SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[ ] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
----------
AMERON INTERNATIONAL CORPORATION
(Name of Registrant as Specified in its Charter)
----------
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO]
AMERON INTERNATIONAL CORPORATION
CORPORATE OFFICES: 245 SOUTH LOS ROBLES AVE., PASADENA, CALIFORNIA 91101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To The Stockholders:
The Annual Meeting of Stockholders of Ameron International Corporation, a
Delaware corporation (the "Company") will be held at The Pasadena Hilton Hotel,
150 South Los Robles Ave., Pasadena, California, on Wednesday, March 24, 2004 at
9:00 a.m. for the following purposes:
1. To elect three directors to hold office for a term of three years, or
until their successors are elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
public accountants of the Company for fiscal year 2004.
3. To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock and
Preferred Stock.
4. To approve the Ameron International Corporation 2004 Stock Incentive
Plan.
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed February 10, 2004 as the record date for the
determination of stockholders entitled to vote at this meeting and any
adjournments thereof.
YOUR VOTE IS IMPORTANT
Holders of a majority of the outstanding voting shares of the Company must be
present either in person or by proxy in order for the meeting to be held.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important.
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY. A return envelope, requiring no
postage if mailed in the United States, is enclosed for your convenience in
replying.
If you are a stockholder of record and plan to attend the meeting, please check
your proxy card in the space provided. If your shares are not registered in your
name, please advise the stockholder of record (your broker, bank, etc.) that you
wish to attend. That firm will provide you with evidence of ownership which will
admit you to the meeting.
Javier Solis,
Secretary
February 18, 2004
AMERON INTERNATIONAL CORPORATION
CORPORATE OFFICES: 245 SOUTH LOS ROBLES AVE.
PASADENA, CALIFORNIA 91101
------------------------
PROXY STATEMENT
FEBRUARY 18, 2004
------------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Ameron International Corporation ("Ameron" or the
"Company") of proxies for use at the Annual Meeting of Stockholders of Ameron to
be held at the time and place and for the purposes set forth in the foregoing
Notice of Annual Meeting of Stockholders. This proxy statement and the proxy
card included herewith were first sent to stockholders on or about February 18,
2004.
Please sign, date and return the enclosed proxy card to ensure that your
shares are voted. The proxy may be revoked at any time prior to exercise thereof
but if not revoked will be voted. A proxy can be revoked by filing with the
Secretary of the Company either an instrument revoking the proxy or a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person. Each proxy will be voted as instructed, and if no instruction
is given will be voted FOR the election of the three nominees for director named
below, FOR the ratification of the appointment of PricewaterhouseCoopers LLP as
independent public accountants of the Company, FOR the amendment to the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock and Preferred Stock and FOR the approval of the Ameron
International Corporation 2004 Stock Incentive Plan. The named proxies may vote
in their discretion upon such other matters as may properly come before the
meeting.
The record date for the determination of stockholders entitled to vote at
the Annual Meeting is February 10, 2004. On such date, there were issued,
outstanding and entitled to vote at the Annual Meeting, 8,214,563 shares of
Common Stock of the Company (the "Common Stock"). Every stockholder is entitled
to one vote for each share of Common Stock registered in his or her name at the
close of business on the record date, except that stockholders may cumulate
their votes in the election of directors. See "Election of Directors." Common
Stock is the only class of voting stock outstanding.
Assuming a quorum is present in person or by proxy at the meeting, with
respect to the election of directors, the three nominees receiving the greatest
number of votes cast will be elected directors. The affirmative vote of the
holders of a majority of the shares of Common Stock represented at the Annual
Meeting is necessary for the ratification of the appointment of
PricewaterhouseCoopers LLP as independent public accountants of the Company for
fiscal year 2004, for the approval of the amendment to the Certificate of
Incorporation to increase the number of authorized shares of Common Stock and
Preferred Stock and for the approval of the Ameron International Corporation
2004 Stock Incentive Plan.
For purposes of determining whether a matter has received a majority vote,
abstentions will be included in the vote totals, with the result that an
abstention has the same effect as a negative vote. In instances where brokers
are prohibited from exercising discretionary authority for beneficial owners who
have not returned a proxy (so-called "broker nonvotes"), those shares will not
be included in the vote totals and therefore will have no effect on the vote.
ELECTION OF DIRECTORS
(PROXY ITEM 1)
As of the date of this Proxy Statement, the Bylaws of the Company provide
that the Board of Directors of Ameron be composed of nine directors, divided
into three classes. Directors are elected for three-year terms, and one class is
elected at each Annual Meeting.
Three directors are to be elected at the 2004 Annual Meeting. J. Michael
Hagan and Terry L. Haines were elected to their present terms of office as Class
II directors at the Company's 2001 Annual Meeting of Stockholders. Dennis C.
Poulsen joined Ameron in 2002 as a Class II director. Class II directors will
hold office until the Annual Meeting of Stockholders in the year 2007 or until
their respective successors have been elected and qualified. All of the nominees
have consented to being named herein and to serve if elected. In the event that
any of the nominees should become unavailable prior to the Annual Meeting,
proxies in the enclosed form will be voted for a substitute nominee or nominees
designated by the Board of Directors, or the Board, at its option, may reduce
the number of directors that constitute the entire Board.
Stockholders have cumulative voting rights with respect to the election of
directors. Cumulative voting rights entitle a stockholder to give one nominee as
many votes as is equal to the number of directors to be elected, multiplied by
the number of shares owned by the stockholder, or to distribute such votes to
one or more nominees, as the stockholder determines. Unless you indicate
otherwise on the proxy card, if you vote "FOR" all nominees, the proxies will
allocate your votes equally among the nominees listed above; if you withhold
authority to vote for any nominee or nominees, the proxies will allocate your
votes equally among the nominees listed above except those for whom you withhold
authority to vote.
The following information, which has been provided to the Company by the
directors, shows for each of the nominees for director and for each director
whose term continues, the principal occupation and business experience during
the past five years and other affiliations.
2004 NOMINEES FOR DIRECTOR
J. Michael Hagan. Retired Chairman, President and Chief Executive Officer
of Furon Company, a manufacturer of polymer components. Director of Remedytemp,
Inc., a temporary staffing and employment company; PIMCO Funds, an investment
management services company and Fleetwood Enterprises, a manufacturer of
recreational vehicles and producer of manufactured housing. Age 64. He has been
a director of the Company since 1994.
Terry L. Haines. President, Chief Executive Officer and director of A.
Schulman, Inc., a leading multinational manufacturer of high-performance
plastics, compounds and resins. Director of First Merit Bank Corp. Age 57. He
has been a director of the Company since 1997.
Dennis C. Poulsen. Chairman of Rose Hills Company, one of the largest
memorial parks service companies in the U.S., since 1999. Also served as Chief
Executive Officer of Rose Hills from February 2002 to June 2003. Age 61. He has
been a director of the Company since 2002.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THESE
NOMINEES, AND THE ENCLOSED PROXY CARD WILL BE SO VOTED UNLESS THE STOCKHOLDER
SPECIFIES OTHERWISE.
-2-
CONTINUING DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING
IN 2005
James S. Marlen. Chairman of the Board of the Company since 1995, President
and Chief Executive Officer since 1993. Formerly Vice President and Officer of
GenCorp Inc. and President, GenCorp Polymer Products, the consumer and
industrial product sectors of GenCorp. Mr. Marlen is a director of A. Schulman,
Inc. (NASDAQ), a leading multinational manufacturer of high-performance
plastics, compounds and resins, and Parsons Corporation, a privately-held,
worldwide engineering and construction firm. Mr. Marlen was named a
Distinguished Engineering Fellow of the University of Alabama, and, in 1998, he
was inducted into the State of Alabama Engineering Hall of Fame. Mr. Marlen is
also a director of various civic and trade organizations. Age 62. He has been a
director of the Company since 1993.
David Davenport. Research Fellow, Hoover Institution, Stanford University,
dedicated to research in domestic policy and international affairs, since August
2001 and Distinguished Professor of Public Policy and Law - Pepperdine
University since 2003. Chief Executive Officer of Starwire, a computer software
company from May 2000 to June 2001 and President, Pepperdine University from
April 1985 to May 2000. Director of Salem Communications, a provider of radio
programming, and Forest Lawn Memorial Parks Association, a memorial park
services company. Age 53. He has been a director of the Company since 2002.
Thomas L. Lee. Retired Chairman and Chief Executive Officer of the Newhall
Land and Farming Co., a real estate developer. Director of Blue Shield of
California, a life and health insurance company. Age 61. He has been a director
of the Company since 2002.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING
IN 2006
Peter K. Barker. Retired Advisory Director and former partner with Goldman
Sachs & Co., a global investment banking, securities and investment management
firm. Director of Stone Energy, Inc., an independent oil and gas company, and
Avery Dennison Corporation, a leader in pressure sensitive technology and
self-adhesives. Age 55. He has been a director of the Company since 1999.
John F. King. President & Chief Executive Officer since 1996 of Weingart
Center Association, a social services rehabilitation center. Formerly Chairman
of the Board and Chief Executive Officer, World Trade Bank. Director of Kilroy
Realty Finance, Inc., a commercial real estate developer. Age 70. He has been a
director of the Company since 1986.
John E. Peppercorn. Retired Vice President of Chevron Corporation and
President of Chevron Chemical Co. LLC, a subsidiary of Chevron Corporation,
manufacturer of industrial chemicals. Age 66. He has been a director of the
Company since 1999.
THE BOARD AND ITS COMMITTEES
The Board has standing committees, with duties, current membership and
number of meetings for each as shown below.
Audit Committee Six meetings held during 2003
Members:
John F. King, Chairman
J. Michael Hagan
Terry L. Haines
Thomas L. Lee
The Audit Committee advises the Board of Directors on internal and external
audit matters affecting the Company including recommendations as to the
appointment of the independent public accountant of the company. The Audit
Committee is governed by a charter which has been adopted by the Board of
Directors and which appears as Exhibit "A" to this proxy statement. The charter
can also be found on Ameron's website located at www.ameron.com. A more detailed
description
-3-
of the Audit Committee can be found in the Audit Committee Charter. As required
by the Audit Committee Charter, all members of the Audit Committee meet the
criteria for "independence" within the meaning of the Corporate Governance
Guidelines and are "financially literate" as required by the listing standards
of the New York Stock Exchange. The Board of Directors has not determined that
any of the members of the Audit Committee is an "audit committee financial
expert" as defined in Item 401(h)(2) of Regulation S-K.
Compensation & Stock Option Committee Two meetings held during fiscal 2003
Members:
John E. Peppercorn, Chairman
Peter K. Barker
David Davenport
The Compensation & Stock Option Committee approves the salaries and bonuses
of Ameron's executive officers as well as grants under Ameron's 2001 Stock
Incentive Plan. The Compensation & Stock Option Committee is governed by a
charter which has been adopted by the Board of Directors and which appears as
Exhibit "B" to this proxy statement. This charter can also be found on Ameron's
website located at www.ameron.com. A more detailed description of the functions
of the Compensation & Stock Option Committee can be found in the Compensation &
Stock Option Committee charter. All members of the Compensation & Stock Option
Committee are "independent" as required by the Compensation & Stock Option
Committee Charter.
Executive Committee No meetings held during fiscal 2003
Members:
James S. Marlen, Chairman
Peter K. Barker
J. Michael Hagan
John E. Peppercorn
Functions of the Executive Committee, all of whose actions are subject to
approval by the Board, are: Exercise, between meetings of the Board and while
the Board is not in session, those duties of the Board of Directors in the
management of the business of the Company which may have been lawfully delegated
to it by the Board.
Finance Committee One meeting held during fiscal 2003
Members:
J. Michael Hagan, Chairman
Peter K. Barker
Dennis C. Poulsen
Functions of the Finance Committee, all of whose actions are subject to
approval by the Board, are: Review financing policies and programs and consider
their effect on the financial position of the Company; review policies, plans
and performance of pension fund investments.
Nominating & Corporate Governance Committee One meeting held during fiscal 2003
Members:
Terry L. Haines, Chairman
John F. King
John E. Peppercorn
Dennis C. Poulsen
The Nominating & Corporate Governance Committee is governed by a charter
which has been adopted by the Board of Directors and which appears as Exhibit
"C" to this proxy statement. This charter can also be found on Ameron's website
located at www.ameron.com. A more detailed description of the functions of the
Nominating & Corporate Governance Committee can be found in the Nominating &
Corporate Governance charter. The Nominating & Corporate Governance Committee
charter directs the members of that committee to identify, review and recommend
qualified candidates to be elected or reelected to the Board and to be appointed
to serve on various committees, review procedures and policies of the Board, and
oversee the Board. All members of the Nominating & Corporate Governance
Committee are "independent" as required by the Nominating & Corporate Governance
Committee Charter.
The Board of Directors met a total of six times in 2003, and all directors
attended at least 75% of the aggregate number of meetings of the Board and Board
committees on which they served for the period in which they served.
-4-
Non-management directors meet regularly in executive sessions without
management. Non-management directors are all those directors who are not Company
officers. No single director has yet been chosen to preside at the
non-management executive sessions.
All directors attended last year's Annual Meeting. Although Ameron does not have
a formal policy regarding attendance by directors at Annual Meetings, all
directors are strongly encouraged to attend.
Director Nomination Process
The Board of Directors is responsible for selecting nominees for election
to the Board by the stockholders. Based upon its periodic evaluation of the
Board's performance and composition and the terms of the Nominating & Corporate
Governance Committee charter, the Nominating & Corporate Governance Committee
determines the need and criteria for new directors. When a Board vacancy occurs,
or the Board otherwise determines that an individual should be recruited for
possible nomination to the Board, the Nominating & Corporate Governance
Committee, in consultation with the Company's Chief Executive Officer, will
prepare a profile of a candidate expected to provide the most meaningful
contribution to the Board as a whole. In general, the Company seeks as
directors, individuals with substantial management experience who possess the
highest personal values, judgment and integrity, an understanding of the
environment in which the Company does business, and diverse experience in the
key business, financial and other challenges that face a substantial U.S.
corporation. Stockholders may submit written recommendations for nominees
directly to the Chairman of the Nominating & Corporate Governance Committee in
care of the Secretary of the Company at the Company's headquarters' address. The
Bylaws of the Company provide that only persons who are nominated in accordance
with the procedures set forth in Section 3.15 of the Bylaws shall be eligible
for election as Director at the annual meeting of the stockholders. Nominations
of candidates for election to the Board of Directors of the Company at any
annual meeting may be made only by or at the direction of the Board of Directors
or by a stockholder entitled to vote at such annual meeting. All such
nominations, except those made by or at the direction of the Board of Directors,
shall be made pursuant to timely notice in writing to the Secretary of the
Company of the stockholder's intention to make such nomination. To be timely,
any such notice must be received at the principal office of the Company not less
than sixty (60) and not more than one hundred twenty (120) days prior to the
date of such annual meeting; provided, however, that in the event that the first
public disclosure (whether by mailing of a notice to stockholders, press release
or otherwise) of the date of such annual meeting is made less than sixty-five
(65) days prior to the date of such annual meeting, notice by the stockholder
will be timely if received not later than the close of business on the tenth day
following the day on which such first public disclosure was made. Such
stockholder's notice with respect to a proposed nomination shall set forth (i)
the name, age, business and residence address and principal occupation or
employment of each nominee proposed in such notice; (ii) the name and address of
the stockholder giving the notice as the same appears in the Company's stock
register; (iii) the number of shares of capital stock of the Company which are
beneficially owned by each such nominee and by such stockholder; and (iv) such
other information concerning each such nominee as would be required, under the
rules of the Securities and Exchange Commission, to be disclosed in a proxy
statement soliciting proxies for the election of such nominee. Such notice must
also include a signed consent of each such nominee to serve as a director of the
Company, if elected.
