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
(Amendment No. )
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by the Registrant
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☒
Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Under Rule 14a-12
HANDY & HARMAN LTD.
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(Name of Registrant as Specified in Its Charter)
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
(3)
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fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and
the date of its filing.
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HANDY
& HARMAN LTD.
590
Madison Avenue, 32nd Floor
New
York, New York 10022
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 25, 2017
To
our Stockholders:
You
are cordially invited to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of Handy & Harman
Ltd. (the “Company”) to be held on May 25, 2017, at 9:00 a.m., local time, at Olshan Frome Wolosky LLP, 1325
Avenue of the Americas, New York, NY 10019 for the following purposes:
1.
To elect seven directors to the Board of Directors (the “Board”) of the Company.
2.
To approve, on a non-binding, advisory basis, named executive officer compensation.
3.
To ratify the selection of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December
31, 2017.
4.
To transact any other business as may properly come before the Annual Meeting or any postponement or adjournments of the Annual
Meeting.
These
items of business are more fully described in the attached Proxy Statement. Only holders of record of the Company’s common
stock, $0.01 par value per share, at the close of business on March 27, 2017 will be entitled to notice of and to vote at the
Annual Meeting.
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By
Order of the Board of Directors
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/s/
Warren G. Lichtenstein
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WARREN
G. LICHTENSTEIN
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Chairman of the Board
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Whether
or not you plan to attend the Annual Meeting, please cast your vote online, by telephone or by completing, dating, signing and
promptly returning the enclosed proxy card or voting instruction card in the enclosed postage-paid envelope before the Annual
Meeting. This will assure that your shares are represented at the Annual Meeting.
HANDY
& HARMAN LTD.
590
Madison Avenue, 32nd Floor
New
York, New York 10022
PROXY
STATEMENT
Annual
Meeting of Stockholders
This
Proxy Statement is being furnished to the stockholders of Handy & Harman Ltd., a Delaware corporation (the “Company,”
“HNH,” “we” or “us”), in connection with the solicitation of proxies by the Board of Directors
(the “Board”) of Handy & Harman Ltd., for use at the Annual Meeting of Stockholders of the Company (the “Annual
Meeting”) to be held on May 25, 2017, at 9:00 a.m., local time, at Olshan Frome Wolosky LLP, 1325 Avenue of the Americas,
New York, NY 10019 and at any postponements or adjournments thereof.
At
the Annual Meeting, stockholders will be asked:
1.
To elect seven directors to the Board.
2.
To approve, on a non-binding, advisory basis, named executive officer compensation.
3.
To ratify the selection of BDO USA, LLP (“BDO”) as our independent registered public accounting firm for the fiscal
year ending December 31, 2017.
4.
To transact any other business as may properly come before the Annual Meeting or any postponement or adjournments of the Annual
Meeting.
The
Board has fixed the close of business on March 27, 2017, as the record date for the determination of the holders of the Company’s
common stock, $0.01 par value per share (“Common Stock”), entitled to notice of and to vote at the Annual Meeting.
Each eligible stockholder will be entitled to one vote for each share held on all matters to come before the Annual Meeting and
may vote in person or by proxy by completing the enclosed proxy card and returning it in the enclosed postage prepaid envelope
or, as indicated on the proxy card, by voting on the Internet or by voting by telephone. At the close of business on March 27,
2017, there were 12,221,429 shares of Common Stock entitled to vote.
This
Proxy Statement and the accompanying form of proxy are first being sent to holders of the Common Stock on or about April 25, 2017.
Our Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2016 (“2016”)
is enclosed with this Proxy Statement.
THE
ANNUAL MEETING
Date,
Time and Place
The
Annual Meeting will be held on May 25, 2017, at 9:00 a.m., local time, at Olshan Frome Wolosky LLP, 1325 Avenue of the Americas,
New York, NY 10019.
Matters
to be Considered
At
the Annual Meeting, stockholders will be asked to consider and cast a vote on the following matters: the election of seven directors;
the approval, on a non-binding, advisory basis, of named executive officer compensation; and the ratification of the selection
of independent auditors.
The
Board does not know of any matters to be brought before the Annual Meeting other than as set forth in the notice of Annual Meeting.
If any other matters properly come before the Annual Meeting, the persons named in the enclosed form of proxy or their substitutes
will vote in accordance with their best judgment on such matters.
Record
Date; Quorum; List of Stockholders of Record
Only
holders of record of the Company’s Common Stock at the close of business on March 27, 2017 (the “Record Date”)
will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, we had 12,221,429 shares of Common
Stock outstanding and entitled to vote. A majority of the shares outstanding on the Record Date, represented by proxy or in person,
will constitute a quorum for the transaction of business at the Annual Meeting. A list of stockholders entitled to vote at the
Annual Meeting will be available for inspection at our executive offices for a period of ten days before the Annual Meeting. Stockholders
may examine the list for purposes germane to the Annual Meeting.
Voting
Rights; Required Vote
Stockholders
are entitled to one vote for each share of Common Stock held by them as of the Record Date.
Proposal
1: Election of Directors.
Under our bylaws, the director nominees receiving a plurality of the votes cast at the Annual Meeting
in person or by proxy will be elected to fill the seats of our Board. Abstentions are not counted as votes “FOR” or
“AGAINST” the election of directors. Stockholders do not have the right to cumulate their votes in the election of
directors.
The
Board recommends a vote “FOR” all nominees.
Proposal
2: Approval of Named Executive Officer Compensation
. The approval, on a non-binding, advisory basis, of the compensation of
the Company’s named executive officers requires the affirmative vote of the holders of a majority of the votes cast at the
Annual Meeting in person or by proxy on the matter. The vote is advisory and therefore not binding on the Board, the Compensation
Committee of the Board (the “Compensation Committee”), or the Company.
The
Board recommends a vote “FOR” this proposal.
Proposal
3: Selection of Auditors
. Ratification of the selection of BDO as our independent registered public accounting firm for the
fiscal year ending December 31, 2017 requires the affirmative vote of the holders of a majority of the votes cast at the Annual
Meeting in person or by proxy on the matter. The vote is advisory and therefore not binding on the Board, the Audit Committee
of the Board (the “Audit Committee”), or the Company.
The
Board recommends a vote “FOR” this proposal.
We
have been advised that it is the intention of SPH Group Holdings LLC (“SPHG Holdings”) to vote the shares of our Common
Stock over which it has voting power “FOR” all nominees for director and in favor of all other proposals described
in this Proxy Statement. SPHG Holdings beneficially owned approximately 70.0% of our outstanding shares of Common Stock as of
the Record Date. See the stock ownership table set forth in “Stock Ownership of Principal Stockholders and Management”
below for information regarding the ownership of our Common Stock.
Voting
of Proxies
Stockholders
that are “beneficial owners” (your HNH shares are held for you in street name, by a bank, broker or other nominee)
and “registered stockholders” (your HNH shares are held in your own name through our transfer agent, American Stock
Transfer & Trust Company, LLC, or you are in possession of stock certificates) may submit their votes before the Annual Meeting
by: (a) Internet at www.proxyvote.com, or (b) telephone by calling 1-800-690-6903. Additionally, if you received your materials
for the Annual Meeting by mail and do not wish to vote by Internet or telephone, you may mail a completed proxy card (in the case
of registered stockholders), or voting instruction card (in the case of beneficial owners), in the prepaid envelope that was provided
with your Annual Meeting materials. Stockholders wishing to vote by mail should be sure to complete and properly sign the proxy
card (registered holders) or voting instruction card (beneficial owners) you received and return it in the prepaid envelope provided,
and it will be voted in accordance with the specifications made on the proxy card or voting instruction card. If no specification
is made on a signed and returned proxy card or voting instruction card, the shares represented by the proxy will be voted “FOR”
the election to the Board of each of the seven nominees named on the proxy or instruction card, “FOR” the advisory
vote on approval of the compensation of our named executive officers, and “FOR” ratification of the appointment of
BDO as our independent registered public accounting firm for the fiscal year ending December 31, 2017, and, if any other matters
are properly brought before the Annual Meeting, the proxy will be voted as the Board may recommend.
Voting
instructions, including instructions for both telephonic and Internet voting, are provided on the proxy card. The Internet and
telephone voting procedures are designed to authenticate stockholder identities, to allow stockholders to give voting instructions
and to confirm that stockholders’ instructions have been recorded properly. A control number, located on the proxy card,
will identify stockholders and allow them to vote their shares and confirm that their voting instructions have been properly recorded.
If you do vote by Internet or telephone, it will not be necessary to return your proxy card.
We
encourage stockholders with Internet access to record your vote on the Internet or, alternatively, to vote by telephone. Internet
and telephone voting is convenient, saves on postage and mailing costs and is recorded immediately, minimizing risk that postal
delays may cause your vote to arrive late and therefore not be counted.
If
your shares are held in the name of a bank or broker, follow the voting instructions on the form you receive from your record
holder. The availability of Internet and telephone voting will depend on their voting procedures.
If
you attend the Annual Meeting, you may also vote in person, and any previously submitted votes will be superseded by the vote
you cast at the Annual Meeting (attendance at the Annual Meeting will not, in and of itself, constitute a revocation of any previously
submitted votes). If your shares are held in a brokerage, bank, or other institutional account, you must obtain a proxy from that
entity showing that you were the record holder as of the close of business on the Record Date, in order to vote your shares at
the Annual Meeting.
If
a stockholder neither returns a signed proxy card, votes by the Internet or by telephone, nor attends the Annual Meeting and votes
in person, his or her shares will not be voted.
Revocability
of Proxies
Any
proxy signed and returned by a stockholder or voted by telephone or via the Internet may be revoked at any time before it is voted.
A proxy may be revoked by giving written notice of revocation to the Secretary of the Company, at the Company’s address
set forth herein, by executing and delivering a later-dated proxy, either in writing, by telephone or via the Internet, or by
voting in person at the Annual Meeting. The mere presence at the Annual Meeting of a stockholder who has previously appointed
a proxy will not revoke the appointment. Please note, however, that if a stockholder has instructed a broker, bank or nominee
to vote his, her or its shares of Common Stock, the stockholder must follow the directions received from the broker, bank or nominee
to change his, her or its instructions. In the event of multiple online or telephone votes by a stockholder, each vote will supersede
the previous vote and the last vote cast will be deemed to be the final vote of the stockholder, unless such vote is revoked in
person at the Annual Meeting according to the revocability instructions outlined above.
Attending
in Person
Only
holders of Common Stock as of the Record Date, their proxy holders and our invited guests may attend the Annual Meeting. If you
wish to attend the Annual Meeting in person but you hold your shares in street name, such as by a broker, you must bring proof
of your ownership and identification with a photo at the Annual Meeting. For example, you may bring an account statement showing
that you beneficially owned Common Stock as of the Record Date as acceptable proof of ownership.
Effect
of Abstentions and “Broker Non-Votes”
If
a registered stockholder indicates on his or her proxy card that the stockholder wishes to abstain from voting, or a beneficial
owner instructs its bank, broker or other nominee that the stockholder wishes to abstain from voting, these shares are considered
present and entitled to vote at the Annual Meeting. These shares will count toward determining whether or not a quorum is present.
Because directors are elected by a plurality of votes, abstentions will have no effect on the outcome of Proposal No. 1, concerning
the election of the seven nominees to our Board. Similarly, abstentions will have no effect on Proposal No. 2, concerning the
non-binding, advisory vote on executive compensation, and Proposal No. 3, concerning the ratification of the appointment of BDO
as our independent registered public accounting firm for the fiscal year ending December 31, 2017.
A
“broker non-vote” occurs when a beneficial owner does not provide his or her broker with instructions as to how to
vote the shares (“uninstructed shares”) and the broker does not vote on a particular proposal because they do not
have authority to vote on that particular proposal without receiving voting instructions from the beneficial owner. Brokers may
not vote on “non-routine” proposals unless they have received voting instructions from the beneficial owner, and to
the extent that they have not received voting instructions, brokers report such number of shares as “non-votes.” Proposal
No. 1, concerning the election of the seven nominees to our Board and Proposal No. 2, concerning the non-binding, advisory vote
on executive compensation, are considered “non-routine”, which means that brokerage firms may not vote in their discretion
regarding these items on behalf of beneficial owners who have not furnished voting instructions; however, such uninstructed shares
will be counted towards establishing a quorum. Therefore, we encourage you to vote your shares by Internet, telephone or by signing
and returning your proxy card or voting instruction card with complete voting instructions before the Annual Meeting, so that
your shares will be represented and voted at the Annual Meeting even if you cannot attend in person.
Brokers
do have authority to vote uninstructed shares for or against “routine” proposals. Proposal No. 3, ratification of
the appointment of BDO as our independent registered public accounting firm for the fiscal year ending December 31, 2017, constitutes
a “routine” proposal. Accordingly, a broker may vote uninstructed shares “FOR” or “AGAINST”
Proposal No. 3 and such votes will count towards establishing a quorum.
The
inspector of elections appointed for the Annual Meeting will separately tabulate the relevant affirmative and negative votes,
abstentions and broker non-votes (which are votes that could have been provided had the beneficial holder provided voting instructions
to its broker) for each proposal.
