UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant
þ
Filed by a Party other than the
Registrant
o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12
Portec Rail Products, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ
No fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Proposed maximum aggregate value of transaction:
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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.
(1) Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
November 16, 2010
Dear Shareholder:
We cordially invite you to attend the annual meeting of
shareholders of Portec Rail Products, Inc. The annual meeting
will be held at the Pullman Plaza Hotel, 1001 Third Avenue,
Huntington, West Virginia 25701, at 10:00 a.m., local time,
on December 17, 2010.
The enclosed notice of annual meeting and proxy statement
describe the formal business to be transacted at the annual
meeting. During the annual meeting we will also report on the
operations of the Company. Directors and officers of the Company
will be present to respond to any questions that shareholders
may have. Also enclosed for your review is our Annual Report to
Shareholders, which contains detailed information concerning our
activities and operating performance during the year. We have
entered into an Agreement and Plan of Merger with L.B. Foster
Company pursuant to which we will become a wholly-owned
subsidiary of L.B. Foster Company. If the merger contemplated by
this Agreement and Plan of Merger is consummated prior to
December 17, 2010, we will not hold the annual meeting.
The business to be conducted at the annual meeting consists of
the election of eleven (11) directors to our Board of
Directors of the Company and the ratification of the appointment
of Arnett & Foster, PLLC as independent registered
public accounting firm for the Company for the year ending
December 31, 2010. The Board of Directors has determined
that the matters to be considered at the Annual Meeting are in
the best interests of the Company and that of our shareholders.
For the reasons set forth in the proxy statement, the Board of
Directors recommends a vote
FOR
the election
of directors and
FOR
the appointment of
Arnett & Foster, PLLC.
On behalf of the Board of Directors, we urge you to sign, date
and return the enclosed proxy card as soon as possible, even if
you currently plan to attend the annual meeting. You may also
vote your shares by telephone or internet using the instructions
on the enclosed proxy or voting instruction card (if those
options are available to you). This will not prevent you from
voting in person, but will assure that your vote is counted if
you are unable to attend the annual meeting. Your vote is
important, regardless of the number of shares that you own.
Sincerely,
Richard J. Jarosinski
President and Chief Executive Officer
Portec
Rail Products, Inc.
900 Old Freeport Road
Pittsburgh, Pennsylvania 15238
(412) 782-6000
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
To
Be Held On December 17, 2010
Notice is hereby given that the annual meeting of shareholders
of Portec Rail Products, Inc. will be held at the Pullman Plaza
Hotel, 1001 Third Avenue, Huntington, West Virginia 25701, at
10:00 a.m., local time, on December 17, 2010. A Proxy
Card and a Proxy Statement for the annual meeting are enclosed.
The annual meeting is being held for the purpose of considering
and acting upon:
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1.
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the election of directors to the Board of Directors;
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2.
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the ratification of the appointment of Arnett &
Foster, PLLC as independent registered public accounting firm
for the Company for the year ending December 31,
2010; and
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such other matters as may properly come before the annual
meeting or any adjournments thereof. The Board of Directors is
not aware of any other business to come before the annual
meeting.
Any action may be taken on the proposal to elect directors at
the annual meeting on the date specified above or on any date or
dates to which the annual meeting may be adjourned. Shareholders
of record at the close of business on November 10, 2010 are
the shareholders entitled to vote at the annual meeting and at
any adjournments. We have entered into an Agreement and Plan of
Merger with L.B. Foster Company pursuant to which we will become
a wholly-owned subsidiary of L.B. Foster Company. If the merger
contemplated by this Agreement and Plan of Merger is consummated
prior to December 17, 2010, we will not hold the annual
meeting.
A list of shareholders entitled to vote at the annual meeting
will be available at our main office located at 900 Old Freeport
Road, Pittsburgh, Pennsylvania 15238 for the period beginning
two days after notice of the annual meeting is given through the
date of the annual meeting. It also will be available for
inspection at the annual meeting itself.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL
MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE REVOKED AT ANY TIME
BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING WITH
OUR CORPORATE SECRETARY A WRITTEN REVOCATION OR A DULY EXECUTED
PROXY BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE
ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE IN PERSON ON
EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING. HOWEVER, IF YOU
ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR
OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER IN ORDER FOR YOU TO VOTE IN PERSON AT THE ANNUAL
MEETING.
Our proxy statement, annual report to shareholders which
includes our
Form 10-K
and proxy card are available on the internet at
www.portecrail.com
.
By Order of the Board of Directors
Kirby J. Taylor
Corporate Secretary
Pittsburgh, Pennsylvania
November 16, 2010
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE
US THE EXPENSE OF FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES. YOU MAY ALSO VOTE
YOUR SHARES BY TELEPHONE OR OVER THE INTERNET IF TELEPHONE
OR INTERNET VOTING IS AVAILABLE TO YOU. VOTING
INSTRUCTIONS ARE PRINTED ON THE PROXY CARD OR VOTING
INSTRUCTION CARD SENT TO YOU.
PROXY
STATEMENT
Portec
Rail Products, Inc.
900 Old Freeport Road
Pittsburgh, Pennsylvania 15238
(412) 782-6000
ANNUAL
MEETING OF SHAREHOLDERS
December 17, 2010
This proxy statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of
Portec Rail Products, Inc. to be used at our annual meeting of
shareholders, which will be held at the Pullman Plaza Hotel,
1001 Third Avenue, Huntington, West Virginia 25701, on
December 17, 2010, at 10:00 a.m., local time, and at
all adjournments. The accompanying notice of annual meeting of
shareholders and this proxy statement are first being mailed to
shareholders on or about November 16, 2010.
AGREEMENT AND
PLAN OF MERGER
We have entered into an Agreement and Plan of Merger, dated as
of February 16, 2010 and as amended on May 13, 2010
and August 30, 2010 (the Merger Agreement),
with L.B. Foster Company and its subsidiary Foster-Thomas
Company (together, L.B. Foster), pursuant to which
(i) L.B. Foster has commenced a tender offer to purchase
all of our outstanding common stock (the Offer) and
(ii) we will merge with Foster-Thomas Company and become a
wholly-owned subsidiary of Foster (the Merger). L.B.
Foster may not accept shares for payment in the Offer until at
least 65% of the outstanding shares have been tendered. You may
have received an Offer to Purchase regarding the tender offer.
Details regarding the transactions contemplated by the Merger
Agreement are available in the
Schedule 14D-9
that we have filed with the Securities and Exchange Commission
and the
Schedule TO-T
that L.B. Foster has filed with the Securities and Exchange
Commission. The timing of the completion of the Offer and the
Merger could have one of two results:
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if the Merger is completed prior to December 17, 2010, we
will not hold the annual meeting, and your shares will not be
voted regardless of whether you have submitted an otherwise
valid proxy; or
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if the Offer is completed
after
the close of business on
November 10, 2010 and the Merger is not completed prior to
December 17, 2010, then you will be able to vote your
shares by proxy or by attending the annual meeting even if you
have already tendered your shares to L.B. Foster.
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POTENTIAL APPOINTMENT OF DIRECTORS BY L.B. FOSTER
Pursuant to the Merger Agreement, once the Offer is completed
(meaning L.B. Foster has accepted all tendered shares for
payment), a minimum of six (6) directors will resign from
the Board of Directors, and L.B. Foster will be entitled to
appoint directors to fill any vacancy. The exact number of
directors who will resign and be replaced by individuals
appointed by L.B. Foster depends on the number of shares
tendered in the Offer. If the Offer is completed at any time
prior to the annual meeting, then at least six (6) of the
individuals listed in this proxy statement as nominees will not
be standing for re-election, and the individuals appointed by
L.B. Foster will be standing for election. We have not
determined which directors will resign in the event the Offer is
completed, and L.B. Foster has not identified any individuals
that it intends to appoint to fill the resulting vacancies.
REVOCATION OF
PROXIES
Shareholders who properly complete their proxy cards retain the
right to revoke them in the manner described below. Unless so
revoked, the shares represented by such proxies will be voted at
the annual meeting and all adjournments. Proxies solicited on
behalf of the Board of Directors will be voted in accordance
with the directions given thereon.
Where no instructions are
indicated, validly executed proxies will be voted
FOR the proposals set forth in this proxy statement
for consideration at the annual meeting.
We know of no additional matters that will be presented for
consideration at the annual meeting. Execution of a proxy,
however, confers on the proxy holders discretionary authority to
vote the shares in accordance with their best judgment on such
other business, if any, that may properly come before the annual
meeting or any adjournments.