Compensation of Directors and Retirement Policies
Directors who are not officers or employees of the Company receive an
annual retainer of $33,000 plus $2,200 for each Board meeting attended.
Directors are available for consultation at any time by management and normally
receive no additional compensation for such consultation. For meetings of
committees of the Board of Directors, a fee of $1,500 per meeting is paid. The
fee is paid to each director who attends and actively participates. In addition,
Chairs of the Audit and the Compensation & Stock Option Committees receive an
annual retainer of $5,000 and Chairs of the Finance and the Nominating &
Corporate Governance Committees receive an annual retainer of $1,000. Currently,
each year on the first business day following the date of the Annual Meeting of
Stockholders, non-employee directors are granted an option to purchase 3,000
shares of Common Stock. These shares are exercisable in annual increments of 750
shares each, beginning on the first anniversary date of the grant and have an
exercise price
-5-
equal to the fair market value of the shares on the date of the grant. The
Company is proposing that, under the terms of the proposed 2004 Stock Incentive
Plan, which will be adopted if and when approved by stockholders (see proposal
for Approval of Ameron International Corporation 2004 Stock Incentive Plan), any
future awards of options to non-employee directors be made on a discretionary
basis.
The Board of Directors has a policy establishing the mandatory retirement
date of each member of the Board as the date of the Annual Meeting of
Stockholders of the Company next following the director's 72nd birthday.
Director Independence
The Board of Directors of the Company has been determined to be comprised
of a majority of directors who are considered "independent" within the meaning
of the Company's Corporate Governance Guidelines, which provides that a majority
of the members of the Board must meet the criteria for independence as required
by the listing standards of the New York Stock Exchange. These Guidelines can be
found on Ameron's website located at www.ameron.com.
The determination that the Board is comprised of a majority of
"independent" directors has been made based on written answers provided by each
of the directors to a questionnaire regarding relationships and possible
conflicts of interest between each of the directors and members of their family
and the Company.
In making that determination, the Board has applied the following
standards, in addition to any relevant facts and circumstances:
o the director has no material relationship with the Company, either directly
or through an organization that has a material relationship with the
Company;
o the director is not, or in the past five years has not been, an employee of
the Company or any of its subsidiaries;
o an immediate family member of the director is not, and in the past five
years has not been, employed as an executive officer of the Company;
o neither the director nor a member of the director's immediate family is, or
in the past three years has been, affiliated with or employed by the
Company's present or former (within three years) internal or external
auditor;
o neither the director nor a member of the director's immediate family is, or
in the past three years has been, employed as an executive officer of
another company where any of the Company's present executives serve on that
company's compensation committee;
o neither the director nor a member of the director's immediate family,
receives or has received more than $100,000 per year in direct compensation
from the Company in the past three years, other than director and committee
fees and pensions or other forms of deferred compensation for prior
services (provided such compensation is not contingent in any way on
continous service); and
o the director is not, and during the past three years has not been, an
executive officer or employee, and no member of the director's immediate
family is or has been during the past three years an executive officer, of
a company that makes payments to, or receives payments from, the Company
for property or services in an amount which, in any single fiscal year,
exceeds the greater of $1 million, or 2% of such other company's
consolidated gross revenues.
Code of Business Conduct & Ethics
The Company has adopted a Code of Business Conduct & Ethics (the "Code"),
which is designed to assist directors, officers and employees of the Company
with ethical risk, provide guidance to help recognize and deal with ethical
issues, provide mechanisms to report unethical conduct, and help foster a
culture of honesty and accountability. Each director, officer and employee is
required to comply with this Code, including the Company's principal executive
officer, principal financial officer, principal accounting officer or
controller, and other persons performing similar functions. This
-6-
Code can be found on Ameron's website located at www.ameron.com and the Company
will disclose amendments to or waivers from provisions of this Code by posting
such information on its website. Copies of each of the Company's Audit Committee
Charter, Compensation & Stock Option Committee Charter, Nominating and Corporate
Governance Committee Charter, Corporate Governance Guidelines and Code of
Business Conduct & Ethics are available to stockholders upon written request to
the Secretary of the Company at the Company's headquarter address.
PROPOSAL FOR RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROXY ITEM 2)
The Board of Directors, upon recommendation of its Audit Committee, has
appointed the firm of PricewaterhouseCoopers LLP, as independent public
accountants to examine the Company's financial statements for its fiscal year
ending November 30, 2004. This firm has no financial interest of any kind in the
Company or its subsidiaries. The firm has had no connection with the Company or
its subsidiaries in the capacity of promoter, underwriter, voting trustee,
director, officer or employee. A member of the firm of PricewaterhouseCoopers
LLP is expected to be present at the Annual Meeting to answer questions and to
make a statement if he or she desires to do so. Effective May 21, 2003, the
Company dismissed Deloitte & Touche LLP as its independent accountants. The
reports of Deloitte & Touche LLP on the Company's financial statements for
fiscal years 2002 and 2001 did not contain an adverse opinion or a disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope, or
accounting principles. The decision to dismiss Deloitte & Touche LLP was
recommended by the Company's Audit Committee and approved by its Board of
Directors. During fiscal years 2002 and 2001 and the subsequent interim period
preceding Deloitte & Touche LLP's dismissal, there were no disagreements (as
such term is defined in instruction 4 to Item 304 of Securities and Exchange
Commission Regulation S-K) with Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Deloitte & Touche LLP would have caused it to make reference to the subject
matter of the disagreement(s) in connection with its report.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY FOR 2004, AND THE ENCLOSED PROXY CARD WILL BE SO
VOTED UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
If the appointment is not ratified by a majority of the shares of Common
Stock represented at the meeting on this proposal, the adverse vote will be
considered as a directive to the Board of Directors to select other independent
public accountants for the following year. However, because of the difficulty
and expense of making any substitution so long after the beginning of the
current year, it is contemplated that the appointment for the fiscal year ending
November 30, 2004 will be permitted to stand unless the Board finds other good
reason for making a change.
PROPOSAL FOR APPROVAL OF
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
(PROXY ITEM 3)
The Board of Directors has approved an amendment to the Certificate of
Incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue from 12,000,000 to 24,000,000 shares and the number of
shares of Preferred Stock which the Company is authorized to issue from
1,000,000 to 2,000,000 shares. The text of the proposed amendment is set forth
as Exhibit "D" hereto.
On May 27, 2003, the Company completed a two-for-one stock split in the
form of a stock dividend. The proposed amendment maintains the same proportion
of authorized but unissued shares as was available prior to the two-for-one
stock split. As of February 10, 2004, 8,214,563 shares of the Company's
12,000,000 currently authorized shares of common stock were issued and
outstanding. Of the remaining authorized shares 2,947,318 shares are unissued
and not reserved for issuance. None of the preferred stock is issued and
outstanding.
The Board of Directors believes that the proposed amendment is in the best
interests of the Company and the Company's stockholders because the Company
currently has a limited number of authorized and unissued shares that are not
reserved for issuance, and is advisable to provide the Company with additional
flexibility to meet its future business needs. If the proposed amendment is
adopted by the Company's stockholders, the Company will have additional shares
available for possible stock
-7-
splits in the future, to support the Company's future business prospects and to
maintain the Company's stock-based compensation programs.
Although the Company does not have any plan at this time for the issuance
of the additional shares, the proposed amendment would enable the Company to
take timely advantage of favorable opportunities and market conditions when they
arise without the necessity of further stockholder action. The issuance of
additional shares in the future could have a dilutive effect on the percentage
ownership of existing stockholders. The proposed amendment could also have an
anti-takeover effect as additional shares of common stock and preferred stock
could be issued to dilute the stock ownership and voting power of, or increase
the cost to, a person seeking to obtain control of the Company. However, the
amendment is not being proposed for anti-takeover purposes or in response to
any known effort to accumulate shares of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION, AND THE ENCLOSED PROXY
CARD WILL BE SO VOTED UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
PROPOSAL FOR APPROVAL OF
AMERON INTERNATIONAL CORPORATION
2004 STOCK INCENTIVE PLAN
(PROXY ITEM 4)
General
At the 2004 Annual Meeting, the stockholders will be asked to approve the
Ameron International Corporation 2004 Stock Incentive Plan (the "Plan").
The description of the Plan contained below is qualified in its entirety by
reference to the provisions of the Plan, which is attached as Exhibit "E" to
this proxy statement.
Purpose
The purpose of the Plan is to enable the Company to offer various incentive
awards based on the equity of the Company to key employees, officers, and
directors (including non-employee directors) of, and consultants and independent
contractors providing services to, the Company and certain subsidiaries and/or
affiliates. As of the date of this proxy statement, approximately 50 persons are
eligible to participate in the Plan.
Effect on Predecessor Plan
The Plan will serve as the successor to the Company's existing 2001 Stock
Incentive Plan ("the Predecessor Plan"), and no further awards will be made
under the Predecessor Plan as of the date on which the Company's stockholders
approve the adoption of the Plan (the "Effective Date"). As of the Effective
Date, all outstanding awards under the Predecessor Plan will be incorporated
into the Plan and accordingly will be treated as outstanding awards under the
Plan. However, each outstanding award so incorporated will continue to be
governed by the express terms and conditions of the agreements evidencing such
award, and to the extent that the provisions of the Plan conflict with the terms
and conditions of any such agreement, the agreement shall govern. No provision
of the Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such incorporated awards with respect to their
acquisition of shares of the Company's common stock ("Common Stock") thereunder.
Administration
The Plan will be administered by the Compensation & Stock Option Committee
(the "Committee") of the Board of Directors of the Company (the "Board"), which
is composed entirely of "independent directors" as defined by Section 303A.02 of
the New York Stock Exchange Listed Company Manual. Members of the Committee will
serve for such term as the Board may determine, and may be removed by the Board
at any time.
The Committee generally is authorized to construe and interpret the Plan,
to select from among eligible individuals those who will participate in the
Plan, and to specify the terms of awards under the Plan, subject to the terms
and conditions of the Plan. The number of shares and the applicable terms,
conditions, and restrictions may vary from award to award.
The Company will pay all costs of administration of the Plan. Cash proceeds
received from the issuance of awards under the Plan will be used for general
corporate purposes.
Shares and Terms
Stock subject to award under the Plan is the Company's authorized but
unissued Common Stock and reacquired shares of Common Stock, including shares
repurchased by the Company on the open market. Subject to adjustment on account
of a change in the capital structure of the Company, as described below, the
number of shares of Common Stock that may be issued pursuant to awards granted
after the Effective Date is (i) 525,000, plus (ii) shares that were subject to
outstanding awards under the Predecessor Plan to the extent that such awards
expire, are terminated, are cancelled, or are forfeited for any reason without
such shares being issued, plus (iii) shares that are delivered by an awardholder
to the Company, or are withheld from shares otherwise issuable under the award,
in payment of all or a portion of the exercise price or tax withholding
obligation of an award under the Predecessor Plan. Notwithstanding the
foregoing, if any portion of an outstanding award under the Predecessor Plan is
paid in the form of cash, then the shares of Common Stock that otherwise would
have been issued on account of such award or portion thereof will not be
available for issuance under the Plan.
To the extent that an outstanding award granted after the Effective Date
expires, is terminated, is canceled, or is forfeited for any without having been
paid out to a participant in full, any remaining shares allocable to the unpaid
portion of such award will become available for subsequent grants under the Plan
provided that no cash payment was made in substitution thereof. Any shares that
are delivered to the Company by an awardholder, or are withheld from shares
otherwise issuable under an award granted after the Effective Date, in payment
of all or a portion of the exercise price or tax withholding obligation for such
award will be available for subsequent awards. Any shares issued or awards
settled by the Company as a result of the assumption or substitution of
outstanding grants or grant commitments of an acquired company or other entity
will not be counted against the maximum share limitation under the Plan.
The market value of the Company's Common Stock as reported on the New York
Stock Exchange as of the close of business on February 5, 2004 was $38.45 per
share.
The Plan provides that, during any consecutive three-calendar-year period,
no individual may receive awards of non-qualified stock options, stock
appreciation rights, or any combination thereof with respect to greater than
300,000 shares in the aggregate, and no individual may receive awards of
restricted stock, restricted stock units, performance shares, or any combination
thereof with respect to greater than 150,000 shares in the aggregate (subject to
adjustment in all cases as described below). Cash payments made to a participant
in settlement of an award under the Plan will be counted against the individual
limits described in this paragraph.
If any change is made to the Common Stock of the Company by reason of a
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares, or other similar change affecting the outstanding Common Stock as a
class, then appropriate adjustments will be made to the maximum number and/or
class of securities issuable under the Plan as a whole and to the limitations on
the number of shares that any one individual can receive pursuant to awards
under the Plan. The purpose of these adjustments will be to preclude the
enlargement or dilution of rights and benefits under the awards.
In addition, the Plan limits to $2,500,000 the aggregate amount of all
awards qualifying as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code that may be paid to a participant in
a single performance cycle over which such "performance-based compensation" is
measured.
Stock Options
The Committee may grant non-qualified stock options.
The exercise price of an option, and the other terms and conditions
relating to the exercise of an option, will be determined by the Committee. In
no event, however, will the exercise price of an option be less than 100% of the
Fair Market Value (as defined in the Plan) of the option shares on the date of
the grant of the option. The duration of an option is limited to ten years. The
exercise price will generally be payable in full in cash or, at the Committee's
discretion, in previously owned shares or, under certain conditions, by the
proceeds, delivered to the Company by a broker, of a same-day sale of the award
shares. No option granted under the Plan shall be amended to reduce the exercise
price thereof, or surrendered in exchange for a replacement option having a
lower price.
Non-qualified options granted under the Plan, at the Committee's discretion
may provide that upon exercise of the option, the optionholder automatically
will be granted a "reload" option covering the number of shares equal to (i) the
number of shares delivered to the Company or withheld from shares otherwise
issuable to the optionholder upon exercise in payment of the exercise price of
the option or the applicable tax withholding obligation and/or (ii) the number
of shares with a then-fair-market value equal to the amount of withholding
obligations paid in cash by the holder.
