Flows and to
provide a discretionary bonus in addition to the Free Cash Flow based
incentive. The revised Plan does not provide for an award of options
to purchase shares of the Company’s common stock; however Mr. Lancaster remains
eligible to receive an option to purchase up to 25,000 shares of the Company’s
common stock as noted below.
Dr.
Segers.
For 2010 and subsequent years while he is actively
employed by the Company and in addition to his Base Salary as defined in his
employment agreement, Dr. Segers will be eligible to receive a performance-based
cash bonus in an amount to be determined by the Compensation
Committee. Dr. Segers remains eligible to receive an option to
purchase up to 25,000 shares of the Company’s common stock as noted
below.
|
·
|
Stock Option
Grants
. Pursuant to their employment agreements, each
NEO is eligible on an annual basis to receive a stock option to purchase
up to 25,000 shares of the Company’s common stock, which shares will vest
over a four-year period. The option is at the sole discretion
of the Board or Compensation Committee. No options were awarded
for 2008 or 2009. Each NEO received an option to purchase
20,000 shares upon assuming their current roles in
2007.
|
|
·
|
Other
Plans
. The NEOs and, to the extent applicable, the NEOs’
families, dependents, and beneficiaries may participate in the benefit or
similar plans, policies, or programs provided to similarly situated
employees under our standard employment practices as in effect from time
to time.
|
|
·
|
Termination and
Change-in-Control Payments.
The employment agreements
provide for the following termination
payments:
|
|
·
|
Upon
termination for any reason whatsoever, an NEO (or in case of death, his
estate) is entitled to all salary and expense reimbursements due through
the date of such termination and such benefits as are available pursuant
to the terms of any benefit or similar plans, policies, or programs in
which he was participating at the time of such
termination.
|
|
·
|
Upon
termination for death or permanent disability, an NEO (or his estate, as
applicable) will be entitled to earned but unpaid bonus payments and
accrued, unused paid vacation.
|
|
·
|
Upon
termination of an NEO for any reason other than death, disability, or
cause, he will be entitled to continued salary payments for a period of
one year, to continue coverage for a period of one year under
Company-provided health plans, and to other benefits pursuant to the
employment agreement. If we pay this salary and benefits for
the one-year period, the NEO will be required to execute a general release
for any claims such NEO may have against
us.
|
|
·
|
Upon
a Change-in-Control (as defined in the employment agreement) or within 12
months thereafter, each NEO will be entitled to certain change of control
payments if (a) his employment is involuntarily terminated other than for
cause or (b) he terminates his employment with the Company because (i) his
base salary is reduced by 10% or more or his annual target bonus award or
other equity compensation or benefits are materially reduced, (ii) his
duties, authority, or responsibilities are materially diminished, or (iii)
he is required to relocate by more than 50 miles. If triggered,
the Change-in-Control payments to the NEO will be made in a lump sum cash
payment equal to two times his base salary and coverage under Company
provided health plans will be continued for a period of two
years.
|
Outstanding
Equity Awards at Fiscal Year-End 2009
|
|
Option Awards
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
underlying
Unexercised
Unearned
Options (#)
(d)
|
|
|
Option
Exercise
Price ($)
(e)
|
|
Option
Expiration
Date
(f)
|
|
Number
of Shares
or Units
of Stock
That Have
Not
Vested (#)
(g)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(h)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)
(i)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)
(j)
|
|
J.
Bruce
|
|
|
10,000
|
|
|
|
10,000
|
1
|
|
|
—
|
|
|
|
11.42
|
|
01/21/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Lancaster
|
|
|
10,000
|
|
|
|
10,000
|
2
|
|
|
—
|
|
|
|
13.70
|
|
06/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO
& CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don
Segers,
|
|
|
3,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3.125
|
|
02/05/2011
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
President
and COO
|
|
|
12,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6.52
|
|
01/29/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,800
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4.03
|
|
12/16/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8.36
|
|
01/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
2
|
|
|
|
—
|
|
|
|
13.70
|
|
06/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
5,000
shares vested on January 21, 2010 and the remaining 5,000 shares will vest
on January 21, 2011.
|
|
2
|
5,000
shares will vest on each June 25, 2010 and June 25,
2011.
|
Post-Employment
Compensation
The
Company did not offer any pension benefits to its executive officers during
2009.
Nonqualified
Deferred Compensation
The
Company did not offer a nonqualified deferred compensation plan in
2009.