Proxies may be revoked by sending written notice of revocation
to our Corporate Secretary at the address shown above,
delivering to us a properly completed proxy bearing a later
date, or attending the annual meeting and voting in person.
However, if you are a shareholder whose shares are not
registered in your own name, you will need appropriate
documentation from your record holder to vote personally at the
annual meeting. The presence at the annual meeting of any
shareholder who had returned a proxy shall not revoke such proxy
unless the shareholder delivers his or her ballot in person at
the annual meeting or delivers a written revocation to our
Corporate Secretary prior to the voting of such proxy.
VOTING SECURITIES AND VOTING PROCEDURES
Holders of record of our common stock, par value $1.00 per
share, as of the close of business on November 10, 2010,
(the Record Date), are entitled to one vote for each
share then held, except as described below, and unless the
Merger has been completed prior to December 17, 2010. As of
the Record Date, we had 9,601,350 shares outstanding and
entitled to vote. The presence in person or by proxy of a
majority of the outstanding shares of common stock entitled to
vote is necessary to constitute a quorum at the annual meeting.
Broker non-votes and proxies marked
ABSTAIN
will be
counted for purposes of determining that a quorum is present. In
the event there are not sufficient votes for a quorum, or to
approve or ratify any matter being presented at the time of the
annual meeting, the annual meeting may be adjourned in order to
permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided
by the Board of Directors enables a shareholder to vote
FOR
the election of the nominees proposed by the nominating
committee of the Board of Directors or to
WITHHOLD AUTHORITY
to vote for one or more of the nominees being proposed.
Directors are elected by a plurality of votes cast, without
regard to either broker non-votes or proxies as to which the
authority to vote for the nominees being proposed is withheld.
Under the West Virginia Business Corporation Act, in the
election of directors, holders of common stock possess
cumulative voting rights, consequently, stockholders have as
many votes as the number of shares owned, multiplied by the
number of directors to be elected, and they may either cumulate
all votes for one candidate or distribute those votes among as
many candidates as the shareholder may choose.
As to the ratification of the appointment of the independent
registered public accounting firm, the proxy card being provided
by the Board of Directors enables a shareholder to:
(i) vote
FOR
the proposal; (ii) vote
AGAINST
the proposal; or (iii)
ABSTAIN
from voting on
the proposal. The ratification of the appointment of the
independent registered public accounting firm must be approved
by the affirmative vote of a majority of the votes cast without
regard to broker non-votes or proxies marked
ABSTAIN
.
Proxies we solicit will be tabulated by an inspector of election
designated by our Board of Directors. You may vote your shares:
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By internet
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Vote at the internet
address shown on your proxy card. The internet voting system is
available 24 hours a day until 6:00 a.m., Eastern
Time, on December 17, 2010. Once you are into the internet
voting system, you can record and confirm (or change) your
voting instructions.
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By telephone
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Use the toll free
telephone number shown on your proxy card. The telephone voting
system is available 24 hours a day in the United States
until 6:00 a.m., Eastern Time, on December 17, 2010.
Once you are into the telephone voting system, a series of
prompts will tell you how to record and confirm (or change) your
voting instructions.
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By mail
. Mark and sign the enclosed
proxy card and return it in the enclosed postage-paid envelope.
All properly executed proxies will be voted in accordance with
the instructions marked on the proxy card.
If you return an
executed proxy card without marking your instructions, your
executed proxy will be voted FOR the proposals
identified in the preceding Notice of Annual Meeting of
Shareholders. Returning a proxy card will not prevent you from
voting in person if you attend the annual meeting.
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Alternatively, you may attend the annual meeting and vote in
person.
If you are a shareholder whose shares are not
registered in your own name, you will need an assignment of
voting rights or a proxy from your shareholder of record to vote
personally at the annual meeting.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups who beneficially own in excess of five
percent of our common stock are required to file certain reports
with the Securities and Exchange Commission (the
SEC) regarding such ownership. The following table
sets forth, as of the Record Date, the shares of common stock
beneficially owned by each person who was the beneficial owner
of more than five percent of our outstanding shares of common
stock, as well as the shares owned by our directors and
executive officers as a group.
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Amount of Shares
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Owned and Nature
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Percent of Shares
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Name and Address of
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of Beneficial
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of Common Stock
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Beneficial Owners
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Ownership
(1)
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Outstanding
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All Directors and Executive Officers
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2,941,186
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30.63
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%
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as a Group
(14 persons)
(2)
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Principal Shareholders:
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L.B. Foster
Company
(3)
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3,109,036
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32.37
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%
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415 Holiday Drive
Pittsburgh, PA 15220
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Marshall T.
Reynolds
(4)
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1,033,318
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10.76
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%
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P.O. Box 4040
Huntington, WV 25729
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Daniel P.
Harrington
(5)
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745,446
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7.76
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%
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30195 Chagrin Boulevard
Suite 310
Pepper Pike, OH 44124
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(1)
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In accordance with
Rule 13d-3
under the Securities Exchange Act of 1934, a person is deemed to
be the beneficial owner for purposes of this table of any shares
of common stock if he has sole or shared voting or investment
power with respect to such security, or has a right to acquire
beneficial ownership at any time within 60 days from the
date as of which beneficial ownership is being determined. As
used herein, voting power is the power to vote or
direct the voting of shares and investment power is
the power to dispose or direct the disposition of shares.
Includes all shares held directly as well as by spouses and
minor children, in trust and other indirect ownership, over
which shares the named individuals effectively exercise sole or
shared voting and investment power.
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(2)
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All 14 directors and executive
officers have granted an irrevocable proxy to L.B. Foster in
connection with the Merger Agreement with respect to all
reported shares (except for 15,000 shares subject to vested
options held by such persons), and, accordingly, these
individuals have shared voting and investment power over all
reported shares (except for 15,000 shares subject to vested
options).
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(3)
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Based on Schedule 13D filed
with the SEC on February 26, 2010. L.B. Foster Company
claims sole voting and investment power over 182,850 shares
and shared voting and investment power over
2,926,186 shares.
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(4)
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Mr. Reynolds shares voting and
investment power over all reported shares with L.B. Foster. See
note 2.
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(5)
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Mr. Harrington shares voting
and investment power over all reported shares with L.B. Foster.
See note 2.
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3
PROPOSAL 1 ELECTION OF DIRECTORS
Our Board of Directors currently is composed of 11 members. Our
directors are elected annually to serve for a one-year period
and until their respective successors are elected and qualify.
The nominating committee of the Board of Directors has nominated
each of the nominees listed in the table on the next page to
serve as directors, each of whom is currently a member of the
Board of Directors.
The table below sets forth certain information regarding the
composition of our Board of Directors, including the terms of
office of board members. It is intended that the proxies
solicited on behalf of the Board of Directors (other than
proxies in which the vote is withheld as to one or more
nominees) will be voted at the annual meeting for the election
of the nominees identified below. If the nominee is unable to
serve, the shares represented by all such proxies will be voted
for the election of such substitute as the Board of Directors
may recommend. Except as set forth under Potential
Appointment of Directors by L.B. Foster on page 1 of
this proxy statement, the Board of Directors knows of no reason
why any of the nominees might be unable to serve, if elected.
Except as set forth under Potential Appointment of
Directors by L.B. Foster on page 1 of this proxy
statement, there are no arrangements or understandings between
any nominee and any other person pursuant to which such nominee
was selected.
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Shares of Common
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Stock Beneficially
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Director
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Current Term to
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Owned on Record
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Percent
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Names and
Address
(1)
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Age
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Positions Held
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Since
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Expire
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Date
(2)(3)
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of Class
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Directors/Nominees:
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Marshall T. Reynolds
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73
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Chairman of the Board
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1997
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2010
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1,033,318
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10.76
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%
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John S. Cooper
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76
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Vice-Chairman of the Board
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1997
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2010
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57,000
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*
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Louis J. Akers
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58
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Director
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2008
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2010
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5,000
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*
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Philip E. Cline
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77
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Director
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1998
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2010
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149,451
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(4)
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1.56
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Daniel P. Harrington
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54
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Director
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1998
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2010
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745,446
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7.76
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A. Michael Perry
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74
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Director
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2004
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2010
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Douglas V. Reynolds
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34
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Director
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1998
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2010
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413,646
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4.31
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Neal W. Scaggs
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74
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Director
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1998
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2010
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242,246
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2.52
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Phillip Todd Shell
|
|
|
42
|
|
|
Director
|
|
|
2005
|
|
|
|
2010
|
|
|
|
11,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirby J. Taylor
|
|
|
65
|
|
|
Director and Corporate
Secretary
|
|
|
1997
|
|
|
|
2010
|
|
|
|
20,500
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas W. Wright
|
|
|
59
|
|
|
Director
|
|
|
2004
|
|
|
|
2010
|
|
|
|
178,379
|
|
|
|
1.86
|
|
Executive Officers Who Are Not Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Jarosinski
|
|
|
56
|
|
|
President and Chief
Executive Officer
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
22,200
|
(5)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Konstantinos Papazoglou
|
|
|
58
|
|
|
Executive Vice President
and Chief Operating Officer
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
55,000
|
(5)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John N. Pesarsick
|
|
|
44
|
|
|
Chief Financial Officer and
Principal Accounting Officer
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
8,000
|
(5)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group (14 persons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,941,186
|
|
|
|
30.63
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Less than 1%.