Other Stock-Based Awards
The Plan also provides for other types of awards that are based, in whole
or in part, on the Company's equity or the value thereof. Such awards include,
but are not limited to, stock appreciation rights, restricted stock, restricted
stock units, and performance shares. The terms, conditions and restrictions to
which other stock-based awards are subject (including, but not limited to,
continued employment, performance standards, and/or forfeiture rights in favor
of the Company) generally shall be determined by the Committee, and may vary
from award to award.
Notwithstanding the foregoing, the following rules shall apply to stock
appreciation rights and restricted stock awarded under the Plan. In the case of
a stock appreciation right, (i) award must be based on the Fair Market Value per
share of Common Stock on the date of grant; and (ii) the term may not exceed ten
years. In the case of restricted stock, the restrictions imposed on restricted
stock shall lapse in their entirety no sooner than three years from the date of
grant, provided, however, that the Committee shall have the authority to
determine (i) whether such restrictions shall lapse incrementally over such
three-year period or longer period, if determined by the Committee; and (ii)
whether the lapse of such restrictions shall be accelerated in the case of
retirement, disability, or death of the awardholder, or in the case of a change
in control.
Payment of Awards; Consideration
The Committee may provide awardholders with an election, or require
awardholders, to receive a percentage of the total value of awards made under
the Plan in cash, subject to such terms, conditions, and restrictions as the
Committee may specify. The Committee also will determine whether any
consideration is to be paid by participants with regard to awards.
Awards to Non-Employee Directors
The Predecessor Plan provided for an automatic grant of 3,000 options to
purchase Common Stock on an annual basis to each non-employee director of the
Company. This provision was not incorporated into the Plan. Awards to directors
under the Plan are discretionary and are subject to the general terms and
conditions set forth in the Plan.
Performance Goals
Section 162(m) of the Internal Revenue Code limits federal income tax
deductions for compensation paid to the Chief Executive Officer and the four
other most highly compensated officers of a public company to $1 million per
year, but contains an exception for "performance-based compensation" that only
is paid subject to the attainment of performance goals relating to one or more
business criteria. The Plan is structured so that awards made to such officers
of the Company may be eligible to satisfy the requirements of Section 162(m).
The relevant business criteria are set forth in the Plan document and may be
applied to the Company or certain subsidiaries or affiliates, as a whole or to
any unit thereof, or to a specified group of peer companies as determined by the
Committee.
Assignment
The Plan permits the Committee to determine the assignment of awards to
third parties or to members of the recipient's family or a trust, foundation, or
other entity in which one or more family members has more than 50% of the
beneficial interest. Otherwise, awards under the Plan may not be assigned or
transferred during the lifetime of the awardholder.
Corporate Transactions
Under the Plan, the Committee may determine and set forth in any award the
effect, if any, that any sale of stock or assets, merger, combination, spin-off,
reorganization or liquidation of the Company will have upon the term,
exercisability or vesting of such award, provided that any award that is
continued, assumed, or replaced with a comparable award in connection with any
transaction will be appropriately adjusted.
Term of Plan
No award may be made under the Plan after ten years from the Effective
Date.
Amendment or Termination
The Plan provides that the Board may amend, suspend, or discontinue the
Plan at any time, provided that, without stockholder approval, the Board may not
make any change with respect to which the Board determines that stockholder
approval is required by applicable law or regulatory standards, or by the
requirements of Section 162(m) of the Code. To the extent not inconsistent with
the Plan, the Committee may modify or waive the terms of any outstanding award,
provided that (i) no modification or waiver may adversely affect a holder's
rights without the holder's consent and (ii) subject to the provisions of the
Plan regarding adjustments due to a change in corporate or capital structure,
the Committee will have no authority to reprice outstanding options or other
awards, whether through amendment, cancellation, or replacement grants.
New Plan Benefits
Generally, future awards under the Plan are discretionary so that it is
impossible to determine who will receive awards, and in what amounts, in the
event the Plan is approved.
Federal Income Tax Consequences
The following is only a summary of the Federal income tax consequences to
the participant and the Company with respect to the awards under the Plan. The
summary does not discuss the tax treatment of awards that may have been granted
under the Predecessor Plan. Reference should be made to the applicable
provisions of the Internal Revenue Code. In addition, the summary does not
discuss the tax consequences of a participant's death or any consequence under
state, local, or foreign tax laws.
Non-Qualified Options
A participant usually does not realize taxable income upon the grant of a
non-qualified stock option. Upon the exercise of a non-qualified stock option,
the holder will realize ordinary income equal to the difference between the
fair-market value of the Common Stock being purchased and the exercise price.
The Company generally will be entitled to take a federal income tax deduction in
the amount of ordinary income recognized by the optionholder at the time the
option is exercised.
If a holder exercises a non-qualified stock option and subsequently sells
the option shares, any appreciation will be taxed as capital gain in an amount
equal to the excess of the sales proceeds for the option shares over the
holder's basis in the option shares. The holder's basis in the option shares
generally will be the amount paid for the shares plus the amount included in the
holder's ordinary income upon exercise.
Other Awards
The tax treatment of other types of awards will vary depending on the
nature of the award, including being based on such factors as whether property
(such as shares) or a mere right to receive payment (such as units) is
transferred pursuant to such award, and whether or not the award is restricted.
Tax Withholding
The Company generally will be entitled to withhold any required taxes in
connection with the exercise or payment of an award, and may require the
participant to pay such taxes as a condition to exercise of an award.
Accounting Treatment
The following is a summary of certain accounting consequences of awards
under generally accepted accounting principles. In October 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123").
This standard defines a fair-value-based method of accounting for stock-based
employee compensation plans; however, it also allows an entity to continue to
measure compensation cost for those plans using the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations ("Opinion 25"). Under the fair-value-based method,
compensation cost is measured at the grant date based on the estimated fair
value of the award and is recognized over the service period, which is usually
the vesting period. The Company has elected to continue accounting for
compensation cost arising from its stock-based compensation plans under Opinion
25, with disclosure of required fair-value information. Under Opinion 25,
compensation cost is recognized based on the difference, if any, between the
market price of the stock at the date of grant and the amount an employee must
pay to acquire the stock. Therefore, an option granted with an exercise price
less than the fair-market value of the option shares on the date of grant will
give rise to compensation expense equal to the difference between the
fair-market value of the shares on the date of grant and the exercise price. The
expense will be accrued as the optionee vests in the option or the shares
purchasable under the option. Option grants at 100% of fair-market value will
not result in any charge to the Company's earnings.
A grant of restricted stock or any award that provides for the transfer of
Common Stock to the awardholder, will generally result in compensation expense
equal to the market value of the underlying shares of Common Stock on the date
of grant (less any consideration paid therefor). This expense will generally be
accrued over the term of the vesting of such awards.
Generally, the fair-market value on the date of grant (less any
consideration paid therefor) of an award that provides for the payment of cash
by the Company to the awardholder or is performance-based, will be accrued as an
expense and, at the end of each fiscal quarter thereafter, the amount (if any)
by which the fair-market value of the unit has increased or decreased from the
amount previously accrued will be recorded as an adjustment to compensation
expense. In the case of certain vesting or performance criteria, the expense may
be amortized over the performance cycle or be delayed until the performance
criteria are attained or are likely to be attained.
The number of outstanding options, restricted stock and share rights will
be a factor in determining earnings per share on a diluted basis.
SFAS No. 123 requires the Company to disclose, in footnotes to the
Company's financial statements, the impact that options and other awards granted
under the Plan would have had on the Company's reported earnings were the
fair-value approach used to record compensation expense.
Vote Required for Approval of the Plan
The affirmative vote of a majority of the shares of Common Stock
represented and voting at the Annual Meeting is necessary to approve the Plan.
The Board believes that the Plan is in the best interests of the Company and its
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
AMERON INTERNATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN, AND THE ENCLOSED
PROXY CARD WILL BE SO VOTED UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Security Ownership of Certain Beneficial Owners
The Company has been informed that as of the dates indicated, the following
persons were beneficial owners of more than five percent of the Company's Common
Stock.
NAME AND ADDRESS SHARES OF STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED/AS OF PERCENT
------------------- ------------------------------ --------
Putnam Investments, LLC ................................ (1) (Information not
Putnam Investment Management LLC yet available)
Putnam Advisory Company LLC
One Post Office Square
Boston, MA 02109
T. Rowe Price Associates, Inc........................... 783,100(2)/December 31, 2003 9.53
100 E. Pratt Street
Baltimore, MD 2120
Taro Iketani ........................................... 612,792/January 5, 2004 7.46
Funakawara 18, Ichigaya
Shinjuku-ku
Tokyo, Japan
-8-
-----------------
The information that is footnoted in the table above and set forth in the
notes below is based upon information received from each respective stockholder.
(1) Putnam Investments, LLC stated that, in its capacity as investment advisor
it has shared voting power with respect to 102,610 shares and shared
dispositive power with all such shares.
(2) In its Schedule 13G and correspondence received January 6, 2004, T. Rowe
Price Associates, Inc. stated that these securities are owned by various
individual and institutional investors, including T. Rowe Price Small Cap
Value Fund, Inc. which owns 503,800 shares, representing 6.13% of the
shares outstanding, which T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment adviser with power to direct investments
and/or sole power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of
such securities.
Security Ownership of Management
As of February 10, 2004, the shares of Common Stock held by all directors,
nominees for director and executive officers named in the Summary Compensation
Table individually and by directors and officers as a group were:
Vested Shares Rights to
Shares of Stock Held in Acquire
Beneficially Trust under Beneficial
Name Owned(1)# 401(k) Plan# Ownership(2)# Percent(3)
---- --------------- ------------- ------------- ----------
DIRECTORS AND NOMINEES:
Peter K. Barker.............................. 2,000 -- 12,000 *
David Davenport.............................. -- -- 750 *
J. Michael Hagan............................. 5,260(4) -- 22,000 *
Terry L. Haines.............................. 4,130 -- 18,000 *
John F. King................................. 600 -- 22,000 *
Thomas L. Lee................................ 1,000 -- 750 *
John E. Peppercorn........................... -- -- 12,000 *
Dennis C. Poulsen............................ -- -- 750
NAMED EXECUTIVE OFFICERS:
James S. Marlen.............................. 46,227 187 436,351 *
Javier Solis................................. 11,045 -- 82,684 *
Gary Wagner.................................. 11,181(5) -- 79,684 *
Thomas P. Giese.............................. 11,045 472 57,400 *
James R. McLaughlin.......................... -- 267 -- *
DIRECTORS AND OFFICERS AS A GROUP (INCLUDING
THOSE ABOVE)................................. 93,488 1,011 744,869 1.15%(6)
--------------------
(1) Direct ownership except as otherwise noted.
(2) Represents shares subject to options which could be exercised by April 10,
2004 by the named individuals or the Group.
(3) This represents Shares of stock beneficially owned and vested shares held
under 401(k) Plan as a percent of total outstanding shares.
(4) Held in Hagan Family Trust, a Living Trust.
(5) 200 of these shares are owned jointly with his wife.
-9-
(6) If the 744,869 shares subject to exercisable options held by directors and
officers as a group were included in the total amount of shares
outstanding, then the percentage of Common Stock owned by the group would
be 9.37%
* Percentage owned of less than 1% of total outstanding shares not shown.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities & Exchange Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. The Company believes that during the fiscal year ended November 30,
2003, all Section 16(a) filing requirements were met except that a Form 4 was
filed late to report an award of restricted shares from the Company to Thomas P.
Giese, Vice President. This was an inadvertent omission and upon discovery of
the oversight, a Form 4 was promptly filed.
Equity Compensation Plan Information
The following table sets forth certain information as of November 30, 2003,
regarding the Company's 1992 Incentive Stock Compensation Plan, 1994
Non-Employee Director Stock Option Plan, 2001 Stock Incentive Plan and options
not covered by approved plans.
Number of Securities
Remaining Available for
Number of Securities to Weighted-Average Future Issuance under
be Issued Upon Exercise Exercise price of Equity Compensation
of Outstanding Options, Outstanding Options, Plans (Excluding Securities
Warrants and Rights# Warrants and Rights$ Reflected in (a))#
------------------------ ------------------- ----------------------------
(a)
Equity compensation plans
approved by security holders ...... 808,119 22.21 234,000
Equity compensation plans not
approved by security holders ...... 30,000(1) 20.28 N/A
TOTAL 838,119 22.15 234,000
-------------------
(1) On January 24, 2001, the Board approved grants of options to purchase 6,000
shares of Company common stock to each Director. These options are
exercisable in annual increments of 1,500 each, beginning on the first
anniversary date of the grant, and have an exercise price equal to the fair
market value of the shares on the date of the grant.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and the four remaining most highly paid executive officers for
each of the last three fiscal years ended November 30.
-10-
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------------- ---------------------------------------------
Awards Payouts
--------------------- -------------------
Other Number of All Other
Annual Securities Restricted LTIP Compen-
Name and Salary Bonus Compen- Underlying Stock Payouts sation
Principal Position Year $(1) $(1) sation $ Options# Awards ($) $(1) $
------------------ ---- ------- --------- -------- ----------- ---------- -------- ---------
James S. Marlen............ 2003 727,745 1,350,000 -- -- -- 413,946 31,407
Chairman, President 2002 696,115 995,000 9,042 -- 1,503,480(2) 572,441 6,253
& Chief Executive Officer 2001 660,055 800,000 -- 50,000 -- 680,000 29,247
Javier Solis............... 2003 279,132 407,000 -- -- -- 93,932 12,803
Senior Vice President 2002 265,753 300,000 4,741 -- 410,040(2) 129,882 3,286
Administration, 2001 241,603 245,000 -- 10,000 -- 147,000 12,669
Secretary and General
Counsel
Gary Wagner................ 2003 279,132 407,000 -- -- -- 93,932 12,987
Senior Vice President, 2002 265,753 300,000 2,190 -- 410,040(2) 129,882 2,792
Chief Financial Officer 2001 241,603 245,000 -- 10,000 -- 147,000 6,758
Thomas P. Giese............ 2003 233,301 225,000 -- -- -- 104,740 11,844
Vice President; 2002 223,615 200,000 2,129 -- 410,040(2) 144,313 4,352
Group President, 2001 208,301 200,000 -- -- -- 168,000 7,895
Water Transmission
Group
James R. McLaughlin....... 2003 179,981 100,000 -- -- -- -- 3,839(4)
Vice President, 2002 167,575 75,000 -- -- -- -- 5,561(4)
Treasurer & Controller 2001 147,452 65,000 -- -- -- -- 57,119(5)
-----------------
(1) Amounts shown include cash and non-cash compensation earned for services
performed and received by the Executive Officers as well as amounts earned
but deferred at the election of those officers during the fiscal years
indicated.