Potential Payments upon Termination
or Change-in-Control
The
following summaries set forth potential payments payable to our NEOs upon
termination of employment or a Change-in-Control of us under their current
employment agreements and our stock plans and other compensation programs.
For purposes of the following summaries, dollar amounts are estimates based on
Base Salary as of December 31, 2009, benefits paid to the NEOs in 2009 (and any
prior years as applicable), and stock and option holdings of the NEOs as of
December 31, 2009. The summaries assume a price per share of our common
stock of $8.28, which was the closing price per share on December 31, 2009, as
reported on the Nasdaq Global Market.
Termination and
Change-in-
Control.
Each of our
NEOs is entitled to certain benefits under his employment agreement upon any of
the following:
|
·
|
We
terminate his employment as a result of his death or permanent
disability;
|
|
·
|
We
terminate his employment for
“cause;”
|
|
·
|
We
terminate his employment for any reason other than “cause,” death, or
permanent disability;
|
|
·
|
The
NEO involuntarily terminates his employment for “Good Reason” within 12
months following a
Change-in-Control.
|
Upon our
Change-in-Control or the NEO’s death or permanent disability, all of the NEO’s
restricted stock and stock options which are unvested will automatically
accelerate and become fully vested.
Upon
termination for any reason whatsoever, each NEO (or in case of death, his
estate) is entitled to all salary and expense reimbursements due to such NEO
through the date of his termination and such benefits as are available pursuant
to the terms of any benefit or similar plans, policies, or programs in which he
was participating at the time of such termination.
Death or Permanent
Disability.
Upon termination for death or disability, we will pay
to such NEO (or his estate), earned but unpaid bonus payments and accrued unused
paid vacation.
Termination by Us for Reason Other
than Death, Permanent Disability, or Cause.
Upon termination by us
for reason other than death, permanent disability, or cause, we will pay to such
NEO continued salary payments for a period of one year, continue coverage for a
period of one year under company provided health plans, and provide other
benefits pursuant to the employment agreement.
Termination by Us within 12 Months
Following a Change in Control.
The Company shall pay to each NEO
terminated, or who terminates his employment agreement for “Good Reason” as
defined therein, within 12 months of a Change in Control a lump sum cash payment
equal to two times his base salary and continue coverage for a period of two
years under Company provided health plans.
J.
Bruce Lancaster
Assuming
that Bruce Lancaster’s employment was terminated under each of these
circumstances, or a Change-in-Control occurred on December 31, 2009, such
payments and benefits have an estimated value as follows (less applicable
withholding taxes):
Scenario
|
|
Cash
Severance ($)
|
|
|
Value of Equity
Awards Received
or to be
Received($)
|
|
Death
or Disability
|
|
|
0
|
|
|
|
0
|
(1)
|
Termination
for cause
|
|
|
0
|
|
|
|
0
|
|
Termination
without cause by O.I. Corporation
|
|
|
231,276
|
(2)
|
|
|
0
|
|
Involuntary
Termination other than for cause or Termination by Mr. Lancaster for “Good
Reason” within 12 months of a Change-in-Control
|
|
|
462,553
|
(3)
|
|
|
0
|
(1)
|
|
(1)
|
Mr.
Lancaster held no unvested options which were in-the-money as of December
31, 2009.
|
|
(2)
|
Cash
severance is equal to the sum of Mr. Lancaster’s base salary ($225,000)
and estimated health insurance premiums
($6,276).
|
|
(3)
|
Cash
severance is equal to the sum of two times Mr. Lancaster’s base salary
($450,000) and estimated health insurance premiums for a two year period
($12,553).
|
Donald
P. Segers
Assuming
that Donald Segers’ employment was terminated under each of these circumstances,
or a Change-in-Control occurred on December 31, 2009, such payments and benefits
have an estimated value as follows (less applicable withholding
taxes):
Scenario
|
|
Cash
Severance ($)
|
|
|
Value of Equity
Awards Received
or to be
Received($)
|
|
Death
or Disability
|
|
|
0
|
|
|
|
0
|
(1)
|
Termination
for cause
|
|
|
0
|
|
|
|
0
|
|
Termination
without cause by O.I. Corporation
|
|
|
234,897
|
(2)
|
|
|
0
|
|
Involuntary
Termination other than for cause or Termination by Dr. Segers for “Good
Reason” within 12 months of a Change-in-Control
|
|
|
469,794
|
(3)
|
|
|
0
|
(1)
|
|
(1)
|
Dr.