|
|
(1)
|
|
The mailing address for each person
listed is 900 Old Freeport Road, Pittsburgh, Pennsylvania 15238.
|
|
(2)
|
|
In accordance with
Rule 13d-3
under the Securities Exchange Act of 1934, a person is deemed to
be the beneficial owner for purposes of this table of any shares
of common stock if he has sole or shared voting or investment
power with respect to such security, or has a right to acquire
beneficial ownership at any time within 60 days from the
date as of which beneficial ownership is being determined. As
used herein, voting power is the power to vote or
direct the voting of shares and investment power is
the power to dispose or direct the disposition of shares.
Includes all shares held directly as well as by spouses and
minor children, in trust and other indirect ownership, over
which shares the named individuals effectively exercise sole or
shared voting and investment power.
|
4
|
|
|
(3)
|
|
In connection with the Merger
Agreement, each director and executive officer has granted an
irrevocable proxy to L.B. Foster with respect to all reported
shares (other than shares subject to vested options).
Accordingly, these individuals now share voting and investment
power over all reported shares (other than shares subject to
vested options) with L.B. Foster.
|
|
(4)
|
|
All of Mr. Clines shares
are pledged as collateral to secure a business loan and a margin
account.
|
|
(5)
|
|
Beneficial ownership of common
stock for each of Messrs. Jarosinski, Papazoglou and
Pesarsick includes vested stock options to purchase
5,000 shares of common stock, which are exercisable within
60 days of the voting record date.
|
Directors
The principal occupation during the past five years of each
director and executive officer of the Company is set forth
below. All directors and executive officers have held their
present positions for five years unless otherwise stated.
Marshall T. Reynolds
has served as our Chairman of
the Board of Directors since December 1997. Mr. Reynolds
has served as Chief Executive Officer and Chairman of the Board
of Directors of Champion Industries, Inc., a commercial printer,
business form manufacturer and supplier of office products and
furniture, from 1992 to the present; President and General
Manager of The Harrah & Reynolds Corporation from 1964
(and sole shareholder since 1972) to present; Chairman of
the Board of Directors of River City Associates, Inc. (owner of
the Pullman Plaza Hotel in Huntington, West Virginia) since
1989; Chairman of the Board of Directors, Broughton Foods
Company from 1996 to June 1999; Chairman of the Board of
Directors of Energy Services of America Corporation of
Huntington, West Virginia since 2006; Chairman of the Board of
Directors of McCorkle Machine and Engineering Company in
Huntington, West Virginia; Chairman of the Board of Directors of
First Guaranty Bancshares, Inc. in Hammond, Louisiana; Director
of The Adams National Bank in Washington, D.C.; and
Chairman of the Board of Directors of Premier Financial Bancorp,
Inc. in Huntington, West Virginia. Mr. Reynolds is the
father of Douglas V. Reynolds, a director of Portec Rail
Products, Inc. Mr. Reynolds was nominated to serve on our
board of directors because he possesses extensive experience in
senior management positions and board service in a variety of
industries and is qualified to evaluate all of the factors that
contribute to the Companys performance, including industry
trends, sales and production data, business risks and financial
data.
John S. Cooper
has served as a member of our board
of directors since December 1997. Mr. Cooper served as our
President and Chief Executive Officer from December 1997 to
September 30, 2006, and was appointed Vice Chairman of the
Board of Directors on October 1, 2006. Mr. Cooper was
hired by our predecessor in July 1979 as Division Vice
President of Operations Railcar Division, and became
Division Vice President and General Manager
Railcar Division in August 1980, Vice President and Group
Executive in June 1983, Vice President and General
Manager Railway Maintenance Products Division in
April 1985, Senior Vice President and Group
Executive Railroad Group in February 1987.
Mr. Cooper was employed by the American Bridge Division of
United States Steel Corporation from 1956 to 1979.
Mr. Cooper received his degree in civil engineering from
Pennsylvania State University. Mr. Cooper was nominated to
serve on our board of directors because he possesses extensive
experience in senior management positions at the Company and,
accordingly, offers unique insight and perspective on the
Companys operations. In addition, he is qualified to
evaluate all of the factors that contribute to the
Companys performance, including industry trends, sales and
production data, business risks and financial data.
Louis J. Akers
has served as a member of our board
of directors since June 2008. Mr. Akers served as Vice
Chairman of the Board of Directors of Ferris, Baker Watts, Inc.
from December 2001 to June 1, 2006, and Chief Executive
Officer from October 1998 to December 2001. Mr. Akers was
nominated to serve on our board of directors because his
experience in investment banking offers insight and specialized
experience with respect to all of the factors that contribute to
the Companys performance, including industry trends, sales
and production data, business risks and financial data.
Philip E. Cline
has served as a member of our
board of directors since January 1998. Since June 2001,
Mr. Cline has served as the President of River City
Associates, Inc. and from June 2001 to April 2010 was the
General Manager of the Pullman Plaza Hotel in Huntington, West
Virginia. He served as President of Monumental Concrete from
June 1999 to June 2001. Mr. Cline served as President and
Chief Executive Officer of Broughton Foods Company from November
1996 to June 1999. He was employed in various capacities,
including Vice President and Treasurer, Executive Vice President
and Consultant by J.H. Fletcher & Co., a manufacturer
of underground mining equipment in Huntington, West Virginia
from 1968 to 1996. He presently serves on the board of directors
of J.H. Fletcher & Co.; the
5
board of directors of the Logan Corporation, a distributor of
mining, industrial and construction supplies; and the board of
directors of Champion Industries, Inc. Mr. Cline was
nominated to serve on our board of directors because he
possesses extensive experience in senior management positions
and board service in a variety of industries and is qualified to
evaluate all of the factors that contribute to the
Companys performance, including industry trends, sales and
production data, business risks and financial data.
Daniel P. Harrington
has served as a member of our
board of directors since January 1998. Since 1991,
Mr. Harrington has served as the President, Chief Executive
Officer and a director of HTV Industries, Inc., a privately held
company engaged in manufacturing and investments in various
industries. Mr. Harrington is President of TVI Corporation,
which is a wholly-owned subsidiary of HTV Industries, Inc.
Mr. Harrington is a director of Biopure Corporation in
Cambridge, Massachusetts; Churchill Downs, Inc. in Louisville,
Kentucky; and First Guaranty Bancshares in Hammond, Louisiana.
Mr. Harrington was nominated to serve on our board of
directors because he possesses extensive experience in senior
management positions and board service in a variety of
industries and is qualified to evaluate all of the factors that
contribute to the Companys performance, including industry
trends, sales and production data, business risks and financial
data.
A. Michael Perry
has served as a member of
our board of directors since April 2004. Mr. Perry served
as Chief Executive Officer of Bank One West Virginia Corporation
(formerly Key Centurion Bancshares, Inc.) from 1983 until his
retirement in June 2001. He also served that institution as
Chairman of the Board of Directors from November 1993 until June
2001, and as President from 1983 until 1993. Mr. Perry is a
member of the board of directors of Champion Industries, Inc.
and Arch Coal, Inc. He is also the co-founder of Heritage Farm
Museum and Village. Mr. Perry was nominated to serve on our
board of directors because he possesses extensive experience in
senior management positions and board service in a variety of
industries and is qualified to evaluate all of the factors that
contribute to the Companys performance, including industry
trends, sales and production data, business risks and financial
data. In addition, due to his experience and training as an
attorney, he offers a unique perspective on the legal issues
facing the Company.
Douglas V. Reynolds
has served as a member of our
board of directors since January 1998. Mr. Reynolds has
been engaged in the private practice of law since June 2003. He
previously served as an attorney for the public defenders office
of Cabell County from May 2001 to June 2003. Mr. Reynolds
is President of the Transylvania Corporation, and a director of
The Harrah & Reynolds Corporation, The Adams National
Bank and Energy Services of America Corporation. He also serves
in the West Virginia House of Delegates. Mr. Reynolds is a
graduate of Duke University and holds a law degree from West
Virginia University. Mr. Reynolds is the son of Marshall T.