(2) The amounts shown in this column represent the dollar value of the
Company's common stock on the date of grant of the restricted stock. On
January 23, 2002 James S. Marlen received a grant of 44,000 shares of
common stock and Javier Solis, Gary Wagner and Thomas P. Giese each
received a grant of 12,000 shares of common stock. This restricted stock
vests at 25% per year. Dividends are paid during the restricted period on
restricted shares.
As of November 30, 2003, the aggregate number of shares of restricted stock
held by the officers and the dollar value of such shares was: James S.
Marlen, 33,000 shares ($1,089,000); Javier Solis, Gary Wagner and Thomas P.
Giese, 9,000 each ($297,000).
(3) Amounts shown represent (a) Contributions by the Company to the 401(K)
Savings Plan for: James S. Marlen, $4,567; Javier Solis, $5,483; Gary
Wagner; $5,667 and Thomas P. Giese, $4,524; (b) Dividends paid on unvested
shares of restricted stock for: James S. Marlen, $26,840; Javier Solis,
$7,320; Gary Wagner, $7,320 and Thomas P. Giese, $7,320 and,
(4) Amounts shown represent contributions by the Company to the 401(K) Savings
Plan.
(5) Amount represents $4,179 in contributions by the Company to the 401(K)
Savings Plan for Mr. James R. McLaughlin and $52,940 in debt forgiveness
per Mr. McLaughlin's Employment Offer letter dated September 12, 1994 which
stated that the housing loan in connection with his relocation from Ohio to
California would be forgiven after seven years of employment.
Employment Agreement
In January 2003, the Company entered into an Amended and Restated
Employment Agreement with Mr. James S. Marlen for his continued employment as
Chairman, President and Chief Executive Officer. The term of the agreement is
automatically extended from day-to-day so that it always has a remaining term of
three years and six months, or until Mr. Marlen attains age 67 1/2, if sooner.
Under the terms of that agreement Mr. Marlen's annual base salary rate is
subject to future merit increases based on annual reviews by the Board of
Directors, with participation in the Company's Management Incentive Compensation
Plan ("MICP"), Key Executive Long-Term Cash Incentive Plan ("LTIP"), and other
executive compensation and benefit plans. If Mr. Marlen is terminated without
cause, he would be entitled to a severance benefit equal to his then current
base salary plus the highest bonus received during the three and one-half years
preceding termination (but not less than 100% of his annual base salary
determined as of the date of termination) times a factor of 3.5. Mr. Marlen has
also been provided with additional pension benefits. Those additional benefits
are described under "Pension Plans" on page 13 below. In addition, under the
terms of the agreement, Mr. Marlen will be reimbursed for any excise taxes which
might be imposed under Section 4999 of the Internal Revenue Code. In the event
of his death or long-term disability while employed, or termination for reasons
other than cause, all stock awards will become fully vested and he will become
entitled to vested pension benefits plus three years of additional service
credit. In the event of a change of control of the Company, all unvested stock
grants and stock
-11-
options granted to Mr. Marlen will automatically vest. In the event that he is
terminated without cause, Mr. Marlen will also be entitled to continued health
and medical benefits coverage at the same cost he would be paying at the time of
termination.
Change of Control Agreements
In September 1998, the Company entered into Agreements with Messrs. Javier
Solis and Gary Wagner, Senior Vice President of Administration, Secretary and
General Counsel and Senior Vice President, Chief Financial Officer,
respectively. The terms of those agreements are automatically extended so that
they always have a remaining term of two years. Under the terms of their
agreements, their annual base salary rates are subject to future merit increases
based on annual reviews by the Board of Directors. In the event of a change of
control of the Company resulting in termination without cause within 12 months
following such change of control, Messrs. Solis and Wagner would be entitled to
a severance benefit equal to three times the sum of (a) the higher of the annual
base salary at the time of termination without cause or their current base
salary and (b) the average annual bonus earned for the two completed fiscal
years immediately prior to such termination. They would also be entitled to a
pro-rata portion of target incentive bonuses under the Company's annual and
long-term management cash incentive plans. Such severance benefits are subject
to reduction in order to comply with certain IRS regulations and limitations
relating to change of control. In addition, all stock option awards would be
become fully vested; and they would be entitled to continued health and medical
benefits coverage at the same cost they would be paying at the time of
termination.
In June 2000, the Company entered into an Agreement with Mr. James R.
McLaughlin, Vice President, Treasurer and Controller. The term of his agreement
is automatically extended so that it always has a remaining term of two years.
Under the terms of his agreement, his annual base salary rate is subject to
future merit increases based on annual reviews by the Board of Directors. In the
event of a change of control of the company resulting in termination without
cause within 12 months following such change of control, Mr. McLaughlin would be
entitled to a severance benefit equal to two times the sum of (a)the higher of
the annual base salary at the time of termination without cause or his current
base salary and (b) the average annual bonus earned for the two completed fiscal
years immediately prior to such termination. He would also be entitled to a
pro-rata portion of the target incentive bonus under the Company's annual and
long- term management cash incentive plans. Such severance benefits are subject
to reduction in order to comply with certain IRS regulations and limitations
relating to change of control. In addition, all stock option awards would become
fully vested and he would be entitled to continued health and medical benefits
coverage at the same cost he would be paying at the time of termination.
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted during fiscal 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-the-money Options
Number of Options at Fiscal Year-End At Fiscal Year-End
Securities # $ (1)
Underlying Value ---------------------------- -------------------------------
Options Realized
Name Exercised # $ Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --------- ----------- ------------- ----------- -------------
James S. Marlen....... 277,039 3,810,754 386,351 75,000 3,917,893 971,873
Javier Solis.......... -- -- 73,934 13,750 912,527 177,578
Gary Wagner........... -- -- 70,934 13,750 862,277 177,578
Thomas P. Giese....... -- -- 55,900 1,500 726,595 20,156
James R. McLaughlin... -- -- -- -- -- --
___________
(1) Based on the market value of the common stock at November 30, 2003 minus
the exercise price of "in-the-money" options.
-12-
Long-Term Incentive Plan Awards
The Key Executive Long-Term Cash Incentive Plan ("LTIP") was approved by
the stockholders of the Company in March 2003. The purpose of this plan is to
reward selected senior executives with above-average total pay for achieving and
sustaining above-average long-term financial goals. Participants in the LTIP are
eligible to receive cash incentive awards and grants of stock options based on
the financial performance of the Company and, in some cases, a combination of
the financial performance of the Company and its business units, after the end
of each three-year performance cycle. The following table shows, for the named
executive officers, the calculated future payouts, if any, under the LTIP for
the three-year performance cycle which began in 2003. Threshold amounts are the
minimum amounts payable under the LTIP provided that the minimum level of
performance is achieved with respect to the pre-established performance
objective, measured in terms of cumulative earnings per share for that
three-year cycle. If such performance is not achieved, amounts paid would be
zero.
LONG TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR
Number of Performance Estimated Future Payouts under
Shares, Or Other Non-stock Price-based Plans(1)
Units or Period until ------------------------------
Other Rights Maturation Threshold Target Maximum
Name Awarded Or Payout $ $ $
---- ------------ ----------- --------- -------- --------
James S. Marlen.......................... -- 3 Years 92,875 371,500 743,000
Javier Solis............................. -- 3 Years 28,100 112,400 224,800
Gary Wagner.............................. -- 3 Years 28,100 112,400 224,800
Thomas P. Giese.......................... -- 3 Years 23,500 94,000 188,000
James R. McLaughlin...................... -- 3 Years 13,575 54,300 108,600
------------------------
(1) Amounts shown in this table were calculated using the salaries for the
listed participants in the LTIP as of November 30, 2003. Actual payouts, if
any, would be based on actual salaries at November 30, 2004, the end of the
performance cycle.
PENSION PLANS
The following schedule shows the estimated annual benefit payable under the
combined Ameron Pension Plan (Salaried Section) and Ameron Supplemental
Executive Retirement Plan for participating executives at varying pay levels and
years of service.
Years of Service
Final Avg. Annual -----------------------------------------
Compensation 15 20 25 30
----------------- -------- -------- -------- --------
$ 200,000........................... $ 54,540 $ 72,720 $ 90,900 $ 109,080
300,000........................... 83,790 111,720 139,650 167,580
400,000........................... 113,040 150,720 188,400 226,080
500,000........................... 142,290 189,720 237,150 284,580
600,000........................... 171,540 228,720 285,900 343,080
700,000........................... 200,790 267,720 334,650 401,580
800,000........................... 230,040 306,720 383,400 460,080
900,000........................... 259,290 345,720 432,150 518,580
1,000,000........................... 288,540 384,720 480,900 577,080
1,500,000........................... 434,790 579,720 724,650 869,580
2,000,000........................... 581,040 774,720 968,400 1,162,080
2,500,000........................... 727,290 969,720 1,212,150 1,454,580
For purposes of the Ameron Pension Plan, compensation is base monthly
salary, exclusive of overtime, severance, bonuses, commissions or amounts
deferred under the
-13-
Executive Deferral Plan. The Internal Revenue Code limits the amount per year on
which benefits are based and the aggregate amount of the annual pension which
may be paid by an employer from a plan which is qualified under the Internal
Revenue Code for federal income tax purposes. The Supplemental Executive
Retirement Plan provides for supplemental payments to be made to certain
eligible executives of the Company in amounts sufficient to maintain total
benefits upon retirement had there been no such Internal Revenue Code
limitations and, among other features, expands annual compensation to include
bonuses and deferred compensation, calculated based upon the highest five of the
last ten years of earnings prior to retirement. Such supplemental payments are
typically made in the form of straight-life annuities paid over the life of
retired executives, however, future payments can be accelerated at any time,
including in-service lump-sum payments, subject to certain reductions. Benefits
shown above are computed assuming payout is in the form of a straight life
annuity. The schedule assumes retirement at age 65. Benefits are not subject to
deduction for Social Security or other offset amounts.
As of February 1, 2004, the estimated credited service under both plans for
each of the named individuals in the foregoing Summary Compensation Table is:
Credited Years
Of Service(1)
---------------------------
Present At Age 65
------------ ------------
James S. Marlen....................................... 27 10/12(2) 30(2)
Javier Solis.......................................... 22 4/12 30
Gary Wagner........................................... 18 10/12 30
Thomas P. Giese....................................... 30 30
James R. McLaughlin................................... 9 4/12 17 10/12
________________
(1) The maximum credit is 30 years.
(2) Refer to Employment Agreement section on Page 11 above. Under the terms of
a May 2001 amendment to Mr. Marlen's Employment Agreement, he was credited
with an additional 9.5 years of service such that he would have 25 years of
service on his 60th birthday and will be credited with one year of service
for each actual year of service during his employment with the company
between the ages of 60 and 65, so that he will have attained 30 years of
credited service at age 65. In addition, in the event that Mr. Marlen is
terminated for reasons other than for cause and/or a change of control
takes place, he will be entitled to his vested pension benefits plus three
years of additional credited service up to the maximum credit of 30 years.
In the event that he obtains new employment within three years of leaving
the Company following termination, he will be entitled only to his vested
pension benefits (not additional years of service).
The following report of the Compensation & Stock Option Committee of the
Board of Directors and the Stock Price Performance Graph included in this proxy
statement shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent the Company specifically incorporates this Report or the Performance
Graph by reference therein, and shall not be deemed soliciting material or
otherwise deemed filed under either of such acts.
REPORT OF THE COMPENSATION & STOCK OPTION COMMITTEE
The Compensation & Stock Option Committee of the Board of Directors (the
"Committee") is composed entirely of independent outside directors, and its
composition meets the membership requirements described in the Compensation &
Stock Option Committee Charter. No member of the Committee is a former or
current officer or employee of the Company or any of its subsidiaries. The
Committee, all of whose actions are subject to approval by the Board of
Directors, is responsible for the proper administration of the Company's various
compensation programs, including its salary policies, its Management Incentive
Compensation Plan ("MICP") (which comprises its annual bonus plan for management
employees), its Key Executive Long-Term Cash Incentive Plan ("LTIP") and its
2001 Stock Incentive Plan. The Committee reviews, on an annual basis, base
salary ranges for the Company's various levels of management, approves annual
salaries of officers, approves MICP and LTIP awards, administers the 2001 Stock
Incentive Plan and makes grants
-14-
thereunder, and reviews with the Board in detail all aspects of compensation for
all officers of the Company, including the Chief Executive Officer.
The executive compensation policy of the Company, which is endorsed by the
Committee, is that the base compensation of all officers should be generally
comparable to base salaries being paid to similarly situated officers of other
general diversified manufacturing companies with similar sales and industries in
the U.S., and that bonus compensation be in the form of MICP and LTIP awards and
stock compensation benefits which are contingent upon the performance of the
Company as well as the individual contributions of each officer. Because of the
inherent cyclical nature of some of the Company's businesses, and because a
significant portion of its businesses are dependent on the timing of projects
over which it has no control, the Committee does not believe that the base
salary portion of compensation of the Company's officers should be subject to
annual fluctuations based solely on such effects.
In determining comparability of officer salaries to those of other
similarly situated officers, members of the Committee review the results of
compensation surveys provided by various compensation consulting firms of
national reputation. The Committee has reviewed the compensation for each of the
five highest paid officers for 2003 and has determined that in its opinion, the
compensation of all officers is reasonable in view of the Company's consolidated
performance and the contribution of those officers to that performance.
The MICP is based on the following measures: corporate performance,
business unit performance and personal performance. The corporate performance
measure is based on earnings per share and return on sales. The Committee
believes that these factors are the primary determinant of share price over
time. Because of the relatively low volume of trade of the Company's stock and
therefore its susceptibility to volatility based on extraneous factors, the
Committee does not believe that share price per se is necessarily a measure of
corporate performance. Business unit performance measures are based primarily on
return on assets. Personal performance measures are based on such qualitative
factors as performance against objectives and plans, and organizational and
management development.
Cash awards under the LTIP for the 2001-2003 performance cycle, which
appear in the Summary Compensation Table, were earned based on the Company's
successfully having exceeded its financial plan, measured in terms of its
cumulative earnings per share and meeting the Return on Equity threshold for
that three-year cycle. The determination of cash payouts, if any, under the LTIP
for the fiscal years, 2002-2004, 2003-2005 and 2004- 2006 performance cycles
will not be made until after the end of the 2004, 2005 and 2006 fiscal years,
respectively. For those performance cycles, the Company's financial performance
will continue to be measured based on cumulative earnings per share, with return
on assets and return on equity thresholds.