Adjournment
of Annual Meeting
If
a quorum is not present to transact business at the Annual Meeting or if we do not receive sufficient votes in favor of the proposals
by the date of the Annual Meeting, the persons named as proxies may propose one or more adjournments of the Annual Meeting to
permit solicitation of additional proxies. The chairperson of the Annual Meeting shall have the power to adjourn the Annual Meeting.
If the Annual Meeting is postponed or adjourned, a stockholder’s proxy may remain valid and may be voted at the postponed
or adjourned meeting. A stockholder still will be able to revoke the stockholder’s proxy until it is voted.
No
Right of Appraisal
Neither
Delaware law, the Company’s Certificate of Incorporation, nor its bylaws provide for appraisal or other similar rights for
dissenting stockholders in connection with any of the proposals to be voted upon at the Annual Meeting. Accordingly, the Company’s
stockholders will have no right to dissent and obtain payment for their shares.
Expenses
of Soliciting Proxies
Our
Board is soliciting the proxy included with this Proxy Statement for use at the Annual Meeting. We will pay the expenses of soliciting
proxies for the Annual Meeting. After the mailing of the proxy cards and other soliciting materials, we and/or our agents, including
our directors, officers or employees, also may solicit proxies by mail, telephone, facsimile, email or in person. After the mailing
of the proxy cards and other soliciting materials, we will request that brokers, custodians, nominees and other record holders
of our Common Stock forward copies of the proxy cards and other soliciting materials to persons for whom they hold shares and
request authority for the exercise of proxies. We will reimburse the record holders for their reasonable expenses if they ask
us to do so. Our directors, officers and employees will not receive any additional compensation for any soliciting efforts in
which they may be engaged.
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May 25, 2017
This
Proxy Statement and the Annual Report are available at www.handyharman.com/2017annual.php.
Annual
Report and Company Information
A
copy of the Annual Report is being furnished to stockholders concurrently herewith.
The
Company will mail without charge, upon written request, a copy of the Annual Report, including the financial statements and list
of exhibits, and any exhibit specifically requested. Stockholders may request a written copy of our Audit Committee Charter, Compensation
Committee Charter, Nominating Committee Charter, our Corporate Governance Guidelines and our Code of Business Conduct and Ethics,
by writing to our Corporate Secretary. Requests should be sent to:
Handy
& Harman Ltd.
Attn:
Corporate Secretary
590
Madison Avenue, 32nd Floor
New
York, New York 10022
Each
of these documents is also available on our website,
www.handyharman.com
under “Investor Relations –
Corporate Governance.”
Independent
Auditors
We
have been advised that representatives of BDO are not expected to attend the Annual Meeting.
FORWARD-LOOKING
STATEMENTS
This
Proxy Statement contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933,
as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). These statements may be identified by the use of such words as “expects,” “anticipates,”
“intends,” “hopes,” “believes,” “could,” “may,” “will,”
“projects,” and “estimates,” and other similar expressions, but these words are not the exclusive means
of identifying such statements. We caution that a variety of factors, including but not limited to the following, could cause
our results to differ materially from those expressed or implied in our forward-looking statements: our ability to deploy our
capital in a manner that maximizes stockholder value; the ability to identify suitable acquisition candidates or business and
investment opportunities; the inability to realize the benefits of our net operating losses; the ability to consolidate and manage
our newly acquired businesses; fluctuations in demand for our products; environmental and other health and safety laws and regulations;
general economic conditions and other risks detailed from time to time in filings we make with the United States Securities and
Exchange Commission (the “SEC”), including our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q.
Except as required by law, we assume no obligation to update any forward-looking information that is included in this Proxy Statement.
PROPOSAL
NO. 1: ELECTION OF DIRECTORS
At
the Annual Meeting, stockholders are being asked to elect seven directors to serve until the next annual meeting or until their
successors are elected and qualified.
The
persons named in the enclosed form of proxy have advised that, unless contrary instructions are received, they intend to vote
for
the seven nominees named by the Board and listed on the following table. The Board does not expect that any of the
nominees will be unavailable for election as a director. However, if by reason of an unexpected occurrence one or more of the
nominees is not available for election, the persons named in the form of proxy have advised that they will vote for the substitute
nominees as the Board may propose.
Director
Nominees
Each
of the following nominees is currently serving as a director. Each of the biographies of the nominees for election as directors
below contains information regarding the person’s service as a director, business experience, director positions held currently
or at any time during the past five years, and the experience, qualifications, attributes and skills that caused the Nominating
Committee of the Board (the “Nominating Committee”) and the Board to determine that the person should be nominated
for election as a director of the Company at the Annual Meeting. No family relationships exist between any directors or executive
officers (as such term is defined in Item 401(d) of Regulation S-K promulgated under the Exchange Act). The following information
is as of March 27, 2017.
Name
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Age
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Position
With The Company
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Director
Since
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Warren
G. Lichtenstein
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51
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Chairman
of the Board
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2005
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Jack
L. Howard
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55
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Vice
Chairman and Principal Executive Officer of HNH
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2005
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Patrick
A. DeMarco (1)(2)(3)
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52
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Director
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2012
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Robert
Frankfurt (1)(2)(3)
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51
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Director
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2008
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John
H. McNamara, Jr.
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53
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Director
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2008
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Garen
W. Smith (1)(2)(3)
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74
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Director
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2002
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Jeffrey
A. Svoboda
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65
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Director
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2011
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(1)
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Member
of the Nominating Committee.
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(2)
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Member
of the Compensation Committee.
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(3)
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Member
of the Audit Committee.
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Warren
G. Lichtenstein
has served as the Chairman of the Board of the Company since July 2005. Mr. Lichtenstein has served on the
Board of Directors of over twenty public companies. He served as the Chairman of the Board and Chief Executive Officer of Steel
Partners Holdings GP Inc. (“Steel Holdings GP”) from July 2009 to February 2013, and has served as Executive Chairman
since February 2013. Steel Holdings GP is the general partner of Steel Partners Holdings L.P. (“Steel Holdings”),
a global diversified holding company that engages in multiple businesses through consolidated subsidiaries, associated companies
and other interests.
Mr. Lichtenstein has been associated with Steel Holdings and its predecessors
and affiliates since 1990
. Mr. Lichtenstein served as Chairman of the Board of ModusLink Global Solutions, Inc. (“ModusLink”),
a NASDAQ company providing customized supply chain management services to the world’s leading high technology companies
from March 2013 until June 2016, at which time he was appointed Executive Chairman. Mr. Lichtenstein also served as interim Chief
Executive Officer of ModusLink from March 2016 to June 2016. Mr. Lichtenstein has served as a director of Aerojet Rocketdyne Holdings,
Inc., a NYSE-listed manufacturer of aerospace and defense products and systems with a real estate business segment, since March
2008, serving as the Chairman of the Board from March 2013 to June 2016 and as Executive Chairman since June 2016. Mr. Lichtenstein
has served as a director of Steel Excel Inc., since October 2010 and Chairman of the Board since May 2011. In 2011, Mr. Lichtenstein
founded Steel Sports, Inc., a subsidiary of Steel Excel Inc. dedicated to building a network of participatory and experience-based
sports-related businesses, with a particular emphasis on youth sports. He served as a director of SL Industries, Inc. (“SLI”),
a company that designs, manufactures and markets power electronics, motion control, power protection, power quality electromagnetic
and specialized communication equipment, from March 2010 to June 2016 (when SLI was acquired by the Company). He previously served
as a director (formerly Chairman of the Board) of SLI from January 2002 to May 2008 and served as Chief Executive Officer from
February 2002 to August 2005. SLI was listed on the New York Stock Exchange until its acquisition as a wholly owned subsidiary
of the Company effective June 1, 2016.
The
Board has determined that Mr. Lichtenstein’s extensive experience in corporate finance, executive management, investing
and his service as a director and advisor to a diverse group of public companies enable him to assist in the effective management
of the Company.
Jack
L. Howard
has been Vice Chairman of the Board of the Company since March 2012 and Principal Executive Officer of the Company
since January 2013, and has served as a director of the Company since July 2005. Mr. Howard has been a registered principal of
Mutual Securities, Inc., a FINRA registered broker-dealer, since 1989. Mr. Howard has served as the President of Steel Holdings
GP since July 2009 and has served as a director of Steel Holdings GP since October 2011. He also served as the Assistant Secretary
of Steel Holdings GP from July 2009 to September 2011 and as Secretary from September 2011 to January 2012. He is the President
of SP General Services LLC. He is the President of Steel Holdings and has been associated with Steel Holdings and its
predecessors
and affiliates
since 1993. Mr. Howard has been a director of Steel Excel since December 2007, serving as Vice Chairman
of the Steel Excel Board since May 2012, and Principal Executive Officer of Steel Excel since March 2013. He currently holds the
securities licenses of Series 7, Series 24, Series 55 and Series 63.
The
Board has determined that Mr. Howard’s managerial and investing experience in a broad range of businesses over the past
30 years, as well as his service on the boards of directors and committees of both public and private companies, enable him to
effectively lead the management of the Company.
Patrick
A. DeMarco
has served as a director of the Company since 2012. Mr. DeMarco has been President of Risken Software Services,
a provider of enterprise level technology solutions to automotive dealerships, since 2006. From 2002 to 2006, he was Executive
Director, Client Solutions for J.D. Power & Associates, a global marketing information services company operating in key business
sectors across a variety of industries. From 2000 to 2002, he was Vice President of Sales and Business Development for Blue Falcon
Networks (now known as Akimbo Systems), a leader in distributed networking technologies and provider of cost-effective streaming
media delivery solutions. From 1999 to 2000, Mr. DeMarco was a co-founder of MValue.com, which offered a privacy protection application
for internet shoppers. He received a M.B.A. from Miami University (Ohio).
The
Board had determined that Mr. DeMarco’s experience and success in key roles across a variety of industries, including with
other manufacturing companies having attributes similar to the Company, enable him to assist in the effective management of the
Company.
Robert
Frankfurt
has been a director of the Company since November 2008. Mr. Frankfurt is the founder of Myca Partners, Inc., an
investment advisory services firm, and has served as its President since November 2006. From February 2005 through December 2005,
Mr. Frankfurt served as the Vice President of Sandell Asset Management Corp., a privately owned hedge fund. From October 2002
through January 2005, Mr. Frankfurt was a private investor. Mr. Frankfurt served as a director of Peerless Systems Corp., a public
company that licenses and sells imaging and networking technologies and components to the digital document markets, from November
2010 to June 2012. Mr. Frankfurt served as a director of Mercury Payment Systems, Inc., a private company that provides integrated
transaction processing, from October 2010 until its sale in June 2014. Mr. Frankfurt graduated from the Wharton School of Business
at the University of Pennsylvania with a B.S. in Economics and received an M.B.A. from the Anderson Graduate School of Management
at the University of California at Los Angeles.
The
Board has determined that Mr. Frankfurt’s years of experience with private investing and investment advising and his post-graduate
education, which provide him with comprehensive financial and accounting expertise, enable him to assist in the effective management
of the Company.
John
H. McNamara, Jr.
has served as a director of the Company since February 2008. He is an investment professional of Steel Holdings
and has been associated with Steel Holdings and its
predecessors and affiliates
since
2006. Mr. McNamara has served as Chairman of the Board of WebBank, a Utah chartered industrial bank that is a wholly-owned subsidiary
of Steel Holdings, since 2009, and Executive Chairman since 2012. Prior to working at Steel Holdings, Mr. McNamara was a Managing
Director and Partner at Imperial Capital LLC, an investment banking firm, which he joined in 1995. As a member of its Corporate
Finance Group, he provided advisory services for middle market companies in the areas of mergers and acquisitions, restructurings
and financings. Mr. McNamara began his career at Bay Banks, Inc., a commercial bank, where he served in lending and work-out capacities.
The
Board has determined that Mr. McNamara’s record of success in leadership positions in other public companies and extensive
expertise in banking and corporate finance, particularly in the areas of mergers and acquisitions, restructuring and financing,
enable him to assist in the effective management of the Company.
Garen
W. Smith
has served as a director of the Company since 2002. He has served as Vice President, Secretary and Treasurer of New
Abundance Corp., a business consulting company, since 1997. Mr. Smith has served as a director of Phillips Manufacturing Company
since November 2006. Mr. Smith also serves on the advisory board of Steel Warehouse Company, Inc. Mr. Smith is also currently
the President of Grove Park Associates, a small, regional residential developer. Mr. Smith received his Bachelor of Science degree
in Civil Engineering and his Masters of Engineering degree (Civil Engineering) from Penn State University.
The
Board has determined that Mr. Smith’s years of experience and record of success in leadership positions in other manufacturing
and industrial companies having attributes similar to the Company enable him to assist in the effective management of the Company.