Reynolds, our Chairman of the Board. Mr. Reynolds was
nominated to serve on our board of directors because he
possesses extensive experience in senior management positions
and board service in a variety of industries and is qualified to
evaluate all of the factors that contribute to the
Companys performance, including industry trends, sales and
production data, business risks and financial data. In addition,
due to his experience as an attorney and in governmental
affairs, he offers a unique perspective on the legal and
regulatory issues facing the Company as well as developments in
the political landscape that affect the Company and its
operations.
Neal W. Scaggs
has served as a member of our board
of directors since January 1998. Since 1961, Mr. Scaggs has
served as the President of Baisden Brothers, Inc.
Mr. Scaggs is a director of Champion Industries, Inc.,
Premier Financial Bancorp, Inc., Energy Services of America
Corp. and Logan Corporation. Mr. Scaggs also serves as
Chairman of the Board of Directors of Bucane, Inc.
Mr. Scaggs was nominated to serve on our board of directors
because he possesses extensive experience in senior management
positions and board service in a variety of industries and is
qualified to evaluate all of the factors that contribute to the
Companys performance, including industry trends, sales and
production data, business risks and financial data.
Phillip Todd Shell
has served as a member of our
board of directors since September 2005. Since 1992
Mr. Shell has held the position of Chief Investment Officer
of Guyan International. Mr. Shell has also been the
Vice-President of Guyan Machinery Rebuilders since 2001, and
serves on the board of directors of The Adams National Bank.
Mr. Shell graduated from the University of Georgia in 1991,
and received an MBA from Marshall University in 1996.
Mr. Shell was nominated to serve on our board of directors
because he possesses extensive experience in senior management
positions and board service in a variety of industries and is
qualified to evaluate all of the factors that
6
contribute to the Companys performance, including industry
trends, sales and production data, business risks and financial
data.
Kirby J. Taylor
has served as our Corporate
Secretary and a member of our board of directors since December
1997. Mr. Taylor has been President and Chief Executive
Officer of Action Business Consulting, a management-consulting
firm, since April 2006, and served as President and Chief
Operating Officer of Champion Industries, Inc. from September
2000 to January 2005. He served as a director of C.J. Hughes
Company from September 2002 to August 2008, when it was acquired
by Energy Services of America Corporation. Mr. Taylor is
the Vice-President, Secretary and Treasurer of Pritchard
Electric Company, Inc., an industrial electrical contractor,
since May 1998. He previously spent four years with General
Electric, twenty-two years with Tenneco Inc., two years with
Outboard Marine Corp. and two years with Addington Resources,
Inc. Mr. Taylor was nominated to serve on our board of
directors because he possesses extensive experience in senior
management positions and board service in a variety of
industries and is qualified to evaluate all of the factors that
contribute to the Companys performance, including industry
trends, sales and production data, business risks and financial
data.
Thomas W. Wright
has served as a member of our
board of directors since April 2004. He has served as Chief
Executive Officer of NexQuest, Inc. since 1996. From 1971 to
1996, Mr. Wright was President/Owner and then President of
an industrial services company. Mr. Wright is a member of
the board of directors of Premier Financial Bancorp, Inc. He
previously served as Board Chairman of Rose Hill Christian
School, and Regional Vice Chairman and board member for Kentucky
Chamber of Commerce. He is a former member of the Eastern
Kentucky University Foundation and a former director of National
City Bank. Mr. Wright was nominated to serve on our board
of directors because he possesses extensive experience in senior
management positions and board service in a variety of
industries and is qualified to evaluate all of the factors that
contribute to the Companys performance, including industry
trends, sales and production data, business risks and financial
data.
Executive
Officers Who Are Not Directors
Richard J. Jarosinski
has been employed by the
Company since 1975, and was appointed President and Chief
Executive Officer effective October 1, 2006.
Mr. Jarosinski was Group Vice President of the Company from
February 2, 2005 through September 30, 2006, and
President and General Manager of the Railway Maintenance
Products Division from January 1998 through February 1,
2005. Mr. Jarosinski served as a member of our board of
directors from January 1998 to May 2004. Mr. Jarosinski is
a registered Professional Engineer in the state of Pennsylvania
and has held various positions with trade associations in the
rail industry.
Konstantinos Papazoglou
has been employed by the
Company since 1978, and was appointed Executive Vice President
and Chief Operating Officer effective October 1, 2006.
Mr. Papazoglou was Group Vice President of the Company from
February 2, 2005 through September 30, 2006, and
President of the Portec, Rail Products Ltd. Division from August
1997 to February 1, 2005. Mr. Papazoglou served as a
member of our board of directors from January 1998 to May 2004.
Mr. Papazoglou holds both a Bachelors Degree and a
Masters Degree in Mechanical Engineering from Concordia
University in Montreal, Quebec, Canada.
John N. Pesarsick
has been employed by the Company
since 2003, and was appointed Chief Financial Officer in April
2006 and Assistant Secretary in June 2006. Mr. Pesarsick
previously served as Corporate Controller for the Company and
held various positions in the Corporate Accounting department.
Prior to joining the Company in 2003, he was employed by NCS
Healthcare, Inc. as a Regional Assistant Controller since 2000.
Mr. Pesarsick began his career in public accounting with
Ernst & Young, LLP and is a Certified Public
Accountant, and holds a Bachelors Degree in Accounting
from Robert Morris University.
None of our directors or executive officers serves on the board
of directors of any corporation or other organization that is a
parent or affiliate of the Company, other than subsidiaries of
the Company.
Service
on Public Company Boards
Unless indicated, the service on boards of directors of public
companies indicated below has been for at least five years.
7
Mr. Marshall Reynolds is chairman of the board of directors
and Messrs. Scaggs and Wright are directors of Premier
Financial Bancorp, Inc. of Huntington, West Virginia, which has
a class of securities registered pursuant to the Exchange Act.
Mr. Marshall Reynolds is chairman of the board of directors
and Messrs. Scaggs and Douglas Reynolds are directors of
Energy Services of America Corporation of Huntington, West
Virginia, which has a class of securities registered pursuant to
the Exchange Act.
Mr. Marshall Reynolds is chairman of the board of directors
and Mr. Harrington is a director of First Guaranty
Bancshares, Inc. of Hammond, Louisiana, which has a class of
securities registered pursuant to the Exchange Act.
Mr. Perry is a director of Arch Coal, Inc. which has a
class of securities registered pursuant to the Exchange Act.
Messrs. Marshall and Douglas Reynolds and Shell were
directors of Abigail Adams National Bancorp, Inc. of Washington
D.C., which previously had a class of securities registered
pursuant to the Exchange Act, but which filed a termination of
registration in October 2009.
Mr. Marshall Reynolds is chairman of the board of directors
and Messrs. Cline, Perry, Akers and Scaggs are directors of
Champion Industries, Inc. of Huntington, West Virginia, which
has a class of securities registered pursuant to the Exchange
Act.
Mr. Scaggs is chairman of the board of directors and
Messrs. Harrington, Marshall Reynolds and Wright are
directors of First State Financial Corporation of Sarasota,
Florida, which previously had a class of securities registered
pursuant to the Exchange Act, but which filed a termination of
registration in August 2009.
Mr. Harrington is a director of Biopure Corporation of
Cambridge, Massachusetts and Churchill Downs Inc., of
Louisville, Kentucky, which have a class of securities
registered pursuant to the Exchange Act.
Board
Independence
The board of directors consists of a majority of
independent directors within the meaning of the
NASDAQ corporate governance listing standards. The board of
directors has determined that Messrs. Harrington, Perry,
Scaggs, Shell, Akers and Wright, are independent
directors within the meaning of such standards.
The board of directors has adopted a policy that the independent
directors of the board of directors shall meet in executive
sessions periodically, which meetings may be held in conjunction
with regularly scheduled board meetings.
The board of directors has also determined that each member of
the Audit Committee of the board of directors meets the
independence requirements applicable to that committee
prescribed by the NASDAQ Marketplace Rules, the SEC and the
Internal Revenue Service.
In determining the independence of our directors, the board of
directors considered transactions between our directors and the
Company which are not required to be disclosed under the federal
securities laws. Based on this review the board of directors
made the determination as to independence set forth above.
Board
Leadership Structure and Risk Oversight
Our board of directors is chaired by Marshall T. Reynolds, who
is a non-executive director.
We separate the roles of CEO and Chairman of the Board in
recognition of the differences between the two roles. The CEO is
responsible for setting the strategic direction for the Company
and the day to day leadership and performance of the Company,
while the Chairman of the Board provides guidance to the CEO and
presides over meetings of the full board of directors.