The current annual base salary of $743,000 for Mr. Marlen was set in June
2003. That base salary was established based on comparability of compensation
being paid to other similarly situated officers of general diversified,
multinational manufacturing companies. That base salary will be reviewed again
by the Committee in June 2004. A bonus award of $1,350,000 was approved for
payment to Mr. Marlen under the MICP with respect to fiscal year 2003 based on
the Company's performance against various financial goals established by the
Committee, including earnings per share and return on sales, as well as a
continuing very favorable assessment by the Board of Mr. Marlen's individual
performance and leadership. Such MICP award, taking into account the financial
performance of the Company versus targets, is in line with the average of bonus
awards paid to chief executive officers of general diversified, multinational
manufacturing companies in the U.S. as reported by various compensation
consulting firms of national reputation.
Submitted by:
John E. Peppercorn, Chairman
Peter K. Barker
David Davenport
Stock Price Performance Graph
The following line graph compares the yearly changes in the cumulative total
-15-
return on the Company's Common Stock against the cumulative total return of the
New York Stock Exchange Market Value Index and the Peer Group Composite
described below for the period of the Company's five fiscal years commencing
December 1, 1998 and ended November 30, 2003. The comparison assumes $100
invested in stock on December 1, 1998. Total return assumes reinvestment of
dividends. The Company's stock price performance over the years indicated below
does not necessarily track the operating performance of the Company nor is it
necessarily indicative of future stock price performance.
DEC-98 NOV-99 NOV-00 NOV-01 NOV-02 NOV-03
Ameron International Corporation 100 121.25 99.64 197.56 173.52 205.69
N.Y.S.E. 100 111.48 110.45 103.06 89.58 105.49
Peer Group Composite Index 100 85.19 68.33 77.54 71.23 85.90
The Peer Group Composite is based 70% on a Building Materials Companies
Component and 30% on a Protective Coatings Companies Component. This percentage
split was arrived at based on the historical sales volumes during the past five
years of the Company's Performance Coatings & Finishes Business Segment in
comparison to the remainder of the Company's other business segments which are
generically in the building materials category. The Building Materials Companies
Component is comprised of the following companies: Advanced Environ Recycle,
American Woodmark Corp., Ameron, Armstrong Holdings Inc., Bairnco Corp., Butler
Manufacturing Co., Ceradyne, Inc., Griffon Corp., Insituform Technols CLA,
Internacional De Ceramic, Knape & Vogt Mfg. Co., Martin Marietta Material, NCI
Building Systems Inc., Owens-Corning, Raytech Corp., Shaw Group Inc., Southwall
Technologies, T-3 Energy Services Inc., USG Corp. and Vulcan Materials Co. The
Protective Coatings Companies Component is comprised of the following companies:
Ameron, PPG Industries, Inc., RPM International, Inc., Sherwin-Williams Co., and
Valspar Corp.
The following report of the Audit Committee of the Board of Directors and
the Stock Price Performance Graph included in this proxy statement, shall not be
deemed to be incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this Report or the Performance Graph by reference
therein, and shall not be deemed soliciting material or otherwise deemed filed
under either of such acts.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed entirely of
independent directors and its composition meets the membership requirements
described in the Audit Committee Charter.
With respect to the Company's fiscal year ended November 30, 2003, the
Audit Committee: (a) has reviewed and discussed with management and
PricewaterhouseCoopers LLP, the Company's independent public accountants, the
audited financial statements for fiscal year 2003; (b) has discussed with the
independent public accountants the matters required to be discussed by Statement
on Auditing Standards No. 61 (Communication with Audit Committees); (c) has
received from the independent public accountants the written disclosures and the
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with them their
independence from the Company and its management; and (d) has considered whether
the independent public accountants' provision of the non-audit services which
are described below under the caption "All Other Fees" is compatible with the
independent public accountants' independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee has recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Company's Annual Report
on SEC Form 10-K for the year ended November 30, 2003 for filing with the
Securities and Exchange Commission.
Audit and Non-Audit Fees
Prior to June 2003, the Audit Committee did not have a specific auditor
engagement approval policy.
The following table presents the aggregate fees billed by the Company's then
current principal independent accountant for services provided to the Company
for fiscal years 2002 and 2003.
-16-
2002(5) 2003(4)(5)
------- ----------
Audit Fees (1) ....................... $ 725,000 $ 835,000
Audit Related Fees (2) ............... 69,000 42,000
Tax Fees (3) ......................... 670,000 802,000
All Other Fees ....................... -- --
Total ................................ $ 1,464,000 $1,679,000
------------
(1) Audit Fees consisted of audit work performed in the preparation of the
financial statements, as well as work that generally only the independent
auditor can reasonably be expected to provide, such as statutory audits,
reviews of interim financial information and assistance with registration
statements filed with the SEC.
(2) Audit-related fees consisted primarily of fees paid for accounting and
auditing consultation services and audits of the Company's employee benefit
plans.
(3) Tax fees consisted principally of assistance related to tax compliance and
reporting.
(4) All audit and audit-related fees were approved by the Audit Committee. Of
the tax fees, $494,000 (or approximately 62%) were incurred prior to the
adoption of the Audit Committee approval policy; and, therefore, were not
approved by the Audit Committee.
(5) The Audit Committee approves in advance, all audit services, audit-related
services and tax-related services provided by the Company's independent
public accountants. Pursuant to the a pre-approval policy adopted by the
Board of Directors in 2003, the Audit Committee also approves all other
services provided by the independent public accountants in advance on a
case-by-case basis. All engagements of the independent public accountants
in 2003, subsequent to the implementation of the policy outlined above,
were pre-approved pursuant to the policy.
Deloitte & Touche LLP was the Company's principal independent accountant in
fiscal 2002 and up to May 2003, and PricewaterhouseCoopers LLP was the
Company's principal independent accountant from May 2003.
Submitted by:
John F. King, Chairman
J. Michael Hagan
Terry L. Haines
Thomas L. Lee
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company owns 50% of Tamco. Tokyo Steel Manufacturing Co, Ltd. ("Tokyo
Steel") and Mitsui & Co. (and its U. S. subsidiary) each own 25% of Tamco. It is
the Company's understanding that Mr. Taro Iketani owns approximately 16.46% of
the outstanding shares in Tokyo Steel. As disclosed under "Voting Securities and
Principal Holders Thereof" Mr. Iketani owns 7.46% of the shares of the Company.
Tamco leases from the Company, certain land, buildings and improvements
used in Tamco's steelmaking operations at a monthly rate of $37,350 per month,
payable quarterly in arrears. The amount receivable from Tamco on the lease as
of November 30, 2003 was $74,700. The Company leases certain land from Tamco
used to store product at a monthly rate of $9,988 per month, payable in advance.
Tamco also provides and charges Ameron for certain utilities used in Ameron's
production processes. The Company reimbursed Tamco $638,000 for its share of
such costs in the year ended November 30, 2003.
MISCELLANEOUS
Cost of Soliciting Proxies
The cost of soliciting proxies in the accompanying form has been or will be
paid by the Company. In addition to solicitation by mail, arrangements will be
made with brokerage houses and other custodians, nominees and fiduciaries to
send proxy materials to beneficial owners, and the Company will, upon request,
reimburse them for their reasonable expenses in so doing. Officers, directors
and regular employees of the Company may request the return of proxies
personally, by means of materials prepared for employee-stockholders or by
telephone or such other means to the extent deemed appropriate by the Board of
Directors. No additional compensation will be paid to such individuals for this
activity. The extent to which this solicitation will be necessary will depend
upon how promptly proxies are received; therefore, stockholders are urged to
return their proxies without delay. In addition, the Company has retained the
The Proxy Advisory Group of Strategic Stock Surveillance LLC to perform
solicitation services. For such services, this firm will receive a fee of
approximately $7,500 and will be reimbursed for certain out-of-pocket expenses.
-17-
STOCKHOLDER PROPOSALS
Proposals of Stockholders to be considered for inclusion in the proxy
statement and form of proxy relating to the 2005 meeting must be addressed to
the Company, Attention: Corporate Secretary, at the Company's principal office,
and must be received there no later than October 24, 2004.
The Company's Bylaws provide that for business to be brought before an
annual meeting by a stockholder, written notice must be received by the
Secretary of the Company not less than 60 and not more than 120 days prior to
the meeting; provided that in the event the first public disclosure of the date
of the meeting is made less than 65 days prior thereto, the required notice may
be received within ten days following such public disclosure. The information
which must be included in the notice is specified in the applicable Bylaws, a
copy of which may be obtained from the Secretary.
ABILITY OF STOCKHOLDERS TO COMMUNICATE WITH THE COMPANY'S BOARD OF DIRECTORS
Stockholders may communicate with any one of the Company's independent
directors in writing, care of the Secretary of the Company at the Company's
headquarter's address. All stockholder communications will be sent to the
applicable director(s). If no specific director is named, communications will be
sent to the members of the Board, as appropriate, depending on the facts and
circumstances outlined in the communication to the extent that the management of
the Company, using its best business judgment, determines such communication
should be relayed to the Board.
OTHER MATTERS
So far as management knows, there are no matters to come before the meeting
other than those set forth in the Proxy Statement. If any further business is
presented at the Annual Meeting, the persons named in the proxies will act
according to their best judgment on behalf of the Stockholders they represent.
By Order of the Board of Directors
Javier Solis
Secretary
February 18, 2004
Pasadena, California
EXHIBIT A
AMERON INTERNATIONAL CORPORATION
AUDIT COMMITTEE CHARTER
Members. The Audit Committee shall be appointed by the Board of Directors
and shall consist of at least three members, all of whom shall be independent
directors. One member shall be designated as chairperson. For purposes hereof,
the term "independent" shall mean a director determined by the Board to be
independent pursuant to the Company's Corporate Governance Guidelines, and who,
in addition:
o has not, at any time in the fiscal year, accepted, directly or
indirectly, any consulting, advisory, or other compensatory fee
from the Company or any of its subsidiaries, provided that
compensatory fees do not include the receipt of fixed amounts of
compensation under a retirement plan (including deferred
compensation) for prior service with the Company or any
subsidiary of the Company (provided that such compensation is not
contingent in any way on continued service);
o is not an affiliated person of the Company or any of its
subsidiaries, as defined in Rule 10A-3 of the Securities and
Exchange Commission.
A-1
Each member of the Audit Committee must be "financially literate", and at
least one member must have "accounting or related financial management
expertise", as such terms are used in the Rules of the New York Stock Exchange
and as determined by the Board.
Purposes, Duties, and Responsibilities.
--------------------------------------
The Audit Committee's responsibility is one of oversight and it recognizes
that the Company's management is responsible for preparing the Company's
financial statements and that the Company's outside auditors are responsible for
auditing those financial statements. Additionally, the Audit Committee
recognizes that the financial management of the Company, as well as the outside
auditors of the Company, have more time, knowledge and more detailed information
about the Company than do Audit Committee members; consequently, in carrying out
its oversight responsibilities, the Audit Committee is not expected to provide
any expert or special assurance as to the Company's financial statements or any
professional certification as to the work of the Company's outside auditors.
The purposes of the Audit Committee shall be to:
o represent and assist the Board of Directors in discharging its
oversight responsibility relating to: (i) the accounting,
reporting, and financial practices of the Company and its
subsidiaries, including the integrity of the Company's financial
statements; (ii) the surveillance of administration and financial
controls and the Company's compliance with legal and regulatory
requirements; (iii) the outside auditor's qualifications and
independence; and (iv) the performance of the Company's internal
audit function and of the Company's outside auditor; and
o prepare the report required by the rules of the Securities and
Exchange Commission ("SEC") to be included in the Company's
annual proxy statement.
Among its specific duties and responsibilities, the Audit Committee shall:
(i) Be directly responsible, in its capacity as a committee of the
Board, for the appointment, compensation and oversight of the work of
the outside auditor. In this regard, the Audit Committee shall appoint
and retain, compensate, evaluate, and terminate, when appropriate, the
outside auditor, which shall report directly to the Audit Committee.
(ii) Obtain and review, at least annually, a report by the outside
auditor describing: the outside auditor's internal quality-control
procedures; and any material issues raised by the most recent internal
quality-control review, or peer review, or by any inquiry or
investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits
carried out by the outside auditing firm, and any steps taken to deal
with any such issues.
(iii) Approve in advance all audit services to be provided by the
outside auditor. (By approving the audit engagement, an audit service
within the scope of the engagement shall be deemed to have been
pre-approved.)
(iv) Establish policies and procedures for the engagement of the
A-2
outside auditor to provide audit and permissible non-audit services,
which shall include pre-approval of all permissible non-audit services
to be provided by the outside auditor.
(v) Consider, at least annually, the independence of the outside
auditor, including whether the outside auditor's performance of
permissible non-audit services is compatible with the auditor's
independence, and obtain and review a report by the outside auditor
describing any relationships between the outside auditor and the
Company or any other relationships that may adversely affect the
independence of the auditor.
(vi) Review and discuss with the outside auditor: (A) the scope of the
audit, the results of the annual audit examination by the auditor, and
any difficulties the auditor encountered in the course of their audit
work, including any restrictions on the scope of the outside auditor's
activities or on access to requested information, and any significant
disagreements with management; and (B) any reports of the outside
auditor with respect to interim periods.
(vii) Review and discuss with management and the outside auditor the
annual audited and quarterly financial statements of the Company,
including: (A) an analysis of the auditor's judgment as to the quality
of the Company's accounting principles, setting forth significant
financial reporting issues and judgments made in connection with the
preparation of the financial statements; (B) the Company's disclosures
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations," including accounting policies that may be
regarded as critical; and (C) major issues regarding the Company's
accounting principles and financial statement presentations, including
any significant changes in the Company's selection or application of
accounting principles and financial statement presentations; and
receive reports from the outside auditor as required by SEC rules.
(viii) Recommend to the Board based on the review and discussion
described in paragraphs (v) - (vii) above, whether the financial
statements should be included in the Annual Report on Form 10-K.
(ix) Review and discuss the adequacy and effectiveness of the
Company's internal controls, including any significant deficiencies in
internal controls and significant changes in such controls reported to
the Audit Committee by the outside auditor or management.
(x) Review and discuss the adequacy and effectiveness of the Company's
disclosure controls and procedures and management reports thereon.
A-3
(xi) Review and discuss with the principal internal auditor of the
Company the scope and results of the internal audit program.
(xii) Review and discuss corporate policies with respect to earnings
press releases, as well as financial information and earnings guidance
provided to analysts and ratings agencies.
(xiii) Review and discuss the Company's policies with respect to risk
assessment and risk management.
(xiv) Oversee the Company's compliance systems with respect to legal
and regulatory requirements and review the Company's codes of conduct
and programs to monitor compliance with such codes.
(xv) Establish procedures for handling complaints regarding
accounting, internal accounting controls and auditing matters,
including procedures for confidential, anonymous submission of
concerns by employees regarding accounting and auditing matters.
(xvi) Establish policies for the hiring of employees and former
employees of the outside auditor.
(xvii) Annually evaluate the performance of the Audit Committee and
assess the adequacy of the Audit Committee charter.