Segers held no unvested options which were in-the-money as of December 31,
2009.
|
|
(2)
|
Cash
severance is equal to the sum of Dr. Segers’ base salary ($225,000) and
estimated health insurance premiums
($9,897).
|
|
(3)
|
Cash
severance is equal to the sum of two times Dr. Segers’ base salary
($450,000) and estimated health insurance premiums for a period of two
years ($19,794).
|
Disclosure
of Director Compensation
Name
(a)
|
|
Fees
Earned
or Paid
in Cash
($)
(b)
|
|
|
Stock
Awards
($)
(c)
|
|
|
Option
Awards
($)
(d)
|
|
|
Non-equity
Incentive Plan
Compensation
($)
(e)
|
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
(f)
|
|
|
All Other
Compensation
($)
(g)
|
|
|
Total
($)
(h)
|
|
Raymond
E. Cabillot
|
|
|
22,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,600
|
|
Richard
W. K. Chapman
|
|
|
22,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,600
|
|
J.
Bruce Lancaster
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
John
K.H. Linnartz
|
|
|
22,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,600
|
|
Donald
P. Segers
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Leo
B. Womack
(1)
|
|
|
32,103
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,103
|
|
|
(1)
|
Served
as a Director through September 21,
2009.
|
Narrative
Disclosure to Director Compensation Table
For the
first two quarters of 2009 all non-employee directors received a cash fee of
$7,000 each quarter, with the Chairman of the Audit Committee receiving an
additional cash fee in the amount of $1,250 each quarter. Effective February 26,
2009, each of Messrs. Cabillot, Chapman, and Linnartz elected to take a 10%
reduction in compensation as part of a Company-wide cost reduction.
Effective for the third quarter of 2009 and going forward, all
non-employee directors receive a cash fee of $3,000 a quarter, or $12,000
annually. Non-employee directors receive no additional compensation for
attendance at Board or committee meetings. Fees were pro-rated for
directors who departed the Board before the end of the third quarter.
Employee directors receive no additional compensation for attendance at Board or
committee meetings.
Stock
Ownership Guidelines
In 2008,
the Board adopted stock ownership guidelines for its directors and executive
officers. The guidelines provide that non-employee directors should own
shares of the Company’s common stock totaling five times the value of their
annual retainer, while executive officers should own shares with a value of
three times their annual base salary. Each of the Company’s directors and
executive officers is encouraged to attain such ownership within five
years.
Equity
Compensation Plans
The
Company maintains two equity compensation plans under which the Company may
issue qualified or non-qualified stock options to employees, directors, and
other key persons. Both of these plans have been approved by our
shareholders. Options granted prior to 2003 were granted under the 1993
Incentive Compensation Plan and options granted under this plan to purchase up
to 190,700 shares of our common stock remain outstanding. Options granted
in 2003 and subsequent years have been granted under the 2003 Incentive
Compensation Plan. There were no grants of options or other equity-based
compensation to the executive officers under any plans during the fiscal year
2009. The Company does not maintain any retirement or pension benefit
plans for its executive officers.
Messrs. Lancaster and Segers did not
receive an award of options under the Executive Incentive Compensation Plan for
2009.
The following table provides
information as of December 31, 2009, on these plans:
Plan Category
|
|
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and
rights
|
|
|
(b)
Weighted-average exercise
price of
outstanding
options, warrants
and rights
|
|
|
(c)
Number of securities
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column
(a))
|
|
|
|
|
|
|
|
|
|
|
|
Employee
Stock Purchase Plan
|
|
|
—
|
1
|
|
|
—
|
1
|
|
|
120,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
Incentive Compensation Plan
|
|
|
100,000
|
|
|
$
|
12.06
|
|
|
|
190,700
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1993
Incentive Compensation Plan
|
|
|
36,800
|
|
|
$
|
5.08
|
|
|
|
—
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
136,800
|
|
|
$
|
10.18
|
|
|
|
311,169
|
|
|
(1)
|
Employees
eligible to participate in the Employee Stock Purchase Plan may purchase
shares of our stock on a regular basis through payroll deductions.