The role of the board of directors in the Companys risk
oversight process includes receiving regular reports from
members of senior management on areas of material risk to the
Company, including operational, financial, legal and regulatory,
and strategic and reputational risks. The full board of
directors receives these reports from the
8
appropriate personnel within the Company to enable it to
understand our risk identification, risk management and risk
mitigation strategies.
Section 16(a)
Beneficial Ownership Reporting Compliance
Our common stock is registered with the SEC pursuant to
Section 12(b) of the Exchange Act. Our officers and
directors and beneficial owners of greater than 10% of our
common stock (10% beneficial owners) are required to
file reports on Forms 3, 4 and 5 with the SEC disclosing
beneficial ownership and changes in beneficial ownership of the
common stock. SEC rules require disclosure in our Proxy
Statement or Annual Report on
Form 10-K
of the failure of an officer, director or 10% beneficial owner
of our common stock to file a Form 3, 4 or 5 on a timely
basis. Based on our review of ownership reports required to be
filed for the year ended December 31, 2009, no executive
officer, director or 10% beneficial owner of our shares of
common stock failed to file ownership reports on a timely basis.
Meetings
and Committees of the Board of Directors
The board of directors meets quarterly, or more often as may be
necessary. The board of directors has four standing committees:
the executive committee, compensation committee, nominating
committee and audit committee. The board of directors held four
(4) regular meetings and no special meetings during 2009.
All directors attended at least 75% in the aggregate of the
total number of board meetings held. Of the directors serving on
our committees, Mr. Shell attended fewer than 75% of the
total number of committee meetings on which he served during
2009.
We do not have a policy regarding director attendance at the
annual meetings of shareholders. All of our directors attended
the 2009 annual meeting of shareholders.
Executive Committee.
The executive
committee generally has the power and authority to act on behalf
of the board of directors while the board of directors is not in
session, except as otherwise provided by law and subject at all
times to the direction of the board of directors. The executive
committee is comprised of Directors
Marshall T. Reynolds (Chairman), Douglas V. Reynolds,
Kirby J. Taylor and John S. Cooper. The executive committee did
not meet during 2009.
Compensation Committee.
The
compensation committee is responsible for recommending to the
full board of directors the compensation of the chief executive
officer and senior management, reviewing and administering
overall compensation policy, including setting performance
measures and goals, administering any stock-based compensation
plans as may be adopted, establishing compensation of the board
of directors and other matters of personnel policy and practice.
The compensation committee is comprised of Directors Harrington
(Chairman), Perry and Shell. Each member of the compensation
committee is considered independent as defined in
the NASDAQ corporate governance listing standards. Our board of
directors has adopted a written charter for the compensation
committee. A copy of the compensation committee charter is also
available at our website at
http://www.portecrail.com.
The compensation committee met once during 2009.
The Compensation Committee reserves the right to recommend
elements of executive compensation to the board of directors for
its approval. The Compensation Committee does not use strict
numerical formulas to determine changes in compensation for our
named executive officers; however, a variety of different
factors are weighed in deliberations, including emphasis on
profitability and scope of operations, experience and expertise,
and management skills of the executive officers and their roles
in our future success. While each of the quantitative and
qualitative factors described above are considered by the
Compensation Committee, such factors are not assigned a specific
weight in evaluating the performance of our named executive
officers. No compensation consultants were used in determining
director or executive officer compensation for 2009.
Nominating Committee.
The nominating
committee consists of Directors Scaggs (Chairman), Shell and
Wright. Each member of the nominating committee is considered
independent as defined in the NASDAQ corporate
governance listing standards. Our board of directors has adopted
a written charter for the nominating committee. A copy of the
nominating committee charter is also available at our website at
http://www.portecrail.com
.
The nominating committee met once during 2009.
9
The functions of the nominating committee include the following:
|
|
|
|
|
to lead the search for individuals qualified to become members
of the board of directors and to select director nominees to be
presented for shareholder approval;
|
|
|
|
to review and monitor compliance with the requirements for board
independence;
|
|
|
|
to review the committee structure and make recommendations to
the board of directors regarding committee membership; and
|
|
|
|
to develop and recommend to the board of directors for its
approval a set of corporate governance guidelines.
|
The nominating committee identifies nominees by first evaluating
the current members of the board of directors willing to
continue in service. Current members of the board of directors
with skills and experience that are relevant to our business and
who are willing to continue in service are first considered for
re-nomination, balancing the value of continuity of service by
existing members of the board of directors with that of
obtaining a new perspective. If any member of the board of
directors does not wish to continue in service, or if the
nominating committee or the board of directors decides not to
nominate a member for re-election, or if the size of the board
of directors is increased, the nominating committee would
solicit suggestions for director candidates from all board
members. In addition, the nominating committee is authorized by
its charter to engage a third party to assist in the
identification of director nominees. The nominating committee
would seek to identify a candidate who at a minimum satisfies
the following criteria:
|
|
|
|
|
has personal and professional ethics and integrity and whose
values are compatible with ours;
|
|
|
|
has had experiences and achievements that have given him or her
the ability to exercise and develop good business judgment;
|
|
|
|
is willing to devote the necessary time to the work of the board
of directors and its committees, which includes being available
for board and committee meetings;
|
|
|
|
is familiar with the communities in which we operate
and/or
is
actively engaged in community activities;
|
|
|
|
is involved in other activities or interests that do not create
a conflict with his or her responsibilities to us and our
shareholders; and
|
|
|
|
has the capacity and desire to represent the balanced, best
interests of our shareholders as a group, and not primarily a
special interest group or constituency.
|
The nominating committee will also take into account whether a
candidate satisfies the criteria for independence
under the NASDAQ corporate governance listing standards and, if
a nominee is sought for service on the audit committee, the
financial and accounting expertise of a candidate, including
whether an individual qualifies as an audit committee
financial expert. Although the nominating committee and
the board of directors do not have a formal policy with regard
to the consideration of diversity in identifying a director
nominee, diversity is considered in the identification process.
The board of directors seeks independent directors who represent
a mix of backgrounds and experiences that will enhance the
quality of the board of directors deliberations and
decisions. Candidates shall have experience with one or more
publicly traded companies or shall have achieved a high level of
distinction in their chosen fields.
Audit Committee.
The audit committee
consists of Directors Scaggs (Chairman), Harrington and Akers.
Each member of the audit committee is considered
independent as defined in the NASDAQ corporate
governance listing standards and under SEC
Rule 10A-3.
The board of directors has determined that Director Akers
qualifies as an audit committee financial expert as
that term is used in the rules and regulations of the SEC.
Mr. Akers has significant experience as a result of his
many years of service as Chief Executive Officer of Ferris,
Baker, Watts, Inc. and his extensive knowledge in the investment
banking field.
10
The audit committee meets with our financial management and
independent registered public accounting firm to review and
discuss financial statements and disclosure matters to make
recommendations to the board of directors with respect to such
matters. The audit committee also has the authority to approve
the annual appointment of our independent registered public
accounting firm and to monitor the performance of such firm; to
review with management the status of internal accounting
controls, internal audit procedures and results; and to
establish procedures for the reporting and resolution of
complaints regarding conflicts of interest, accounting, internal
accounting controls, and auditing matters.
The audit committee met eight (8) times during 2009. The
board of directors has adopted a written charter for the audit
committee. A copy of the audit committee charter is available at
our website at
http://www.portecrail.com
.
Procedures
for the Nomination of Directors by Shareholders
The nominating committee has adopted procedures for the
submission of director nominees by shareholders. If a
determination is made that an additional candidate is needed for
the board of directors, the nominating committee will consider
candidates submitted by our shareholders. Shareholders can
submit the names of qualified candidates for director by writing
to our Corporate Secretary at 900 Old Freeport Road, Pittsburgh,
Pennsylvania 15238. The Corporate Secretary must receive a
submission not less than 45 days prior to the anniversary
date of our proxy materials for the preceding years annual
meeting. The submission must include the following information:
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a statement that the writer is a shareholder and is proposing a
candidate for consideration by the nominating committee;
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the name and address of the shareholder as they appear on our
books and number of shares of our common stock that are owned
beneficially by such shareholder (if the shareholder is not a
holder of record, appropriate evidence of the shareholders
ownership will be required);
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the name, address and contact information for the candidate, and
the number of shares of common stock that are owned by the
candidate (if the candidate is not a holder of record,
appropriate evidence of the shareholders ownership should
be provided);
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a statement of the candidates business and educational
experience;
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such other information regarding the candidate as would be
required to be included in the proxy statement pursuant to SEC
Regulation 14A;
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a statement detailing any relationship between us and the
candidate;
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a statement detailing any relationship between the candidate and
any of our customers, suppliers or competitors;
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detailed information about any relationship or understanding
between the proposing shareholder and the candidate; and
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a statement that the candidate is willing to be considered and
willing to serve as a director if nominated and elected.