3. Subcommittees. The Audit Committee may delegate any of the foregoing
duties and responsibilities to a subcommittee of the Audit Committee consisting
of not less than two members of the committee.
4. Outside Advisors. The Audit Committee shall have the authority to retain
such outside counsel, accountants, experts and other advisors as it determines
appropriate to assist it in the performance of its functions and shall receive
appropriate funding, as determined by the Audit Committee, from the Company for
payment of compensation to any such advisors.
5. Meetings. The Audit Committee shall meet at least four times per year,
either in person or telephonically, and at such times and places as the Audit
Committee shall determine. The majority of the members of the Audit Committee
constitutes a quorum. The Audit Committee shall meet separately in executive
session, periodically, with each of management, the principal internal auditor
of the Company and the outside auditor. The Audit Committee shall report
regularly to the full Board of Directors with respect to its activities.
A-4
EXHIBIT B
AMERON INTERNATIONAL CORPORATION
COMPENSATION & STOCK OPTION COMMITTEE CHARTER
1. Members. The Compensation & Stock Option Committee shall be appointed by
the Board of Directors and shall consist of at least three members, all of whom
shall be independent directors. One member shall be designated as chairperson.
For purposes hereof, the term "independent" shall mean a director determined by
the Board to be independent pursuant to the Company's Corporate Governance
Guidelines. Additionally, members of the Compensation & Stock Option Committee
must qualify as "non-employee
B-1
directors" for purposes of Rule 16b-3 under the Securities Exchange Act of 1934,
as amended, and as "outside directors" for purposes of Section 162(m) of the
Internal Revenue Code.
2. Purpose, Duties, and Responsibilities. The purpose of the Compensation &
Stock Option Committee shall be to supervise and, to the extent consistent with
the Company's Corporate Governance Guidelines, exercise the powers of the Board
with respect to compensation of the Company's top managerial and executive
officers and directors, and produce the annual report on executive compensation
for inclusion in the Company's proxy statement. The duties and responsibilities
of the Compensation & Stock Option Committee include the following:
(a) Oversee the Company's overall compensation structure, policies and
programs, and assess whether the Company's compensation structure
establishes appropriate incentives for management and employees.
(b) Administer and make recommendations to the Board with respect to the
Company's incentive-compensation and equity-based compensation plans and
grant options and awards thereunder.
(c) Review and approve corporate goals and objectives relevant to the
compensation of the Chief Executive Officer ("CEO"), evaluate the CEO's
performance in light of those goals and objectives, and recommend to the
Board the CEO's compensation.
(d) Set the compensation of other top managerial and executive officers after
consideration of the recommendations of the CEO.
(e) Approve stock option and other stock incentive awards for top managerial
and executive officers after consideration of the recommendations of the
CEO.
(f) Review and approve the design of other benefit plans pertaining to top
managerial and executive officers.
(g) Review and recommend employment agreements and severance arrangements for
top managerial and executive officers, including change-in-control
provisions, plans or agreements.
(h) Approve, amend or modify the terms of any compensation or benefit plan that
does not require shareholder approval.
(i) Review the compensation of directors for service on the Board and its
committees and recommend changes in compensation to the Board.
B-2
(j) Annually evaluate the performance of the Compensation & Stock Option
Committee and the adequacy of the committee's charter.
(k) Perform such other duties and responsibilities as are consistent with the
purpose of the Compensation & Stock Option Committee and as the Board or
the committee deems appropriate.
3. Subcommittees. The Compensation & Stock Option Committee may delegate
any of the foregoing duties and responsibilities to a subcommittee of the
Compensation & Stock Option Committee consisting of not less than two members of
the committee.
4. Outside advisors. The Compensation & Stock Option Committee will have
the authority to retain, at the expense of the Company, such outside counsel,
experts, and other advisors as it determines appropriate to assist it in the
full performance of its functions, including sole authority to retain and
terminate any compensation consultant used to assist the committee in the
evaluation of director, CEO or senior executive compensation, and to approve the
consultant's fees and other retention terms.
5. Meetings. The Compensation & Stock Option Committee will meet as often
as may be deemed necessary or appropriate, in its judgment, either in person or
telephonically, and at such times and places as the Compensation & Stock Option
Committee determines. The majority of the members of the Compensation & Stock
Option Committee constitutes a quorum. The Compensation & Stock Option Committee
will report regularly to the full Board with respect to its activities.
B-3
EXHIBIT C
NOMINATING & CORPORATE GOVERNANCE
COMMITTEE CHARTER
1. Members. The Nominating & Corporate Governance Committee shall be
appointed by the Board of Directors and shall consist of at least three members,
all of whom shall be independent directors. One member shall be designated as
chairperson. For purposes hereof, the term "independent" shall mean a director
determined by the Board to be independent pursuant to the Company's Corporate
Governance Guidelines.
2. Purpose, Duties and Responsibilities. The purpose of the Nominating and
Corporate Governance Committee shall be to identify individuals qualified to
become Board members, recommend to the Board director candidates for the annual
meeting of stockholders, develop and recommend to the Board a set of corporate
governance principles, and perform a leadership role in shaping the Company's
corporate governance. The duties and responsibilities of the Nominating &
Corporate Governance Committee include the following:
(a) Identify, review the qualifications of, and recruit candidates for the
Board consistent with the criteria set forth in the Company's Corporate
Governance Guidelines.
(b) Assess the incumbent directors in light of the Board Membership Criteria
set forth in the Company's Corporate Governance Guidelines in determining
whether to recommend them for reelection to the Board.
(c) Establish a procedure for the consideration of Board candidates recommended
by the Company's stockholders.
(d) Recommend to the Board candidates for election or reelection to the Board
at each annual stockholders' meeting.
(e) Recommend to the Board candidates to be elected by the Board as necessary
to fill vacancies and newly created directorships.
(f) Periodically review and recommend to the Board changes in the Company's
Corporate Governance Guidelines.
(g) Make recommendations to the Board concerning the structure, composition and
functioning of the Board and its committees.
(h) Recommend to the Board candidates for appointment to Board committees.
(i) Review and recommend to the Board retirement and other tenure policies for
directors.
(j) Review directorships in other public companies held by or offered to
directors and senior officers of the Company.
(k) Review and assess the channels through which the Board receives
information, and the quality and timeliness of information received.
(l) Review annually succession plans relating to the Chief Executive Officer
("CEO") position, including contingency plans in the event of an emergency
with respect to
C-1
the CEO position.
(m) Oversee the evaluation of the Board.
(n) Annually evaluate the performance of the Nominating & Corporate Governance
Committee and the adequacy of the committee's charter.
(o) Perform such other duties and responsibilities as are consistent with the
purpose of the Nominating & Corporate Governance Committee and as the Board
or the committee deems appropriate.
3. Subcommittees. The Nominating & Corporate Governance Committee may
delegate any of the foregoing duties and responsibilities to a subcommittee of
the Nominating & Corporate Governance Committee consisting of not less than two
members of the committee.
4. Outside advisors. The Nominating & Corporate Governance Committee will
have the authority to retain, at the expense of the Company, such outside
counsel, experts, and other advisors as it determines appropriate to assist it
in the full performance of its functions, including sole authority to retain and
terminate any search firm used to identify director candidates, and to approve
the search firm's fees and other retention terms.
5. Meetings. The Nominating & Corporate Governance Committee will meet as
often as may be deemed necessary or appropriate, in its judgment, either in
person or telephonically, and at such times and places as the Nominating &
Corporate Governance Committee determines. The majority of the members of the
Nominating & Corporate Governance Committee constitutes a quorum. The
Nominating & Corporate Governance Committee shall report regularly to the full
Board with respect to its meetings.
C-2
EXHIBIT D
CERTIFICATE OF INCORPORATION OF
AMERON INTERNATIONAL CORPORATION
(As amended through January 21, 2004)
FIRST: The name of this corporation is:
AMERON INTERNATIONAL CORPORATION
SECOND: The name and address of the registered agent of the corporation in
the State of Delaware is:
Corporation Trust Company
Wilmington, Delaware 19801
County of New Castle
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: 1. The total number of shares of stock which the Corporation shall
have authority to issue is Twenty-six Million (26,000,000), consisting of
Twenty-four Million (24,000,000) shares of Common Stock, par value Two Dollars
and 50/100 ($2.50) per share (the "Common Stock"), and Two Million (2,000,000)
shares of Preferred Stock, par value One Dollar ($1.00) per share (the
"Preferred Stock").
2. Shares of Preferred Stock may be issued from time to time in one or
more classes or series, each of which class or series shall have such
distinctive designation or title as shall be fixed by resolution of the Board of
Directors of the Corporation (the "Board of Directors") prior to the issuance of
any shares thereof. Each such class or series of Preferred Stock shall have such
voting powers, full or limited, or no voting powers, and such preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated in such
resolution providing for the issuance of such class or series of Preferred Stock
as may be adopted from time to time by the Board of Directors prior to the
issuance of any shares thereof pursuant to the authority hereby expressly vested
in it, all in accordance with the laws of the State of Delaware. The Board of
Directors is further authorized to increase or decrease (but not below the
number of shares of such class or series then outstanding) the number of shares
of any class or series subsequent to the issuance of shares of that class or
series.
FIFTH: The name and mailing address of the incorporator of the corporation
is as follows:
D-1
Name Mailing Address
---- ---------------
R. H. Jenner 4700 Ramona Boulevard
Monterey Park, California 91754
SIXTH: New bylaws may be adopted or the bylaws may be amended or repealed
by a vote of eighty percent (80%) of the outstanding stock of the corporation
entitled to vote thereon. Bylaws may also be adopted, amended or repealed by the
Board of Directors as provided or permitted by law; however, any bylaw amendment
adopted by the Board of Directors increasing or reducing the authorized number
of directors shall require a resolution adopted by the affirmative vote of not
less than two-thirds of the directors.
SEVENTH: The number of directors which shall constitute the whole Board of
Directors of the corporation shall be specified in the bylaws of the
corporation, subject to the provisions of Article SIXTH hereof and this Article
SEVENTH. The board is divided into three classes, Class I, Class II and Class
III. Such classes shall be as nearly equal in number of directors as possible.
Each director shall serve for a term ending on the third annual meeting
following the annual meeting at which such director was elected; provided,
however, that the directors first elected to Class I shall serve for a term
ending at the annual meeting to be held in 1987, the directors first elected to
Class II shall serve for a term ending at the annual meeting to be held in 1988,
and the directors first elected to Class III shall serve for a term ending at
the annual meeting to be held in 1989. The foregoing notwithstanding, each
director shall serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified, disabled or shall
otherwise be removed.
At each annual election, the directors chosen to succeed those whose terms
then expire shall be of the same class as the directors they succeed, unless, by
reason of any intervening changes in the authorized number of directors the
Board shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, in the event of any change in the authorized
number of directors each director then continuing to serve as such shall
nevertheless continue as a director of the class of which he is a member until
the expiration of his current term, or his prior death, resignation or removal.
In any election of directors of the Corporation, a holder of any class or
series of stock then entitled to vote in such election shall be entitled to as
many votes as shall equal (i) the number of votes which (except for this
provision as to cumulative voting) he would be entitled to cast for the election
of directors with respect to his shares of stock multiplied by (ii) the number
of directors to be elected in the election in which his class or series of
shares is entitled to vote, and each stockholder may cast all of such votes for
a single director or for any two or more of them as he may see fit.
EIGHTH: Notwithstanding any other vote which may be required under
applicable law, and in addition thereto, the affirmative vote of holders of not
less than eighty percent (80%) of the total voting power of all outstanding
shares of voting stock of this corporation shall be required to approve: (a) any
merger (other than a merger with a 90% stockholder of this Corporation effected
in accordance with Section 253 of the Delaware General Corporation Law),
consolidation, combination or reorganization of this corporation or any of its
subsidiaries with any other
D-2
corporation if such other corporation is a Substantial Stockholder (as defined
below) or an Associate (as defined below) of a Substantial Stockholder, or (b)
the sale, lease or exchange by this corporation or any of its subsidiaries of
all or a Substantial Part (as defined below) of its assets to or with a
Substantial Stockholder or an Associate thereof, or (c) the issuance or delivery
of any stock or other securities of this corporation or any of its subsidiaries
in exchange or payment for any cash or other properties or assets of such
Substantial Stockholder or Associate thereof or securities of such Substantial
Stockholder or Associate thereof, or (d) any reverse stock split of, or exchange
of securities, cash or other properties or assets for, any outstanding
securities of this corporation or any of its subsidiaries or liquidation or
dissolution of this Corporation or any of its subsidiaries, in any such case in
which a Substantial Stockholder or an Associate thereof receives or retains any
securities, cash or other properties or assets whether or not different from
those received or retained by any holder of securities of the same class as held
by such Substantial Stockholder or Associate thereof; provided, however, that
the foregoing shall not apply to any such merger, consolidation, combination,
reorganization, sale, lease or exchange, or for issuance or delivery of stock or
other securities, or reverse stock split, exchange, liquidation or dissolution
which is approved by resolution adopted by a majority of the Continuing
Directors (as defined below) of this corporation, nor shall it apply to any such
transaction solely between this corporation and another corporation controlled
by this corporation and none of the securities of which is owned before or after
such transaction directly or indirectly by a Substantial Stockholder or
Associate thereof.
As used in this Certificate of Incorporation, the following terms shall
have the respective meanings set forth below.
(i) "Substantial Stockholder" shall mean any person or group of two or
more persons who have agreed to act together for the purpose of acquiring,
holding, voting or disposing of securities who singly or together with its
or their Associates own or owns beneficially, in the aggregate, directly or
indirectly, securities representing ten percent (10%) or more of the voting
power of all shares of voting stock of this corporation; provided, however,
that the term "Substantial Stockholder" shall not include any benefit plan
or trust established by this corporation or any of its subsidiaries for the
benefit of the employees of this corporation and/or any of its subsidiaries
or any trustee, agent or other representative of any such plan or trust;
(ii) An "Affiliate" of any specified person is any person (other than
this corporation and any corporation controlled by this corporation and
none of the voting securities of which is owned directly or indirectly by a
Substantial Stockholder or any Associate thereof) who directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the person specified;
(iii) The term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting
securities, by contract or otherwise;
(iv) "Substantial Part" of the assets shall mean assets of this
corporation or any of its subsidiaries comprising more than ten percent
(10%) of the book value or fair market value of the total assets of this
corporation and its subsidiaries taken as a whole;
(v) An "Associate" of a Substantial Stockholder is any person who is,
D-3
or was within a period of five years prior to the time of determination, an
officer, director, employee, partner, trustee, agent, member of the
immediate family or Affiliate of the Substantial Stockholder or of an
Affiliate thereof.
(vi) The term "person" shall include a corporation, partnership, trust
or government or political subdivision thereof, an individual, an estate,
an association or any unincorporated organization;
(vii) The term "member of the immediate family" shall mean any of a
person's spouse, parents, children, siblings, mothers- and fathers-in-law,
sons- and daughters-in-law, and brothers- and sisters-in-law.