The price of the shares to the employees equals the average of the closing
price of the Company’s stock as traded on the Nasdaq Stock Exchange for
the last five days on which the Nasdaq is open for business during the
fiscal quarter.
|
|
(2)
|
This
number increased from the prior year due to the cancellation of
outstanding options awarded employees whose employment was terminated in
2009 due to our reduction in force.
|
|
(3)
|
The
1993 Incentive Compensation Plan has expired and no new awards may be
issued under this Plan.
|
Certain
Relationships and Related Transactions, Employment Contracts, Termination of
Employment Contracts, and Change in Control Agreements
Other than the employment agreements
between the Company and J. Bruce Lancaster and Donald P. Segers that are
described under “Narrative to Summary Compensation Table” above, we are not
aware of any transactions since the beginning of 2009 or any currently proposed
transaction between us or our subsidiaries and any member of the Board of
Directors, any of our executive officers, any security holder who is known to us
to own of record or beneficially more than 5% of our common stock, or any member
of the immediate family of any of the foregoing persons, in which the amount
involved exceeds $120,000 and in which any of the foregoing persons had, or will
have, a direct or indirect material interest.
Although we do not have a written
policy, all material related-party transactions must be approved by the Board of
Directors or an appropriate Committee thereof. Our Chief Financial Officer
certifies our compliance with this policy in accordance with the provisions of
the Sarbanes-Oxley Act of 2002.
PROPOSAL
2
RATIFICATION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The
Audit Committee has unanimously selected McGladrey & Pullen, LLP and
urges you to vote FOR the ratification of the appointment of such firm as
independent registered public accountants of OI for the year 2010.
Proxies solicited hereby will be so voted unless shareholders specify
otherwise in their proxies. The affirmative vote of the holders of a
majority of the Common Stock present in person or by proxy at the Meeting
and entitled to vote is required for approval of this
Proposal.
|
The firm of McGladrey & Pullen, LLP
has served as the independent registered public accountants of our year-end
financial statements since 2007. The Board of Directors recommends their
appointment as our independent registered public accountants for the fiscal year
ending December 31, 2010 and recommends a vote in favor of the proposal to
ratify their appointment.
The Company has not yet
formally engaged
McGladrey & Pullen,
LLP
for these
services and the actual engagement will be dependent upon reaching a
satisfactory agreement with the accounting firm on all terms, including the fees
to be charged.
Shareholder ratification of the
appointment of McGladrey & Pullen, LLP as our independent registered public
accountants is not required by our bylaws or other applicable legal
requirement. However, the appointment is being submitted to the
shareholders for ratification. In the event the shareholders fail to
ratify the appointment, our Audit Committee will reconsider its selection.
Even if the selection is ratified, the Audit Committee in its discretion may
direct the appointment of a different independent auditing firm at any time
during the year if the Audit Committee believes that such a change would be in
the best interests of OI and its shareholders.
Representatives of McGladrey &
Pullen, LLP are not expected to be present at the Annual Meeting of Shareholders
but will be available by telephone if necessary to make a statement, if they
desire to do so, and to respond to appropriate questions from those attending
the Meeting.
Principal
Accounting Fees and Services
The following table shows the fees paid
by us for the audit and other services for fiscal years 2008 and
2009.
|
|
MCGLADREY & PULLEN, LLP
|
|
|
|
2009
|
|
|
2008
|
|
Audit
fees
|
|
$
|
170,129
|
|
|
$
|
161,170
|
(1)
|
Audit-related
fees
|
|
$
|
322
|
|
|
$
|
395
|
|
Tax
fees
|
|
$
|
28,400
|
|
|
$
|
-0-
|
|
All
other fees
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
TOTAL
|
|
$
|
198,851
|
|
|
$
|
161,565
|
|
|
(1)
|
Includes
$10,616 for 2007 Audit Fees billed in excess of the original 2007
estimate.
|
“Audit
Fees” consist of fees incurred for professional services rendered for the audit
of our consolidated financial statements, review of our interim consolidated
financial statements included in quarterly reports, and professional services
that are normally provided in connection with statutory and regulatory
filings.
“Audit-Related
Fees” consist of fees for assurance and related services that are reasonably
related to the performance of the audit or review of the financial statements
and not reported under Audit Fees.
“Tax Fees” consist of professional
service billings for tax compliance, advice and planning.
The Audit Committee has established a
pre-approval policy whereby, upon receiving management requests to perform
additional audit-related or tax services not contemplated in the original
independent auditors’ proposal or not previously approved by the Audit
Committee, the Audit Committee Chairman may approve the performance of such
services in between meetings of the Audit Committee, when the independent
auditor contacts the Audit Committee Chairman seeking such approval. If
the Audit Committee Chairman is not available, then with all of the other
members of the Audit Committee in agreement, they may approve the request of the
independent auditors for authorization.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of March
31, 2010, certain information with respect to the shares of common stock
beneficially owned by: (i) each person known by the Company to own beneficially
five percent or more of the Common Stock, (ii) each director of the Company,
(iii) each of the executive officers of the Company named above under "Executive
Officers of the Registrant," and (iv) all directors and executive officers of
the Company as a group.