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A nomination submitted by a shareholder for presentation by the
shareholder at an annual meeting of shareholders will also need
to comply with any additional procedural and informational
requirements we may adopt in the future. There have been no
changes in these procedures since they were last disclosed in
the proxy statement for our 2009 annual meeting of shareholders.
Shareholder
Communications with the Board
A shareholder who wants to communicate with the board of
directors or with any individual director can write to our
Corporate Secretary at 900 Old Freeport Road, Pittsburgh,
Pennsylvania 15238, Attention: Board
11
Administration. The letter should indicate that the author is a
shareholder and if shares are not held of record, should include
appropriate evidence of stock ownership. Depending on the
subject matter, management will:
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forward the communication to the director or directors to whom
it is addressed;
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attempt to handle the inquiry directly, i.e. where it is a
request for information about us or it is a stock-related
matter; or
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not forward the communication if it is primarily commercial in
nature, relates to an improper or irrelevant topic, or is unduly
hostile, threatening, illegal or otherwise inappropriate.
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At each board meeting, management shall present a summary of all
communications received since the last meeting that were not
forwarded and make those communications available to the
directors.
Code of
Ethics
The board of directors adopted a Code of Business Conduct and
Ethics that applies to all of our officers, directors and
employees, and a Code of Ethics for the Chief Executive Officer,
Chief Financial Officer and Principal Accounting Officer
(collectively the Codes). The Codes are intended to
promote honest and ethical conduct, full and accurate reporting
and compliance with laws. A copy of the Code of Ethics is
available on our website
at
http://www.portecrail.com
.
Amendments to and waivers from the Code of Ethics will also be
disclosed on our website.
Audit
Committee Report
In accordance with rules established by the SEC, the audit
committee has prepared the following report for inclusion in
this proxy statement:
As part of its ongoing activities, the audit committee has:
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reviewed and discussed with management and the independent
registered public accounting firm our audited consolidated
financial statements for the year ended December 31, 2009;
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discussed with the independent registered public accounting firm
the matters required to be discussed by Statement on Auditing
Standards No. 61,
Communications with Audit
Committees
, as amended; and
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received the written disclosures and the letter from the
independent registered public accounting firm required by
Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees
, and has
discussed with the independent registered public accounting firm
their independence.
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Based on the review and discussions referred to above, the audit
committee recommended to the board of directors that the audited
consolidated financial statements be included in our Annual
Report on
Form 10-K
for the year ended December 31, 2009.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that we specifically incorporate this
information by reference, and shall not otherwise be deemed
filed under such Acts.
This report has been provided by the Audit Committee:
Neal W. Scaggs (Chairman)
Daniel P. Harrington
Louis J. Akers
12
Executive
Compensation
Chief
Executive Officer Compensation
Effective October 1, 2009, Mr. Jarosinski, our
President and Chief Executive Officer, received an increase in
his base salary of 5.0% resulting in a new annual base salary of
$210,000. Mr. Jarosinskis previous base salary
increase occurred on October 1, 2008.
Chief
Operating Officer Compensation
Effective October 1, 2009, Mr. Papazoglou, our
Executive Vice-President and Chief Operating Officer, received
an increase in his base salary of 4.7% resulting in a new annual
base salary of $223,000 Canadian dollars (approximately $210,000
U.S. dollars applying the exchange rate in effect
February 3, 2010). Mr. Papazoglous previous base
salary increase occurred on October 1, 2008.
Chief
Financial Officer Compensation
Effective October 1, 2009, Mr. Pesarsick, our Chief
Financial Officer, received an increase in his base salary of
5.4% resulting in a new annual base salary of $137,000.
Mr. Pesarsicks previous base salary increase occurred
on October 1, 2008.
Summary Compensation Table.
The
following table shows the compensation of Richard J. Jarosinski,
our President and Chief Executive Officer, Konstantinos
Papazoglou, our Executive Vice President and Chief Operating
officer, and John N. Pesarsick, our Chief Financial Officer
(collectively our Named Executive Officers), who are
our only executive officers to have received total compensation
of $100,000 or more for services to Portec Rail Products, Inc.
and its subsidiaries during the year ended December 31,
2009.
SUMMARY
COMPENSATION TABLE
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Option
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All other
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Name and
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Salary
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Bonus
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Awards
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Compensation
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Total
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Principal Position
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Year
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($)
(1)
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($)
(2)
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($)
(3)
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($)
(4)
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($)
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Richard J. Jarosinski,
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2009
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200,000
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100,000
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15,000
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315,000
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President and Chief Executive
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2008
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185,000
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92,500
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18,400
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16,000
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311,900
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Officer
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Konstantinos Papazoglou,
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2009
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188,300
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94,100
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15,100
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297,500
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Executive Vice President and
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2008
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189,200
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95,100
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18,400
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15,300
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318,000
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Chief Operating
Officer
(5)
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John N. Pesarsick,
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2009
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130,000
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65,000
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10,400
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205,400
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Chief Financial Officer
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2008
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122,500
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61,300
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18,400
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11,000
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213,200
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(1)
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Represents cash-basis salaries paid
to our named executive officers in 2009 and 2008 rather than
their annual salaries at a particular point in time.
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(2)
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Represents bonuses earned for 2009
and 2008, but paid in the first quarters of 2010 and 2009,
respectively.
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(3)
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Represents the aggregate grant date
fair value of 5,000 stock options awarded to each of the named
executive officers on January 30, 2008. For further details
regarding stock option awards, reference Footnote 18 of our 2008
consolidated financial statements reported on Form
10-K
as
filed with the Securities and Exchange Commission.
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(4)
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Amounts represent life, accidental
death and dismemberment, and travel and accident insurance
premiums for 2009 ($1,100 for Mr. Jarosinski; $1,700 for
Mr. Papazoglou; and $700 for Mr. Pesarsick) paid by
us. Additionally, amounts in this column include employer
contributions under our 401(k) plan during 2009 ($13,900 for
Mr. Jarosinski and $9,700 for Mr. Pesarsick) and our
Canadian Simplified Pension Plan and Group Registered Retirement
Savings Plan ($13,300 for Mr. Papazoglou). Perquisites and
personal benefits are not included with all other compensation
as they represent less than $10,000 of compensation in the
aggregate.
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(5)
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Mr. Papazoglou receives all of
his compensation in Canadian dollars. For 2009, the amounts in
Canadian dollars are salary $213,000, bonus $106,500, and other
compensation $16,900. The amounts presented in the table above
were converted into U.S. dollars using an average foreign
exchange rate for the full year 2009.
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Retirement
Benefits
Mr. Jarosinski will receive retirement benefits from the
Portec Rail Products, Inc. Retirement Plan (the Retirement
Plan), our noncontributory defined benefit pension plan.
The board of directors of Portec Rail Products, Inc. voted on
August 26, 2003 to freeze the Retirement Plan effective
December 31, 2003, meaning that no benefits
13
will accrue to participants after that date. Credited service
earned after December 31, 2003, will not be taken into
account and no new hire or rehired participants will be
permitted to join the Retirement Plan after that date; however,
the benefit that a person had earned as of December 31,
2003 will not be reduced in any way. Employees with five or more
years of service are entitled to annual pension benefits
beginning at age 65. The Retirement Plan permits early
retirement at ages 55 through 64. If employees terminate
before rendering five years of service, they forfeit the right
to receive their accumulated plan benefits. Full and immediate
vesting occurs upon the completion of five years of service. The
pension benefits of a salaried participant under the Retirement
Plan are equal to 1.4% of their final average earnings
multiplied by credited service from December 31, 1991
through December 31, 2003. Additional benefit provisions
apply for salaried employees hired prior to January 1,
1992. The normal form of benefit from the Retirement Plan for a
single participant is a life annuity, or for a married
participant, a qualified joint and survivor annuity.
Mr. Jarosinski is eligible for benefits under the
Retirement Plan, as he was part of our predecessors
defined benefit pension plan (Portec Incorporated Employees
Retirement Program), and as such, he is entitled to benefits
accrued while a participant of that plan and has received credit
for his years of service with Portec, Inc. Mr. Pesarsick
and Papazoglou are not covered by the Retirement Plan, as
Mr. Pesarsick was a new hire at the time the plan was
frozen and Mr. Papazoglou is ineligible because he is a
resident of Canada.