(viii) The term "Continuing Director" shall mean, as to any
Substantial Stockholder, any member of the Board of Directors of this
corporation who (a) is unaffiliated with and is not the Substantial
Stockholder and (b) was a member of the Board of Directors of this
corporation prior to April 1, 1986 or thereafter became a member of the
Board of Directors of this corporation prior to the time the Substantial
Stockholder became a Substantial Stockholder, and any successor of a
Continuing Director who is recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board.
In the context of any transaction described in this Article EIGHTH, the
Board of Directors acting by majority vote shall have the exclusive power and
duty to determine, on the basis of information known to them after reasonable
inquiry, (i) whether a person is a Substantial Stockholder, (ii) whether a
person is an Affiliate or Associate of a Substantial Stockholder and (iii)
whether a portion of the assets of this corporation constitutes a Substantial
Part of such assets. Any such determination of the Directors shall be final and
binding in the absence of bad faith, fraud or gross negligence by such
Directors.
NINTH: No action shall be taken by the stockholders except at an annual or
special meeting of stockholders. No action shall be taken by stockholders by
written consent.
TENTH: Special meetings of the stockholders of the corporation for any
purpose or purposes may be called at any time by the Board of Directors, or by a
majority of the members of the Board of Directors, or by a committee of the
Board of Directors which has been duly designated by the Board of Directors and
whose powers and authority, as provided in a resolution of the Board of
Directors or in the by-laws of the corporation, include the power to call such
meetings, but such special meetings may not be called by any other person or
persons; provided, however, that, if and to the extent that any special meeting
of stockholders may be called by any other person or persons specified in any
provisions of this Certificate of Incorporation or any amendment thereto, then
such special meeting may also be called by the person or persons, in the manner,
at the times and for the purposes so specified.
ELEVENTH: 1. No director shall be personally liable to the Corporation or
any stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director shall be liable under
Section 174 of the Delaware General Corporation Law or any amendment thereto or
successor provision thereof or shall be liable by reason that, in addition to
any and all other requirements for such liability, such person (i) shall have
breached such person's duty of loyalty to the Corporation or its stockholders,
(ii) in acting or in
D-4
failing to act, shall not have acted in good faith or shall have acted in a
manner involving intentional misconduct or a knowing violation of law or (iii)
shall have derived an improper personal benefit from the transaction in respect
of which such breach of fiduciary duty occurred. Neither the amendment nor
repeal of Section 1 of this Article ELEVENTH shall eliminate or reduce the
effect of Section 1 of this Article ELEVENTH in respect of any matter occurring,
or any cause of action, suit or claim that, but for Section 1 of this Article
ELEVENTH would accrue or arise, prior to such amendment or repeal. If the
Delaware Corporation Law is amended after approval by the stockholders of this
Article ELEVENTH to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of the director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended from time to time.
2. (i) Each person who was or is a party, or is threatened to be made
a party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that such person, or a person of whom such
person is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a director
or officer of another corporation or in any capacity with respect to an employee
benefit plan maintained or sponsored by the Corporation, shall be indemnified
and held harmless by the Corporation to the fullest extent permissible under the
Delaware General Corporation Law, as the same exists or may hereafter be
amended, against all expenses, liabilities and losses (including attorneys'
fees, judgments, fines, excise taxes pursuant to the Employee Retirement Income
Security Act of 1974 or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (ii) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided however, that, if the Delaware
General Corporation Law so requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any any other capacity in which service was or is rendered by such person while
a director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(ii) If a claim under paragraph (i) of this Section is not paid in
full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standard of
D-5
conduct required under Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(iii) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, provision of
this Certificate of Incorporation, by-law, agreement, vote of stockholders
or disinterested directors or otherwise.
(iv) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation Law.
TWELFTH: This corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation. Notwithstanding the
foregoing, the provisions set forth in Articles SIXTH, SEVENTH, EIGHTH, NINTH,
TENTH and this Article TWELFTH may not be repealed or amended in any respect
unless such repeal or amendment is approved by the affirmative vote of the
holders of not less than eighty percent (80%) of the total voting power of all
outstanding shares of voting stock of this corporation and no provision may be
added to this Certificate of Incorporation permitting the removal of directors
of this corporation otherwise than for cause, unless such provision is so
approved.
Date of Incorporation: February 10, 1986
D-6
Exhibit E
AMERON INTERNATIONAL CORPORATION
2004 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL PROVISIONS
1.1 Eligibility
This Ameron International Corporation 2004 Stock Incentive Plan (the
"Plan"), adopted effective January 21, 2004, is intended to enable Ameron
International Corporation (the "Company") to offer various incentive awards
based on the equity of the Company to the following eligible individuals
("Eligible Individuals"): key employees, officers, and directors (including
non-employee directors) of, and consultants and independent contractors
providing services to, the Company or any other corporation, partnership, joint
venture, limited liability company or other entity in which the Company owns
fifty percent (50%) or more of the equity ownership interests, directly or
indirectly (as determined by the Committee, as defined in Paragraph 1.2A below)
(any such entity being referred to herein as an "Eligible Affiliate").
This Plan will serve as the successor to the Company's existing 2001 Stock
Incentive Plan (the "Predecessor Plan"), and no further awards will be made
under the Predecessor Plan from and after the adoption of this Plan by the
Company's stockholders on the Effective Date (as defined in Paragraph 5.4A
below). All outstanding awards under the Predecessor Plan as of the Effective
Date will be incorporated into this Plan and accordingly will be treated as
outstanding awards under this Plan. However, each outstanding award so
incorporated will continue to be governed by the express terms and conditions of
the agreements evidencing such award, and to the extent that the provisions of
this Plan conflict with the terms and conditions of any such agreement, such
agreement shall govern. No provision of this Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such incorporated
awards with respect to their acquisition of shares of the Company's common stock
("Common Stock") thereunder.
1.2 Administration Of The Plan
A. Committee. The Plan will be administered by the Compensation & Stock
Option Committee (the "Committee") of the Board of Directors of the Company (the
"Board"), which is composed entirely of "independent directors" as defined by
Section 303A.02 of the New York Stock Exchange Listed Company Manual. Members of
the Committee will serve for such term as the Board may determine, and may be
removed by the Board at any time.
B. Authority. Subject to the provisions of the Plan, the Committee has full
authority to administer the Plan within the scope of its delegated
responsibilities, including authority to interpret and construe any relevant
provision of the Plan, to adopt rules and regulations that it deems necessary,
to determine which individuals are Eligible Individuals and which Eligible
Individuals are to receive awards under the Plan, to determine the amount and/or
number of shares of Common Stock subject to such awards, and to determine the
terms of such awards made under the Plan (which terms need not be identical).
Notwithstanding the foregoing, the Committee shall not be empowered or entitled
to take any action or exercise any discretion that
E-1
would cause an award intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the Code to fail such qualification.
Decisions of the Committee made within the discretion delegated to it by the
Board are final and binding on all persons.
1.3 Stock Subject To The Plan
A. Number of Shares. Shares of the Company's Common Stock available for
issuance under the Plan will be drawn from the Company's authorized but unissued
shares of Common Stock or from reacquired shares of Common Stock, including
shares repurchased by the Company on the open market. Subject to adjustment in
accordance with Paragraph 1.3C, the number of shares of Common Stock that may be
issued pursuant to awards granted after the Effective Date is (i) 525,000, plus
(ii) shares that were subject to outstanding awards under the Predecessor Plan
to the extent that such awards expire, are terminated, are cancelled, or are
forfeited for any reason without such shares being issued, plus (iii) shares
that are delivered by an awardholder to the Company, or are withheld from shares
otherwise issuable under the award, in payment of all or a portion of the
exercise price or tax withholding obligation of an award under the Predecessor
Plan. Notwithstanding the foregoing, if any portion of an outstanding award
under the Predecessor Plan is paid in the form of cash, then the shares of
Common Stock that otherwise would have been issued on account of such award or
portion thereof will not be available for issuance under the Plan.
B. Share Counting.
(i) If any outstanding award granted after the Effective Date expires, is
terminated, is cancelled, or is forfeited for any reason before the full number
of shares governed by such award are issued, those remaining shares will not be
charged against the limit in Paragraph 1.3A above: PROVIDED, HOWEVER, that if
any portion of an outstanding award under the Plan is paid in the form of cash,
then the shares of Common Stock that otherwise would have been issued on account
of such award or portion thereof will be charged against the limit in Paragraph
1.3A above and will not be available for subsequent awards under the Plan.
(ii) In determining whether the number of shares issued pursuant to awards
granted after the Effective Date exceeds the maximum number set forth in
Paragraph 1.3A, only the net number of shares actually issued shall count
against the limit. Thus, if shares are delivered by an awardholder to the
Company, or are withheld from shares otherwise issuable under the award, in
payment of all or a portion of the exercise price or tax withholding obligation
of the award, only the net number of shares issued by the Company (i.e., the
gross number less the shares delivered or withheld) shall be counted toward the
limit of Paragraph 1.3A.
(iii) Any Common Stock issued or award settled by the Company pursuant to
the assumption or substitution of outstanding awards or award commitments of an
acquired company or other entity (whether acquired through the acquisition of
stock, assets or otherwise) shall not be counted against the limit set forth in
Paragraph 1.3A.
C. Adjustments. If any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments will be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
and, if applicable, price per share in effect under each outstanding award under
the Plan, and (iii) the maximum number of shares issuable to one individual
pursuant to Paragraph 1.3D. The purpose of these adjustments will be to preclude
the enlargement or dilution of rights and benefits under the awards.
D. Individual Limit. No Eligible Individual will receive non-qualified
stock options, stock appreciation rights, or any combination of each under this
Plan for more than 300,000
E-2
shares in the aggregate (subject in each case to adjustment as provided in
Paragraph 1.3C) during any consecutive three-calendar-year period, not including
shares issued pursuant to Section 2.4, and no Eligible Individual will receive
restricted stock, restricted stock units, performance shares, or any combination
of each under this Plan for more than 150,000 shares in the aggregate (subject
in each case to adjustment as provided in Paragraph 1.3C) during any consecutive
three-calendar-year period; PROVIDED, HOWEVER, that if any portion of an
outstanding award under the Plan is paid in the form of cash, then the shares of
Common Stock that otherwise would have been issued on account of such award or
portion thereof will be charged against the individual limit in this Paragraph
1.3D.
ARTICLE TWO
NON-QUALIFIED STOCK OPTIONS
2.1 Terms of Award
The Committee has full authority to determine the terms of non-qualified
stock options awarded under this Plan, which terms may vary from award to award,
including, without limitation, the time or times at which such options become
vested and exercisable and the time at which such options terminate; PROVIDED,
HOWEVER, that in no event shall a non-qualified stock option be exercisable
after ten (10) years from the date of grant. Non-qualified stock options will be
evidenced by such instruments as the Committee may from time to time approve.
2.2 Price
The exercise price per share will be fixed by the Committee; PROVIDED,
HOWEVER, that in no event will the exercise price per share be less than one
hundred percent (100%) of the Fair Market Value (as defined in Section 5.3
below) of a share of Common Stock on the date of grant.
2.3 Exercise And Payment
Any non-qualified stock option awarded under the Plan may be exercised by
notice to the Company, in such form as the Committee shall authorize, at any
time before termination of the option. The exercise price will be payable in
full in cash or check made payable to the Company; PROVIDED, HOWEVER, that the
Committee may, either at the time the option is awarded or at any subsequent
time, and subject to such limitations as it may determine, authorize payment of
all or a portion of the exercise price in one or more of the following
alternative forms:
A in shares of Common Stock valued as of the date of notice of exercise, in
such form as the Committee shall authorize, is delivered to the Company; or
B through a sale and remittance procedure under which the option holder
delivers, in such form as the Committee shall authorize, an exercise notice and
irrevocable instructions to a broker promptly to deliver to the Company the
amount of sale proceeds to pay the exercise price.
E-3
2.4 Additional Options Upon Exercise
A non-qualified stock option may provide, subject to such terms as the
Committee authorizes, that upon the exercise of the non-qualified stock option,
the holder automatically will be awarded a new non-qualified stock option
covering that number of shares equal to (i) the number of shares delivered to
the Company by the holder pursuant to Paragraph 2.3A or by a broker pursuant to
Paragraph 2.3B in payment of the exercise price of the option, (ii) the number
of shares delivered to the Company by the holder or withheld by the Company to
satisfy the tax withholding obligation attributable thereto, and\or (iii) the
number of shares with a then Fair Market Value equal to the amount of the tax
withholding obligation paid in cash by the holder. Notwithstanding the
foregoing, the Committee may not authorize new options to be issued pursuant to
this Section 2.4 if the compensation paid to the option holder is intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code.
2.5 Stockholder Rights
An optionholder will have no stockholder rights with respect to shares
covered by an option unless and until shares of Common Stock actually are issued
to such person.
2.6 Separation From Service
The Committee will determine and set forth in each option whether and on
what terms the non-qualified stock option will continue to be exercisable, on
and after the date that an optionee ceases to be employed by or to provide
services to the Company or an Eligible Affiliate. The date of termination of an
optionee's employment or services will be determined by the Committee, which
determination will be final.
ARTICLE THREE
STOCK APPRECIATION RIGHTS, RESTRICTED STOCK,
RESTRICTED STOCK UNITS, PERFORMANCE SHARES, AND OTHER
STOCK-BASED AWARDS
3.1 Stock Appreciation Rights
Stock appreciation rights may be awarded under the Plan either in tandem
with a non-qualified stock option ("Tandem SARs") or on a stand-alone basis
("Stand-Alone SARs"). Tandem SARs consist of the right to receive, with respect
to any number of shares of Common Stock, payment in the form of cash and/or
Common Stock in an amount equal to the excess of the Fair Market Value of a
share of Common Stock at the time of exercise of the Tandem SAR over the
exercise price of the related non-qualified option; PROVIDED, HOWEVER, that the
exercise of a Tandem SAR with respect to a number of shares of Common Stock
shall cause the immediate and automatic termination of its related non-qualified
stock option with respect to an equal number of shares (and vice versa).
Stand-Alone SARs consist of the right to receive, with respect to any number of
shares of Common Stock, payment in the form of cash and/or Common Stock in an
amount equal to the excess of the Fair Market Value of a share of Common Stock
at the time of exercise of the Stand Alone SAR over the Fair Market Value per
share of Common Stock on the date of grant of the Stand-Alone SAR.
Stock appreciation rights are subject to such terms and conditions as the
Committee shall determine (including, but not limited to, continued employment
and/or performance standards), which may vary from award to award; PROVIDED,
HOWEVER, that
E-4
the term of any stock appreciation right shall not exceed ten (10) years. The
holder of a stock appreciation right will have no stockholder rights with
respect to shares covered by such stock appreciation right unless and until
shares of Common Stock actually are issued to such person. Stock appreciation
rights will be evidenced by such instruments as the Committee from time to time
may approve.