Jeffrey
A. Svoboda
has served as a director of the Company since June 2011 and served as President and Chief Executive Officer of
Handy & Harman Group Ltd. (“HNH Group”), a wholly owned subsidiary of the Company, from August 2011 until October
2016. Mr. Svoboda served as President of Handy & Harman (“H&H”), from January 2008 to October 2016, and of
Bairnco LLC (“Bairnco”), from January 2009 to October 2016, each of H&H and Bairnco being a wholly owned subsidiary
of HNH Group. Mr. Svoboda served as a Senior Vice President of the Company from March 2009 until October 2016. Mr. Svoboda has
served as the Vice Chairman of Steel Holdings GP since June 2016. Mr. Svoboda also has served as a director of Api Group plc since
March 2015. Mr. Svoboda has previously served as a Group Executive and Corporate Vice President of Danaher Corporation from 2001
through 2007. From 1998 through 2001, he was with Fortune Brands as President of Moen Incorporated. Prior positions included Vice
President of Manufacturing and Distribution for Black & Decker, General Manager of International Marketing and Sales for General
Electric Appliances, and President of Electro Componentes de Mexico, an affiliate of General Electric.
The
Board has determined that Mr. Svoboda’s familiarity with the Company and its operations and his experience with other global
manufacturing and industrial companies having attributes similar to the Company, as well as over 30 years of international operations
and commercial responsibility in both consumer and industrial products companies, enables him to assist in the effective management
of the Company.
Required
Vote and Board Recommendation
If
a quorum is present, the director nominees receiving a plurality of the votes cast during the Annual Meeting will be elected to
fill the seats of our Board. Stockholders do not have the right to cumulate their votes in the election of directors.
If
you hold your shares in your own name and indicate that you wish to abstain from voting on this matter, your abstention will be
counted as present for purposes of determining if a quorum is present. If you hold your shares through a broker and you do not
instruct the broker on how to vote on this proposal, as is discussed above, your broker will not have the authority to vote your
shares with respect to the election of directors to our Board. Such abstentions and broker non-votes will have no effect on the
outcome of the election of directors to our Board, but such shares will be counted for purposes of establishing a quorum.
THE
Board
RECOMMENDS A VOTE
FOR
THE ELECTION OF EACH NOMINEE.
INFORMATION
CONCERNING
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
Director
Independence
The
Board has undertaken its annual review of director independence. During this review, the Board considered all transactions and
relationships between each current director and nominee for director or any member of such person’s immediate family and
the Company, its subsidiaries and affiliates. The purpose of this review is to determine whether any relationship or transaction
is considered a “material relationship” that would be inconsistent with a determination that a director is independent.
In assessing the independence of our directors, our Board has reviewed and analyzed the standards for independence required under
the NASDAQ Listing Rules, including NASDAQ Listing Rule 5605(a)(2), which includes a series of objective tests, such as that a
director may not be our employee or officer, and that the director has not engaged in various types of business dealings with
us. The Board affirmatively determined that, of our current directors and director nominees, Messrs. DeMarco, Frankfurt and Smith
qualify as “independent” in accordance with the NASDAQ Listing Rules.
Under
the NASDAQ Listing Rules, we have been considered a “controlled company” as a result of SPHG Holdings holding in excess
of 50% of our outstanding voting power. As a “controlled company,” we are exempt from certain independence requirements
under the NASDAQ Listing Rules, including that a majority of our directors be independent and that our Compensation Committee
and Nominating Committee be comprised solely of independent directors.
Board
Structure and Risk Oversight
Our
Board believes that it is in the best interests of the Company to separate the roles of Chairman and Principal Executive Officer.
The Board believes that freeing our Principal Executive Officer from this responsibility allows him to focus on the operations
of our Company, while our Chairman is enabled to focus on the larger strategic interests of the Company.
Among
the responsibilities that our Corporate Governance Guidelines place upon our Board is the oversight of the conduct of our business
to evaluate whether it is being properly managed. Within this responsibility is the obligation to oversee risk management. The
involvement of the full Board in setting the Company’s business strategy and objectives is integral to the Board’s
assessment of our risk and also a determination of what constitutes an appropriate level of risk and how best to manage any such
risk. The Board fulfills this responsibility by its regular updates from management, including our Principal Executive Officer
and our Chief Financial Officer. Additionally, the Board delegates responsibility for certain aspects of risk management to its
committees. In particular, the Audit Committee focuses on financial reporting risks and related controls and procedures. The Compensation
Committee has historically strived to create compensation practices that do not encourage excessive levels of risk-taking that
would be inconsistent with the Company’s strategy and objectives. The Nominating Committee is responsible for overseeing
the Company’s corporate governance and Corporate Governance Guidelines.
Annual
Meeting Attendance
We
strongly encourage directors to attend our annual meetings of stockholders. The Board endeavors to hold its Board and committee
meetings on the same day as the annual meeting of stockholders to encourage director attendance. All of our directors except one
attended our 2016 Annual Meeting of Stockholders held on May 26, 2016.
Meetings
of the Board
During
2016, the Board met 7 times (including the 2016 Annual Meeting) and acted by unanimous written consent 10 times. Each director,
except Warren Lichtenstein, attended over 75% of the aggregate number of meetings of the Board and the meetings held by committees
of the Board during the period such director served on the Board or applicable committee during 2016.
Committees
of the Board
Standing
committees of the Board consist of the Audit Committee, Compensation Committee and Nominating Committee. Each committee operates
under a written charter approved by the Board. Each of the charters of the Audit Committee, Compensation Committee and Nominating
Committee are available on our website at
www.handyharman.com
. Each of these charters also is available in print to any
stockholder upon request.
Audit
Committee
. The members of our Audit Committee are Patrick A. DeMarco, Robert Frankfurt and Garen W. Smith. Each of Messrs.
DeMarco, Frankfurt and Smith is “independent” as defined by the rules of the NASDAQ Market and meet the financial
literacy requirements of the NASDAQ Market. Our Board has determined that Mr. Frankfurt qualifies as an “audit committee
financial expert,” under applicable SEC rules and meets the NASDAQ Market financial sophistication requirement of having
past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable
experience or background which results in such director’s financial sophistication, including being or having been a chief
executive officer, chief financial officer or other senior officer with financial oversight responsibilities. Stockholders should
understand that this designation is a disclosure requirement of the SEC related to the experience and understanding of Mr. Frankfurt
with respect to certain accounting and auditing matters. The designation of “audit committee financial expert” does
not impose upon Mr. Frankfurt any duties, obligations or liabilities that are greater than are generally imposed on any such director
as a member of the Audit Committee and the Board, and a director’s designation as an audit committee financial expert pursuant
to this SEC requirement does not affect the duties, obligations or liabilities of the other members of our Audit Committee or
the Board.
The
Audit Committee met 8 times during 2016 and acted by unanimous written consent 2 times. The Audit Committee assists the full Board
in its general oversight of our financial reporting, internal controls and audit functions, and is directly responsible for the
appointment, compensation and retention of our independent registered public accounting firm, which reports to the Audit Committee.
In addition, any related-person transactions, excluding certain limited compensation matters involving one of our directors or
executive officers, which are delegated to the Compensation Committee, must be reviewed and approved by the Audit Committee or
another independent body of the Board.
Compensation
Committee
. The members of our Compensation Committee are Patrick A. DeMarco, Robert Frankfurt and Garen W. Smith. Each of
Messrs. DeMarco, Frankfurt and Smith is “independent” as defined by the rules of the NASDAQ Market. The Compensation
Committee met 3 times during 2016 and acted by unanimous written consent 9 times.
For
a summary of the functions of our Compensation Committee, see “Compensation Discussion and Analysis.”
Nominating
Committee
. The members of our Nominating Committee are Patrick A. DeMarco, Robert Frankfurt and Garen W. Smith. Each of Messrs.
DeMarco, Frankfurt and Smith is “independent” as defined by the rules of the NASDAQ Market. The Nominating Committee
met 1 time during 2016 and acted by unanimous written consent 2 times.
The
Nominating Committee is responsible for reviewing the qualifications of potential candidates for membership on our Board and recommending
such candidates to the full Board. In addition, the Nominating Committee makes recommendations regarding the structure and composition
of our Board and advises and makes recommendations to the full Board on matters concerning corporate governance.
Consideration
of Director Nominees; New Nominees for Director
Director
Qualifications
. The goal of the Nominating Committee is to identify nominees who will contribute to our overall corporate
goals and objectives. In making such evaluation, the Nominating Committee considers a nominee’s character, judgment, business
experience, personal and professional background, areas of expertise and contribution to diversity of the Board in light of its
then-current composition and the Nominating Committee’s assessment of the perceived needs of the Board. The Nominating Committee
considers the qualifications of each potential nominee not only for their individual strengths, but also for the potential contribution
to the Board as a group. In addition, the Nominating Committee considers the level of the candidate’s commitment to active
participation as a director, both at board and committee meetings and otherwise. The Nominating Committee does
not use different standards to evaluate nominees depending on whether they are proposed by our directors and management or by our stockholders.
When appropriate, the Nominating Committee may retain executive recruitment firms to assist it in identifying suitable candidates.
After its evaluation of potential nominees, the Nominating Committee submits its chosen nominees to the Board for approval.
Stockholder
Nominees
. The Nominating Committee will consider stockholder recommendations for director candidates. If a stockholder would
like to recommend a director candidate for the 2018 Annual Meeting of Stockholders, the stockholder must deliver the recommendation
to our Corporate Secretary at our principal executive offices no later than 90 days prior to and no earlier than 120 days prior
to May 25, 2018, the date that is the one year anniversary of the Annual Meeting (the deadline for nominations for the 2018 Annual
Meeting of Stockholders is between January 25, 2018 and February 24, 2018). Notwithstanding the foregoing, if the 2018 Annual
Meeting of Stockholders occurs on a date more than 30 days earlier or 60 days after the date that is the one year anniversary
of the Annual Meeting, then notice by the stockholder to be timely for the 2018 Annual Meeting must be delivered no later than
the later of the 90
th
day prior to the actual date of the 2018 Annual Meeting of Stockholders or 10 days following
the day on which public announcement (in a filing under the Exchange Act or by press release) of the date of the 2018 Annual Meeting
of Stockholders is first made by our Board.
Recommendations
for candidates should be accompanied by personal information about the candidate, including a list of the candidate’s references,
the candidate’s resume or curriculum vitae and the other information that would be required in the stockholder notice required
by Section 1.11 of our bylaws. A stockholder recommending a candidate may be asked to submit additional information as determined
by the Nominating Committee and as necessary to satisfy the rules of the SEC. If a stockholder’s recommendation is received
within the time period set forth above and the stockholder has met the criteria set forth above, the Nominating Committee will
evaluate such candidate, along with the other candidates being evaluated by the Nominating Committee, in accordance with the committee’s
charter and corporate governance principles, and will apply the criteria described under “Consideration of Director Nominees;
New Nominees for Director—Director Qualifications” above.
There
have been no changes to the procedures by which our security holders may recommend nominees to our Board since the filing of our
Definitive Proxy Statement on April 8, 2016 for our 2016 Annual Meeting of Stockholders, which was held on May 26, 2016.
Communication
with the Board
You
may contact the Board by mail: Board of Directors, c/o Corporate Secretary, Handy & Harman Ltd., 590 Madison Avenue, 32
nd
Floor, New York, New York 10022. An employee will forward these emails and letters directly to the Board. We reserve the
right not to forward to the Board any abusive, threatening or otherwise inappropriate materials.
Corporate
Governance Principles
The
Board serves as our ultimate decision-making body, except with respect to matters reserved for the decision of our stockholders.
The Board has adopted Corporate Governance Guidelines to assist in the performance of its responsibilities. These principles are
available on our website at
www.handyharman.com
under “Investor Relations – Corporate Governance.”
Code
of Conduct
We
maintain a Code of Business Conduct and Ethics, which incorporates our code of ethics that is applicable to all employees, including
all officers, and our independent directors with regard to their HNH-related activities. The Code of Business Conduct and Ethics
incorporates our guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable
laws and regulations. It also incorporates our expectations of our employees that enable us to provide accurate and timely disclosure
in our filings with the SEC, and other public communications. In addition, it incorporates our guidelines pertaining to topics
such as non-discrimination; fair competition and conflicts of interest. The full text of the Code of Business Conduct and Ethics
is published on our website under “Investor Relations – Corporate Governance” at
www.handyharman.com
.
We will post any amendments to the Code of Business Conduct and Ethics, as well as any waivers that are required to be disclosed
by the rules of the SEC on our website.
STOCK
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
following table presents certain information regarding the beneficial ownership of our Common Stock as of the Record Date, by
(a) each beneficial owner of 5% or more of our outstanding Common Stock known to us, (b) each of our directors and our director
nominees, (c) each of our “named executive officers” and (d) all of our current directors and executive officers as
a group.
The
percentage of beneficial ownership for the table is based on 12,221,429 shares of our Common Stock outstanding as of the Record
Date. To our knowledge, except under community property laws or as otherwise noted, the persons and entities named in the table
have sole voting and sole investment power over their shares of our Common Stock. Unless otherwise indicated, each beneficial
owner listed below maintains a mailing address of c/o Handy & Harman Ltd., 590 Madison Avenue, 32nd Floor, New York, New York
10022.