Mr. Jarosinski and Mr. Pesarsick are participants in
the qualified defined contribution 401(k) plan covering
substantially all of our United States employees. Under the
terms of the plan, the Company contributes 3% of each
employees monthly compensation as a non-elective
contribution and may also contribute up to 50% of the first 6%
of each employees compensation contributed to the plan as
an annual profit sharing match, depending on certain
profitability thresholds.
Mr. Papazoglou will receive benefits under our Canadian
employee post-retirement benefit plan, which provides retiree
life insurance, health care benefits, and dental care. The only
requirement necessary for participation in this plan is ten
years of service with the Company. Health care and dental care
are lifetime benefits, which provide additional coverage to
retirees over and above the medical insurance provided by the
Canadian government. The Company does not make regular
contributions to this plan; rather, the Company is responsible
for the payment of the premiums to purchase this insurance.
Mr. Papazoglou is covered by our Canadian Simplified
Pension Plan, which is similar to a defined contribution plan.
Under the terms of the plan, the Company may contribute 4% of
his compensation as a non-elective contribution. For purposes of
this plan, compensation includes the executives base
salary and annual bonus. This amount is immediately vested, but
cannot be withdrawn until age 65; however, the plan does
permit early retirement before age 65. The provisions of
the Canadian Simplified Pension Plan are the same for
Mr. Papazoglou as they are for all non-union employees of
our Canadian operation near Montreal.
In addition, Mr. Papazoglou is covered by our Canadian
Group Registered Retirement Savings Plan, which is also similar
to a defined contribution plan. Under the terms of the plan, an
employee may contribute the lesser of 18% of his compensation or
the maximum allowable limit set by the Income Tax Act in Canada.
Compensation includes the executives base salary and his
annual bonus. The Company may contribute up to 30% of the first
6% contributed by the employee. The 30% contribution is at the
discretion of management, and may be changed as long as the
change is made prior to December
15
th
of
the preceding year. Both the employees contribution and
the 30% employer contribution vest immediately; however, neither
the employees contribution nor the 30% contribution can be
withdrawn without penalty unless a financial hardship exists. An
employee may begin withdrawing from the plan at any time prior
to the end of the calendar year in which he reaches age 69.
The provisions of the Canadian Group Registered Retirement
Savings Plan are the same for Mr. Papazoglou as they are
for all non-union employees of our Canadian operation near
Montreal.
14
Outstanding Equity Awards at Year
End.
The following table sets forth
information with respect to our outstanding equity awards as of
December 31, 2009 for our named executive officers.
Outstanding
Equity Awards at December 31, 2009
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Option Awards
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Stock Awards
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Equity Incentive
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Plan Awards;
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Market
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Equity
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Equity
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or Payout
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Incentive
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Incentive
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Value of
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Plan Awards:
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Market
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Plan Awards:
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Unearned
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# of
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Value of
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# of
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Shares,
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# of Securities
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# of Securities
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Securities
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# of Shares
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Shares or
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Unearned
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Units or
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Underlying
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Underlying
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Underlying
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or Units of
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Units of
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Shares,
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Other
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Unexercised
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Unexercised
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Unexercised
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Option
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Option
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Stock That
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Stock That
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Units or Other
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Rights that
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Options
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Options
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Unearned
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Exercise
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Expiration
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Have Not
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Have Not
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Rights That Have
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Have
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Name
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Exercisable
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Unexercisable
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Options
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Price
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Date
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Vested
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Vested
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Not Vested
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Not Vested
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Richard J. Jarosinski,
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1,000
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4,000
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$
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9.68
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1/30/2018
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$
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$
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President and Chief Executive
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2,000
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3,000
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$
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9.65
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1/16/2017
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Officer
(1)
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Konstantinos Papazoglou,
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1,000
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4,000
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$
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9.68
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1/30/2018
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$
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$
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Executive Vice-President and
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2,000
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3,000
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$
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9.65
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1/16/2017
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Chief Operating
Officer
(1)
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John N. Pesarsick,
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1,000
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4,000
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$
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9.68
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1/30/2018
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$
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$
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Chief Financial
Officer
(1)
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2,000
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3,000
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$
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9.65
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1/16/2017
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(1)
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Each of our Executive Officers was
granted 10,000 stock options (5,000 on January 16, 2007 and
5,000 on January 30, 2008). As of December 31, 2009,
2,000 options held by each Executive Officer have vested from
the January 16, 2007 grant and 1,000 options held by each
Executive Officer have vested from the January 30, 2008
grant. As of December 31, 2009, 3,000 options held by each
Executive Officer remain unvested from the January 16, 2007
grant and 4,000 options held by each Executive Officer remain
unvested from the January 30, 2008 grant.
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In June 2006, our shareholders ratified the Portec Rail
Products, Inc. 2006 Stock Option Plan (the Option
Plan), which authorizes the issuance of up to
150,000 shares of common stock of Portec Rail Products,
Inc. pursuant to grants of incentive and non-statutory stock
options. The Option Plan will be able to make awards to the
extent shares are available for a period of ten years from the
date of shareholder approval, or until June 8, 2016. On
January 30, 2008 and January 16, 2007, the
Compensation Committee of our board of directors approved the
granting of 5,000 stock options with an exercise price of $9.68
and $9.65 per stock option, respectively, to
Messrs. Jarosinski, Papazoglou, and Pesarsick. The stock
options will vest ratably over a five-year vesting period and
will expire on January 30, 2018 and January 16, 2017,
respectively.
Director
Compensation
Our directors are paid $500 for each meeting of the board of
directors that they attend. No committee fees have been paid.
All directors are entitled to be reimbursed for their expenses
incurred while attending meetings of the board of directors.
Directors Summary Compensation
Table.
Set forth below is summary
compensation for each of our directors for 2009.
15
DIRECTOR
COMPENSATION
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Fees Earned
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or Paid in
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Cash
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Total
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Name
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($)
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($)
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Marshall T. Reynolds
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$
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2,000
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$
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2,000
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John S.
Cooper
(1)
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$
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50,600
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$
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50,600
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Louis J. Akers
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$
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2,000
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$
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2,000
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Philip E. Cline
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$
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1,500
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$
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1,500
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Daniel P. Harrington
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$
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2,000
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$
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2,000
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A. Michael Perry
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|
$
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1,500
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|
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$
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1,500
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Douglas V. Reynolds
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|
$
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1,500
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|
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$
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1,500
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Neal W. Scaggs
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|
$
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2,000
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$
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2,000
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Philip Todd Shell
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$
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2,000
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$
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2,000
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Kirby
Taylor
(2)
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$
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44,000
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$
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44,000
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Thomas W. Wright
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$
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2,000
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|
$
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2,000
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(1)
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Mr. Cooper received director
fees of $500 for each meeting that he attended. In addition,
Mr. Cooper received a total of $48,600 for consulting
services performed during 2009 under a consulting agreement
entered into effective January 1, 2008.
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(2)
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Mr. Taylor received director
fees of $500 for each meeting that he attended. In addition,
Mr. Taylor received a total of $42,000 for consulting
services performed during 2009.
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Certain
Relationships and Related Transactions
Since January 1, 2008, we and our subsidiaries have not had
any transactions or series of transactions, in which the amount
involved exceeds $120,000 and in which our directors, executive
officers or 5% or more shareholders have a direct or indirect
material interest.
As of December 31, 2009, we had a credit facility with an
outstanding principal balance of $1.7 million with Boone
County Bank, Inc., a related party. Boone County Bank, Inc. is a
wholly-owned subsidiary of Premier Financial Bancorp, Inc.
located in Madison, West Virginia. Our Chairman of the Board of
Directors is the Chairman of the Board of Directors and a
shareholder of Premier Financial Bancorp, Inc. We believe that
our credit facility with Boone County Bank, Inc. is on terms
comparable to those obtained by a non-affiliated third party.