3.2 Restricted Stock
Restricted stock awarded under the Plan consists of shares of Common Stock,
the retention and transfer of which are subject to such terms, conditions and
restrictions (including, but not limited to, continued employment, performance
standards, and/or forfeiture rights in favor of the Company) as the Committee
shall determine, which may vary from award to award. Notwithstanding the
foregoing, the restrictions imposed on restricted stock shall lapse in their
entirety no sooner than three (3) years from the date of grant, PROVIDED,
HOWEVER, that the Committee shall have the authority to determine (i) whether
such restrictions shall lapse incrementally over such three-year period (or
longer period, if determined by the Committee); and (ii) whether the lapse of
such restrictions shall be accelerated in the case of retirement, disability, or
death of the awardholder, or in the case of a change in control. With the
exception of the restrictions imposed on the shares of restricted stock, the
holder of restricted stock will have all the rights of a stockholder of the
Company. Grants of restricted stock will be evidenced by such instruments as the
Committee may from time to time approve.
3.3 Restricted Stock Units
Restricted stock units awarded under the Plan consist of the right to
receive shares of Common Stock, subject to such terms, conditions, and
restrictions (including, but not limited to, continued employment, performance
standards, and/or forfeiture rights in favor of the Company) as the Committee
shall determine, which may vary from award to award. The holder of restricted
stock units will have no stockholder rights with respect to shares covered
thereby unless and until shares of Common Stock actually are issued to such
person. Restricted stock units will be evidenced by such instruments as the
Committee may from time to time approve.
3.4 Performance Shares
Performance shares awarded under the Plan consist of the right to receive
shares of Common Stock, subject to such terms, conditions and restrictions
(including, but not limited to, continued employment, performance standards,
and/or forfeiture rights in favor of the Company) as the Committee shall
determine, which may vary from award to award. The holder of performance shares
will have no stockholder rights with respect to shares covered thereby unless
and until shares of Common Stock actually are issued to such person. Performance
shares will be evidenced by such instruments as the Committee may from time to
time approve.
3.5 Other Stock-Based Awards
Other awards may be made under this Plan that are valued in whole or in
part by reference to, or otherwise are based on, shares of Common Stock. Awards
under this Section 3.5 may be made to Eligible Individuals either alone or in
addition to other awards granted under the Plan, the Predecessor Plan, or any
other stock compensation plan, or as payment of a deferred
E-5
grant, award, or bonus made outside the Plan, all as determined in the sole
discretion of the Committee. The terms, conditions and restrictions (including,
but not limited to, continued employment, performance standards, and/or
forfeiture rights in favor of the Company) to which other stock-based awards are
subject shall be determined by the Committee and may vary from award to award.
Other stock-based awards will be evidenced by such instruments as the Committee
may from time to time approve.
3.6 Settlement of Awards
The Committee may provide awardholders with an election, or require a
holder, to receive all or a portion of the total value of any award under this
Plan in the form of a cash payment and/or Common Stock, or to defer receipt of
such cash payment and/or Common Stock, subject to such terms, conditions, and
restrictions as the Committee may specify.
ARTICLE FOUR
PERFORMANCE-BASED COMPENSATION
4.1 Application of Article
Notwithstanding any other provision of this Plan, if the Committee
determines at the time that any award (other than a non-qualified stock option
or a stock appreciation right) is granted, that the awardee is, or likely will
be as of the end of the tax year in which the Company would claim a tax
deduction in connection with such award, a "covered employee" within the meaning
of Section 162(m)(3) of the Code, then the Committee may determine that this
Article Four shall be applicable to such award.
4.2 Award Cycle
The determination of whether, and to what extent, awards subject to this
Article Four are granted or will vest shall be based on the achievement of the
performance goals described in Section 4.3 over a pre-established period of time
designated by the Committee (the "Performance Cycle").
4.3 Performance Goals
If an award is subject to this Article Four, then either the grant of the
award, or the lapsing of contingencies or restrictions thereon, as the Committee
shall determine, shall be subject to the achievement of one or more objective
performance goals established by the Committee. No later than ninety (90) days
after the beginning of each Performance Cycle, or, in the case of a Performance
Cycle that is shorter than one (1) year, no later than the date that represents
twenty-five percent (25%) of the number of days in such Performance Cycle, the
Committee shall establish in writing the specific performance goals to be
achieved and the formula pursuant to which the amount of the award (or the
lapsing of restrictions with respect thereto, as applicable) shall be determined
based on the attainment of specified levels of the applicable performance goals.
Performance goals shall be based on one or any combination of the following
business criteria, as applied to the Company or an Eligible Affiliate as a
whole, or any unit thereof, or as compared against a peer group of companies as
determined by the
E-6
Committee: revenue; earnings before interest, taxes, depreciation, and
amortization (EBITDA); operating income; pre- or after-tax income; earnings per
share; net cash flow; net cash flow per share; net earnings; return on equity;
return on total capital; return on sales; return on net assets employed; return
on assets; economic value added; share price performance; total shareholder
return; improvement in or attainment of expense levels; or improvement in or
attainment of working capital levels. An award subject to this Article Four that
is paid to a single individual shall not, when combined with other
"performance-based compensation" within the meaning of Section 162(m) of the
Code paid to such individual, exceed $2,500,000 in any given Performance Cycle.
4.4 Adjustment of Awards
Notwithstanding anything in this Plan to the contrary, the Committee may
not increase the amount payable pursuant to, waive the achievement of the
performance goals applicable to, or accelerate the lapsing of contingencies or
restrictions with respect to, an award subject to this Article Four. The
Committee may decrease, or delay the lapsing of contingencies or restrictions
with respect to, an award subject to this Article Four.
4.5 Committee Authority
The Committee shall have the power to impose such other restrictions on
awards subject to this Article Four as it may deem necessary or appropriate to
ensure that such awards satisfy all requirements for "performance-based
compensation" within the meaning of Section 162(m) of the Code, or any successor
provision thereto.
ARTICLE FIVE
MISCELLANEOUS
5.1 Amendment
A. Board Action. The Board may amend, suspend or discontinue the Plan in
whole or in part at any time; PROVIDED, HOWEVER, that certain amendments may, as
determined by the Board in its sole discretion, require stockholder approval
pursuant to applicable laws or regulations.
B. Modification of Awards. The Committee shall have full power and
authority to modify or waive any term, condition, or restriction applicable to
any outstanding award under the Plan, to the extent not inconsistent with the
Plan; PROVIDED, HOWEVER, that no such modification or waiver shall, without the
consent of the holder of the award, adversely affect the holder's rights
thereunder; and PROVIDED, FURTHER, the Committee shall have no authority to
reprice outstanding awards through reducing the exercise price thereof, or
through amendment, cancellation, or replacement of awards, except that no
provision of this Paragraph 5.1B shall restrict or prohibit any adjustment or
other action taken pursuant to Paragraph 1.3C above.
C. Other Programs. Nothing in this Plan shall prevent the Company from
adopting any other compensation program, including programs involving equity
compensation, for
E-7
employees, directors or consultants. The adoption or amendment of any such
program shall not be considered an amendment to this Plan.
5.2 Tax Withholding
A. Obligation. The Company's obligation to deliver shares or cash upon the
exercise of awards under the Plan is subject to the satisfaction of all
applicable Federal, state, and local income and employment tax withholding
requirements.
B. Stock Withholding. The Committee may require or permit, in its
discretion and upon such terms and conditions as it may deem appropriate
(including the applicable safe-harbor provisions of SEC Rule 16b-3), holders of
outstanding awards under the Plan to elect to have the Company withhold, from
the shares of Common Stock otherwise issuable pursuant to such awards, one or
more of such shares with an aggregate Fair Market Value equal to the Federal,
state, and local employment and income taxes ("Taxes") incurred in connection
with the acquisition of such shares. Holders of awards under the Plan also may
be granted the right to deliver previously acquired shares of Common Stock in
satisfaction of such Taxes. The withheld or delivered shares will be valued at
Fair Market Value on the applicable determination date for such Taxes.
5.3 Valuation
For all purposes under this Plan, the fair market value per share of Common
Stock on any relevant date under the Plan (the "Fair Market Value") will be the
closing selling price per share of Common Stock on the day before the date in
question on the New York Stock Exchange, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the day before the date in question,
then the Fair Market Value will be the closing selling price on the exchange on
the last preceding date for which such quotation exists. Notwithstanding the
foregoing, if the Committee determines that, as a result of circumstances
existing on any date, the use of the above rule is not a reasonable method of
determining Fair Market Value on that date, or if Common Stock is not at the
time listed or admitted to trading as outlined above, the Committee may use such
other method as, in its judgment, is reasonable.
5.4 Effective Date And Term Of Plan
A. Effective Date. This Plan shall be effective from and after January 21,
2004 (the "Effective Date"), subject to approval by the shareholders of the
Company. No award granted hereunder shall be of any force or effect unless and
until this Plan shall have been so approved.
B. Term. No award may be granted under the Plan after ten (10) years from
the Effective Date (the "Termination Date"). Subject to this limit, the
Committee may make awards under the Plan at any time after the Effective Date of
the Plan and before the Termination Date.
E-8
5.5 Use Of Proceeds
Any cash proceeds received by the Company from the sale of shares pursuant
to awards under the Plan will be used for general corporate purposes.
5.6 No Employment/Service Rights
Neither the establishment of this Plan, nor any action taken under the
terms of this Plan, nor any provision of this Plan will be construed to grant
any individual the right to remain in the employ or service of the Company or an
Eligible Affiliate (or any subsidiary or parent thereof) for any period of
specific duration, and the Company or an Eligible Affiliate (or any subsidiary
or parent thereof) may terminate such individual's employment or service at any
time and for any reason, with or without cause. Nothing contained in this Plan
or in any award under this Plan will affect any contractual right of an employee
or other service provider pursuant to a written employment or service agreement
executed by both parties.
5.7 Election Under Code Section 83(b)
An Eligible Individual who receives an award of restricted stock or any
other award under this Plan constituting restricted property (and not a mere
right to receive payment or a potential payment in the future) shall be entitled
to make, at his or her discretion, within thirty (30) days of receipt of such
restricted property and in accordance with applicable laws and regulations, the
election provided for under Section 83(b) of the Code to be taxed on the fair
market value of such restricted property at the time it is received. Eligible
Individuals should consult their individual tax advisors as to the tax
consequences to them of the election under Section 83(b).
5.8 Corporate Transactions
The Committee may determine and set forth in each award, either at the time
of grant or by amendment thereafter, the effect, if any, that any sale of stock
or assets, merger, combination, spinoff, reorganization, or liquidation of the
Company will have upon the term, exercisability and/or vesting of outstanding
awards; provided that any awards that are continued, assumed or replaced with
comparable awards in connection with any transaction will be adjusted as
provided in Paragraph 1.3C. The grant of awards under this Plan will in no way
affect the right of the issuer of Common Stock to adjust, reclassify,
reorganize, or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
5.9 Transferability of Awards
During the lifetime of the awardee, awards under this Plan will be
exercisable only by the awardee and will not be assignable or transferable by
the awardee other than by will or by the laws of descent and distribution
following the awardee's death. However, if and to the extent that the Committee
so authorizes at the time an award is granted or amended, an option or other
award may, (i) in connection with a gift or a qualified domestic relations
order, be assigned in whole or in part during the awardee's lifetime to one or
more members of the awardee's family or to a trust, foundation or other entity
in which one or more such family members has more than
E-9
fifty percent (50%) of the beneficial interest and (ii) be assigned in whole or
in part during the awardee's lifetime to a third party. Rights under the
assigned portion only may be exercised by the person or persons who acquire a
proprietary interest in the award pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
award immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Committee may deem appropriate.
5.10 Change in Control
The terms and conditions (if any) that will apply to any award granted
under this Plan in the case of a change in control of the Company shall be
determined by the Committee, in its sole discretion, and shall be set forth in
the individual award agreements or other instruments to which awards under the
Plan are subject.
E-10
ANNUAL MEETING
OF
AMERON INTERNATIONAL CORPORATION
Wednesday, March 24, 2004
The Pasadena Hilton Hotel
9:00 a.m.
The California Ballroom
150 South Los Robles Avenue
Pasadena, CA 91101
Your vote is important to us. Please detach the proxy card below, and sign, date
and mail it using the enclosed reply envelope, at your earliest convenience,
even if you plan to attend the meeting. Your vote is held in confidence by our
outside tabulator, Automatic Data Processing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
================================================================================
Ameron International Corporation
245 South Los Robles Avenue, Pasadena, California 91101
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF THE DIRECTORS
R The undersigned hereby appoints James S. Marlen, Javier Solis and Gary
Wagner, and each of them, with full power of substitution in each, proxies
O to vote all the shares of Ameron International Corporation ("Ameron")
Common Stock which the undersigned may be entitled to vote at the Annual
X Meeting of Stockholders to be held March 24, 2004, and at any adjournments
thereof, upon the matters stated on the reverse side, as specified and in
Y their discretion upon such other business as may properly come before the
meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, the proxy
will be voted FOR Proposals 1, 2, 3 and 4.
================================================================================
[LOGO] VOTE BY INTERNET - www.proxyvote.com
AMERON Use the Internet to transmit your voting
INTERNATIONAL instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the
AMERON INTERNATIONAL CORPORATION day before the cut-off date or meeting date. Have
245 SOUTH LOS ROBLES AVENUE your proxy card in hand when you access the web
PASADENA, CALIFORNIA 91101 site and follow the instructions to obtain your
records and to create an electronic voting
instruction form.
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've provided or
return to Ameron International Corporation, c/o
ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: AMRINC KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
====================================================================================================================================
AMERON INTERNATIONAL CORPORATION
The Board of Directors recommends a vote
FOR Proposals 1, 2, 3 and 4.
For Withhold For All To withhold authority to
Election of Directors. All All Except vote, mark "For All Except"
and write the nominee's
1. Nominees: [ ] [ ] [ ] number on the line below.
01) J. Michael Hagan, 02) Terry L. Haines, 03) Dennis C. Poulsen ___________________________
Vote On Proposals For Against Abstain
2. Ratify the appointment of PricewaterhouseCoopers
LLP, independent public accountants. [ ] [ ] [ ] NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
3. Approve an amendment to the Certificate of attorney, executor, administrator, trustee or
Incorporation to increase the number of [ ] [ ] [ ] guardian, please give full title as such. If signer
shares authorized to be issued. is a corporation, please sign full corporate name by
duly authorized officer.
4. Approve the 2004 Stock Incentive Plan. [ ] [ ] [ ]
Please indicate if you plan to attend this meeting [ ] [ ]
YES NO
---------------------------------------------------------- ------------------------------------------------
========================================================== ================================================
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
====================================================================================================================================