The
number of shares beneficially owned by each stockholder is determined under SEC rules and is not necessarily indicative of beneficial
ownership for any other purpose. Under these rules, beneficial ownership includes those shares of Common Stock over which the
stockholder has sole or shared voting or investment power and those shares of Common Stock that the stockholder has the right
to acquire within 60 days after the Record Date, including through the exercise of an option or vesting of restricted stock. The
“Percentage of Shares Outstanding” column treats as outstanding all shares underlying options that are exercisable
within 60 days after the Record Date, or vesting of restricted stock held by the Directors and named executive officers individually
and as a group, but not shares underlying equity awards that are exercisable by other stockholders.
Name
of Beneficial Owner
|
|
Number
of
Shares
|
|
Percentage
of
Shares
Outstanding
|
Directors
and Named Executive Officers:
|
|
|
|
|
Warren
G. Lichtenstein
|
|
298,624
|
|
2.4%
|
Patrick
A. DeMarco
|
|
12,801
|
|
Less
than 1%
|
Robert
Frankfurt
|
|
23,289
|
|
Less
than 1%
|
Jack
L. Howard (1)
|
|
248,947
|
|
2.0%
|
John
H. McNamara, Jr.
|
|
36,301
|
|
Less
than 1%
|
Garen
W. Smith
|
|
15,216
|
|
Less
than 1%
|
Jeffrey
A. Svoboda (2)
|
|
102,148
|
|
Less
than 1%
|
Douglas
B. Woodworth (3)
|
|
5,387
|
|
Less
than 1%
|
William
T. Fejes, Jr.
|
|
0
|
|
0%
|
Directors,
director nominees and executive officers as a group (9 persons)
|
|
742,713
|
|
6.1%
|
5%
Stockholders:
|
|
|
|
|
SPH
Group Holdings LLC (4)
590
Madison Avenue
32nd
Floor
New
York, New York 10022
|
|
8,560,592
|
|
70.0%
|
(1)
|
Includes
57,642 shares owned directly by EMH Howard, LLC (“EMH”) which may be deemed beneficially owned by Mr. Howard by
virtue of his position as the managing member of EMH. Mr. Howard disclaims beneficial ownership of the shares owned by EMH
except to the extent of his pecuniary interest therein.
|
|
|
(2)
|
Includes
734 unvested shares of restricted stock issued as of March 26, 2015 pursuant to the 2007 Plan (defined below), which currently
have voting rights and will vest on March 26, 2018.
|
|
|
(3)
|
Includes
2,429 unvested shares of restricted stock issued as of March 9, 2016 pursuant to the 2007 Plan, which currently have voting
rights and will vest in approximately equal installments on March 9, 2018 and 2019.
|
|
|
(4)
|
Based
upon Amendment No. 32 to the Schedule 13D filed on March 7, 2017, SPHG Holdings directly owns 8,560,592 shares of the Company’s
common stock. SPH Group LLC (“SPHG”) is the sole member of SPHG Holdings and Steel Holdings owns 99% of the membership
interests of SPHG. Steel Holdings GP is the general partner of Steel Holdings, the managing member of SPHG and the manager
of SPHG Holdings. Steel Holdings, SPHG and Steel Holdings GP disclaim beneficial ownership of the shares owned by SPHG Holdings
except to the extent of their pecuniary interest therein.
|
Transactions
with Related Persons
Related-Person
Transactions Policy and Procedures
Any
related-person transactions, excluding compensation (whether cash, equity or otherwise), which is delegated to the Compensation
Committee, involving one of our directors or executive officers, must be reviewed and approved by the Audit Committee or another
independent body of the Board. Any member of the Audit Committee who is a related person with respect to a transaction under review
may not participate in the deliberations or vote on the approval or ratification of the transaction. However, such a director
may be counted in determining the presence of a quorum at a meeting of the committee that considers the transaction. Related persons
include any of our directors or executive officers, certain of our stockholders and their immediate family members. To identify
any related person transactions, each year, we require our directors and executive officers to complete questionnaires identifying
any transactions with us in which the executive officer or director or their family members has an interest. In addition, the
Board determines, on an annual basis, which members of our Board meet the definition of “independent” as defined in
the NASDAQ Listing Rules, and reviews and discusses any relationships with a director that would potentially interfere with his
or her exercise of independent judgment in carrying out the responsibilities of a director.
The
Audit Committee reviews all requests for reimbursement of expenses by Steel Holdings and its affiliates, excluding reimbursement
of expenses incurred by Steel Services Ltd (“Steel Services”) or its employees under the Management Services Agreement
(defined below), which is subject to certain limitations approved by the Audit Committee. We maintain this policy since certain
affiliates of Steel Services hold positions with the Company and because of the scope and nature of the services provided by Steel
Services.
Certain
Related Person Transactions
Management
by Affiliates of Steel Holdings
As
of the Record Date, SPHG Holdings beneficially owned 8,560,592 shares of the Company’s Common Stock, representing approximately
70.0% of our outstanding shares of Common Stock. The power to vote and dispose of the securities held by SPHG Holdings is controlled
by Steel Holdings GP. Warren G. Lichtenstein, our Chairman of the Board, is also the Executive Chairman of Steel Holdings GP.
Jack L. Howard, our Principal Executive Officer and Vice Chairman, John H. McNamara, Jr., a director, Jeffrey A. Svoboda, a director,
William T. Fejes, Jr., a Senior Vice President of the Company and President and Chief Executive Officer of HNH Group, and Douglas
B. Woodworth, our Chief Financial Officer and a Senior Vice President, are also affiliates of Steel Holdings GP. James F. McCabe,
Jr., our Chief Financial Officer and a Senior Vice President until May 2016, was also an affiliate of Steel Holdings GP until
May 2016.
Management
Services Agreement
On
January 1, 2012, we entered into a Management Services Agreement (as amended, the “Management Services Agreement”)
with SP Corporate Services LLC (“SP Corporate”), pursuant to which SP Corporate provided us with continued executive
and corporate services. The Management Services Agreement was amended and restated effective February 23, 2016 to have SPH Services,
Inc. (“SPH Services”) furnish the services to the Company and to make certain other changes. Effective May 11, 2016,
SP Corporate merged with and into SPH Services and the name of SPH Services was changed to Steel Services. Steel Services is,
and both SP Corporate and SPH Services were, affiliates of SPHG Holdings. Warren G. Lichtenstein is the Chief Executive Officer
of Steel Services, Jack Howard is Senior Vice President of Steel Services, and Douglas B. Woodworth is Chief Financial Officer
of Steel Services. Under the Management Services Agreement, SP Corporate furnished and, effective as of February 23, 2016, Steel
Services (f/k/a SPH Services) furnishes the services of Jack L. Howard, William T. Fejes, Jr., and Douglas B. Woodworth. The prior
services of Messrs. McCabe and Svoboda as executive officers of the Company were also furnished under the Management Services
Agreement. Additionally, Steel Services has agreed to furnish to us personnel to perform additional services, which include, without
limitation:
|
●
|
legal,
tax, accounting, treasury, environmental health and safety, human resources, marketing,
operating group management, and investor relations;
|
|
●
|
additional
executive services;
|
|
●
|
international
business services; and
|
|
●
|
preparation
of our reports for filing with the SEC.
|
Performance
of services under the Management Services Agreement by Steel Services and its personnel are subject to the oversight of our Audit
Committee, and the authority of Steel Services and its personnel to incur any obligation or enter into any transaction is subject
to the prior approval of the Audit Committee or a prior written delegation of authority of the Audit Committee delivered to Steel
Services.
Messrs.
Howard, Fejes and Woodworth, as well as the persons that will render the above functions to the Company, are made available to
us on a non-exclusive basis. However, pursuant to the terms of the Management Services Agreement, all such persons are required
to devote such time and effort as is reasonably necessary to fulfill the statutory and fiduciary duties applicable to them in
performing such services.
On
May 3, 2015, the Management Services Agreement was modified to clarify the services to be provided and to adjust the annual fee
in consideration of such services from $8.9 million to $10.6 million. Additionally, we reimburse Steel Services for all expenses
incurred on our behalf in connection with the performance of the services under the Management Services Agreement. During 2016,
we reimbursed Steel Services and its affiliates an aggregate of approximately $1.6 million for business expenses incurred on our
behalf pursuant to the Management Services Agreement. The Management Services Agreement provides that we are to indemnify and
hold harmless Steel Services and its affiliates and employees from any claims or liabilities by a third party in connection with
activities or the rendering of services under the Management Services Agreement.
The
Management Services Agreement continues through December 31, 2017 and shall renew for successive one year periods, unless and
until terminated in accordance with the terms set forth therein. Upon any such termination, a reserve fund will be established
by the Company for the payment of expenses incurred by or due to Steel Services that are attributable to the services provided
to the Company.
Our
Audit Committee approved the entry into the Management Services Agreement. The Audit Committee concluded that the engagement of
Steel Services provides a cost effective solution to the Company for obtaining executive and other necessary services. The services
provided under the Management Services Agreement were formerly provided by employees of the Company. In negotiating and approving
the Management Services Agreement, our Audit Committee, consisting of our “independent” directors as defined by the
rules of the NASDAQ Market, considered such issues as the scope of the services to be provided by Steel Services to the Company,
the pricing of any arrangement with Steel Services and the limits of authority for the outsourced personnel.
Equity
Grants
During
2016, we awarded 38,545 shares of restricted stock in the aggregate to persons who provided services to us under the Management
Services Agreement. This amount includes awards of 3,625 shares to Mr. Woodworth and 3,448 shares to Mr. McCabe. Our Compensation
Committee approved these awards after taking into account the recommendation of Steel Services.
Additionally,
during 2016, we awarded as cash awards in lieu of restricted stock grants, awards of $778,875 to Mr. Howard and $91,733 to Mr.
Svoboda for their services to us under the Management Services Agreement. The awards to Messrs. Howard and Svoboda represent fifty
percent of the 2016 grant, with Messrs. Howard and Svoboda having chosen to defer the other fifty percent. At the discretion of
the Compensation Committee, the 2017 grants for each of Messrs. Howard and Svoboda could have been increased by the amount of
their deferral, or approved at such level as is deemed appropriate depending upon the Company’s performance in 2016. In
fact, the deferred portion of the 2016 grants were approved and awarded in March 2017.
Our
Compensation Committee approved these awards after taking into account the recommendation of Steel Services.
Mutual
Securities
Mutual
Securities, Inc. is the custodian for the majority of the Company’s holdings in ModusLink common stock. Jack L. Howard,
our Principal Executive Officer and Vice Chairman of the Board, is a registered principal of Mutual Securities, Inc.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
This
Compensation Discussion and Analysis section discusses our executive compensation philosophy, decisions and practices for 2016.
As set forth in the Summary Compensation Table below, our named executive officers for 2016 were Jack L. Howard, Vice Chairman
and Principal Executive Officer, James F. McCabe, Jr., Chief Financial Officer and Senior Vice President until May 19, 2016, Jeffrey
A. Svoboda, Senior Vice President of the Company and President and Chief Executive Officer of HNH Group until October 1, 2016,
Douglas B. Woodworth, Chief Financial Officer and Senior Vice President effective May 19, 2016, and William T. Fejes, Jr., Senior
Vice President of the Company and President and Chief Executive Officer of HNH Group effective June 9, 2016. From June 9, 2016
to October 1, 2016 Messrs. Fejes and Svoboda each served as co- President and Chief Executive Officer of HNH Group. Messrs. Howard
and Svoboda also serve as directors, and their biographical information is included in Proposal 1 - Election of Directors.
William
T. Fejes, Jr. (age 60) has served as Senior Vice President of the Company and President and Chief Executive Officer of HNH Group
since June 2016. Mr. Fejes has served as President of SLI since June 2010 and served as Chief Executive Officer of SLI from June
2010 until October 2016. From 2007 until April 2010, Mr. Fejes was the Chief Operating Officer of Seakeeper, Inc., a company that
designs, manufactures and markets motion stabilization equipment for boats under 50 meters in length. Prior to joining Seakeeper,
Inc., Mr. Fejes was the President and Chief Executive Officer of TB Wood’s Corporation (“TB Wood’s”),
a public company that designs, manufactures and markets industrial power transmission components, with plants in the United States,
Mexico and Italy, from 2004 to 2007, and was a director of TB Wood’s from 2004 to 2005. Mr. Fejes also held various executive
and management roles at Danaher Corporation, a public company that designs, manufactures and markets industrial and consumer products,
for 18 years. From March 2009 to February 2015, Mr. Fejes served as a director of Broadwind Energy, a public company for which
he also served as the Chairman of the Governance / Nominating Committee, as a member of the Audit and Compensation Committees.
From 2008 to 2010, Mr. Fejes was a Director of Automation Solutions, Inc., a privately held distributor of factory automation
equipment.