In addition, in connection with the Merger, we intend to make a
payment to our executive officers and to Gary P. Bale, our
Managing Director of United Kingdom Materials Handling Division,
at or immediately prior to the effective time of the Merger, in
an amount equal to one years base salary. We also intend
to pay to Kirby Taylor a bonus as compensation for services
performed in assisting our Chairman of the Board in managing and
negotiating the Merger on our behalf (in consultation with, and
at the direction of, the Chairman of the Board), for
coordinating due diligence efforts on our behalf and for
attending due diligence reviews conducted by L. B. Foster in
Canada, the United States and the United Kingdom. The payment to
Mr. Taylor is contingent upon the consummation of the
Merger. The following table sets forth the amounts of these
payments:
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Payment
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Executive
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Amount
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Richard J. Jarosinski
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$
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210,000
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Konstantinos Papazoglou
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$
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210,000
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John N. Pesarsick
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$
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137,000
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Gary P. Bale
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$
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141,000
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Kirby J. Taylor
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$
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350,000
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Information with respect to payments to Mr. Papazoglou is
presented in U.S. dollars, and has been converted from
Canadian dollars using a foreign exchange rate as of the close
of business on February 3, 2010. The amount in Canadian
dollars is $223,000. Information with respect to payments to
Mr. Bale is presented in U.S. dollars, and has been
converted from British pounds sterling using a foreign exchange
rate as of the close of business on February 3, 2010. The
amount in British pounds sterling is £88,000. The actual
value, in U.S. dollars, of the payments to be made to
Messrs. Papazoglou and Bale will depend on the exchange
rates at the time of payment.
16
PROPOSAL 2 RATIFICATION OF THE SELECTION OF OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee requests that shareholders ratify the Audit
Committees selection of Arnett & Foster, PLLC to
serve as our independent registered public accounting firm for
the fiscal year ending December 31, 2010. Representatives
of Arnett & Foster, PLLC will be present at the Annual
Meeting and will have an opportunity to make a statement if they
so desire and to respond to questions by shareholders.
Arnett & Foster audited the consolidated financial
statements as of and for the years ended December 31, 2009
and 2008. The engagement of Arnett & Foster, PLLC as
independent registered public accounting firm for the year ended
December 31, 2009 was approved by our Audit Committee.
Set forth below is certain information concerning aggregate fees
billed for professional services rendered for fiscal years 2009
and 2008 by Arnett & Foster, PLLC.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
289,191
|
|
|
$
|
288,400
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|
Audit-related Fees
|
|
|
40,174
|
|
|
|
39,214
|
|
Tax Fees
|
|
|
57,646
|
|
|
|
59,753
|
|
All Other Fees
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|
|
|
|
|
|
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Reimbursed Expenses
|
|
|
27,612
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|
|
|
34,203
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|
|
|
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|
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|
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Total Fees
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|
$
|
414,623
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|
|
$
|
421,570
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|
|
|
|
|
|
|
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Audit Fees.
Includes financial
statement audit fees for 2009 and 2008, which includes
additional fees for procedures performed on the Canadian
subsidiaries related to internal audit control procedures.
Audit-Related Fees.
Includes fees for
the
10-Q
quarterly review for the quarters ended March 31, 2008,
June 30, 2008, September 30, 2008, March 31,
2009, June 30, 2009 and September 30, 2009.
Tax Fees.
Includes fees for tax return
preparation, tax research regarding international tax issues and
other permitted and approved income tax research and
consultation services.
Reimbursed Expenses.
Primarily includes
travel expenses.
Policy on
Audit Committee Pre-Approval of Audit and Non-Audit Services of
Independent Registered Public Accounting Firm
The audit committee adopted a policy requiring pre-approval of
all audit and non-audit services provided by the independent
registered public accounting firm. These services may include
audit services, audit-related services, tax services and other
services. Pre-approval is generally provided for up to one year
and any pre-approval is detailed as to particular service or
category of services and is generally subject to a specific
budget. The audit committee has delegated pre-approval authority
to its chairman when expedition of services is necessary. The
independent registered public accounting firm and management are
required to periodically report to the full audit committee
regarding the extent of services provided by the independent
registered public accounting firm in accordance with this
pre-approval, and the fees for the services performed to date.
In order to ratify the selection of Arnett & Foster,
PLLC as the independent registered public accounting firm for
the 2010 fiscal year, the proposal must receive the affirmative
vote of a majority of the shares represented at the Annual
Meeting and entitled to vote.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF ARNETT & FOSTER, PLLC AS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2010 FISCAL YEAR.
17
SHAREHOLDER
PROPOSALS
In order to be eligible for inclusion in the proxy materials for
next years annual meeting of shareholders, any shareholder
proposal to take action at such meeting must be received at our
executive office located at 900 Old Freeport Road, Pittsburgh,
Pennsylvania 15238, no later than July 15, 2011. Any such
proposals shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934.
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the annual meeting other than the matters described above
in this Proxy Statement. However, if any matters should properly
come before the annual meeting, it is intended that holders of
the proxies will act as directed by a majority of the Board of
Directors, except for matters related to the conduct of the
annual meeting, as to which they shall act in accordance with
their best judgment. The Board of Directors intends to exercise
its discretionary authority to the fullest extent permitted
under the Securities Exchange Act of 1934.
MISCELLANEOUS
The cost of solicitation of proxies in the form enclosed
herewith will be borne by us. Proxies also may be solicited
personally or by mail, telephone or internet by our directors,
officers and employees, without additional compensation
therefor. We also will request persons, firms and corporations
holding shares in their names, or in the names of their nominees
which are beneficially owned by others, to send proxy materials
to and to obtain proxies from such beneficial owners, and will
reimburse such holders for their reasonable expenses in doing so.
A COPY OF OUR ANNUAL REPORT ON
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2009 WILL BE FURNISHED WITHOUT
CHARGE TO SHAREHOLDERS AS OF THE RECORD DATE UPON WRITTEN OR
TELEPHONIC REQUEST TO JOHN N. PESARSICK, PORTEC RAIL PRODUCTS,
INC., 900 OLD FREEPORT ROAD, PITTSBURGH, PENNSYLVANIA 15238, OR
CALL US AT
(412) 782-6000.
BY ORDER OF THE BOARD OF DIRECTORS
Kirby J. Taylor
Corporate Secretary
Pittsburgh, Pennsylvania
November 16, 2010
18
REVOCABLE PROXY
PORTEC RAIL PRODUCTS, INC.
ANNUAL MEETING OF SHAREHOLDERS
December 17, 2010
The undersigned hereby appoints John S. Cooper and Kirby J. Taylor with full powers of
substitution to act as attorneys and proxies for the undersigned to vote all shares of common stock
of Portec Rail Products, Inc. (the Company) which the undersigned is entitled to vote at the
annual meeting of shareholders (annual meeting) to be held at the Pullman Plaza Hotel, 1001 Third
Avenue, Huntington, West Virginia 25701 on December 17, 2010, at 10:00 a.m., local time. The proxy
holders are authorized to cast all votes to which the undersigned is entitled as follows:
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FOR
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VOTE
WITHHELD
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1.
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The election as directors of all
nominees listed below each to serve
for a one-year term.
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o
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o
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Marshall T. Reynolds, John S.
Cooper, Louis J. Akers, Philip
E. Cline, Daniel P. Harrington,
A. Michael Perry, Douglas V.
Reynolds, Neal W. Scaggs,
Phillip Todd Shell, Kirby J.
Taylor and Thomas W. Wright
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INSTRUCTION
: To withhold your vote for one
or more nominees, write the name of the
nominee(s) on the line(s) below.
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Should a shareholder wish to cumulate his
or her votes for the election of directors,
he or she should indicate the director(s)
for whom they wish to cumulate their vote
for and the number of votes they wish to
cast for the individual below. You may
distribute your votes by multiplying the
number of shares you own by the number of
nominees up for election and then allocate
your votes among the candidates you
designate.
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FOR
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AGAINST
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ABSTAIN
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2.
|
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The ratification of the appointment of
Arnett & Foster, PLLC as independent
auditors for the Company for the year
ending December 31, 2010.
|
o
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o
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o
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The Board of Directors recommends a vote FOR the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE PROPOSALS STATED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING,
THIS PROXY WILL BE VOTED AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the annual meeting or at any adjournment
thereof and after notification to the Secretary of the Company at the annual meeting of the
shareholders decision to terminate this proxy, then the power of said attorneys and proxies shall
be deemed terminated and of no further force and effect. This proxy may also be revoked by sending
written notice to the Secretary of the Company at the address set forth on the Notice of annual
meeting of Shareholders, or by the filing of a later proxy prior to a vote being taken on a
particular proposal at the annual meeting.
The undersigned acknowledges receipt from the Company prior to the execution of this proxy of
notice of the annual meeting, a Proxy Statement dated November 16, 2010 and the Companys 2009 Annual
Report.
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Dated:
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o
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Check Box if You Plan
to Attend annual meeting
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PRINT NAME OF SHAREHOLDER
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PRINT NAME OF SHAREHOLDER
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SIGNATURE OF SHAREHOLDER
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SIGNATURE OF SHAREHOLDER
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Please sign exactly as your name appears on
this proxy card. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title.
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Please complete and date this proxy card and return it promptly
in the enclosed postage-prepaid envelope.
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