Name and Address of Beneficial Owner
(1)
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percent
of Class
(2)
|
|
Executive
Officers and Directors
|
|
|
|
|
|
|
Raymond
E. Cabillot, Co-Chairman of the Board
|
|
|
329,880
|
|
|
|
13.92
|
%
|
Richard
W. K. Chapman, Director
|
|
|
24,000
|
(4)
|
|
|
1.01
|
%
|
J.
Bruce Lancaster, CEO, CFO, & Director
|
|
|
39,499
|
(5)
|
|
|
1.65
|
%
|
John
K. H. Linnartz, Co-Chairman of the Board
|
|
|
348,820
|
(6)
|
|
|
14.75
|
%
|
Donald
P. Segers, President, COO, & Director
|
|
|
55,900
|
(7)
|
|
|
2.32
|
%
|
Directors
and executive officers as a group (5 persons)
|
|
|
798,099
|
(8)
|
|
|
32.66
|
%
|
Other
5% or Greater Shareholders
|
|
|
|
|
|
|
|
|
Farnam
Street Partners, L.P.
|
|
|
312,880
|
(9)
|
|
|
13.23
|
%
|
Heartland
Advisors, Inc.
|
|
|
245,900
|
(10)
|
|
|
10.40
|
%
|
Mustang
Capital Advisors, L.P.
|
|
|
334,720
|
(11)
|
|
|
14.15
|
%
|
Dimensional
Fund Advisors, Inc.
|
|
|
196,039
|
(12)
|
|
|
8.29
|
%
|
|
(1)
|
Unless
otherwise noted, the Company believes all persons named in the table have
sole voting and investment power with respect to shares of common stock
beneficially owned by them. Under SEC rules, a person is deemed to be a
“beneficial” owner of securities if he or she has or shares the power to
vote or direct the voting of such securities or the power to direct the
disposition of such securities. More than one person may be deemed to be a
beneficial owner of the same securities. Unless otherwise noted, the
address of the persons and entities listed in the table above is c/o O.I.
Corporation, 151 Graham Road, College Station, Texas
77845.
|
|
(2)
|
Percent
of class owned is based on the number of shares outstanding plus options
presently exercisable or that will become exercisable within 60 days of
the date of this table by the named beneficial
owners.
|
|
(3)
|
Includes
312,880 shares held by Farnam Street Partners, L.P. Mr. Cabillot is
the Chief Executive Officer and Chief Financial Officer of Farnam Street
Capital, Inc., the general partner of Farnam Street Partners, L.P.
Mr. Cabillot disclaims beneficial ownership of the shares held by Farnam
Street Partners, L.P.
|
|
(4)
|
Includes
4,000 shares subject to options currently exercisable or exercisable
within 60 days after the date
hereof.
|
|
(5)
|
Includes
25,000 shares subject to options currently exercisable or exercisable
within 60 days after the date
hereof.
|
|
(6)
|
Includes
334,720 shares held by Mustang Capital Advisors, L.P. Mr. Linnartz
is the Managing Member of Mustang Capital Management, LLC, the general
partner of Mustang Capital Advisors,
L.P.
|
|
(7)
|
Includes
45,400 shares subject to options currently exercisable or exercisable
within 60 days after the date
hereof.
|
|
(8)
|
Includes
78,400 shares subject to options.
|
|
(9)
|
Based
on a Form 13D/A filed by Farnam Street Partners, L.P. with the SEC on
April 16, 2009. The mailing address of Farnam Street Partners, L.P.
is 3033 Excelsior Blvd., Suite 300, Minneapolis, MN
55416.
|
|
(10)
|
Based
on a Schedule 13G/A filed by Heartland Advisors, Inc. with the SEC on
February 10, 2010. Heartland Advisors, Inc. has shared dispositive
power as to all 245,900 shares. All shares are held in investment
advisory accounts of Heartland Advisors, Inc. As a result, various
persons have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the securities.