James
F. McCabe, Jr. (age 54) served as Senior Vice President of the Company and H&H from March 2007 until May 2016, and as Chief
Financial Officer of the Company from August 2008 until May 2016. From October 2011 until May 2016, Mr. McCabe served as the Chief
Financial Officer of the general partner of Steel Holdings and as an officer of certain of its affiliates. Mr. McCabe served as
the Chief Financial Officer of SPH Services, a subsidiary of Steel Holdings and the parent of SP Corporate, from October 2011
until May 2016 and as President from January 2012 until May 2016. He served as the President of SP Corporate, a subsidiary of
Steel Holdings, from January 2012 until May 2016. See “Transactions With Related Persons” above. From July 2004 to
February 2007, Mr. McCabe served as Vice President of Finance and Treasurer, Northeast Region, of American Water Works Company,
a public water utility. From August 1991 to September 2003, he was with Teleflex Incorporated, a NYSE-listed diversified global
industrial company, where he served in senior management positions including President of Teleflex Aerospace, President of Sermatech
International, Chief Operating Officer of Sermatech International, President of Airfoil Technologies International and Chief Financial
Officer of Teleflex Aerospace.
Douglas
B. Woodworth (age 45) was appointed Chief Financial Officer and Senior Vice President of the Company in May 2016, and holds similar
positions in substantially all of the Company’s affiliates. Prior to such appointment, Mr. Woodworth had served as Vice
President and Controller of HNH from August 2012. Since May 2016, Mr. Woodworth has also served as Chief Financial Officer of
Steel Holdings GP. Mr. Woodworth has over two decades of progressive responsibility in accounting and finance. Prior to joining
HNH, Mr. Woodworth served as Vice President and Corporate Controller with SunEdison, Inc. (formerly MEMC Electronic Materials,
Inc.), from August 2011 to July 2012, and as Vice President and Corporate Controller of Globe Specialty Metals, Inc. from November
2007 to July 2011. Prior to that, Mr. Woodworth held positions of increasing responsibility with Praxair, Inc. Mr. Woodworth began
his career with KPMG LLP. Mr. Woodworth holds an MBA from the Kellogg School of Management at Northwestern University, a Master
of Engineering Management from the McCormick School of Engineering at Northwestern University, and a Bachelor of Science in Accountancy
from Miami University (Ohio). Mr. Woodworth is a certified public accountant.
On
January 1, 2012, we entered into the Management Services Agreement with SP Corporate, an affiliate of SPHG Holdings, which owns
approximately 70.0% of our outstanding shares of Common Stock as of the Record Date. Pursuant to the Management Services Agreement,
as amended, SP Corporate provided us with the services of Jack L. Howard as our Principal Executive Officer, James F. McCabe,
Jr. as our Chief Financial Officer and Senior Vice President, and, effective as of May 3, 2015, Jeffrey Svoboda, as our Senior
Vice President and President and Chief Executive Officer of HNH Group, and certain other employees and corporate services, including,
without limitation, legal, tax, accounting, treasury, consulting, auditing, administrative, compliance, environmental health and
safety, human resources, marketing, operating group management, investor relations and other similar services.
The
Management Services Agreement was amended and restated effective February 23, 2016 to have SPH Services, a wholly owned subsidiary
of Steel Holdings, furnish the services to the Company and to make certain other changes. Effective May 11, 2016, the name of
SPH Services was changed to Steel Services. On May 3, 2015, in connection with an amendment to the Management Services Agreement,
Mr. Svoboda’s employment was transferred from the Company to Steel Services, which assumed the cost of compensating Mr.
Svoboda and providing applicable benefits. Prior to May 3, 2015, the terms and conditions of Mr. Svoboda’s service as Senior
Vice President of the Company and President and Chief Executive Officer of HNH Group were governed by an employment agreement
between Mr. Svoboda and the Company, and Mr. Svoboda’s total compensation, including his base salary, was reviewed and approved
annually by the Compensation Committee.
On
May 19, 2016, Mr. McCabe resigned from the Company, and Douglas B. Woodworth became our Chief Financial Officer and a Senior Vice
President of the Company. On June 9, 2016, William T. Fejes, Jr., became a Senior Vice President of the Company and co-President
and Chief Executive Officer of HNH Group (becoming sole President and Chief Executive Officer of HNH Group effective October 2016).
The services of both Messrs. Fejes and Woodworth are provided by Steel Services pursuant to the Management Services Agreement.
We would note that although his services were provided through Steel Services and his employment agreement assigned to Steel Services
as described in June 2016, from that time until January 1, 2017, Mr. Fejes’ salary continued to be paid through SLI’s
payroll for reasons of continuity of benefits.
Notwithstanding
the Management Services Agreement, we may elect to provide equity based or other compensation to our executive officers, key employees
and other senior Steel Services personnel providing services to us after considering the recommendation of Steel Services. During
2016, after considering the recommendation of Steel Services, we awarded 3,625 shares of restricted stock to Mr. Woodworth and
3,448 shares of restricted stock to Mr. McCabe. Messrs. Fejes, Howard and Svoboda were not awarded shares of restricted stock
by the Company in 2016.
The
discussion that follows in this Compensation Discussion and Analysis relates only to the compensation policies, philosophies and
decision making process for Mr. Svoboda only through May 3, 2015, except with respect to certain discretionary equity compensation
awards that have been made to all named executive officers, as the compensation of the Company’s named executive officers
has been provided by Steel Services and its affiliates pursuant to the Management Services Agreement since that date as to Mr.
Svoboda and prior to that date for the other named executive officers. A description of the terms of the Management Services Agreement
is set forth under the heading “Transactions with Related Persons-Certain Related Person Transactions.”
Compensation
Philosophy
The
goal of the Company’s compensation program for Mr. Svoboda was to build long-term value for the Company’s stockholders.
In furtherance of this goal, the Compensation Committee developed an executive compensation program designed to: (i) attract and
retain a quality executive with the leadership skills, attributes and experience necessary to succeed in an enterprise with the
Company’s diverse product offerings and global reach; (ii) link compensation to the achievement of both Company and individual
performance goals; and (iii) balance Mr. Svoboda’s motivation to achieve near-term corporate goals with consistent performance
over the long-term, which the Company believed best correlates with the creation of long-term stockholder value.
Elements
of Executive Compensation and How Each Relates to Overall Compensation Objectives
To
achieve the above objectives, the Compensation Committee developed a compensation program that included:
|
●
|
Equity
compensation; and
|
|
●
|
Retirement,
health and other benefits.
|
The
elements were intended to reward Mr. Svoboda for building long-term stockholder value and achieving specified annual goals for
personal and company-wide performance.
Base
compensation
. Base salary payable to Mr. Svoboda was reviewed and approved annually by the Compensation Committee in accordance
with the terms of his employment agreement with the Company. The payment of base salary was intended to recognize particularly
the experience, skills, knowledge and responsibility required of Mr. Svoboda.
Cash
bonuses
. Cash bonuses were payable to Mr. Svoboda and other members of the Company’ senior management team pursuant
to the terms of bonus plans adopted annually by the Compensation Committee, effective each of January 1, 2014 and 2015 (the “Bonus
Plans”). The Bonus Plans included two components. The first component was a Short Term Incentive Plan (“STIP”)
and the second component was a Long Term Incentive Plan (“LTIP”). The structure of the Bonus Plans was designed to
provide short-term incentives to participants for achieving annual targets, while also motivating and rewarding eligible participants
for achieving longer term growth goals.
Equity
compensation
. Equity compensation, in the form of restricted stock, is awarded from time to time to the Company’s named
executive officers, including the officers who serve pursuant to the Management Services Agreement. On May 26, 2016, the Company’s
stockholders approved the adoption of the Company’s 2016 Equity Incentive Award Plan (the “2016 Plan”) to replace
the Company’s 2007 Incentive Stock Plan (as amended, the “2007 Plan”). The 2016 Plan provides equity-based compensation
through the grant of cash-based awards, nonqualified stock options, incentive stock options, stock appreciation rights, restricted
stock, restricted stock units, performance shares, performance units and other stock-based awards. No further awards will be granted
under the 2007 Plan. The primary purpose of awarding equity compensation is to align the financial interest of all of our named
executive officers with those of our stockholders. The Compensation Committee believes that awards of equity compensation achieve
this goal because the named executive officers realize additional value from such awards on the same basis as our stockholders.
Moreover, because the restricted stock granted to the Company’s named executive officers requires vesting, such rewards
promote loyalty to the Company, and recipients are further incentivized to focus on the long-term creation of value for stockholders.
Retirement;
heath and other benefits
. Through May 3, 2015, the Company provided payments for life insurance, car allowance and 401(k)
matching contributions to Mr. Svoboda pursuant to his employment agreement with the Company as an additional incentive to retain
his employment.
Compensation
Consultant
The
Compensation Committee engaged Hay Group to assist it in reviewing and determining appropriate, competitive compensation for Mr.
Svoboda until May 2015 and since 2006 for other senior employees of the Company whose services were not being provided by the
Management Services Agreement. The Compensation Committee has engaged Hay Group since 2006 and believes Hay Group’s familiarity
with the Company and its compensation policies allows Hay Group to provide more meaningful insights to the Compensation Committee.
Hay Group also reviewed the design and competitiveness of the Company’s non-employee director compensation program. Hay
Group has continued to provide to the Company, at its request, benchmarking, best practices and other data relevant to our compensation
programs and changes thereto. In 2016, Hay Group did not provide any other services to the Company. Hay Group does however provide
similar services to Steel Holdings with respect to executives of Steel Services, including Messrs. Svoboda, Fejes and Woodworth.
The
Compensation Committee determined that the work of Hay Group did not raise any conflicts of interest in 2016. In making this assessment,
the Compensation Committee considered the independence factors enumerated in new Rule 10C-1(b) under the Exchange Act, including
the fact that Hay Group does not provide any other services to the Company, the level of fees received from the Company as a percentage
of Hay Group’s total
revenue, policies and procedures employed by Hay Group to prevent conflicts of interest, and whether
the individual Hay Group advisers to the Compensation Committee own any stock of the Company or have any business or personal
relationships with members of the Compensation Committee or our executive officers.
Hay
Group provides management and the Compensation Committee with external benchmarking data to establish competitive total compensation
pay practices for each senior position not provided under the Management Services Agreement. To generate this benchmarking data,
Hay Group utilizes broad market surveys of companies of our size and operating in similar geographic areas, but has not developed
a specific peer group of companies that it reviews. The Compensation Committee evaluates our executives’ compensation on
an annual basis and makes changes accordingly. The Compensation Committee also takes into consideration current economic conditions
and the Company’s financial projections, as well as Hay Group’s data, for each position being reviewed, of the 50th
percentile of compensation for each such position across the companies represented in its surveys.
Although
substantial portions of the Company’s compensation program are performance-based, the Compensation Committee does not believe
that the risks arising from the Company’s compensation policies and practices for its employees are reasonably likely to
have a material adverse effect on the Company. In making this determination, the Company’s Vice President of Human Resources
(the “VP of HR”) and the Compensation Committee evaluated the risk profile of the Company’s compensation programs
and policies. In performing this evaluation, the VP of HR and the Compensation Committee looked at each element of compensation
and the associated risks and mitigating factors for each element of compensation. Specifically, the evaluation included the mix
of short-term and long-term incentive compensation, extended vesting periods for long-term equity awards, the mix of corporate
and specific business unit measures used in assessing performance, the use of multiple performance review criteria, the Compensation
Committee’s discretion in making individual awards and caps on individual compensation awards.
Role
of Executives in Establishing Compensation
Mr.
Svoboda, our Chairman and Vice Chairman, other members of management (particularly the VP of HR), and Compensation Committee members
regularly discuss the Company’s compensation issues and the performance and retention of its named executive officers. Mr.
Svoboda, with the assistance of the VP of HR, typically recommended to the Compensation Committee for its review, modification
and approval, the annual base salary, bonus and equity awards (if any) for the other members of the management team, other than
for himself. Effective October 2016, these tasks performed by Mr. Svoboda were taken over by Mr. Fejes. Through May 3, 2015, the
VP of HR typically presented the recommendation to the Compensation Committee for compensation for Mr. Svoboda.
Certain
members of the executive management team, including Mr. Fejes, and previously Mr. Svoboda, attend portions of Compensation Committee
meetings in order to provide information and recommendations to the Compensation Committee as requested, although the Compensation
Committee meets in executive session with only Compensation Committee members present when it deems appropriate.
Factors
Considered in Determining the Amount of Each Element of Compensation
Through
May 3, 2015, the level of Mr. Svoboda’s overall compensation was reviewed by the Compensation Committee not less than annually.
The factors considered in determining Mr. Svoboda’s base pay included those related both to overall performance of the Company
and the individual performance of Mr. Svoboda. In determining annual base salary levels, consideration was also given to comparable
compensation data provided by Hay Group, as described above, for individuals holding similarly responsible positions at other
companies. The determination of cash bonuses amounts was based on the achievement of certain predetermined metrics set forth in
the Bonus Plans and described in more detail below in “Narrative Disclosure to Summary Compensation Table and Grants of
Plan-Based Awards Table.”
The
timing, amount and form of equity compensation awards are determined by the Compensation Committee in consultation with key officers
of the Company and other members of the Board. The Compensation Committee does not have a formal policy with respect to the timing
and amount of equity compensation grants. Rather, in determining whether to approve equity compensation awards and the amount
of such award, the Compensation Committee considers a number of factors, including the recipient’s position, contribution
to the
Company’s growth and profitability, length of service, prior equity-based compensation awards and shares of the Company’s
stock owned, as well as the overall performance of the Company.
Potential
Payments Upon Termination or a Change in Control
Pursuant
to the employment agreement the Company had with Mr. Svoboda, through May 3, 2015, the Company was required to make certain severance
payments to Mr. Svoboda in the event the Company terminated Mr. Svoboda’s employment agreement without cause or gave notice
not to extend the term of the employment agreement. Mr. Svoboda would also have received the severance compensation if he terminated
his employment agreement due to the material diminution of duties or if the Company relocated more than 50 miles from White Plains,
NY, as more specifically described in the employment agreement. The Company believed that agreeing to such terms in the employment
agreement with Mr. Svoboda was necessary to maintain the level of trust, loyalty and commitment it believed was required to achieve
the Company’s long-term goals. Mr. Svoboda’s employment agreement with the Company was assigned to Steel Services
effective May 3, 2015. See below under “Employment Agreements” at page 24 and “Potential Payments Upon Termination
or a Change in Control” at page 24.
Executive
Compensation Tables
Summary
Compensation Table
The
following table sets forth all compensation awarded to, paid to or earned by the Company’s named executive officers during
the fiscal years ended December 31, 2016, 2015 and 2014.
Name and Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
Compensation
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(i)
|
|
|
(j)
|
|
Jack. L. Howard
|
|
2016
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
778,875
(3)(4)
|
|
|
778,875
|
|
Principal Executive Officer
|
|
2015
|
|
|
(2)
|
|
|
—
|
|
|
778,878
|
|
|
778,875
(3)
|
|
|
1,557,753
|
|
|
|
2014
|
|
|
(2)
|
|
|
—
|
|
|
1,557,750
|
|
|
—
|
|
|
1,557,750
|
|
William T. Fejes, Jr.
|
|
2016
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Senior
Vice President of HNH and President and Chief Executive Officer of HNH Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas B. Woodworth
|
|
2016
|
|
|
(2)
|
|
|
—
|
|
|
73,624
|
|
|
—
|
|
|
73,624
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey A. Svoboda
|
|
2016
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
91,733
(3)(4)
|
|
|
91,733
|
|
Senior Vice President of
HNH and President and Chief Executive Officer of HNH Group until October 1, 2016
|
|
2015
|
|
|
211,829 (2)
|
|
|
—
|
|
|
91,738
|
|
|
105,152
(5)
|
|
|
408,719 (6)
|
|
|
|
2014
|
|
|
593,744
|
|
|
392,345
|
|
|
220,162
|
|
|
25,044
(7)
|
|
|
1,231,295
|
|
James F. McCabe, Jr.
|
|
2016
|
|
|
(2)
|
|
|
—
|
|
|
70,029
|
|
|
—
|
|
|
70,029
|
|
Chief Financial
Officer and Senior Vice President until May 19, 2016
|
|
2015
|
|
|
(2)
|
|
|
—
|
|
|
35,019
|
|
|
35,010
(3)
|
|
|
70,029
|
|
|
|
2014
|
|
|
(2)
|
|
|
—
|
|
|
79,487
|
|
|
—
|
|
|
79,487
|
|
|
(1)
|
This
column represents the grant date fair value of equity awards calculated in accordance with FASB ASC Topic 718. See Note 15
to our audited consolidated financial statements in our Annual Report for details as to the assumptions used to determine
the fair value of the awards.
|
|
|
|
|
(2)
|
In
2016, 2015 and 2014, Messrs. Howard and McCabe and, beginning in May 3, 2015, Mr. Svoboda, did not receive any salary from
the Company as their services were provided to the Company pursuant to the Management Services Agreement. In 2016, Mr. Woodworth
did not receive any salary from the Company as his services were provided to the Company pursuant to the Management Services
Agreement. Mr. Fejes continued to be paid from a subsidiary of the Company’s payroll for all of 2016 as described above
under “Compensation Discussion and Analysis-Overview,” at page 17; however, his services were provided to the
Company pursuant to the Management Services Agreement. The Management Services Agreement provides that the Company will pay
Steel Services a fixed annual fee of approximately $10.6 million, subject to annual adjustment. See “Transactions With
Related Persons” above.
|
|
|
|
|
(3)
|
Cash
award in lieu of restricted stock grant.
|
|
|
|
|
(4)
|
Represents
50% of the 2016 grant, which was paid in cash. Messrs. Howard and Svoboda deferred 50% of their 2016 grants. At the discretion
of the Compensation Committee, the 2017 grants for each of Messrs. Howard and Svoboda could have been increased by the amount
of their deferral, or approved at such level as is deemed appropriate depending upon the Company’s performance in 2016.
In fact, the deferred portion of the 2016 grants were approved and awarded in March 2017, and were made in cash.
|
|
|
|
|
(5)
|
Includes
a cash award in lieu of restricted stock grant and payments for life insurance, car allowance, and 401(k) matching payments.
|
|
(6)
|
Compensation
through May 3, 2015, at which time Mr. Svoboda’s employment was transferred to Steel Services.
|
|
|
|
|
(7)
|
Includes
payments for life insurance, car allowance, and 401(k) matching payments.
|
Grant
of Plan-Based Awards
The
following table shows all plan-based awards granted to the Company’s named executive officers during 2016. For additional
information regarding incentive plan awards, see “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based
Awards Table” below.
|
|
Estimated
Possible/Future Payouts Under Non-Equity Incentive Plan Awards
|
Estimated
Possible/Future Payouts Under Equity Incentive Plan Awards
|
All
Other Stock Awards: Number of Shares of Stocks
|
Grant
Date Fair Value of Stock and
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
or
Units
(#)
|
Option
Awards
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(l)
|
Jack
L. Howard
|
March
9, 2016
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
778,875
(1)(2)
|
William
T. Fejes, Jr.
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Douglas
B. Woodworth
|
March
9, 2016
|
—
|
—
|
—
|
—
|
—
|
—
|
3,625
(3)
|
73,624
|
Jeffrey
A. Svoboda
|
March
9, 2016
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
91,733
(1)(2)
|
James
F. McCabe, Jr.
|
March
9, 2016
|
—
|
—
|
—
|
—
|
—
|
—
|
3,448
(4)
|
70,029
|
(1)
|
Cash
award in lieu of restricted stock grant.
|
|
|
(2)
|
Represents
50% of the 2016 grant, which was paid in cash. Messrs. Howard and Svoboda deferred 50% of their 2016 grants. At the discretion
of the Compensation Committee, the 2017 grants for each of Messrs. Howard and Svoboda could have been increased by the amount
of their deferral, or approved at such level as is deemed appropriate depending upon the Company’s performance in 2016.
In fact, the deferred portion of the 2016 grants were approved and awarded in March 2017, and were made in cash.
|
|
|
(3)
|
The
restricted stock vests over three years in approximately equal installments on each anniversary of the date of grant.
|
|
|
(4)
|
Mr.
McCabe forfeited the restricted stock on May 19, 2016.
|
Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
The
compensation paid to the named executive officers during the fiscal years ended December 31, 2016, 2015 and 2014 included salaries,
bonus and equity compensation. In addition, through May 3, 2015, Mr. Svoboda was eligible to receive contributions to his 401(k)
plan under our matching contribution program.
Base
Compensation
. Currently, and since no later than May 2015 when the last such named executive officer was transferred to Steel
Services, all of the named executive officers serve pursuant to the Management Services Agreement. During the term of the Management
Services Agreement, the Company is not responsible for compensating or providing applicable employment benefits to any officers
or other personnel provided thereunder. See “Transactions With Related Persons.”
The
Company paid Mr. Svoboda’s salary through May 3, 2015, at which time Mr. Svoboda’s employment was transferred from
the Company to Steel Services, which paid any applicable award to Mr. Svoboda for 2015. In 2014, salaries and bonuses accounted
for 49.4% of total compensation for Mr. Svoboda. See “Employment Agreements” below.
On
May 3, 2015, in connection with an amendment to the Management Services Agreement, Mr. Svoboda’s employment was transferred
from the Company to Steel Services, which assumed the cost of compensating Mr. Svoboda and providing applicable benefits. Therefore,
his STIP bonus awarded for 2015, which was awarded and paid by Steel Services in 2016, is not included in the table above. Mr.
Svoboda received a STIP bonus of $392,345 in 2014; representing 94.4% of the STIP potential amount in 2014.
Equity
Grants
. Effective each of March 9, 2016, March 17 and March 26, 2015, and March 21, 2014, the Compensation Committee approved
the grant of restricted stock awards under the 2007 Plan, to certain executive officers, including: (i) grants in 2016 of 3,448
shares to Mr. McCabe and 3,625 shares to Mr. Woodworth; (ii) grants in 2015 of 18,305 shares to Mr. Howard, 2,156 shares to Mr.
Svoboda and 823 shares to Mr. McCabe; and (iii) grants in 2014 of 75,000 shares to Mr. Howard, 10,600 shares to Mr. Svoboda and
3,827 shares to Mr. McCabe. The grant made to Mr. Svoboda in 2014 constituted the entire LTIP component of the 2014 Bonus Plan
for Mr. Svoboda. The restricted stock grants awarded to Mr. Svoboda, Mr. McCabe and Mr. Woodworth vest over three years in approximately
equal installments on each anniversary of the date of grant. Mr. McCabe forfeited any unvested restricted shares on May 19, 2016.
The restricted stock grants awarded to Mr. Howard vest in one year, on the anniversary date of the grant.
Additionally,
effective each of March 9, 2016, and March 17, 2015 (with respect to Mr. Howard), and March 26, 2015 (with respect to Mr. Svoboda),
the Compensation Committee approved cash awards in lieu of restricted stock grants to certain executive officers, including: (i)
cash awards in 2016 of $778,875 to Mr. Howard and $91,733 to Mr. Svoboda; and (ii) cash awards in 2015 of $778,875 to Mr. Howard
and $91,733 to Mr. Svoboda. The cash awards awarded to Messrs. Howard and Svoboda in 2015 were paid immediately, the restricted
stock grants received in 2015 for Mr. Howard vested in one year, on the anniversary date of the grant. The restricted stock grants
awarded to Mr. Svoboda in 2015 vest over three years in approximately equal installments on each anniversary of the date of grant.
The cash awards in 2016 to Messrs. Howard and Svoboda were paid immediately and represented fifty percent of the 2016 cash award,
with Messrs. Howard and Svoboda having chosen to defer the other fifty percent. At the discretion of the Compensation Committee,
the 2017 cash award for each of Messrs. Howard and Svoboda could have been increased by the amount of their deferral, or approved
at such level as is deemed appropriate depending upon the Company’s performance in 2016. In fact, the deferred portion of
the 2016 cash awards were approved and awarded in March 2017.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information concerning unexercised options and unvested shares of restricted stock held by each named
executive officer as of December 31, 2016. The market values of the restricted stock reported in this table are calculated based
on the closing market price of the Company’s common stock on the NASDAQ Capital Market on December 31, 2016, which was $25.55
per share.
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number
of Securities
Underlying Unexercised Options
Exercisable (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number
of shares
or units of stock
that have not vested
(#)
|
|
Market
value of
shares or units of
stock
that have not vested ($)
|
(a)
|
|
(b)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
(h)
|
Jack L. Howard
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Jeffrey A. Svoboda
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,604
(1)
|
|
|
92,082
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,445
(2)
|
|
|
36,920
|
|
Douglas B. Woodworth
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,625
(3)
|
|
|
92,619
|
|
William T. Fejes, Jr.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Restricted
shares granted as of March 21, 2014, which vested on March 21, 2017.
|
|
|
(2)
|
Restricted
shares granted as of March 26, 2015, which vested or vest in approximately equal installments on each of March 26, 2017 and
2018.
|
|
|
(3)
|
Restricted
shares granted as of March 9, 2016, which vested or vest in approximately equal installments on each of March 9, 2017, 2018,
and 2019.
|
Option
Exercises and Stock Vested
The
following table sets forth information regarding the vesting of restricted stock awards held by each of the named executive officers
during 2016, on an aggregate basis. The value realized on the vesting of restricted stock awards is calculated based on the closing
market price of the Company’s common stock as reported on the NASDAQ Capital Market on the applicable vesting dates of the
restricted stock awards.
|
|
Stock
Awards
|
Name
|
|
Number
of
Shares
Acquired
On
Vesting
(#)
|
|
|
Value
Realized
On
Vesting
($)
|
Jack
L. Howard
|
|
18,305
|
|
|
$
|
404,174
|
Jeffrey
A. Svoboda
|
|
7,813
|
|
|
$
|
188,962
|
James
F. McCabe, Jr.
|
|
2,836
|
|
|
$
|
67,875
|
Douglas
B. Woodworth
|
|
1,360
|
|
|
$
|
32,817
|
William
T. Fejes, Jr.
|
|
—
|
|
|
$
|
—
|
Employment
Agreements
William
T. Fejes, Jr.
Mr. Fejes’ former employment agreement with SL Industries, Inc. (the “Fejes Employment Agreement”)
was assigned to Steel Services effective January 1, 2017. The Fejes Employment Agreement provides for automatic one year renewals
unless the agreement is terminated in accordance with its terms. Under the terms of the Fejes Employment Agreement, Mr. Fejes
is entitled to receive an annual base salary and is eligible for an annual bonus of up to 100% of his base salary, to be composed
of a short term incentive portion and a long term incentive portion, at the sole discretion of the Board. Mr. Fejes’ services
have been provided to the Company pursuant to the Management Services Agreement, his employment was formally assigned to Steel
Services effective June 9, 2016.