The interest of one such account, Heartland Value Fund, a series of
Heartland Group, Inc., a registered investment company, relates to more
than 5% of the class. The mailing address of Heartland Advisors,
Inc., is 789 North Water Street, Milwaukee, WI
53202.
|
|
(11)
|
Based
on a Form 4 filed by Mustang Capital Advisors, L.P. with the SEC on
December 14, 2009. The mailing address of Mustang Capital Advisors,
L.P. is 1506 McDuffie Street, Houston, TX
77019.
|
|
(12)
|
Based
on a Schedule 13G/A filed by Dimensional Fund Advisors, Inc. with the SEC
on February 8, 2010. Dimensional Fund Advisors LP furnishes investment
advice to four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain other
commingled group trusts and separate accounts. These investment companies,
trusts and accounts are the “Funds.” In its role as investment advisor or
manager, Dimensional possesses investment and/or voting power over the
securities that are owned by the Funds and may be deemed to be the
beneficial owner of the shares held by the Funds. Dimensional
disclaims beneficial ownership of such securities. The mailing
address of Dimensional Fund Advisors, Inc. is Palisades West, Building
One, 6300 Bee Caves Road, Austin, TX
78746.
|
NO
INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY
STATEMENT
Notwithstanding
anything to the contrary set forth in any of our filings made under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, that might incorporate information in this Proxy Statement, neither the
Audit Committee Report nor the Compensation Committee Report is to be
incorporated by reference into any such filings as provided by SEC
regulations. In addition, this Proxy Statement includes certain website
addresses intended to provide inactive, textual references only. The
information on these websites shall not be deemed part of this Proxy
Statement.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities
Exchange Act of 1934, as amended requires our directors and officers, and
persons who own more than ten percent of our common stock, to file initial
reports of ownership and reports of changes in ownership (Forms 3, 4, and 5) of
common stock with the Securities and Exchange Commission and Nasdaq.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all such forms that they
file. To our knowledge, based solely on our review of the copies of such
reports received by us and on written representation by our directors and
executive officers, no reports on Form 5 were required. We believe that,
during the fiscal year ended December 31, 2009, our executive officers and
directors were in compliance with all applicable Section 16(a) filing
requirements.
SHAREHOLDER
PROPOSALS
A proposal of a shareholder, including
nomination of persons for election to the Board of Directors, intended to be
presented at the next Annual Meeting must be received at the Company’s principal
executive offices by December 17, 2010 (the date that is 120 days prior to the
one year anniversary of the mailing of this Proxy Statement), if the
shareholder making the proposal desires such proposal to be considered for
inclusion in the Company’s proxy statement and form of proxy relating to such
Meeting. If such timely notice of a shareholder proposal is not given, the
proposal may not be brought before the Annual Meeting. If timely
notice is given but is not accompanied by a written statement to the extent
required by applicable securities laws, the Company may exercise discretionary
voting authority over proxies with respect to such proposal if presented at the
Annual Meeting.
Notices regarding each matter must
contain:
|
·
|
a
brief description of the business to be brought before the Annual Meeting
and the reason for conducting the business at the Annual
Meeting;
|
|
·
|
the
name and address of record of the shareholder proposing the
business;
|
|
·
|
the
class and number of shares of stock that are beneficially owned by the
shareholder; and
|
|
·
|
any
material interest of the shareholder in the business to be
conducted.
|
ANNUAL
REPORT
A copy of the Annual Report on Form
10-K for fiscal year 2009 has been provided concurrently with this Proxy
Statement to all shareholders entitled to notice of and to vote at the Annual
Meeting. The Annual Report is not incorporated into this Proxy
Statement and is not considered proxy solicitation
material. Shareholders may also obtain a copy of our Annual Report on
Form 10-K, including financial statements but not including any exhibits,
without charge, by writing to our Corporate Secretary at our principal executive
offices: P.O. Box 9010, College Station, Texas
77842-9010.
OTHER
MATTERS
Management knows of no other matters to
be brought before the Annual Meeting of Shareholders at the time and place
indicated in the notice thereof; however, if any additional matters are properly
brought before the Meeting, the persons named in the enclosed proxy shall vote
the proxies in their discretion in the manner they believe to be in the best
interest of O.I. Corporation.
The accompanying form of proxy has been
prepared at the direction of our Board of Directors and is sent to you at the
request of the Board of Directors. The proxies named therein have
been designated by your Board of Directors.
EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE EXECUTE YOUR PROXY IMMEDIATELY. YOU MAY REVOKE YOUR PROXY IN
PERSON IF YOU ARE ABLE TO ATTEND.
|
O.I.
CORPORATION
|
|
|
|
By
Order of the Board of Directors
|
|
|
|
Laura
E. Hotard
|
|
Corporate
Counsel &
|
|
Corporate
Secretary
|
College
Station, Texas
April 16,
2010
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