James
F. McCabe, Jr.
Mr. McCabe’s former employment agreement with the Company was assigned to SP Corporate effective January
1, 2012.
Jeffrey
A. Svoboda
. Effective January 28, 2008, Jeffrey A. Svoboda entered into an employment agreement, pursuant to which Mr. Svoboda
agreed to become the President and Chief Executive Officer of H&H. Mr. Svoboda was also appointed by the Board to serve as
the President and Chief Executive Officer of Bairnco, effective January 2009, and as a Senior Vice President of the Company, effective
March 2009, and President and Chief Executive Officer of HNH Group, effective August 2011. His employment agreement provided for
an initial two-year term, which automatically extended for successive one-year periods unless earlier terminated pursuant to its
terms. The employment agreement also provided to Mr. Svoboda, among other things, (i) an annual salary of $500,000, (ii) an annual
bonus with a target of 100% of base salary under the Company’s STIP and LTIP (as base salary is defined in his employment
agreement); (iii) a grant of 100,000 options to purchase shares of the Company’s common stock pursuant to the terms and
conditions of the 2007 Plan at an exercise price equal to $9.00; and (iv) other benefits. Effective November 24, 2008, the outstanding
option to purchase shares of the Company’s common stock granted pursuant to Mr. Svoboda’s employment agreement was
adjusted pursuant to the 2007 Plan to reflect a 1-for-10 reverse split of the Company’s common stock effected November 2008
by reducing the number of shares issuable thereunder to 10,000 and by increasing the exercise price of such option to $90.00 per
share. Effective January 4, 2009, we amended our employment agreement with Mr. Svoboda to permit the reduction of the annual salary
payable thereunder by 5% in accordance with company-wide salary reductions. Certain technical amendments were also made to Mr.
Svoboda’s employment agreement, effective January 1, 2009, for the purpose of bringing the severance payment provisions
of the employment agreement into compliance with the applicable provisions of Section 409A of the Internal Revenue Code and the
regulations and interpretive guidance issued thereunder. Mr. Svoboda’s employment agreement with the Company was assigned
to Steel Services effective May 3, 2015. The options to purchase shares expired January 28, 2016.
Douglas
B. Woodworth
. Mr. Woodworth has an employment agreement with Steel Services which provides certain severance compensation
upon termination of the agreement. Such compensation is described below under “Potential Payments Upon Termination or a
Change in Control.”
Potential
Payments Upon Termination or a Change in Control
William
T. Fejes, Jr.
Under the terms of the Fejes Employment Agreement, if Mr. Fejes’
employment is terminated, at his or the Company’s election at any time due to his death or disability, due to the expiration
or non-renewal of the Fejes Employment Agreement prior to his 65th birthday, or for reasons other than cause or voluntary resignation,
Mr. Fejes is entitled to receive the certain accrued obligations (accrued vacation, expenses, etc.) and, provided he executes
a general release, severance payments and benefits equal to: (i) one (1) year of his base salary;
(ii) reimbursement for the premium associated with one (1) year continuation of health insurance coverage pursuant to COBRA, (iii) immediate vesting of any options that are scheduled to vest within one year of the date of termination of employment; (iv) unpaid bonuses with respect to the fiscal
year ending on or preceding the date of termination, if any, provided Mr. Fejes is employed on December 31 of that year and the
bonus plan is in full force and effect; and (v) unpaid bonus through the termination or resignation date, if any, or, if the full
bonus has not been earned, a pro-rata portion of such bonus, pursuant to the terms of the applicable bonus plan.
James
F. McCabe, Jr.
In connection with the termination of his employment agreement, Steel Services paid to Mr. McCabe, as aggregate
compensation, (i) a lump-sum cash payment equal to one (1) year of his then current annual base, (ii) the continuation of certain
health-related benefits for up to a twelve (12) month period following termination, (iii) any bonus payment that he was entitled
to pursuant to any bonus plans as were then-in-effect and (iv) a car allowance for a one-year period after termination.
Jeffrey
A. Svoboda
. Prior to May 3, 2015, in the event that the Company terminated Mr. Svoboda’s employment agreement without
cause or gave notice not to extend the term of the employment agreement, the Company would have paid to Mr. Svoboda, as aggregate
compensation, (i) a lump-sum cash payment equal to the greater of the balance of his base salary due for the remaining term of
his contract (as base salary is defined in his employment agreement) or one (1) year of the greater of his then current annual
base salary or of his base salary as of December 31, 2008, (ii) the continuation of certain health-related benefits and (iii)
a bonus payment equal to the cash portion of the most recent bonus paid to Mr. Svoboda. Mr. Svoboda would also have received the
same compensation set forth in the preceding sentence if he had terminated the employment agreement due to a material diminution
of duties or the Company relocated more than 50 miles from White Plains, NY, as more specifically described in the employment
agreement. Mr. Svoboda’s employment agreement with the Company was assigned to Steel Services effective May 3, 2015.
Douglas
B. Woodworth
. In the event that Mr. Woodworth’s employment agreement is terminated for any reason other than cause or
voluntary resignation, Steel Services will pay to Mr. Woodworth, as aggregate compensation, a lump-sum cash payment equal to six
(6) months of his then current annual base salary.
Risk
Assessment of the Company’s Compensation Policies
The
Company’s compensation programs are discretionary, balanced and focused on the long term. Goals and objectives of the Company’s
compensation programs reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on
a single performance measure. The Company’s approach to compensation practices and policies applicable to employees throughout
the Company is consistent with that followed for its executives and, accordingly, the Company believes that its compensation policies
and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
Director
Compensation
The
following table sets forth information with respect to compensation earned by or awarded to each director who served on the Board
during 2016.
Name
|
|
Fees
Earned or
Paid
in Cash
($)
|
|
Stock
Awards
($)
(5)
|
|
Total
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(h)
|
Patrick
A. DeMarco
|
|
101,289
|
|
|
62,311
|
|
|
163,600
|
|
Robert
Frankfurt
|
|
104,853
|
|
|
62,311
|
|
|
167,164
|
|
Jack
L. Howard
|
|
49,883
|
|
|
778,875
(1)(2)
|
|
|
828,758
|
|
Warren
G. Lichtenstein
|
|
97,740
|
|
|
1,557,750
(1)(3)
|
|
|
97,740
(4)
|
|
John
H. McNamara, Jr.
|
|
48,353
|
|
|
62,311
|
|
|
110,664
|
|
Garen
W. Smith
(6)
|
|
101,798
|
|
|
62,311
|
|
|
164,109
|
|
Jeffrey
A. Svoboda
|
|
—
|
|
|
91,733
(1)(2)
|
|
|
91,733
|
|
(1)
|
Cash
award in lieu of restricted stock grant.
|
|
|
(2)
|
Represents
50% of the 2016 grant, which was paid in cash. Messrs. Howard and Svoboda deferred 50% of their 2016 grants. At the discretion
of the Compensation Committee, the 2017 grants for each of Messrs. Howard and Svoboda could have been increased by the amount
of their deferral, or approved at such level as is deemed appropriate depending upon the Company’s performance in 2016.
In fact, the deferred portion of the 2016 grants were approved and awarded in March 2017, and were made in cash.
|
(3)
|
Represents
100% of the 2016 grant, none of which was paid in 2016. Mr. Lichtenstein deferred 100% of his 2016 grant. At the discretion
of the Compensation Committee, the 2017 grant for Mr. Lichtenstein could have been increased by the amount of his deferral,
or approved at such level as is deemed appropriate depending upon the Company’s performance in 2016. In fact, the deferred
portion of the 2016 grant was approved and awarded in March 2017.
|
|
|
(4)
|
Excludes
the cash award in lieu of restricted stock as 100% of Mr. Lichtenstein’s 2016 grant was deferred.
|
|
|
(5)
|
Represents
the grant date fair value of the award calculated in accordance with FASB ASC Topic 718. See Note 15 to our audited consolidated
financial statements in our Annual Report for details as to the assumptions used to determine the fair value of the awards.
As of December 31, 2016, each director of the Company held the following number of unvested shares of restricted stock granted
pursuant to the 2007 Plan:
|
Name
|
Shares
|
|
Patrick
A. DeMarco
|
3,068
|
|
Robert
Frankfurt
|
3,068
|
|
Jack
L. Howard
|
—
|
|
Warren
G. Lichtenstein
|
—
|
|
John
H. McNamara, Jr.
|
3,068
|
|
Garen
W. Smith
|
3,068
|
|
Jeffrey
A. Svoboda
(7)
|
—
|
|
(6)
|
In
addition, Mr. Smith and his wife also receive medical benefits pursuant to an agreement entered into as of June 19, 2002 by
and between the Company, Unimast and Mr. Smith in connection with the sale by the Company of Unimast, its then wholly-owned
subsidiary, and the termination of Mr. Smith’s employment as President and Chief Executive Officer of Unimast.
|
|
|
(7)
|
Any
unvested shares held by Mr. Svoboda were granted to him in his capacity as an officer and not a director of the Company.
|
Effective
December 7, 2015, the Board adopted the following compensation schedule for non-employee directors:
Annual
Retainer for Independent Directors (1)
|
|
$
|
61,200
|
|
Annual
Retainer for Chairman
|
|
$
|
91,800
|
|
Board
Meeting Fee
|
|
$
|
1,530
|
|
Annual
Retainer for Audit Committee Members
|
|
$
|
7,650
|
|
Annual
Retainer for Audit Committee Chair
|
|
$
|
10,200
|
|
Audit
Committee Meeting Fee
|
|
$
|
1,020
|
|
Annual
Retainer for Compensation Committee Members
|
|
$
|
6,120
|
|
Annual
Retainer for Compensation Committee Chair
|
|
$
|
6,630
|
|
Compensation
Committee Meeting Fee
|
|
$
|
1,020
|
|
Annual
Retainer for Nominating Committee Members
|
|
$
|
5,100
|
|
Annual
Retainer for Nominating Committee Chair
|
|
$
|
6,120
|
|
Nominating
Committee Meeting Fee
|
|
$
|
1,020
|
|
Special
Committee Meeting Fee
|
|
$
|
1,020
|
|
|
(1)
|
The
annual retainer for Messrs. Howard and McNamara is $40,800. No annual retainer is currently
payable to Mr. Svoboda.
|
Shares
granted to our directors in 2016 vested entirely in March 2017.
Compensation
Committee Report
The
members of the Compensation Committee noted below have reviewed and discussed the Compensation Discussion and Analysis
section set forth above with management and, based on such review and discussion, the members of the Compensation Committee
noted below recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy
Statement.
THE
COMPENSATION COMMITTEE
Patrick
A. DeMarco
Robert
Frankfurt
Garen
W. Smith
Compensation
Committee Interlocks and Insider Participation
Our
Compensation Committee consists of Patrick A. DeMarco, Robert Frankfurt and Garen W. Smith. None of the members of our Compensation
Committee during 2016 served as an officer or employee of HNH or was formerly an officer of HNH. None of our executive officers
during 2016 served as a member of the board of directors or compensation committee of any entity that had one or more executive
officers serving as a member of our Board or Compensation Committee.
PROPOSAL
NO. 2:
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
The
Dodd-Frank Act requires that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis,
the compensation of our Company’s named executive officers as disclosed in this Proxy Statement in accordance with the SEC’s
rules. The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote
relates to the overall compensation of our executive officers.
As
described in detail in the section entitled, “Executive Compensation—Compensation Discussion and Analysis” beginning
on page 16, pursuant to the Management Services Agreement, Steel Services provides us with the services of all of our named executive
officers and we pay Steel Services directly for such services. Pursuant to the terms of the Management Services Agreement, Steel
Services is responsible for compensating all of our executive officers, including our named executive officers. However, we may
elect to provide equity or other compensation to our executive officers, but expect to do so after taking into account the recommendations
of Steel Services.
The
Board recommends that stockholders approve the compensation of the Company’s named executive officers as described in this
Proxy Statement by approving the following advisory resolution:
RESOLVED,
that the stockholders of Handy & Harman Ltd. (the “Company”) approve, on a non-binding, advisory basis, the compensation
of the Company’s named executive officers, as described in the Compensation Discussion and Analysis and disclosed in the
Summary Compensation Table and related compensation tables as set forth in this Proxy Statement.
Required
Vote and Board Recommendation
The
affirmative vote of a majority of the votes cast at the Annual Meeting, at which a quorum is present, either in person or by proxy,
is required to approve the compensation of our named executive officers on a non-binding, advisory basis. If you hold your shares
in your own name and indicate that you wish to abstain from voting on this matter, your abstention will be counted as present
for purposes of determining the presence of a quorum. If you hold your shares through a broker and you do not instruct the broker
on how to vote on this proposal, as is discussed above, your broker will not have the authority to vote your uninstructed shares
on this proposal. Such abstentions and broker non-votes will have no effect on the outcome of this proposal. As an advisory vote,
this proposal is non-binding. Although the vote is non-binding, the Board and the Compensation Committee value the opinions of
our stockholders, and will consider the outcome of the vote when making future compensation decisions for our named executive
officers.
THE
BOARD RECOMMENDS A VOTE
FOR
THE APPROVAL OF
THE COMPANY’S EXECUTIVE COMPENSATION.
Report
of the Audit Committee
The
following is the Report of the Audit Committee with respect to our audited financial statements for 2016.
The
Audit Committee’s purpose is, among other things, to assist our Board in its oversight of its financial accounting, reporting
and controls. Our Board has determined that each member of the Audit Committee meets the independence criteria prescribed by applicable
law and the rules of the SEC for audit committee membership and each is an “independent” director within the meaning
of the listing standards of the NASDAQ Market. The Audit Committee operates under a written charter.
Our
management is responsible for the preparation, presentation and integrity of our financial statements, including setting the accounting
and financial reporting principles and designing our system of internal control over financial reporting. Our independent registered
public accounting firm, BDO USA, LLP (“BDO”), is responsible for performing an independent audit of our consolidated
financial statements and for expressing opinions on the conformity of our audited financial statements to generally accepted accounting
principles and on the effectiveness of our internal control over financial reporting based on their audit. The Audit Committee
oversees these processes, although members of the Audit Committee are not engaged in the practice of auditing or accounting, and
their functions are not intended to duplicate or to certify the activities of management or BDO.
The
Audit Committee has reviewed and discussed our audited consolidated financial statements for 2016 with management and BDO. The
Audit Committee met with BDO, with and without management present, to discuss the results of its examinations, its evaluation
of our internal control over financial reporting and the overall quality of our financial reporting.
The
Audit Committee has also received from, and discussed with, BDO the matters required to be discussed by Public Company Accounting
Oversight Board Auditing Standard No. 16 (Communications with Audit Committees). The Audit Committee has received the written
disclosures and the letter from BDO required by the Public Company Accounting Oversight Board. The Audit Committee has discussed
with BDO the communications concerning independence and that firm’s independence. Based on the review and discussions described
in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to in this report
and its charter, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in
our Annual Report.
The
preceding report is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference
in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date of this Proxy Statement
and irrespective of any general incorporation language in any of our filings.
THE
AUDIT COMMITTEE
Patrick
A. DeMarco
Robert
Frankfurt
Garen
W. Smith
INDEPENDENT
ACCOUNTING FIRM FEES
Fees
Paid to BDO
The
following table presents information regarding the fees estimated and billed by BDO for the 2016 and 2015 fiscal years.
Nature
of Services
|
|
2016 Fiscal Year
|
|
|
2015
Fiscal Year
|
Audit
Fees
|
|
$1,699,200
|
|
|
$1,393,432
|
|
Audit-Related
Fees
|
|
$351,447
|
|
|
$28,000
|
|
Tax Fees
|
|
—
|
|
|
—
|
|
All
Other Fees
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
Total
Fees
|
|
$2,050,647
|
|
|
$1,421,432
|
|
Audit
Fees
. This category includes professional services rendered for the audit of our consolidated financial statements included
in our annual reports, review of our unaudited condensed consolidated financial statements included in our quarterly reports,
and services that were provided in connection with statutory or regulatory filings or engagements.
Audit-Related
Fees
. This category includes fees billed by BDO for assurance and related services that are reasonably related to the performance
of an audit or review of HNH’s financial statements, including audits in connection with acquisitions, due diligence for
mergers and acquisitions and consultations regarding acquisitions and divestitures.
Audit
Committee Pre-Approval Policies and Procedures
Section
10A(i)(1) of the Exchange Act and related SEC rules require that all auditing and permissible non-audit services to be performed
by a company’s principal accountants be approved in advance by the Audit Committee, subject to a de minimis exception set
forth in the SEC rules (the “De Minimis Exception”). Pursuant to Section 10A(i)(3) of the Exchange Act and related
SEC rules, the Audit Committee has established procedures by which the Chairperson of the Audit Committee may pre-approve such
services provided the pre-approval is detailed as to the particular service or category of services to be rendered and the Chairperson
reports the details of the services to the full Audit Committee at its next regularly scheduled meeting. None of the audit or
audit-related services described above were performed pursuant to the De Minimis Exception. In fiscal 2016 and 2015, the Audit
Committee followed SEC guidelines in approving all services rendered by BDO.
PROPOSAL
NO. 3: RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee has selected BDO as our independent registered public accounting firm for
our
fiscal year ending December 31, 2017
.
The
ratification of the selection of BDO as our independent registered public accounting firm is being submitted to stockholders because
we believe that this action follows sound corporate practice and is in the best interests of the stockholders. If the stockholders
do not ratify the selection by the affirmative vote of the holders of a majority of the Common Stock voted on the matter at the
Annual Meeting, the Audit Committee will reconsider the appointment of BDO as our independent registered public accounting firm
for
our fiscal year ending December 31, 2017
, but such a vote will not be binding
on the Audit Committee. If the stockholders ratify the selection, the Audit Committee, in its discretion, may still direct the
appointment of new independent auditors at any time during the year if the Audit Committee determines that such a change would
be in the best interests of HNH and our stockholders.
Required
Vote and Board Recommendation
The
affirmative vote of a majority of the votes cast at the meeting, at which a quorum is present, either in person or by proxy, is
required to ratify the appointment of BDO as our independent registered public accounting firm for
the
fiscal year ending December 31, 2017
on a non-binding, advisory basis. If you hold your shares in your own name and indicate
that you wish to abstain from voting on this matter, your abstention will be counted as present for purposes of determining the
presence of a quorum and will have no effect on the outcome of this proposal. As discussed above, if you hold your shares through
a broker and you do not instruct the broker on how to vote on this proposal, your broker will have the authority to vote your
uninstructed shares on this proposal. If a broker chooses to leave these uninstructed shares unvoted, such shares will be counted
for the purpose of establishing a quorum, but will have no effect on the outcome of this proposal. As an advisory vote, this proposal
is non-binding. Although the vote is non-binding, the Board and the Audit Committee value the opinions of our stockholders and
will consider the outcome of the vote.
THE
BOARD RECOMMENDS A VOTE
FOR
RATIFICATION OF
THE APPOINTMENT OF BDO USA, LLP
DEADLINE
FOR SUBMISSION OF STOCKHOLDER PROPOSALS
FOR 2018 ANNUAL MEETING OF STOCKHOLDERS
Pursuant
to Rule 14a-8 of the Exchange Act (“Rule 14a-8”), stockholders are entitled to present proposals for consideration
at forthcoming stockholder meetings provided that they comply with the proxy rules promulgated by the SEC and our bylaws. Stockholders
wishing to present a proposal at our 2018 Annual Meeting of Stockholders must submit such proposal to our Corporate Secretary
at our principal executive offices by December 26, 2017, if they wish for it to be eligible for inclusion in the Proxy Statement
and form of proxy relating to that meeting. We reserve the right to reject, rule out of order, or take other appropriate action
with respect to any proposal that does not comply with Rule 14a-8 and other applicable requirements.
In
addition, under our bylaws, a stockholder wishing to nominate a person to our Board at the 2018 Annual Meeting of Stockholders
(but not include such nomination in the proxy statement) or wishing to make a proposal with respect to any other matter (but not
include such proposal in the proxy statement) at the 2018 Annual Meeting the stockholder must deliver the nomination or recommendation
to our Corporate Secretary at our principal executive offices no later than no later than 90 days prior to and no earlier than
120 days prior to May 25, 2018, the date that is the one year anniversary of the Annual Meeting (the deadline for nominations
for the 2018 Annual Meeting of Stockholders is between January 25, 2018 and February 24, 2018). Notwithstanding the foregoing,
if the 2018 Annual Meeting of Stockholders occurs on a date more than 30 days earlier or 60 days after the date that is the one
year anniversary of the Annual Meeting, then notice by the stockholder to be timely for the 2018 Annual Meeting must be delivered
no later than the later of the 90
th
day prior to the actual date of the 2018 Annual Meeting of Stockholders or 10 days
following the day on which public announcement (in a filing under the Exchange Act or by press release) of the date of the 2018
Annual Meeting of Stockholders is first made by our Board. A stockholder’s notice of proposal shall include (i) a brief
description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting
and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal
is made; and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made, (a) the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial
owner, and (b) the class and number of shares of the Company that are owned beneficially and held of record by such stockholder
and such beneficial owner. See “Consideration of Director Nominees; New Nominees for Director – Stockholder Nominees”
for a discussion of the information required to be submitted with stockholder director nominations. The requirements for advance
notice of stockholder proposals under our bylaws do not apply to proposals properly submitted under Rule 14a-8 under the Exchange
Act, as those stockholder proposals are governed by Rule 14a-8. We reserve the right to reject, rule out of order, or take other
appropriate action with respect to any director nomination or stockholder proposal that does not comply with our bylaws and other
applicable requirements.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16 of the Exchange Act, requires our directors and certain of our officers, and persons who own more than 10% of a registered
class of our equity securities, to file initial reports of ownership and reports of changes in ownership with the SEC. SEC regulations
also require these persons to furnish us with a copy of all Section 16(a) forms they file. Based solely on our review of the copies
of the forms furnished to us and written representations from our officers who are required to file Section 16(a) forms and our
directors, we believe that all Section 16(a) filing requirements were met during 2016.
OTHER
BUSINESS
The
Board knows of no other business that will be presented for consideration at the Annual Meeting. If any other matters are properly
brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote the shares they
represent as the Board may recommend.
Whether
or not you plan to attend the Annual Meeting, please cast your vote online, via telephone, or complete, date, sign and promptly
return the enclosed proxy card or voting instruction card in the enclosed postage-paid envelope before the Annual Meeting so that
your shares will be represented at the Annual Meeting.
It
is important that your proxy be returned promptly, whether by mail, by the Internet or by telephone. You may revoke the proxy
at any time before it is exercised. If you attend the Annual Meeting in person, you may withdraw any proxy (including an Internet
or telephonic proxy) and vote your own shares. If your shares are held in a brokerage, bank, or other institutional account, you
must obtain a proxy from that entity showing that you were the record holder as of the close of business on March 27, 2017, in
order to vote your shares at the Annual Meeting.
|
By
Order of the Board of Directors
|
|
|
|
/s/
Warren G. Lichtenstein
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WARREN
G. LICHTENSTEIN
Chairman of the Board
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HANDY
& HARMAN LTD.
1133 WESTCHESTER AVENUE, SUITE N-222
WHITE PLAINS, NY 10604
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VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions
to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS
PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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The Board of Directors
recommends you vote FOR the following:
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1.
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Election of Directors
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Nominees
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For
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Against
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Abstain
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01
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Warren G. Lichtenstein
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☐
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☐
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☐
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02
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Robert Frankfurt
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☐
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☐
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☐
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03
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Jack L. Howard
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☐
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☐
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☐
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04
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John H. McNamara, Jr.
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☐
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☐
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☐
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05
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Patrick A. DeMarco
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☐
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☐
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☐
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06
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Garen W. Smith
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☐
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☐
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☐
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07
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Jeffrey A. Svoboda
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☐
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☐
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☐
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The Board of Directors recommends
you vote FOR proposals 2. and 3.
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For
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Against
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Abstain
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2.
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To
approve, on a non-binding, advisory basis, named executive officer compensation.
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☐
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☐
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☐
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator,
or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation
or partnership, please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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For
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Against
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Abstain
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3.
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To
ratify the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2017.
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☐
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☐
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☐
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NOTE:
Such
other business as may properly come before the meeting or any adjournment thereof.
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Signature (Joint Owners)
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Date
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0000335194_1 R1.0.1.15
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, Annual Report on Form 10-K, Stockholder
Letter are available at
www.proxyvote.com
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HANDY
& HARMAN LTD.
Annual Meeting of Stockholders
May 25, 2017 9:00 AM
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This
proxy is solicited by the Board of Directors
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The
undersigned hereby appoints Jack L. Howard and Douglas B. Woodworth, each of them, the
true and lawful attorneys and proxies of the undersigned, with full power of substitution,
to vote all of the shares of Common Stock of Handy & Harman Ltd. (the “Company”),
which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on May 25, 2017, at 9:00 a.m., local time, at Olshan Frome Wolosky
LLP, 1325 Avenue of the Americas, New York, NY 10019, or at any adjournment or postponement
thereof.
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The
undersigned hereby revokes any proxy or proxies heretofore given and acknowledges receipt
of a copy of the Notice of Annual Meeting and Proxy Statement and a copy of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
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THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY
DIRECTIONS HEREIN GIVEN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” EACH OF THE NOMINEES TO THE
BOARD OF DIRECTORS SET FORTH IN PROPOSAL NO. 1 AND “FOR” APPROVAL OF PROPOSAL NOS. 2 AND 3. IN THEIR DISCRETION,
THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
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Continued and to be signed
on reverse side
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0000335194_2 R1.0.1.15
Handy & Harman Ltd. (NASDAQ:HNH)
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